SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File number 33-339505
ContiMortgage Home Equity Loan Trust 1999-1
------------------------------------------------------
(Exact name of registrant as specified in its charter)
16-1565856
16-1565858
New York 16-1565859
------------------------------- ----------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Manufacturers and Traders Trust Company
Corporate Trust Department
One M&T Plaza
Buffalo, New York 14240-2599
- ---------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 842-5589 Securities
registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
None None
-------------------------- ------------------------------------------
Securities registered pursuant to Section 12 (g) of the Act:
None
- --------------------------------------------------------------------------------
(Title of class)
Indicated by check mark whether the registrant (1) has filed all reports
required to be file by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (e 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X ]
State the aggregate market value of the voting stock held by
non-affiliates of registrant. The aggregate market value shall be computed by
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock, as of specified date within 60 days prior to the date of
filing:
Not Applicable
Documents Incorporated by Reference:
None
<PAGE>
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
INDEX
<PAGE>
Page
----
PART 1................................................................. 3
ITEM 1 - Business............................................. 3
ITEM 2 - Properties........................................... 3
ITEM 3 - Legal Proceedings.................................... 3
ITEM 4 - Submission of Matters to a Vote of Security Holders
3
PART II .............................................................. 3
ITEM 5 - Market for Registrant's Common Stock and
Related Stockholder Matters........................... 3
ITEM 6 - Selected Financial Data ............................ 3
ITEM 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations ....... 3
ITEM 7A - Quantitative and Qualitative Disclosures about
Market Risk ......................................... 3
ITEM 8 - Financial Statements and Supplementary Data............ 4
ITEM 9 - Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure............... 4
PART III............................................................... 4
ITEM 10 - Directors and Executive Officers of the Registrant..... 4
ITEM 11 - Executive Compensation................................. 4
ITEM 12 - Security Ownership of Certain Beneficial
Owners and Management.................................. 4
ITEM 13 - Certain Relationships and Related Transactions......... 8
PART IV................................................................ 9
ITEM 14 - Exhibits, Financial Statement Schedules and
Reports on Form 8-K.................................... 9
SIGNATURES ....................................................... 10
INDEX TO EXHIBITS...................................................... 11
<PAGE>
PART I
ITEM 1 - Business
Not Applicable.
ITEM 2 - Properties
Not Applicable.
ITEM 3 - Legal Proceedings
The Depositor is not aware of any material pending legal proceedings
involving either the ContiMortgage Home Equity Loan Trust 1999-1 (the "Trust")
established pursuant to the Pooling and Servicing Agreement (the "Agreement")
dated March 1, 1999, among Manufacturers and Traders Trust Company, as trustee
(the "Trustee"), ContiSecurities Asset Funding Corp., as depositor (the
"Depositor") and ContiMortgage Corporation, as servicer (the "Servicer"), the
Trustee, the Depositor or the Servicer which relates to the Trust.
ITEM 4 - Submission of Matters to a Vote of Security Holders
No matter has been submitted to a vote of the holders of beneficial
interests in the Trust through the solicitation of proxies or otherwise.
PART II
ITEM 5 - Market for Registrants Common Stock and Related Stockholder Matters
To the best knowledge of the Depositor, there is no established public
trading market for any beneficial interests in the Trust.
All of the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates, Class A-6
Certificates, Class A-7 Certificates, Class A-8 Certificates, Class B
Certificates and A-9IO Certificates, issued by the Trust are held by the
Depository Trust Company ("DTC") which in turn maintains records of holders of
beneficial interests in such Certificates. Based on information obtained by the
Trust from DTC, as of January 28, 2000, there were 14 holders of the Class A-1
Certificates, 15 holders of the Class A-2 Certificates, 4 holders of the Class
A-3 Certificates, 3 holders of the Class A-4 Certificates, 1 holder of the Class
A-5 Certificates, 6 holders of the Class A-6 Certificates, 8 holders of the
Class A-7 Certificates, 4 holders of the Class A-8 Certificates, 3 holders of
the Class B Certificates and 1 holder of the Class A-9IO Certificates.
ITEM 6 - Selected Financial Data
Not applicable.
ITEM 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Not applicable.
ITEM 7A- Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
-3-
<PAGE>
ITEM 8 - Financial Statements and Supplementary Data
In addition to the information included in the Annual Compilation of
Monthly Trustee's Statements attached as Exhibit 99.3 hereto, the gross
servicing compensation paid to the Servicer for the year ended December 31, 1999
was $5,029,935.96.
ITEM 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no changes of accountants or disagreements on accounting or
financial disclosures between the Issuer and its accountants.
PART III
ITEM 10 - Directors and Executive Officers of the Registrant
Not applicable.
ITEM 11 - Executive Compensation
Not applicable.
ITEM 12 - Security Ownership of Certain Beneficial Owners and Management
The following table sets forth (i) the name and address of each entity
owning more than 5% of the outstanding principal amount of each Class of
Certificates of the Trust; (ii) the principal amount of the Class of
Certificates owned by each and (iii) the percent that the principal amount of
the Class of Certificates owned by such entity represents of the outstanding
principal amount of such Class of Certificates. The information set forth in the
table for the Certificates is based upon information obtained by the Trust from
DTC and represents ownership of beneficial interest in the Certificates held by
DTC. The Depositor is not aware of any Schedules 13D or 13G filed with the
Securities and Exchange Commission in respect of the Certificates.
Amount Owned
------------
Name and Address All Dollar Amounts Are in Thousands
---------------- -----------------------------------
Principal Percent
--------- -------
Class A-1 Certificates
- ----------------------
State Street Bank and Trust Company $44,750 27%
1776 Heritage Drive
Global Corporate Action Unit, JAB 5NW
North Quincy, MA 02171
Chase Manhattan Bank $36,230 22%
4 New York Plaza
13th Floor
New York, NY 10004
-4-
<PAGE>
Boston Safe Deposit and Trust Company $26,120 16%
C/o Mellon Bank N.A.
Three Mellon Bank Center, Room 153-3015
Pittsburgh, PA 15259
Investors Fiduciary Trust Company/SSB $23,955 15%
1776 Heritage Drive
Global Corporate Action Unit, JAB 5NW
North Quincy, MA 02171
The Northern Trust Company $15,825 10%
801 South Canal, C-IN
Chicago, IL 60607
Bankers Trust Company $10,200 6%
C/o BT Services Tennessee Inc.
648 Grassmere Park Drive
Nashville, TN 37211
Class A-2 Certificates
- ----------------------
Chase Manhattan Bank $44,690 46%
4 New York Plaza
13th Floor
New York, NY 10004
Compass Bank $19,500 20%
701 South 20th Street, 11th Floor
Birmingham, AL 35233
State Street Bank and Trust Company $15,000 15%
1776 Heritage Drive
Global Corporate Action Unit, JAB 5NW
North Quincy, MA 02171
Bankers Trust $5,900 6%
C/o BT Services Tennessee Inc.
648 Grassmere Park Drive
Nashville, TN 37211
FUNB - Philadelphia Main $5,842 6%
123 South Broad Street
Philadelphia, PA 19109
-5-
<PAGE>
Class A-3 Certificates
- ----------------------
The Bank of New York $23,259 44%
925 Patterson Plank Road
Secaucus, NJ 07094
Chase Manhattan Bank $20,000 38%
4 New York Plaza
13th Floor
New York, NY 10004
State Street Bank and Trust Company $8,000 15%
1776 Heritage Drive
Global Corporate Action Unit, JAB 5NW
North Quincy, MA 02171
Class A-4 Certificates
- ----------------------
Chase Manhattan Bank $15,125 51%
4 New York Plaza
13th Floor
New York, NY 10004
Boston Safe Deposit and Trust Company $12,000 40%
C/o Mellon Bank N.A.
Three Mellon Bank Center, Room 153-3015
Pittsburgh, PA 15259
Merrill Lynch, Pierce Fenner & Smith Safekeeping $2,780 9%
4 Corporate Place
Corporate Park 287
Piscataway, NJ 08855
Class A-5 Certificates
- ----------------------
Chase Manhattan Bank $31,401 100%
4 New York Plaza
13th Floor
New York, NY 10004
Class A-6 Certificates
- ----------------------
Chase Manhattan Bank $30,250 57%
4 New York Plaza
13th Floor
New York, NY 10004
-6-
<PAGE>
State Street Bank and Trust Company $10,240 19%
1776 Heritage Drive
Global Corporate Action Unit, JAB 5NW
North Quincy, MA 02171
U.S. Bank National Association $8,000 15%
MPFP 1603 Proxy Unit
601 Second Avenue South
Minneapolis, MN 55402
First Union National Bank $3,750 7%
1525 West W.T. Harris Blvd., 3A4
Charlotte, NC 28288
Class A-7 Certificates
- ----------------------
State Street Bank and Trust Company $12,400 36%
1776 Heritage Drive
Global Corporate Action Unit, JAB 5NW
North Quincy, MA 02171
Bankers Trust $6,750 20%
C/o BT Services Tennessee Inc.
648 Grassmere Park Drive
Nashville, TN 37211
Chase Manhattan Bank $4,750 14%
4 New York Plaza
13th Floor
New York, NY 10004
The Bank of New York $4,675 14%
925 Patterson Plank Road
Secaucus, NJ 07094
Boston Safe Deposit and Trust Company $2,000 6%
C/o Mellon Bank N.A.
Three Mellon Bank Center, Room 153-3015
Pittsburgh, PA 15259
Comerica Bank $1,950 6%
CAP.CHG./Proxy 7CBB/MC 3530
Detroit, MI 48275-3530
-7-
<PAGE>
Class A-8 Certificates
- ----------------------
The Bank of New York $89,500 58%
925 Patterson Plank Road
Secaucus, NJ 07094
Norwest Bank Minnesota, National Association $37,500 24%
733 Marquette Avenue
Minneapolis, MN 55479-0056
Bankers Trust $17,375 11%
C/o BT Services Tennessee Inc.
648 Grassmere Park Drive
Nashville, TN 37211
Chase Manhattan Bank $10,000 7%
4 New York Plaza
13th Floor
New York, NY 10004
Class B Certificates
- --------------------
First Union National Bank $15,000 46%
1525 West W.T. Harris Blvd., 3A4
Charlotte, NC 28288
The Bank of New York $13,500 42%
925 Patterson Plank Road
Secaucus, NJ 07094
U.S. Bank National Association/Safekeeping $4,000 12%
First Trust Center SPFT 0913
180 East Fifth Street, 9th Floor
St. Paul, MN 55101
Class A-9IO Certificates
- ------------------------
Chase Manhattan Bank $34,125 100%
4 New York Plaza
13th Floor
New York, NY 10004
ITEM 13 - Certain Relationships and Related Transactions
None
-8-
<PAGE>
PART IV
ITEM 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements:
Not applicable.
2. Financial Statement Schedules:
Not applicable.
3. Exhibits:
Exhibit No. Description
----------- -----------
99.1 Statement of Compliance of the
Servicer.
99.2 Annual Report of Independent
Accountants with respect to the
Servicer's overall servicing operations.
99.3 Annual compilation of Monthly
Trustee's Statement.
99.4 Amended and restated Pooling and
Servicing Agreement dated as of October
1, 1999 by and among ContiSecurities
Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as Seller and
Servicer, ContiWest Corporation, as
Seller, Manufacturers and Traders Trust
Company, as the Trustee, and Norwest
Bank Minnesota, as the Master Servicer.
99.5 Supplemental Servicing Amendment,
dated as of November 9, 1999 by and
among ContiMortgage Corporation as
Servicer, ContiWest Corporation,
ContiSecurities Asset Funding Corp.,
as Depositor, Greenwich Capital
Financial Products, Inc., as
Supplemental Servicer and
Manufacturers and Traders Trust
Company, as Trustee.
-9-
<PAGE>
b) Reports on Form 8-K.
10 reports on Form 8-K have been filed by the Issuer during the period covered
by this report.
Items Reported/Financial
Date of Report on Form 8-K Statements Filed
April 25, 1999 Trustee's Monthly Report for the
March Monthly Period.
May 25, 1999 Trustee's Monthly Report for the
April Monthly Period
June 25, 1999 Trustee's Monthly Report for the May
Monthly Period
July 25, 1999 Trustee's Monthly Report for the June
Monthly Period
August 25, 1999 Trustee's Monthly Report for the July
Monthly Period
September 25, 1999 Trustee's Monthly Report for the
August Monthly Period
October 25, 1999 Trustee's Monthly Report for the
September Monthly Period
November 25, 1999 Trustee's Monthly Report for the
October Monthly Period
December 25, 1999 Trustee's Monthly Report for the
November Monthly Period
January 25, 2000 Trustee's Monthly Report for the
December Monthly Period
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Depositor has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
By: CONTISECURITIES ASSET FUNDING CORP.,
AS DEPOSITOR
By: /s/ Alan Fishman
--------------------
Name: Alan Fishman
Title: President
By: /s/ Frank Baier
-------------------
Name: Frank Baier
Title: Vice President
Date: March 30, 2000
-10-
<PAGE>
INDEX TO EXHIBITS
Item 14(a)3.
Exhibit No. Description
----------- -----------
99.1 Statement of Compliance of the
Servicer.
99.2 Annual Report of Independent
Accountants with respect to the
Servicer's overall servicing operations.
99.3 Annual compilation of Monthly
Trustee's Statement.
99.4 Amended and restated Pooling and
Servicing Agreement dated as of October
1, 1999 by and among ContiSecurities
Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as Seller and
Servicer, ContiWest Corporation, as
Seller, Manufacturers and Traders Trust
Company, as the Trustee, and Norwest
Bank Minnesota, as the Master Servicer.
99.5 Supplemental Servicing Amendment,
dated as of November 9, 1999 by and
among ContiMortgage Corporation as
Servicer, ContiWest Corporation,
ContiSecurities Asset Funding Corp.,
as Depositor, Greenwich Capital
Financial Products, Inc., as
Supplemental Servicer and
Manufacturers and Traders Trust
Company, as Trustee.
-11-
Exhibit 99.1
ContiMortgage
One ContiPark
338 S. Warminster Road
Hatboro, PA 19040-3430
(215) 347-3000
As of and for the year ended December 31, 1999, ContiMortgage Corporation has
complied with the minimum servicing standards set forth in the Mortgage Bankers
Association of America's Uniform Single Attestation Program for Mortgage
Bankers. As of December 31, 1999 ContiMortgage Corporation had in effect
fidelity bond and errors and omissions policy in the amounts of $14,000,000 and
$10,000,000, respectively.
/s/ Dennis Hedrick /s/ William P. Higgins
- ---------------------------- -------------------------------
Dennis Hedrick William P. Higgins
Vice President - Servicing Vice President and Controller
March 21, 1999 March 21, 1999
Exhibit 99.2
ARTHUR ANDERSEN
CONTIMORTGAGE CORPORATION
UNIFORM SINGLE ATTESTATION PROGRAM
FOR MORTGAGE BANKERS
FOR THE YEAR ENDED DECEMBER 31, 1999
TOGETHER WITH AUDITORS' REPORT
<PAGE>
ARTHUR ANDERSEN LLP
Independent Accountants' Report
To the Board of Directors of ContiMortgage Corporation:
We have examined management's assertion about ContiMortgage Corporation's
compliance with the minimum servicing standards identified in the Mortgage
Bankers Association of America's Uniform Single Attestation Program for Mortgage
Bankers (USAP) and that ContiMortgage Corporation had in effect a fidelity bond
and errors and omissions policy in the amount of $14,000,000 and $10,000,000,
respectfully, as of December 31, 1999 and for the year then ended, included in
the accompanying management assertion. Management is responsible for
ContiMortgage Corporation's compliance with those minimum servicing standards
and for maintaining a fidelity bond and errors and omissions policy. Our
responsibility is to express an opinion on management's assertion about the
entity's compliance with the minimum servicing standards and maintenance of a
fidelity bond and errors and omissions policy based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and accordingly, included
examining, on a test basis, evidence about ContiMortgage Corporation's
compliance with the minimum servicing standards and performing such other
procedures as we considered necessary in the circumstances. We believe that our
examination provides a reasonable basis for our opinion. Our examination does
not provide a legal determination on ContiMortgage Corporation's compliance with
the minimum servicing standards.
In our opinion, management's assertion that ContiMortgage Corporation complied
with the aforementioned minimum servicing standards and that ContiMortgage
Corporation had in effect a fidelity bond and errors and omissions policy in the
amount of $14,000,000 and $10,000,000 as of December 31, 1999, is fairly stated,
in all material respects.
/s/ Arthur Andersen LLP
New York, New York
March 21, 1999
----------------------------------------------------
ContiMortgage Corporation
Home Equity Loan Pass-Through Certificates
Series 1999-1
----------------------------------------------------
Distribution Period: 25-Jan-00
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Original Beginning Ending
Certificate Certificate Principal Interest Total Certificate
CUSIP Class Face Value Balance Distribution Distribution Distribution Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
21075WJT3 A-1 164,250,000.00 103,959,527.49 9,371,316.04 520,663.97 9,891,980.01 94,588,211.45
21075WJU0 A-2 96,940,000.00 96,940,000.00 0.00 484,700.00 484,700.00 96,940,000.00
21075WJV8 A-3 53,259,000.00 53,259,000.00 0.00 273,840.03 273,840.03 53,259,000.00
21075WJW6 A-4 29,905,000.00 29,905,000.00 0.00 157,001.25 157,001.25 29,905,000.00
21075WJX4 A-5 31,401,000.00 31,401,000.00 0.00 166,686.98 166,686.98 31,401,000.00
21075WJY2 A-6 53,245,000.00 53,245,000.00 0.00 303,940.21 303,940.21 53,245,000.00
21075WJZ9 A-7 34,125,000.00 34,125,000.00 0.00 183,990.63 183,990.63 34,125,000.00
21075WKA2 A-8 154,375,000.00 121,998,561.23 4,621,004.87 664,472.79 5,285,477.66 117,377,556.36
21075WKC8 B 32,500,000.00 32,500,000.00 0.00 230,208.33 230,208.33 32,500,000.00
21075X2P7 C 0.00 0.00 0.00 15,095.40 15,095.40 0.00
R 0.00 0.00 0.00 0.00 0.00 0.00
---------------------------------------------------------------------------------------------------------------------
Total 650,000,000.00 557,333,088.72 13,992,320.91 3,000,599.59 16,992,920.50 543,340,767.81
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Notional Notional Principal Interest Total Notional
Class Amount Amount Distribution Distribution Distribution Amount
---------------------------------------------------------------------------------------------------------------------
21075WKB0 A-9IO 34,125,000.00 34,125,000.00 0.00 199,062.50 199,062.50 34,125,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
AMOUNTS PER $1,000 UNIT PASS THROUGH RATES
---------------------------------------------------------------------------------------------------------------------
Ending
Principal Interest Total Certificate Current Pass
Class Distribution Distribution Distribution Balance Class Thru Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
21075WJT3 A-1 57.05519659 3.16994807 60.22514466 575.87952177 A-1 6.01000%
21075WJU0 A-2 0.00000000 5.00000000 5.00000000 1,000.00000000 A-2 6.00000%
21075WJV8 A-3 0.00000000 5.14166676 5.14166676 1,000.00000000 A-3 6.17000%
21075WJW6 A-4 0.00000000 5.25000000 5.25000000 1,000.00000000 A-4 6.30000%
21075WJX4 A-5 0.00000000 5.30833349 5.30833349 1,000.00000000 A-5 6.37000%
21075WJY2 A-6 0.00000000 5.70833336 5.70833336 1,000.00000000 A-6 6.85000%
21075WJZ9 A-7 0.00000000 5.39166681 5.39166681 1,000.00000000 A-7 6.47000%
21075WKA2 A-8 29.93363479 4.30427718 34.23791197 760.34044606 A-8 6.76125%
21075WKC8 B 0.00000000 7.08333323 7.08333323 1,000.00000000 A-9IO 7.00000%
-----------------------------------------------------------------------------------
Total 21.52664755 4.59308337 26.11973092 835.90887355 B 8.50000%
- ----------------------------------------------------------------------------------------------------------------------------------
LIBOR: 6.48125%
--------------
Uncapped A-8 Rate: 6.76125%
--------------
<CAPTION>
-----------------------------------------------------------------------------------
Ending
Principal Interest Total Notional
Class Distribution Distribution Distribution Amount
-----------------------------------------------------------------------------------
21075WKB0 A-9IO 0.00000000 5.83333333 5.83333333 1,000.00000000
- --------------------------------------------------------------------------------------------------
</TABLE>
PLEASE DIRECT ANY QUESTIONS OR COMMENTS TO THE FOLLOWING ADMINISTRATOR:
Neil Witoff
M & T Corporate Trust Department
One M & T Plaza-7th Floor
Buffalo, NY 14240
Page 1
<PAGE>
Distribution Period: 25-Jan-00
<TABLE>
<CAPTION>
Group I Group II Total
------- -------- -----
<S> <C> <C> <C> <C>
SEC. 7.09 (a) (ii) Scheduled Principal Received 377,881.75 54,964.98 432,846.73
Prepayments (incl. Curtailments) 7,970,602.82 3,725,191.22 11,695,794.04
Purchased Principal 0.00 0.00 0.00
Liquidation Proceeds applied to principal 248,829.42 348,949.16 597,778.58
Realized Loss of Principal 95,456.77 63,968.66 159,425.43
Realized Loss of Interest 2,588.10 16.00 2,604.10
Extra Principal Distribution 774,002.05 491,899.51 1,265,901.56
SEC. 7.09 (a) (iv) Total Certificate Interest Carry-Forward Amount 0.00
Class A-1 Interest Carry-Forward Amount 0.00
Class A-2 Interest Carry-Forward Amount 0.00
Class A-3 Interest Carry-Forward Amount 0.00
Class A-4 Interest Carry-Forward Amount 0.00
Class A-5 Interest Carry-Forward Amount 0.00
Class A-6 Interest Carry-Forward Amount 0.00
Class A-7 Interest Carry-Forward Amount 0.00
Class A-8 Interest Carry-Forward Amount 0.00
Class A-9IO Interest Carry-Forward Amount 0.00
Class B Interest Carry-Forward Amount 0.00
Group I Group II Total
------- -------- -----
SEC. 7.09 (a) (vi) Outstanding Loan Balance: 423,564,528.11 124,685,949.72 548,250,477.83
SEC. 7.09 (a) (vii) Code Section 6049(d)(7)(C) Information-Required Market Discount Information Provided at Calendar Year End.
Group I Group II Total
SEC. 7.09 (a) (viii) Loan Purchase Prices 0.00 0.00 0.00
Substitution Amounts 0.00 0.00 0.00
SEC. 7.09 (a) (ix) & (x) Weighted Average Coupon 10.2553% 10.2475% 10.2535%
SEC. 7.09 (a) (xi) Weighted Average Remaining Term to Maturity 263 347 282
SEC. 7.09 (a) (xii) Cumulative Realized Loss Trigger Event Occurrence NO
Cumulative Realized Loss Termination Trigger Occurrence NO
SEC. 7.09 (a) (xiii) Overcollateralization Amount 4,909,710.02
Targeted Overcollateralization Amount 16,575,000.00
Class A Optimal Balance 499,175,477.83
Class B Optimal Balance 32,500,000.00
SEC. 7.09 (a) (xiv) Applied Realized Realized Loss Unpaid Realized
Loss Amount Amortization Amount Loss Amount
----------- ------------------- -----------
Class B 0.00 0.00 0.00
SEC. 7.09 (a) (xvi) Group I Group II
------- --------
Available Funds Cap 8.96660% 9.01130%
SEC. 7.09 (a) (xvii) Insured Payment 0.00
SEC. 7.09 (a) (xviii) Reimbursement Amount Paid 0.00
Remaining Reimbursement Amount Unpaid 0.00
SEC. 7.09 (a) (xx) Largest Home Equity Loan Balance Outstanding 409,295.36
2nd Largest Home Equity Loan Balance Outstanding 401,019.57
3rd Largest Home Equity Loan Balance Outstanding 392,200.32
SEC. 7.09 (a) (xxi) Class B Available Funds Cap Carry-Forward Amount 0.00
</TABLE>
Page 2
<PAGE>
Distribution Period: 25-Jan-00
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
SEC. 7.09 (b) (i) Delinquencies(1) Period Number Percentage Prin. Balance Percentage
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
30-59 Days 156 2.60739% 9,231,697.43 2.17953%
Group I 60-89 Days 49 0.81899% 3,158,116.49 0.74560%
90+ Days 209 3.49323% 14,605,843.62 3.44832%
-----------------------------------------------------------------------------------------------------------
30-59 Days 43 3.08244% 3,097,666.70 2.48438%
Group II 60-89 Days 14 1.00358% 1,119,586.53 0.89793%
90+ Days 82 5.87814% 5,933,254.79 4.75856%
-----------------------------------------------------------------------------------------------------------
30-59 Days 199 2.69721% 12,329,364.13 2.24886%
TOTAL 60-89 Days 63 0.85389% 4,277,703.02 0.78025%
90+ Days 291 3.94416% 20,539,098.41 3.74630%
-----------------------------------------------------------------------------------------------------------
Total Group I 5,983 100.00000% 423,564,528.11 100.00000%
-----------------------------------------------------------------------------------------
Total Group II 1,395 100.00000% 124,685,949.72 100.00000%
-----------------------------------------------------------------------------------------
Total 7,378 100.00000% 548,250,477.83 100.00000%
-----------------------------------------------------------------------------------------
(1) Includes Bankruptcies, Foreclosures and REOs ; Based on each respective Group's
loan count and balance.
<CAPTION>
Group I Group II Total
------- -------- -----
<S> <C> <C> <C>
SEC. 7.09 (b) (ii) Loans in Foreclosure (LIF): Count 117 48 165
Loans in Foreclosure (LIF): Balance 7,847,425.62 3,526,428.04 11,373,853.66
SEC. 7.09(b)(iii) Loans in Bankruptcy: Count 67 30 97
Loans in Bankruptcy: Balance 5,350,837.31 2,033,360.34 7,384,197.65
SEC. 7.09 (b)(iv) & (v) REO Properties: Count 16 8 24
REO Properties: Balance 1,405,087.50 644,955.97 2,050,043.47
Loans in Loss Mitigation: Count 31 8 39
Loans in Loss Mitigation: Balance 2,008,978.74 695,459.11 2,704,437.85
Loans in Forbearance: Count 8 4 12
Loans in Forbearance: Balance 483,415.84 395,292.94 878,708.78
SEC. 7.09 (b) (vi) Cumulative Realized Losses 573,897.98 115,141.22 689,039.20
Current Period Reimbursed Delinquency and Servicing Advances 0.00
Unreimbursed Delinquency and Servicing Advances 3,009.13
SEC. 7.09 (b) (vii) Loan Balance of 90+ Day Delinquent Loans 14,605,843.62 5,933,254.79 20,539,098.41
SEC. 7.09 (b) (viii) Six Month Rolling Average 90+ Day Delinquency Rate 2.56489%
Six-Month Rolling Average Excess Spread 0.20987%
Cumulative Realized Loss Trigger Event Occurrence NO
SEC. 7.09 (b) (ix) Optional Buyout Loans 0 0
</TABLE>
Page 3
<PAGE>
Distribution Period: 25-Jan-00
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SEC. 7.08(b)(i) Amount on Deposit in the Certificate Account 17,302,385.86
SEC. 7.08(b)(ii) & (iv) Amount Due Amount Paid
Class A-1 Allocation 9,891,980.01 9,891,980.01
Class A-2 Allocation 484,700.00 484,700.00
Class A-3 Allocation 273,840.03 273,840.03
Class A-4 Allocation 157,001.25 157,001.25
Class A-5 Allocation 166,686.98 166,686.98
Class A-6 Allocation 303,940.21 303,940.21
Class A-7 Allocation 183,990.63 183,990.63
Class A-8 Allocation 5,285,477.66 5,285,477.66
Class A-9IO Allocation 199,062.50 199,062.50
------------------------------------
Class A Distribution Amount 16,946,679.27 16,946,679.27
====================================
Class B Allocation 230,208.33 230,208.33
SEC. 7.08(b)(iii) Insured Payment made by the Certificate Insurer 0.00
<CAPTION>
SEC. 7.08(b)(v) Beginning Principal Ending
Class Balance * Distribution Balance *
<S> <C> <C> <C> <C>
A-1 103,959,527.49 9,371,316.04 94,588,211.45
A-2 96,940,000.00 - 96,940,000.00
A-3 53,259,000.00 - 53,259,000.00
A-4 29,905,000.00 - 29,905,000.00
A-5 31,401,000.00 - 31,401,000.00
A-6 53,245,000.00 - 53,245,000.00
A-7 34,125,000.00 - 34,125,000.00
A-8 121,998,561.23 4,621,004.87 117,377,556.36
A-9IO 34,125,000.00 NA 34,125,000.00
B 32,500,000.00 0.00 32,500,000.00
* Denotes Notional Amounts for Class A-9IO.
Group I Group II Total
SEC. 7.08(b)(vi) Current Period Realized Losses (Recoveries) 98,044.87 63,984.66 162,029.53
Cumulative Realized Losses 573,897.98 115,141.22 689,039.20
SEC. 7.08(b)(vii) Six-Month Rolling Average Excess Spread 0.20987%
Six-Month Rolling Average 90+ Day Delinquency Rate 2.56489%
</TABLE>
<PAGE>
Distribution Period: 25-Jan-00
REO Status
SEC. 7.09 (b) (v&vi) Loan Number Book Value Status
7388457 143,865.07 Eviction
7774961 39,983.77 Eviction
6504427 163,821.83 List Pending
8099681 148,000.00 List Pending
8097487 104,647.02 List Pending
8367542 79,932.74 List Pending
8362345 43,929.12 List Pending
8405474 38,249.11 List Pending
8071672 38,193.46 List Pending
7880305 24,970.70 List Pending
8312522 23,800.00 List Pending
5827308 23,684.67 List Pending
7564503 267,602.21 Listed
8098139 104,647.02 Listed
7425622 77,350.84 Listed
7638695 82,409.94 Pending Closing
8081945 129,444.11 Eviction
7874431 60,265.39 Eviction
7272057 22,469.25 Eviction
7315815 237,022.50 List Pending
7390875 82,288.54 List Pending
7466113 42,329.97 List Pending
8123788 43,174.59 Listed
7539950 27,961.62 Listed
Page 4
<PAGE>
Insurer's Report
Distribution Period: 25-Jan-00
<TABLE>
<CAPTION>
Group I Group II Total
<S> <C> <C> <C>
* Monthly Excess Cashflow Amount 961,741.19 304,160.37 1,265,901.56
* Premium paid from cash flow (1) 65,577.20 19,562.93 85,140.13
* Trustee Fee paid from cash flow (1) 1,449.79 432.26 1,882.05
* Master Serv Fee paid from cash flow 18,010.72 5,369.96 23,380.68
* Interest Collected on Mortgage
Loans (net of Service Fee) 3,513,999.69 1,046,871.42 4,560,871.11
* Current Period Realized Losses:
Principal 95,456.77 63,968.66 159,425.43
Interest 2,588.10 16.00 2,604.10
</TABLE>
(1) Allocated based upon the related Certificate Balances.
EXECUTION COPY
==============================================================================
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1999
Amending and Restating the Pooling and Servicing Agreement
Dated as of March 1, 1999
--------------------
among
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor,
CONTIMORTGAGE CORPORATION,
as Seller and Servicer,
CONTIWEST CORPORATION,
as Seller
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Master Servicer
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
Home Equity Loan Pass-Through Certificates
Series 1999-1
==============================================================================
-i-
<PAGE>
TABLE OF CONTENTS
Page
Article I DEFINITIONS; RULES OF CONSTRUCTION............................3
Section 1.01 Definitions................................................3
Section 1.02 Use of Words and Phrases..................................31
Section 1.03 Captions; Table of Contents...............................32
Section 1.04 Opinions..................................................32
Article II ESTABLISHMENT AND ORGANIZATION OF THE TRUST..................33
Section 2.01 Establishment of the Trust................................33
Section 2.02 Office....................................................33
Section 2.03 Purposes and Powers.......................................33
Section 2.04 Appointment of the Trustee; Declaration of Trust..........33
Section 2.05 Expenses of the Trust.....................................33
Section 2.06 Ownership of the Trust....................................34
Section 2.07 Situs of the Trust........................................34
Section 2.08 Miscellaneous REMIC Provisions............................34
Article III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
DEPOSITOR, THE SERVICER AND THE SELLERS; COVENANT OF
SELLERS TO CONVEY HOME EQUITY LOANS..........................40
Section 3.01 Representations and Warranties of the Depositor...........40
Section 3.02 Representations and Warranties of the Servicer............42
Section 3.03 Representations and Warranties of the Sellers.............44
Section 3.04 Covenants of the Sellers to Take Certain Actions with
Respect to the Home Equity Loans In Certain
Situations................................................50
Section 3.05 Conveyance of the Home Equity Loans and Qualified
Replacement Mortgages.....................................59
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee....................63
Article IV ISSUANCE AND SALE OF CERTIFICATES............................66
Section 4.01 Issuance of Certificates..................................66
Section 4.02 Sale of Certificates......................................66
Article V CERTIFICATES AND TRANSFER OF INTERESTS.......................67
Section 5.01 Terms.....................................................67
Section 5.02 Forms.....................................................67
Section 5.03 Execution, Authentication and Delivery....................67
Section 5.04 Registration and Transfer of Certificates.................68
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.........70
Section 5.06 Persons Deemed Owners.....................................71
-ii-
<PAGE>
Section 5.07 Cancellation..............................................71
Section 5.08 Limitation on Transfer of Ownership Rights................71
Section 5.09 Assignment of Rights......................................72
Article VI COVENANTS....................................................73
Section 6.01 Distributions.............................................73
Section 6.02 Money for Distributions to be Held in Trust;
Withholding...............................................73
Section 6.03 Protection of Trust Estate................................74
Section 6.04 Performance of Obligations................................75
Section 6.05 Negative Covenants........................................75
Section 6.06 No Other Powers...........................................76
Section 6.07 Limitation of Suits.......................................76
Section 6.08 Unconditional Rights of Owners to Receive
Distributions.............................................77
Section 6.09 Rights and Remedies Cumulative............................77
Section 6.10 Delay or Omission Not Waiver..............................77
Section 6.11 Control by Owners.........................................77
Section 6.12 Indemnification...........................................78
Section 6.13 Access to Names and Addresses of Owners of
Certificates..............................................78
Article VII ACCOUNTS, DISBURSEMENTS AND RELEASES.........................80
Section 7.01 Collection of Money.......................................80
Section 7.02 Establishment of Accounts.................................80
Section 7.03 Flow of Funds.............................................80
Section 7.04 [Reserved]................................................84
Section 7.05 Investment of Accounts....................................84
Section 7.06 Payment of Trust Expenses.................................85
Section 7.07 Eligible Investments......................................85
Section 7.08 Accounting and Directions by Trustee......................87
Section 7.09 Reports by Trustee to Owners and the Certificate
Insurer...................................................88
Section 7.10 Reports by Trustee........................................93
Section 7.11 Preference Payments.......................................94
Article VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS............95
Section 8.01 Servicer and Sub-Servicers................................95
Section 8.02 Collection of Certain Home Equity Loan Payments...........96
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.............................................96
Section 8.04 Successor Sub-Servicers...................................97
Section 8.05 Liability of Servicer; Indemnification....................97
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee, Certificate Insurer or the Owners................97
Section 8.07 Assumption or Termination of Sub-Servicing Agreement
by Trustee................................................98
Section 8.08 Principal and Interest Account............................98
Section 8.09 Delinquency Advances and Servicing Advances..............100
Section 8.10 Compensating Interest; Repurchase of Home Equity
Loans....................................................101
Section 8.11 Maintenance of Insurance.................................102
-iii-
<PAGE>
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements...............................................102
Section 8.13 Realization Upon Defaulted Home Equity Loans;
Modification.............................................103
Section 8.14 Trustee to Cooperate; Release of Files...................105
Section 8.15 Servicing Compensation...................................106
Section 8.16 Annual Statement as to Compliance........................106
Section 8.17 Annual Independent Certified Public Accountants'
Reports..................................................106
Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans..........................107
Section 8.19 Assignment of Agreement..................................107
Section 8.20 Removal of Servicer; Resignation of Servicer.............107
Section 8.21 Successor Servicers......................................111
Section 8.22 Inspections by Certificate Insurer; Errors and
Omissions Insurance......................................114
Article IX TERMINATION OF TRUST........................................115
Section 9.01 Termination of Trust.....................................115
Section 9.02 Termination Upon Option of Owners of Class R-I
Certificates.............................................115
Section 9.03 Termination Upon Loss of REMIC Status....................116
Section 9.04 Disposition of Proceeds..................................118
Article X THE TRUSTEE.................................................119
Section 10.01 Certain Duties and Responsibilities......................119
Section 10.02 Removal of Trustee for Cause.............................120
Section 10.03 Certain Rights of the Trustee............................122
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates.............................................123
Section 10.05 May Hold Certificates....................................123
Section 10.06 Money Held in Trust......................................124
Section 10.07 Compensation and Reimbursement; No Lien for Fees.........124
Section 10.08 Corporate Trustee Required; Eligibility..................124
Section 10.09 Resignation and Removal; Appointment of Successor........124
Section 10.10 Acceptance of Appointment by Successor Trustee...........126
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee..................................126
Section 10.12 Reporting; Withholding...................................127
Section 10.13 Liability of the Trustee.................................127
Section 10.14 Appointment of Co-Trustee or Separate Trustee............128
Article XI MISCELLANEOUS...................................................130
Section 11.01 Compliance Certificates and Opinions.....................130
Section 11.02 Form of Documents Delivered to the Trustee...............130
Section 11.03 Acts of Owners...........................................131
Section 11.04 Notices, etc. to Trustee.................................132
Section 11.05 Notices and Reports to Owners; Waiver of Notices.........132
Section 11.06 Rules by Trustee.........................................132
Section 11.07 Successors and Assigns...................................132
Section 11.08 Severability.............................................133
Section 11.09 Benefits of Agreement....................................133
-iv-
<PAGE>
Section 11.10 Legal Holidays...........................................133
Section 11.11 Governing Law; Submission to Jurisdiction................133
Section 11.12 Counterparts.............................................134
Section 11.13 Usury....................................................134
Section 11.14 Amendment................................................134
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.......135
Section 11.16 REMIC Status.............................................136
Section 11.17 Additional Limitation on Action and Imposition of Tax....137
Section 11.18 Appointment of Tax Matters Person........................138
Section 11.19 The Certificate Insurer..................................138
Section 11.20 Reserved.................................................138
Section 11.21 Third Party Rights.......................................138
Section 11.22 Notices..................................................138
Article XII THE MASTER SERVICER............................................142
Section 12.01 Appointment and Duties of the Master Servicer............142
Section 12.02 Representations, Warranties and Covenants of the
Master Servicer..........................................144
SCHEDULE I-A.....................................................I-A-1
SCHEDULE I-B.....................................................I-B-1
SCHEDULE II......................................................II-1
SCHEDULE III.....................................................III-1
SCHEDULE IV......................................................IV-1
EXHIBIT A-1......................................................A-1-1
EXHIBIT A-2......................................................A-2-1
EXHIBIT A-3......................................................A-3-1
EXHIBIT A-4......................................................A-4-1
EXHIBIT A-5......................................................A-5-1
EXHIBIT A-6......................................................A-6-1
EXHIBIT A-7......................................................A-7-1
EXHIBIT A-8......................................................A-8-1
EXHIBIT A-9IO....................................................A-9-IO-1
EXHIBIT B........................................................B-1
EXHIBIT C .......................................................C-1
EXHIBIT R........................................................R-1
EXHIBIT R-I......................................................R-I-1
EXHIBIT R-II.....................................................R-II-1
EXHIBIT D........................................................D-1
EXHIBIT E........................................................E-1
EXHIBIT F........................................................F-1
EXHIBIT G........................................................G-1
EXHIBIT H........................................................H-1
EXHIBIT I........................................................I-1
-v-
<PAGE>
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, relating to
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1 as of October 1, 1999 by and among
CONTISECURITIES ASSET FUNDING CORP., a Delaware corporation, in its capacity as
Depositor (the "Depositor"), CONTIMORTGAGE CORPORATION, a Delaware corporation
in its capacities as a Seller (in such capacity, a "Seller") and as Servicer (in
such capacity, the "Servicer"), CONTIWEST CORPORATION, a Nevada corporation, in
its capacity as a Seller (a "Seller" and together with ContiMortgage
Corporation, the "Sellers") NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, in its capacity as the Master Servicer (the
"Master Servicer") and MANUFACTURERS AND TRADERS TRUST COMPANY, a New York
banking corporation, in its capacity as the trustee (the "Trustee") of the
Trust.
WHEREAS, the Depositor wishes to establish the Trust and two
subtrusts thereof and to provide for the allocation and sale of the beneficial
interests therein and the maintenance and distribution thereof;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the Trust Estate;
WHEREAS, the Master Servicer has agreed to perform the master
servicing functions described herein;
WHEREAS, all things necessary to make the Certificates, when
executed and authenticated by the Trustee, valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have been
done;
WHEREAS, Manufacturers and Traders Trust Company is willing to
serve in the capacity of Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Sellers, the Servicer, and the Trustee hereby
agree as follows:
CONVEYANCE
To provide for the distribution of the interest on and/or principal
of the Certificates in accordance with their terms, all of the sums
distributable under this Agreement with respect to the Certificates and the
performance of the covenants contained in this Agreement, each Seller hereby
bargains, sells, conveys, assigns and transfers to the Depositor and the
Depositor hereby bargains, sells, conveys, assigns and transfers to the Trust,
without recourse and for the exclusive benefit of the Owners of the Certificates
and the Certificate Insurer, all of its respective right, title and interest in
and to any and all benefits accruing to it from (a) the Home Equity Loans (other
than any principal received thereon on or prior to the Cut-Off Date, and
interest accrued thereon on or prior to February 28, 1999) listed in Schedules
I-A and I-B to this Agreement which the Sellers are causing to be delivered to
the Depositor and the Depositor is causing to be delivered to the Trustee
herewith (and all substitutions therefor as provided by Sections 3.03, 3.04 and
3.06), together with the related Home Equity Loan documents and each Seller's
interest in any Property which secured a Home Equity Loan but
-1-
<PAGE>
which has been acquired by foreclosure or deed in lieu of foreclosure, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts as may be held by the Trustee in the Certificate
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); (c) the
Insurance and Indemnity Agreement; (d) the Certificate Insurance Policy; and (e)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing) to pay the Certificates as specified herein (a)-(e) above
shall be collectively referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
-2-
<PAGE>
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have
the meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section
7.02 or 8.08 hereof.
"Accrual Period": With respect to the Fixed Rate Certificates and
any Payment Date, the calendar month immediately preceding the month in which
the Payment Date occurs. A "calendar month" shall be deemed to be 30 days. With
respect to the Class A-8 Certificates and any Payment Date, the period
commencing on the immediately preceding Payment Date (or the Closing Date in the
case of the first Payment Date) to and including the day prior to the current
Payment Date. All calculations of interest on the Fixed Rate Certificates will
be made on the basis of a 360-day year assumed to consist of twelve 30-day
months and calculations of interest on the Class A-8 Certificates will be made
on the basis of the actual number of days elapsed in the related Accrual Period
and in a year of 360 days.
"Adjustable Rate Home Equity Loans": The Home Equity Loans
identified in Schedule I-B hereto as having adjustable Coupon Rates, including
any Qualified Replacement Mortgages delivered in replacement thereof.
"Aggregate Certificate Principal Balance": As of any time of
determination, the sum of the Aggregate Class A Certificate Principal Balance
plus the Class B Certificate Principal Balance. Unless otherwise specified
herein with respect to any particular provision with respect to a Payment Date
the "Aggregate Certificate Principal Balance" shall be calculated after taking
into account the Class A Principal Distribution Amount and the Class B Principal
Distribution Amount on such Payment Date.
"Aggregate Class A Certificate Principal Balance": As of any time of
determination, the sum of the Class A Certificate Principal Balances of all
Class A Certificates. Unless otherwise specified herein with respect to any
particular provision, with respect to a Payment Date, the "Aggregate Class A
Certificate Principal Balance" shall be calculated after taking into account the
Class A Principal Distribution Amount on such Payment Date.
"Aggregate Extra Principal Distribution Amount": As of any Payment
Date, the excess, if any, of (x) the Class A Principal Distribution Amount plus
the Class B Principal Distribution Amount over (y) the Principal Remittance
Amount with respect to both Loan Groups, in each case with respect to such
Payment Date.
"Agreement": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
-3-
<PAGE>
"Applied Class B Realized Loss Amount": As of any Payment Date, the
excess of (x) the Aggregate Certificate Principal Balance on such Payment Date,
after taking into account all distributions of principal of the Class A
Certificates and the Class B Certificates on such Payment Date, but prior to the
reduction of the Class B Certificate Principal Balance pursuant to Section
7.03(h), if any, on such Payment Date over (y) the Combined Pool Balance as of
the end of the related Remittance Period.
"Appraised Value": The appraised value of any Property based upon
the appraisal or other valuation made at the time of the origination of the
related Home Equity Loan, or, in the case of a Home Equity Loan which is a
purchase money mortgage, the sales price of the Property at such time of
origination, if such sales price is less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of
such Person who is authorized to act for such Person in matters relating to the
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Sellers and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any Vice President, Assistant Vice President, Trust
Officer or any Officer of the Trustee located at the Corporate Trust Office.
"Available Funds": As defined in Section 7.03(b).
"Balloon Loans": Home Equity Loans having scheduled amortization
based on a longer remaining term than the actual remaining term, with the result
that a relatively large principal amount is due on the final scheduled due date
(i.e., "30 due in 10").
"Business Day": Any day that is not a Saturday, Sunday or other day
on which the Certificate Insurer or commercial banking institutions in the City
of New York, or in the city in which either principal corporate trust office of
the Trustee is located or the master servicing offices of the Master Servicer,
if applicable, are authorized or obligated by law or executive order to be
closed.
"Certificate": Any one of the Class A Certificates, Class B
Certificates or Class R Certificates, each representing the interests and the
rights described in this Agreement.
"Certificates": The Offered Certificates, the Class C
Certificates and the Class R Certificates.
"Certificate Account": The certificate account established in
accordance with Section 7.02 hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not be
commingled with other funds held by the Trustee.
"Certificate Insurance Policy": With respect to the Class A
Certificates, the certificate guaranty insurance policy (number AB0239BE) dated
March 4, 1999 issued by the Certificate Insurer for the benefit of the Owners of
the Class A Certificates pursuant to which the Certificate Insurer guarantees
Insured Payments.
"Certificate Insurer": Ambac Assurance Corporation, a Wisconsin
stock insurance company, or any successor thereto, as issuer of the Certificate
Insurance Policy.
-4-
<PAGE>
"Certificate Insurer Default": The existence and continuance of any
of the following:
(a) the Certificate Insurer fails to make a payment required under
a Certificate Insurance Policy in accordance with its terms; or
(b) (i) the entry by a court having jurisdiction in the premises of
(A) a final and nonappealable decree or order for relief in respect of the
Certificate Insurer in an involuntary case or proceeding under any applicable
United States federal or state bankruptcy, insolvency, rehabilitation,
reorganization or other similar law or (B) a final and nonappealable decree or
order adjudging the Certificate Insurer as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganizing, rehabilitation, arrangement,
adjustment or composition of or in respect of the Certificate Insurer under any
applicable United States federal or state law, or appointing a custodian,
receiver, liquidator, rehabilitator, assignee, trustee, sequestrator or other
similar official of the Certificate Insurer or of any substantial part of its
property, or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or
(ii) the commencement by the Certificate Insurer of a voluntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the acquiescence by the
Certificate Insurer to the filing of such petition or to the appointment of or
the taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer or of any
substantial part of its property, or the failure of the Certificate Insurer to
pay debts generally as they become due, or the admission by the Certificate
Insurer in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Certificate Insurer in furtherance
of any such action.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal
Balances thereof, as follows:
Initial
Certificate
Principal
Class Balance
------------- ----------------
Class A-1 $164,250,000
Class A-2 $96,940,000
Class A-3 $53,259,000
Class A-4 $29,905,000
Class A-5 $31,401,000
Class A-6 $53,245,000
Class A-7 $34,125,000
Class A-8 $154,375,000
Class A-9-IO N/A
Class B $32,500,000
Class C N/A
-5-
<PAGE>
The Class A-9IO and the Residual Certificates do not have a
Certificate Principal Balance.
As of any time of determination, the Certificate Principal Balance
of any Class of Certificates is the Certificate Principal Balance as of the
Startup Day of such Class less any amounts actually distributed on such Class
with respect to principal thereon on all prior Payment Dates (except, for
purposes of effecting the Certificate Insurer's subrogation rights, that portion
of Insured Payments made in respect of principal) and, additionally in the case
of the Class B Certificates, less the amount of any reduction in the Class B
Certificate Principal Balance on all prior Payment Dates pursuant to Section
7.03(i).
"Chapter 13 Loan": A Home Equity Loan with a Mortgagor in bankruptcy
under a "Chapter 13" Plan.
"Class": Any Class of the Class A Certificates, the Class B
Certificates, the Class C Certificates or the Residual Certificates.
"Class A Certificate": Any one of the Certificates designed on the
face thereof as a Class A Certificate, substantially in the form annexed hereto
as Exhibit A, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A Certificate Principal Balance": As of any time of
determination and with respect to any Class of Class A Certificates, the
Certificate Principal Balance as of the Startup Day of all Class A Certificates
of such Class plus any amount previously distributed thereon with respect to
principal that is recovered as a voidable preference by a trustee in bankruptcy
pursuant to a final nonappealable order less any amounts actually distributed to
the Owners of such Class of the Class A Certificates with respect to the related
Class A Principal Distribution Amount pursuant to Sections 7.03(a) and 7.03(d)
hereof on all prior Payment Dates (except, for purposes of effecting the
Certificate Insurer's subrogation rights, that portion of Insured Payments made
in respect of principal).
"Class A Current Interest": With respect to any Payment Date and
with respect to any individual Class of Class A Certificates, the amount of
interest accrued on the Class A Certificate Principal Balance (or, with respect
to the Class A-9IO Certificates, the Class A-9IO Notional Principal Amount)
immediately prior to such Payment Date during the related Accrual Period at the
related Class A Pass-Through Rate.
"Class A Distribution Amount": With respect to any Payment Date, and
with respect to any individual Class of Class A Certificates, the sum of (x) the
related Class A Current Interest, (y) the related Class A Interest Carry Forward
Amount and (z) except for the Class A-9IO Certificates, the portion of Class A
Principal Distribution Amount payable to the Owners of the Class A Certificates
of such Class pursuant to Sections 7.03(c) and 7.03(d) hereof.
"Class A Interest Carry Forward Amount": With respect to any Payment
Date and with respect to any Class of Class A Certificates, the sum of (x) the
amount, if any, by which (i) the sum of (A) the related Class A Current Interest
as of the immediately preceding Payment Date and (B) any related unpaid Class A
Interest Carry Forward Amount with respect to such Class
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as of the immediately preceding Payment Date exceeds (ii) the amount of the
actual distribution with respect to interest made to the Owners of such Class of
Class A Certificates on such immediately preceding Payment Date and (y) 30 days'
interest on such amount at the related Class A Pass-Through Rate.
"Class A Optimal Balance": As of any Payment Date and with
respect to both Loan Groups together, as follows, but in no event less than
zero:
I. Prior to the Stepdown Date, the lesser of:
(a) (i) if a Cumulative Realized Loss Trigger Event is
not then in effect, the excess of :
(x) the Combined Pool Balance as of the end of
the related Remittance Period
over
(y) an amount equal to (i) prior to the 7th
Payment Date, 5.00% of the Original Combined
Pool Balance, and (ii) on and after the 7th
Payment Date, 7.55% of the Original Combined
Pool Balance; or
(ii) if a Cumulative Realized Loss Trigger Event is
in effect, the excess of (x) the Combined Pool
Balance as of the end of the related Remittance
Period over (y) an amount equal to 8.00% of the
Original Combined Pool Balance;
(b) the product of :
(x) 100% minus two times the excess of :
(a) one-half of the Six-Month Rolling
Average 90+ Day Delinquency Rate over
(b) three times the Six-Month Rolling
Average Excess Spread
and
(y) the Combined Pool Balance as of the end of
the related Remittance Period.
II. On and after the Stepdown Date, the least of:
(a) (i) if a Cumulative Realized Loss Trigger Event is
not then in effect, the greater of:
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(x) the product of (1) 84.90% and (2) the
Combined Pool Balance as of the end of the
related Remittance Period;
and
(y) the excess of (1) the Combined Pool Balance
as of the amount equal to 7.55% of the
Original Combined Pool Balance;
(ii) if a Cumulative Realized Loss Trigger Event is
then in effect, the product of (x) 89% minus the
percentage equivalent of a fraction, the numerator of
which is 3.50% of the Original Combined Pool Balance
and the denominator of which is the Combined Pool
Balance as of the end of the related Remittance
Period and (y) the Combined Pool Balance as of the
end of the related Remittance Period;
(b) the product of:
(x) 100.00% minus two times the excess of
(a) one-half of the Six-Month Rolling
Average 90+ Day Delinquency Rate over
(b)three times the Six-Month Rolling Average
Excess Spread and
(y) the Combined Pool Balance as of the end of
the related Remittance Period;
(c) the excess of (x) the Combined Pool Balance as of the
end of the related Remittance Period over (y) an
amount equal to 0.50% of the Original Combined Pool
Balance; or
(d) the excess of (x) the Combined Pool Balance as of the
end of the related Remittance Period over (y) the sum
of the Loan Balances as of the end of the related
Remittance Period of the three Home Equity Loans
having the largest Loan Balances.
"Class A Overcollateralization Deficit": For any Payment Date means
the excess of the Aggregate Class A Certificate Principal Balance over the
outstanding Combined Pool Balance as of the last day of the related Remittance
Period.
"Class A Pass-Through Rate": As applicable, the Class A-1
Pass-Through Rate, the Class A-2 Pass-Through Rate, the Class A-3 Pass-Through
Rate, the Class A-4 Pass-Through Rate, the Class A-5 Pass-Through Rate, the
Class A-6 Pass-Through Rate, the Class A-7 Pass-Through Rate, the Class A-8
Pass-Through Rate and the Class A-9IO Pass-Through Rate.
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"Class A Principal Distribution Amount": As of any Payment Date, the
actual amount distributed as principal to the Owners of the Class A Certificates
pursuant to Section 7.03(b)(v) on such Payment Date.
"Class A-1 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A-1, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-1 Pass-Through Rate": With respect to any Payment Date,
6.01% 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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-2 Pass-Through Rate": With respect to any Payment Date,
6.00% per annum.
"Class A-3 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-3 Pass-Through Rate": With respect to any Payment Date,
6.17% 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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-4 Pass-Through Rate": With respect to any Payment Date,
6.30% 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, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-5 Pass-Through Rate": With respect to any Payment Date
the lesser of (x) 6.37% per annum and (y) the Group I Available Funds Cap.
"Class A-6 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
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"Class A-6 Pass-Through Rate": For any Payment Date, the lesser of
(i)(a) with respect to any Payment Date which occurs on or prior to the Step-Up
Payment Date, 6.85% per annum, or (b) with respect to any Payment Date
thereafter, 7.35% per annum or (ii) the Group I Available Funds Cap for such
Payment Date.
"Class A-7 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-7 Pass-Through Rate": For any Payment Date, the lesser of
(i)(a) with respect to any Payment Date which occurs on or prior to the Step-Up
Payment Date, 6.47% per annum, or (b) with respect to any Payment Date
thereafter, 6.97% per annum or (ii) the Group I Available Funds Cap Rate for
such Payment Date.
"Class A-7 Principal Distribution Amount": For any Payment Date
occurring during the periods set forth below is the "applicable percentage" set
forth below of the Class A-7 Pro Rata Principal Distribution Amount with respect
to such Payment Date:
Applicable
Payment Date Percentage
-------------------------------------------------
1-36 0%
37-60 45%
61-72 80%
73-84 100%
85-end 300%
"Class A-7 Pro Rata Principal Distribution Amount": For any Payment
Date is the product of (x) the Class A Principal Distribution Amount for such
Payment Date and (y) a fraction, the numerator of which is the Class A-7
Certificate Principal Balance immediately prior to such Payment Date and the
denominator of which is the Group I Class A Certificate Principal Balance
immediately prior to such Payment Date.
"Class A-8 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-8 Certificate, substantially in the form annexed
hereto as Exhibit A-8, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-8 Pass-Through Rate": With respect to any Payment Date, the
lesser of (x) (i) if such Payment Date occurs on or prior to the Step-Up Payment
Date, LIBOR plus 0.28% per annum and (ii) if such Payment Date occurs after the
Step-Up Payment Date, LIBOR plus 0.56% per annum and (y) the Group II Available
Funds Cap.
"Class A-9IO Certificate": Any one of the Certificates designated on
the face thereof as a Class A-9IO Certificate, substantially in the form annexed
hereto as Exhibit A-9IO, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
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"Class A-9IO Notional Principal Amount": With respect to any Payment
Date occurring on or prior to the 30th Payment Date the Certificate Principal
Balance of the Class A-7 Certificates immediately prior to such Payment Date;
with respect to any Payment Date thereafter, zero.
"Class A-9IO Pass-Through Rate": With respect to any Payment
Date, 7.00% per annum.
"Class B Applied Realized Loss Amount": With respect to any Payment
Date, the lesser of (x) the Class B Certificate Principal Balance (after taking
into account the distribution of the Class B Principal Distribution Amount on
such Payment Date, but prior to the reduction of such Class B Certificate
Principal Balance pursuant to Section 7.03(h), if any, on such Payment Date) and
(y) the Applied Class B Realized Loss Amount as of such Payment Date.
"Class B Available Funds Cap Carry-Forward Amount": With respect to
any Payment Date, the excess of (x) the sum of all Class B Available Funds Cap
Shortfall Amounts on all prior Payment Dates, plus interest thereon at the
applicable rate described in clause (i) of the definition of "Class B
Pass-Through Rate" to the date on which such amount was paid pursuant to Section
7.03(b)(viii)(c), over (y) the amount distributed on all prior Payment Dates
pursuant to Section 7.03(b)(viii)(c).
"Class B Available Funds Cap Shortfall Amount": With respect to any
Payment Date, the excess of (x) the interest due on the Class B Certificates on
such Payment Date, calculated without regard to the limitation described in
clause (ii) of the definition of "Class B Pass-Through Rate", over (y) the
interest due on the Class B Certificates on such Payment Date, calculated at the
Class B Pass-Through Rate for such Payment Date.
"Class B Certificates": Any one of the Certificates designated on
the face thereof as a Class B Certificate, substantially in the form annexed
hereto as Exhibit B, executed authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class B Certificate Principal Balance": As of any time of
determination and with respect to the Class B Certificates, the Certificate
Principal Balance as of the Startup Day of all Class B Certificates plus any
amount previously distributed thereon with respect to principal that is
recovered as a voidable preference by a trustee in bankruptcy pursuant to a
final, nonappealable order, less the sum of (x) any amounts of the Class B
Principal Distribution Amount actually distributed to the Owners of such Class B
Certificates pursuant to Section 7.03(b)(vii) hereof on all prior Payment Dates
and (y) the aggregate, cumulative amount of the Class B Applied Realized Loss
Amounts on all prior Payment Dates.
"Class B Current Interest": With respect to any Payment Date and
with respect to the Class B Certificates, the amount of interest accrued during
the related Accrual Period on the Class B Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B Pass-Through Rate.
"Class B Distribution Amount": With respect to any Payment Date and
with respect to the Class B Certificates, the sum of (w) the Class B Current
Interest, (x) the Class B
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Principal Distribution Amount, if any, payable to the Owners of the Class B
Certificates pursuant to Section 7.03(b)(vii) hereof, (y) the Class B Interest
Carry Forward Amount, if any, and (z) the Class B Realized Loss Amortization
Amount, if any.
"Class B Interest Carry Forward Amount": With respect to any Payment
Date and with respect to the Class B Certificates, the sum of (x) the amount, if
any, by which (i) the sum of (A) the Class B Current Interest as of the
immediately preceding Payment Date and (B) any unpaid Class B Interest Carry
Forward Amount as of the immediately preceding Payment Date exceeds (ii) the
amount of the actual distribution with respect to interest made to the Owners of
the Class B Certificates on such immediately preceding Payment Date and (y) 30
days' interest on such amount at the Class B Pass-Through Rate.
"Class B Pass-Through Rate": For any Payment Date, the lesser of
(i)(a) with respect to any Payment Date which occurs on or prior to the Step-Up
Payment Date, 8.50% per annum, or (b) with respect to any Payment Date
thereafter, 9.00% per annum or (ii) the lesser of (x) the Group I Available
Funds Cap for such Payment Date or (y) the Group II Available Funds Cap for such
Payment Date.
"Class B Principal Distribution Amount": With respect to any Payment
Date, the actual amount distributed as principal to the Owners of the Class B
Certificates in accordance with Section 7.03(b)(vii) hereof on such Payment
Date.
"Class B Optimal Balance": As of any Payment Date:
I. Prior to the Stepdown Date and if the Aggregate Class A
Certificate Principal Balance is then greater than zero, the
Class B Initial Certificate Principal Balance; and
II. On and after the Stepdown Date, or if the Aggregate Class A
Certificate Principal Balance then equals zero, the excess of
(a) the Combined Pool Balance as of the end of the related
Remittance Period over (b) the Aggregate Class A Certificate
Principal Balance (after taking into account any reduction
thereof on such Payment Date) plus the Targeted
Overcollateralization Amount.
"Class B Realized Loss Amortization Amount": As of any Payment Date
and with respect to the Class B Certificates, the lesser of (x) the Unpaid Class
B Realized Loss Amount as of such Payment Date and (y) the amount of Available
Funds remaining after funding priorities "First" through "Seventh" of Section
7.03(b) hereof.
"Class C Certificates": Any one of the Certificates designated on
the face thereof as a Class C Certificate, substantially in the form annexed
hereto as Exhibit C, executed authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein. The Class C
Certificates represent a class of "regular interests" in REMIC III.
"Class C Distribution Amount": With respect to any Payment Date,
the amount payable to the Class C pursuant to footnotes 5 and 6 of Section
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2.08(c) Certificates.
"Class C Pass-Through Rate": With respect to any Payment Date, the
interest payable on the Group I and Group II Loans in excess of the interest
payable on the Class A and Class B Certificates.
"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 R, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as a
"residual interest" in REMIC III for the purposes of the REMIC Provisions.
"Class R-I Certificate": Any one of the Certificates designated
herein as a Class R-I Certificate, substantially in the form annexed hereto as
Exhibit R-I, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as a
"residual interest" in REMIC I for the purposes of the REMIC Provisions.
"Class R-II Certificate": Any one of the Certificates designated
herein as a Class R-II Certificate, substantially in the form annexed hereto as
Exhibit R-II, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as a
"residual interest" in REMIC II for the purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date
immediately following the date on which the Combined Pool Balance has
declined to $65,000,000 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Combined Pool Balance": As of any date, the aggregate
outstanding Loan Balance of the Home Equity Loans in Loan Group I and Loan
Group II as of the close of business on such date.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Compensating Interest Shortfall": With respect to any Payment Date,
the excess, if any, of (x) the aggregate amount of Compensating Interest for the
related Remittance Period over (y) the lesser of (i) the aggregate amount of the
Servicing Fee for such Remittance Period and (ii) the actual aggregate amount of
Compensating Interest funded by the Servicer and/or the Master Servicer with
respect to such Payment Date.
"ContiMortgage": ContiMortgage Corporation, a Delaware
corporation, and the originator of each Home Equity Loan, one of the Sellers
and the Servicer.
"ContiWest": ContiWest Corporation, a Nevada corporation, and
one of the Sellers.
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"Corporate Trust Office": The principal office of the Trustee at
One M&T Plaza, Buffalo, New York 14203.
"Coupon Rate": The rate of interest borne by each Note.
"Cumulative Realized Loss Trigger Event": A Cumulative Realized
Loss Trigger Event occurs on any date of determination if the amount of
Cumulative Realized Losses with respect to both Loan Groups expressed as a
percentage of the Original Combined Pool Balance on any date of determination
equals or exceeds the percentage for such date set out below:
Date Percentage
---- ----------
April 1999 - March 2001 1.05%
April 2001 - March 2002 1.80%
April 2002 - March 2003 2.40%
April 2003 - March 2004 2.85%
April 2004 and thereafter 3.15%
"Cumulative Realized Losses": As of any date of determination,
the aggregate amount of Realized Losses with respect to the Home Equity Loans
since the Startup Day.
"Curtailment": Prepayment of principal by a Mortgagor which does
not satisfy the Note in full, and which is not intended as a Prepaid
Installment.
"Cut-Off Date": As of the close of business on February 10, 1999.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Date-of-Payment Loans": Any Home Equity Loan as to which, pursuant
to the Note relating thereto, interest is computed and charged to the Mortgagor
at the Coupon Rate on the outstanding principal balance of such Note based on
the number of days elapsed between receipt of the Mortgagor's last payment
through receipt of the Mortgagor's most current payment.
"Deed in Lieu": The Servicer's acceptance of a deed in lieu of
foreclosure.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Home Equity Loan is "30 days Delinquent" if such payment
has not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such payment was due, or, if
there is no such corresponding day (e.g., as when a 30-day month follows a
31-day month in which a payment was due on the 31st day of such month) then on
the last day of such immediately succeeding month. Similarly for "60 days
Delinquent," "90 days Delinquent" and so on.
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"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delivery Order": Each delivery order in the form set forth as
Exhibit G hereto and delivered by the Depositor to the Trustee on the Startup
Day pursuant to Section 4.01 hereof.
"Depositor": ContiSecurities Asset Funding Corp., a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 7 Hanover Square,
New York, New York 10004, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the Principal
and Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Certificate
Insurer acting in its fiduciary capacity, having combined capital and surplus of
at least $50,000,000; provided, however, that if the Principal and Interest
Account is not maintained with the Trustee, (i) such institution shall have a
long-term debt rating of at least "A2" by Moody's, and, if rated by Fitch, at
least "A" by Fitch (ii) a short-term debt rating of at least "A-1" by Standard &
Poor's and (iii) if such Principal and Interest Account is moved to a new
institution, the Servicer shall provide the Trustee, the Master Servicer, the
Certificate Insurer and the Owners with a statement identifying the location of
the Principal and Interest Account.
"Determination Date": As to each Payment Date, the third
Business Day next preceding such Payment Date.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank
or other financial institution for which the Depository holds Offered
Certificates from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to
time in the definition thereof at Section 860E(e)(5) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated pursuant
to Section 7.07 hereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"FannieMae": FannieMae, a federally-chartered and
privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
"FannieMae Guide": FannieMae's Servicing Guide, as the same may be
amended by FannieMae from time to time, and the Servicer shall elect to apply
such amendments in accordance with Section 8.01 hereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
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"File": The documents delivered to the Trustee pursuant to
Section 3.05 hereof pertaining to a particular Home Equity Loan and any
additional documents required to be added to the File pursuant to this
Agreement.
"Final Determination": As defined in Section 9.03 hereof.
"First Mortgage Loan": A Home Equity Loan which constitutes a
first priority mortgage lien with respect to the related Property.
"Fiscal Agent": State Street Bank and Trust Company, N.A., as
Fiscal Agent for the Certificate Insurer under the Certificate Insurer Policy
or any successor thereto appointed by the Certificate Insurer.
"Fitch": Fitch IBCA, Inc.
"Fixed Rate Loans": Home Equity Loans bearing interest at fixed
rate.
"Fixed Rate Certificates": The Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-9IO and Class B
Certificates.
"Freddie Mac": 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.
"Group I Available Funds Cap": With respect to any Payment Date, the
weighted average Coupon Rate of the Home Equity Loans in Loan Group I as of the
opening of business on the first day of the related Remittance Period, less the
sum of (i) the annualized percentage equivalent of a fraction equal to (a) the
sum of the related Premium Amount plus the sum of the related Trustee Fee, the
related Servicing Fee, the related Master Servicing Fee (so long as the Master
Servicer is engaged under this Agreement), divided by (b) the aggregate Pool
Balance of Loan Group I as of the opening of business on the first day of the
related Remittance Period, and (ii) during the period commencing on the first
Payment Date and ending on the 30th Payment Date, the annualized percentage
equivalent of the product of (a) the Class A-9IO Pass-Through Rate and (b) the
Class A-9IO Notional Principal Amount divided by the outstanding aggregate Pool
Balance of Loan Group I as of the opening of business on the first day of the
related Remittance Period.
"Group I Class A Optimal Balance": With respect to any Payment
Date is an amount equal to the product of:
(x) the Group I Pool Balance as of the end of the related
Remittance Period; and
(y) a fraction, the numerator of which is equal to (i) the Aggregate
Class A Certificate Principal Balance immediately prior to such Payment Date
minus (ii) the Class A Principal Distribution Amount for such Payment Date and
the denominator of which is (y) the Combined Pool Balance as of the end of the
related Remittance Period.
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"Group I Class A Principal Distribution Amount": For any Payment
Date is an amount equal to the lesser of:
(I) the excess of (x) the aggregate Certificate Principal Balance of
the Class A Group I Certificates immediately prior to such Payment Date over (y)
the Group I Class A Optimal Balance with respect to such Payment Date; and
(II) the Class A Principal Distribution Amount with respect to such
Payment Date;
provided, however, that in no event will the aggregate Certificate Principal
Balance of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6
and Class A-7 Certificates exceed the Group I Pool Balance as of the last day of
the related Remittance Period.
"Group I Pool Balance": For any date, the aggregate outstanding Loan
Balance of the Home Equity Loans in Loan Group I as of the close of business on
such date.
"Group II Available Funds Cap": With respect to any Payment Date,
the weighted average Coupon Rate of the Home Equity Loans in Loan Group II as of
the opening of business on the first day of the related Remittance Period, less
the sum of (i) the annualized percentage equivalent of a fraction equal to (a)
the sum of the related Premium Amount plus the sum of the related Trustee Fee,
the related Servicing Fee and the related Master Servicing Fee (so long as the
Master Servicer is engaged under this Agreement), divided by (b) the aggregate
Loan Balance of the Home Equity Loans in Loan Group II as of the opening of
business on the first day of the related Remittance Period, and (ii) after the
6th Payment Date, 0.50% per annum.
"Group II Class A Optimal Balance": With respect to any Payment Date
is an amount equal to the product of:
(x) the aggregate Group II Pool Balance as of the end of the related
Remittance Period; and
(y) a fraction, the numerator of which is equal to (i) the Aggregate
Class A Certificate Principal Balance immediately prior to such Payment Date
minus (ii) the Class A Principal Distribution Amount for such Payment Date and
the denominator of which is (y) the Combined Pool Balance as of the end of the
related Remittance Period.
"Group II Class A Principal Distribution Amount": For any Payment
Date is an amount equal to the lesser of:
(I) the excess of (x) the aggregate Certificate Principal Balance of
the Class A Group II Certificates immediately prior to such Payment Date over
(y) the Group II Class A Optimal Balance with respect to such Payment Date; and
(II) the Class A Principal Distribution Amount with respect to such
Payment Date;
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provided, however, that in no event will the Certificate Principal
Balance of the Class A-8 Certificates exceed the Group II Pool Balance as of the
last day of the related Remittance Period.
"Group II Loans": The Home Equity Loans in Loan Group II.
"Group II Pool Balance": For any date, the aggregate outstanding
Loan Balance of the Home Equity Loans in Loan Group II as of the close of
business on such date.
"Highest Lawful Rate": As defined in Section 11.13.
"Home Equity Loans": Such of the home equity loans transferred and
assigned to the Trust pursuant to Section 3.05(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan". The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any home equity loan which, although intended by the parties hereto to
have been, and which purportedly was, transferred and assigned to the Trust by
the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.04(b)(x) hereof with respect to such home
equity loan, shall nevertheless be considered a "Home Equity Loan" for all
purposes of this Agreement.
"Home Equity Loan Documents": With respect to any Home Equity Loan,
all agreements, instruments, promissory notes, financing statements, mortgages,
security agreements, assignments and other documents executed and delivered by
any Person in connection with such Home Equity Loan, whether such documents are
in the possession or under the control of the Trustee, the Servicer or any other
Person (including any Sub-Servicer).
"Indemnification Agreement": The Indemnification Agreement dated
March 4, 1999 among the Certificate Insurer, the Depositor, the Sellers, the
Servicer, and the Underwriters.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Offered Certificate.
"Insurance and Indemnity Agreement": The Insurance and Indemnity
Agreement dated as of March 4, 1999, among the Depositor, the Sellers, the
Servicer, the Certificate Insurer and the Trustee as it may be amended from time
to time.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted
under Section 8.11 hereof.
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"Insurance Proceeds": Payments received with respect to any
Insurance Policy, except the Certificate Insurance Policy.
"Insured Payment": With respect to any Payment Date, without
duplication, (A) the excess, if any, of (i) the sum of the aggregate Current
Interest of the Class A Certificates (less any Relief Act Shortfalls or
Compensating Interest Shortfalls) and the then existing Class A
Overcollateralization Deficit, if any, over (ii) the amount of the Monthly
Remittance Amount or deposit in the Certificate Account on such Payment Date,
less the aggregate amount of the Trustee Fee and the Premium Amount, plus (B) an
amount equal to the aggregate Preference Amount with respect to the Class A
Certificates.
"Interest Amount Available": As defined in Section 7.03(b) hereof.
"Interest Only Period": The period from the Startup Day through and
including the 30th Payment Date.
"Interest Remittance Amount": As of any Monthly Remittance Date and
with respect to a Loan Group, the sum, without duplication, of (i) all interest
due during the related Remittance Period with respect to the Home Equity Loans
in such Loan Group, and collected or advanced (less the Servicing Fee with
respect to such Home Equity Loans), (ii) all Compensating Interest paid by the
Servicer on such Monthly Remittance Date with respect to such Home Equity Loans,
(iii) the portion of the Substitution Amount relating to interest on the Home
Equity Loans in such Loan Group substituted during the related Remittance
Period, (iv) the portion of any Loan Purchase Price relating to interest on any
such Home Equity Loan in such Loan Group repurchased during the related
Remittance Period and (v) the portion of Net Liquidation Proceeds relating to
interest in such in Home Equity Loans in such Loan Group liquidated during the
related Remittance Period, in all cases after taking into account items which
are withdrawn from the Principal and Interest Account pursuant to Section
8.08(d) hereof.
"Involuntary Payoff": The amount of Net Liquidation Proceeds
received with respect to a Liquidated Loan.
"Late Payment Rate": As defined in the Insurance and Indemnity
Agreement.
"LIBOR": With respect to any Accrual Period for the Class A-8
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer,
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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 Dates": are:
o March 2, 1999, for the Accrual Period for the Class A-8
Certificates beginning on and including the Closing Date and
ending on and excluding March 25, 1999;
o March 23, 1999 for the Accrual Period for the Class A-8
Certificates beginning on and including March 25, 1999 and
ending on and excluding April 25, 1999; and
o the second London Business Day prior to the first day of each
Accrual Period for the Class A-8 Certificates following the
first Accrual Period.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation
Proceeds, which are incurred by the Servicer in connection with the liquidation
of any defaulted Home Equity Loan, such expenses including, without limitation,
legal fees and expenses, and any unreimbursed Servicing Advances expended by the
Servicer pursuant to Section 8.09(b) with respect to the related Home Equity
Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Liquidity Agreement": As defined in Section 8.3(b).
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the outstanding principal balance thereof on the Cut-Off
Date, less any principal payments relating to such Home Equity Loan included in
previous Monthly Remittance Amounts; provided, however, that the Loan Balance
for any Home Equity Loan that has become a Liquidated Loan shall be zero as of
the first day of the Remittance Period following the Remittance Period in which
such Home Equity Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Group" or "Group": Loan Group I or Loan Group II, as
applicable.
"Loan Group I": The Home Equity Loans identified in Schedule I-A
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof. Loan Group I will constitute a separate sub-trust of the Trust.
"Loan Group II": The Home Equity Loans identified in Schedule I-B
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof. Loan Group II will constitute a separate sub-trust of the Trust.
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"Loan Purchase Price": With respect to any Home Equity Loan
purchased from the Trust on a Monthly Remittance Date pursuant to Section 3.03,
3.04, 3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of
such Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus one month's interest on the outstanding Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Home Equity Loan, (ii) all
Delinquency Advances and Servicing Advances which the Servicer and the Master
Servicer have theretofore failed to remit with respect to such Home Equity Loan
and (iii) all reimbursed Delinquency Advances to the extent that reimbursement
is not made from the Mortgagor or from Liquidation Proceeds from the respective
Home Equity Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage obtained
by dividing the Appraised Value as of the date of origination of such Second
Mortgage Loan into an amount equal to the sum of (a) the remaining principal
balance of the Senior Lien note relating to such First Mortgage Loan as of the
date of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Note relating to such Second Mortgage Loan.
"London Business Day": Any day on which dealings in deposits of
United States dollars are transacted in the London interbank market.
"Master Servicer": Norwest Bank Minnesota, National Association, a
national banking association, and its permitted successors and assigns.
"Master Servicing Fee": With respect to any Home Equity Loan, the
amount to be paid to the Master Servicer on each Payment Date as compensation
for its master servicing duties relating to such Home Equity Loan, and equal to
the Master Servicing Fee Rate times the then outstanding principal amount of
such Home Equity Loan as of the first day of the calendar month preceding the
month of such Payment Date.
"Master Servicing Fee Rate": 0.05% per annum.
"Maximum Certificate Insurer Current Reimbursement Amount" With
respect to any Payment Date, equals the lesser of (x) the Available Funds
remaining in the Certificate Account after taking into account all distributions
described in clauses "First" through "Third" in Section 7.03(b) hereof and (y)
the excess of (1) the sum of (a) the aggregate Loan Balance with respect to such
Loan Group plus (b) the amount described in the immediately preceding clause (x)
over (2) the Aggregate Class A Certificate Principal Balance prior to taking
into account any payment of principal on such Payment Date.
"Monthly Excess Cashflow Amount": As defined in Section
7.03(b)(viii) hereof.
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"Monthly Remittance Amount": As of any Monthly Remittance Date and
with respect to a Loan Group, the sum of (i) the Interest Remittance Amount and
(ii) the Principal Remittance Amount, in each case with respect to such Loan
Group, for such Monthly Remittance Date.
"Monthly Remittance Date": The 20th day of each month or, if such
day is not a Business Day, the Business Day succeeding such day,
commencing in the month following the Startup Day.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first or second lien on an estate in fee simple interest in real
property securing a Note.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses and unreimbursed Delinquency Advances
relating to such Home Equity Loan. In no event shall Net Liquidation Proceeds
with respect to any Liquidated Loan be less than zero.
"Net Post-REMIC Recovery Proceeds": With respect to any Optional
Buyout Loan, Post-REMIC Recovery Proceeds less the costs and expenses incurred
by the Servicer in conducting its loss mitigation strategy with respect thereto,
including, without limitation, legal fees and expenses.
"No Equity Secured Mortgage": A Home Equity Loan in which no
material equity in the related Mortgaged Property secures the related Note.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Offered Certificates": The Class A Certificates and the Class B
Certificates.
"Officer's Certificate": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the
Trustee.
"Operative Documents": Collectively, this Agreement, the
Underwriting Agreement, the Certificates, the Certificate Insurance Policy, the
Insurance and Indemnity Agreement and the Indemnification Agreement.
"Optional Buyout Loan": A Home Equity Loan repurchased from the
Trust for the purpose of allowing the Servicer to use its loss mitigation
strategy in maximizing the Post-REMIC Recovery Proceeds thereof.
"Original Group I Pool Balance": The original aggregate Loan Balance
of the Home Equity Loans in Loan Group I as of the Cut-Off Date.
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"Original Group II Pool Balance": The original aggregate Loan
Balance of the Home Equity Loans in Loan Group II as of the Cut-Off Date.
"Original Pool Balance": The applicable Original Group I Loan
Balance or Original Group II Loan Balance.
"Original Combined Pool Balance": The sum of the Original Group I
Pool Balance and the Original Group II Pool Balance.
"Outstanding": With respect to all Certificates of a Class, as of
any date of determination, all such Certificates theretofore executed and
delivered hereunder except:
(i) Certificates theretofore canceled by the Registrar or delivered
to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or stolen for
which replacement Certificates have been issued as provided for in Section
5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned to
the Trustee.
"Overcollateralization Amount": As of any Payment Date means the
positive difference, if any, between (x) the Combined Pool Balance and (y)
the Aggregate Certificate Principal Balance.
"Owner": The Person in whose name a Certificate is registered in the
Register and the Certificate Insurer to the extent described in Section 5.06 and
Section 7.03 (m) hereof, respectively hereof; provided that solely for the
purposes of determining the exercise of any voting rights hereunder, if any
Offered Certificates are beneficially owned by a Seller or any affiliate
thereof, such Seller or such affiliate shall not be considered an Owner
hereunder.
"Overcollateralization Floor": An amount equal to 0.50% of the
Original Combined Pool Balance ($3,250,000).
"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.
"Percentage Interest": With respect to a Class of the Offered
Certificates, a fraction, expressed as a percentage, the numerator of which is
the initial Certificate Principal Balance represented by such Certificate and
the denominator of which is the aggregate initial Certificate Principal Balance
represented by all the Certificates in such Class. With respect to the Class
A-9IO Certificates, a fraction, expressed as a percentage, the numerator of
which is the initial Class A-9IO Notional Principal Amount represented by such
Class A-9IO Certificate and the denominator of which is the aggregate initial
Class A-9IO Notional Principal Amount represented by all of the Class A-9IO
Certificates. With respect to a Class R, Class R-I or Class R-II 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%.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Balance": As of any date, the aggregate outstanding Loan
Balance of the Home Equity Loans in the related Loan Group as of the last day of
the close of business on such date.
"Post-REMIC Recovery Proceeds": With respect to any Optional Buyout
Loan, any amounts (including the proceeds of any Insurance Policy) recovered by
the Servicer in connection with such Optional Buyout Loan, whether through
trustee's sale, foreclosure sale, a "short sale", or otherwise.
"Preference Amount": With respect to the Class A Certificates and
Class B Certificates, any amounts of Current Interest and principal included in
previous distributions to the Owners of such Certificates which are recovered
from such Owners as a voidable preference by a trustee in bankruptcy pursuant to
the United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not theretofore
been repaid to such Owners.
"Premium Amount": As of any Payment Date, the product of (x)
one-twelfth of the Premium Percentage and (y) the Aggregate Class A Certificate
Principal Balance.
"Premium Percentage": As defined in the Insurance and Indemnity
Agreement.
"Prepaid Installment": With respect to any Home Equity Loan, any
installment of principal thereof and interest thereon received by the Servicer
prior to the scheduled due date for such installment, intended by the Mortgagor
as an early payment thereof and not as a Prepayment with respect to such Home
Equity Loan.
"Prepayment": Any payment of principal of a Home Equity Loan which
is received by the Servicer in advance of the scheduled due date for the payment
of such principal (other than the principal portion of any Prepaid Installment),
Substitution Amounts, the portion
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of the purchase price of any Home Equity Loan purchased from the Trust pursuant
to Section 3.03, 3.04, 3.06(b), 8.10(b) or 8.13(a) hereof representing principal
and the proceeds of any Insurance Policy which are to be applied as a payment of
principal on the related Home Equity Loan shall be deemed to be Prepayments for
all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date and
with respect to a Loan Group, the sum, without duplication, of (i) the principal
actually collected by the Servicer on the Home Equity Loans in the related Loan
Group during the related Remittance Period, (ii) the Loan Balance of each Home
Equity Loan in the related Loan Group that was repurchased from the Trust during
the related Remittance Period, (iii) any Substitution Amount relating to
principal delivered by the Seller in connection with a substitution of a Home
Equity Loan in the related Loan Group during the related Remittance Period, (iv)
any Insurance Proceeds actually collected by the Servicer during the related
Remittance Period with respect to a Home Equity Loan in the related Loan Group
(to the extent such Insurance Proceeds relate to principal) and (v) all Net
Liquidation Proceeds actually collected by the Servicer during the related
Remittance Period with respect to in the related Loan Group (to the extent such
Net Liquidation Proceeds relate to principal), in all cases after taking into
account items which are withdrawn from the Principal and Interest Account
pursuant to Section 8.08(d) hereof.
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Property": The underlying property (including all building thereon)
securing a Home Equity Loan.
"Prospectus": The Prospectus dated September 17, 1998 constituting
part of the Registration Statement.
"Prospectus Supplement": The ContiMortgage Home Equity Loan Trust
1999-1 Prospectus Supplement dated February 24, 1999 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03 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.
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"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 or 3.06(b) hereof, which (i) has a Coupon
Rate at least equal to the Coupon Rate of the Home Equity Loan being replaced,
(ii) is of the same property type or is a single family dwelling and the same
occupancy status or is a primary residence as the replaced Home Equity Loan,
(iii) shall mature no later than March 31, 2028, (iv) has a Loan-to-Value Ratio
as of the Replacement Cut-Off Date no higher than the Loan-to-Value Ratio of the
replaced Home Equity Loan at such time, (v) shall be of the same or higher
credit quality classification (determined in accordance with ContiMortgage's
credit underwriting guidelines set forth in ContiMortgage's underwriting manual)
as the Home Equity Loan which such Qualified Replacement Mortgage replaces, (vi)
has a Loan Balance as of the related Replacement Cut-Off Date equal to or less
than the Loan Balance of the replaced Home Equity Loan as of such Replacement
Cut-Off Date, (vii) shall not provide for a "balloon" payment if the related
Home Equity Loan did not provide for a "balloon" payment (and if such related
Home Equity Loan provided for a "balloon" payment, such Qualified Replacement
Mortgage shall have an original maturity of not less than the original maturity
of such related Home Equity Loan), (viii) shall be a fixed rate Home Equity Loan
if the Home Equity Loan being replaced is a Fixed Rate Home Equity Loan and
shall be a first lien adjustable rate Home Equity Loan if the Home Equity Loan
being replaced is an Adjustable Rate Home Equity Loan and (ix) satisfies the
criteria set forth from time to time in the definition thereof at Section
860G(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Rating Agencies": Collectively, Moody's, Standard & Poor's and
Fitch or any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which the Loan Balance thereof as of the date of liquidation is in excess of Net
Liquidation Proceeds realized thereon applied in reduction of such Loan Balance.
As to any Optional Buyout Loan, the amount, if any, by which the Loan Balance
thereof as of the date of the Servicer's final loss determination with respect
thereto is in excess of the Net Post-REMIC Recovery Proceeds realized thereon
applied in reduction of such Loan Balance.
"Records": With respect to any Home Equity Loan, all Home Equity
Loan Documents and other material documents held or maintained by or for the
Sellers, the Depositor, the Trustee, the Servicer or any other Person (including
any Sub-Servicer) with respect to such Home Equity Loan and/or the related
Mortgagor, including the File and any and all Servicing Records.
"Record Date": With respect to the Fixed Rate Certificates and any
Payment Date, the last day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs and with respect to the Class
A-8 Certificates, the day immediately preceding the related 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 Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with either Seller or any affiliate thereof, (iii) whose
quotations appear on Telerate Page 3750 on the relevant LIBOR Determination Date
and (iv) which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in accordance
with Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar
appointed pursuant to Section 5.04 hereof, or any duly appointed and eligible
successor thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-39505), including all amendments thereto and including the Prospectus
relating to the Offered Certificates constituting a part thereof.
"Reimbursement Amount": As of any Payment Date and as to the
Certificate Insurance Policy, 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)(iv) hereof plus (ii) interest
accrued on each such Insured Payment not previously repaid calculated at the
Reimbursement Late Payment Rate and (y)(i) any amounts then due and owing to the
Certificate Insurer under the Insurance and Indemnity Agreement plus (ii)
interest on such amounts at the Late Payment Rate. The Certificate Insurer shall
notify the Trustee, the Depositor and the Sellers of the amount of any
Reimbursement Amount.
"Relief Act Shortfall": With respect to any Payment Date, for any
Home Equity Loan 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 application of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, the amount, if any, by which (a) the interest collectible on
such Home Equity Loan during such Remittance Period is less than (b) the
interest due on such Home Equity Loan during such Remittance Period, calculated
at the related Coupon Rate.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC I": A REMIC established pursuant to Section 2.08 hereof.
"REMIC II": A REMIC established pursuant to Section 2.08 hereof.
"REMIC III": A REMIC established pursuant to Section 2.08 hereof.
"REMIC Opinion": As defined in Section 3.03 hereof.
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"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations and revenue rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
"Remittance Period": The calendar month immediately preceding the
month in which a Monthly Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Offered
Certificates registered in the Register under the nominee name of the
Depository.
"Residual Certificates": Collectively, the Class R-I, Class R-II and
Class R Certificates.
"Retained Certificates": Collectively, the Class C, Class R-I, Class
R-II and Class R Certificates.
"Schedule of Home Equity Loans": Each of the schedules of Home
Equity Loans, segregated by Loan Group I and Loan Group II, listing each Home
Equity Loan in such category to be conveyed on the Startup Day. Such Schedules
of Home Equity Loans shall identify each Home Equity Loan by the Servicer's loan
number and the borrower's name and address (including the state) of the Property
and shall set forth as to each Home Equity Loan the lien status thereof (and
with respect to Adjustable Rate Home Equity Loans, the margin), the
Loan-to-Value Ratio and the Loan Balance as of the Cut-Off Date, the Coupon Rate
thereof, the current scheduled monthly payment of principal and interest and the
maturity of the related Note, the property type, occupancy status, Appraised
Value and original term-to-maturity thereof, whether or not such Home Equity
Loan (including the related Note) has been modified and the aggregate Loan
Balances of all Home Equity Loans. Such Schedules shall also identify the Seller
of each Home Equity Loan.
"Scheduled Payment": As of any date of calculation, with respect to
a Home Equity Loan, the then stated scheduled monthly installment of principal
and interest payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date).
"Second Mortgage Loan": A Home Equity Loan which constitutes a
second priority mortgage lien with respect to the related Property.
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"Securities Act": The Securities Act of 1933, as amended.
"Sellers": ContiMortgage and ContiWest.
"Senior Lien": With respect to any Second Mortgage Loan, the
mortgage loan relating to the corresponding Property having a first priority
lien.
"Servicer": ContiMortgage Corporation, a Delaware corporation, and
its permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicing Advance": As defined in Section 8.09(b) and Section
8.13(a) hereof.
"Servicing Fee": With respect to any Home Equity Loan, the amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 8.15 and equal to the
Servicing Fee Rate times the then outstanding principal amount of such Home
Equity Loan as of the first day of each calendar month payable on a monthly
basis.
"Servicing Fee Rate": 0.50% per annum less, for so long as the
Master Servicer is engaged under this Agreement, the per annum rate payable to
the Master Servicer in excess of an annualized rate of 0.04%.
"Servicing Records": With respect to any Home Equity Loan, all books
and records in any form or format whatsoever (including records kept in
electronic form) that have been maintained by or for the Servicer or any
Sub-Servicer with respect to such Home Equity Loan, including all documents
(whether originals or copies), files, records, databases, computer tapes, floppy
disks, tax bills, assessment notices, binders and other proof of insurance
coverage, insurance policies, insurance premium notices, appraisals, other
closing documentation, payment history records, agreements, and any other
records in any way relating to or evidencing the servicing of any of such Home
Equity Loan.
"Six-Month Rolling Average 90+ Day Delinquency Rate": With respect
to any Payment Date, the fraction, expressed as a percentage (A) the numerator
of which is the sum of the following six (or lesser number of Remittance Periods
which have elapsed since the Closing Date) percentages for each of the past six
(or such lesser number) Remittance Periods (x) the aggregate outstanding Loan
Balance of all 90+ Day Delinquent Loans as of the last day of the related
Remittance Period divided by (x) the Combined Pool Balance as of the end of the
related Remittance Period and (B) the denominator of which is six (or such
lesser number).
"Six-Month Rolling Average Excess Spread": With respect to any
Payment Date, the fraction, expressed as a percentage (A) the numerator of which
is the sum of the following six (or lesser number of Remittance Periods) which
have elapsed since the Closing Date) percentages for each of the past six (or
such lesser number) Remittance Periods (x) the weighted average Coupon Rate of
the Home Equity Loans as of the opening of business on the first day of the
related Remittance Period, less (a) the sum of (i) the aggregate Premium Amount,
the
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aggregate Servicing Fee, the aggregate Trustee Fee and the aggregate Master
Servicing Fee (if the Master Servicer is then engaged under this Agreement) for
such Remittance Period, (ii) the aggregate Current Interest for the Class A and
Class B Certificates with respect to such Payment Date and (iii) Realized Losses
which occurred during such Remittance Period divided by (b) the Combined Pool
Balance as of the end of the related Remittance Period and (B) the denominator
of which is six (or such lesser number).
"90+ Day Delinquent Loan": With respect to any Determination Date,
all REO Properties, each Home Equity Loan with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, three
months or more past due (without giving effect to any grace period), each Home
Equity Loan in Foreclosure and each Home Equity Loan for which the mortgagor has
filed for bankruptcy.
"Short Sale": A sale of a Home Equity Loan at a price less than the
outstanding Loan Balance thereof.
"Six-Month LIBOR Loans": Home Equity Loans bearing interest at an
adjustable rate indexed to six-month LIBOR.
"Standard & Poor's": Standard & Poor's Ratings Services, a division
of the McGraw-Hill Companies, Inc.
"Startup Day": March 4, 1999.
"Stepdown Date": The later to occur of (x) the Payment Date in April
2002 and (y) the first Payment Date on which the Aggregate Class A Certificate
Principal Balance is less than or equal to the Class A Optimal Balance for such
Payment Date.
"Step-Up Payment Date": The first Payment Date which occurs after
the Clean-Up Call Date.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Targeted Overcollateralization Amount" as of any Payment Date
means:
(i) on or prior to the sixth Payment Date, zero;
(ii) after the sixth Payment Date, but prior to the Stepdown Date:
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(A) if no Cumulative Realized Loss Trigger Event is in effect,
2.55% of the Original Combined Pool Balance (i.e.,
$16,575,000); or
(B) if a Cumulative Realized Loss Trigger Event is in effect,
an amount equal to 3.00% of the Original Combined Pool Balance
(i.e., $19,500,000);
(iii) on and after the Stepdown Date:
(A) if a Cumulative Realized Loss Trigger Event is not in effect,
the greater of (I) the lesser of (x) 2.55% of the Original
Combined Pool Balance (i.e., $16,525,000) and (y) 5.10% of the
Combined Pool Balance and (II) 0.50% of the Original Combined
Pool Balance (i.e., $3,250,000); or
(B) if a Cumulative Realized Loss Trigger Event is in effect, an
amount equal to 3.00% of the Original Combined Pool Balance
(i.e., $19,500,000).
"Tax Matters Certificate": The Residual Certificate initially issued
to ContiFunding Corporation as the initial Tax Matters Person for each REMIC.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in each
Class of the Residual Certificates issued to and held by ContiFunding
Corporation throughout the term hereof unless another Person shall accept an
assignment of such interest and the designation of Tax Matters Person pursuant
to Section 11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the
Dow Jones Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).
"Termination Date Pass-Through Rate": A rate equal to the sum of (a)
Weighted Average Pass-Through Rate, (b) any portion of the Trustee Fee
(calculated as a percentage of the outstanding principal amount of the Offered
Certificates) then accrued and outstanding and (c) the Premium Amount
(calculated as a percentage of the outstanding principal amount of the Class A
Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03 hereof.
"3/27 Loans": Home Equity Loans which bear interest for the first
three years following origination at a fixed rate, and at an adjustable rate
thereafter.
"Trust": ContiMortgage Home Equity Loan Trust 1999-1, the trust
created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
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"Trustee": Manufacturers and Traders Trust Company, a New York
banking corporation, the Corporate Trust Department of which is located on the
date of execution of this Agreement at One M&T Plaza, Buffalo, New York 14203,
not in its individual capacity but solely as Trustee under this Agreement, and
any successor hereunder.
"Trustee Fee": The fee payable monthly on each Payment Date in an
amount equal to one-twelfth of the sum of (i) 0.0032% multiplied by the
then-outstanding Aggregate Certificate Principal Balance and (ii) $4,750.00.
"2/28 Loans": Home Equity Loans which bear interest for the first
two years following origination at a fixed rate, and at an adjustable rate
thereafter.
"Underwriters": Bear, Stearns & Co. Inc., ContiFinancial
Services Corporation, Credit Suisse First Boston Corporation,
Greenwich Capital Markets, Inc., Merrill Lynch, Pierce Fenner & Smith,
Incorporated, and Paine Webber Incorporated.
"Unpaid Class B Realized Loss Amount": With respect to any Payment
Date and each Loan Group, the excess of (x) the aggregate cumulative amount of
Class B Applied Realized Loss Amounts with respect to the Class B Certificates
related to such Loan Group for all prior Payment Dates over (y) the aggregate,
cumulative amount of Class B Realized Loss Amortization Amounts with respect to
the Class B Certificates related to such Loan Group for all prior Payment Dates.
"Voluntary Payoff": A Prepayment which satisfies the related Note in
full, and did not result from a liquidation of the related Home Equity Loan, or
its repurchase from the Trust.
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
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expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the
laws of the State of New York and this Agreement, the Trust, which, for
convenience, shall be known as "ContiMortgage Home Equity Loan Trust 1999-1."
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed
to One M&T Plaza, Buffalo, New York 14203, Attention Corporate Trust
Administration, or at such other address as the Trustee may designate by notice
to the Depositor, the Seller, the Certificate Insurer, the Master Servicer and
the Servicer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities
and only such activities: (i) the issuance of the Certificates and the
acquiring, owning and holding of Home Equity Loans and the Trust Estate in
connection therewith; (ii) activities that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect any of the REMIC I's, REMIC II's or REMIC III's status as a
REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Trustee
(including any portion of the Trustee Fee not paid pursuant to Section 7.03(b)
hereof), (ii) any reasonable expenses of the Trustee, and (iii) any other
expenses of the Trust that have been reviewed by ContiMortgage, which review
shall not be required in connection with the enforcement of a remedy by the
Trustee resulting from a default under this Agreement, shall be paid directly by
ContiMortgage. ContiMortgage shall pay directly the reasonable fees and expenses
of counsel to the Trustee. The reasonable fees and expenses of the Trustee's
counsel in connection with the
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review and delivery of this Agreement and related documentation shall be paid by
ContiMortgage on the Startup Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute
a trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof) located in any state other than in the
State of New York and payments will be received by the Trustee only in the State
of New York and payments from the Trustee will be made only from the State of
New York. The Trust's only office will be at the office of the Trustee as set
forth in Section 2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
The Trustee shall elect that each of REMIC I, REMIC II and REMIC III
shall be treated as a REMIC under Section 860D of the Code. Any inconsistencies
or ambiguities in this Agreement or in the administration of this Agreement
shall be resolved in a manner that preserves the validity of such REMIC
elections. The assets of REMIC I shall include the Home Equity Loans, the
Accounts, any REO Property, and any proceeds of the foregoing. The REMIC I
Regular Interests (as defined below) shall constitute the assets of REMIC II.
The REMIC II Regular Interests (as defined below) shall constitute the assets of
REMIC III.
REMIC I will be evidenced by (x) the Class IA, Class IB, and Class
IC Certificates (the "REMIC I Regular Interests"), which will be uncertificated
and non-transferable and are hereby designated as the "regular interests" in
REMIC I and (y) the Class R-I Certificates, which are hereby designated as the
single "residual interest" in REMIC I (the REMIC I Regular Interests, together
with the Class R-I Certificates, the "REMIC I Certificates"). The REMIC I
Regular Interests shall be recorded on the records of REMIC I as being issued to
and held by the Trustee on behalf of REMIC II.
The Class IA Certificates shall have an initial principal balance
equal to the initial principal balance of the Class A-7 Certificates (that is,
$34,125,000). The Class IB Certificates shall have an initial principal balance
equal to the excess of the Original Group I Loan Balance over the initial
principal balance of the Class IA Certificates (that is, $453,352,925). The
Class IC Certificates shall have an initial principal balance equal to the
Original Group II Loan Balance (that is, $162,522,163).
On each Payment Date, principal collections on the Group I Home
Equity Loans shall be allocated as follows: an amount equal to the principal
payable on the Class A-7
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Certificates shall be payable on the Class IA Certificates and the remaining
principal collections shall be payable to the Class IB Certificates. On each
Payment Date, to the extent that any of the Aggregate Extra Principal
Distribution Amount is paid to the Class A-7 Certificates pursuant to Section
7.03(d)(i), an amount of interest otherwise payable on the Class IB Certificates
shall instead be paid as principal on the Class IA Certificates (and will be
accrued and added to principal on the Class IB Certificates). Realized Losses on
the Group I Home Equity Loans shall be allocated as follows: an amount equal to
the Realized Losses allocable to the Class A-7 Certificates shall be allocable
to the Class IA Certificates and the remaining Realized Losses shall be
allocable to the Class IB Certificates.
On each Payment Date, all principal collections and Realized Losses
on the Group II Home Equity Loans shall be allocated to the Class IC
Certificates.
The Class IA and Class IB Certificates shall each have Pass-Through
Rates equal to the weighted average Coupon Rate of the Group I Home Equity Loans
net of the sum of the Servicing Fee for Loan Group I, the Trustee Fee for Loan
Group I, and the Premium Amount for Loan Group I (the sum expressed as a per
annum rate on the Group Loan Balance for Loan Group I). The Class IC shall have
a Pass-Through Rate equal to the weighted average Coupon Rate of the Group II
Home Equity Loans net of the sum of the Servicing Fee for Loan Group II, the
Trustee Fee for Loan Group II, and the Premium Amount for Loan Group II (the sum
expressed as a per annum rate on the Group Loan Balance for Loan Group II). The
Class R-I Certificates shall have no principal balance and no Pass-Through Rate
and shall be entitled to only those distributable assets, if any, remaining in
the REMIC I on each Payment Date after all amounts required to be distributed to
the Class IA, Class IB and Class IC Certificates and applicable Trust expenses
have been paid.
REMIC II will be evidenced by (x) the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class
II-A-8, Class II-A-9IO, Class II-B-1, Class II-B-2, Class II-M-1, Class II-M-2,
and Class II-M-3 Certificates (the "REMIC II Regular Interests"), which will be
uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC II and (y) the Class R-II Certificates, which are hereby
designated as the single "residual interest" in REMIC II (the REMIC II Regular
Interests, together with the Class R-II Certificates, the "REMIC II
Certificates"). The REMIC II Regular Interests shall be recorded on the records
of REMIC II as being issued to and held by the Trustee on behalf of REMIC III.
Any Aggregate Extra Principal Distribution Amount will not be paid
as interest to the REMIC II Regular Interests, but instead to the extent
available, a portion of the interest payable with respect to the Class II-M-3
Certificates which equals 1% of the Extra Principal Distribution Amount (and, to
the extent 1% of the Extra Principal Distribution Amount exceeds the interest
payable on the Class II-M-3 Certificates, a pro rata portion of the interest
payable on the Class II-M-1 and Class II-M-2 Certificates equal to such excess)
will be payable as a reduction of the principal balances of the Class II-A-1,
Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class
II-A-7, Class II-A-8, Class II-B-1 and Class II-B-2 Certificates in the same
manner in which the Extra Principal Distribution Amount is allocated among the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8 and, with respect to both the Class II-B-1 and Class II-B-2
Certificates, to Class B Certificates,
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respectively (and will be accrued and added to principal on the Class II-M-1 and
Class II-M-2 Certificates in the same proportion as interest payable on such
Certificates is used to reduce principal on other Certificates as just
described).
Principal payments on the Home Equity Loans shall be allocated 99%
to the Class II-M-1, Class II-M-2 and Class II-M-3 Certificates, and 1% to the
Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class
II-A-6, Class II-A-7, Class II-A-8, Class II-B-1 and Class II-B-2 Certificates
until paid in full. The aggregate amount of principal allocated to the Class
II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6,
Class II-A-7, Class II-A-8, Class II-B-1 and Class II-B-2 Certificates shall be
apportioned among such Classes in the same manner in which principal on the Home
Equity Loans is payable with respect to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and, with respect to both
the Class II-B-1 and Class II-B-2 Certificates, to Class B Certificates,
respectively. The aggregate amount of principal allocated to the Class II-M-1,
Class II-M-2 and Class II-M-3 Certificates shall be allocated and apportioned
among such Certificates first, to the Class II-M-1 and Class II-M-2 Certificates
the least amount of principal necessary which when applied to such classes can
be applied so that the ratio of the principal balance of the Class II-M-1
Certificates to the principal balance of the Class II-M-2 Certificates equals
the ratio of the Group I Loan Balance to the Group II Loan Balance (the "Balance
Ratio") and second, to the Class II-M-3 Certificates.
Notwithstanding the above, principal payments on the Home Equity
Loans that are attributable to the Aggregate Overcollateralization Release
Amount shall be allocated to the Class II-M-1, Class II-M-2 and Class II-M-3
Certificates (allocated first to the Class II-M-3 Certificates until such
certificates are paid in full, and second to the Class II-M-1 and Class II-M-2
Certificates and apportioned among the Class II-M-1 and Class II-M-2
Certificates in such a manner that the Balance Ratio is maintained until paid in
full).
Realized Losses shall be applied such that after all distributions
have been made on such Payment Date the principal balances of the Class II-A-1,
Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class
II-A-7, Class II-A-8, and the sum of the Class II-B-1 and Class II-B-2
Certificates are each 1% of the principal balances of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class B
Certificates, respectively, and the aggregate principal balance of the Class
II-M-1, Class II-M-2 and Class II-M-3 Certificates is equal to the Total Loan
Balances of the Home Equity Loans less an amount equal to the sum of the
principal balances of the Class II-A-1, Class II-A-2, Class II-A-3, Class
II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class II-A-8, Class II-B-1 and
Class II-B-2 Certificates and is allocated and apportioned first, to the Class
II-M-1 and Class II-M-2 Certificates the least amount of Realized Losses
necessary which when applied to such Classes can be applied in such a manner
that the Balance Ratio is maintained, and second, to the Class II-M-3
Certificates.
The REMIC II Certificates will have the following designations and
Pass-Through Rates, and distributions of principal and interest thereon shall be
allocated to the Certificates in the following manner:
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Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal Interest
------------ ------- ---- --------- --------
II-A-1 $1,642,000 (1) (5) (6)
II-A-2 $969,400 (1) (5) (6)
II-A-3 $532,590 (1) (5) (6)
II-A-4 $299,050 (1) (5) (6)
II-A-5 $314,010 (1) (5) (6)
II-A-6 $532,450 (1) (5) (6)
II-A-7 $341,250 (1) (5) (6)
II-A-8 $1,543,750 (1) (5) (6)
II-A-9IO (notional) (2) (notional) (7)
II-B-I $243,738 (1) (5) (6)
II-B-2 $81,261 (1) (5) (6)
II-M-1 $4,874,779 (3) (5) (6)
II-M-2 $1,625,221 (4) (5) (6)
II-M-3 $637,000,087 (1) (5) (6)
R-II 0 (8) (8) (8)
- ----------
(1) The Pass-Through Rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average of the Class IB
Pass-Through Rate, the Class IC Pass-Through Rate, and the excess of the
Class IA Pass-Through Rate over (a) 7.0% for the first 30 Payment Dates
and (b) 0.0% thereafter
(2) Interest on the Class II-A-9IO will equal 7.0% per annum on the principal
balance of the Class IA Certificate for the first 30 Payment Dates and
0.0% thereafter.
(3) The Pass-Through Rate on this REMIC II Regular Interest shall at any time
of determination equal the weighted average of the Class IB Pass-Through
Rate and the excess of the Class IA Pass-Through Rate over (a) 7.0% for
the first 30 Payment Dates and (b) 0.0% thereafter.
(4) The Pass-Through Rate on this REMIC II Regular Interest shall at any time
of determination equal the Pass-Through Rate on the Class IC Certificate.
(5) Principal will be allocated to and apportioned among the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and
Class B Certificates in the same proportion as principal from the Home
Equity Loans is payable with respect to such Certificates, except that a
portion of such principal in an amount equal to the Overcollateralization
Stepdown Amount shall first be allocated as a payment of interest to the
Class C Certificates, and all principal will be allocated as a payment of
interest to the Class C Certificates after the principal balances of the
Class A and Class B Certificates have been reduced to zero.
(6) Except as provided in the next sentence, interest will be allocated among
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6,
Class A-7, Class A-8, Class A-9IO and Class B Certificates in the same
proportion as interest is payable on such Certificates.
Any interest with respect to each REMIC II Certificate in excess of the
product of (i) 100 times the weighted average coupon of the Class II-A-1,
Class II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6,
Class II-A-7, Class II-A-8, Class II-A-9IO, Class II-B-1, Class II-B-2,
Class II-M-1, Class II-M-2 and Class II-M-3 Certificates, where each of
such Classes, other than the Class II-M-1, Class II-M-2 and Class II-M-3
Certificates, is first subject to a cap and floor equal to the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-8, Class A-9IO and, with respect to the Class II-B-1 and Class II-B-2
Certificates, the Class B Pass-Through Rate, respectively, and the Class
II-M-1, Class II-
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M-2 and Class II-M-3 Certificates are each subject to a cap equal to 0%,
and (ii) the principal balance of each such REMIC II Certificate, shall
not be allocated to the Class A and Class B Certificates but will be
allocated to the Class C Certificates. However, the Class C Certificates
shall be subordinated to the extent provided in Section 7.03.
(7) to Class A-9IO
(8) On each Distribution Date, available funds, if any, remaining in the REMIC
II after payments of interest and principal, as designated above, will be
distributed to the Class R-II Certificate. It is expected that there shall
not be any distributions on the Class R-II Certificates.
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The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9IO, Class B and Class C Certificates are
hereby designated as "regular interests" with respect to the REMIC III (the
"REMIC III Regular Interests") and the Class R Certificate is hereby designated
as the single "residual interest" with respect to REMIC III. On each Payment
Date, available funds, if any, remaining in REMIC III after payments of interest
and principal as designated herein shall be distributed to the Class R
Certificates.
For federal income tax purposes, the "latest possible maturity date"
for each of the REMIC I Regular Interests, REMIC II Regular Interests and REMIC
III Regular Interests (other than the Class A-9IO Certificates) is hereby set to
be the Payment Date of April 25, 2030 and for the Class A-9IO Certificates is
hereby set to be the Payment Date of September 25, 2001.
The Startup Day is hereby designated for each of REMIC I, REMIC II
and REMIC III as the "startup day" within the meaning of Section 860G(a)(9) of
the Code.
The Trustee shall provide to the Internal Revenue Service and to the
persons described in Section 860E(e)(3) and (6) of the Code, the information
described in Treasury regulations Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto, with respect to each of REMIC I, REMIC II and REMIC III.
Such information will be provided in the manner described in Treasury
regulations 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 SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the
Trustee, the Master Servicer, the Certificate Insurer and the Owners that as of
the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it make such
qualification necessary. The Depositor has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor
and its performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of the Depositor and will not violate
the Depositor's Certificate of Incorporation or Bylaws or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of the Depositor or its
properties or the consequences of which would materially and adversely affect
its performance hereunder or under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor which litigation might have consequences that
would prohibit its entering into this Agreement or
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any other Operative Documents to which it is a party or that would materially
and adversely affect the condition (financial or otherwise) or operations of the
Depositor or its properties or might have consequences that would materially and
adversely affect its performance hereunder and under the other Operative
Documents to which the Depositor is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Depositor makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by the
Depositor of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Depositor and the
performance by the Depositor of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is the Depositor aware of any pending
insolvency.
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(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(l) The Depositor is not transferring the Home Equity Loans to the
Trustee with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.01 shall survive delivery of the respective Home
Equity Loans to the Trustee.
Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the
Trustee, the Master Servicer, the Certificate Insurer and the Owners that as of
the Startup Day:
(a) The Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is, and each
Sub-Servicer is, in compliance with the laws of each state in which any Property
is located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Servicer and each Sub-Servicer has all
requisite corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under this Agreement and the
other Operative Documents to which it is a party. The Servicer is designated as
an approved seller-servicer by FannieMae for first and second mortgage loans and
has combined equity and subordinated debt of at least $1,500,000, as determined
in accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been duly
authorized by all necessary corporate action on the part of the Servicer and
will not violate the Servicer's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Servicer is a party or by
which the Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the Servicer
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect
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its performance hereunder or under the other Operative Documents to which the
Servicer is a party.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which the Servicer is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and the other Operative Documents to which the
Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Document or which are attributed to
the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer, in light of the circumstances under which they were
made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Servicer makes no such
representation or warranty), that are necessary or advisable in connection with
the execution and delivery by the Servicer of the Operative Documents to which
it is a party, have been duly taken, given or obtained, as the case may be, are
in full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the part of
the Servicer and the performance by the Servicer of its obligations under this
Agreement and such of the other Operative Documents to which it is a party.
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(j) The collection practices used by the Servicer with respect to
the Home Equity Loans have been, in all material respects, legal, proper,
prudent and customary in the mortgage servicing business and in conformity with
relevant FannieMae guidelines.
(k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive delivery of the Home Equity Loans
to the Trustee.
Upon discovery by any of either Seller, the Servicer, the Master
Servicer, any Sub-Servicer, any Owner, the Certificate Insurer or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. Within 60 days of its discovery or its receipt of notice of breach, the
Servicer shall cure such breach in all material respects and, upon the
Servicer's continued failure to cure such breach, may thereafter be removed by
the Trustee pursuant to Section 8.20 hereof; provided, however, that if any
party can establish to the reasonable satisfaction of the Certificate Insurer
that it is diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of the Sellers.
(1) ContiMortgage hereby represents, warrants and covenants to the
Trustee, the Master Servicer, the Certificate Insurer and the Owners that as of
the Startup Day:
(a) ContiMortgage is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it, make such
qualification necessary. ContiMortgage has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by ContiMortgage
and its performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of ContiMortgage and will not violate
ContiMortgage's Certificate of Incorporation or Bylaws or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which ContiMortgage is a party or by which ContiMortgage is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over
ContiMortgage or any of its properties.
(c) This Agreement and the other Operative Documents to which
ContiMortgage is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of
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ContiMortgage, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) ContiMortgage is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of ContiMortgage or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under the other Operative Documents to which
ContiMortgage is a party.
(e) No litigation is pending with respect to which ContiMortgage has
received service of process or, to the best of ContiMortgage's knowledge,
threatened against ContiMortgage which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of ContiMortgage or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which
ContiMortgage is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by ContiMortgage contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe ContiMortgage or matters or activities for which ContiMortgage is
responsible in accordance with the Operative Documents or which are attributable
to ContiMortgage therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiMortgage required to be stated therein or necessary to make
the statements contained therein with respect to ContiMortgage, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to ContiMortgage that
materially adversely affects or in the future may (so far as ContiMortgage can
now reasonably foresee) materially adversely affect ContiMortgage or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the related
Note) and other items of the Trust Estate delivered by ContiMortgage to the
Depositor and by the Depositor to the Trustee under this Agreement, the Trust
will have good title to such Home Equity Loan (including the related Note) and
such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released).
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(i) Neither ContiMortgage nor any affiliate thereof will report on
any financial statement any part of the Servicing Fee as an adjustment to the
sales price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which ContiMortgage makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by
ContiMortgage of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of ContiMortgage and the
performance by ContiMortgage of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(k) The origination practices used by ContiMortgage with respect to
the Home Equity Loans have been, in all material respects, legal, proper,
prudent and customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiMortgage.
(m) ContiMortgage is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is ContiMortgage aware of any pending
insolvency.
(n) The transfer, assignment and conveyance of the Notes and the
Mortgages by ContiMortgage hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
(o) ContiMortgage is not transferring the Home Equity Loans to the
Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.03(1) shall survive delivery of the respective Home
Equity Loans to the Trustee.
Upon discovery by any of the Servicer, the Master Servicer, any
Sub-Servicer, either Seller, the Certificate Insurer or the Trustee (each, for
purposes of this paragraph, a "party") of a breach of any of the representations
and warranties set forth in this Section 3.03 which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the other parties.
ContiMortgage hereby covenants and agrees that within 60 days of its discovery
or its receipt of notice of breach, it shall cure such breach in all material
respects or, with respect to a breach of clause (h) above, ContiMortgage may (or
may cause an affiliate of ContiMortgage to) on the
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Monthly Remittance Date next succeeding such discovery or receipt of notice (i)
if such monthly Remittance Date is within two years following the Startup Day
substitute in lieu of any Home Equity Loan not in compliance with clause (h) a
Qualified Replacement Mortgage and, if the outstanding principal amount of such
Qualified Replacement Mortgage as of the applicable Replacement Cut-Off Date is
less than the Loan Balance of such Home Equity Loan as of such Replacement
Cut-Off Date, deliver an amount equal to such difference together with the
aggregate amount of (A) all Delinquency Advances and Servicing Advances
theretofore made with respect to such Home Equity Loan and (B) all Delinquency
Advances and Servicing Advances which the Servicer and the Master Servicer have
theretofore failed to remit with respect to such Home Equity Loan (a
"Substitution Amount") to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan from the Trust at the Loan
Purchase Price, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Home Equity Loan which is
not in default or as to which no default is imminent, no repurchase or
substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made unless
ContiMortgage obtains for the Trustee and the Certificate Insurer an opinion of
counsel experienced in federal income tax matters to the effect that such a
repurchase or substitution would not constitute a Prohibited Transaction for the
Trust or any REMIC therein or otherwise subject the Trust or any REMIC therein
to tax and would not jeopardize the status of any REMIC therein as a REMIC (a
"REMIC Opinion") addressed to the Trustee and the Certificate Insurer and
acceptable to the Trustee and the Certificate Insurer. Any Home Equity Loan as
to which repurchase or substitution was delayed pursuant to this Section shall
be repurchased or substituted for (subject to compliance with Sections 3.03,
3.04 or 3.06, as the case may be) upon the earlier of (a) the occurrence of a
default or imminent default with respect to such Home Equity Loan and (b)
receipt by the Trustee and the Certificate Insurer of a REMIC Opinion.
(2) ContiWest hereby represents, warrants and covenants to the
Trustee, the Master Servicer, the Certificate Insurer and the Owners that as of
the Startup Day:
(a) ContiWest is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it, make such
qualification necessary. ContiWest has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by ContiWest and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of ContiWest and will not violate
ContiWest's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which ContiWest is a party or by which ContiWest is bound or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over ContiWest or any of
its properties.
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<PAGE>
(c) Agreement and the other Operative Documents to which ContiWest
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of ContiWest, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) ContiWest is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of ContiWest or its properties or
the consequences of which would materially and adversely affect its performance
hereunder and under the other Operative Documents to which ContiWest is a party.
(e) No litigation is pending with respect to which ContiWest has
received service of process or, to the best of ContiWest's knowledge, threatened
against ContiWest which litigation might have consequences that would prohibit
its entering into this Agreement or any other Operative Documents to which it is
a party or that would materially and adversely affect the condition (financial
or otherwise) or operations of ContiWest or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which ContiWest is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by ContiWest contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe ContiWest or matters or activities for which ContiWest is responsible
in accordance with the Operative Documents or which are attributable to
ContiWest therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiWest required to be stated therein or necessary to make the
statements contained therein with respect to ContiWest, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to ContiWest that materially
adversely affects or in the future may (so far as ContiWest can now reasonably
foresee) materially adversely affect ContiWest or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has not been
set forth in the Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the related
Note) and other items of the Trust Estate delivered by ContiWest to the
Depositor and by the Depositor to the Trustee under this Agreement, the Trust
will have good title to such Home Equity Loan (including the related Note) and
such other items of the Trust Estate free and clear of any lien,
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charge, mortgage, encumbrance or rights of others, except as set forth in
Section 3.04 (b) (ix) (other than liens which will be simultaneously released).
(i) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which ContiWest makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution and delivery by
ContiWest of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of ContiWest and the performance
by ContiWest of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiWest.
(k) ContiWest is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is ContiWest aware of any pending
insolvency.
(l) The transfer, assignment and conveyance of the Notes and the
Mortgages by ContiWest hereunder are not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
(m) ContiWest is not transferring the Home Equity Loans to the
Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties
set forth in this Section 3.03(2) shall survive delivery of the respective Home
Equity Loans to the Trustee.
Upon discovery by any of the Servicer, any Sub-Servicer, either
Seller, the Certificate Insurer or the Trustee (each, for purposes of this
paragraph, a "party") of a breach of any of the representations and warranties
set forth in this Section 3.03 which materially and adversely affects the
interests of the Owners or of the Certificate Insurer, the party discovering
such breach shall give prompt written notice to the other parties. ContiWest
hereby covenants and agrees that within 60 days of its discovery or its receipt
of notice of breach, it shall cure such breach in all material respects or, with
respect to a breach of clause (h) above, ContiWest may (or may cause an
affiliate of ContiWest to) on the Monthly Remittance Date next succeeding such
discovery or receipt of notice (i) if such monthly Remittance Date is within two
years of the startup day substitute in lieu of any Home Equity Loan not in
compliance with clause (h) a Qualified Replacement Mortgage and, if the
outstanding principal amount of such Qualified Replacement Mortgage as of the
applicable Replacement Cut-Off Date is less than the Loan
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Balance of such Home Equity Loan as of such Replacement Cut-Off Date, deliver an
amount equal to such difference together with the aggregate amount of (A) all
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan and (B) all Delinquency Advances and Servicing Advances
which the Servicer and the Master Servicer have theretofore failed to remit with
respect to such Home Equity Loan (a "Substitution Amount") to the Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Home Equity
Loan from the Trust at the Loan Purchase Price, which purchase price shall be
delivered to the Servicer for deposit in the Principal and Interest Account.
Notwithstanding any provision of this Agreement to the contrary, with respect to
any Home Equity Loan which is not in default or as to which no default is
imminent, no repurchase or substitution pursuant to Section 3.03, 3.04 or 3.06
shall be made unless ContiWest obtains for the Trustee and the Certificate
Insurer a REMIC Opinion addressed to the Trustee and the Certificate Insurer and
acceptable to the Trustee and the Certificate Insurer. Any Home Equity Loan as
to which repurchase or substitution was delayed pursuant to this Section shall
be repurchased or substituted for (subject to compliance with Sections 3.03,
3.04 or 3.06, as the case may be) upon the earlier of (a) the occurrence of a
default or imminent default with respect to such Home Equity Loan and (b)
receipt by the Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of the Sellers to Take Certain Actions with Respect to
the Home Equity Loans In Certain Situations.
(a) Upon the discovery by either Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer or the Trustee (i) that any of the
statements set forth in subsection (b) below were untrue as of the Startup Day
with the result that the interests of the Owners or the Certificate Insurer are
materially and adversely affected or (ii) that statements set forth in Clauses
(ix), (x), (xiii), (xxxvi), (xl), or (xli) of subsection (b) below were untrue
in any material respect as of the Startup Day, the party discovering such breach
shall give prompt written notice to the other parties. Upon the earliest to
occur of such Seller's discovery, its receipt of notice of breach from any one
of the other parties or such time as a situation resulting from an existing
statement which is untrue materially and adversely affects the interests of the
Owners or of the Certificate Insurer, such Seller hereby covenants and warrants
that it shall promptly cure such breach in all material respects or subject to
the last two sentences of Section 3.03 it shall on the second Monthly Remittance
Date next succeeding such discovery, receipt of notice or such time (i) if such
Monthly Remittance Date is within two years of the Startup Day substitute in
lieu of each Home Equity Loan which has given rise to the requirement for action
by such Seller a Qualified Replacement Mortgage and deliver the Substitution
Amount to the Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Home Equity Loan from the Trust at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. Other than as
specified in Section 6.12 hereof, it is understood and agreed that the
obligation of a Seller so to substitute or purchase any Home Equity Loan as to
which such a statement set forth below is untrue in any material respect and has
not been remedied shall constitute the sole remedy under this Agreement
respecting a discovery of any such statement which is untrue in any material
respect in this Section 3.04 available to the Owners, the Certificate Insurer
and the Trustee, the Certificate Insurer.
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(b) The information set out below speaks as of the Startup Day,
unless a different date is specified:
(i) The information with respect to each Home Equity Loan and the
aggregate Loan Balance of all Home Equity Loans set forth in
the related Schedule of Home Equity Loans is true and correct
as of the Cut-Off Date;
(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related
thereto) with respect to each Home Equity Loan has been or
will be delivered to the Trustee on the Startup Day or as
otherwise provided in Section 3.05;
(iii) Each Home Equity Loan being transferred to the Trust is a
Qualified Mortgage;
(iv) Each Property is improved by a single (one-to-four) family
residential dwelling, which may include condominiums and
townhouses, manufactured housing or small multifamily or
mixed-use property but shall not include co-operatives or
mobile homes; provided, however, that not more than 0.06% and
0.12% of the aggregate Loan Balance of the Home Equity Loans
in Loan Group I and Loan Group II, respectively, are secured
by condominiums with more than four stories and no more than
0.50% and 1.46% of the Loan Balance of the Home Equity Loans
in Loan Group I and Loan Group II, respectively, are secured
by condominiums of less than four stories;
(v) No Home Equity Loan in Loan Group I has a Loan-to-Value Ratio
in excess of 85%, except 25.03% of such Home Equity Loans
which have a combined Loan-to-Value Ratio not greater than
100%; no Home Equity Loan in Loan Group II has a Loan-to-Value
Ratio in excess of 85%, except 21.72% of such Home Equity
Loans which have a Loan-to-Value Ratio not greater than 100%;
(vi) Each Home Equity Loan is being serviced by the Servicer;
(vii) The Note related to each Home Equity Loan in the Loan Group I
bears a fixed Coupon Rate of at least 6.85% per annum; the
Note related to each Home Equity Loan in Loan Group II bears a
current Coupon Rate of at least 6.90% per annum. The weighted
average Coupon Rate of the Home Equity Loans in the Loan Group
I is approximately 10.31%; the weighted average Coupon Rate of
the Home Equity Loans in Loan Group II is approximately
10.07%;
(viii) Each Note with respect to the Home Equity Loans will provide
for a schedule of substantially level and equal monthly
Scheduled Payments which are sufficient to amortize fully the
principal balance of such Note on or before its maturity date
(other than Notes representing not more than 30.38% of the
aggregate Loan Balance of the fixed rate Home Equity
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Loans or 0.26% of the adjustable rate Home Equity Loans, which
may provide for a "balloon" payment due on a maturity date
which is not more than 15 years from the date of origination);
(ix) As of the Startup Day, each Mortgage is a valid and subsisting
first or second lien of record on the Property subject in the
case of any Second Mortgage Loan only to a Senior Lien on such
Property and subject in all cases to the exceptions to title
set forth in the title insurance policy or attorney's opinion
of title with respect to the related Home Equity Loan, which
exceptions are generally acceptable to banking institutions in
connection with their regular mortgage lending activities, and
such other exceptions to which similar properties are commonly
subject and which do not individually, or in the aggregate,
materially and adversely affect the benefits of the security
intended to be provided by such Mortgage;
(x) Immediately prior to the transfer and assignment of the Home
Equity Loans by the related Seller to the Depositor and by the
Depositor to the Trust herein contemplated, such Seller and
the Depositor, as the case may be, held good and indefeasible
title to, and was the sole owner of, each Home Equity Loan
(including the related Note) conveyed by such Seller subject
to no liens, charges, mortgages, encumbrances or rights of
others except as set forth in clause (ix) or other liens which
will be released simultaneously with such transfer and
assignment; and immediately upon the transfer and assignment
herein contemplated, the Trustee will hold good and
indefeasible title to, and be the sole owner of, each Home
Equity Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in
paragraph (ix) or other liens which will be released
simultaneously with such transfer and assignment;
(xi) As of the Startup Day, (a) no more than 1.68% and 1.48% of the
Home Equity Loans in Loan Group I and Loan Group II,
respectively, as a percentage of the outstanding aggregate
Loan Balance of such Home Equity Loans are 30-59 days
Delinquent, (b) no more than 0.03% and 0.24% of the Home
Equity Loans in Loan Group I and Loan Group II, respectively,
as a percentage of the outstanding aggregate Loan Balance of
such Home Equity Loans, are 60-89 days Delinquent, (c) none of
the Home Equity Loans, is 90 or more days Delinquent, (d) no
Mortgagor of any Home Equity Loan has been 30 days or more
Delinquent more than once during the 12 months immediately
preceding the Startup Day except as indicated on Schedule III
attached hereto and (e) no Mortgagor of any Home Equity Loan
has been 90 or more days Delinquent during the 12 months
immediately preceding the Startup Day except as indicated on
Schedule III attached hereto;
(xii) There is no delinquent tax or assessment lien on any Property,
and each Property is free of substantial damage and is in good
repair;
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(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation
of the related Mortgagor to pay the unpaid principal of or
interest on such Note;
(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien
prior to, or equal with, the lien of the related Mortgage
except those which are insured against by any title insurance
policy referred to in paragraph (xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in all
material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act and other consumer protection laws,
usury, equal credit opportunity, disclosure and recording
laws;
(xvi) With respect to each Home Equity Loan either (a) an attorney's
opinion of title has been obtained but no title policy has
been obtained (provided that no title policy has been obtained
with respect to not more than 1.0% of the Original Combined
Pool Balance of the Home Equity Loans), or (b) a lender's
title insurance policy, issued in standard American Land Title
Association form by a title insurance company authorized to
transact business in the state in which the related Property
is situated, in an amount at least equal to the original
balance of such Home Equity Loan together, in the case of a
Second Mortgage Loan, with the then-current principal balance
of the mortgage note relating to the Senior Lien, insuring the
mortgagee's interest under the related Home Equity Loan as the
holder of a valid first or second mortgage lien of record on
the real property described in the related Mortgage, as the
case may be, subject only to exceptions of the character
referred to in paragraph (ix) above, was effective on the date
of the origination of such Home Equity Loan, and, as of the
Startup Day, such policy is valid and thereafter such policy
shall continue in full force and effect;
(xvii) Each Sub-Servicer, if any, is a qualified servicer as defined
in Section 8.03 with respect to the Home Equity Loans serviced
by it;
(xviii) The improvements upon each Property are covered by a valid
and existing hazard insurance policy with a generally
acceptable carrier that provides for fire and extended
coverage representing coverage not less than the least of (A)
the outstanding principal balance of the related Home Equity
Loan (together, in the case of a Second Mortgage Loan, with
the outstanding principal balance of the Senior Lien), (B) the
minimum amount required to compensate for damage or loss on a
replacement cost basis or (C) the full insurable value of the
Property;
(xix) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having
special flood hazards,
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a flood insurance policy in a form meeting the requirements of
the current guidelines of the Flood Insurance Administration
is in effect with respect to such Property with a generally
acceptable carrier in an amount representing coverage not less
than the least of (A) the outstanding principal balance of the
related Home Equity Loan (together, in the case of a Second
Mortgage Loan, with the outstanding principal balance of the
Senior Lien), (B) the minimum amount required to compensate
for damage or loss on a replacement cost basis or (C) the
maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973;
(xx) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may
be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity
or at law), and all parties to each Home Equity Loan had full
legal capacity to execute all documents relating to such Home
Equity Loan and convey the estate therein purported to be
conveyed;
(xxi) Each Seller has caused and will cause to be performed any and
all acts required to be performed to preserve the rights and
remedies of the Trustee in any Insurance Policies applicable
to any Home Equity Loans delivered by such Seller including,
without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and
establishments of co-insured, joint loss payee and mortgagee
rights in favor of the Trustee;
(xxii) As of the Startup Day, no more than 0.38% of the aggregate
Loan Balance of the Home Equity Loans Loan Group I and 0.62%
in Loan Group II, respectively, will be secured by Properties
located within any single zip code area;
(xxiii) Each original Mortgage was recorded or is in the process of
being recorded, and all subsequent assignments of the original
Mortgage have been delivered for recordation or have been
recorded in the appropriate jurisdictions wherein such
recordation is necessary to perfect the lien thereof as
against creditors of or purchasers from the Seller delivering
the related Home Equity Loan (or, subject to Section 3.05
hereof, are in the process of being recorded);
(xxiv) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary, to
protect the interest of the Owners and the Certificate Insurer
and which has been delivered to the Trustee. The substance of
any such alteration or modification is reflected on the
related Schedule of Home Equity Loans;
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(xxv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the
mortgagee to make future advances thereunder. Any and all
requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses
incurred in making or closing or recording such Home Equity
Loans were paid;
(xxvi) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien
of the corresponding Mortgage;
(xxvii) No Home Equity Loan was originated under a buydown plan;
(xxviii) No Home Equity Loan has a shared appreciation feature, or
other contingent interest feature;
(xxix) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one
or more parcels of real property with a residential dwelling
erected thereon;
(xxx) Each Mortgage contains a provision for the acceleration of the
payment of the unpaid principal balance of the related Home
Equity Loan in the event the related Property is sold without
the prior consent of the mortgagee thereunder;
(xxxi) Any advances made after the date of origination of a Home
Equity Loan but prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by
the related Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single
repayment term reflected on the respective Schedule of Home
Equity Loans. The consolidated principal amount does not
exceed the original principal amount of the related Home
Equity Loan. No Note permits or obligates the Servicer to make
future advances to the related Mortgagor at the option of the
Mortgagor;
(xxxii) There is no proceeding pending or threatened for the total
or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged
by waste, fire, water, flood, earthquake or earth movement;
(xxxiii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property
lie wholly within the boundaries and building restriction
lines of such Property, and no improvements on adjoining
properties encroach upon such Property, unless any such
improvements and are stated in the title insurance policy and
affirmatively insured;
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(xxxiv) No improvement located on or being part of any Property is
in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property
and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy and
fire underwriting certificates, have been made or obtained
from the appropriate authorities and such Property is lawfully
occupied under the applicable law;
(xxxv) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will
become payable by the Owners or the Trust to the trustee under
the deed of trust, except in connection with a trustee's sale
after default by the related Mortgagor;
(xxxvi) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of
the benefits of the security, including (A) in the case of a
Mortgage designated as a deed of trust, by trustee's sale and
(B) otherwise by judicial foreclosure. There is no homestead
or other exemption available to the related Mortgagor which
would materially interfere with the right to sell the related
Property at a trustee's sale or the right to foreclose the
related Mortgage;
(xxxvii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note
and no event which, with the passage of time or with notice
and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of
acceleration; and neither the Servicer nor the related Seller
has waived any default, breach, violation or event of
acceleration;
(xxxviii) No instrument of release or waiver has been executed in
connection with any Home Equity Loan, and no Mortgagor has
been released, in whole or in part, except in connection with
an assumption agreement which has been approved by the primary
mortgage guaranty insurer, if any, and which has been
delivered to the Trustee;
(xxxix) The maturity date of each Home Equity Loan is at least
twelve months prior to the maturity date of the related first
mortgage loan if such first mortgage loan provides for a
balloon payment;
(xl) Each Home Equity Loan conforms, and all such Home Equity Loans
in the aggregate conform, in all material respects to the
description thereof set forth in the Prospectus Supplement;
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(xli) The credit underwriting guidelines applicable to each Home
Equity Loan conform in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xlii) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the
subject property;
(xliii) The Home Equity Loans were not selected for inclusion in the
Trust by the Sellers on any basis intended to adversely affect
the Trust;
(xliv) No more than 4.41% and 7.67% of the aggregate Loan Balance of
the Home Equity Loans in the Loan Group I and Loan Group II,
respectively, are secured by Properties that are non-owner
occupied Properties (i.e., investor-owned and vacation);
(xlv) No more than 3.81% and 7.17% of the aggregate Loan Balance of
the Home Equity Loans in Loan Group I and Loan Group II,
respectively, are secured by Home Equity Loans which were
originated under ContiMortgage's non-income verification
program;
(xlvi) Neither Seller has any actual knowledge that there exist any
hazardous substances, hazardous wastes or solid wastes, as
such terms are defined in the Comprehensive Environmental
Response Compensation and Liability Act, the Resource
Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation on any Property;
(xlvii) Both Sellers were properly licensed or otherwise authorized,
to the extent required by applicable law, to originate or
purchase each Home Equity Loan; and the consummation of the
transactions herein contemplated, including, without
limitation, the receipt of interest by the Owners and the
ownership of the Home Equity Loans by the Trustee as trustee
of the Trust will not involve the violation of such laws;
(xlviii) With respect to each Property subject to a ground lease (i)
the current ground lessor has been identified and all ground
rents which have previously become due and owing have been
paid; (ii) the ground lease term extends, or is automatically
renewable, for at least five years beyond the maturity date of
the related Home Equity Loan; (iii) the ground lease has been
duly executed and recorded; (iv) the amount of the ground rent
and any increases therein are clearly identified in the lease
and are for predetermined amounts at predetermined times; (v)
the ground rent payment is included in the borrower's monthly
payment as an expense item; (vi) the Trust has the right to
cure defaults on the ground lease; and (vii) the terms and
conditions of the leasehold do not prevent the free and
absolute marketability of the Property. As of the Cut-Off
Date, the Loan Balance of the Home Equity Loans with related
Properties subject to
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ground leases does not exceed 1% of the Original Aggregate
Loan Balance;
(xlix) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been
paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and
which has been assessed but is not yet due and payable;
(l) As of the Startup Day, neither Seller has received a notice of
default of any first mortgage loan secured by any Property
which has not been cured by a party other than such Seller;
(li) All of the Adjustable Rate Home Equity Loans are in a first
lien position;
(lii) As of the Cut-off Date, each Home Equity Loan has an
outstanding balance of less than $411,762.96;
(liii) Each Home Equity Loan is secured by a mortgage on property
which, at the time of origination of each Home Equity Loan,
has an appraised value of not more than $895,000.00;
(liv) No more than 7.52% of the Fixed Rate Home Equity Loans and
none of the Adjustable Rate Home Equity Loans are in a second
priority position; and
(lv) The weighted average margin of the Home Equity Loans in Loan
Group II is 6.47%.
(c) In the event that any action required by paragraph (a) above
results in a prohibited transaction tax, the Trustee shall immediately notify
the related Seller in writing thereof and such Seller will, within 10 days of
receiving notice thereof from the Trustee, deposit the amount due from the Trust
with the Trustee for the payment thereof, including any interest and penalties,
in immediately available funds. In the event that any Qualified Replacement
Mortgage is delivered by either Seller to the Trust pursuant to Section 3.03,
Section 3.04 or Section 3.06 hereof, such Seller shall be obligated to take the
actions described in Section 3.04(a) with respect to such Qualified Replacement
Mortgage upon the discovery by any of the Owners, the other Seller, the
Servicer, any Sub-Servicer, the Certificate Insurer or the Trustee that the
statements set forth in clause (ix), (x), (xiii), (xxxvi), (xl) or (xli) of
subsection (b) above are untrue in any material respect on the date such
Qualified Replacement Mortgage is conveyed to the Trust or that any of the other
statements set forth in subsection (b) above are untrue on the date such
Qualified Replacement Mortgage is conveyed to the Trust such that the interests
of the Owners or the Certificate Insurer in the related Qualified Replacement
Mortgage are materially and adversely affected; provided, however, that for the
purposes of this subsection (c) the statements in subsection (b) above referring
to items "as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to
refer to such items as of the date such Qualified Replacement Mortgage is
conveyed to the Trust.
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Notwithstanding the fact that a representation contained in subsection (b) above
may be limited to a Seller's knowledge, such limitation shall not relieve a
Seller of its repurchase obligation under this Section and Section 3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05 Conveyance of the Home Equity Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day each Seller, concurrently with the execution
and delivery hereof, hereby transfers, assigns, sets over and otherwise conveys
to the Depositor and the Depositor, concurrently with the execution and delivery
hereof, transfers, assigns, sets over and otherwise conveys, without recourse,
to the Trust all of their respective right, title and interest in and to the
Trust Estate; provided, however, that each Seller reserves and retains all of
its right, title and interest in and to principal (including Prepayments)
collected on or prior to the Cut-Off Date and all interest accrued on or prior
to February 28, 1999. The transfer by the Depositor of the Home Equity Loans set
forth on the Schedule of Home Equity Loans to the Trustee is absolute and is
intended by the Owners and all parties hereto to be treated as a sale by the
Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Home Equity Loans conveying good
title thereto free and clear of any liens and encumbrances from each Seller to
the Depositor and from the Depositor to the Trust and that the Home Equity Loans
not be part of the Depositor's or either Seller's estate in the event of
insolvency. In the event that such conveyance is deemed to be a loan, the
parties intend that each Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Trustee a first
priority perfected security interest in the Trust Estate, and that this
Agreement shall constitute a security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance
from the Sellers to the Depositor, each Seller has filed, in the appropriate
office or offices in the States of Delaware, Pennsylvania and Nevada, as the
case may be, a UCC-1 financing statement executed by such Seller as debtor,
naming the Depositor as secured party and listing the Home Equity Loans and the
other property described above as collateral. The characterization of a Seller
as debtor and the Depositor as secured party on such financing statements is
solely for protective purposes and shall in no way be construed as being
contrary to the intent of the parties that this transaction be treated as a sale
of such Seller's entire right, title and interest in and to the Trust Estate. In
connection with such filing, each Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Trustee's, the Certificate Insurer's and the Owners' interest in the Trust
Estate.
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In connection with such sale, transfer, assignment, and conveyance
from the Depositor to the Trustee, the Depositor has filed, in the appropriate
office or offices in the States of New York, Nevada and Delaware, a UCC-1
financing statement executed by the Depositor as debtor, naming the Trustee as
secured party and listing the Home Equity Loans and the other property described
above as collateral. The characterization of the Depositor as debtor and the
Trustee as secured party in such financing statements is solely for protective
purposes and shall in no way be construed as being contrary to the intent of the
parties that this transaction be treated as a sale of the Depositor's entire
right, title and interest in and to the Trust Estate. In connection with such
filing, the Depositor agrees that it shall cause to be filed all necessary
continuation statements thereof and to take or cause to be taken such actions
and execute such documents as are necessary to perfect and protect the
Trustee's, the Certificate Insurer's and the Owners' interest in the Trust
Estate.
(b) In connection with the transfer and assignment of the Home
Equity Loans, the Depositor agrees to:
(i) deliver without recourse to the Trustee on the Startup Day
with respect to each Home Equity Loan (A) the original Notes
endorsed in blank or to the order of the Trustee, (B) the
original title insurance policy or a copy certified by the
issuer of the title insurance policy, or the attorney's
opinion of title, (C) originals or certified copies of all
intervening assignments, showing a complete chain of title
from origination to the Trustee, if any, including warehousing
assignments, with evidence of recording thereon, (D) originals
of all assumption and modification agreements, if any and (E)
either: (1) the original Mortgage, with evidence of recording
thereon (if such original Mortgage has been returned to the
related Seller from the applicable recording office or a
certified copy thereof if such original Mortgage has not been
returned to the related Seller from the applicable recording
office), or (2) a copy of the Mortgage certified by the public
recording office in those instances where the original
recorded Mortgage has been lost;
(ii) cause, within 60 days following the Startup Day or 15 days
following the receipt from the relevant state authorities,
assignments of the Mortgages to "Manufacturers and Traders
Trust Company, as Trustee of ContiMortgage Home Equity Loan
Trust 1999-1 under the Pooling and Servicing Agreement dated
as of March 1, 1999" to be submitted for recording in the
appropriate jurisdictions; provided, however, that the
Depositor shall not be required to record an assignment of a
Mortgage if the Depositor furnishes to the Trustee and the
Certificate Insurer, on or before the Startup Day, at the
Depositor's expense an opinion of counsel with respect to the
relevant jurisdiction that such recording is not necessary to
perfect the Trustee's interest in the related Home Equity
Loans (in form and substance and from counsel satisfactory to
the Rating Agencies and the Certificate Insurer);
notwithstanding the furnishing of such opinion of counsel,
however, the Certificate Insurer may, in its reasonable
discretion after consultation with the Depositor prior to the
date on which all
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assignments of Mortgages are required to be filed hereunder,
require the filing of assignments of Mortgages in any state
that is the subject of such opinions; and
(iii) deliver the title insurance policy or title searches, the
original Mortgages and such recorded assignments, together
with originals or duly certified copies of any and all prior
assignments, to the Trustee within 15 days of receipt thereof
by the Depositor (but in any event, with respect to any
Mortgage as to which original recording information has been
made available to the Depositor, within one year after the
Startup Day).
Notwithstanding the delivery of opinions specified in clause (i)
above the Trustee shall cause to be recorded each assignment of a Mortgage upon
the earliest to occur of (a) the reasonable direction of the Certificate
Insurer, (b) the removal of the Servicer pursuant to Section 8.20 hereof or (c)
notification to the Trustee of the occurrence of a bankruptcy or insolvency
relating to the Mortgagor.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period
referred in clause (ii) of the second preceding paragraph, each Seller shall
deliver to the Trustee a list of all Mortgages with respect to Home Equity Loans
delivered by such Seller for which no Mortgage assignment has yet been submitted
for recording by such Seller, which list shall state the reason why such Seller
has not yet submitted such Mortgage assignments for recording. With respect to
any Mortgage assignment disclosed on such list as not yet submitted for
recording for a reason other than a lack of original recording information, the
Trustee shall make an immediate demand on such Seller to prepare such Mortgage
assignments, and shall inform the Certificate Insurer of such Seller's failure
to prepare such Mortgage assignments. Thereafter, the Trustee shall cooperate in
executing any documents prepared by the Certificate Insurer and submitted to the
Trustee in connection with this provision. Following the expiration of the
60-day period referred to in clause (ii) of the second preceding paragraph, each
Seller shall promptly prepare a Mortgage assignment for any Mortgage with
respect to Home Equity Loans delivered by such Seller for which original
recording information is subsequently received by such Seller, and shall
promptly deliver a copy of such Mortgage assignment to the Trustee. Each Seller
agrees that it will follow its normal servicing procedures and attempt to obtain
the original recording information necessary to complete a Mortgage assignment
with respect to Home Equity Loans delivered by such Seller. In the event that a
Seller is unable to obtain such recording information with respect to any
Mortgage prior to the end of the 18th calendar month following the Startup Day
and has not provided to the Trustee a Mortgage assignment with evidence of
recording thereon relating to the assignment of such Mortgage to the Trustee,
the Trustee shall notify such Seller of such Seller's obligation to provide a
completed assignment (with evidence of recording thereon) on or before the end
of the 20th calendar month following the Startup Day with respect
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to the Home Equity Loans. A copy of such notice shall be sent by the Trustee to
the Certificate Insurer. If no such completed assignment (with evidence of
recording thereon) is provided before the end of such 20th calendar month, the
related Home Equity Loan shall be deemed to have breached the representation
contained in clause (xxiii) of Section 3.04(b) hereof; provided, however, that
if as of the end of such 20th calendar month either Seller then required to
deliver such a completed assignment demonstrates to the satisfaction of the
Certificate Insurer that it is exercising its best efforts to obtain such
completed assignment and, during each month thereafter until such completed
assignment is delivered to the Trustee, such Seller continues to demonstrate to
the satisfaction of the Certificate Insurer that it is exercising its best
efforts to obtain such completed assignment, the related Home Equity Loan will
not be deemed to have breached such representation. The requirement to deliver a
completed assignment with evidence of recording thereon will be deemed satisfied
upon delivery of a copy of the completed assignment certified by the applicable
public recording office.
Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 with respect to
one or more Home Equity Loans shall be accomplished at the expense of the Seller
delivering such Home Equity Loan.
(c) In the case of Home Equity Loans which have been prepaid in full
after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of
the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) Each Seller shall transfer, assign, set over and otherwise
convey, without recourse, to the Trustee for the benefit of the Owners of the
Certificates and of the Certificate Insurer all right, title and interest of
such Seller in and to any Qualified Replacement Mortgage delivered to the
Trustee on behalf of the Trust by such Seller pursuant to Section 3.03, 3.04 or
3.06 hereof and all its right, title and interest to principal and interest due
on such Qualified Replacement Mortgage after the applicable Replacement Cut-Off
Date; provided, however, that such Seller shall reserve and retain all right,
title and interest in and to payments of principal and interest due on such
Qualified Replacement Mortgage on or prior to the applicable Replacement Cut-Off
Date.
(e) As to each Home Equity Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage therefor, the
Trustee will transfer, assign, set over and otherwise convey without recourse or
representation, on the order of the Seller delivering such Home Equity Loan, all
of its right, title and interest in and to such released Home Equity Loan and
all the Trust's right, title and interest to principal and interest due on such
released Home Equity Loan after the applicable Replacement Cut-Off Date;
provided, however, that the Trust shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such released Home
Equity Loan on or prior to the applicable Replacement Cut-Off Date.
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(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee for the benefit of the Owners of the
Certificates and the Certificate Insurer, each Seller agrees to (i) deliver
without recourse to the Trustee on the date of delivery of such Qualified
Replacement Mortgage the original Note relating thereto, endorsed in blank or to
the order of the Trustee, (ii) cause promptly to be recorded an assignment in
the appropriate jurisdictions, (iii) deliver the original Qualified Replacement
Mortgage and such recorded assignment, together with original or duly certified
copies of any and all prior assignments, to the Trustee within 15 days of
receipt thereof by such Seller (but in any event within 120 days after the date
of conveyance of such Qualified Replacement Mortgage) and (iv) deliver the title
insurance policy, or where no such policy is required to be provided under
Section 3.05(b)(i)(B), the other evidence of title in the same manner required
in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in
connection with the conveyance of a Qualified Replacement Mortgage the Trustee
shall deliver on the date of conveyance of such Qualified Replacement Mortgage
and on the order of the Seller delivering such Qualified Replacement Mortgage
(i) the original Note relating thereto, endorsed without recourse or
representation, to such Seller, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as constituted the
File with respect thereto.
(h) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a defect
therein, the Seller that delivered the corresponding Home Equity Loan shall
prepare a substitute assignment or cure such defect, as the case may be, and
thereafter cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by each of the Sellers and the
Depositor in the form attached as Exhibit E hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definitions of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners. The Trustee agrees, for the
benefit of the Owners, to review such items within 45 days after the Startup Day
(or, with respect to any document delivered after the Startup Day, within 45
days of receipt and with respect to any Qualified Replacement Mortgage, within
45 days after the assignment thereof) and to deliver to the Depositor, each of
the Sellers, the Certificate Insurer and the Servicer a certification in the
form attached hereto as Exhibit F (a "Pool Certification") to the effect that,
as to each Home Equity Loan listed in the Schedule of Home Equity Loans (other
than any Home Equity Loan paid in full or any Home Equity Loan specifically
identified in such Pool Certification as not covered by such Pool
Certification), (i) all documents required to be delivered to it pursuant to
Section 3.05(b)(i) of this Agreement are in its possession, (ii) such documents
have been reviewed by it and have not been mutilated, damaged or torn and relate
to such Home Equity Loan and (iii) based on its examination and only as to the
foregoing documents, the information set forth on the Schedule of Home Equity
Loans accurately reflects the information set forth in
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the File. The Trustee shall have no responsibility for reviewing any File except
as expressly provided in this subsection 3.06(a). Without limiting the effect of
the preceding sentence, in reviewing any File, the Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment is in proper form (except to determine if the
Trustee is the assignee), whether any document has been recorded in accordance
with the requirements of any applicable jurisdiction or whether a blanket
assignment is permitted in any applicable jurisdiction, but shall only be
required to determine whether a document has been executed, that it appears to
be what it purports to be, and, where applicable, that it purports to be
recorded. The Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose or that they are other than what they purport to be on their face, nor
shall the Trustee be under any duty to determine independently whether there are
any intervening assignments or assumption or modification agreements with
respect to any Home Equity Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Home Equity Loans identified in the Schedule of Home Equity
Loans, or that any Home Equity Loan does not conform to the description thereof
as set forth in the Schedule of Home Equity Loans, the Trustee shall promptly so
notify the Depositor, each of the Sellers, the Certificate Insurer and the
Owners. In performing any such review, the Trustee may conclusively rely as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's review of the items delivered by each
of the Sellers pursuant to Section 3.05(b)(i) is limited solely to confirming
that the documents listed in Section 3.05(b)(i) have been executed and received,
relate to the Files identified in the Schedule of Home Equity Loans and conform
to the description thereof in the Schedule of Home Equity Loans. Each Seller
agrees to use reasonable efforts to remedy a material defect in a document
constituting part of a File delivered by such Seller of which it is so notified
by the Trustee. If, however, within 60 days after the Trustee's notice to it
respecting such defect the related Seller has not remedied the defect and the
defect materially and adversely affects the interest of the Owners or the
Certificate Insurer in the related Home Equity Loan such Seller will (or will
cause an affiliate of such Seller to) on the next succeeding Monthly Remittance
Date (i) if such Monthly Remittance Date is within two years following the
Startup Day, 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. However, such substitution or purchase must occur within 90 days of the
Trustee's notice of the defect if the defect would prevent the Home Equity Loan
from being a Qualified Mortgage, and no substitution or purchase of a Home
Equity Loan that is not in default or for which no default is imminent shall be
made unless such Seller obtains for the Trustee and Certificate Insurer a REMIC
Opinion, addressed to and acceptable to the Trustee and Certificate Insurer.
(c) In addition to the foregoing, the Trustee also agrees to make a
review during the [6]th month after the Startup Day indicating the current
status of the exceptions previously indicated on the Pool Certification (the
"Final Certification"). After delivery of the Final Certification, the Trustee
and the Servicer shall monitor and upon request from the
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Certificate Insurer provide no less frequently than monthly, updated
certifications indicating the then current status of exceptions, until all such
exceptions have been eliminated.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Depositor of
an executed Delivery Order in the form set forth as Exhibit G hereto, the
Trustee shall execute, authenticate and deliver the Certificates on behalf of
the Trust.
Section 4.02 Sale of Certificates.
At 11:00 a.m. New York City time on the Startup Day (the "Closing"),
at the offices of Dewey Ballantine LLP, 1301 Sixth Avenue, New York, New York
(or at such other location acceptable to the Seller), the Sellers will sell and
convey the Home Equity Loans and the money, instruments and other property
related thereto to the Depositor and the Depositor will sell and convey the Home
Equity Loans and the money, instruments and other property related thereto to
the Trustee, and the Trustee will deliver (i) to the Underwriters the Class A
Certificates and the Class B Certificates with an aggregate Percentage Interest
in each Class equal to 100%, registered in the name of Cede & Co., or in such
other names as the Underwriters shall direct, against payment of the purchase
price thereof by wire transfer of immediately available funds to the Trust and
(ii) to the respective registered Owners thereof, the Class C Certificates and a
Residual Certificate of each Class, each with a Percentage Interest equal to
99.999%, registered in the name of ContiSecurities Holding Corporation and a
Residual Certificate of each Class, each with a Percentage Interest equal to
0.001%, registered in the name of ContiFunding Corporation.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Certificates, the Trustee shall remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by the
Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law) and except for the rights of
the Trustee on behalf of the Owners of the Class A Certificates with respect to
the Certificate Insurance Policies. The Certificates are payable solely from
payments received on or with respect to the Home Equity Loans (other than the
Servicing Fees), moneys in the Principal and Interest Account, earnings on
moneys and the proceeds of property held as a part of the Trust Estate. Each
Certificate entitles the Owner thereof to receive monthly on each Payment Date,
in order of priority of distributions with respect to such Class of Certificates
as set forth in Section 7.03, a specified portion of such payments with respect
to the Home Equity Loans, pro rata in accordance with such Owner's Percentage
Interest.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed canceled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.02 Forms.
The Class A-1, the Class A-2, the Class A-3, the Class A-4, the
Class A-5, the Class A-6, the Class A-7, the Class A-8, the Class A-9-IO, Class
B, Class C and the Class R, Class R-I, Class R-II Certificates shall be in
substantially the forms set forth in Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7,
A-8, A-9-IO, B, C and R, R-I, R-II hereof, respectively, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement or as may in the Depositor's judgment be necessary,
appropriate or convenient to comply, or facilitate compliance, with applicable
laws, and may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to comply with
the rules of any applicable securities laws or as may, consistently herewith, be
determined by the Authorized Officer of the Depositor executing such
Certificates, as evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated by the manual
or facsimile signature of one of the Trustee's Authorized Officers. Upon proper
authentication by the Trustee, the Certificates shall bind the Trust.
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The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as
set forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register")
in which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and the registration
of transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Owners, the Certificate Insurer and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates and the Class B Certificates then Outstanding with the
consent of the Certificate Insurer, or if there are no longer any Class A
Certificates or Class B Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class C Certificates, the Trustee will
give the Owners and the Certificate Insurer prompt written notice of the
appointment of such Registrar and of the location, and any change in the
location, of the Register. In connection with any such appointment the annual
fees of the bank then serving as Trustee and Registrar shall thenceforth be
reduced by the amount to be agreed upon by the Trustee and the Depositor at such
time and the reasonable fees of the Registrar shall be paid, as expenses of the
Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the 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
principal amount or percentage interest of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by
such Owner may be exchanged for other Certificates authorized of like Class and
tenor and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to
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the same benefits under this Agreement as the Certificates surrendered upon such
registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration
of transfer or exchange of Certificates, but the Registrar or Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Offered Certificates be registered so as
to participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Certificate of such Class. Upon initial issuance, the ownership of each such
Certificate shall be registered in the Register in the name of Cede & Co., or
any successor thereto, as nominee for the Depository.
On the Startup Day, the Offered Certificates (other than the Class
A-9IO Certificates) shall be issued in denominations of no less than $1,000 and
integral multiples thereof. On the Startup Day, the Class A-9IO Certificates
shall be issued in denominations of no less than $1,000 (based on the Class
A-9IO Notional Principal Amounts thereof) and integral multiples thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Offered Certificates registered in the Register
in the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Sellers, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Offered Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Sellers, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Offered Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of an Offered Certificate as shown in the Register, of any
notice with respect to the Offered Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Offered Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Offered
Certificates. No Person other than a registered Owner of a Offered Certificate
as shown in the Register shall receive a certificate evidencing such Offered
Certificate.
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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 Offered Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises
the Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Offered Certificates and the Depositor or the Trustee is unable to locate
a qualified successor or (ii) the Depositor at its sole option elects to
terminate the book-entry system through the Depository, the Offered Certificates
shall no longer be restricted to being registered in the Register in the name of
Cede & Co. (or a successor nominee) as nominee of the Depository. At that time,
the Depositor may determine that the Offered Certificates shall be registered in
the name of and deposited with a successor depository operating a global
book-entry system, as may be acceptable to the Depositor and at the Depositor's
expense, or such depository's agent or designee but, if the Depositor does not
select such alternative global book-entry system, then the Offered Certificates
may be registered in whatever name or names registered Owners of Offered
Certificates transferring the Offered Certificates shall designate, in
accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any of the Offered Certificates is registered in the name
of Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Offered Certificates and all notices with respect to such
Offered Certificates shall be made and given, respectively, in the manner
provided in the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (ii) in the case of any mutilated Certificate,
such mutilated Certificate shall first be surrendered to the Trustee, and in the
case of any destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee such security or indemnity as may be reasonably
required by it to hold the Trustee and the Certificate Insurer harmless, then,
in the absence of notice to the Trustee or the Registrar that such Certificate
has been acquired by a bona fide purchaser, and the Trustee shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange
for or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute
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interest in the Trust, and shall be entitled to all the benefits of this
Agreement equally and proportionately with any and all other Certificates of the
same Class duly issued hereunder and such mutilated, destroyed, lost or stolen
Certificate shall not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Trustee and the Certificate Insurer and any agent of the Trustee
may treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever and the Trustee and the
Certificate Insurer or any agent of the Trustee shall not be affected by notice
to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. No Certificate
shall be authenticated in lieu of or in exchange for any Certificate canceled as
provided in this Section, except as expressly permitted by this Agreement. All
canceled Certificates may be held by the Trustee in accordance with its standard
retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership of a
Residual Certificate (whether pursuant to a purchase, a transfer resulting from
a default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Residual Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Residual Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Residual Certificate nor authenticate and make
available any new Residual Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit I.
Each holder of a Residual Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
The Residual Certificates are not transferable except that the Owner of the Tax
Matters Person Residual Interest may assign its interest to another Person who
accepts such assignment and the designation as Tax Matters Person pursuant to
Section 11.18 hereof.
(b) No other sale or other transfer of record or beneficial
ownership of a Class R Certificate shall be made unless such transfer is exempt
from the registration requirements of the Securities Act and any applicable
state securities laws or is made in accordance with said Act and laws. In the
event such a transfer is to be made within three years from the Startup day, (i)
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the Trustee or the Depositor shall require a written opinion of counsel
acceptable to and in form and substance satisfactory to the Depositor and the
Certificate Insurer in the event that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from said
Act and laws or is being made pursuant to said Act and laws, which opinion of
counsel shall not be an expense of the Trustee, the Certificate Insurer or the
Trust Estate, and (ii) the Trustee shall require the Transferee to execute an
investment letter acceptable to and in form and substance satisfactory to each
of the Sellers certifying to the Trustee, the Certificate Insurer and each of
the Sellers and the Certificate Insurer the facts surrounding such transfer,
which investment letter shall not be an expense of the Trustee, the Trust
Estate, the Certificate Insurer or either of the Sellers. The Owner of a Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Depositor, the Certificate Insurer and each of the
Sellers against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
(c) [RESERVED].
(d) No transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter from the transferee of such
Class R Certificate, acceptable to and in form and substance satisfactory to the
Trustee to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA nor a plan or other arrangement subject to
Section 406 of ERISA nor a plan or other arrangement subject to Section 4975 of
the Code (collectively, a "Plan"), nor is acting on behalf of any Plan nor using
the assets of any Plan to effect such transfer. By its acceptance or acquisition
of a Class B, the transferee shall be deemed to have represented that it either
(i) is not a Plan and is not acquiring its interest in such Class B with assets
of a Plan or (ii) is an insurance company acquiring its interest as permitted in
accordance with Prohibited Transaction Exemption 95-60. Notwithstanding anything
else to the contrary herein, any purported transfer of a Certificate to or on
behalf of any Plan without the delivery to the Trustee a representation letter
as described above shall be null and void and of no effect.
(e) No sale or other transfer of any Offered Certificate may be made
to the Depositor, the Sellers or the Servicer. No sale or other transfer of any
Offered Certificate may be made to an affiliate of either Seller unless the
Trustee and the Certificate Insurer shall have been furnished with an opinion of
counsel acceptable to the Trustee and the Certificate Insurer experienced in
federal bankruptcy matters to the effect that such sale or transfer would not
adversely affect the character of the conveyance of the Home Equity Loans to the
Trust as a sale. No sale or other transfer of the Residual Certificate issued to
ContiFunding Corporation on the Startup Day may be transferred or sold to any
Person, except to a person who accepts the appointment of Tax Matters Person
pursuant to Section 11.18 hereof.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part
of its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
related Account(s) and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date or
(ii) if requested by any Owner of (A) an Offered Certificate (other than the
Class A-9IO Certificates) having an original principal balance of not less than
$1,000,000, (B) a Class A-9IO Certificate having an original Notional Amount of
not less than $1,000,000 or (C) Class C or Residual Certificate having a
Percentage Interest of not less than 10% in writing not later than one Business
Day prior to the applicable Record Date (which request does not have to be
repeated unless it has been withdrawn), to such Owner by wire transfer to an
account within the United States designated no later than five Business Days
prior to the related Record Date, made on each Payment Date, in each case to
each Owner of record on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust;
Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account, shall be made by and on behalf of the Trustee, and no amounts so
withdrawn from the Certificate Account, for payments of Certificates except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to
the Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for
the payment of any amount due with respect to any Offered Certificate and
remaining unclaimed by
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the Owner of such Certificate for the period then specified in the escheat laws
of the State of New York after such amount has become due and payable shall be
discharged from such trust and be paid to the Owners of the Class C
Certificates; and the Owner of such Offered Certificate shall thereafter, as an
unsecured general creditor, look only to the Owners of the Class C Certificates
for payment thereof (but only to the extent of the amounts so paid to the Owners
of the Class C Certificates) and all liability of the Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; provided, however,
that the Trustee or such Paying Agent before being required to make any such
payment, may, at the expense of the Trust, cause to be published once, in the
eastern edition of The Wall Street Journal, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not fewer
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Owners of the Class C Certificates. The
Trustee shall, at the direction of the Depositor, also adopt and employ, at the
expense of the Trust, any other reasonable means of notification of such payment
(including but not limited to mailing notice of such payment to Owners whose
right to or interest in moneys due and payable but not claimed is determinable
from the records of the Registrar, the Trustee or any Paying Agent, at the last
address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit
of the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims
of all Persons and parties.
The Trustee shall send copies of any request received from the
Depositor or the Certificate Insurer to take any action pursuant to this Section
6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce
the obligations and rights of the other parties to this Agreement and the
obligations of the Certificate Insurer under each Certificate Insurance Policy;
in addition, the Certificate Insurer or the Owners, by action, suit or
proceeding at law or equity and shall also have the power to enjoin, by action
or suit in equity, and acts or occurrences which may be unlawful or in violation
of the rights of the Certificate Insurer and/or the Owners as such rights are
set forth in this Agreement; provided, however, that nothing in this Section
shall require any action by the Trustee unless the Trustee shall first (i) have
been furnished indemnity satisfactory to it and (ii) when required by this
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Agreement, have been requested by the Certificate Insurer or Owners of a
majority of the Percentage Interests represented by the Offered Certificates
then Outstanding with the consent of the Certificate Insurer or, if there are no
longer any Offered Certificates then outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates; provided, further,
however, that if there is a dispute with respect to payments under a Certificate
Insurance Policy, the Trustee's sole responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to
this Section so long as such instrument does not conflict with this Agreement or
with the Trustee's fiduciary duties, or adversely affect its rights and
immunities hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person
from any of such Person's covenants or obligations under any instrument or
document relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in
performing its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of the
Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other
than amounts properly withheld from such payments under the
Code) or assert any claim against any present or former Owner
by reason of the payment of any taxes levied or assessed upon
any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person
except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except pursuant to
Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement to
be impaired, or permit any Person to be released from any
covenants or obligations with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly
permitted hereby or (B) permit any lien, charge, adverse
claim, security interest, mortgage or other encumbrance to be
created on or extend to or otherwise arise upon or burden the
Trust Estate or any part thereof or any interest therein or
the proceeds thereof.
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Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Agreement, the Insurance and Indemnity
Agreement, the Indemnification Agreement or the Certificate Insurance Policy or
for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder,
unless:
(1) such Owner has previously given written notice to the Depositor, the
Certificate Insurer and the Trustee of such Owner's intention to
institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates and Class B Certificates
then Outstanding or, if there are no Class A or Class B Certificates
then Outstanding, by such percentage of the Percentage Interests
represented by the Class C Certificates, shall have made written
request to the Trustee to institute such proceeding in its own name
as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such proceeding;
(5) as long as any Class A Certificates are Outstanding or any
Reimbursement Amount remains unpaid, the Certificate Insurer
consented in writing thereto (unless the Certificate Insurer is the
party against whom the proceeding is directed); and
(6) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Owners of a majority
of the Percentage Interests represented by the Class A and Class B
Certificates or, if there are no Class A or Class B Certificates
then Outstanding, by such majority of the Percentage Interests
represented by the Class C 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
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applicable Class of Certificates and each conforming to paragraphs (1)-(5) of
this Section 6.07, the Certificate Insurer in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other provision of this
Agreement (unless the Certificate Insurer is the party against whom the
proceeding is directed).
Section 6.08 Unconditional Rights of Owners to Receive
Distributions.
Notwithstanding any other provision in this Agreement, the Owner of
any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or the Owners
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement with respect to
any event described in Section 8.20(a) or (b) shall impair any such right or
remedy or constitute a waiver of any such event or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer or the
Owners, as the case may be.
Section 6.11 Control by Owners.
The Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Offered Certificates then Outstanding
with the consent of the Certificate Insurer or, if there are no longer any Class
A or Class B Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class C 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
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(3) the Trustee may take any other action deemed proper by the Trustee,
as the case may be, which is not inconsistent with such direction;
provided, however, that neither of the Sellers nor the Trustee, as
the case may be, need take any action which it determines might
involve it in liability or may be unjustly prejudicial to the Owners
not so directing.
Section 6.12 Indemnification.
The Depositor agrees to indemnify and hold the Trustee, the Master
Servicer, 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 Master
Servicer, the Certificate Insurer and any Owner may sustain in any way related
to the failure of the Depositor to perform its duties in compliance with the
terms of this Agreement. The Depositor shall immediately notify the Trustee, the
Master Servicer, the Certificate Insurer and each Owner if such a claim is made
by a third party with respect to this Agreement, and the Depositor shall assume
(with the consent of the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, either of the Sellers, the Trustee, the Master Servicer,
the Certificate Insurer and/or any Owner in respect of such claim. The Trustee
may, if necessary, reimburse the Depositor from amounts otherwise distributable
on the Class C Certificates for all amounts advanced by it pursuant to the
preceding sentence, except when the claim relates directly to the failure of the
Depositor to perform its duties in compliance with the terms of this Agreement.
In addition to the foregoing, ContiMortgage agrees to indemnify and hold the
Trustee, the Master Servicer, the Certificate Insurer and each Owner harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and other costs, fees and expenses that the
Trustee, the Master Servicer, the Certificate Insurer and any Owner may sustain
in any way related to the breach by ContiMortgage of its representations and
warranties set forth in Section 3.04(b)(xiii) or (xv) hereof with respect to a
Home Equity Loan if such Home Equity Loan qualifies as a "high cost mortgage"
pursuant to Section 226.32 of the Truth-in-Lending Act, as amended. The
provisions of this Section 6.12 shall survive the termination of this Agreement
and the payment of the outstanding Certificates.
Section 6.13 Access to Names and Addresses of Owners of
Certificates.
(a) If any Owner (for purposes of this Section 6.13, an "Applicant")
applies in writing to the Trustee, and such application states that the
Applicant desires to communicate with other Owners with respect to their rights
under this Agreement or under the Certificates and is accompanied by a copy of
the communication which such Applicant proposes to transmit, then the Trustee
shall, at the expense of such Applicant, within ten (10) Business Days after the
receipt of such application, furnish or cause to be furnished to such Applicant
a list of the names and addresses of the Owners of record as of the most recent
Payment Date.
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(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall
demand payment or delivery of all money and other property payable to or
receivable by the Trustee pursuant to this Agreement or the Certificate
Insurance Policy, including all payments due on the Home Equity Loans in
accordance with the respective terms and conditions of such Home Equity Loans
and required to be paid over to the Trustee by the Servicer or by any
Sub-Servicer. The Trustee shall hold all such money and property received by it,
other than pursuant to or as contemplated by Section 6.02(e) hereof, as part of
the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts.
The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office the Certificate
Account, which is to be held by the Trustee on behalf of the Owners of the
Certificates, the Certificate Insurer and the Trustee.
Section 7.03 Flow of Funds.
(a) The Trustee shall deposit to the Certificate Account, without
duplication, upon receipt, any Insured Payments, the proceeds of any liquidation
of the assets of the Trust, all remittances made to the Trustee pursuant to
Section 8.08(d)(ii) and the Monthly Remittance Amount.
(b) On each Payment Date, the Monthly Remittance Amount plus amounts
described in Section 7.03(a) which are then on deposit in the Certificate
Account (such amount, the "Available Funds") will be applied in the following
order of priority:
(i) First, for the payment of certain fees, concurrently, to the
Trustee, the Trustee Fee, to the Certificate Insurer, the
Premium Amount and to the Master Servicer, the Master
Servicing Fee (as long as the Master Servicer is engaged under
this Agreement);
(ii) Second, for the payment of that Class A Certificate interest,
to the extent of the Available Funds then remaining in the
Certificate Account, plus the interest component of any
related Insured Payment, (such amount, the "Interest Amount
Available"), to the Owners of the Class A Certificates, the
related Current Interest plus the Interest Carry Forward
Amount with respect to each such Class of related Class A
Certificates without any priority among such Class A
Certificates; provided, that if the Interest Amount Available
is not sufficient to make a full distribution of interest with
respect to all Classes of the related Class A Certificates,
then such amount will be distributed among the outstanding
Classes of related Class
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A Certificates pro rata based on the aggregate amount of
interest due on each such Class, and any shortfall will be
carried forward with accrued interest;
(iii) Third, for the payment of Class B Certificate interest, to the
extent of the Available Funds then remaining in the
Certificate Account, to the Owners of the Class B
Certificates, an amount equal to the Current Interest for the
Class B Certificates;
(iv) Fourth, for the payment of the Reimbursement Amount, if any,
then due to the Certificate Insurer, to the extent of the
Available Funds then remaining in the Certificate Account the
lesser of (x) the Reimbursement Amount then owed to the
Certificate Insurer and (y) the Maximum Insurer Current
Reimbursement Amount with respect to such Payment Date;
(v) Fifth, for the payment of the Class A Certificate principal,
to the extent of the Available Funds then remaining in the
Certificate Account plus the principal component of an Insured
Payment, to the Owners of the Class A Certificates, an amount
necessary to reduce the Class A Certificate Principal Balance
of such related Class A Certificates to the Class A Optimal
Balance for such Payment Date;
(vi) Sixth, to fund the Interest Carry Forward Amount, if any, with
respect to the Class B Certificates, to the extent of the
Available Funds then remaining in the Certificate Account;
(vii) Seventh, for the payment of Class B Certificate principal, to
the extent of the amount then remaining in the Certificate
Account, an amount necessary to reduce the Class B Principal
Balance to the Class B Optimal Balance for such Payment Date;
(viii) Eighth, the remaining amount, if any, on deposit in the
Certificate Account with respect to both Loan Groups is the
"Monthly Excess Cashflow Amount", which shall be applied in
the following order of priority:
(a) to fund the Class B Realized Loss Amortization Amount
for such Payment Date;
(b) to the Master Servicer, to the extent of (i) any
unreimbursed Delinquency Advances, (ii) any servicing
transition expenses incurred by the Master Servicer or
its designee in assuming the direct servicing of the
Home Equity Loans and (iii) any other documented costs
and expenses incurred by the Master Servicer;
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(c) to the Servicer to the extent of any unreimbursed
Delinquency Advances or Servicing Advances and any other
costs and expenses incurred by the Servicer;
(d) from the Class C Distribution Amount, to fund the
Class B Available Funds Cap Carry-Forward Amount;
(e) to fund a distribution to Owners of the Class C
Certificates in an amount equal to the remaining Class C
Distribution Amount; and
(f) to fund a distribution to Owners of the Owners of the
Class R Certificates.
(c) The Class A Principal Distribution Amount shall be distributed
on each Payment Date, pari passu, to (i) the Group I Class A Certificates, in an
amount equal to the Group I Principal Distribution Amount and (ii) the Class A-8
Certificates, in an amount equal to the Loan Group II Principal Distribution
Amount.
(d) The Group I Class A Principal Distribution Amount shall be
distributed on each Payment Date in the following order of priority:
(i) first, to the Class A-7 Certificates, in an amount equal to
the lesser of (a) the Class A-7 Principal Distribution Amount
for such Payment Date and (b) the Class A-7 Certificate
Principal Balance on such Payment Date;
(ii) second, to the to the Class A-1 through the Class A-6
Certificates, sequentially, in the amounts necessary to reduce
their respective Certificate Principal Balances to zero; and
(iii) third, to the Class A-7 Certificates, without regard to the
Class A-7 Principal Distribution Amount, any remaining amount
of the Group I Principal Distribution Amount for such Payment
Date, until the Class A-7 Certificate Principal Balance has
been reduced to zero.
(e) The Group II Class A Principal Distribution Amount is required
to be distributed on each Payment Date to the Class A-8 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.
(f) Notwithstanding the foregoing, on any Payment Date on which the
Class B Certificate Principal Balance and the Overcollateralization Amount is
zero and a Certificate Insurer Default has occurred and is continuing, any
amounts of principal payable to the Owners of the Class A Certificates shall be
distributed pro rata without regard to order of priority.
(g) For federal income tax purposes amounts paid to the Owners of
the Class B Certificates on account of the Class B Available Funds Cap
Carry-Forward Amount shall be deemed first to have been paid to the Owners of
the Class C Certificates as a distribution of the Class C Distribution Amount.
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(h) On each Payment Date, if the Class B Certificate Principal
Balance has not been reduced to zero, the Trustee shall allocate the excess of
the Aggregate Certificate Principal Balance over the Combined Loan Balance as of
the end of the related Remittance Period to reduce such Class B Certificate
Principal Balance, but not below zero.
(i) [Reserved];
(j) Notwithstanding anything above, the aggregate amounts
distributed on all Payment Dates to the Owners of the Certificates on account of
principal shall not exceed the original Certificate Principal Balance of the
related Certificates.
(k) On any Payment Date during the continuance of any Certificate
Insurer Default any amounts otherwise payable to the Certificate Insurer as
Premium Amounts shall be retained in the Certificate Account.
(l) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of the Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Certificate Account and shall distribute such Insured
Payments, or the proceeds thereof as provided in paragraph (b) above.
(m) 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 monies received pursuant to the terms of the Certificate
Insurance Policy shall not be considered payment of such Certificates from the
Trust and shall not result in the payment of or the provision for the payment of
the principal of or interest on such Certificates within the meaning of Section
7.03. The Depositor, the Servicer and the Trustee acknowledge, and each Owner by
its acceptance of a Certificate agrees, that without the need for any further
action on the part of the Certificate Insurer, the Depositor, the Servicer, the
Trustee or the Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest on any
Class A Certificates to the Owners of such Certificates, the Certificate Insurer
will be fully subrogated to the rights of such Owners to receive such principal
and interest together with any interest thereon of the applicable Pass-Through
Rate for such Class from the Trust and (b) the Certificate Insurer shall be paid
such principal and interest only from the sources and in the manner provided
herein for the payment of such principal and interest.
It is understood and agreed that the intention of the parties is
that the Certificate Insurer shall not be entitled to reimbursement on any
Payment Date for amounts previously paid by it unless on such Payment Date the
Owners of the Class A Certificates shall also have received the full amount of
the related Class A Distribution Amounts for such Payment Date.
The Trustee or Paying Agent shall (i) receive as attorney-in-fact of
each Owner of Class A Certificates any Insured Payment from the Certificate
Insurer and (ii) disburse the same to the Owners of the related Class A
Certificates as set forth in this Section 7.03. Insured Payments disbursed by
the Trustee or Paying Agent from proceeds of a Certificate Insurance Policy
shall not be considered payment by the Trust, nor shall such payments discharge
the obligation of the Trust with respect to such Class A Certificates and the
Certificate Insurer shall be entitled to receive the related Reimbursement
Amount pursuant to Section 7.03(b)(v) hereof.
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The rights of the Owners to receive distributions from the proceeds
of the Trust Estate and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Residual Certificates to receive distributions in
respect of Residual Certificates, and all ownership interests of the Owners of
the Residual Certificates in and to such distributions, shall be subject and
subordinate to the preferential rights of the holders of the Offered
Certificates to receive distributions thereon and the ownership interests of
such Owners in such distributions, as described herein. In accordance with the
foregoing, the ownership interests of the Owners of the Residual Certificates in
amounts deposited in the Accounts from time to time shall not vest unless and
until such amounts are distributed in respect of the Residual Certificates in
accordance with the terms of this Agreement. Notwithstanding anything contained
in this Agreement to the contrary, the Owners of the Residual Certificates shall
not be required to refund any amount properly distributed on the Residual
Certificates pursuant to this Section 7.03.
Section 7.04 [Reserved].
Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion
of any Account held by the Trustee for the benefit of the Owners and the
Certificate Insurer shall be invested and reinvested by the Trustee in the name
of the Trustee for the benefit of the Owners and the Certificate Insurer, as
directed in writing by the Depositor, in one or more Eligible Investments
bearing interest or sold at a discount (provided, that the proceeds of the
Certificate Insurance Policy shall not be so invested). The bank serving as
Trustee or any affiliate thereof may be the obligor on any investment which
otherwise qualifies as an Eligible Investment. No investment in any Account
shall mature later than the Business Day immediately preceding the next Payment
Date.
(b) If any amounts are needed for disbursement from any Account held
by the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any
way be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any loss on any Eligible Investment included therein
(except to the extent that the bank serving as Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held
by the Trustee, in accordance with the written instructions delivered to the
Trustee on the Startup Day, but only in one or more Eligible Investments bearing
interest or sold at a discount.
If the Depositor shall have failed to give investment directions to
the Trustee then the Trustee shall invest in money market funds described in
Section 7.07(h); to be redeemable without penalty no later than the Business Day
immediately preceding the next Payment Date.
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(e) All income or other gain from investments in any Account held by
the Trustee shall be for the account of the Owners of the Class R-I Certificates
and distributed to the Owners of the Class R-I Certificates immediately prior to
any distribution under Section 7.03 hereof on any Payment Date, and any loss
resulting from such investments shall be for the account of the Servicer and
promptly upon the realization of such loss the Servicer shall contribute funds
in an amount equal to such loss to such Account.
Section 7.06 Payment of Trust Expenses.
(a) The Trustee shall make demand on ContiMortgage to pay the amount
of the expenses of the Trust (other than payments of premiums to the Certificate
Insurer) (including Trustee's fees and expenses not covered by Section
7.03(b)(i)) and ContiMortgage shall promptly pay such expenses directly to the
Persons to whom such amounts are due.
(b) The Depositor shall pay directly the reasonable fees and
expenses of counsel to the Trustee.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FannieMae senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; and consolidated senior debt obligations of any
Federal Home Loan Banks; provided, that any such investment shall be rated (or
have an implied rating) in one of the two highest ratings categories by each
Rating Agency;
(c) Federal funds, certificates of deposit, time deposits, and
bankers' acceptances (having original maturities of not more than 365 days) of
any domestic bank, the short-term debt obligations of which have been rated as
follows by at least Moody's and Standard & Poor's: A-1 or better by Standard &
Poor's and P-1 by Moody's and F-1 or better, if rated by Fitch;
(d) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is rated as follows by at least Moody's and
Standard & Poor's: Baa3 or better by Moody's and A by each of Standard & Poor's
and by Fitch, if rated by Fitch), which has combined capital, surplus and
undivided profits of at least $50,000,000 which deposits are insured by the FDIC
and held up to the limits insured by the FDIC;
(e) Investment agreements approved by the Certificate Insurer,
provided:
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(i) The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations
rated as follows by at least Moody's and Standard & Poor's:
Aa2 or better by Moody's and AA or better by Standard & Poor's
and by Fitch, if rated by Fitch, and
(ii) Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time
prior to the withdrawal date), and
(iii) The agreement is not subordinated to any other obligations of
such insurance company or bank, and
(iv) The same guaranteed interest rate will be paid on any future
deposits made pursuant to such agreement, and
(v) The Trustee receives an opinion of counsel that such agreement
is an enforceable obligation of such insurance company or
bank;
(f) Repurchase agreements collateralized by securities described in
(a) above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
short-term or long-term obligation rated, as follows by at least Moody's and
Standard & Poor's: P-1 or Aa2, respectively, or better by Moody's, A-1 or AA,
respectively or better by Standard & Poor's and F-1 or AA, respectively, or
better by Fitch, if rated by Fitch, provided:
(i) A master repurchase agreement or specific written repurchase
agreement governs the transaction, and
(ii) The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent
for the Trustee, and such third party is (a) a Federal Reserve
Bank or (b) a bank which is a member of the FDIC and which has
combined capital, surplus and undivided profits of not less
than $125 million, or (c) a bank approved in writing for such
purpose by the Certificate Insurer and the Trustee shall have
received written confirmation from such third party that it
holds such securities, free and clear of any lien, as agent
for the Trustee, and
(iii) 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
(iv) The repurchase agreement has a term of thirty days or less and
the Trustee will value the collateral securities no less
frequently than weekly and will
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liquidate the collateral securities if any deficiency in the
required collateral percentage is not restored within two
business days of such valuation, and
(v) The fair market value of the collateral securities in relation
to the amount of the repurchase obligation, including
principal and interest, is equal to at least 104% and such
collateral securities must be valued weekly and
market-to-market at current market price plus accrued
interest.
(g) Commercial paper (having original maturities of not more than
270 days) rated in the highest short-term rating categories of each of Moody's
and Standard & Poor's and Fitch, if rated by Fitch; and
(h) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated as follows by at least Moody's and Standard & Poor's: AAAm or
AAAm-G by Standard & Poor's, Aaa by Moody's, and AAA, if rated by Fitch;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) Trustee shall determine whether an Insured Payment will be
required to be made by the Certificate Insurer on the following Payment Date and
if so then no later than 12:00 noon on the second Business Day immediately
preceding the related Payment Date the Trustee shall furnish the Certificate
Insurer and the Depositor with a completed Notice in the form set forth as
Exhibit A to the Certificate Insurance Policy Agreement. The Notice shall
specify the amount of the Insured Payment and shall constitute a claim for an
Insured Payment pursuant to the Certificate Insurance Policy.
(b) By 12:00 noon New York time, on the Business Day preceding each
Payment Date (or such earlier period as shall be agreed by the Depositor and the
Trustee), the Trustee shall notify (subject to the terms of Section 10.03(j)
hereof, based solely on information provided to the Trustee by the Servicer) the
Depositor, each of the Sellers, the Master Servicer, the Certificate Insurer and
each Owner of the following information with respect to the next Payment Date
(which notification may be given by facsimile or by telephone promptly confirmed
in writing):
(i) The aggregate amount then on deposit in the Certificate Account;
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(ii) The Class A Distribution Amount, with respect to each Class
individually and all Classes of the Class A Certificates in
the aggregate, on the next Payment Date and the related Class
B Distribution Amount;
(iii) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(iv) The application of the amounts described in clause (i)
preceding to the allocation and distribution of the Class A
Distribution Amounts, and the Class B Distribution Amount, on
such Payment Date in accordance with Section 7.03 hereof;
(v) The Certificate Principal Balance of each Class of the Class A
and Class B Certificates, the Class A-9IO Notional Principal
Amount, the aggregate amount of the principal of each Class of
Certificates to be paid on such Payment Date and the remaining
Certificate Principal Balance (or Class A-9IO Notional
Principal Amount) of each Class of Certificates following any
such payment;
(vi) The amount, if any, of any Realized Losses for the related
Remittance Period in the aggregate and for each of the Loan
Group I and Loan Group II and the amount of Cumulative
Realized Losses as of the last day of the related Remittance
Period; and
(vii) The Six-Month Rolling Average Excess Spread and the Six-Month
Rolling Average 90+ Day Delinquency Rate.
Section 7.09 Reports by Trustee to Owners and the Certificate
Insurer.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor, each Owner, the Certificate Insurer, the Master Servicer, the
Underwriters and the Rating Agencies:
(i) the amount of the distribution with respect to the each Class
of Certificates (based on a Certificate in the original
principal amount of $1,000;
(ii) the amount of such distribution allocable to principal on the
Home Equity Loans in both Loan Groups, separately identifying
the aggregate amount of any Prepayments, Loan Purchase Price
amounts or other recoveries of principal included therein and
any Aggregate Group Extra Principal Distribution Amount;
(iii) the amount of such distribution allocable to interest on the
Home Equity Loans in each Loan Group (based on a Certificate
in the original principal amount of $1,000);
(iv) the Interest Carry Forward Amount for each Class;
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(v) the principal amount and the Planned Principal Balance, if
any, of each Class of the Offered Certificates (based on a
Certificate in the original principal amount of $1,000) which
will be outstanding after giving effect to any payment of
principal on such Payment Date;
(vi) the aggregate Loan Balance of all Home Equity Loans in both
Loan Groups and in each Loan Group, as of the last day of the
related Remittance Period;
(vii) based upon information furnished by the Seller such
information as may be required by Section 6049(d)(7)(C) of the
Code and the regulations promulgated thereunder to assist the
Owners in computing their market discount;
(viii) the total of any Substitution Amounts or Loan Purchase Price
amounts included in such distribution with respect to both
Loan Groups and in each Loan Group;
(ix) the weighted average Coupon Rate of the Home Equity Loans;
(x) the weighted average Coupon Rate of both Loan Groups and in
each Loan Group;
(xi) the weighted average remaining term of both Loan Groups and in
each of Loan Group;
(xii) whether a Cumulative Realized Loss Trigger Event and/or the
Cumulative Realized Loss Termination Trigger Event has
occurred;
(xiii) the Targeted Overcollateralization Amount,
Overcollateralization Amount, Class A Optimal Balance and
Class B Optimal Balance;
(xiv) the amount of any Applied Realized Loss Amount, Realized Loss
Amortization Amount and Unpaid Realized Loss Amount for the
Class B Certificates as of the close of such Payment Date;
(xv) the Pass-Through Rate for the Class A-8 Certificates
applicable to the related Accrual Period and if the
Pass-Through Rate was based on the applicable Available Funds
Cap, that such Pass-Through Rate would have been in the
absence thereof;
(xvi) the Available Funds Cap for each Offered Certificate for such
Payment Date, if any applies;
(xvii) the amount of any Insured Payment included in the
distribution to Owners of Class A Certificates;
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(xviii) any Reimbursement Amount paid on such Payment Date and any
Reimbursement Amount remaining unpaid;
(xix) such other information as the Certificate Insurer may
reasonably request with respect to Home Equity Loans that are
Delinquent in Loan Group I and Loan Group II;
(xx) the three largest Home Equity Loan Balances outstanding; and
(xxi) the Class B Available Funds Cap Carry-Forward Amount.
The Servicer shall provide to the Trustee the information described
in Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (ii), (vii), (viii), (ix), (xi), (xii),
(xiii) and (xiv) shall be based solely upon information contained in the monthly
servicing report provided by the Servicer to the Trustee pursuant to Section
8.01 hereof.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, the Certificate Insurer, the Master Servicer, each Owner, the
Underwriters and the Rating Agencies, together with the information described in
Subsection (a) preceding, the following information with respect to the Home
Equity Loans which is hereby required to be prepared by the Servicer and
furnished to the Trustee for such purpose on or prior to the related Monthly
Remittance Date:
(i) the number and aggregate principal balances of all Home Equity
Loans in each Loan Group that are: (i) 30-59 days delinquent,
(ii) 60-89 days delinquent and (iii) 90 or more days
delinquent, as of the close of business on the last business
day of the calendar month next preceding the Payment Date and
the aggregate number and aggregate Loan Balance of such Loans;
(ii) the status and the number and dollar amounts of all Home
Equity Loans in each Loan Group that are in foreclosure
proceedings as of the close of business on the last business
day of the calendar month next preceding such Payment Date;
(iii) the number of Mortgagors and the Loan Balances of the related
Mortgages for all Home Equity Loans, and in each Loan Group
involved in bankruptcy proceedings as of the close of business
on the last business day of the calendar month next preceding
such Payment Date;
(iv) the existence and status of any Properties for all Home Equity
Loans, and in each Loan Group as to which title has been taken
in the name of, or on behalf of the Trustee, as of the close
of business of the last business day of the month next
preceding the Payment Date;
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(v) the book value of any real estate acquired through foreclosure
or grant of a deed in lieu of foreclosure for all Home Equity
Loans, and in each Loan Group as of the close of business on
the last business day of the calendar month next preceding the
Payment Date;
(vi) the amount of Cumulative Realized Losses for all Home Equity
Loans, and in each Loan Group;
(vii) the aggregate Loan Balance of 90+ Day Delinquent Loans for all
Home Equity Loans and the Home Equity Loans in Loan Group I
and Loan Group II;
(viii) the Three-Month Rolling Average 90+ Day Delinquency Rate for
all Home Equity Loans and the Home Equity Loans in Loan Group
I and Loan Group II, the Six-Month Rolling Average Excess
Spread and whether a Cumulative Realized Loss Trigger Event is
in effect; and
(ix) the aggregate Loan Balance of Optional Buyout Loans with
respect to Loan Group I and Loan Group II.
(c) In addition, on each Payment Date the Trustee will distribute to
the Depositor, together with the information described in Subsection (a) and (b)
preceding, the following information with respect to all the Home Equity Loans
by each product type: Fixed Rate Loans, 6 Month LIBOR Loans, 2/28 Mortgage
Loans, 3/27 Loans, Balloon Loans, which information is hereby required to be
prepared by the Servicer and furnished to the trustee on or prior to the related
Monthly Remittance Date:
(i) the number and aggregate principal balances of all Home Equity
Loans with respect to each product type as of the close of
business on the last business day of the calendar month next
preceding the Payment Date;
(ii) the amount received from scheduled principal payments with
respect to each product type as of the close of business on
the last business day of the calendar month next preceding the
Payment Date;
(iii) the amount of Prepayments received from all Home Equity Loans
separately identifying the aggregate amount received from:
a. Curtailments (or partial prepayments)
b. Voluntary Payoffs
c. Involuntary Payoffs (the amount of Net Liquidation
Proceeds applicable to the unpaid principal balance from
the loan)
d. loans purchased from the Trust
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with respect to each product type as of the close of business on the last
business day of the calendar month next preceding the Payment Date;
(iv) the number and principal balance with respect to each product
type of all Home Equity Loans that are a. 30 - 59 days
delinquent, b. 60-89 days delinquent, c. 90 or more days
delinquent as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(v) the number and principal balance with respect to each product
type of all Home Equity Loans that are in foreclosure
proceedings as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(vi) the number and principal balance with respect to each product
type of all Home Equity Loans that are in bankruptcy
proceedings as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(vii) the number and principal balance with respect to each product
type of all Home Equity Loans that were acquired through
foreclosure or grant of a deed in lieu of foreclosure as of
the close of business on the last business day of the calendar
month next preceding the Payment Date;
(viii) the number and principal balance with respect to each product
type of all Home Equity Loans that are in bankruptcy
proceedings as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(ix) the number and principal balance with respect to each product
type of all Home Equity Loans that are subject to loss
mitigation as of the close of business on the last business
day of the calendar month next preceding the Payment Date;
(x) the amount of current and cumulative realized losses
(separately identifying principal and interest losses) from
following resolution types:
a. REO Property sold
b. Short Sale
c. Deed in Lieu
d. No equity second mortgages
e. Other
as of the close of business on the last business day of the calendar month
next preceding the Payment Date;
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(xi) the number and principal amount with respect to each product
type of all Home Equity Loans of Chapter 13 Loans separately
identifying:
a. those Chapter 13 Loans that are currently meeting
their payment plan;
b. those Chapter 13 Loans that are 1 to 2 payments
behind their payment plan;
c. those Chapter 13 Loans that are 2 to 3 payments
behind their payment plan;
d. and, those Chapter 13 Loans that are greater than 3
payments behind their payment plan;
(xii) the weighted average remaining term to maturity with respect
to each product type of all Home Equity Loans as of the close
of business on the last Business Day of the calendar month
next preceding the Payment Date;
(xiii) the weighted average Coupon Rate with respect to each product
type of all Home Equity Loans as of the close of business on
the last Business Day of the calendar month next preceding the
Payment Date;
(d) The Servicer shall furnish to the Trustee, to each Owner of a
Class B Certificate and to the Certificate Insurer, in each case during the term
of this Agreement, such periodic, special, or other reports or information not
specifically provided for herein, as may be necessary, reasonable, or
appropriate with respect to the Trustee or the Certificate Insurer, as the case
may be, or otherwise with respect to the purposes of this Agreement, all such
reports or information to be provided by and in accordance with such applicable
instructions and directions as the Trustee or the Certificate Insurer may
reasonably require; provided, that the Servicer shall be entitled to be
reimbursed by the requesting party for the fees and actual expenses associated
with providing such reports, if such reports are not generally produced in the
ordinary course of business.
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, each of the Sellers,
the Underwriters, the Certificate Insurer and each Owner, with respect to the
amount on deposit in the Certificate Account and the identity of the investments
included therein, as the Depositor, the Certificate Insurer or the Seller may
from time to time request. Without limiting the generality of the foregoing, the
Trustee shall, at the request of the Depositor, the Certificate Insurer or
either of the Sellers transmit promptly to the Depositor, the Certificate
Insurer and each of the Sellers copies of all accounting of receipts in respect
of the Home Equity Loans furnished to it by the Servicer and shall notify the
Certificate Insurer and each of the Sellers if any Monthly Remittance Amount has
not been received by the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each
Owner with respect to any written notices it may from time to time receive which
provide an Authorized
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Officer with actual knowledge that any of the statements set forth in Section
3.04(b) hereof are inaccurate.
Section 7.11 Preference Payments.
The Certificate Insurer will pay any Insured Payment that is a
Preference Amount on the Business Day following receipt on a Business Day by the
Fiscal Agent of (i) a certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the Certificate
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Certificate Insurer, irrevocably
assigning to the Certificate Insurer all rights and claims of the Owners
relating to or arising under the Class A Certificates against the debtor which
made such preference payment or otherwise with respect to such preference
payment and (iv) appropriate instruments to effect the appointment of the
Certificate Insurer as agent for such Owner in any legal proceeding related to
such preference payment, such instruments being in a form satisfactory to the
Certificate Insurer, provided that if such documents are received after 12:00
noon New York City time on such Business Day, they will be deemed to be received
on the following Business Day. Such payment shall be disbursed to the receiver
or trustee in bankruptcy named in the final court order of the court exercising
jurisdiction on behalf of the Owner and not to any Owner directly unless such
Owner has returned principal or interest paid on the Class A Certificates to
such receiver or trustee in bankruptcy in which case payment will be disbursed
to the Owner.
Each Owner of a Class A Certificate, by its purchase of Class A
Certificates, the Servicer and the Trustee hereby agree that the Certificate
Insurer may at any time during the continuation of any proceeding relating to a
preference claim direct all matters relating to such preference claim,
including, without limitation, the direction of any appeal of any order relating
to such preference claim and the posting of any surety or performance bond
pending any such appeal. In addition and without limitation of the foregoing,
the Certificate Insurer shall be subrogated to the rights of the Servicer, the
Master Servicer, the Trustee and the Owner of each Class A Certificate in the
conduct of any such preference claim, including, without limitation, all rights
of any party to an adversary proceeding action with respect to any court order
issued in connection with any such preference claim.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and 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.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have all the rights and powers of the Servicer with respect
to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Trustee to execute and deliver, and may be
authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) any and all instruments
of satisfaction or cancellation or of partial or full release or discharge and
all other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer; and provided further, however, that Section
8.14(a) shall constitute an authorization from the Trustee to the Servicer to
execute an instrument of satisfaction (or assignment of mortgage without
recourse) with respect to any Home Equity Loan paid in full (or with respect to
which payment in full has been escrowed). The Trustee shall execute any
documentation furnished to it by the Servicer for recordation by the Servicer in
the appropriate jurisdictions as shall be necessary to effectuate the foregoing.
Subject to Sections 8.13 and 8.14, the Trustee shall execute any authorizations
and other documents as the Servicer or such Sub-Servicer shall reasonably
request that are furnished to the Trustee to enable the Servicer and such
Sub-Servicer to carry out their respective servicing and administrative duties
hereunder.
The Servicer shall give prompt notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
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Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described in
the FannieMae Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Note, the Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and Delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Home Equity Loans with any institution that is
acceptable to the Certificate Insurer and the Master Servicer and that is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Sub-Servicing Agreement and (x) has (i) been designated
an approved seller-servicer by FHLMC or FannieMae for second mortgage loans and
(ii) has equity of at least $5,000,000, as determined in accordance with
generally accepted accounting principles or (y) is a Servicer Affiliate. The
Servicer shall give notice to the Trustee, the Certificate Insurer, the Master
Servicer and the Rating Agencies of the appointment of any Sub-Servicer. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Home Equity Loans when any Sub-Servicer has received such payments.
Each Sub-Servicer shall be required to service the Home Equity Loans in
accordance with this Agreement and any such Sub-Servicing Agreement shall be
consistent with and not violate the provisions of this Agreement. Each
Sub-Servicing Agreement shall provide that the Master Servicer or other
successor Servicer shall have the option to terminate such agreement without
payment of any fees if the original Servicer is terminated or resigns.
(b) The Servicer and the Trust shall execute, by joinder with the
prior written consent of the Certificate Insurer, the Sub-Servicing Agreement
dated as of November 1, 1998 among the Servicer, the Trustee, Continental Grain
Company and the other trusts listed therein (such Sub-Servicing Agreement, the
"Liquidity Agreement"). Without limitation upon any of the Servicer's or Master
Servicer's obligations hereunder, the Master Servicer hereby consents to the
foregoing arrangement.
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Section 8.04 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing
Agreement in accordance with the terms and conditions of such Sub-Servicing
Agreement and to either itself directly service the related Home Equity Loans or
enter into a Sub-Servicing Agreement with a successor Sub-Servicer which
qualifies under Section 8.03.
Section 8.05 Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer (except Manufacturers and Traders Trust Company if
it is required to succeed the Servicer hereunder) agrees to indemnify and hold
the Trustee, the Master Servicer, 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, the Master Servicer and any Owner may
sustain in any way related to the failure of the Servicer to perform its duties
and service the Home Equity Loans in compliance with the terms of this
Agreement. The Servicer shall immediately notify the Trustee, the Certificate
Insurer, the Master Servicer 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, the Master Servicer and the Certificate Insurer) the defense of
any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Servicer, the Trustee, the Certificate
Insurer, the Master Servicer and/or Owner in respect of such claim. The Trustee
may, if necessary, reimburse the Servicer from amounts otherwise distributable
on the Class C Certificates for all amounts advanced by it pursuant to the
preceding sentence except when the claim relates directly to the failure of the
Servicer to service and administer the Home Equity Loans in compliance with the
terms of this Agreement. The provisions of this Section 8.05 shall survive the
termination of this Agreement and the payment of the outstanding Certificates.
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee, Certificate Insurer or the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee, the Certificate
Insurer, the Master Servicer 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.
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Notwithstanding the foregoing, the Trust and the Trustee shall be
parties to, and have the rights set forth in, the Liquidity Agreement, as set
forth therein.
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 Master Servicer, the Trustee or other successor Servicer pursuant to
Section 8.20, it is understood and agreed that the Servicer's rights and
obligations under any Sub-Servicing Agreement then in force between the Servicer
and a Sub-Servicer shall be assumed simultaneously by the Master Servicer, the
Trustee or other successor Servicer without act or deed on the part of such
Person; provided, however, that the successor Servicer may terminate the
Sub-Servicer as provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Master
Servicer, the Trustee or other successor Servicer, but at the expense of the
Servicer, deliver to the assuming party documents and records relating to each
Sub-Servicing Agreement and an accounting of amounts collected and held by it
and otherwise use its best reasonable efforts to effect the orderly and
efficient transfer of the Sub-Servicing Agreements to the assuming party.
Section 8.08 Principal and Interest Account.
(a) The Servicer shall establish and maintain at one or more
Designated Depository Institutions the Principal and Interest Account to be held
as a trust account. Each Principal and Interest Account shall be identified on
the records of the Designated Depository Institution as follows: "Manufacturers
and Traders Trust Company, as Trustee under the Pooling and Servicing Agreement
dated as of March 1, 1999." If the institution at any time holding the Principal
and Interest Account ceases to be eligible as a Designated Depository
Institution hereunder, then the Servicer shall, within 30 days, be required to
name a successor institution meeting the requirements for a Designated
Depository Institution hereunder. If the Servicer fails to name such a successor
institution, then the Principal and Interest Account shall thenceforth be held
as a trust account with a qualifying Designated Depository Institution. The
Servicer shall notify the Trustee, the Master Servicer, the Certificate Insurer
and the Owners if there is a change in the name, account number or institution
holding the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all
receipts required pursuant to Subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held
(i) uninvested (up to the limits insured by the FDIC) or (ii) invested in
Eligible Investments. Any investments of funds in the Principal and Interest
Account shall mature or be withdrawable at par on or prior to the immediately
succeeding Monthly Remittance Date. The Principal and Interest Account shall be
held in trust in the name of the Trustee for the benefit of the Owners and the
Certificate Insurer. Any investment earnings on funds held in the Principal and
Interest Account shall be for the account of the Servicer and may only be
withdrawn from the Principal and Interest Account by the Servicer immediately
following the remittance of the Monthly Remittance Amount (and
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the Monthly Excess Interest Amount included therein) by the Servicer. Any
investment losses on funds held in the Principal and Interest Account shall be
for the account of the Servicer and promptly upon the realization of such loss
shall be contributed by the Servicer to the Principal and Interest Account. Any
references herein to amounts on deposit in the Principal and Interest Account
shall refer to amounts net of such investment earnings.
(c) The Servicer shall deposit to the Principal and Interest Account
on the Business Day after receipt all principal collections on the Home Equity
Loans received, and after the Cut-Off Date including any Prepayments and Net
Liquidation Proceeds, other recoveries or amounts related to the Home Equity
Loans received by the Servicer and any income from REO Properties, and all
interest accrued after February 28, 1999, but net of (i) the Servicing Fee with
respect to each Home Equity Loan and other servicing compensation to the
Servicer as permitted by Section 8.15 hereof, (ii) principal collected on or
prior to the Cut-Off Date and interest accrued on or prior to February 28, 1999,
(iii) Net Liquidation Proceeds to the extent such Net Liquidation Proceeds
exceed the sum of (I) the Loan Balance of the related Home Equity Loan
immediately prior to liquidation, (II) accrued and unpaid interest on such Home
Equity Loan (net of the Servicing Fee) to the date of such liquidation, and
(III) any Realized Losses incurred during the related Remittance Period, (iv)
reimbursements for Delinquency Advances and (v) reimbursements for amounts
deposited in the Principal and Interest Account representing payments of
principal and/or interest on a Note by a Mortgagor which are subsequently
returned by a depository institution as unpaid (all such net amount herein
referred to as "Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from
the amounts on deposit in the Principal and Interest Account, with respect to
the Home Equity Loans, only in the following priority and for the following
purposes:
(A) to withdraw interest paid with respect to any Home Equity Loans that
had accrued for periods prior to March 1, 1999;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to reimburse itself pursuant to Section 8.09(a) for unrecovered
Delinquency Advances and Servicing Advances;
(D) to withdraw amounts that have been deposited to the Principal and
Interest Account in error; and
(E) to clear and terminate the Principal and Interest Account following
the termination of the Trust pursuant to Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds
available in immediately available funds, without duplication, the
Daily Collections allocable to a Remittance Period not later than
the related Monthly Remittance Date and Loan Purchase Prices and
Substitution Amounts two Business Days following the related
purchase or substitution, and (b) on each Monthly Remittance Date,
deliver to the Master
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Servicer, the Trustee and the Certificate Insurer a monthly
servicing report, with respect to the Home Equity Loans, containing
the following information: principal and interest collected,
scheduled interest, Liquidated Loans, summary and detailed
delinquency reports, Liquidation Proceeds and other similar
information concerning the servicing of the Home Equity Loans as may
reasonably be requested by the Master Servicer. In addition, the
Servicer shall inform the Master Servicer, the Trustee and the
Certificate Insurer on each Monthly Remittance Date with respect to
the Home Equity Loans of the amounts of any Loan Purchase Prices or
Substitution Amounts so remitted during the related Remittance
Period.
(iii) The Servicer shall provide to the Trustee the information described
in Section 8.08(d)(ii)(b) and in Section 7.09(c) to enable the
Trustee to perform its reporting requirements under Section 7.09 and
the Trustee shall forward such information to the Underwriters
within five Business Days of receipt thereof.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) If, on any Monthly Remittance Date, the interest component (net
of the Servicing Fee) of any Mortgagor payment due during the preceding
Remittance Period has not yet been received, the Servicer or the Master
Servicer, to the extent described in Section 12.01(c) hereof, shall make an
advance of such amount to the Certificate Account, but only to the extent that
the Servicer, or Master Servicer, as applicable, reasonably believes that the
amount of such advance will be recoverable from subsequent collections on the
related Home Equity Loan, and would increase Net Liquidation Proceeds on such
Home Equity Loan, were such Home Equity Loan to continue to be delinquent and
ultimately liquidated. Such amounts of the Servicer's, or Master Servicer's, as
applicable, own funds so advanced are "Delinquency Advances," and include but
are not limited to any amount advanced due to the invocation by a Mortgagor of
the relief provisions provided by the Soldiers' and Sailors' Civil Relief Act of
1940.
The Servicer, or Master Servicer, as applicable, shall be permitted
to fund its payment of Delinquency Advances on any Business Day and to reimburse
itself for any Delinquency Advances paid from the Servicer's own funds from
collections on any Home Equity Loan deposited to the Principal and Interest
Account subsequent to the related Remittance Period and shall deposit into the
Principal and Interest Account with respect thereto (i) collections from the
Mortgagor whose Delinquency gave rise to the shortfall which resulted in such
Delinquency Advance and (ii) Net Liquidation Proceeds recovered on account of
the related Mortgage Loan to the extent of the amount of aggregate Delinquency
Advances related thereto. If not previously reimbursed therefor, the Servicer
shall recover Delinquency Advances pursuant to Section 7.03(b)(viii)(c) hereof,
and the Master Servicer shall recover Delinquency Advances pursuant to Section
7.03(b)(viii)(b).
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, the cost of (i) Preservation Expenses, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of REO Property and (iv) advances required by Section 8.13(a), but
the Servicer is only required to pay such costs and expenses to the extent the
Servicer
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reasonably believes such costs and expenses will be recoverable from
the related Home Equity Loan. Each such expenditure will constitute a "Servicing
Advance". The Servicer may recover Servicing Advances (x) from the Mortgagors to
the extent permitted by the Home Equity Loans or, if not recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(e)(iii). The Servicer shall be entitled to recover
the Servicing Advances from the aforesaid Liquidation Proceeds prior to the
payment of the Liquidation Proceeds to any other party to this Agreement. Except
as provided in the previous sentence, in no case may the Servicer recover
Servicing Advances from the principal and interest payments on any Home Equity
Loan or from any amounts relating to any other Home Equity Loan, except as
provided in Section 7.03(b)(viii)(c).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If Prepayment of a Home Equity Loan occurs during any calendar
month and if the amount received in connection therewith represents less than a
full month's interest, any difference between the interest collected from the
Mortgagor and the full month's interest at the Coupon Rate less the Servicing
Fee ("Compensating Interest") that is due shall be deposited by the Servicer
(but not in excess of the aggregate Servicing Fee for the related Remittance
Period) to the Principal and Interest Account on the next succeeding Monthly
Remittance Date and shall be included in the Monthly Remittance to be made
available to the Trustee on such Monthly Remittance Date. The Servicer shall not
be entitled to reimbursement for amounts paid as Compensating Interest.
(b) The Servicer, and in the absence of exercise thereof by the
Servicer, the Certificate Insurer, has the right and the option, but not the
obligation, for administrative convenience, to purchase for its own account any
Home Equity Loan which becomes Delinquent, in whole or in part, as to four
consecutive monthly installments or any Home Equity Loan as to which enforcement
proceedings have been brought by the Servicer pursuant to Section 8.13;
provided, however, that the Servicer or the Certificate Insurer, as the case may
be, may not purchase any such Home Equity Loan unless the Servicer or the
Certificate Insurer, as the case may be, has delivered to the Trustee an opinion
of counsel experienced in federal income tax matters acceptable to the Trustee
and the Certificate Insurer to the effect that such a purchase would not
constitute a Prohibited Transaction for the Trust or otherwise subject the Trust
to tax and would not jeopardize the status any REMIC therein as a REMIC. Any
such Loan so purchased shall be purchased by the Servicer or the Certificate
Insurer, as the case may be, on a Monthly Remittance Date at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
deposited in the Principal and Interest Account.
(c) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Daily Collections remitted by the Servicer to the
Trustee.
Section 8.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to each
Home Equity Loan a hazard insurance policy with a generally acceptable carrier
that provides for fire
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and extended coverage, and which provides for a recovery by the Trust of
insurance proceeds relating to such Home Equity Loan in an amount not less than
the least of (i) the outstanding principal balance of the Home Equity Loan (plus
the related senior lien loan, if any), (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the full
insurable value of the premises. The Servicer shall maintain the insurance
policies required hereunder in the name of the mortgagee, its successors and
assigns, as loss payee. The policies shall require the insurer to provide the
mortgagee with 30 days' notice prior to any cancellation or as otherwise
required by law. The Servicer may also maintain a blanket hazard insurance
policy or policies if the insurer or insurers of such policies are rated
investment grade by each Rating Agency. Upon the request of the Master Servicer,
the Trustee or the Certificate Insurer, the Servicer will cause to be delivered
to such requesting Person a certified true copy of such blanket policy.
(b) If the Home Equity Loan at the time of origination relates to a
Property in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Servicer will cause to be
maintained with respect thereto a flood insurance policy in a form meeting the
requirements of the current guidelines of the Federal Insurance Administration
with a generally acceptable carrier in an amount representing coverage, and
which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related senior lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust out of the Servicer's own funds for any loss to the Trust
resulting from the Servicer's failure to maintain premiums for such insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. An opinion of counsel to the
foregoing effect shall conclusively establish the reasonableness of such belief.
In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Note and,
unless prohibited by applicable law or the Mortgage Documents, the Mortgagor
remains liable thereon. If the foregoing is not permitted under applicable law,
the Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Note; provided, however, that to the extent any such substitution of
liability agreement would be delivered by the Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Servicer shall,
prior to executing and delivering such agreement, obtain the prior written
consent of the Certificate Insurer. The Home Equity Loan, as assumed, shall
conform in all respects to the requirements, representations and warranties of
this
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Agreement. The Servicer shall notify the Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement (indicating the File
to which it relates) which copy shall be added by the Trustee to the related
File and which shall, for all purposes, be considered a part of such File to the
same extent as all other documents and instruments constituting a part thereof.
The Servicer shall be responsible for recording any such assumption or
substitution agreements. In connection with any such assumption or substitution
agreement, the required monthly payment on the related Home Equity Loan shall
not be changed but shall remain as in effect immediately prior to the assumption
or substitution, the stated maturity or outstanding principal amount of such
Home Equity Loan shall not be changed nor shall any required monthly payments of
principal or interest be deferred or forgiven. Any fee collected by the Servicer
or the Sub-Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Home Equity Loans;
Modification.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Servicer on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FannieMae Guide, including, but not limited
to, advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property before the start of the 12th month of the 3rd
taxable year following the taxable year in which the Trust acquired such
property, at such price as the Servicer deems necessary to comply with this
covenant unless the Seller which delivered the related Home Equity Loan obtains
for the Trustee, the Certificate Insurer and the Servicer an opinion of counsel
experienced in federal income tax matters acceptable to the Trustee and the
Certificate Insurer, addressed to the Trustee, the Certificate Insurer, and the
Servicer, to the effect that the holding by the Trust of such REO Property for
any greater period will not result in the imposition of taxes on "Prohibited
Transactions" of the Trust or any REMIC therein as defined in Section 860F of
the Code or cause any REMIC therein to fail to qualify as a REMIC under the
REMIC Provisions at any time that any Certificates are outstanding.
Notwithstanding the generality of the foregoing provisions, the Servicer shall
manage, conserve, protect and operate each REO Property for the Owners solely
for the purpose of its prompt disposition and sale in a manner which does not
cause such REO Property to fail to qualify as "foreclosure
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property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by any REMIC of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. Pursuant to
its efforts to sell such REO Property, the Servicer shall either itself or
through an agent selected by the Servicer protect and conserve such REO Property
in the same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and protection of
the interests of the Owners, rent the same, or any part thereof, as the Servicer
deems to be in the best interest of the Owners for the period prior to the sale
of such REO Property. The Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such Property.
The Servicer shall not take any such action with respect to any Property known
by the Servicer to contain such wastes or substances, without the prior written
consent of the Certificate Insurer. With respect to any Home Equity Loan secured
by a mixed use Property, the Servicer shall, prior to foreclosing upon or
otherwise comparably effecting the ownership in the name of the Servicer on
behalf of the Trust, either (x) perform a "phase one environmental study" of
such Property or (y) repurchase such Property at the Loan Purchase Price.
(b) The Servicer shall determine, with respect to each defaulted
Home Equity Loan and in accordance with the procedures set forth in the
FannieMae Guide, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or on
account of such defaulted Home Equity Loan, whereupon such Home Equity Loan
shall become a "Liquidated Loan." After a Home Equity Loan has become a
Liquidated Loan, the Servicer shall promptly prepare and forward to the
Depositor, the Certificate Insurer and the Trustee a report detailing the
Liquidation Proceeds received from the Liquidated Loan, expenses incurred with
respect thereto, and any loss incurred in connection therewith.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a payment default with respect to such Home Equity Loan
or in the event that a payment default with respect to such Home Equity Loan is
reasonably foreseeable by the Servicer; provided, however, that no such
modification, waiver or amendment shall extend the maturity date of such Home
Equity Loan beyond the Remittance Period related to the Final Scheduled Payment
Date of the latest Class of Certificates remaining in the Trust. Notwithstanding
anything set out in this Section 8.13(c) or elsewhere in this Agreement to the
contrary, the Servicer shall be permitted to modify, waive or amend any
provision of a Home Equity Loan if required by statute or a court of competent
jurisdiction to do so.
(d) The Servicer shall deliver to the Trustee for deposit in the
related File, an original counterpart of any agreement relating to such
modification, waiver or amendment, promptly following the execution thereof.
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Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Trustee the FannieMae "Request for Release of Documents" (FannieMae Form 2009).
Upon receipt of such Request for Release of Documents, the Trustee shall
promptly release the related File, in trust, in its reasonable discretion to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Trustee. Upon any such payment in full, or the receipt of such notification
that such funds have been placed in escrow, the Servicer is authorized to give,
as attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Servicer may prepare and
submit to the Trustee a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Trustee with all requisite information completed by the Servicer; in such
event, the Trustee shall execute and acknowledge such satisfaction or
assignment, as the case may be, and deliver the same with the related File, as
aforesaid.
(b) From time to time and as appropriate in the servicing of any
Home Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File is released to an escrow agent or an
employee, agent or attorney of the Trustee), upon request of the Servicer and
delivery to the Trustee of a receipt signed by an Authorized Officer of the
Servicer, release the related File to the Servicer and shall execute such
documents as shall be necessary to the prosecution of any such proceedings,
including, without limitation, an assignment without recourse of the related
Mortgage to the Servicer; provided that there shall not be released and
unreturned at any one time more than 10% of the entire number of Files. Such
receipt shall obligate the Servicer to return the File to the Trustee when the
need therefor by the Servicer no longer exists unless the Home Equity Loan shall
be liquidated, in which case, upon receipt of the FannieMae "Liquidation
Schedule" relating to such liquidation, the receipt shall be released by the
Trustee to the Servicer.
(c) The Servicer shall have the right to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio after any release does not exceed the Loan-to-Value Ratio of
such Home Equity Loan as of the date of origination thereof and any increase in
the Loan-to-Value Ratio shall not exceed 15% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be
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taken in respect of a particular Home Equity Loan and certifying that the
criteria set forth in the immediately preceding sentence have been satisfied,
the Trustee shall execute and deliver to the Servicer the consent or partial
release so requested by the Servicer. A proposed form of consent or partial
release, as the case may be, shall accompany any Officer's Certificate delivered
by the Servicer pursuant to this paragraph. The Servicer shall notify the
Certificate Insurer and the Rating Agencies if an application is approved under
clause (y) above without approval in writing by the Certificate Insurer.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Home
Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer.
Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor, the Master Servicer, the Certificate Insurer, any Owner of a Class B
Certificate and the Rating Agencies, on or before March 31 of each year,
commencing in 2000, an Officer's Certificate stating, as to each signer thereof,
that (i) a review of the activities of the Servicer during such preceding
calendar year and of performance under this Agreement has been made under such
officers' supervision, and (ii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement for such year, or, if there has been a default in the fulfillment of
all such obligations, specifying each such default known to such officers and
the nature and status thereof including the steps being taken by the Servicer to
remedy such default.
Section 8.17 Annual Independent Certified Public Accountants'
Reports.
On or before June 30 of any year, commencing in 2000, the Servicer,
at its own expense (or if the Trustee is then acting as Servicer, at the expense
of the Depositor, which in no event shall exceed $1,000 per annum), shall cause
to be delivered to the Trustee, the Master Servicer, the Certificate Insurer,
any Owner of a Class B Certificate and the Rating Agencies a letter or letters
of a firm of independent, nationally recognized certified public accountants
reasonably acceptable to the Certificate Insurer, dated as of the date of the
Servicer's fiscal audit for subsequent letters, stating that such firm has
examined the Servicer's overall servicing operations in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans.
The Servicer shall provide to the Trustee, the Master Servicer, the
Certificate Insurer, any Owner of a Class B Certificate, the FDIC and the
supervisory agents and examiners of each of the foregoing (which, in the case of
supervisory agents and examiners,
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may be required by applicable state and federal regulations) access to the
documentation regarding the Home Equity Loans, such access being afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Servicer designated by it.
Section 8.19 Assignment of Agreement.
The Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of the
Trustee and the Certificate Insurer, which consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 8.20(i) hereof for a successor servicer.
Section 8.20 Removal of Servicer; Resignation of Servicer.
(a) The Certificate Insurer (or Trustee with the consent of the
Certificate Insurer and acting upon the request of a majority of the Percentage
Interests of the Offered Certificates then Outstanding), may remove the Servicer
upon the occurrence of any of the following events:
(i) The Servicer shall (I) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they
become due, (III) make a general assignment for the benefit of
creditors, (IV) be adjudicated a bankrupt or insolvent, (V)
commence a voluntary case under the federal bankruptcy laws of
the United States of America or file a voluntary petition or
answer seeking reorganization, an arrangement with creditors
or an order for relief or seeking to take advantage of any
insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate
action for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in
respect of the Servicer an order for relief or an adjudication
in bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or similar entity with respect to the
Servicer or of all or any substantial part of its assets, or
other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by
the Servicer in good faith, the same shall (A) result in the
entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and
unstayed for any period of seventy-five (75) consecutive days;
or
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(iii) The Servicer shall fail to perform any one or more of its
obligations hereunder and shall continue in default thereof
for a period of thirty (30) days (one (1) Business Day in the
case of a delay in making a required payment to the Trustee
under Section 8.08(d)(ii)(a)) after the earlier of (a) actual
knowledge of an officer of the Servicer or (b) receipt of
notice from the Trustee or the Certificate Insurer of said
failure; provided, however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, then
the cure period may be extended with the written approval of
the Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.02 which
materially and adversely affects the interests of the Owners
or the Certificate Insurer for a period of sixty (60) days
after the earlier of the Servicer's discovery or receipt of
notice thereof; provided however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, then
the cure period may be extended with the written approval of
the Certificate Insurer; or
(v) The merger, consolidation or other combination of the Servicer
with or into any other entity, unless (1) the Servicer is the
surviving entity of such combination or (2) the surviving
entity is a corporation or a state-chartered or national bank
acceptable to the Certificate Insurer (acceptable to the
Owners of the Class R Certificates as provided below but if
such Owners and the Certificate Insurer cannot agree, the
Certificate Insurer shall control) organized and doing
business under the laws of any state or the United States.
(b) The Certificate Insurer may remove the Servicer upon the
occurrence of any of the following events, if the Certificate Insurer has
delivered written notice to the Servicer, the Master Servicer, and the Trustee
so removing the Servicer:
(i) an Insured Payment is made by the Certificate Insurer;
provided, however, that in the event that the Trustee shall
become the Servicer hereunder, if the Servicer can demonstrate
to the reasonable satisfaction of the Certificate Insurer that
such event was due to circumstances beyond the control of the
Servicer, the right of removal hereunder shall not be
considered a default by the Servicer;
(ii) the failure by the Servicer to make any required Servicing
Advance when due;
(iii) the occurrence of a Servicer Termination Delinquency Rate
Trigger or a Servicer Termination Loss Trigger (each as
defined in the Insurance and Indemnity Agreement); or
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(iv) the failure by the Servicer to make any required Delinquency
Advance or to pay any Compensating Interest, in each case two
Business Days following the Servicer's receipt of a written
notice from the Master Servicer, the Trustee or the
Certificate Insurer demanding that the Servicer pay such
amount;
provided, however, that (x) prior to any removal of the Servicer by the
Certificate Insurer pursuant to clause (iii) of this Section 8.20(b), the
Servicer and the Trustee shall first have been given by the Certificate Insurer
and by registered or certified mail, notice of the occurrence of one or more of
the events set forth in clause (iii) above and the Servicer shall not have
remedied, or shall not have taken actions satisfactory to the Certificate
Insurer to remedy, such event or events within 60 days after the Servicer's
receipt of such notice and (y) upon the Trustee's determination that a required
Delinquency Advance or payment of Compensating Interest has not been made by the
Servicer, the Trustee shall so notify an Authorized Officer of the Servicer, the
Owners, if any, and the Certificate Insurer as soon as is reasonably practical.
(c) The Master Servicer may remove the Servicer upon the failure of
the Servicer to make any required Delinquency Advance or to pay any Compensating
Interest, which failure causes the Master Servicer to remit any such amount to
the Trust, in each case if the Servicer's failure has continued for two Business
Days following the Servicer's receipt of a written notice demanding that the
Servicer pay such amount.
(d) If any event described in sections (a), (b) and (c) above occurs
and is continuing, the Certificate Insurer shall notify the Owners of the Class
C Certificates in writing if the Certificate Insurer intends to terminate the
Servicer in its capacity as Servicer under this Agreement. During the 30 day
period following receipt of such notice by the Owners of the Class C
Certificates, such Owners and the Certificate Insurer shall cooperate with each
other to determine if the occurrence of such event is more likely than not the
result of the acts or omissions of the Servicer or more likely than not the
result of events beyond the control of the Servicer. If the Owners of the Class
C Certificates and the Certificate Insurer conclude that the event is the result
of the latter, the Servicer may not be terminated. If the Owners of the Class C
Certificates and the Certificate Insurer conclude that the event is the result
of the former, or if the Owner of the Class C Certificates and the Certificate
Insurer cannot agree as to the cause of the event, the Certificate Insurer may
terminate the Servicer in accordance with this Section, and the provisions of
Section 8.21 hereof shall apply.
(e) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Master Servicer, the Trustee and the
Certificate Insurer, which opinion shall be at the Servicer's expense.
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(f) No removal or resignation of the Servicer shall become effective
until the Master Servicer, the Trustee or other successor Servicer shall have
assumed the Servicer's responsibilities and obligations in accordance with this
Section.
(g) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to the Master
Servicer, the Trustee or other successor Servicer all Records, Servicing Records
and Home Equity Loan Documents.
(h) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Master Servicer, if it is then
acting, or otherwise to the Trustee and remitted directly and immediately to the
Trustee or the successor Servicer.
(i) The Master Servicer, the Trustee, or any successor servicer,
shall be reimbursed for all reasonable costs and expenses incurred in connection
with the appointment of the successor servicer and the replacement of the
servicer, which reimbursement shall be paid (1) first, by the predecessor
Servicer, and (2) second, to the extent that any such costs and expenses are not
promptly reimbursed by the predecessor Servicer, as an expense from amounts in
the Certificate Account, as provided in Section 7.03(b)(viii)(b).
(j) ContiMortgage hereby covenants and agrees to act as the Servicer
under the Agreement for an initial term from the Closing Date to July 31, 1999,
which term shall be renewable by the Certificate Insurer by notice (each, a
"Servicer Extension Notice") to the Servicer, the Master Servicer and to the
Trustee for successive terms of two (2) calendar months each, until either June
30, 2000 or, if earlier, such time as the Certificate Insurer authorizes
ContiMortgage's term as servicer to extend through to the termination of the
Trust pursuant to Article IX hereof, subject only to removal pursuant to the
other paragraphs of this Section 8.20. ContiMortgage hereby agrees that, upon
its receipt of any such Servicer Extension Notice, ContiMortgage shall become
bound for the duration of the term covered by such Servicer Extension Notice to
continue as the Servicer subject to and in accordance with the other provisions
of this Agreement. The Trustee agrees that if as of the fifteenth (15th) day
prior to the last day of any term of ContiMortgage the Trustee shall not have
received any Servicer Extension Notice from the Certificate Insurer, the Trustee
will, within five (5) days thereafter, given written notice of such non-receipt
to the Certificate Insurer, the Master Servicer and, upon expiration of
ContiMortgage's term as Servicer, the Servicer and the provisions of Section
8.21 shall apply.
In the event that ContiMortgage's term as Servicer has not ended
prior to July 1, 2000, then this paragraph (i) shall no longer apply, and
ContiMortgage shall remain as Servicer for the term of the Trust, subject only
to removal pursuant to the other paragraphs of this Section 8.20.
(k) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors, the Certificate Insurer and the Rating Agencies of the
transfer of the servicing to the successor Servicer.
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The Trustee shall give notice to the Owners, the Trustee, the
Seller, the Certificate Insurer and the Rating Agencies of the occurrence of any
event described in paragraphs (a) or (b) above of which the Trustee is aware.
Section 8.21 Successor Servicers.
(a) Appointment of Successor. On and after the occurrence of a
Servicer Termination Event, or the failure of ContiMortgage to be renewed as
Servicer pursuant to Section 8.20(j) hereof, , or a resignation of the Servicer
as evidenced by an opinion of counsel as described in Section 8.20(e) hereof,
then the Master Servicer if it is then acting, within 60 days of the occurrence
of such event, shall have a successor servicer in place to be the successor in
all respects to the Servicer in its capacity as Servicer under this Agreement
and the transactions set forth or provided for herein and shall be subject to
all the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof; provided, however, that the
successor servicer shall not be liable for any actions of any servicer prior to
it. If a successor servicer cannot be retained in a timely manner, then the
Master Servicer shall act as the successor Servicer, or if the Master Servicer
is not then acting or cannot act as the successor servicer (as evidenced by an
opinion of counsel delivered by the Master Servicer to the Trustee and the
Certificate Insurer), then the Trustee (x) may solicit bids for a successor
servicer as described in clause (b) below, and (y) pending the appointment of a
successor servicer as a result of soliciting such bids, shall serve as Servicer
. Notwithstanding the foregoing, the parties hereto agree that the Master
Servicer, in its capacity as successor servicer, immediately will assume all of
the obligations of the Servicer to make Delinquency Advances, Servicing Advances
and to pay Compensating Interest and the Master Servicer will assume the other
duties of the Servicer as soon as practicable, but in no event later than 60
days after the Servicer Termination Date. If the Master Servicer or the Trustee,
as applicable, assumes the responsibilities of the Servicer pursuant to this
Section 8.21, then the Master Servicer or the Trustee, as applicable, will make
reasonable efforts consistent with applicable law to become licensed, qualified
and in good standing in each state the laws of which require licensing or
qualification in order to perform its obligations as Servicer hereunder or,
alternatively, shall retain an agent that is so licensed, qualified and in good
standing in any such state. Notwithstanding the foregoing, the Master Servicer,
in its capacity as successor Servicer shall not be responsible for the lack of
information and/or documents that it cannot obtain through reasonable efforts.
If the Master Servicer or the Trustee, as applicable, serves as
successor servicer, then the Master Servicer or the Trustee, as applicable, in
such capacity shall not be liable for any servicing of the Home Equity Loans
prior to its date of appointment and shall not be subject to any obligations to
repurchase any Home Equity Loans.
Any successor servicer, the Master Servicer or the Trustee shall be
reimbursed for all reasonable costs and expenses incurred in connection with the
appointment of the successor servicer and the replacement of the Servicer which
reimbursement shall be paid (1) first, by the predecessor Servicer, and (2)
second, to the extent that any such costs and expenses are not promptly
reimbursed by the predecessor servicer, as described in Section 7.03(b)(viii)(b)
hereof.
(b) (i) If the Trustee is required to act as the successor servicer
it shall, if it is unable to obtain a qualifying bid and is prevented by law
from acting as Servicer, appoint, or
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petition a court of competent jurisdiction to appoint, any housing and home
finance institution, bank or mortgage servicing institution which has been
designated as an approved seller-servicer by FannieMae or Freddie Mac for first
and second mortgage loans and having equity of not less than $10,000,000 (or
such lower level as may be acceptable to the Certificate Insurer), as determined
in accordance with generally accepted accounting principles and acceptable to
the Certificate Insurer and the Owners of the Class C Certificates (provided
that if the Certificate Insurer and such Owners cannot agree as to the
acceptability of such successor Servicer, the decision of the Certificate
Insurer shall control) as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder. If the Trustee acts as successor Servicer then
ContiMortgage agrees to pay to the Trustee at such time that the Trustee becomes
such successor Servicer a set-up fee of twenty-five dollars ($25.00) for each
Home Equity Loan then included in the Trust Estate. The Trustee shall be
obligated to serve as successor Servicer whether or not the fee described in the
preceding sentence is paid by ContiMortgage, but shall in any event be entitled
to receive, and to enforce payment of, such fee from ContiMortgage.
(ii) In the event the Trustee solicits bids as provided above,
the Trustee shall solicit, by public announcement at least once in The American
Banker and such other publications as directed by the Certificate Insurer, bids
from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer shall be entitled to the
full amount of the aggregate Servicing Fees as servicing compensation, together
with the other servicing compensation in the form of assumption fees, late
payment charges or otherwise as provided in Sections 8.08 and 8.15. Within
thirty days after any such public announcement, the Trustee shall negotiate and
effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party approved by the Certificate
Insurer submitting the highest satisfactory bid as to the price they will pay to
obtain servicing. The Trustee shall deduct from any sum received by the Trustee
from the successor servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder. After such
deductions, the remainder of such sum less any amounts due the Trustee or the
Trust from the Servicer shall be paid by the Trustee to the Servicer at the time
of such sale, transfer and assignment to the successor servicer.
(iii) The Trustee upon assuming the duties of Servicer hereunder,
shall immediately make all Delinquency Advances and deposit them to the
Principal and Interest Account which the Servicer has theretofore failed to
remit with respect to the Home Equity Loans; provided, however, that if the
Trustee is acting as successor Servicer, the Trustee shall only be required to
make Delinquency Advances (including the Delinquency Advances described in this
clause (b)(iii)) if, in the Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the Home Equity Loans.
(c) Successor Servicer Compensation. The compensation of any
successor servicer (including, without limitation, the Master Servicer or the
Trustee) so appointed shall be the aggregate Servicing Fee, together with the
other servicing compensation in the form of assumption fees, late payment
charges or otherwise as provided in Sections 8.08 and 8.15. If the
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Master Servicer becomes the successor servicer, the separate Master Servicing
Fee will no longer be payable and shall be returned in the Certificate Account
as part of the Available Funds.
(d) Termination Fee to Prior Servicer. The Master Servicer shall
deduct from any sum received by the Master Servicer from the successor servicer
to the Servicer in respect of the sale, transfer and assignment of the servicing
rights for the Home Equity Loans the sum of (i) all costs and expenses of any
public announcement and of any sale, transfer and assignment of such servicing
rights, (ii) the amount of any unpaid Servicing Fees and unreimbursed
Delinquency Advances or Servicing Advances made by the Master Servicer and (iii)
all costs and expenses of the Master Servicer incurred in connection with the
appointment of the successor servicer. After such deductions, the remainder of
such sum shall be paid by the Master Servicer to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor. The Servicer
shall not be entitled to any termination fee, if it is terminated pursuant to
Section 8.20 hereof but shall be entitled to any accrued and unpaid Servicing
Fees to the date of termination.
(e) Cooperation of Prior Servicer with Succession. The Master
Servicer, the Trustee, the Servicer and any such successor servicer shall take
such action, consistent with this Agreement, as shall be necessary to effect any
such succession. Any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee, and remitted directly to the
Trustee or, at the direction of the Trustee, to the successor servicer. The
Servicer agrees to cooperate with the Master Servicer, the Trustee and any
successor Servicer, as applicable, in effecting the termination of the
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Master Servicer, 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 any Account maintained by the
Servicer or which are thereafter received with respect to the Home Equity Loans.
(f) Effectiveness of Appointment. Neither the Master Servicer, the
Trustee nor any other successor Servicer, as applicable, shall be held liable by
reason of any failure to make, or any delay in making, any payment or
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 hereunder. No appointment of a successor to the Servicer
hereunder shall be effective until (A) the Depositor, the Trustee, the
Certificate Insurer and the Master Servicer shall have consented thereto, except
in the case of the appointment of the Master Servicer or the Trustee as
successor to the Servicer (when no consent shall be required), and (B) written
notice of such proposed appointment shall have been provided by the Master
Servicer or the Trustee, as applicable, to the Trustee, the Certificate Insurer
and the Depositor.
Section 8.22 Inspections by Certificate Insurer; Errors and
Omissions Insurance.
At any reasonable time and from time to time upon reasonable notice,
the Trustee, the Certificate Insurer, the Master Servicer, any Owner of a Class
B Certificate or any agents thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of
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the Servicer during the Servicer's normal business hours with any of its
officers or directors; provided, however, that the costs and expenses incurred
by the Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Servicer;
The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FannieMae Guide or any successor provision thereof; provided, however, that
if the Trustee shall become the Servicer, any customary insurance coverage that
the Trustee maintains shall be deemed sufficient hereunder; provided, further,
that in the event that the fidelity bond or the errors and omissions coverage is
no longer in effect, the Trustee shall promptly give such notice to the
Certificate Insurer and the Owners. Upon the request of the Trustee or the
Certificate Insurer, the Servicer shall cause to be delivered to such requesting
Person a certified true copy of such fidelity bond or errors and omission
policy.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance Policy,
of all amounts held by the Trustee and required to be paid to such Owners
pursuant to this Agreement upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last Home
Equity Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Home Equity Loan remaining in the Trust Estate, (c) at any time
when a Qualified Liquidation of the Home Equity Loans included within the Trust
is effected as described below and (d) the final payment to the Certificate
Insurer of all amounts then owing to it. To effect a termination of this
Agreement pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of the REMIC to
adopt a plan of complete liquidation as contemplated by Section 860F(a)(4) of
the Code and (ii) provide to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Trustee either shall sell the Home Equity Loans and distribute the
proceeds of the liquidation of the Trust Estate, or shall distribute equitably
in kind all of the assets of the Trust Estate to the remaining Owners of the
Certificates each in accordance with such plan, so that the liquidation or
distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation. In no event, however, will the
Trust created by this Agreement continue beyond the expiration of twenty-one
(21) years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of Saint James,
living on the date hereof. The Trustee shall give written notice of termination
of the Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R-I
Certificates.
On any Monthly Remittance Date on or after the Clean-Up Call Date,
the Owners of a majority of the Percentage Interests represented by the Class
R-I Certificates then outstanding or, in the absence of a determination by such
Owners, the Certificate Insurer may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Home Equity Loans and
all property theretofore acquired in respect of any Home Equity Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate (i) on terms agreed upon between the Certificate Insurer and the
Owners of such Class R-I Certificates, or (ii) in the absence of such an
agreement, at a price equal to 100% of the aggregate Loan Balances of the
related Home Equity Loans as of the day of purchase minus amounts remitted from
the Principal and Interest Account to the Certificate Account representing
collections of principal on the Home Equity Loans during the current Remittance
Period, plus one month's interest on such amount computed at the Termination
Date Pass-Through Rate, plus all accrued
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and unpaid Servicing Fees and unpaid Master Servicing Fees, if any, plus the
aggregate amount of any unreimbursed Delinquency Advances and Servicing Advances
and any Delinquency Advances which the Servicer has theretofore failed to remit
plus any amounts due and owing to the Certificate Insurer under the Insurance
and Indemnity Agreement, provided that any such purchase price pursuant to
clause (i) or (ii) shall be sufficient to pay the Outstanding Certificate
Principal Balance of and accrued and unpaid interest on all Classes of
outstanding Class A and Class B Certificates, plus the Class B Unpaid Realized
Loss Amount, plus any amounts due and owing the Certificate Insurer under the
Insurance and Indemnity Agreement. If any such termination would result in a
draw on the Certificate Insurance Policy, then the prior consent of the
Certificate Insurer is required. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the Certificate Account, which deposit shall be
deemed to have occurred immediately preceding such purchase.
In connection with any such purchase, such Owners of the Class R-I
Certificates shall unanimously direct the Trustee to adopt and the Trustee shall
adopt, as to each REMIC, a plan of complete liquidation of all Home Equity as
contemplated by Section 860F(a)(4) of the Code and shall provide to the Trustee
and the Certificate Insurer an opinion of counsel experienced in federal income
tax matters acceptable to the Trustee and the Certificate Insurer to the effect
that such purchase and liquidations constitutes, as to the REMIC, a Qualified
Liquidation. In addition, such Owners of the Class R-I Certificates shall
provide to the Trustee and the Certificate Insurer an opinion of counsel
acceptable to the Trustee and the Certificate Insurer to the effect that such
purchase and liquidation does not constitute a preference payment pursuant to
the United States Bankruptcy Code.
The purchase option reserved to the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates may be exercised
by the Certificate Insurer if (i) not exercised by such owners and (ii) the
Servicer as of the Closing Date is no longer the Servicer hereunder.
Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R-I Certificates or
the Certificate Insurers, as the case may be, or otherwise upon their order, in
a manner similar to that described in Section 8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal or, if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that any REMIC in the Trust does not and will no longer
qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination (i) the Certificate Insurer or the Owners of
a majority in Percentage Interests represented by the Class A and Class B
Certificates then Outstanding may direct the Trustee on behalf of the Trust to
adopt a plan of complete liquidation, as contemplated by Section 860F(a)(4) of
the Code and (ii) the Certificate Insurer may notify the Trustee of the
Certificate Insurer's determination to
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purchase from the Trust all (but not fewer than all) Home Equity Loans and all
property theretofore acquired by foreclosure, deed in lieu of foreclosure, or
otherwise then remaining in the Trust Estate at a price equal to the sum of (x)
the greater of (i) 100% of the aggregate Loan Balances of the Home Equity Loans
as of the day of purchase minus amounts remitted from the Principal and Interest
Account representing collections of principal on the Home Equity Loans during
the current Remittance Period, and (ii) the fair market value of such Home
Equity Loans (disregarding accrued interest), as reasonably determined by the
Servicer based upon at least three market quotes (or such fewer number of quotes
as are reasonably obtainable), (y) one month's interest on such amount computed
at the Termination Date Pass-Through Rate and (z) the aggregate amount of any
unreimbursed Delinquency Advances and Servicing Advances and any Delinquency
Advances which the Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Class R-I Certificates of such election
to liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interests of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate at a purchase price
equal to the aggregate Loan Balances of all Home Equity Loans as of the date of
such purchase, plus (a) one month's interest on such amount at the Termination
Date Pass-Through Rate, (b) the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and (c) any Delinquency Advances which the
Servicer has theretofore failed to remit. If, during the Purchase Option Period,
the Owners of the Class R Certificates have not exercised the option described
in the immediately preceding sentence, then upon the expiration of the Purchase
Option Period in the event that the Certificate Insurer or the Owners of the
Class A and Class B 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 and Class B Certificates
with the consent of the Certificate Insurer shall permit or direct in writing,
after the expiration of the Purchase Option Period and (ii) in the event that
the Certificate Insurer has given the Trustee notice of the Certificate
Insurer's determination to purchase the Trust Estate described in clause (a)(ii)
above the Certificate Insurer shall, within 60 days, purchase all (but not fewer
than all) Home Equity Loans and all property theretofore acquired by
foreclosure, deed in lieu of foreclosure or otherwise then remaining in the
Trust Estate. In connection with such purchase, the Servicer shall remit to the
Trustee all amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R-I Certificates then Outstanding may, at
their option and upon delivery to the Certificate Insurer of an opinion of
counsel experienced in federal income tax matters acceptable to the Certificate
Insurer selected by the Owners of the Class R-I Certificates, which
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opinion shall be reasonably satisfactory in form and substance to the
Certificate Insurer, to the effect that the effect of the Final Determination is
to increase substantially the probability that the gross income of the Trust
will be subject to federal taxation, purchase from the Trust all (but not fewer
than all) Home Equity Loans and all property theretofore acquired by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate at a purchase price equal to the aggregate Loan Balances of all
Home Equity Loans as of the date of such purchase, plus (a) one month's interest
on such amount computed at the Termination Date Pass-Through Rate, (b) the
aggregate amount of unreimbursed Delinquency Advances and (c) any Delinquency
Advances which the Servicer has theretofore failed to remit. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase. The foregoing opinion shall be deemed satisfactory unless the
Certificate Insurer gives the Owners of a majority of the Percentage Interests
of the Class R-I Certificates notice that such opinion is not satisfactory
within thirty days after receipt of such opinion. In connection with any such
purchase, such Owners shall direct the Trustee to adopt a plan of complete
liquidation as contemplated by Section 860F(a)(4) of the Code and shall provide
to the Trustee an opinion of counsel experienced in federal income tax matters
to the effect that such purchase constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account; provided, however, that (i) any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
or Master Servicer from the Servicer's or Master Servicer's own funds shall be
paid by the Trustee to the Servicer or Master Servicer, as applicable, from the
proceeds of the Trust Estate and (ii) the amount of any Class B Unpaid Realized
Loss Amount shall be paid to the Owners of the Class B Certificates.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee
and (B) the banking institution that is the Trustee shall serve as the Trustee
at all times under this Agreement, and (ii) in the absence of bad faith on its
part, may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished pursuant to and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, shall be under a duty
to examine the same to determine whether or not they conform to the requirements
of this Agreement.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to any
termination of the Servicer, the Servicer and, thereafter, the Master Servicer,
the Trustee or any other successor servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee if it shall
become the successor Servicer, have the power and duty during its performance as
successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
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(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance
with the direction of the Certificate Insurer or the Owners of
a majority in Percentage Interest of the Certificates of the
affected Class or Classes and the Certificate Insurer relating
to the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Agreement
relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated
in this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit,
or to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
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(i) the Trustee shall fail to distribute to the Owners entitled
hereto on any Payment Date amounts available for distribution
in accordance with the terms hereof; (provided, however, that
any such failure which is due to circumstances beyond the
control of the Trustee shall not be a cause for removal
hereunder); or
(ii) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if
any representation or warranty of the Trustee made in this
Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall prove to be
incorrect in any material respect as of the time when the same
shall have been made, and such failure or breach shall
continue or not be cured for a period of 30 days after there
shall have been given, by registered or certified mail, to the
Trustee by the Sellers, the Certificate Insurer or by the
Owners of at least 25% of the aggregate Percentage Interests
in the Trust Estate represented by the Offered Certificates
then Outstanding, or, if there are no Offered Certificates
then Outstanding, by such Percentage Interests represented by
the Class C Certificates, a written notice specifying such
failure or breach and requiring it to be remedied; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Trustee, and
such decree or order shall have remained in force undischarged
or unstayed for a period of 75 days; or
(iv) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the
Trustee or relating to all or substantially all of its
property; or
(v) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due,
file or consent to the filing of a petition to take advantage
of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, voluntarily
suspend payment of its obligations, or take corporate action
for the purpose of any of the foregoing.
The Depositor shall give notice to the Certificate Insurer and the Rating
Agencies of the occurrence of any such event of which the Depositor is aware.
(b) If any event described in paragraph (a) occurs and is
continuing, then and in every such case (i) the Certificate Insurer or (ii) with
the prior written consent (which shall not be unreasonably withheld) of the
Certificate Insurer, the Depositor and the Owners of a majority
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of the Percentage Interests represented by the Offered Certificates or if there
are no Offered Certificates then outstanding by such majority of the Percentage
Interests represented by the Class R Certificates, may, whether or not the
Trustee resigns pursuant to Section 10.09(b) hereof, immediately, concurrently
with the giving of notice to the Trustee, and without delaying the 30 days
required for notice therein, appoint a successor Trustee pursuant to the terms
of Section 10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Depositor, either of the
Sellers, the Certificate Insurer or the Owners of any Class of Certificates
mentioned herein shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Trustee in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodians;
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(h) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is
required to furnish to the Trustee from time to time certain information and to
make various calculations which are relevant to the performance of the Trustee's
duties under this Agreement. The Trustee shall be entitled to rely in good faith
on any such information and calculations in the performance of its duties
hereunder, (i) unless and until an Authorized Officer of the Trustee has actual
knowledge, or is advised by any Owner of a Certificate (either in writing or
orally with prompt written or telecopies confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Home Equity Loan or document related thereto other than as
to validity and sufficiency of its authentication of the Certificates. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor, either of the Sellers or the
Servicer in respect of the Home Equity Loans or deposited into or withdrawn from
the Principal and Interest Account or the Certificate Account by the Depositor,
the Servicer or either of the Sellers, and shall have no responsibility for
filing any financing or continuation statement in any public office at any time
or otherwise to perfect or maintain the perfection of any security interest or
lien or to prepare or file any tax returns or Securities and Exchange Commission
filings for the Trust or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have notice or knowledge of any default
unless an Authorized Officer of the Trustee shall have received written notice
thereof or an Authorized Officer has actual knowledge thereof. In the absence of
receipt of such notice, the Trustee may conclusively assume that no default has
occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may
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otherwise deal with the Trust with the same rights it would have if it were not
Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement
for expenses pursuant to Section 2.05, Section 7.03(b)(i) and Section 7.06
hereof. The Trustee shall have no lien on the Trust Estate for the payment of
such fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a deposit rating of at
least A2 by Moody's (or such lower rating as may be acceptable to Moody's), and
deposit rating of A (and a short-term rating of A-1 or better) by Standard &
Poor's (or such lower rating as may be acceptable to Standard & Poor's) and, if
rated by Fitch, having a rating of at least A from Fitch (or such lower rating
as may be acceptable to Fitch). If such Trustee publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall, upon the request of
ContiMortgage with the consent of the Certificate Insurer (which consent shall
not be unreasonably withheld) or of the Certificate Insurer, resign immediately
in the manner and with the effect hereinafter specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Certificate Insurer and the Owners at their addresses appearing on the Register;
provided, that the Trustee cannot resign solely for the failure to receive the
Trustee Fee. A copy of such notice shall be sent by the resigning Trustee to
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the Rating Agencies. Upon receiving notice of resignation, the Depositor shall
promptly appoint a successor trustee or trustees acceptable to the Certificate
Insurer (or, if no Class A Certificates are then outstanding, to the Owners of a
majority in Percentage Interest of the Class B Certificates then Outstanding) by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of ContiMortgage, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor trustee or
trustees. If no successor trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written request therefor by
the Depositor or the Certificate Insurer, the Certificate Insurer or the
Depositor with the consent of the Certificate Insurer may remove the Trustee and
appoint a successor trustee acceptable to the Certificate Insurer by written
instrument, in duplicate, executed on behalf of the Trust by an Authorized
Officer of the Depositor, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented
by the Class A Certificates with the consent of the Certificate Insurer or, if
there are no Class A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class B Certificates, may at any time
remove the Trustee and appoint a successor trustee acceptable to the Certificate
Insurer by delivering to the Trustee to be removed, to the successor trustee so
appointed, to the Depositor, to the Certificate Insurer and to the Servicer
copies of the record of the act taken by the Owners, as provided for in Section
11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with
the terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
ContiMortgage shall promptly appoint a successor trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, or, if there are no Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class B Certificates, 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
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the manner hereinafter provided, any Owner may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor on behalf of the Trust and to its
predecessor Trustee an instrument accepting such appointment hereunder and
stating its eligibility to serve as Trustee hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts, duties and obligations of its
predecessor hereunder; but, on request of the Depositor or the successor
Trustee, such predecessor Trustee shall, upon payment of its charges then
unpaid, execute and deliver an instrument transferring to such successor trustee
all of the rights, powers and trusts of the Trustee so ceasing to act, and shall
duly assign, transfer and deliver to such successor trustee all property and
money held by such Trustee so ceasing to act hereunder. Upon request of any such
successor trustee, the Depositor on behalf of the Trust shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time
of such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor
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by merger, conversion or consolidation to such Trustee may adopt such execution
and deliver the Certificates so executed with the same effect as if such
successor Trustee had itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal
Revenue Service's Form 1099 and any other statement required by applicable
Treasury regulations as determined by the Tax Matters Person, and shall
withhold, as required by applicable law, federal, state or local taxes, if any,
applicable to distributions to the Owners, including but not limited to backup
withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Trustee
shall timely file all reports prepared by the Depositor and required to be filed
by the Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable to REMICs.
Furthermore, the Trustee shall report to Owners, if required, with respect to
the allocation of expenses pursuant to Section 212 of the Code in accordance
with the specific instructions to the Trustee by the Depositor with respect to
such allocation of expenses. The Trustee shall, upon request of the Depositor,
collect any forms or reports from the Owners determined by the Depositor to be
required under applicable federal, state and local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Trustee herein. Neither the Trustee nor any of the directors, officers,
employees or agents of the Trustee shall be under any liability on any
Certificate or otherwise to the Depositor, either of the Sellers, the Servicer,
the Certificate Insurer or any Owner for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Trustee, its directors, officers, employees or agents or any such Person against
any liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. Subject to
the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Trustee is the obligor). In
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addition, the Depositor, each of the Sellers and Servicer covenant and agree to
indemnify the Trustee, and when the Trustee is acting as Servicer, the Servicer,
from, and hold it harmless against, any and all losses, liabilities, damages,
claims or expenses (including legal fees and expenses) of whatsoever kind
arising out of or in connection with the performance of its duties hereunder
other than those resulting from the negligence or bad faith of the Trustee, and
the Depositor shall pay all amounts not otherwise paid pursuant to Sections 2.05
and 7.06 hereof. The Trustee and any director, officer, employee or agent of the
Trustee may rely and shall be protected in acting or refraining from acting in
good faith on any certificate, notice or other document of any kind prima facie
properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder. The provisions of this Section 10.13
shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners, such title to the Trust Estate, or any part thereof, and,
subject to the other provisions of this Section 10.14, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or in
the case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee subject to reasonable approval of the Certificate
Insurer alone shall have the power to make such appointment. No co-Trustee or
separate Trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 10.08 and no notice to Owners of the
appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent
permitted, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate
Trustee or co-Trustee jointly (it being understood that such
separate Trustee or co-Trustee is not authorized to act
separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust
Estate or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate Trustee or
co-Trustee, but solely at the direction of the Trustee;
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(ii) No co-Trustee hereunder shall be held personally liable by
reason of any act or omission of any other co-Trustee
hereunder; and
(iii) The Servicer, the Certificate Insurer and the Trustee acting
jointly may at any time accept the resignation of or remove
any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
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, either of the Sellers, the
Certificate Insurer or the Owners, as the case may be, shall furnish to the
Trustee a certificate stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate need be furnished.
Except as otherwise specifically provided herein, each certificate
or opinion with respect to compliance with a condition or covenant provided for
in this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such Authorized Officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or opinion
of an Authorized Officer of the Trustee or any opinion of counsel may be based,
insofar as it relates to factual matters upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Depositor, either of
the Sellers or the Servicer, stating that the information with respect to
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such factual matters is in the possession of the Depositor, such Seller or the
Servicer, unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any opinion of counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Trustee, stating that
the information with respect to such matters is in the possession of the
Trustee, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Any opinion of counsel may be based on the written
opinion of other counsel, in which event such opinion of counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to one or both of
the Sellers. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the Owners
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
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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 Depositor, the Certificate Insurer or either of the Sellers shall
be sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Trustee at the Corporate Trust Office.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or
the mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigns or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any Rating Agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
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Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Owners, the Certificate
Insurer and the parties hereto and their successors hereunder, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any
Payment Date, any other date on which any distribution to any Owner is proposed
to be paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or such
other date for the payment of any distribution to any Owner or the mailing of
such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction
of the United States District Court for the Southern District of New York and
any court in the State of New York located in the City and County of New York,
and any appellate court from any thereof, in any action, suit or proceeding
brought against it or in connection with this Agreement or any of the related
documents or the transactions contemplated hereunder or for recognition or
enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. The parties hereto agree that a
final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. To the extent permitted by applicable law, the parties
hereto hereby waive and agree not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any
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claim that it is not personally subject to the jurisdiction of such courts, that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that the related
documents or the subject matter thereof may not be litigated in or by such
courts.
(c) Each of the Depositor, the Sellers and the Servicer hereby
irrevocably appoints and designates the Trustee as its true and lawful attorney
and duly authorized agent for acceptance of service of legal process with
respect to any action, suit or proceeding set forth in paragraph (b) hereof.
Each of the Sellers and the Servicer agrees that service of such process upon
the Trustee shall constitute personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the
right of the Depositor, the Seller, the Certificate Insurer or the Servicer or
any third-party beneficiary hereunder, as the case may be, to serve process in
any other manner permitted by law or to start legal proceedings relating to any
of the Home Equity Loans against any Mortgagor in the courts of any
jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, either of the Sellers and the
Servicer may, at any time and from time to time, and without notice to or the
consent of the Owners but with the consent of the Certificate Insurer amend this
Agreement, subject to the provisions of Section 11.16 and 11.17 and the Trustee
shall consent to such amendment, for the purpose of (i) curing any ambiguity,
correcting or supplementing any provision hereof which may be inconsistent with
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other provision hereof, or adding provisions hereto which are not inconsistent
with the provisions hereof; (ii) upon receipt of an opinion of counsel
experienced in federal income tax matters to the effect that no entity-level tax
will be imposed on the Trust or upon the transferor of a Residual Certificate as
a result of the ownership of any Residual Certificate by a Disqualified
Organization, removing the restriction on transfer set forth in Section 5.08(b)
hereof or (iii) complying with the requirements of the Code and the regulations
proposed or promulgated thereunder including any amendments necessary to
maintain REMIC status or (iv) for any other purpose, provided that in the case
of this clause (iv) such amendment shall not adversely affect in any material
respect any Owner. Any such amendment shall be deemed not to adversely affect in
any material respect any Owner if there is delivered to the Trustee written
notification from each Rating Agency that such amendment will not cause such
Rating Agency to reduce its then current rating assigned to (x) the Class A
Certificates without regard to the Certificate Insurance Policies or (y) to the
Class B Certificates. Notwithstanding anything to the contrary herein, no such
amendment shall (a) change in any manner the amount of, or change the timing of,
payments which are required to be distributed to any Owner without the consent
of the Owner of such Certificate, or (b) which affects in any manner the terms
or provisions of the Certificate Insurance Policies.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to the
Certificate Insurer and each Owner in the manner set forth in Section 11.05, and
to the Rating Agencies; provided, that any Owner of a Class B Certificate shall
receive a full copy of any such amendment, together with all opinions delivered
in connection therewith.
(c) The Rating Agencies shall be provided with copies of any
amendments to this Agreement, together with copies of any opinions or other
documents or instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify
its acceptance of the duties and obligations imposed upon it by this Agreement
by written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of Section 6.02, that such Paying Agent
will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of the Owners entitled
thereto until such sums shall be
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paid to such Owners or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and
be discharged of the duties and obligations created by this Agreement by giving
at least sixty (60) days written notice to the Trustee. Any such Paying Agent
may be removed at any time by an instrument filed with such Paying Agent and
signed by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that each REMIC shall constitute, and
that the affairs of each REMIC shall be conducted so as to qualify it as a REMIC
in accordance with the REMIC Provisions. In furtherance of such intention,
ContiFunding Corporation or such other person designated pursuant to Section
11.18 hereof shall act as agent for the Trust and as "tax matters person" (as
defined in the REMIC Provisions) for the Trust and in such capacity it shall:
(i) prepare or cause to be prepared and filed, in a timely manner, annual tax
returns and any other tax return required to be filed by each REMIC established
hereunder using a calendar year as the taxable year for each REMIC established
hereunder; (ii) in the related first such tax return, make (or cause to be made)
an election satisfying the requirements of the REMIC Provisions, on behalf of
each REMIC, for it to be treated as a REMIC; (iii) prepare and forward, or cause
to be prepared and forwarded, to the Owners all information, reports or tax
returns required with respect to each REMIC as, when and in the form required to
be provided to the Owners, and to the Internal Revenue Service and any other
relevant governmental taxing authority in accordance with the REMIC Provisions
and any other applicable federal, state or local laws, including without
limitation information reports relating to "original issue discount" as defined
in the Code based upon the prepayment assumption and calculated by using the
"issue price" (within the meaning of Section 1273 of the Code) of the
Certificates of the related Class; (iv) not take any action or omit to take any
action that would cause the termination of the REMIC status of a REMIC, except
as provided under this Agreement; (v) represent the Trust or a REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to a
taxable year of the Trust or a REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust or a REMIC, and otherwise act on behalf of the Trust or a
REMIC therein in relation to any tax matter involving the Trust or the REMIC
therein; (vi) comply with all statutory or regulatory requirements with regard
to its conduct of activities pursuant to the foregoing clauses of this Section
11.16, including, without limitation, providing all notices and other
information to the Internal Revenue Service and Owners of Residual Certificates
required of a "tax matters person" pursuant to subtitle F of the Code and the
Treasury Regulations thereunder; (vii) make available information necessary for
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the computation of any tax imposed (A) on transferors of residual interests to
certain Disqualified Organizations or (B) on pass-through entities, any interest
in which is held by or treated as held by a Disqualified Organization; and
(viii) acquire and hold the Tax Matters Person Residual Interest. The
obligations of ContiFunding Corporation or such other designated Tax Matters
Person pursuant to this Section 11.16 shall survive the termination or discharge
of this Agreement.
(b) Each of the Sellers, the Depositor, the Trustee and the Servicer
covenant and agree for the benefit of the Owners and the Certificate Insurer (i)
to take no action which would result in the termination of "REMIC" status for a
REMIC, (ii) not to engage in any "prohibited transaction," as such term is
defined in Section 860F(a)(2) of the Code, (iii) not to engage in any other
action which may result in the imposition on the Trust of any other taxes under
the Code and (iv) to cause the Servicer not to take or engage in any such
action, to the extent the Sellers are aware of any such proposed action by the
Servicer.
(c) Each REMIC shall, for federal income tax purposes, maintain
books on a calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, either of the Sellers nor the Trustee
shall enter into any arrangement by which the Trustee will receive a fee or
other compensation for services rendered pursuant to this Agreement, other than
as expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), neither the
Trustee nor either of the Sellers may engage in any of the transactions
prohibited by such clauses, unless the Trustee shall have received an opinion of
counsel experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that such transaction does not result in a
tax imposed on the Trustee or cause a termination of REMIC status for a REMIC;
provided, however, that such transaction is otherwise permitted under this
Agreement.
(g) The Servicer and Tax Matters Person agree to indemnify the Trust
for any tax imposed on the Trust or a REMIC as a result of their negligence.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer to the effect
that such transaction does not result in a tax imposed on the Trust or a REMIC
or cause a termination of REMIC status for a REMIC, (i) sell any assets in the
Trust Estate, (ii) accept any contribution of assets after the Startup Day or
(iii) agree to any modification of this Agreement. To the extent that sufficient
amounts cannot be so retained to pay or provide for the payment of such tax, the
Trustee is hereby authorized to and shall segregate, into a separate
non-interest bearing account, the net income from any such Prohibited
Transactions of a REMIC and use such income, to the extent necessary, to pay
such tax; provided that, to the extent that any such income is paid to the
Internal Revenue Service, the
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Trustee shall retain an equal amount from future
amounts otherwise distributable to the Owners of Class R Certificates and shall
distribute such retained amounts to the Owners of Offered Certificates to the
extent they are fully reimbursed and then to the Owners of the Class R
Certificates. If any tax, including interest penalties or assessments,
additional amounts or additions to tax, is imposed on the Trust, such tax shall
be charged against amounts otherwise distributable to the owners of the Class R
Certificates on a pro rata basis. The Trustee is hereby authorized to and shall
retain from amounts otherwise distributable to the Owners of the Class R
Certificates sufficient funds to pay or provide for the payment of, and to
actually pay, such tax as is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for each REMIC for all
purposes of the Code and such Tax Matters Person will perform, or cause to be
performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Tax Matters Person for each REMIC shall be ContiFunding Corporation as long as
it owns a Class R-I, Class R-II or Class R Certificate. If ContiFunding
Corporation does not own a Class R-I, Class R-II or Class R Certificate, as the
case may be, the Tax Matters Person may be any other entity that owns such a
Class R-I, Class R-II or Class R Certificate and accepts a designation hereunder
as Tax Matters person by delivering an affidavit in the form of Exhibit I.
ContiFunding Corporation shall notify the Trustee in writing of the name and
address of another person who accepts a designation as Tax Matters Person
hereunder.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
the Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policies. At such time as the Class A Certificates and any
Reimbursement Amounts are no longer Outstanding hereunder, the Certificate
Insurer's rights hereunder shall terminate.
Section 11.20 Reserved.
Section 11.21 Third Party Rights.
The Trustee, each of the Sellers, the Depositor and the Owners agree
that the Certificate Insurer shall be deemed a third-party beneficiary of this
Agreement as if it were a party hereto.
Section 11.22 Notices.
All notices hereunder shall be given as follows, until any
superseding instructions are given to all other Persons listed below:
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The Trustee: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
Tel: (716) 842-5589
Fax: (716) 842-5905
Attention: Corporate Trust Administration
The Depositor: ContiSecurities Asset Funding Corp.
3811 West Charleston Boulevard
Suite 104
Las Vegas, Nevada 89102
Tel: (702) 822-5836
Fax: (702) 822-5839
The Sellers: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: President and Chief Counsel
Tel: (215) 347-3000
Fax: (215) 347-3400
ContiWest Corporation
3811 West Charleston Boulevard
Suite 104
Las Vegas, Nevada 89102
Tel: (702) 822-5836
Fax: (702) 822-5839
The Servicer: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: Senior Vice President and
Chief Counsel
Tel: (215) 347-3000
Fax: (215) 347-3400
The Master Servicer: Norwest Bank Minnesota, N.A.
11000 Broken Land Parkway
Columbia, Maryland 21044
Attention: Master Servicing Department
Tel: (410) 884-2000
Fax: (410) 884-2360
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The Certificate Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Tel:
Fax:
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity Monitoring
Department
Tel: (212) 553-0300
Fax: (212) 553-4773
Fitch: Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Tel: (800) 753-4824
Fax: (212) 376-6964
Standard & Poor's: Standard & Poor's
55 Water Street, 41st Floor
New York, New York 10041
Tel: (212) 438-2000
Fax: (212) 438-2664
Attention: Residential Mortgage
Surveillance Group
Underwriters: Bear, Stearns & Co. Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Attention: Asset Backed Securities Group
Tel: (212) 272-3311
Fax: (212) 272-7294
ContiFinancial Services Corporation
277 Park Avenue, 38th Floor
New York, New York 10172
Attention: Chief Counsel, Chief
Financial Officer and Chief
Operating Officer
Tel: (212) 207-2822
Fax: (212) 207-5251
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Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Attention: Asset Finance
Tel: (212) 325-2000
Fax: (212) 325-8261
Greenwich Capital Markets, Inc.
600 Steamboat Rd.
Greenwich, CT 06830
Tel: (203) 622-5693
Fax: (203) 622-3650
Merrill Lynch, Pierce Fenner & Smith, Inc.
26th Floor
World Financial Center, North Tower
New York, New York 10281-1326
Tel: (212) 449-1000
Fax: (212) 449-9015
Paine Webber Incorporated
1285 Avenue of the Americas
11th Floor
New York, NY 10019
Tel: (212) 713-8601
Fax: (212) 713-7999
Owners: As set forth in the Register.
Others: Any notice to the Depositor, either Seller or the Servicer
shall also be furnished to:
ContiTrade Services L.L.C.
Chief Counsel
277 Park Avenue, 38th Floor
New York, New York 10172
Tel: (212) 207-2822
Fax: (212) 207-5251
END OF ARTICLE XI
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ARTICLE XII
THE MASTER SERVICER
Section 12.01 Appointment and Duties of the Master Servicer.
(a) Appointment and Compensation of Master Servicer. The Depositor,
the Servicer and the Trustee hereby assign and appoint the Master Servicer to
act as the Master Servicer for the Home Equity Loans (including all of the
duties, obligations and rights of the Master Servicer) under this Agreement. The
Master Servicer hereby accepts its appointment as the Master Servicer hereunder.
The Master Servicer shall not consent to any material amendment, modification or
waiver of the servicing provisions of this Agreement, without the consent of the
Certificate Insurer, and without having received written confirmation from
Standard & Poor's and Fitch that such action would not cause a downgrade,
withdrawal or qualification of the then current ratings on any Class of
Certificates (in the Class A Certificates, without regard to the Certificate
Insurance Policy).
As compensation for its services hereunder, the Master Servicer
shall be entitled to receive the Master Servicing Fee on each Payment Date from
the Certificate Account. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its Master Servicer duties and
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
(b) Master Servicer Assumes Servicing Responsibility. If the
Servicer Termination Date occurs, or if ContiMortgage's term as Servicer is not
extended pursuant to Section 8.20(i) hereof, then the Master Servicer shall be
obligated (1) to select a successor servicer subject to Section 8.21 hereof,
that is reasonably acceptable to the Certificate Insurer and the appointment of
which would not cause either Standard & Poor's or Fitch to downgrade, withdraw
or qualify the then current ratings on any Class of Certificates, or (2) to act
as the successor servicer hereunder (in the case of the Class A Certificates,
without regard to the Certificate Insurance Policy).
(c) Monitoring of Servicing. The Master Servicer shall: (i) review
the servicing reports, loan level information or other relevant information
prepared by the Servicer (A) to determine whether such reports are inaccurate or
incomplete, in any material respect, (B) to ascertain whether the Servicer is in
compliance, in all material respects, with its duties and obligations with
respect to such reports under this Agreement and (C) in the event that any
servicing report is inaccurate or incomplete, to prepare and deliver an
exception report to the Trustee, the Certificate Insurer and the Servicer, which
describes such inaccuracy or incompleteness; (ii) otherwise monitor the
performance by the Servicer of its duties and obligations hereunder (other than
the provisions of Section 8.13) and notify the Trustee, the Certificate Insurer,
and the Rating Agencies of any Servicer Termination Event of which it has
received notice or has actual knowledge; and (iii) be obligated to verify that
the Servicer, has or has caused to be deposited all amounts required to be
deposited into the Certificate Account as reflected on the reports of the
Servicer; provided, that, with respect to any Home Equity Loans with respect to
which interest accrues on the basis of simple interest, the Master Servicer's
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obligation to monitor the Servicer's performance with respect to such Home
Equity Loans shall be limited to a review of a sampling of such loans as
selected by the Master Servicer. Within two Business Days following each Monthly
Remittance Date the Master Servicer, assuming that it has received the related
monthly servicing report from the Servicer not later than the Monthly Report
Date, shall review such report and determine whether the Servicer has made all
required Delinquency Advances and paid all required Compensating Interest for
the related Payment Date. If the Master Servicer determines that the Servicer
has not done so, the Master Servicer shall make a written demand on the Servicer
to deposit any shortfall in such required amounts in the Certificate Account.
If, by the end of the second Business Day following such notice the Servicer has
not so deposited such shortfall, the Master Servicer shall deposit such
shortfall into the Certificate Account, provided that the Master Servicer's
obligation to fund any shortfall in respect of Compensating Interest in any one
month shall be limited to the Master Servicing Fee for such month. Pursuant to
Section 8.20(c) the Master Servicer may, but shall not be obligated to, remove
the Servicer for any failure of the Servicer to make any required Delinquency
Advance or to pay any required Compensating Interest.
(d) Successor Servicer. The Master Servicer agrees that it shall at
all times be prepared, to perform the duties and obligations of the Servicer and
become the successor servicer, if the Servicer fails to perform its duties and
obligations hereunder.
(e) Servicer Cooperation. The Servicer shall act, in a good faith
and reasonable manner, to assist and cooperate with the Master Servicer in
performing its duties and obligations under this Section 12.01. On a monthly
basis pursuant to Section 8.08(d)(ii) hereof, the Servicer, shall provide the
Master Servicer with its monthly servicing report in a compatible computer
readable format.
(f) Termination and Removal of Master Servicer. (i) The Certificate
Insurer, at any time prior to October 31, 2000, may renew the Master Servicer's
contractual obligations hereunder following the end of the November 2000
Remittance Period. If the Certificate Insurer does renew the Master Servicer,
the Master Servicer shall remain as Master Servicer after the November 2000
Remittance Period, until such time, if it occurs, as the Certificate Insurer may
dismiss the Master Servicer. Notwithstanding the foregoing, no dismissal of the
Master Servicer shall occur unless the Trustee has received written confirmation
from Standard & Poor's and from Fitch that such dismissal would not cause (in
the case of the Class A Certificates, without regard to the Certificate
Insurance Policy) a downgrade, withdrawal or qualification of the then current
ratings of any Class of Certificates.
(ii) If the Master Servicer is material default of any of its
obligations hereunder, or is in breach of any of its representations and
warranties set forth below, and such default or breach continues for a period of
30 days following the Master Servicer's receipt of notice of such failure or
such breach from the Trustee or from the Certificate Insurer, then the
Certificate Insurer may remove the Master Servicer. If the Master Servicer is so
removed, the Certificate Insurer will attempt to name a replacement, if the
failure so to name a replacement would cause either Standard & Poor's or Fitch
(in the case of the Class A Certificates, without regard to the Certificate
Insurance Policy) to downgrade, withdraw or qualify the then current ratings on
any Class of Certificates.
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(g) Resignation of Master Servicer. The Master Servicer may resign
on 60 days' prior written notice to all parties or immediately if the Master
Servicer determines 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 and cannot be cured, provided that such
determination shall be evidenced by an opinion of counsel to such effect
delivered to the Servicer, the Certificate Insurer and the Trustee. No
resignation of the Master Servicer shall become effective until a successor
master servicer reasonably acceptable to the Certificate Insurer, Standard &
Poor's and to Fitch shall have assumed the obligations of the Master Servicer
hereunder.
(h) Limitation on Liability of Master Servicer. Neither the Master
Servicer nor any director, officer, employee or agent of the Master Servicer
shall be under any liability to the Trustee, the Servicer, the Certificate
Insurer, the Owners or any other Person 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
Master Servicer or any such Person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its obligations
and duties under this Agreement. The Master Servicer and any director, officer,
employee or agent of the Master Servicer may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder.
Section 12.02 Representations, Warranties and Covenants of the
Master Servicer.
The Master Servicer hereby represents and warrants to the Servicer, the Trustee,
the Owners, the Depositor, and the Certificate Insurer that as of the Closing
Date (except as otherwise specifically provided herein):
(a) The Master Servicer is a national banking association duly
organized, validly existing, and in good standing under the laws of the United
States of America.
(b) The execution and delivery of this Agreement by the Master
Servicer and its performance of and compliance with the terms of this Agreement
will not violate the Master Servicer's articles of association 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 Master
Servicer is a party or which may be applicable to the Master Servicer or any of
its assets.
(c) The Master Servicer 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 Trustee,
the Servicer, each Seller, and the Depositor, constitutes a valid, legal and
binding obligation of the Master Servicer, 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
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generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
(d) The Master Servicer is not in violation of, and the execution
and delivery of this Agreement by the Master Servicer and its performance 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 affect the condition (financial or
otherwise) or operations of the Master Servicer or its properties or materially
and adversely affect the performance of its duties hereunder.
(e) There are no actions or proceedings against, or investigations
of, the Master Servicer currently pending with regard to which the Master
Servicer has received service of process and no action or proceeding against, or
investigation of, the Master Servicer is, to the knowledge of the Master
Servicer, threatened or otherwise pending, before any court, administrative
agency or other tribunal that (i) if determined adversely, would prohibit its
entering into this Agreement or render the Certificates invalid, (ii) seek to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement or (iii) if determined adversely,
would prohibit or materially and adversely affect the sale of the Home Equity
Loans to the Depositor, the performance by the Master Servicer of its
obligations under, or the validity or enforceability of, this Agreement or the
Certificates.
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (i) the execution, delivery and
performance by the Master Servicer of, or compliance by the Master Servicer
with, this Agreement or the Notes, or (ii) the consummation of the transactions
required of it by this Agreement, except such as shall have been obtained before
the Closing Date.
END OF ARTICLE XII
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<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused this Pooling and Servicing Agreement to be duly executed by
their respective officers thereunto duly authorized, all as of the day and year
first above written.
CONTISECURITIES ASSET FUNDING CORP., as
Depositor
By:
----------------------------------------
Name: Frank Baier
Title: Authorized Signatory
By:
----------------------------------------
Name: Alan Fishman
Title: Authorized Signatory
CONTIMORTGAGE CORPORATION,
as Seller and Servicer
By:
----------------------------------------
Name: Margaret Curry
Title: Senior Vice President
By:
----------------------------------------
Name: Daniel Egan
Title: Senior Vice President
CONTIWEST CORPORATION,
as Seller
By:
----------------------------------------
Name: Joy Tolbert
Title: Vice President
By:
----------------------------------------
Name: Todd Hart
Title: Assistant Vice President
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
----------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
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NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Master Servicer
By:
----------------------------------------
Name:
Title:
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<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the ____ day of ________ 1999, before me personally came
________________ and ________________, to me known, who, being by me duly sworn,
did depose and say that he/she resides at ________________________________ and
________________________________, respectively; that he/she is an Authorized
Signatory and an Authorized Signatory, respectively, of ContiSecurities Asset
Funding Corp., a Delaware Corporation; and that he/she signed his/her name
thereto by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
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STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the ____ day of ________ 1999, before me personally came
________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________________; that he/she is a Senior Vice
President of ContiMortgage Corporation, a Delaware Corporation; and that he/she
signed his/her name thereto by order of the respective Boards of Directors of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
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STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the ____ day of ________ 1999, before me personally came
________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________________; that he/she is a Senior Vice
President of ContiMortgage Corporation, a Delaware corporation; and that he/she
signed his/her name thereto by order of the respective Boards of Directors of
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
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STATE OF NEVADA )
): ss.:
COUNTY OF CLARK )
On the ____ day of ________ 1999, before me personally came
________________ and ________________, to me known, who, being by me duly sworn,
did depose and say that he resides at ________________________________ and
________________________________, respectively; that he is a Vice President and
Assistant Secretary, respectively, of ContiWest Corporation, a Nevada
corporation; and that he signed his name thereto by order of the respective
Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
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STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the ____ day of ________ 1999, before me personally came
________________, to me known, who, being by me duly sworn did depose and say
that he resides at ________________________; that he is an ________________ of
Manufacturers and Traders Trust Company, the New York banking corporation
described in and that executed the above instrument as Trustee; and that he
signed his name thereto by order of the Board of Directors of said New York
banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
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STATE OF ________________ )
): ss.:
COUNTY OF ________________ )
On the ____ day of ________ 1999, before me personally came
________________, to me known, who, being by me duly sworn did depose and say
that he resides at ________________________; that he is a(n) ________________ of
Norwest Bank Minnesota, National Association, a national banking corporation;
and that he/she signed his/her name thereto by order of the Board of Directors
of said New York banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
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SCHEDULE I-A
SCHEDULE OF FIXED RATE HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
I-A-1
<PAGE>
SCHEDULE I-B
SCHEDULE OF GROUP II HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
I-B-1
<PAGE>
SCHEDULE II
HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
II-1
<PAGE>
SCHEDULE III
HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
III-1
<PAGE>
SCHEDULE IV
HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
A-II-1
SUPPLEMENTAL SERVICING AMENDMENT
SUPPLEMENTAL SERVICING AMENDMENT dated as of November 9, 1999 by and
among ContiMortgage Corporation, a Delaware corporation (the "Servicer"),
ContiWest Corporation, a Nevada corporation, ContiSecurities Asset Funding
Corp., a Delaware corporation (the "Depositor"), Greenwich Capital Financial
Products, Inc., a Delaware corporation (the "Supplemental Servicer") and
Manufacturers and Traders Trust Company, a New York banking corporation (the
"Trustee"), in its capacity as Trustee under each of the Pooling and Servicing
Agreements listed on the attached Schedule A-1 and Schedule A-2 (the "Pooling
Agreements") with respect to the trusts (the "Trusts") formed pursuant to the
Pooling Agreements.
WHEREAS, the Servicer and the Trustee have previously entered into
the Pooling Agreements, among the Servicer, the Trustee, the Depositor and the
other parties named therein pursuant to which the Servicer is to act as servicer
to service and administer the home equity loans (the "Home Equity Loans") owned
by the Trusts in accordance with the Pooling Agreements;
WHEREAS, Servicer and Continental Grain Company, among others, are
party to a Subservicing Agreement dated as of November 1, 1998 (the "Grain
Subservicing Agreement") and desire to terminate that Agreement;
WHEREAS, the Depositor, Servicer and each Trustee desire the
appointment of the Supplemental Servicer to perform the obligations under
Section 2.02(a) of this Amendment;
WHEREAS, the Certificate Insurers for each Trust, as applicable,
have consented to this Amendment and the Rating Agencies rating securities
issued by each Trust have confirmed that this Amendment to each Pooling
Agreement will not cause such Rating Agency to reduce its current rating
assigned to any Class of rated Certificates;
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
Article I
AMENDMENT; DEFINITIONS
Section 1.01. Amendment. This Supplemental Servicing Amendment
("Amendment") constitutes an amendment and supplement to each Pooling Agreement.
Section 1.02. Definitions. The following terms have the following
meanings when used in this Amendment.
"Advance Conditions" has the meaning set forth in Section 2.02(d)
hereof.
<PAGE>
"Amendment" means this Supplemental Servicing Amendment, and all
amendments hereof and supplements hereto.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banking institutions in The City of New York, or in the
city in which the principal corporate trust office of the Trustee is located,
are authorized or obligated by law or executive order to be closed, and when
used with reference to the determination of LIBOR, shall also exclude any day on
which banks are not open for dealings in dollar deposits in the London interbank
market.
"Calculated Delinquency Advance" has the meaning set forth in
Section 2.02(a) hereof.
"Clearance Account" has the meaning set forth in Section 2.03(a)
hereof.
"Clearing Bank" means Chase Manhattan Bank, N.A. or any other
Designated Depository Institution mutually acceptable to the Supplemental
Servicer, the Servicer and the Certificate Insurer for each Trust.
"Compensating Interest" with respect to any Trust Group, has the
meaning set forth in the related Pooling Agreement.
"Daily Collections" has the meaning, with respect to a particular
Trust Group, set forth in the Pooling Agreement relating to such Trust Group.
"Depositor" has the meaning set forth in the introductory paragraph
hereof.
"Disbursing Agent" shall mean each of the Servicer and Supplemental
Servicer acting as agents for each Trust.
"Disbursement Notice" has the meaning set forth in Section 2.03(d)
herein.
"Funds Available for Servicing Payments" means, with respect to any
Trust, the amounts described in the related Pooling Agreement as the Servicing
Fee and other servicing compensation payable to the Servicer under such Pooling
Agreement, including but not limited to, late payment charges, prepayment
charges, release fees, assumption fees and bad check charges during any
Remittance Period.
"Grain Subservicing Agreement" has the meaning set forth in the
second WHEREAS clause in the Recitals hereof.
"Gross Collections" means, with respect to each Trust Group, all
amounts paid with respect to the Home Equity Loans, including but not limited
to, the total amount of principal, interest, Prepayments, Net Liquidation
Proceeds, Insurance Proceeds, late payment charges, prepayment charges, release
fees, assumption fees and bad check charges, received by the Servicer or by any
other entity on behalf of the Trust,
2
<PAGE>
in all circumstances prior to the payment, netting or deduction of any amount
and prior to the deposit of such funds into the Principal and Interest Account.
"Home Equity Loans" has the meaning set forth in the first WHEREAS
clause in the Recitals hereof.
"LIBOR" means, with respect to any period commencing on a Monthly
Remittance Date and ending on the day before the next Monthly Remittance Date,
the rate of interest (calculated on a per annum basis) equal to the one month
London Interbank Offered Rate as reported on the display designated as "Page
3750" on the Telerate Service (or such other display as may replace Page 3750 on
the Telerate Service) on the related LIBOR Determination Date.
"LIBOR Determination Date" means, with respect to any period
commencing on a Monthly Remittance Date and ending on the day before the next
Monthly Remittance Date, such earlier Monthly Remittance Date.
"Mandatory Trust Groups" means the Trusts identified on Schedule A-1
and the Trust Groups identified on Schedule A-2 as "Mandatory."
"Maximum Aggregate Supplemental Delinquency Advance" means
$125,000,000.
"Maximum Available Supplemental Delinquency Advance" means the
Maximum Aggregate Supplemental Delinquency Advance less the amount of any
outstanding unreimbursed Supplemental Delinquency Advances.
"Net Collections" means Gross Collections minus the Funds Available
for Servicing Payments.
"Optional Trust Groups" means the Trust Groups identified on
Schedule A-2 as "Optional."
"Person" means any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Pooling Agreements" has the meaning set forth in the introductory
paragraph hereof.
"Principal and Interest Account" has the meaning, with respect to a
particular Trust, set forth in the Pooling Agreement relating to such Trust.
"Right" has the meaning set forth in Section 6.04 hereof.
"Servicer" has the meaning set forth in the introductory paragraph
hereof.
3
<PAGE>
"Servicer Delinquency Advance" has the meaning set forth in Section
2.02(a) hereof.
"Supplemental Delinquency Advance" has the meaning set forth in
Section 2.02(a) hereof.
"Supplemental Delinquency Advance Notice" has the meaning set forth
in Section 2.02(b) hereof.
"Supplemental Servicer" has the meaning set forth in the
introductory paragraph hereof.
"Supplemental Servicing Fee" has the meaning set forth in Section
2.04(a) hereof.
"Supplemental Servicing Fee Shortfall" means any difference between
the amount of the Supplemental Servicing Fee due to the Supplemental Servicer
pursuant to Section 2.04(a) hereof on any particular day and the amount of the
Supplemental Servicing Fee actually paid to the Supplemental Servicer on such
day.
"Trust Groups" means with respect to the Trusts set forth on
Schedule A-1, such Trusts, and with respect to the Trusts set forth on Schedule
A-2, the Loan Groups for each such Trust identified on such Schedule.
"Trustee" has the meaning set forth in the introductory paragraph
hereof
"Trusts" has the meaning set forth in the introductory paragraph
hereof.
"Turbo Event" has the meaning set forth in Section 4.01(c) hereof.
"Verification Agent" has the meaning set forth in Section 6.01
hereof.
Section 1.03. Other Terms. Capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the related Pooling
Agreements.
Article II
THE SERVICER AND THE SUPPLEMENTAL SERVICER
Section 2.01. Appointment of the Supplemental Servicer; Direction to
Trustee. Pursuant to the Pooling Agreements, each Trustee, on behalf of each
Trust, hereby appoints the Supplemental Servicer to perform the services set
forth in Section 2.02 hereof, which appointment the Supplemental Servicer hereby
accepts. The Supplemental Servicer agrees to perform the obligations set forth
in Section 2.02 hereof in accordance with the terms set forth herein and in the
Pooling Agreements. The Supplemental Servicer undertakes no obligations of the
Servicer under the Pooling Agreements other than those expressly set forth in
Section 2.02 hereof. Nothing in this
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Amendment shall relieve the Servicer of its obligations under the Pooling
Agreements or in any way limit such obligations.
The Depositor hereby directs each Trustee to execute and deliver
this Amendment on behalf of each Trust and to notify each Certificateholder
entitled to notice in accordance with the terms of the related Pooling
Agreement.
Section 2.02. Obligations of the Supplemental Servicer.
(a) The Supplemental Servicer shall, with respect to each Mandatory
Trust Group, and may, with respect to each Optional Trust Group, advance on each
Monthly Remittance Date, until the Supplemental Servicer's advancing obligation
terminates pursuant to Section 4.01 hereof, to each Trustee on behalf its
respective Trust Groups, a "Supplemental Delinquency Advance" in an amount equal
to the lesser of
(i) the "Calculated Delinquency Advance," which shall be
the lesser of:
(a) the Delinquency Advance due on such Monthly
Remittance Date for such Trust Group less
(I) any Compensating Interest with respect
to such Remittance Period not paid by the
Servicer with its own funds and (II) any
portion of a Delinquency Advance to the
extent payable as a result of accounting or
other errors, or the failure to deposit
funds or the misapplication of funds by the
Servicer, and
(b) 5.0% of the unpaid principal balance of the
Home Equity Loans of such Trust Group as of
the last Business Day of the calendar month
immediately preceding the calendar month in
which such Monthly Remittance Date occurs
less any unreimbursed Supplemental
Delinquency Advances for such Trust Group as
of such Monthly Remittance Date; and
(ii) if the aggregate of all Calculated Delinquency
Advances exceeds the Maximum Available Supplemental
Delinquency Advance, the amount of the Calculated
Delinquency Advance shall be allocated on a pro rata
basis among the Trusts, based on the ratio of the
aggregate Calculated Delinquency Advances due to all
Trusts to the Maximum Available Supplemental
Delinquency Advance, first among the Mandatory Trust
Groups and secondly among the Optional Trust Groups
for which the
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Supplemental Servicer is making a Supplemental
Delinquency Advance.
With respect to any Trust Group, the Supplemental Servicer may agree in its sole
discretion to make a Supplemental Delinquency Advance in an amount greater than
the Calculated Delinquency Advance provided for above. Unless otherwise agreed
by the Supplemental Servicer in its sole discretion, in no event shall the
aggregate of all Supplemental Delinquency Advances exceed the Maximum Available
Supplemental Delinquency Advance. The difference between the Supplemental
Delinquency Advance paid by the Supplemental Servicer on any Monthly Remittance
Date to a particular Trust Group and received by the Trustee and the total
Delinquency Advance due under the Pooling Agreement for such Trust Group on such
Monthly Remittance Date shall be paid by the Servicer as a Delinquency Advance
(a "Servicer Delinquency Advance").
(b) No later than 1:00 p.m. New York time on the Business Day
preceding each Monthly Remittance Date, the Servicer shall deliver to the
Supplemental Servicer, each Trustee and the Certificate Insurer for each Trust a
notice (the "Supplemental Delinquency Advance Notice"), in the form of Exhibit I
hereto, setting forth, among other things, the amounts due on such Monthly
Remittance Date for the Delinquency Advance, the Supplemental Delinquency
Advance and the Servicer Delinquency Advance to each Trustee for each Trust
Group, and the amounts thereof from prior Remittance Periods that remain
unreimbursed.
(c) As soon as reasonably practicable following receipt of the
Supplemental Delinquency Advance Notice, the Supplemental Servicer shall advise
the Servicer and the Verification Agent of the amount, if any, of the
Supplemental Advance it intends to make in respect of Optional Trust Groups. On
each Monthly Remittance Date, the Supplemental Servicer shall, pursuant to the
terms of this Section 2.02, pay in immediately available funds by wire transfer
to the Certificate Account for each Trust the Supplemental Delinquency Advance
due in respect of each Mandatory Trust Group and, if it elects to make such
advance, the Supplemental Delinquency Advance (or portion thereof) due in
respect of each Optional Trust Group.
(d) The obligation of the Supplemental Servicer to make a
Supplemental Delinquency Advance in respect of a Mandatory Trust Group is
expressly conditioned upon (i) issuance of a Supplemental Delinquency Advance
Notice verified by the Verification Agent at least one Business Day prior to the
Monthly Remittance Date with regard to such Trust Group, (ii) no Turbo Event
with respect to any Trust having occurred and continuing unremedied and no facts
or circumstances described in Section 4.01(c) having occurred and continuing
unremedied, without regard to whether the Supplemental Servicer has issued a
notice with respect to such event(s), (iii) this Amendment not having been
terminated; (iv) the Clearing Bank not having failed to act in accordance with a
Disbursement Notice; (v) the Supplemental Servicer determining in its reasonable
good faith judgment that such Supplemental Delinquency Advance will be
recoverable from Net Collections of such Trust Group within three months of the
date made; and (vi) the Servicer having paid in full all amounts due to the
Verification Agent (collectively, the "Advance Conditions"). Notwithstanding any
provision contained herein to the
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contrary, the Supplemental Servicer shall have no obligation to make a
Supplemental Delinquency Advance to a particular Trust unless all the Advance
Conditions have been satisfied and the making of a Supplemental Delinquency
Advance if any Advance Conditions are not satisfied shall not constitute a
waiver of such right or be construed as a precedent.
Section 2.03. Servicer Acts as Agent; Gross Collections; Disbursing
Notices.
(a) The Servicer shall, during the term of this Amendment, deposit
or cause to be deposited Gross Collections upon receipt for each Trust without
deduction, off-set or netting into an account entitled "ContiMortgage Payment
Clearing A/C FBO Other Investors/Custodial Acct" maintained at the Clearing Bank
for the benefit of the Trusts (the "Clearance Account"). Notwithstanding
anything to the contrary in any Pooling Agreement, the Servicer shall not
receive Servicing Fees, other servicing compensation, or reimbursement of
Servicing Advances or Servicer Delinquency Advances except in accordance with
this Amendment and the Servicer shall not be entitled to deduct, off-set or net
any amounts from Gross Collections prior to deposit into the Clearance Account.
(b) The parties hereto agree that the Servicer shall be acting in
the capacity as agent of the Trusts when it receives Gross Collections, deposits
Gross Collections into the Clearance Account and when it issues Disbursement
Notices, and that the Servicer has no right, title or interest in any Gross
Collections unless and until such amounts are actually paid to the Servicer
pursuant to an authorized Disbursement Notice for its own benefit in accordance
with this Amendment.
(c) The Servicer shall not have or obtain any right, title or
interest in any amounts paid from the Gross Collections to the Supplemental
Servicer as a Supplemental Servicing Fee, as reimbursement for Supplemental
Delinquency Advances, or otherwise. The Servicer acknowledges and agrees that
any Gross Collections received and held by it in the Clearance Account or
otherwise are held as agent and in trust for the applicable Trust. Each Trust is
the owner of its Gross Collections until actually paid pursuant to this
Amendment and the Pooling Agreement.
(d) Subject to Section 2.06, on each Business Day in which collected
funds are on deposit in the Clearance Account, the Disbursing Agent, as agent
for each Trustee, shall issue a notice to the Clearing Bank, the other
Disbursing Agent and the Verification Agent (each a "Disbursement Notice"),
which in each case shall contain (subject to appropriate modification) the items
of information shown on Exhibit II hereto, directing such Clearing Bank to (i)
transfer the appropriate amounts of escrow funds, insurance premiums, and
suspense items to their respective accounts, (ii) to pay by wire transfer from
the Clearance Account to the Supplemental Servicer or the Servicer from Funds
Available for Servicing Payments remaining after transfers pursuant to
subsection (i) in this paragraph, as appropriate and pursuant to the priorities
established in this Amendment, all available funds necessary to pay Supplemental
Servicing Fees, Servicing Fees and other servicing compensation, and (iii) to
pay by wire transfer from the
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Clearance Account to the Supplemental Servicer or the Servicer from any funds of
each Trust Group remaining after transfers pursuant to subsections (i) and (ii)
in this paragraph, as appropriate and pursuant to the priorities established in
this Amendment, all available funds of each Trust Group necessary to reimburse
Supplemental Delinquency Advances and Servicer Delinquency Advances, provided,
that any disputed amounts shall be deposited into the Principal and Interest
Account for the related Trust as provided in Section 6.01. To the extent any
amounts remain in the Clearance Account after such amounts have been paid, the
Disbursing Agent shall issue a Disbursement Notice directing the Clearing Bank
to deposit the Daily Collections into the Principal and Interest Account for the
related Trust.
(e) In all instances in which the Disbursing Agent is required to
perform an action, the Servicer shall be obligated to take such action and the
Supplemental Servicer may, but is not required to perform, such action. Each
person receiving direction or a notice (including, without limitation, a
Disbursement Notice) from the Servicer and Supplemental Servicer, in each case
as Disbursing Agent, pertaining to the payment of Supplemental Servicing Fees or
reimbursement for Supplemental Delinquency Advances shall disregard the
direction or notice from the Servicer and act in accordance with the direction
or notice from the Supplemental Servicer. The Supplemental Servicer as the other
Disbursing Agent, retains the right to issue alternate Disbursement Notices to
the Clearing Bank concerning Supplemental Servicing Fees and reimbursement for
Supplemental Delinquency Advances which shall supercede any inconsistent
direction or notice issued by the Servicer as Disbursing Agent and shall make
all such inconsistent notices or directions null and void. Each Disbursing Agent
agrees that it will only disburse funds on deposit in the Clearance Account in
accordance with the terms of the related Pooling Agreements, as amended by this
Amendment. If the Supplemental Servicer is acting as Disbursing Agent, it shall
disburse funds in the Clearance Account only with respect to the Home Equity
Loans owned by the Trusts. At such time as this Amendment has terminated and the
Supplemental Servicer has been paid and reimbursed all amounts owing to it
pursuant to this Amendment, the Supplemental Servicer shall so notify the
Clearing Bank, and shall advise the Clearing Bank that it is no longer
authorized to issue Disbursement Notices pursuant hereto and that any then
effective Disbursement Notices given by it shall thereafter be void.
Section 2.04. Supplemental Servicing Fee.
(a) As compensation for rendering the services specified herein, the
Supplemental Servicer shall be entitled to receive, on a daily basis, a
supplemental servicing fee (the "Supplemental Servicing Fee") from each Trust.
The Supplemental Servicing Fee due on any particular day from a particular Trust
shall equal the product of (i) LIBOR plus 250 basis points, (ii) 1/360 and (iii)
the highest amount of such unreimbursed Supplemental Delinquency Advances
associated with such Trust on such day, provided, however, that on any day that
there are accrued and unpaid Supplemental Servicing Fees for a prior Monthly
Remittance Period, the Supplemental Servicing Fee for that day shall not exceed
12.0% per annum.
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(b) The Supplemental Servicing Fee shall be paid each Business Day
solely from the Funds Available for Servicing Payments, pursuant to a
Disbursement Notice, prior to any payment to the Servicer (or a successor
servicer) with respect to the Servicing Fee or other servicer compensation. The
Servicer (or a successor servicer) shall not be entitled to receive the
Servicing Fee or other servicing compensation and no Trust shall pay the
Servicing Fee or other servicing compensation to the Servicer (or a successor
servicer) if there exists a Supplemental Servicing Fee Shortfall. The amount of
any Supplemental Servicing Fee paid to the Supplemental Servicer from each Trust
shall reduce, dollar-for-dollar, the amount of the Servicing Fee and other
Servicer compensation that would otherwise have been payable to the Servicer (or
a successor servicer) by such Trust but for the execution of this Amendment.
(c) Upon payment in full of all Supplemental Servicing Fees then due
and owing, all remaining Funds Available for Servicing Payments (if any) shall
be paid to the Servicer (or a successor servicer).
(d) Notwithstanding anything to the contrary in this Amendment, the
amount paid to the Supplemental Servicer as a Supplemental Servicing Fee in a
Remittance Period from a particular Trust may not exceed the total Funds
Available for Servicing Payments deposited to the Clearance Account for such
Trust for such Remittance Period.
Section 2.05. Reimbursement for Supplemental Delinquency Advances.
(a) The Supplemental Servicer shall be reimbursed for all
Supplemental Delinquency Advances it makes. For the avoidance of doubt, the
reimbursement for Supplemental Delinquency Advances and Servicer Delinquency
Advances made in respect of a particular Trust Group shall be from the Net
Collections of such Trust Group and not on a loan-by-loan basis and no funds
shall be remitted from the Principal and Interest Account to the Trustee for
deposit into the Certificate Account to the extent that there are any
Supplemental Delinquency Advances that have not been reimbursed. On each
Business Day during each Remittance Period on which there is an unreimbursed
Supplemental Delinquency Advance, the Disbursing Agent shall, on a Trust
Group-by-Trust Group basis, issue a Disbursement Notice to reimburse the
Supplemental Servicer from Net Collections held in the Clearance Account for all
outstanding Supplemental Delinquency Advances prior to payment of any amount
from Net Collections to the Servicer (or a successor servicer) or to the
Principal and Interest Account.
(b) For the avoidance of doubt, notwithstanding anything contained
in the Pooling Agreements to the contrary, the Servicer (or a successor
servicer) is not entitled to, and may not obtain, reimbursement of Delinquency
Advances in respect of any Trust Group (including, without limitation, from the
Clearance Account or Principal and Interest Account) prior to the Supplemental
Servicer receiving reimbursement of all Supplemental Delinquency Advances
outstanding with respect to such Trust Group.
(c) In the event that the Supplemental Servicer has not been
reimbursed in full for Supplemental Delinquency Advances relating to a
particular Trust Group, but
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funds relating to such Trust Group have nevertheless been deposited into the
related Principal and Interest Account, then the Supplemental Servicer shall be
reimbursed from such funds on deposit in such Principal and Interest Account
prior to the transfer of such amounts to the Certificate Account. Such
reimbursement from the Principal and Interest Account shall be made by the
applicable Trust on receipt of a notice from the Disbursing Agent.
(d) For the avoidance of doubt, and notwithstanding anything herein
or in the Pooling Agreement to the contrary, the Servicer (or a successor
servicer) shall be entitled to recover Servicer Advances on a loan-by-loan basis
from the Mortgagors to the extent permitted by the Home Equity Loans, or, if not
recovered from the Mortgagor on whose behalf the Servicing Advance was made,
from Liquidation Proceeds realized upon the liquidation of the related Home
Equity Loan prior to the payment of Liquidation Proceeds to any other party to
this Amendment.
Section 2.06. Certification of Supplemental Servicer Fee and
Supplemental Delinquency Advance Reimbursement Rights. The right to payment of
the Supplemental Servicing Fee and the right to reimbursement for Supplemental
Delinquency Advances shall be evidenced by a negotiable certificate (a
"Supplemental Servicing Certificate") in the form attached hereto as Exhibit III
if the owner of the Supplemental Delinquency Advances so requests of the Trustee
in writing. Each Supplemental Servicing Certificate shall be executed and
authenticated by the manual or facsimile signature of one of the Trustee's
Authorized Officers. Upon proper authentication by the Trustee, the Supplemental
Servicing Certificates shall bind each Trust and shall evidence each Trust's
obligations to pay and reimburse the Supplemental Servicing Fee and the right to
reimbursement for Supplemental Delinquency Advances in accordance with this
Amendment and the related Pooling Agreement. The holder of any Supplemental
Servicing Certificate may transfer, pledge, encumber, hypothecate or assign all
or any part of its rights in the Supplemental Servicing Certificate. The Trustee
shall cause to be kept a register in which the registration of the Supplemental
Servicing Certificates and any transfer of the Supplemental Servicing
Certificates shall be recorded if so requested by the transferee or pledgee. If
so directed by the Trustee or the Supplemental Servicer, the Servicer will
include payment instructions for the registered owner of a Supplemental
Servicing Certificate in Disbursement Notices subsequently given. If a
Supplemental Servicing Certificate is destroyed, lost of stolen, upon reasonable
security and indemnity to hold the Trustee and the applicable Trust harmless,
the Trustee shall execute a new Supplemental Servicing Certificate in
replacement for the destroyed, lost or stolen Supplemental Servicing
Certificate. Simultaneously with the payment in full of any Supplemental
Servicing Certificate after the termination of this Amendment, such Certificate
shall be surrendered to the Trustee. The Supplemental Servicer shall pay any
reasonable and customary fees charged by the Trustee in connection with the
issuance of any Supplemental Servicing Certificate or for effecting any transfer
thereof. The Supplemental Servicer hereby agrees to indemnify and hold each
Trust and the Trustee harmless against any loss, liability, claim, damage or
expense incurred in connection with any legal action or proceeding brought by
any third party who has acquired an interest in any Supplemental Servicing
Certificate.
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Article III
REPRESENTATIONS, WARRANTIES AND COVENANTS; CONDITIONS PRECEDENT
Section 3.01. Representations, Warranties and Covenants of the
Supplemental Servicer. The Supplemental Servicer hereby represents and warrants
to and covenants with the Trustee as follows:
(a) The Supplemental Servicer is a Delaware 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 necessary to enable it
to perform its obligations under the terms of this Amendment; the Supplemental
Servicer has the full corporate power and authority to execute and deliver this
Amendment and to perform in accordance herewith; the execution, delivery and
performance of this Amendment by the Supplemental Servicer and the consummation
of the transactions contemplated hereby have been duly and validly authorized;
this Amendment evidences the valid, binding and enforceable obligation of the
Supplemental Servicer; and all requisite corporate action has been taken by the
Supplemental Servicer to make this Amendment valid and binding upon the
Supplemental Servicer in accordance with its terms;
(b) Neither the execution and delivery of this Amendment, nor the
fulfillment of or compliance with the terms and conditions of this Amendment,
will conflict with or result in a breach of any of the terms, conditions or
provisions of the Supplemental Servicer's charter or by-laws or any material
agreement or instrument to which the Supplemental Servicer is now a party or by
which it is bound, or constitute a default or result in an acceleration under
any of the foregoing, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Supplemental Servicer or its property is
subject;
(c) There is no action, suit, proceeding, or investigation pending
or, to the knowledge of the Supplemental Servicer, threatened against the
Supplemental Servicer which, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations, financial
condition, properties or assets of the Supplemental Servicer, or in any material
impairment of the right or ability of the Supplemental Servicer to carry on its
business, or of any action taken or to be taken in connection with the
obligations of the Supplemental Servicer contemplated herein, or which would
materially impair the ability of the Supplemental Servicer to perform under the
terms of this Amendment; and
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Supplemental Servicer of or compliance by the Supplemental
Servicer with this Amendment or the consummation of the transactions
contemplated by this Amendment, or if required, such approval has been obtained
prior to the date hereof.
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Section 3.02. Representations, Warranties and Covenants of the
Servicer. The Servicer hereby represents and warrants to and covenants with the
Supplemental Servicer and the Trustee as follows:
(a) The Servicer is a Delaware 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 necessary to enable it to perform its
obligations under the terms of this Amendment; the Servicer has the full
corporate power and authority to execute and deliver this Amendment and to
perform in accordance herewith; the execution, delivery and performance of this
Amendment by the Servicer and the consummation of the transactions contemplated
hereby have been duly and validly authorized; this Amendment evidences the
valid, binding and enforceable obligation of the Servicer; and all requisite
corporate action has been taken by the Servicer to make this Amendment valid and
binding upon the Servicer in accordance with its terms;
(b) Neither the execution and delivery of this Amendment, nor the
fulfillment of or compliance with the terms and conditions of this Amendment,
will conflict with or result in a breach of any of the terms, conditions or
provisions of the Servicer's charter or by-laws or any material agreement or
instrument to which the Servicer is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing, or
result in the violation of any law, rule, regulation, order, judgment or decree
to which the Servicer or its property is subject;
(c) There is no action, suit, proceeding, or investigation pending
or, to the knowledge of the Servicer, threatened against the Servicer which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Servicer, or in any material impairment of the right or ability of
the Servicer to carry on its business substantially as now conducted, or of any
action taken or to be taken in connection with the obligations of the Servicer
contemplated herein, or which would materially impair the ability of the
Servicer to perform under the terms of this Amendment; and
(d) 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 Amendment
or the consummation of the transactions contemplated by this Amendment, or if
required, such approval has been obtained prior to the date hereof.
(e) The Servicer has no right, title or interest in or to any Gross
Collections (other than as trustee, or as agent for the related Trustee, of
Gross Collections held by it or by the Clearing Bank) unless and until funds
from such Gross Collections are actually paid to it pursuant to the applicable
Pooling Agreement, as modified by this Amendment.
(f) The Servicer shall continue to collect and deposit into the
Clearance Account, in the ordinary course of its business, the Gross Collections
in the same manner
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that it has been collecting and depositing such receipts and deposits, except
that the Servicer may not net, off-set or deduct from such collections or
deposits.
(g) The Servicer shall cooperate with the Verification Agent and
shall allow the Verification Agent access to the Servicer's books, records,
computer system and employees during ordinary business hours upon reasonable
notice and shall allow the Verification Agent to review all collections with
respect to Home Equity Loans and to make such copies of books, records and
documents as the Verification Agent determines in its sole discretion, in each
case, on a daily basis.
Section 3.03. Conditions Precedent. This Amendment shall not become
effective unless the following conditions are met or waived in writing by the
Supplemental Servicer: (i) receipt by the Supplemental Servicer of an
acknowledgement by the Clearing Bank in form and substance satisfactory to the
Supplemental Servicer agreeing to accept Disbursement Notices from the
Supplemental Servicer on a priority basis and limiting the ability to change the
name of the Clearance Account, and (ii) termination of the Grain Subservicing
Agreement and receipt by the Supplemental Servicer of a duly authorized letter
from Continental Grain Company that no amounts are owing to it, and all
obligations due it, under the Grain Subservicing Agreement have been paid and
satisfied.
Article IV
REMOVAL; RESIGNATION; MERGER; ASSIGNMENT
Section 4.01. Term of Amendment; Termination of Supplemental
Servicing.
(a) The Supplemental Servicer's obligation to make Supplemental
Delinquency Advances hereunder shall terminate on the date on which this
Amendment terminates, which shall be October 15, 2000 except as this Amendment
may be terminated earlier as set forth in Sections 4.01(b) or 4.01(c) hereof and
as this Amendment may be extended if agreed to in writing by the Depositor, the
Trustee, Servicer and Supplemental Servicer, with 30 days prior written notice
given to the other parties hereto and the related Certificate Insurers.
(b) The Servicer may terminate this Amendment upon 30 days prior
written notice to each of the other parties hereto and the related Certificate
Insurers. Each Certificate Insurer may terminate this Amendment with respect to
the Trusts related to it upon five Business Days prior written notice to each of
the parties hereto. If the Servicer resigns or is terminated pursuant to the
terms of the Pooling Agreements, the Trustee or a successor servicer may
terminate this Amendment upon five Business Days notice to the parties hereto
without payment of any fee (other than reimbursement for unpaid Supplemental
Servicing Fees and unreimbursed Supplemental Delinquency Advances in accordance
with the provisions hereof).
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(c) The Supplemental Servicer may terminate this Amendment and its
obligation to make Supplemental Delinquency Advances immediately upon notice to
each of the other parties hereto and the related Certificate Insurers if any of
the following occur and is continuing on the second Business Day after notice of
the occurrence of any of the following (each, a "Turbo Event"):
(i) The Servicer receives payment for the Servicing Fee
or other servicing compensation with respect to a
Trust at a time when Supplemental Servicing Fees with
respect to such Trust have not been timely paid in
accordance with Section 2.04;
(ii) The Servicer is reimbursed for a Servicer Delinquency
Advance with respect to a Trust Group at a time when
Supplemental Delinquency Advances with respect to
such Trust Group remain unreimbursed;
(iii) The Servicer fails to deposit Gross Collections to
the Clearance Account or fails to deposit the
appropriate amounts to any Principal and Interest
Account as it has been doing in the ordinary course
of business, except for nominal amounts as a result
of inadvertence, error or oversight, which, in each
case is corrected in a prompt manner;
(iv) The Servicer issues a Disbursement Notice to the
Clearing Bank or otherwise withdraws funds from the
Clearance Account or any Principal and Interest
Account except as expressly authorized by the
provisions of any Pooling Agreement, as amended by
this Amendment;
(v) The Servicer breaches any provision of this Amendment
or any of the Servicer's representations, warranties
or covenants are untrue when made or became untrue
thereafter;
(vi) The Clearing Bank fails to act in accordance with a
Disbursement Notice issued by the Supplemental
Servicer or the Clearing Bank informs or otherwise
indicates to the Supplemental Servicer that it will
not honor future Disbursement Notices issued by the
Supplemental Servicer; and
(vii) Any party to this Amendment, or its successor in
interest, except the Supplemental Servicer,
institutes any action or proceeding seeking to avoid
any portion of this
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Amendment or render any portion of this Amendment
ineffective.
(d) Notwithstanding any termination of this Amendment, the
Supplemental Servicer's right to payment and reimbursement for unpaid
Supplemental Servicing Fees and unreimbursed Supplemental Delinquency Advances
shall survive any such termination until such amounts have been paid and
reimbursed in full. Following any termination of this Amendment, the Disbursing
Agent, on behalf of the related Trust, and each Trustee, shall continue to issue
Disbursement Notices directing payment to the Supplemental Servicer amounts due
to it in respect of unpaid Supplemental Servicing Fees and unreimbursed
Supplemental Delinquency Advances, as calculated in and provided by Article II
hereof, until all such amounts have been paid or reimbursed in full. This
Section 4.01(d), Article V, and Sections 6.05 through 6.15 shall survive any
termination of this Amendment. If the Servicer is not replaced by the Trustee or
a successor servicer, Article II also shall survive any termination of this
Amendment until the Supplemental Servicer has been paid and reimbursed all
amounts owing to it pursuant to this Amendment. Notwithstanding anything to the
contrary contained herein, if this Amendment is terminated and the Servicer is
replaced by the Trustee or a successor servicer, then, until all amounts owing
to the Supplemental Servicer in respect of unpaid Supplemental Servicing Fees
and unreimbursed Supplemental Delinquency Advances have been paid and reimbursed
in full, the Trustee or successor servicer, as appropriate, shall (i) assume the
responsibilities of the Servicer to act as Disbursing Agent, on behalf of the
related Trustee pursuant to this Amendment, including the issuance of
Disbursement Notices and allocations of Gross Collections pursuant to Section
2.03(d), (ii) pay the Supplemental Servicing Fee pursuant to Section 2.04, (iii)
reimburse the Supplemental Servicer for all unreimbursed Supplemental
Delinquency Advances pursuant to Section 2.05, and (iv) perform the obligations
of the Servicer pursuant to Section 2.06.
Section 4.02. Merger or Consolidation of the Supplemental Servicer.
The Supplemental Servicer may be merged or consolidated with or into any Person,
or transfer all or substantially all of its assets to any Person, in which case
any Person resulting from any merger or consolidation to which the Supplemental
Servicer shall be a party, or any Person succeeding to the business of the
Supplemental Servicer, shall be the successor of the Supplemental Servicer, as
the case may be, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereof, anything herein to the
contrary notwithstanding.
Section 4.03. Assignment. The Supplemental Servicer may assign its
rights and obligations hereunder to any Person with the prior written consent of
the Servicer and the Certificate Insurer with respect to the related Trust.
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Article V
LIMITATION ON LIABILITY; INDEMNIFICATION
Section 5.01. Limitation on Liability of the Supplemental Servicer;
Indemnification.
(a) The Supplemental Servicer and any director, officer, employee or
agent of the Supplemental Servicer may rely in good faith on any document of any
kind which, prima facie, is properly executed and submitted by any Person
respecting any matters arising thereunder. None of the Supplemental Servicer,
nor any of its directors, officers, employees or agents shall have any liability
to the Trustee, the Trust or the Certificateholders for any action taken or for
refraining from the taking of any action by it relating to this Amendment or for
errors in judgment; provided, however, that this provision shall not protect the
Supplemental Servicer or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of the duties of the Supplemental Servicer or by
reason of reckless disregard of the obligations and duties of the Supplemental
Servicer hereunder. The Supplemental Servicer shall not have any liability for
any consequential, incidental, special, exemplary, punitive, or any similar,
damages and each party hereto irrevocably and unconditionally waives any right
it may have to claim or recover any such damages.
(b) The Servicer hereby indemnifies and holds the Supplemental
Servicer and any director, officer, employee or agent of the Supplemental
Servicer harmless against any loss, liability, claim, damage or expense incurred
in connection with any legal action or proceeding relating to this Amendment or
the Supplemental Servicer's action, or failure to take action, under this
Amendment, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder. To the extent that the Supplemental Servicer incurs any loss,
liability or expense arising out of or in connection with this Amendment, the
Supplemental Servicer shall be reimbursed and held harmless by each Trust Estate
to the same extent that the Servicer would be reimbursed or held harmless from
the Trust Estate pursuant to Section 8.05 of the Pooling Agreements; provided,
however, that in the event the Servicer seeks reimbursement or to be held
harmless pursuant to Section 8.05 of the Pooling Agreements for itself from the
Trust Estate, the Supplemental Servicer shall be reimbursed and held harmless
prior to any payment being made to the Servicer with respect to its request to
be reimbursed or held harmless.
Article VI
MISCELLANEOUS
Section 6.01. Verification Agent. The Supplemental Servicer shall
appoint a nationally-recognized firm of independent accountants reasonably
acceptable to the Certificate Insurers, the Trustee and the Servicer to serve as
the verification agent (the "Verification Agent"). The Supplemental Servicer
hereby appoints KPMG LLP as the
16
<PAGE>
initial Verification Agent. The Servicer shall deliver the proposed Supplemental
Delinquency Advance Notice to the Verification Agent at least one Business Day
prior to the issuance of a Supplemental Delinquency Advance Notice, which notice
the Verification Agent shall review and verify that the calculations of the
amounts set forth therein are correct. In the event the Verification Agent
disagrees with any amounts set for in the Supplemental Delinquency Advance
Notice, it shall immediately notify the Supplemental Servicer and the Servicer
of its findings. Any disagreement must be resolved by the Verification Agent and
the Servicer by 11:00 am New York time on the day on which such Supplemental
Delinquency Advance Notice is due. In the event any such disagreement cannot be
resolved by such time on such date, the findings of the Verification Agent shall
be final and binding, and the Servicer shall submit, as final, such amended
Supplemental Delinquency Advance Notice as the Supplemental Advance Notice. The
findings of the Verification Agent in any Supplemental Delinquency Advance
Notice shall be conclusive and shall be binding on all parties, absent manifest
error. To the extent requested by the Supplemental Servicer, the Verification
Agent shall also review Disbursement Notices given by the Servicer. In the event
the Verification Agent disagrees with any amounts set forth in any Disbursement
Notice(s), it shall immediately notify the Supplemental Servicer and the
Servicer of its findings. All amounts subject to disagreement shall be deposited
into the Principal and Interest Account for the related Trust (and the Servicer
acknowledges and agrees that the Supplemental Servicer may issue a Disbursement
Notice to the Clearing Bank so instructing the Clearing Bank) and shall not be
disbursed from such Principal and Interest Account until the earlier of
resolution or the next Monthly Remittance Date. In the event any such
disagreement cannot otherwise be resolved prior to the next Monthly Remittance
Date, the findings of the Verification Agent shall be final and binding. The
fees and expenses of the Verification Agent will be paid by the Servicer (with
such fees to be paid on an estimated basis, monthly in advance, and such
expenses to be paid as incurred) except that, at the direction of the
Supplemental Servicer, any fees or expenses of the Verification Agent remaining
unpaid more than ten Business Days after submission shall be paid from Funds
Available for Servicing Payments after payment of the Supplemental Servicing Fee
pursuant to Section 2.04(b) hereof, which payment shall reduce the Servicing Fee
and other servicing compensation on a dollar-for-dollar basis. The failure to
pay the fees and expenses of the Verification Agent promptly by the Servicer
shall give rise to a breach of the Advance Conditions.
Section 6.02. Inconsistencies with Pooling Agreements; Amendment to
Supplemental Servicing Amendment and the Pooling Agreements.
(a) The Servicer shall not amend any Pooling Agreement in any way
that would affect the rights or obligations of the Supplemental Servicer
hereunder without the prior written consent of the Supplemental Servicer.
(b) Notwithstanding any provision in a Pooling Agreement requiring
ContiMortgage to pay the expenses of the Trust from its own funds, the Servicer
shall not be responsible for and shall not pay from its own funds the
Supplemental Servicing Fee or the reimbursement of Supplemental Advances or any
other fee or expense described in this Amendment (other than any indemnification
of the Supplemental Servicer as
17
<PAGE>
provided in the first sentence of Section 5.01(b) and the fee of the
Verification Agent as provided in Section 6.01) as expenses of the Trust.
Section 6.03. Servicer Primarily Liable. Notwithstanding anything to
the contrary contained in this Amendment, the Servicer shall continue to be
responsible for making each Delinquency Advance pursuant to Section 8.09(a) of
each Pooling Agreement in the event the Supplemental Servicer fails to make any
required Supplemental Advance on the date required hereunder.
Section 6.04. Indulgences, Etc. Neither the failure nor any delay on
the part of any party to exercise any right, remedy, power or privilege (each, a
"Right") under this Amendment shall operate as a waiver thereof, nor shall any
single or partial exercise of any Right preclude any other or further exercise
of the same or of any other Right, nor shall any waiver of any Right with
respect to any occurrence be construed as a waiver of such Right with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.
Section 6.05. Controlling Law; Jurisdiction.
(a) This Amendment and all questions relating to its validity,
interpretation, performance and enforcement (including, without limitation,
provisions concerning limitations of actions), shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements entered into and to be performed within the State of New York,
notwithstanding any conflict-of-laws doctrines of the State of New York or other
jurisdictions to the contrary, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.
(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 Amendment or any of the related
documents or the transactions contemplated hereunder or for recognition or
enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. The parties hereto agree that a
final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. To the extent permitted by applicable law, the parties
hereto hereby waive and agree not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or the subject
matter thereof may not be litigated in or by such courts.
Section 6.06. Waiver of Jury Trial. Each of the parties hereby
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY in any action,
18
<PAGE>
proceeding or counterclaim arising out of or relating to this Amendment, any
other transaction document or any instrument or document delivered hereunder or
thereunder.
Section 6.07. Notices. All demands, notices, and communications hereunder shall
be effective when personally delivered, when sent by facsimile with confirmation
of receipt by the recipient's facsimile machine or the Business Day after
delivery to a nationally recognized overnight delivery service when the delivery
fee is prepaid and delivery by the next Business Day morning is specified, to
the following addresses or facsimile number, or to such other address or
facsimile number as is later specified by notice:
(i) If to Servicer:
ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: Senior Vice President
and Chief Counsel
Telephone: (215) 347-3404
Fax: (215) 347-3400
(ii) If to Supplemental Servicer:
Greenwich Capital Financial Products, Inc.
600 Steamboat Road
Greenwich, CT 06830
Attention: John Anderson
Telephone: (203) 625-7941
Fax: (203) 618-2135
with a copy to
General Counsel
Telephone: (203) 625-6065
Fax: (203) 618-4571
(iii) If to the Trustee:
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
Telephone: (716) 842-4387
Fax: (716) 842-5905
Attention: Corporate Trust Administration
19
<PAGE>
(iv) If to the Depositor
ContiSecurities Asset Funding Corp.
3811 West Charleston Blvd., Suite 104
Las Vegas, NV 89102
Telephone: (702) 822-5836
Fax: (702) 822-5839
(v) If to MBIA Insurance Corporation
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management - SF (ContiMortgage
Home Equity Loan Pass-Through Certificates, Series 1994-3,
1994-4, 1994-5, 1996-2, 1996-3, 1996-4, 1997-4, 1997-5,
1998-1, 1998-2, 1998-3 and 1999-2)
Telephone: (914) 273-4545
Fax: (914) 765-3810
(vi) If to Ambac Assurance Corporation
Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Telephone: (212) 668-0340
Fax: (212) 509-9190
(vii) If to Financial Guaranty Insurance Company
Financial Guaranty Insurance Company
115 Broadway
New York, NY 10006
Attention: General Counsel
Telephone: (212) 312-3000
Fax: (212) 312-3220
Section 6.08. Binding Nature of Amendment. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns notwithstanding any provision of any Pooling
Agreement that might deem this Amendment to be binding only upon the Servicer or
Supplemental Servicer.
Section 6.09. Provisions Separable. The provisions of this Amendment are
independent of and separate from each other, and no provision shall be affected
or
20
<PAGE>
rendered invalid or unenforceable by virtue of the fact that for any reason any
other or others of them may be invalid or unenforceable in whole or in part.
Section 6.10. Counterparts. For the purpose of facilitating the
execution of this Amendment and or other purposes, this Amendment may be
executed simultaneously in any number of counterparts, each of which shall be
deemed to be an original, and together shall constitute and be one and the same
instrument.
Section 6.11. Entire Agreement; Amendment of this Amendment. This
Amendment contains the entire understanding between the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Amendment may not be
modified or amended other than by an agreement in writing.
Section 6.12. Paragraph Headings. The paragraph headings in this
Amendment are for convenience only; they form no part of this Amendment and
shall not affect its interpretation.
Section 6.13. Advice from Counsel. The parties understand that this
Amendment is a legally binding agreement that may affect such party's rights.
Each party represents to the other that it has received legal advice from
counsel of its choice regarding meaning and legal significance of this Amendment
and that it is satisfied with its legal counsel and the advice received from it.
Section 6.14. Judicial Interpretation. Should any provision of this
Amendment or any of the other transaction documents require judicial
interpretation, it is agreed that a court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against any Person by reason of the rule of construction that a
document is to be construed more strictly against the Person who itself or
through its agent prepared the same, it being agreed that all Parties have
participated in the preparation of this Amendment.
Section 6.15. Third Party Rights. The Trustee, Supplemental Servicer
and the Servicer agree that the Certificate Insurer for each Trust shall be
deemed a third party beneficiary of this Amendment as if it were a party hereto.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
21
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered by their proper and duly authorized officers as of the date first
above written.
CONTIMORTGAGE CORPORATION,
as Servicer and as Seller
By:________________________________
Name: Margaret M. Curry
Title: Senior Vice President
By:________________________________
Name:
Title:
GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC.,
as Supplemental Servicer
By:________________________________
Name: John C. Anderson
Title: Senior Vice President
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By:________________________________
Name: John Banu
Title: Authorized Signatory
By:________________________________
Name: Jay Remis
Title: Authorized Signatory
CONTIWEST CORPORATION,
as Seller
By:________________________________
Name: Joy Tolbert
Title: Vice President
By:________________________________
Name: Todd Hart
Title: Assistant Secretary
[Signature Page to Supplemental
Servicing Amendment]
<PAGE>
MANUFACTURERS AND TRADERS TRUST
COMPANY,
as Trustee and on behalf of the Trusts
By:________________________________
Name: Neil B. Witoff
Title: Assistant Vice President
For the purpose of this Amendment to each Pooling Agreement:
MBIA INSURANCE CORPORATION,
By:________________________
Name:
Title:
FINANCIAL GUARANTY INSURANCE COMPANY
By:________________________
Name:
Title:
AMBAC ASSURANCE CORPORATION
By:________________________
Name:
Title:
[Signature Page to Supplemental Servicing Amendment--con't]
<PAGE>
SCHEDULE A-1
List of Pooling Agreements with Reimbursements Trust-by-Trust
SERIES POOLING AGREEMENT
1994-3 Pooling and Servicing Agreement, dated as of June 1, 1994, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1994-4 Pooling and Servicing Agreement, dated as of August 1, 1994, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1994-5 Pooling and Servicing Agreement, dated as of December 1, 1994, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1995-1 Pooling and Servicing Agreement, dated as of March 1, 1995, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1997-1 Pooling and Servicing Agreement, dated as of February 1, 1997, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1997-4 Pooling and Servicing Agreement, dated as of September 1, 1997,
among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as Servicer and as Seller, ContiWest
Corporation, as Seller and Manufacturers and Traders Trust Company,
as Trustee
1997-5 Pooling and Servicing Agreement, dated as of December 1, 1997, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1998-1 Pooling and Servicing Agreement, dated as of March 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
A-1
<PAGE>
1998-2 Pooling and Servicing Agreement, dated as of June 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1998-3 Pooling and Servicing Agreement, dated as of September 1, 1998,
among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as Servicer and as Seller, ContiWest
Corporation, as Seller and Manufacturers and Traders Trust Company,
as Trustee
1998-4 Pooling and Servicing Agreement, dated as of December 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1999-1 Pooling and Servicing Agreement, dated as of March 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1999-2 Pooling and Servicing Agreement, dated as of March 1, 1999, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1999-3 Pooling and Servicing Agreement, dated as of June 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, Norwest Bank
Minnesota, National Association, as Master Servicer, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
A-2
<PAGE>
SCHEDULE A-2
List of Pooling Agreements with Reimbursements Loan Group-by-Loan Group
<TABLE>
<CAPTION>
SERIES POOLING AGREEMENT LOAN GROUP MANDATORY/
OPTIONAL
DESIGNATION
<S> <C> <C> <C>
1995-2 Pooling and Servicing Agreement, dated as of May 1, 1995, among Fixed Rate Group Mandatory*
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders Trust Adjustable Rate Group Optional
Company, as Trustee
1995-3 Pooling and Servicing Agreement, dated as of August 1, 1995, among Fixed Rate Group Mandatory*
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders Trust Adjustable Rate Group Optional
Company, as Trustee
1995-4 Pooling and Servicing Agreement, dated as of November 1, 1995, among Group I Mandatory*
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders Trust Group II Optional
Company, as Trustee
Group III Optional
1996-1 Pooling and Servicing Agreement, dated as of February 1, 1996, among Fixed Rate Group Mandatory*
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders Trust Adjustable Rate Group Optional
Company, as Trustee
1996-2 Pooling and Servicing Agreement, dated as of June 1, 1996, among Fixed Rate Group Mandatory
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders Trust Adjustable Rate Group Optional
Company, as Trustee
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
SERIES POOLING AGREEMENT LOAN GROUP MANDATORY/
OPTIONAL
DESIGNATION
<S> <C> <C> <C>
1996-3 Pooling and Servicing Agreement, dated as of August 1, 1996, among Fixed Rate Group Mandatory
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders Trust Adjustable Rate Group Optional
Company, as Trustee
1996-4 Pooling and Servicing Agreement, dated as of December 1, 1996, among Fixed Rate Group Mandatory
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as Seller Adjustable Rate Group Optional
and Manufacturers and Traders Trust Company, as Trustee
1997-2 Pooling and Servicing Agreement, dated as of March 1, 1997, among Group I Mandatory
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as Seller Group II Optional
and Manufacturers and Traders Trust Company, as Trustee
1997-3 Pooling and Servicing Agreement, dated as of June 1, 1997, among Group I Mandatory
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as Seller Group II Optional
and Manufacturers and Traders Trust Company, as Trustee
</TABLE>
* These Loan Groups will be treated as Optional with respect to the Monthly
Remittance Date occuring in November, 1999.
A-2
<PAGE>
EXHIBIT I
Form of Supplemental Delinquency Advance Notice
- -------, -----
Greenwich Capital Financial Products, Inc.
600 Steamboat Road
Greenwich, CT 06830
Attention: John Anderson or General Counsel
Re: Supplemental Servicing Amendment, dated as of November 9, 1999;
Notice of Supplemental Delinquency Advance
Pursuant to Section 2.02(b) of the Supplemental Servicing Amendment, dated as of
November 9, 1999 (the "Supplemental Servicing Amendment"), among ContiMortgage
Corporation (the "Servicer"), ContiWest Corporation, as Seller, ContiSecurities
Asset Funding Corp., as Depositor, Greenwich Capital Financial Products, Inc.
(the "Supplemental Servicer") and Manufacturers and Traders Trust Company (the
"Trustee"), the undersigned hereby notifies you that a Supplemental Delinquency
Advance in the amount of $_________ is due on the Monthly Remittance Date
occurring on ________, ___. The computation of the amount of the Supplemental
Delinquency Advance is set forth below.
The undersigned also hereby certifies that to the best of its knowledge, each of
the Advance Conditions contained in Section 2.02(d) have been met.
<TABLE>
<CAPTION>
Sum of
Interest Amount on
Remittance deposit in Unreimbursed Unreimbursed Unpaid
Amount and related Amount of Amount of Amount of Amount of Amount of
Principal Principal Amount of Supplemental Supplemental Servicer Servicer Supplemental
Name of Trust Remittance and Interest Delinquency Delinquency Delinquency Delinquency Delinquency Servicing
Group Amount Account Advance Advance Advances Advance Advances Fees
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Totals
</TABLE>
Please remit the amount of the Supplemental Delinquency Advance
directly to Manufacturers and Traders Trust Company (the "Trustee") at
the account listed below on the Monthly Remittance Date.
I-1
<PAGE>
To:
Account No:
Reference:
Very truly yours,
CONTIMORTGAGE CORPORATION, as Servicer
By: __________________________
Name:
Title:
Verified by:
KPMG LLC
______________________________
By: __________________________
Title:
cc: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
Tel: (716) 842-4387
Fax: (716) 842-5905
Attention: Corporate Trust Administration
I-1
