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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported):June 17, 1999
MORGAN STANLEY CAPITAL I INC.
(Exact name of registrant as specified in its charter)
Delaware 333-45467 13-3291626
- ---------------------------- ------------------------ -------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1585 Broadway
New York, New York 10036
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 703-4000
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<PAGE>
Item 5. Other Events.
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On June 17, 1999, Morgan Stanley Capital I Inc. (the "Company") entered
into a Pooling and Servicing Agreement dated as of June 1, 1999 (the "Pooling
and Servicing Agreement"), by and among the Company, as depositor, Banc One
Financial Services, Inc., as seller (the "Seller"), Bank One, Indiana, National
Association, as master servicer (the "Master Servicer"), and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"), providing for the
issuance of the Banc One Home Equity Loan Asset Certificates, Series 1999-2. The
Pooling and Servicing Agreement is annexed hereto as Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial
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Information and Exhibits.
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(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1. The Pooling and Servicing Agreement, dated as of June 1,
1999, by and among the Company, the Seller, the Master
Servicer and the Trustee.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MORGAN STANLEY CAPITAL I INC.
By: /s/ Sunjeev Khanna
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Name: Sunjeev Khanna
Title: Principal
Dated: June 28, 1999
<PAGE>
Exhibit Index
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Exhibit Page
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99.1. Pooling and Servicing Agreement,
dated as of June 1, 1999, by
and among, the Company, the Seller,
the Master Servicer and the Trustee. 6
<PAGE>
EXHIBIT 99.1
------------
Execution Copy
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BANC ONE FINANCIAL SERVICES, INC.,
as Seller,
BANK ONE, INDIANA, NATIONAL ASSOCIATION,
as Master Servicer,
MORGAN STANLEY CAPITAL I INC.,
as Depositor,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
_______________________
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1999
______________________
Home Equity Loan Asset-Backed Certificates
Series 1999-2
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<PAGE>
Table of Contents
Page
----
ARTICLE I
Definitions
Section 1.01. Definitions.....................................................1
Section 1.02. Interest Calculations..........................................22
ARTICLE II
Conveyance of Home Equity Loans; Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Home Equity Loans................................23
Section 2.02. Acceptance by Trustee..........................................27
Section 2.03. Representations and Warranties of the Depositor................27
Section 2.04. Representations and Warranties Regarding the Seller and
the Master Servicer............................................29
Section 2.05. Representations and Warranties of the Seller Regarding
the Home Equity Loans..........................................31
Section 2.06. Substitution of Home Equity Loans..............................37
Section 2.07. Execution and Authentication of Certificates...................38
Section 2.08. Designation of Interests in the REMIC..........................38
Section 2.09. Designation of Start-up Day....................................38
Section 2.10. REMIC Certificate Maturity Date................................38
Section 2.11. Tax Returns and Reports to Certificateholders..................38
Section 2.12. Tax Matters Person.............................................39
Section 2.13. REMIC Related Covenants........................................39
ARTICLE III
Administration and Servicing of Home Equity Loans
Section 3.01. The Master Servicer............................................42
Section 3.02. Collection of Certain Home Equity Loan Payments................45
Section 3.03. Withdrawals from the Collection Account........................46
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses.......................................................48
Section 3.05. Maintenance of Mortgage Impairment Insurance...................48
Section 3.06. Fidelity Bond..................................................48
Section 3.07. Management and Realization Upon Defaulted Home Equity Loans....49
Section 3.08. Trustee to Cooperate...........................................50
Section 3.09. Servicing Compensation; Payment of Certain Expenses by
Master Servicer................................................51
Section 3.10. Annual Statement as to Compliance..............................51
Section 3.11. Annual Servicing Report........................................52
Section 3.12. Access to Certain Documentation and Information Regarding
the Home Equity Loans..........................................52
Section 3.13. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received
from Individuals and Returns Relating to Cancellation of
Indebtedness...................................................52
Section 3.14. Advances by the Master Servicer................................52
Section 3.15. Superior Liens.................................................53
Section 3.16. Assumption Agreements..........................................53
Section 3.17. Payment of Taxes, Insurance and Other Charges..................54
Section 3.18. Compensating Interest..........................................54
ARTICLE IV
The Certificate Insurance Policy
Section 4.01. The Certificate Insurance Policy...............................55
Section 4.02. Claims Upon the Certificate Insurance Policy...................55
ARTICLE V
Payments and Statements to Certificateholders; Rights of Certificateholders
Section 5.01. Distributions..................................................57
Section 5.02. Statements.....................................................59
Section 5.03. Certificate Account............................................63
Section 5.04. Investment of Accounts.........................................63
ARTICLE VI
The Certificates
Section 6.01. The Certificates...............................................65
Section 6.02. Registration of Transfer and Exchange of Certificates..........65
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates..............70
Section 6.04. Persons Deemed Owners..........................................71
Section 6.05. Appointment of Paying Agent....................................71
ARTICLE VII
The Seller, the Master Servicer and the Depositor
Section 7.01. Liability of the Seller, the Master Servicer and
the Depositor..................................................72
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Master Servicer, or
the Depositor..................................................72
Section 7.03. Limitation on Liability of the Master Servicer and
Others.........................................................72
Section 7.04. Master Servicer Not to Resign..................................73
Section 7.05. Delegation of Duties...........................................73
Section 7.06. Indemnification of the Trust by the Master Servicer............74
Section 7.07. Inspection.....................................................74
ARTICLE VIII
Default
Section 8.01. Servicer Default...............................................75
Section 8.02. Trustee to Act; Appointment of Successor.......................77
Section 8.03. Waiver of Defaults.............................................78
Section 8.04. Notification to Certificateholders.............................78
Section 8.05. Rights of the Certificate Insurer to Exercise Rights of
Class A Certificateholders.....................................78
Section 8.06. Trustee to Act Solely with Consent of the Certificate
Insurer........................................................79
Section 8.07. Home Equity Loans, Trust and Accounts Held for Benefit
of the Certificate Insurer.....................................79
Section 8.08. Certificate Insurer Default....................................79
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee..............................................81
Section 9.02. Certain Matters Affecting the Trustee..........................82
Section 9.03. Trustee Not Liable for Certificates or Home Equity
Loans..........................................................86
Section 9.04. Trustee May Own Certificates...................................87
Section 9.05. Trustee Fees and Expenses......................................87
Section 9.06. Eligibility Requirements for Trustee...........................87
Section 9.07. Resignation or Removal of Trustee..............................87
Section 9.08. Successor Trustee..............................................88
Section 9.09. Merger or Consolidation of Trustee.............................89
Section 9.10. Appointment of Co-Trustee or Separate Trustee..................89
Section 9.11. Limitation of Liability........................................90
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection.......................................91
Section 9.13. Suits for Enforcement..........................................91
Section 9.14. Reports to the Commission......................................91
ARTICLE X
Termination
Section 10.01. Termination...................................................93
Section 10.02. Additional Termination Requirements...........................94
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment.....................................................96
Section 11.02. Recordation of Agreement......................................97
Section 11.03. Limitation on Rights of Certificateholders....................97
Section 11.04. Governing Law.................................................98
Section 11.05. Notices.......................................................98
Section 11.06. Severability of Provisions...................................100
Section 11.07. Assignment...................................................100
Section 11.08. Certificates Nonassessable and Fully Paid....................100
Section 11.09. Third-Party Beneficiaries....................................100
Section 11.10. Counterparts.................................................100
Section 11.11. Effect of Headings and Table of Contents.....................100
EXHIBIT A - FORM OF REGULAR CERTIFICATE...............................A-1
EXHIBIT B - FORM OF CLASS R CERTIFICATE...............................B-1
EXHIBIT C - HOME EQUITY LOAN SCHEDULE.................................C-1
EXHIBIT D - MONTHLY INFORMATION DELIVERED TO TRUSTEE..................D-1
EXHIBIT E - ERISA REPRESENTATION LETTER...............................E-1
EXHIBIT F - LETTER OF REPRESENTATIONS.................................F-1
EXHIBIT G - FORM OF REQUEST FOR RELEASE...............................G-1
EXHIBIT H - FORM OF INVESTMENT LETTER.................................H-1
EXHIBIT I - TRANSFER AFFIDAVIT........................................I-1
EXHIBIT J - LIST OF SERVICING OFFICERS................................J-1
EXHIBIT K - CLOSING LETTER............................................K-1
EXHIBIT L - FORM OF CERTIFICATE INSURANCE POLICY......................L-1
EXHIBIT M-1 FORM OF CERTIFICATION AS TO MORTGAGE NOTES..............M-1-1
EXHIBIT M-2 FORM OF INITIAL CERTIFICATION OF TRUSTEE................M-2-1
EXHIBIT M-3 FORM OF FINAL CERTIFICATION OF TRUSTEE..................M-3-1
<PAGE>
This Pooling and Servicing Agreement, dated as of June 1, 1999, among
MORGAN STANLEY CAPITAL I INC., as Depositor (the "Depositor"), BANC ONE
FINANCIAL SERVICES, INC., as Seller (the "Seller"), BANK ONE, INDIANA, NATIONAL
ASSOCIATION, as Master Servicer (the "Master Servicer"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, as Trustee (the "Trustee").
WITNESSETH
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the
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following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Accounts: Collectively, the Collection Account and the Certificate
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Account.
Affiliate: With respect to any Person, any other Person controlling,
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controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
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hereof and supplements and exhibits hereto.
Appraised Value: The appraised value of the Mortgaged Property used by
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the Seller or the originator to underwrite the Home Equity Loan
Assignment Event: The day following either (i) the occurrence and
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continuance of a Servicer Default, (ii) a Rating Downgrade Event, (iii) 30 days
after the request of the Certificate Insurer, if in the judgment of the
Certificate Insurer, it deems such action necessary to protect its interest, or
(iv) with respect to a particular Home Equity Loan, the occurrence of a
foreclosure proceeding or the insolvency of the related Mortgagor.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
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notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Home Equity Loans secured by Mortgaged
Properties located in the same jurisdiction.
Available Funds: As to any Distribution Date, the sum of:
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(i) the sum of all amounts described in clauses (i) through (vi)
inclusive, of Section 3.02(b) received by the Master Servicer (including
any amounts paid by the Master Servicer and the Seller and excluding (a)
any amounts not expressly required to be deposited in the Collection
Account pursuant to Section 3.02(b) and (b) any amounts paid to the Master
Servicer or withdrawn by the Trustee pursuant to Sections 3.03(ii), (iii),
(iv), (v), (vi), (vii) and (viii) in respect of the Home Equity Loans)
during the related Collection Period and deposited into the Collection
Account;
(ii) any Monthly Advance for such Distribution Date deposited in
the Certificate Account pursuant to Section 3.14; and
(iii) any Termination Price with respect to the Home Equity Loans
deposited to the Certificate Account pursuant to Section 10.01(a).
No amount included in this definition by virtue of being described by any
component of the definition thereof shall be included twice by virtue of also
being described by any other component or otherwise.
BANK ONE: BANK ONE CORPORATION, a Delaware corporation, or any
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successor thereto.
BIF: The Bank Insurance Fund, as from time to time constituted, created
---
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or, if at any time after the execution of this Agreement the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Book-Entry Certificate: Any Class of Class A Certificates registered in
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the name of the Depository or its nominee, ownership of which is reflected on
the books of the Depository or on the books of a Person maintaining an account
with such Depository (directly or as an indirect participant in accordance with
the rules of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
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day on which banking institutions in the States of New York, Indiana, Maryland
or the state in which the Corporate Trust Office is located are required or
authorized by law or executive order to be closed.
Certificate: Any Class A or Class R Certificate.
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Certificate Account: The account established by the Trustee pursuant to
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Section 5.03. The Certificate Account shall be an Eligible Account.
Certificate Insurance Policy: The Certificate Guaranty Insurance Policy
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(No.AB0272BE) with respect to the Class A Certificates and all endorsements
thereto dated the Closing Date, issued by the Certificate Insurer to the Trustee
for the benefit of the Holders of each Class of Class A Certificates, a copy of
which is attached hereto as Exhibit L.
Certificate Insurer: Ambac Assurance Corporation, or its successor in
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interest.
Certificate Insurer Default: The existence and continuance of any of
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the following: (a) a failure by the Certificate Insurer to make a payment
required under a Certificate Insurance Policy in accordance with its terms; (b)
the entry of a decree or order of a court or agency having jurisdiction in
respect of the Certificate Insurer in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law appointing a
conservator or receiver or liquidator or other similar official of the
Certificate Insurer or of any substantial part of its property, or the entering
of an order for the winding up or liquidation of the affairs of the Certificate
Insurer and the continuance of any such decree or order undischarged or unstayed
and in force for a period of 90 consecutive days; (c) the Certificate Insurer
shall consent to the appointment of a conservator or receiver or liquidator or
other similar proceedings or of relating to the Certificate Insurer or of or
relating to all or substantially all of its property; or (d) the Certificate
Insurer shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of or otherwise voluntarily
commence a case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its obligations.
Certificate Owner: The Person who is the beneficial owner of a
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Book-Entry Certificate.
Certificate Principal Balance: As to any Distribution Date, the sum of
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the Class Principal Balances of each Class of Class A Certificates immediately
prior to such Distribution Date.
Certificate Rate: With respect to each Class of Class A Certificates,
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the per annum rate set forth below:
Class Certificate Rate
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A-1 6.46%
A-2 6.69%
A-3 6.94%
A-4 7.10%
A-5 7.31%
A-6 7.50%
A-7 7.18%
Certificate Register and Certificate Registrar: The register maintained
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and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
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registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Class of Certificates registered in the name of the Depositor, the Seller,
the Master Servicer or any Person actually known to a Responsible Officer of the
Trustee to be an Affiliate of the Depositor, the Seller or the Master Servicer
and (y) any Class of Certificates for which the Depositor, the Seller, the
Master Servicer or any Person actually known to a Responsible Officer of the
Trustee to be an Affiliate of the Depositor, the Seller or the Master Servicer
is the Certificate Owner or Holder shall be deemed not to be outstanding (unless
to the actual knowledge of a Responsible Officer of the Trustee (i) the
Depositor, the Seller or the Master Servicer or such Affiliate is acting as
trustee or nominee for a Person who is not an Affiliate of the Depositor, the
Seller or the Master Servicer and who makes the voting decision with respect to
such Class of Certificates or (ii) the Depositor, the Seller or the Master
Servicer or such Affiliate is the Certificate Owner or Holder of all the
Certificates of a Class, but only with respect to the Class as to which the
Depositor, the Seller or the Master Servicer or such Affiliate owns all the
Certificates) and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect any such consent, direction, waiver or request has been
obtained.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
----------------
as amended.
Civil Relief Act Interest Shortfall: With respect to any Distribution
-----------------------------------
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 Collection
Period as a result of the application of the Civil Relief Act, the amount by
which (i) interest collectible on such Home Equity Loan during such Collection
Period is less than (ii) one month's interest on the Principal Balance of such
Home Equity Loan at the Loan Rate net of the Master Servicing Fee Rate for such
Home Equity Loan before giving effect to the application of the Civil Relief
Act.
Class: With respect to each of Class A-1, Class A-2, Class A-3, Class
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A-4, Class A-5, Class A-6, Class A-7 and Class R, all of the Certificates of
such Class.
Class A Certificate: Any of the Class A-1, Class A-2, Class A-3, Class
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A-4, Class A-5, Class A-6 and Class A-7 Certificates.
Class A Certificateholder: A Holder of a Class A Certificate.
-------------------------
Class A Interest Shortfall: With respect to any Distribution Date and
--------------------------
Class of Class A Certificates, the amount, if any, by which the amount
distributed to Holders of such Class on such Distribution Date pursuant to
Section 5.01(a)(iii) is less than such Class's Current Monthly Interest Amount.
Class A-1 Certificate: Any Certificate executed and authenticated by
---------------------
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-1 Certificate pursuant to Section 6.01.
Class A-2 Certificate: Any Certificate executed and authenticated by
---------------------
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-2 Certificate pursuant to Section 6.01.
Class A-3 Certificate: Any Certificate executed and authenticated by
---------------------
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-3 Certificate pursuant to Section 6.01.
Class A-4 Certificate: Any Certificate executed and authenticated by
---------------------
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-4 Certificate pursuant to Section 6.01.
Class A-5 Certificate: Any Certificate executed and authenticated by
---------------------
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-5 Certificate pursuant to Section 6.01.
Class A-6 Certificate: Any Certificate executed and authenticated by
---------------------
the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-6 Certificate pursuant to Section 6.01.
Class A-7 Certificate: Any Certificate executed and authenticated by
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the Trustee and substantially in the form attached hereto as Exhibit A and
designated as a Class A-7 Certificate pursuant to Section 6.01.
Class A-7 Pro Rata Principal Amount: For any Distribution Date, an
-----------------------------------
amount equal to the product of (x) a fraction, the numerator of which is the
Class Principal Balance of the Class A-7 Certificates immediately prior to such
Distribution Date and the denominator of which is the Certificate Principal
Balance immediately prior to such Distribution Date and (y) the Formula
Principal Distribution Amount for such Distribution Date.
Class Interest Distribution: With respect to any Distribution Date and
---------------------------
the distributions to each Class of Class A Certificates pursuant to Section
5.01(a)(iii) and (iv), the sum of (i) the applicable Current Monthly Interest
Amount for such Class on such Distribution Date, (ii) the applicable Unpaid
Interest Shortfall for such Class on such Distribution Date and (iii) the
applicable Interest on Unpaid Interest Shortfalls for such Class on such
Distribution Date.
Class Principal Balance: As of any date of determination and Class of
-----------------------
Class A Certificates, the Original Class Principal Balance for such Class
reduced by the aggregate of all amounts previously distributed to the
Certificateholders of such Class in respect of principal from the Formula
Principal Distribution Amount or any Distributable Excess Spread on all previous
Distribution Dates. The Class R Certificate has no Class Principal Balance.
Class R Certificate: Any Certificate executed and authenticated by the
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Trustee substantially in the form set forth in Exhibit B hereto.
Class R Certificateholder: The Holder of a Class R Certificate.
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Closing Date: June 17, 1999.
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Code: The Internal Revenue Code of 1986, as the same may be amended
----
from time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
------------------
maintained pursuant to Section 3.02(b). The Collection Account shall be an
Eligible Account.
Collection Period: With respect to each Distribution Date, the calendar
-----------------
month preceding the month in which such Distribution Date occurs.
Combined Loan-to-Value Ratio or CLTV: With respect to any Home Equity
---------------------------- ----
Loan, the ratio, expressed as a percentage, the numerator of which is the Home
Equity Loan's original principal balance (including capitalized costs) plus the
principal balance of any related senior mortgage loan as of the date of
origination of such Home Equity Loan, and the denominator of which is the lesser
of (i) the Appraised Value and (ii) the purchase price for the Mortgaged
Property if the Mortgaged Property was purchased within twelve months of the
time of origination of the Home Equity Loan.
Commission: The Securities and Exchange Commission.
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Compensating Interest: With respect to any Distribution Date, for those
---------------------
Home Equity Loans that were the subject during the related Collection Period of
a Principal Prepayment In Full, an amount equal to the lesser of (A) the excess,
if any, of (i) 30 days of interest on the Principal Balance of each such Home
Equity Loan at the Loan Rate (or at such lower rate as may be in effect for such
Home Equity Loan as reduced by any Debt Service Reduction), minus the Master
Servicing Fee for such Home Equity Loan over (ii) the amount of interest
actually remitted by the Mortgagor in connection with such Principal Prepayment
In Full, and (B) the aggregate Master Servicing Fee received by the Master
Servicer for the related Collection Period.
Corporate Trust Office: The office of the Trustee at which at any
----------------------
particular time its corporate business shall be principally administered, which
office on the Closing Date is located at Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0113.
Current Monthly Interest Amount: As to any Distribution Date and Class
-------------------------------
of Class A Certificates, interest accrued during the related Interest Period at
the applicable Certificate Rate on the related Class Principal Balance
immediately prior to such Distribution Date, less (A) such Class's pro rata
share of any Civil Relief Act Shortfall and less (B) such Class's pro rata share
of any Prepayment Interest Shortfall.
Curtailment: With respect to a Home Equity Loan, any payment of
-----------
principal received during a Collection Period as part of a payment that is in
excess of the amount of the Monthly Payment due for such Collection Period and
which is not intended to satisfy the Home Equity Loan in full, nor is intended
to cure a delinquency or to be applied for subsequent Monthly Payments as and
when the same come due pursuant to directions from the Mortgagor to such effect.
Cut-Off Date: The commencement of business on June 1, 1999.
------------
Cut-Off Date Pool Principal Balance: $389,058,804.91, which equals the
-----------------------------------
Pool Principal Balance as of the Cut-Off Date.
Cut-Off Date Principal Balance: With respect to any Home Equity Loan,
------------------------------
the unpaid principal balance thereof as of the Cut-Off Date (or as of the
applicable date of substitution with respect to an Eligible Substitute Home
Equity Loan pursuant to Section 2.02 or 2.05).
Debt Service Reduction: As to any Home Equity Loan and any
----------------------
Determination Date, the excess of (i) the scheduled installment of principal and
interest due each month under the terms of such Home Equity Loan over (ii) the
amount of the monthly payment of principal and/or interest required to be paid
by the Mortgagor as established by a court of competent jurisdiction (pursuant
to an order which has become final and nonappealable) as a result of a
proceeding initiated by or against the related Mortgagor under the Bankruptcy
Code, as amended from time to time (11 U.S.C.).
Defective Home Equity Loan: Any Home Equity Loan subject to repurchase
--------------------------
or substitution by the Seller pursuant to Section 2.02 or 2.05.
Deficiency Amount: As defined in the Certificate Insurance Policy.
-----------------
Definitive Certificates: As defined in Section 6.02(c).
-----------------------
Deposit Event: The lowering of the Master Servicer's short-term debt
-------------
rating below "P-1" by Moody's or "A-1" by S&P.
Depositor: Morgan Stanley Capital I Inc., a Delaware corporation, or
---------
any successor thereto.
Depository: The initial Depository shall be The Depository Trust
----------
Company, the nominee of which is Cede & Co., as the registered Holder 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. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the
------------------
eighteenth day of the month in which such Distribution Date occurs (or if such
day is not a Business Day, the Business Day immediately succeeding such
eighteenth day).
Distributable Excess Spread: As to any Distribution Date, the amount,
---------------------------
if any, of the Excess Spread necessary to be distributed on such Distribution
Date so that the Overcollateralization Amount equals the Required
Overcollateralization Amount (after giving effect to the distribution of the
Formula Principal Distribution Amount on such Distribution Date).
Distribution Date: The twenty-fifth day of each month or, if such day
-----------------
is not a Business Day, then the next Business Day, beginning in July 1999.
Eligible Account: A segregated account that is:
----------------
(i) maintained with a depository institution whose debt
obligations at the time of any deposit therein have the highest short-term
debt rating by the Rating Agencies and whose accounts are insured to the
fullest extent possible legally by either the SAIF or the BIF of the
Federal Deposit Insurance Corporation established by such fund with a
minimum long-term unsecured debt rating of "Aa2" by Moody's and "AA" by S&P
(except that such ratings shall be "A1" by Moody's and "A" by S&P if such
account is held at a BANK ONE banking Affiliate), and which is any of (A) a
federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (B) an institution duly
organized, validly existing and in good standing under the applicable
banking laws of any state, and (C) a national banking association duly
organized, validly existing and good standing under the federal banking
laws;
(ii) a segregated trust account maintained with the corporate
trust department of a federal or state chartered depository institution or
trust company, having capital and surplus of not less than $100,000,000
(except that such capital and surplus requirement shall not be less than
$50,000,000 if such institution is a BANK ONE banking Affiliate), acting in
its fiduciary capacity; or
(iii) otherwise acceptable to each Rating Agency and the
Certificate Insurer as evidenced by a letter from each Rating Agency and
the Certificate Insurer to the Trustee, without reduction or withdrawal of
the then current ratings of the Certificates.
Eligible Investments: One or more of the following (excluding any
--------------------
callable investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided that such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than 30 days from the date of acquisition thereof,
provided however, that collateral transferred pursuant to such repurchase
obligation must be of the type described in clause (a) above and must (i)
be valued daily at current market price plus accrued interest, (ii)
pursuant to such valuation, be equal, at all times, to 105% of the cash
transferred by the Trustee in exchange for such collateral and (iii) be
delivered to the Trustee or, if the Trustee is supplying the collateral, an
agent for the Trustee, in such a manner as to accomplish perfection of a
security interest in the collateral by possession of certified securities;
(iii) federal funds, certificates of deposit, time deposits and
bankers' acceptances of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof and
subject to supervision and examination by federal and/or state banking
authorities, provided that the unsecured short-term debt obligations of
such depository institution or trust company at the date of acquisition
thereof have been rated by S&P and Moody's in their respective highest
unsecured short-term debt rating category and that each such investment has
an original maturity of not more than 365 days;
(iv) commercial paper (having original maturities of not more than
90 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition have been
rated by S&P and Moody's in their respective highest short-term rating
categories;
(v) short term investment funds ("STIFS"), sponsored by any trust
company or national banking association incorporated under the laws of the
United States or any state thereof, which on the date of acquisition has
been rated by S&P and Moody's in their respective highest rating category;
(vi) interests in any money market fund (including any market fund
managed or advised by the Trustee or any Affiliate of the Trustee) which at
the date of acquisition of the interests in such fund and throughout the
time as the interest is held in such fund has a rating by S&P and Moody's
in their respective highest rating category; and
(vii) other obligations or securities that are acceptable to each
Rating Agency and the Certificate Insurer as an Eligible Investment
hereunder and will not result in a reduction in the then current rating of
the Certificates, as evidenced by a letter to such effect from such Rating
Agency and the Certificate Insurer and with respect to which the Master
Servicer and the Trustee have received confirmation that, for tax purposes,
the investment complies with the last clause of this definition;
provided, that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
Eligible Substitute Home Equity Loan: A Home Equity Loan substituted by
------------------------------------
the Seller for a Defective Home Equity Loan which must, on the date of such
substitution,
(i) have an outstanding Principal Balance (or in the case of a
substitution of more than one Home Equity Loan for a Defective Home Equity
Loan, an aggregate Principal Balance), not in excess of and not more than
5% less than the Principal Balance of the Defective Home Equity Loan;
(ii) have a Loan Rate not less than the Loan Rate of the
Defective Home Equity Loan and not more than 1% in excess of the Loan Rate
of such Defective Home Equity Loan;
(iii) have a Mortgage of the same or higher level of priority as
the Mortgage relating to the Defective Home Equity Loan at the time such
Mortgage was transferred to the Trust;
(iv) comply with each representation and warranty set forth in
Section 2.05(a) (deemed to be made as of the date of substitution);
(v) have a Combined Loan-to-Value Ratio the same or lower than the
Combined Loan-to-Value Ratio of the Defective Home Equity Loan;
(vi) have a credit score the same or higher than the credit score
of the Defective Home Equity Loan; and
(vii) have a remaining term to maturity not later than the
remaining term to maturity of the Defective Home Equity Loan.
More than one Eligible Substitute Home Equity Loan may be substituted for a
Defective Home Equity Loan if such Eligible Substitute Home Equity Loans meet
the foregoing attributes in the aggregate.
ERISA-Restricted Certificate: As defined in Section 6.02.
----------------------------
Excess Spread: As to any Distribution Date, the excess, if any, of (A)
-------------
the Available Funds and the amount of any Insured Payment applied on such
Distribution Date pursuant to Section 5.01(a) or (d) over (B) the sum of the
amounts specified in clauses (i) through (vii) of Section 5.01(a) for such
Distribution Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Fannie Mae: Fannie Mae, formerly known as The Federal National Mortgage
----------
Association, or any successor thereto.
FDIC: The Federal Deposit Insurance Corporation or any successor
----
thereto.
First Lien: With respect to any Home Equity Loan which is a second
----------
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
Foreclosure Profits: With respect to a Liquidated Home Equity Loan, the
-------------------
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid through
the date of receipt of the final Liquidation Proceeds) of such Liquidated Home
Equity Loan immediately prior to the final recovery of its Liquidation Proceeds.
Formula Principal Distribution Amount: With respect to any Distribution
-------------------------------------
Date, the sum of (i) the Principal Distributable Amount for such Distribution
Date and (ii) any Unpaid Principal Shortfall for such Distribution Date.
Freddie Mac: Freddie Mac, formerly known as The Federal Home Loan
-----------
Mortgage Corporation, or any successor thereto.
Home Equity Loan Schedule: With respect to any date, the schedule of
-------------------------
Home Equity Loans constituting assets of the Trust. The Home Equity Loan
Schedule is the schedule set forth herein as Exhibit C, which schedule sets
forth as to each Home Equity Loan: (i) the Cut-Off Date Principal Balance, (ii)
the account number, (iii) the original principal amount, (iv) the name of the
borrower, (v) the interest rate, (vi) lien position, (vii) property state,
(viii) property zip code, (ix) property type and (x) Combined Loan-to-Value
Ratio. The Home Equity Loan Schedule will be amended from time to time to
reflect the substitution of an Eligible Substitute Home Equity Loan for a
Defective Home Equity Loan hereunder.
Home Equity Loans: The home equity loans that are transferred and
-----------------
assigned to the Trustee on behalf of the Trust pursuant to Sections 2.01, 2.05
or 2.06, together with the Related Documents, exclusive of Home Equity Loans
that are transferred to the Seller, from time to time pursuant to Sections 2.02,
2.05 or 2.06, as from time to time are held as a part of the Trust, such
mortgage loans originally so held being identified in the Home Equity Loan
Schedule delivered on the Closing Date.
Home Equity Loan With Title Insurance: Each of the following Home
-------------------------------------
Equity Loans:
(i) Home Equity Loans for which the related Mortgages are first
liens on the related Mortgaged Properties;
(ii) Home Equity Loans for which the related Mortgages are second
liens on the related Mortgaged Properties and the original Principal
Balance of each such Home Equity Loan was in excess of $50,000; and
(iii) Any other Home Equity Loan for which the originator required
title insurance to be obtained.
Insurance Agreement: The Insurance and Indemnity Agreement dated as of
-------------------
June 17, 1999 among the Seller, the Master Servicer, the Depositor, the Trustee,
and the Certificate Insurer, including any amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the
------------------
Certificate Insurer) pursuant to any insurance policy covering a Home Equity
Loan or Mortgaged Property or amounts required to be paid by the Master Servicer
pursuant to Sections 3.04 and 3.05, net of any component thereof (i) covering
any expenses incurred by or on behalf of the Master Servicer in connection with
obtaining such proceeds, (ii) applied to the restoration or repair of the
related Mortgaged Property, (iii) released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures or (iv) required to be paid to
any holder of a mortgage senior to such Home Equity Loan.
Insured Amounts: As defined in the Certificate Insurance Policy.
---------------
Insured Payments: As defined in the Certificate Insurance Policy.
----------------
Interest on Unpaid Interest Shortfalls: With respect to any Class of
--------------------------------------
Class A Certificates and any Distribution Date, interest on the Unpaid Interest
Shortfall for such Class and Distribution Date (to the extent payment thereof is
legally permitted) at the applicable Certificate Rate that accrued during the
related Interest Period on the amount of such Unpaid Interest Shortfall
outstanding from Distribution Date to Distribution Date.
Interest Period: With respect to any Distribution Date, the period from
---------------
and including the first day of the calendar month preceding the month of such
Distribution Date through and including the last day of such calendar month.
Junior Lien Ratio: With respect to any Home Equity Loan, the ratio,
-----------------
expressed as a percentage, the numerator of which is the original principal
balance of such Home Equity Loan (including capitalized costs), and the
denominator of which is the sum of the original principal balance of such Home
Equity Loan and principal balance of any related senior mortgage loan, if any,
as of the date of origination of such Home Equity Loan.
Last Scheduled Distribution Date: With respect to each Class of Class A
--------------------------------
Certificates, the Distribution Dates set forth below:
Class Distribution Date in
--------------- ------------------------------
A-1 May 2011
A-2 September 2013
A-3 May 2018
A-4 July 2021
A-5 March 2025
A-6 February 2027
A-7 December 2026
Late Payment Rate: As defined in the Insurance Agreement.
-----------------
Liquidated Home Equity Loan: As to any Distribution Date, any Home
---------------------------
Equity Loan in respect of which the Master Servicer has determined, in
accordance with the servicing procedures specified herein, as of the end of the
preceding Collection Period, that all Liquidation Proceeds which it expects to
recover with respect to the liquidation of the Home Equity Loan have been
recovered.
Liquidation Loan Losses: For each Liquidated Home Equity Loan, the
-----------------------
amount, if any, by which the Principal Balance thereof plus accrued and unpaid
interest thereon plus unreimbursed Monthly Advances and Servicing Advances is in
excess of the Net Liquidation Proceeds realized thereon.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not
--------------------
including amounts drawn under the Certificate Insurance Policy) received in
connection with the liquidation of any Home Equity Loan, whether through
trustee's sale, foreclosure sale or otherwise (including rental income).
Loan Rate: With respect to any Home Equity Loan as of any day, the per
---------
annum rate of interest applicable under the related Mortgage Note to the
calculation of interest for such day on the Principal Balance.
Lost Note Affidavit: The lost note affidavit signed by the Seller.
-------------------
Majority Certificateholder: The Holder or Holders of each Class of
--------------------------
Class A Certificates evidencing Percentage Interests in excess of 51% in the
aggregate with respect to such Class.
Master Servicer: Bank One, Indiana, National Association, a national
---------------
banking association, or any successor thereto or any successor hereunder.
Master Servicer Termination Delinquency Rate Trigger: As defined in the
----------------------------------------------------
Insurance Agreement.
Master Servicer Termination Loss Trigger: As defined in the Insurance
----------------------------------------
Agreement.
Master Servicing Fee: As to each Distribution Date, the annual fee
--------------------
computed monthly and payable to the Master Servicer as provided herein, which is
calculated as an amount equal to the product of the Master Servicing Fee Rate
and the Pool Principal Balance as of the first day of the preceding Collection
Period.
Master Servicing Fee Rate: 0.50% per annum.
-------------------------
Monthly Advance: An advance made by the Master Servicer pursuant to
---------------
Section 3.14.
Monthly Loss Rate: As defined in the Insurance Agreement.
-----------------
Monthly Payment: The scheduled monthly payment of principal and/or
---------------
interest required to be made by a Mortgagor on the related Home Equity Loan.
Monthly Report: As defined in Section 5.02.
--------------
Moody's: Moody's Investors Service, Inc., or its successors in
-------
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
--------
first, second or third lien on an estate in fee simple interest in real property
securing a Home Equity Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
-------------
to a particular Home Equity Loan and any additional documents required to be
added to the Mortgage File pursuant to this Agreement.
Mortgage Note: With respect to a Home Equity Loan, the note or other
-------------
evidence of indebtedness pursuant to which the related Mortgagor agrees to pay
the indebtedness evidenced thereby which is secured by the related Mortgage.
Mortgaged Property: The underlying property, including real property
------------------
and improvements thereon, securing a Home Equity Loan.
Mortgagor: The obligor or obligors under a Mortgage Note.
---------
Net Available Distribution Amount: As defined in the Certificate
---------------------------------
Insurance Policy.
Net Liquidation Proceeds: With respect to any Liquidated Home Equity
------------------------
Loan, Liquidation Proceeds net of unreimbursed Master Servicing Fees, Servicing
Advances and Monthly Advances with respect thereto.
Nonrecoverable Advances: With respect to any Home Equity Loan, (i) any
-----------------------
Servicing Advance or Monthly Advance previously made and not reimbursed pursuant
to Section 3.03(ii) or (ii) a Servicing Advance or Monthly Advance proposed to
be made in respect of a Home Equity Loan or REO Property which, in the good
faith business judgment of the Master Servicer, would not be ultimately
recoverable pursuant to Sections 3.03(ii).
Officer's Certificate: A certificate signed by the President, an
---------------------
Executive Vice President, a Senior Vice President, a First Vice President, a
Vice President, Assistant Vice President, the Treasurer, Assistant Treasurer,
the Secretary, an Assistant Secretary, Comptroller or Assistant Comptroller or
any other authorized officer of the Master Servicer or the Seller, as the case
may be, and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel reasonably acceptable
------------------
to the Trustee, who may be in-house counsel for the Master Servicer, the Seller,
their Affiliates or the Depositor (except that any opinion relating to the
qualification of the Trust as a REMIC or compliance with the REMIC Provisions
must be an opinion of independent outside counsel) and who, in the case of
opinions delivered to each of the Rating Agencies and the Certificate Insurer,
is reasonably acceptable to each of them.
Original Class Principal Balance: With respect to each Class of Class A
--------------------------------
Certificates, the amount set forth below:
Class Original Class Principal Balance
--------------- ------------------------------------------
A-1 $183,484,000
A-2 $56,388,000
A-3 $47,183,000
A-4 $15,404,000
A-5 $20,133,000
A-6 $12,058,000
A-7 $38,912,000
Overcollateralization Amount: As to any Distribution Date, the excess,
----------------------------
if any, of (a) the Pool Principal Balance, as of the close of business on the
last day of the related Collection Period over (b) the Certificate Principal
Balance as of such Distribution Date (after giving effect to any distributions
of principal to be made on the Class A Certificates on such Distribution Date).
Ownership Interest: As to any Certificate or security interest in such
------------------
Certificate, any interest in such Certificate as the Holder thereof and any
other interest therein, whether direct or indirect, legal or beneficial, as
owner or as pledgee.
Paying Agent: Any paying agent appointed pursuant to Section 6.05.
------------
Percentage Interest: As to any Class of Class A Certificates, the
-------------------
percentage obtained by dividing the principal denomination of such Certificate
as of the Closing Date by the aggregate of the principal denominations of all
Certificates of the same Class as of the Closing Date. As to any Class R
Certificate, the portion of the Class evidenced thereby as stated on the face
thereof, which shall be on the Closing Date either 99.999999% or, but only with
respect to the Tax Matters Person Residual Interest held by the Tax Matters
Person, 0.000001%.
Permitted Transferee: Any Person other than (i) the United States, any
--------------------
State or any political subdivision thereof or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) (except
certain farmers' cooperatives described in Code section 521) on any excess
inclusions (as defined in Section 860E(c)(1)) with respect to any Class R
Certificate, (iv) rural electric and telephone cooperatives described in Code
section 1381(a)(2)(C), (v) a Person that is not a citizen or resident of the
United States, a corporation or partnership (including an entity treated as a
corporation or partnership for U.S. federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, or an estate whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States Persons have the authority to control all substantial
decisions of the trust and (vi) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may cause the Trust to fail to qualify as a REMIC at any time the Certificates
are outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax and, with the exception of the Freddie Mac, a
majority of its board of directors is not selected by such governmental unit.
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Pool Principal Balance: With respect to any date, the aggregate of the
----------------------
Principal Balances of all Home Equity Loans as of such date.
Preference Amount: As defined in the Certificate Insurance Policy.
-----------------
Premium Amount: As to any Distribution Date, one-twelfth of the product
--------------
of the Premium Percentage and the Certificate Principal Balance as of such
Distribution Date (after giving effect to any distributions of principal to be
made on the Class A Certificates on such Distribution Date); provided, however,
that the Premium Amount shall be $0 for any Distribution Date on which the
Certificate Insurer has failed to make a required payment under the Certificate
Insurance Policy.
Premium Percentage: As defined in the Insurance Agreement.
------------------
Prepayment Assumption: The prepayment assumption described in the
---------------------
Prospectus Supplement under "Prepayment and Yield Considerations."
Prepayment Interest Shortfall: With respect to any Distribution Date,
-----------------------------
the amount (but not less than zero) equal to (a) the excess, if any, of (i) 30
days of interest on the Principal Balance of those Home Equity Loans that were
the subject during the related Collection Period of a Principal Prepayment In
Full at the Loan Rate (or at such lower rate as may be in effect for such Home
Equity Loan as reduced by any Debt Service Reduction), minus the Master
Servicing Fee for each such Home Equity Loan, over (ii) the amount of interest
actually received during the related Collection Period in connection with such
Principal Prepayments In Full, minus (b) the Compensating Interest received by
the Trustee from the Master Servicer for the related Collection Period.
Principal Balance: As to any Home Equity Loan and any day, other than a
-----------------
Liquidated Home Equity Loan, the related Cut-Off Date Principal Balance, less
all collections credited against the principal balance of such Home Equity Loan
in accordance with the terms of the related Mortgage Note. For purposes of this
definition, a Liquidated Home Equity Loan shall be deemed to have a Principal
Balance equal to the Principal Balance of the related Home Equity Loan as of the
final recovery of related Liquidation Proceeds and a Principal Balance of zero
thereafter.
Principal Distributable Amount: With respect to any Distribution Date,
------------------------------
the amount equal to the sum of the following amounts (without duplication) with
respect to the immediately preceding Collection Period:
(i) that portion of all Monthly Payments allocable to principal on
Home Equity Loans and actually collected, including all Curtailments and
Principal Prepayments In Full received during the related Collection
Period,
(ii) the Principal Balance of each Home Equity Loan which became a
Liquidated Home Equity Loan for the first time during the related
Collection Period,
(iii) all Insurance Proceeds on a Home Equity Loan received by the
Master Servicer during the related Collection Period that are not part of
Liquidation Proceeds and were applied to principal of the related Home
Equity Loan,
(iv) the portion of the Purchase Price allocable to principal of
all Defective Home Equity Loans that were repurchased during the related
Collection Period and any Home Equity Loans that were repurchased during
the related Collection Period pursuant to Section 3.01(j), and
(v) the principal portion of any Substitution Adjustments for Home
Equity Loans that was deposited to the Certificate Account pursuant to
Section 2.06 on or prior to the related Determination Date and not
previously distributed.
Principal Prepayment In Full: Any payment or other recovery of
----------------------------
principal on a Home Equity Loan equal to the outstanding principal balance
thereof, received in advance of the final scheduled payment date for such Home
Equity Loan and which is intended to satisfy a Home Equity Loan in full.
Priority Amount: With respect to any Distribution Date, will be the
---------------
product of (i) the Priority Percentage for such Distribution Date and (ii) the
Class A-7 Pro Rata Principal Amount for such Distribution Date; provided that
the Priority Amount shall not exceed the Class Principal Balance of the Class
A-7 Certificates immediately prior to such Distribution Date.
Priority Percentage: For each Distribution Date shall be as follows:
-------------------
Priority
Distribution Dates Occuring in Percentage
------------------------------ ----------
July 1999 through June 2002............................ 0%
July 2002 through June 2004............................ 45%
July 2004 through June 2005............................ 80%
July 2005 through June 2006............................ 100%
July 2006 and thereafter............................... 300%
Prospectus: The base prospectus of the Depositor dated March 25, 1998.
----------
Prospectus Supplement: The prospectus supplement dated June 10, 1999,
---------------------
relating to the offering of the Class A Certificates.
Purchase Agreement: The Home Equity Loan Purchase Agreement, dated as
------------------
of June 1, 1999, among the Seller, as seller, and the Depositor, as purchaser,
with respect to the Home Equity Loans.
Purchase Price: As to any Home Equity Loan purchased from the Trust on
--------------
any date pursuant to Sections 2.02, 2.05 or 3.01(j) an amount equal to the sum
of (i) the unpaid Principal Balance thereof as of the date of purchase, (ii) the
greater of (a) all unpaid accrued interest thereon to the end of the month
preceding the Distribution Date on which such Purchase Price is included in
Available Funds and (b) 30 days' interest thereon, computed at the applicable
Loan Rate; provided, however, that if at the time of repurchase the Seller is an
affiliate of the Master Servicer, the amount described in clause (ii) shall be
computed at the Loan Rate net of the Master Servicing Fee Rate, and (iii) (x) if
the Master Servicer is not an Affiliate of the Seller, any unreimbursed
Servicing Advances with respect to such Home Equity Loan and (y) expenses
reasonably incurred or to be incurred by the Master Servicer or the Trustee in
respect of the breach or defect giving rise to the purchase obligation.
Purchaser: The Depositor in its capacity as purchaser under the
---------
Purchase Agreement.
Rating Agency: Any statistical credit rating agency, or its successor,
-------------
that rated the Class A Certificates at the request of the Depositor at the time
of the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Depositor and acceptable
to the Certificate Insurer, notice of which designation shall be given to the
Trustee. References herein to the highest short term unsecured rating category
of a Rating Agency shall mean "A-1" or better in the case of S&P and "P-1" or
better in the case of Moody's and in the case of any other Rating Agency shall
mean such equivalent ratings. References herein to the highest long-term rating
category of a Rating Agency shall mean "AAA" in the case of S&P and "Aaa" in the
case of Moody's and in the case of any other Rating Agency, such equivalent
rating.
Rating Downgrade Event: The day on which the senior, unsecured
----------------------
long-term debt rating of the Master Servicer is less than "Baa2" by Moody's or
"BBB" by S&P.
Record Date: With respect to each Distribution Date (other than the
-----------
first Distribution Date), the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs. With respect
to the first Distribution Date, the Closing Date.
Reimbursement Amount: As of any Distribution Date, the sum of (x)(i)
--------------------
all Insured Payments paid by the Certificate Insurer, but for which the
Certificate Insurer has not been reimbursed prior to such Distribution Date
pursuant to Section 5.01(a)(vi), plus (ii) interest accrued on such Insured
Payments not previously repaid calculated at the Late Payment Rate from the date
the Trustee received the related Insured Payments, and (y) without duplication
(i) any amounts then due and owing to the Certificate Insurer under the
Insurance Agreement, as certified to the Trustee by the Certificate Insurer,
plus (ii) interest on such amounts at the Late Payment Rate.
Related Documents: As defined in Section 2.01.
-----------------
Released Mortgaged Property Proceeds: As to any Home Equity Loan,
------------------------------------
proceeds received by the Master Servicer in connection with (a) a taking of an
entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (b) any release of part of the Mortgaged Property from the lien
of the related Mortgage, whether by partial condemnation, sale or otherwise,
which are not released to the Mortgagor in accordance with applicable law,
mortgage servicing standards the Master Servicer would use in servicing home
equity loans for its own account and this Agreement.
REMIC: A "real estate mortgage investment conduit" within the meaning
-----
of Section 860D of the Code.
REMIC Certificate Maturity Date: The "latest possible maturity date" of
-------------------------------
the Class A Certificates as that term is defined in Section 2.10.
REMIC Change of Law: Any proposed, temporary or final regulation,
-------------------
revenue ruling, revenue procedure or other official announcement or
interpretation relating to the REMIC and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating to
----------------
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REO Property: A Mortgaged Property that is acquired by the Master
------------
Servicer on behalf of the Trustee in foreclosure or by deed in lieu of
foreclosure.
Required Overcollateralization Amount: An amount equal to the
-------------------------------------
"Overcollateralization Target Amount" (as defined in the Insurance Agreement).
Required Payments: As defined in the Certificate Insurance Policy.
-----------------
Residential Dwelling: A one- to four-family dwelling, mobile home or
--------------------
manufactured home, a unit in a planned unit development, a unit in a condominium
development or a townhouse.
Responsible Officer: When used with respect to the Trustee, any officer
-------------------
of the Trustee within the Corporate Trust Office of the Trustee including any
vice president or assistant vice president, assistant treasurer, assistant
secretary, senior trust officer or trust officer or, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Seller or the Master Servicer,
the President or any Vice President, Assistant Vice President, Treasurer or
Assistant Treasurer or any Secretary or Assistant Secretary or any other
authorized officer of the Seller or the Master Servicer.
Rolling Twelve Month Loss Rate: As defined in the Insurance Agreement.
------------------------------
SAIF: The Savings Association Insurance Fund, as from time to time
----
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989 or, if at any time after the execution of this Agreement
the Savings Association Insurance Fund is not existing and performing duties now
assigned to it, the body performing such duties on such date.
S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc.,
---
or its successors in interest.
Seller: Banc One Financial Services, Inc., an Indiana corporation, or
------
any successor thereto, as seller under the Purchase Agreement.
Servicer: Any Person with whom the Master Servicer has entered into a
--------
Servicing Agreement and who satisfies the requirements set forth in Section
3.01(b) in respect of the qualification of a Servicer. Banc One Financial
Services, Inc. shall be the initial Servicer.
Servicer Default: As defined in Section 8.01.
----------------
Servicing Advances: All reasonable and customary "out of pocket" costs
------------------
and expenses incurred in the performance by the Master Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (iv) compliance with the
obligations under Section 3.07 and (v) in connection with the liquidation of a
Home Equity Loan, expenditures relating to the purchase or maintenance of the
First Lien pursuant to Section 3.15, all of which reasonable and customary
out-of-pocket costs and expenses are reimbursable to the Master Servicer to the
extent provided in Section 3.03(ii) and Section 3.07.
Servicing Agreement: Any agreement between the Master Servicer and any
-------------------
Servicer relating to servicing and/or administration of certain Home Equity
Loans as provided in Section 3.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee and the Certificate Insurer.
Servicing Certificate: A certificate completed and executed by a
---------------------
Servicing Officer on behalf of the Master Servicer.
Servicing Officer: Any officer of the Master Servicer involved in, or
-----------------
responsible for, the administration and servicing of the Home Equity Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee (with a copy to the Certificate Insurer) by the Master Servicer, as
such list may be amended from time to time, initially set forth in Exhibit J
hereto.
Simple Interest Loan: Any Home Equity Loan as to which, pursuant to the
--------------------
Mortgage Note related thereto, interest is calculated on the basis of the
outstanding principal balance of the Home Equity Loan multiplied by the
applicable Loan Rate and further multiplied by a fraction, of which the
numerator is the number of days in the period elapsed since the date to which
interest was last paid and the denominator is the number of days in the annual
period for which interest accrues on such Home Equity Loan, and the Monthly
Payment received is applied first to interest accrued to the date of payment and
the balance is applied to reduce the unpaid principal balance.
Start-up Day: The day designated as such pursuant to Section 2.09.
------------
Substitution Adjustment: As to any Defective Home Equity Loan and the
-----------------------
date on which a substitution thereof occurs pursuant to Section 2.06, the sum
of:
(a) the excess, if any, of (i) the Principal Balance of such Defective
Home Equity Loan (after the application of any principal payments received on
such Defective Home Equity Loan on or before the date of the substitution of the
applicable Eligible Substitute Home Equity Loan or Loans) over (ii) the
aggregate Principal Balance of the applicable Eligible Substitute Home Equity
Loan or Loans, plus
(b) the greater of (x) accrued and unpaid interest (accruing at the
Loan Rate for such Defective Home Equity Loan) on such excess through the
Collection Period relating to the Distribution Date for which such Substitution
Adjustment will be included as part of Available Funds and (y) 30 days' interest
on such excess calculated on a 360-day year in each case at the Loan Rate (or
Loan Rate net of the Master Servicing Fee Rate if the Seller is an affiliate of
the Master Servicer), plus
(c) if the Master Servicer is not an Affiliate of the Seller, the
amount of any unreimbursed Servicing Advances made by the Master Servicer with
respect to such Defective Home Equity Loan.
Supplemental Home Equity Loan Schedule: As defined in Section 2.06(b).
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Tax Matters Person: As defined in Section 2.12.
------------------
Tax Matters Person Residual Interest: A 0.000001% interest in the Class
------------------------------------
R Certificates, which shall be issued to and held by the Trustee.
Trust: The trust created by this Agreement which shall be entitled
-----
"Banc One Financial Services Home Equity Loan Trust 1999-2," the corpus of which
consists of (i) the Home Equity Loans, (ii) such assets as shall from time to
time be deposited in the Collection Account and the Certificate Account in
accordance with this Agreement (excluding all net income and gain thereon),
(iii) property that secured a Home Equity Loan and that has become REO Property,
(iv) the Certificate Insurance Policy, (v) rights under certain hazard insurance
policies maintained by the Mortgagors or the Master Servicer in respect of the
Home Equity Loans, (vi) the assignment of the Depositor's rights under the
Purchase Agreement, and (vii) all proceeds of each of the foregoing.
Trustee: Norwest Bank Minnesota, National Association, a national
-------
banking association, or any successor thereto.
Trustee Fee: As to each Distribution Date, the fee computed monthly and
-----------
payable to the Trustee from the assets of the Trust pursuant to Section
5.01(a)(i), which is calculated as an amount equal to the product of the Trustee
Fee Rate and the Pool Principal Balance as of the first day of the preceding
Collection Period.
Trustee Fee Rate: 0.0135% per annum.
----------------
UCC: The Uniform Commercial Code, as amended from time to time, as in
---
effect in any specified jurisdiction.
Unpaid Interest Shortfall: With respect to any Class of Class A
-------------------------
Certificates and any Distribution Date, the amount, if any, by which the
aggregate of the Class A Interest Shortfalls for prior Distribution Dates is in
excess of the aggregate of the amounts distributed on prior Distribution Dates
to Holders of such Class pursuant to Section 5.01(a)(iv) in payment thereof.
Unpaid Principal Shortfall: With respect to any Distribution Date, the
--------------------------
amount, if any, by which the Certificate Principal Balance as of the immediately
preceding Distribution Date (after giving effect to the distribution of the
Formula Principal Distribution Amount, any Distributable Excess Spread and any
Insured Payments applied on such preceding Distribution Date) exceeds the Pool
Principal Balance at the end of the second preceding Collection Period.
Voting Rights: The portion of the aggregate voting rights of all the
-------------
Certificates evidenced by a Certificate. At all times during the term of this
Agreement, the Voting Rights shall be allocated among Holders of the Class A
Certificates in proportion to the Original Class Principal Balances of their
respective Classes. Voting Rights allocated to a Class of Certificates shall be
allocated among the Certificates of each such Class in accordance with their
respective Percentage Interests. The Holders of the Class R Certificates shall
have no Voting Rights.
Widely-Held Certification: A certification delivered to the Trustee by
-------------------------
the underwriters of the Class A Certificates on the Closing Date to the effect
that one or more Classes of Class A Certificates will be owned on such date by
100 or more investors independent of the Seller, the Trust, the Depositor, and
each other.
Section 1.02. Interest Calculations. All calculations of interest that
---------------------
are made in respect of the Principal Balance of a Home Equity Loan shall be made
based on the number of days elapsed between the date through which interest was
last paid on the related Home Equity Loan and the date of receipt of the related
Mortgagor's most current payment. The Certificate Rate for the Class A
Certificates shall be calculated on the basis of a 360-day year consisting of
twelve 30-day months. The calculation of the Master Servicing Fee and the
Trustee Fee shall be made on the basis of a 360-day year consisting of twelve
30-day months. All dollar amounts calculated hereunder shall be rounded to the
nearest penny with one-half of one penny being rounded down.
ARTICLE II
Conveyance of Home Equity Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Home Equity Loans. The Depositor,
-------------------------------
concurrently with the execution and delivery of this Agreement, does hereby
irrevocably transfer, assign, sell, set over and otherwise convey to the Trustee
for the benefit of the Certificateholders and the Certificate Insurer without
recourse (subject to Sections 2.02 and 2.05) (i) all of its right, title and
interest in and to each Home Equity Loan, including the Cut-Off Date Principal
Balance, and all collections in respect thereof received on or after the Cut-Off
Date; (ii) property which secured such Home Equity Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest in
any insurance policies in respect of the Home Equity Loans; (iv) all proceeds of
any of the foregoing; and (v) the Depositor's rights under the Purchase
Agreement with respect to the representations and warranties of the Seller
thereunder together with all rights of the Depositor to require the Seller to
cure any breach thereof or to repurchase or substitute for any affected Home
Equity Loan in accordance with the Purchase Agreement. In addition, on or prior
to the Closing Date, the Seller shall cause the Certificate Insurer to deliver
the Certificate Insurance Policy to the Trustee.
On or prior to the Closing Date (with respect to items (i), (ii) and
(iii) below) and within 90 days of an Assignment Event (with respect to items
(iv), (v) and (vi) below), the Seller shall deliver to the Trustee, the
following documents or instruments with respect to each Home Equity Loan (the
"Related Documents") and on or prior to the Closing Date the Seller shall
deliver to the Trustee the Home Equity Loan Schedule in computer readable
format:
(i) the original Mortgage Note, endorsed in blank, with all
intervening endorsements showing a complete chain of title from the
originator of such Home Equity Loan to the Seller or a copy of such
original Mortgage Note with an accompanying Lost Note Affidavit;
(ii) the original Mortgage, with evidence of recording thereon,
provided that if the original Mortgage has been delivered for recording to
the appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located but has not yet been returned to the Seller
by such recording office, the Seller shall deliver to the Trustee a copy of
such original Mortgage, together with a certificate of the Seller
certifying that such original Mortgage has been so delivered to such
recording office; in all such instances, the Seller shall deliver or cause
to be delivered the original recorded Mortgage to the Trustee promptly upon
receipt thereof;
(iii) the original Assignment of Mortgage, from the Seller in
blank or to "Norwest Bank Minnesota, National Association, as Trustee",
which assignment shall be in form and substance acceptable for recording;
(iv) the original attorney's opinion of title or the original
policy of title insurance, provided that if any such original policy of
title insurance has not yet been received by the Seller, the Seller shall
deliver to the Trustee a copy of such policy or a title insurance binder or
commitment for the issuance of such policy;
(v) originals of all intervening assignments of Mortgage, with
evidence of recording thereon, showing a complete chain of title from the
originator to the Seller, provided that if any such original intervening
assignment of Mortgage has been delivered for recording to the appropriate
public recording office of the jurisdiction in which the Mortgaged Property
is located but has not yet been returned to the Seller by such recording
office, the Seller shall deliver to the Trustee a copy of such original
assignment of Mortgage, together with a certificate of the Seller
certifying that such original assignment of Mortgage has been so delivered
to such recording office; in all such instances, the Seller shall deliver
or cause to be delivered any such original assignments to the Trustee
promptly upon receipt thereof; and
(vi) originals of all assumption and modification agreements, if
any, provided that if any such agreement has been delivered for recording
to the appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located but has not yet been returned to the Seller
by such recording office, the Seller shall deliver to the Trustee a copy of
such original agreement, together with a certificate of the Seller
certifying that such original agreement has been so delivered to such
recording office; in all such instances, the Seller shall deliver or cause
to be delivered any such original agreements to the Trustee promptly upon
receipt thereof.
On the Closing Date (i) no more than 5% of the Home Equity Loans (by
Cut-Off Date Principal Balance) shall have Lost Note Affidavits in lieu of
original Mortgage Notes and (ii) the Seller shall deliver to the Trustee a copy
of the original Mortgage Note for each Home Equity Loan with respect to which a
Lost Note Affidavit is delivered.
Except as herein provided, the Master Servicer shall, as custodian and
for the benefit of the Trustee, the Certificateholders and the Certificate
Insurer, be entitled to maintain possession of the foregoing documents and
instruments described in clauses (iv), (v) and (vi) above and shall not be
required to deliver any of them to the Trustee. In the event, however, that
possession of any such documents or instruments is required by any Person
(including the Trustee) acting as successor Master Servicer pursuant to Section
8.02 in order to carry out the duties of the Master Servicer hereunder, then
such successor master servicer shall be entitled to request delivery, at the
expense of the Master Servicer, of such documents or instruments by the Master
Servicer and to retain such documents or instruments for servicing purposes;
provided that the Trustee or such successor master servicers shall maintain such
documents at such offices as may be required by any regulatory body having
jurisdiction over such Home Equity Loans.
The Seller hereby confirms to the Trustee that it has made the
appropriate entries in its general accounting records, to indicate that such
Home Equity Loans have been transferred to the Trustee and constitute part of
the Trust in accordance with the terms of the trust created hereunder.
The Trustee agrees, for the benefit of Certificateholders and the
Certificate Insurer, on or prior to the Closing Date to execute and deliver to
the Seller, the Depositor, the Certificate Insurer and the Master Servicer an
acknowledgment of receipt, with respect to each Home Equity Loan, of the
original Mortgage Note (with any exceptions noted), (in the form of Exhibit M-1)
and declares that it will hold such instruments and any amendments, replacements
or supplements thereto, as well as any other assets included in the definition
of Trust and delivered to the Trustee, as Trustee in trust upon and subject to
the conditions set forth herein for the benefit of the Certificateholders and
the Certificate Insurer.
The Trustee agrees, for the benefit of Certificateholders and the
Certificate Insurer, within forty-five (45) days following (a) the Closing Date
with respect to the Mortgages and Assignments of Mortgage and (b) the receipt of
the remainder of the Mortgage Files after an Assignment Event, to review (or
cause to be reviewed) each Mortgage File and to deliver to the Seller, the
Depositor, the Certificate Insurer and the Master Servicer a certification (in
the form of Exhibit M-2) to the effect that, as to each Home Equity Loan listed
in the Home Equity Loan Schedule (other than any Home Equity Loan paid in full
or any Home Equity Loan specifically identified in the certification as not
covered by such certification), (i) all documents constituting part of such
Mortgage File required to be delivered to it pursuant to Section 2.01 are in its
possession, (ii) such documents have been reviewed by it, appear to be what they
purport to be and relate to such Home Equity Loan, (iii) based on its
examination and only as to the foregoing, the information set forth in the Home
Equity Loan Schedule which corresponds to items (ii), (iii), (iv), (v), (vii)
and (viii) of the definition of "Home Equity Loan Schedule" accurately reflects
information set forth in the Mortgage File. If within such 45-day period, the
Trustee finds any document constituting a part of the Mortgage File not to have
been executed or received or to be unrelated to the Home Equity Loans identified
in said Home Equity Loan Schedule or, if in the course of its review, the
Trustee determines that such Mortgage File is otherwise defective in any
material respect, the Trustee shall notify the parties, and the Seller shall
have a period of one hundred thirty-five (135) days after such notice (subject
to Section 2.02) within which to correct or cure any such defect or to purchase
such Home Equity Loan at the related Purchase Price or substitute an Eligible
Substitute Home Equity Loan therefor pursuant to Section 2.06.
On or prior to two hundred ten (210) days following the Closing Date
(but no earlier than 135 days following the Closing Date), the Trustee shall
deliver (or cause to be delivered) to the Seller, the Depositor, the Certificate
Insurer and the Master Servicer a certification (in the form of Exhibit M-3) to
the effect that, as to each Home Equity Loan listed in the Home Equity Loan
Schedule (other than any Home Equity Loan paid in full or any Home Equity Loan
specifically identified in such certification as not covered by such
certification), and as to any document noted in an exception included in the
Trustee's initial certification, (i) all documents constituting part of such
Mortgage File required to be delivered to it pursuant to Section 2.01 are in its
possession, (ii) such documents have been reviewed by it, appear to be what they
purport to be and relate to such Home Equity Loan, (iii) based on its
examination and only as to the foregoing, the information set forth in the Home
Equity Loan Schedule which corresponds to items (ii), (iii), (iv), (v), (vii)
and (viii) of the definition of "Home Equity Loan Schedule" accurately reflects
information set forth in the Mortgage File.
Within 90 days of an Assignment Event, the Seller, at its own expense,
shall either (i) cause the Master Servicer to record the Assignments of Mortgage
in favor of the Trustee in the appropriate real property or other records (which
may be a blanket assignment if permitted by applicable law) or (ii) deliver to
the Trustee and the Certificate Insurer an Opinion of Counsel reasonably
acceptable to the Certificate Insurer to the effect that recording is not
required to protect the Trustee's right, title and interest in and to the
related Home Equity Loan or, in the event a court should recharacterize the sale
of the Home Equity Loans as a financing, to perfect a first priority security
interest in favor of the Trustee in the related Home Equity Loan.
With respect to any Assignment of Mortgage as to which the related
recording information is unavailable within 90 days of an Assignment Event, such
Assignment of Mortgage shall be submitted for recording within 60 days after
receipt of such information but in no event later than six months from the
occurrence of an Assignment Event. Upon receipt thereof, the Trustee shall
retain a copy of each Assignment of Mortgage submitted by the Seller for
recording. In the event that any such Assignment of Mortgage is lost or returned
unrecorded because of a defect therein, the Seller, at its own expense, shall
promptly prepare a substitute Assignment of Mortgage or cure such defect, as the
case may be, and thereafter the Seller shall be required to submit each such
Assignment of Mortgage for recording.
The Trustee shall have no responsibility for reviewing any Mortgage
File except as expressly provided in this Section 2.01. In reviewing any
Mortgage File pursuant to this Section, the Trustee shall have no responsibility
for determining whether any document is valid and binding, whether the text of
any assignment or endorsement is in proper or recordable form (except, if
applicable, to determine if the Trustee is the assignee or endorsee), whether
any document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction, whether any Person executing any document is authorized
to do so or whether any signature thereon is genuine, but shall only be required
to determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
The parties hereto intend that the transactions set forth herein
constitute a sale and not a pledge by the Depositor to the Trust of all the
Depositor's right, title and interest in and to the Home Equity Loans and other
property as and to the extent described above. In the event the transactions set
forth herein are characterized as a pledge and not a sale, the Depositor hereby
grants to the Trust a security interest in all of the Depositor's right, title
and interest in, to and under the Home Equity Loans and such other property, to
secure all of the Depositor's obligations hereunder, and this Agreement shall
constitute a security agreement under applicable law. The Depositor agrees to
take or cause to be taken such actions and to execute such documents, including
the filing of any continuation statements with respect to the UCC-1 financing
statements filed with respect to the Home Equity Loans by the Trust on the
Closing Date, and any amendments thereto required to reflect a change in the
name or corporate structure of the Depositor or the filing of any additional
UCC-1 financing statements due to the change in the principal office of the
Depositor, as are necessary to perfect and protect the Trust's interests in each
Home Equity Loan and in the proceeds thereof.
Section 2.02. Acceptance by Trustee. The Trustee, on behalf of the
---------------------
Trust, hereby acknowledges the sale and assignment of the Home Equity Loans. The
Trustee, on behalf of the Trust, hereby acknowledges its receipt of the
Certificate Insurance Policy. If the Seller is given notice of an omission or
defect under Section 2.01 and if the Seller does not correct or cure such
omission or defect within the 135-day cure period following such notice, the
Seller shall purchase the related Home Equity Loan from the Trust or substitute
an Eligible Substitute Home Equity Loan for such Home Equity Loan on the
Determination Date in the month following the month in which such 135-day cure
period expired at the Purchase Price of such Home Equity Loan or in accordance
with Section 2.06, as applicable. The Purchase Price for the purchased Home
Equity Loan which is purchased as described in the preceding sentence shall be
deposited in the Collection Account no later than the Business Day prior to the
next succeeding Distribution Date after such obligation arises; provided that,
upon receipt by the Trustee of written notification of such deposit signed by an
officer of the Seller, the Trustee shall release to the Seller the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment, prepared by and at the expense of the Seller, in each
case without recourse, representation or warranty as shall be necessary to vest
in the Seller or its designee any Home Equity Loan released pursuant hereto. It
is understood and agreed that the obligation of the Seller to purchase any Home
Equity Loan or substitute an Eligible Substitute Home Equity Loan for such Home
Equity Loan as to which a material defect in or omission of a constituent
document exists shall constitute the sole remedy against the Seller respecting
such defect or omission available to the Certificate Insurer, the
Certificateholders or the Trustee on behalf of Certificateholders and the
Certificate Insurer. An Opinion of Counsel to the effect set forth in Section
2.06(d) shall be delivered to the Trustee and the Certificate Insurer in
connection with any such repurchase.
The Master Servicer, promptly following the transfer of (i) a Defective
Home Equity Loan from or (ii) an Eligible Substitute Home Equity Loan to the
Trust pursuant to this Section 2.02 and Section 2.06, as the case may be, shall
amend the Home Equity Loan Schedule and deliver a copy of such amended Schedule
to the Trustee and make appropriate entries in its general account records to
reflect such transfer and the addition of any Eligible Substitute Home Equity
Loan, if applicable.
Section 2.03. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor represents and warrants to the Trust, the Trustee on behalf of the
Certificateholders and the Certificate Insurer as follows:
(i) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware, with
full corporate power and authority to own its assets and conduct its
business as presently being conducted;
(ii) The Depositor has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions contemplated
under the Agreement, and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement. Assuming due
authorization, execution and delivery by the other parties hereto, when
executed and delivered, this Agreement constitutes a legal, valid and
binding obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a proceeding
at law or in equity);
(iii) The Depositor is not required to obtain the consent of any
other party or any consent, approval or authorization from any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except for such
consent, approval or authorization as shall have been obtained or filed, as
the case may be, prior to the Closing Date;
(iv) Immediately prior to the sale and assignment by the Depositor
to the Trustee on behalf of the Trust of each Home Equity Loan, the
Depositor had good and equitable title to each Home Equity Loan (insofar as
such title was conveyed to it by the Seller) subject to no prior lien,
claim, participation interest, mortgage, security interest, pledge, charge
or other encumbrance or other interest of any nature;
(v) As of the Closing Date, the Depositor has transferred all
right, title and interest in the Home Equity Loans to the Trustee on behalf
of the Trust;
(vi) The Depositor has not transferred the Home Equity Loans to
the Trustee on behalf of the Trust with any intent to hinder, delay or
defraud any of its creditors;
(vii) The execution, delivery and performance of this Agreement by
the Depositor will not violate any provision of any existing regulation of
any governmental agency having jurisdiction, or any order or decree of any
court having jurisdiction, over the Depositor, that would materially and
adversely affect the performance of its duties hereunder or any provision of
the articles of incorporation or bylaws of the Depositor, or constitute a
material breach of any mortgage, indenture, contract or other agreement to
which the Depositor is a party or by which it may be bound;
(viii) The Depositor is not insolvent, nor will the Depositor be
made insolvent by the transfer of the Home Equity Loans, nor is the
Depositor aware of any pending insolvency;
(ix) There are no actions or proceedings against, or
investigations of it, pending or, to its knowledge, threatened, before any
court, administrative agency or other tribunal (A) that, if determined
adversely, would prohibit the Depositor from entering into this Agreement,
(B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (C) that, if determined adversely, would
prohibit or materially and adversely affect the Depositor's performance of
any of its obligations under, or the validity or enforceability of, this
Agreement; and
(x) The transfer of the Home Equity Loans to the Purchaser on the
Closing Date will be treated by the Seller for financial accounting and
reporting purposes as a sale of assets.
Section 2.04. Representations and Warranties Regarding the Seller and
-------------------------------------------------------
the Master Servicer.
- -------------------
(a) The Seller and the Master Servicer each represents and warrants to
the Trust, the Trustee on behalf of the Certificateholders and the Certificate
Insurer that, as of the Closing Date:
(i) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Indiana, and the Master
Servicer is a national banking association duly organized, validly existing
and in good standing under the laws of the United States, and each has full
power and authority (A) to conduct its business as presently conducted by
it and (B) to execute and deliver this Agreement and perform its
obligations under this Agreement. Each of the Seller and the Master
Servicer is and will remain in compliance with the laws of each state in
which any Mortgaged Property is located to the extent necessary to perform
its obligations in respect of this Agreement;
(ii) The execution and delivery of this Agreement, the performance
by each of the Seller and the Master Servicer of its obligations hereunder
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of each of the Seller and
the Master Servicer, respectively. This Agreement has been duly executed
and delivered by each of the Seller and the Master Servicer and constitutes
a legal, valid and binding obligation of each of the Seller and the Master
Servicer, respectively, enforceable against each in accordance with its
terms subject to (A) bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and to general
principles of equity and (B) public policy considerations underlying the
securities laws, to the extent that such public policy considerations limit
the enforceability of the provisions of this Agreement which purport to
provide indemnification from securities laws liabilities;
(iii) The execution, delivery and performance of this Agreement by
each of the Seller and the Master Servicer, and the consummation of the
transactions contemplated hereby, will not (A) violate or conflict with any
provision of the charter or bylaws of the Seller or the Master Servicer or
any law, rule, regulation, order, judgment, award, administrative
interpretation, injunction, writ, decree or the like affecting the Seller
or the Master Servicer or by which the Seller or the Master Servicer is
bound or (B) result in a breach of or constitute a default under any
indenture or other material agreement to which the Seller or the Master
Servicer is a party or by which the Seller or the Master Servicer is bound,
which in the case of either clause (i) or (ii) will have a material adverse
effect on the Seller's or the Master Servicer's ability to perform its
respective obligations under this Agreement;
(iv) No authorization, consent, approval, license, exemption or
other action by or notice to or registration or filing with any
governmental authority or administrative or regulatory body is required for
either the execution, delivery or performance of this Agreement by the
Seller or the Master Servicer or the consummation of the transactions
contemplated hereby, except such as shall have been made or obtained on or
prior to the Closing Date;
(v) There are no pending or, to the best of the Seller's or the
Master Servicer's knowledge, threatened actions, proceedings or
investigations against the Seller or the Master Servicer, respectively,
before any court, governmental arbitrator or instrumentality which (A) if
determined adversely to the Seller or the Master Servicer, as the case may
be, may reasonably be expected, individually or in the aggregate, to have a
material effect on the Seller's or the Master Servicer's ability to perform
its obligations under this Agreement or (B) affect the legality, validity
or enforceability of this Agreement;
(vi) Neither the Seller nor the Master Servicer is insolvent and
the sale of the Home Equity Loans will not cause the Seller to become
insolvent. The sale of the Home Equity Loans is not undertaken with the
intent to hinder, delay or defraud any of the Seller's creditors;
(vii) The transfer of the Home Equity Loans to the Purchaser on
the Closing Date will be treated by the Seller for financial accounting and
reporting purposes as a sale of assets;
(viii) Immediately prior to the transfer under the Purchase
Agreement, the Seller had good title to and was the sole owner and holder
of the Home Equity Loans;
(ix) The Seller is transferring the Home Equity Loans to the
Purchaser free and clear of any and all known liens, pledges, charges or
security interests of any nature encumbering the Home Equity Loans, and the
Seller had full right and authority to sell and assign the Mortgage Notes
and the Mortgages;
(x) The collection practices used by the Master Servicer with
respect to the Home Equity Loans has been, in all material respects, legal,
proper, prudent and customary in the non-conforming mortgage servicing
business;
(xi) The Home Equity Loans were selected from the outstanding home
equity loans in the Seller's portfolio underwritten to substantially the
same standards as the Home Equity Loans and covering mortgaged properties
similar to the Mortgaged Properties and such selection was not, and will
not be, made in a manner so as to adversely affect the interests of the
Depositor, the Trust or the Certificate Insurer; and
(xii) The Seller has not dealt with any broker or agent or other
Person who might be entitled to a fee, commission or compensation in
connection with the transaction contemplated by this Agreement, other than
the Depositor, BANK ONE and their respective Affiliates.
(b) The representations and warranties set forth in this Section shall
survive the sale and assignment of the Home Equity Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Certificateholders or the Certificate
Insurer, the Person discovering such breach shall give prompt written notice to
the other parties and the Certificate Insurer. Within 90 days of its discovery
or its receipt of notice of breach or, with the prior written consent of a
Responsible Officer of the Trustee, such longer period specified in such
consent, the Seller or the Master Servicer, as appropriate, shall cure such
breach in all material respects.
Section 2.05. Representations and Warranties of the Seller Regarding
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the Home Equity Loans.
- ---------------------
(a) The Seller represents and warrants to the Certificate Insurer and
the Trustee on behalf of the Certificateholders as follows as of the Closing
Date:
(i) The information set forth on the Home Equity Loan Schedule
attached hereto as Exhibit C is true and correct in all material respects
as of the Cut-off Date or such other date as may be indicated in such
schedule;
(ii) To the best of the Seller's knowledge, the related Mortgage
Note and Mortgage are genuine and each is the legal, valid and binding
obligation of the maker thereof, enforceable in accordance with its terms
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(iii) The related Mortgage is a valid and enforceable first or
second lien on the related Mortgaged Property, which Mortgaged Property is
free and clear of all encumbrances and liens (including mechanics liens)
having priority over the first or second lien of the Mortgage except for:
(A) liens for real estate taxes and assessments not yet due and payable;
(B) covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being acceptable to mortgage
lending institutions generally or specifically reflected or considered in
the lender's title insurance policy and referred to in the appraisal made
in connection with the origination of the related Home Equity Loan; (C) in
the case of second lien Mortgages, the related first lien and second lien;
and (D) other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security intended to
be provided by such Mortgage;
(iv) Any security agreement, chattel mortgage or equivalent
document related to such Home Equity Loan establishes and creates a valid
and enforceable lien on the property described herein;
(v) No Home Equity Loan has a Monthly Payment that is 30 or more
days delinquent as of the Cut-Off Date, and no Home Equity Loan has been
dishonored;
(vi) The Seller has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount required
under the Home Equity Loan;
(vii) Except by written instruments included in the related
Mortgage File, the Seller has not impaired, waived, altered or modified the
related Mortgage or Mortgage Note or satisfied, canceled, rescinded or
subordinated such Mortgage or Mortgage Note in whole or in part or released
all or any portion of the Mortgaged Property from the lien of the Mortgage
(except for a release which is reflected in the Combined Loan-to-Value
Ratio for the Home Equity Loan as set forth in the Home Equity Loan
Schedule), or executed any instrument of release, cancellation, rescission
or satisfaction of the Mortgage Note or Mortgage;
(viii) To the best of the Seller's knowledge, no condition exists
which could give rise to any right of rescission, set off, counterclaim, or
defense including, without limitation, the defense of usury, and no such
right has been asserted;
(ix) To the best of the Seller's knowledge, there is no proceeding
pending for the total or partial condemnation and no eminent domain
proceedings pending affecting any Mortgaged Property;
(x) Each Home Equity Loan With Title Insurance is covered by
either (A) a mortgage title insurance policy or other generally acceptable
form of insurance policy customary in the jurisdiction where the Mortgaged
Property is located or (B) if generally acceptable in the jurisdiction
where the Mortgaged Property is located, an attorney's opinion of title
given by an attorney licensed to practice law in the jurisdiction where the
Mortgaged Property is located. All of Seller's rights under such policies,
opinions or other instruments shall be deemed to be transferred and
assigned to Purchaser upon sale and assignment of such Home Equity Loans
hereunder. The title insurance policy insures the original lender, its
successor and assigns, as to the first or second, as applicable, priority
lien of the Mortgage in the original principal amount of the Home Equity
Loan With Title Insurance, subject to the exceptions contained in such
policy. The Seller is the sole insured of such mortgage title insurance
policy, and such mortgage title insurance policy is in full force and
effect and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. Seller has not made and has no
knowledge of any claims made under such mortgagee title insurance policy.
Seller is not aware of any action by a prior holder and Seller has not
done, by act or omission, anything which could impair the coverage or
enforceability of such mortgagee title insurance policy or the accuracy of
such attorney's opinion of title;
(xi) To the best of the Seller's knowledge, there is no material
default, breach, violation or event of acceleration existing under the
related Mortgage or the related Mortgage 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 material default, breach, violation or event of
acceleration. The Seller has not waived any default, breach, violation or
event of acceleration;
(xii) To the best of the Seller's knowledge, there are no
delinquent taxes, ground rents, water charges, sewer rents, assessments,
insurance premiums, leasehold payments, including assessments payable in
future installments or other outstanding charges, affecting the related
Mortgaged Property;
(xiii) To the best of the Seller's knowledge, no material
litigation or lawsuit relating to any Home Equity Loan is pending;
(xiv) The Home Equity Loan obligates the mortgagor thereunder to
maintain a hazard insurance policy ("Hazard Insurance") which contains a
standard mortgagee's clause and which insures against loss by fire and by
hazards included within the term "extended coverage." At the time of
origination of the Home Equity Loan, the Mortgaged Property was covered by
Hazard Insurance and, if the Mortgaged Property was in an area identified
in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy was required;
(xv) The Mortgage Note is not and has not been secured by any
collateral except the lien on the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage;
(xvi) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Home
Equity Loan in the event that the Mortgaged Property is sold or transferred
without the prior written consent of the mortgagee thereunder. The Mortgage
contains customary and enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided thereby,
including (A) in the case of a Mortgage designated as a deed of trust, by
trustee's sale or judicial foreclosure and (B) otherwise by judicial
foreclosure. As of the Cut-Off Date, to the best of the Seller's knowledge,
no Mortgaged Property is subject to any bankruptcy proceeding or
foreclosure proceeding. There is no homestead or other exemption available
to the Mortgagor that would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage. In the
event the Mortgage constitutes a deed of trust, a trustee, duly qualified
under applicable law to serve as such, as been properly designated and
currently so serves and is named in the Mortgage, and no fees or expenses
are or will become payable by Purchaser to the trustee under the deed of
trust, except in connection with a trustee's sale after default by the
related Mortgagor. The Mortgagor has not notified the Seller and the Seller
has no knowledge of any relief requested or allowed to the Mortgagor under
the Civil Relief Act;
(xvii) To the best of the Seller's knowledge, each Mortgaged
Property is undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty (excluding casualty from the
presence of hazardous wastes or hazardous substances) so as to affect
materially and adversely the value of the Mortgaged Property as security
for the Home Equity Loan or the use for which the premises were intended;
(xviii) As of the Closing Date, the Seller has no actual knowledge
that there exists on any Mortgaged Property any hazardous substances,
hazard wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or
local environmental legislation. For purposes of this clause (xviii),
actual knowledge of the Seller means actual knowledge of an officer of the
Seller involved in the servicing of the relevant Home Equity Loan. Actual
knowledge of the Seller does not include knowledge imputable by virtue of
the availability of or accessibility to information relating to
environmental or hazardous waste sites or the locations thereof;
(xix) There was no fraud involved in the origination of the Home
Equity Loan by the mortgagee or, to the best of the Seller's knowledge, by
the Mortgagor, any appraiser or any other party involved in the origination
of the Home Equity Loan;
(xx) Each Mortgage File contains an appraisal of the Mortgaged
Property indicating an appraised value equal to the appraised value
identified for such Mortgaged Property on the Home Equity Loan Schedule;
(xxi) Any and all requirements of any federal, state or local law
with respect to the origination of the Home Equity Loans including, without
limitation, truth-in-lending, real estate settlement procedures, consumer
credit protection, equal credit opportunity or disclosure laws applicable
to the Home Equity Loans have been complied with;
(xxii) No improvements on the related Mortgaged Property encroach
on adjoining properties (and in the case of a condominium unit, such
improvements are within the project with respect to that unit), and no
improvements on adjoining properties encroach upon the Mortgaged Property
unless there exists in the Mortgage File a title policy with endorsements
which insure against losses sustained by the insured as a result of such
encroachments;
(xxiii) Each Home Equity Loan was either originated or acquired by
the Seller;
(xxiv) Principal payments on the Home Equity Loan commenced no
more than sixty days after the proceeds of the Home Equity Loan were
disbursed;
(xxv) No Home Equity Loan by its terms provides for the payment of
a balloon payment by the Mortgagor;
(xxvi) The Home Equity Loan bears interest at the Loan Rate and
the Mortgage Note does not permit negative amortization;
(xxvii) No Home Equity Loan contains provisions pursuant to which
Monthly Payments are: (A) paid or partially paid with funds deposited in
any separate account established by the Seller, the Mortgagor, or anyone on
behalf of the Mortgagor; (B) paid by any source other than the Mortgagor;
or (C) contains any other similar provisions which may constitute a
"buydown" provision. The Home Equity Loan is not a graduated payment
mortgage loan and the Home Equity Loan does not have a shared appreciation
or other contingent interest feature;
(xxviii) The Home Equity Loan has been underwritten or
re-underwritten in accordance with the underwriting guidelines of the
Seller in effect at the time the Home Equity Loan was originated or
purchased, as applicable, by the Seller;
(xxix) No law relating to servicing, collection or notification
practices and no law relating to origination practices, has been violated
in connection with any Home Equity Loan transferred to the Purchaser
pursuant to this Agreement, including, without limitation, usury, truth in
lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws. The Home Equity Loan has been
serviced in accordance with the terms of the Mortgage Note;
(xxx) No Home Equity Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property;
(xxxi) The Seller hereby covenants that it will not directly
solicit any Mortgagor hereunder to refinance the related Home Equity Loan
except that the Seller may solicit a Mortgagor if the Seller obtains
knowledge of the impending payoff of the related Home Equity Loan;
(xxxii) The proceeds of the Home Equity Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation
for the Mortgagee to advance additional funds thereunder, and any and all
requirements as to completion of any on-site or off-site improvement and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Home Equity Loan
and the recording of the Mortgage have been paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due to the Mortgagee pursuant
to the Mortgage Note or Mortgage;
(xxxiii) To the best of the Seller's knowledge, there are no
mechanics' or similar liens or claims that have been filed for work, labor
or material (and no rights are outstanding that under law could give rise
to such lien) affecting the related Mortgaged Property that are or may be
liens prior to, or equal or coordinate with, the lien of the related
Mortgage; provided, however, that this warranty shall be deemed not to have
been made at the time of the initial issuance of the Certificates if a
title policy affording, in substance, the same protection afforded by this
warranty is furnished to the Trustee by the Seller;
(xxxiv) Interest is calculated on the Mortgage Note based on the
number of days elapsed between the date through which interest was last
paid on the related Home Equity Loan and the date of receipt of the related
Mortgagor's most current payment;
(xxxv) The Mortgaged Property consists of a parcel of real
property located in the United States with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an
individual condominium unit in a low-rise or high-rise condominium project,
or an individual unit in a planned unit development or a townhouse
provided, however, that no residence or dwelling is a mobile home or a
manufactured dwelling that is not treated as real property under local law.
To the best of the Seller's knowledge, no Home Equity Loan is secured by a
leasehold estate;
(xxxvi) Each Home Equity Loan conforms, and the Home Equity Loans
in the aggregate conform, in all material respects with the descriptions
thereof set forth in the Prospectus Supplement;
(xxxvii) Each Mortgage is a "qualified mortgage" under the REMIC
Provisions; and
(xxxviii)With respect to each Mortgage where a Lost Note Affidavit
has been delivered to the Trustee in place of the related Mortgage Note,
the related Mortgage Note is no longer in existence.
With respect to the representations and warranties set forth in this
Section (other than clause (xviii) above) that are made to the best of the
Seller's knowledge or as to which the Seller has no knowledge, if it is
discovered by the Depositor, the Seller, the Master Servicer, the Certificate
Insurer or the Trustee that the substance of such representation and warranty is
inaccurate and such inaccuracy materially and adversely affects the value of the
related Home Equity Loan or the interests of the Certificateholders or the
Certificate Insurer, then, notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation and warranty being inaccurate at
the time the representation or warranty was made, such inaccuracy shall be
deemed a breach of the applicable representation or warranty and the Seller
shall cure such breach, repurchase the related Home Equity Loan at the Purchase
Price or substitute an Eligible Substitute Home Equity Loan therefor pursuant to
Section 2.06.
(b) It is understood and agreed that the representations and warranties
set forth in this Section shall survive the conveyance of the Home Equity Loans
and the delivery of the respective Mortgage Files to the Trustee and the
termination of the rights and obligations of the Master Servicer pursuant to
Section 7.04 or 8.01. Upon discovery by the Depositor, the Seller, the Master
Servicer, the Certificate Insurer or the Trustee of a breach of any of the
foregoing representations and warranties, without regard to any limitation set
forth therein concerning the knowledge of the Seller as to the facts stated
therein, which materially and adversely affects the value of the related Home
Equity Loan or the interests of the Trust, the Certificateholders or the
Certificate Insurer in such Home Equity Loan, the party discovering such breach
shall give prompt written notice to the other parties and the Certificate
Insurer. Within 90 days of its discovery or its receipt of notice of breach, the
Seller shall use all reasonable efforts to cure such breach in all material
respects or shall purchase such Home Equity Loan from the Trust or substitute an
Eligible Substitute Home Equity Loan as provided in Section 2.06 for such Home
Equity Loan. Any such purchase by the Seller shall be at the Purchase Price and
in each case shall be accomplished in the manner set forth in Section 2.02. It
is understood and agreed that the obligation of the Seller to cure, substitute
or purchase any Home Equity Loan as to which such a breach has occurred and is
continuing shall constitute the sole remedies against the Seller respecting such
breach available to Certificateholders or the Trustee on behalf of
Certificateholders. An Opinion of Counsel to the effect set forth in Section
2.06(d) shall be delivered to the Trustee in connection with any such
repurchase.
Section 2.06. Substitution of Home Equity Loans.
---------------------------------
(a) On a Determination Date within two years following the Closing Date
and which is on or before the date on which the Seller would otherwise be
required to repurchase a Home Equity Loan under Section 2.02 or 2.05, the Seller
may deliver to the Trustee one or more Eligible Substitute Home Equity Loans in
substitution for any one or more of the Defective Home Equity Loans which the
Seller would otherwise be required to repurchase pursuant to Sections 2.02 or
2.05. In connection with any such substitution, the Seller shall calculate the
Substitution Adjustment, if any, and shall deposit such amount to the Collection
Account on or before the Business Day prior to the Distribution Date in the
month succeeding the calendar month during which the related Home Equity Loan
became required to be purchased or replaced hereunder.
(b) The Seller shall notify the Master Servicer, the Trustee and the
Certificate Insurer in writing not less than five Business Days before the
related Determination Date which is on or before the date on which the Seller
would otherwise be required to repurchase such Home Equity Loan pursuant to
Section 2.02 or 2.05 of its intention to effect a substitution under this
Section 2.06. On such Determination Date (the "Substitution Date"), the Seller
shall deliver to the Trustee (1) the Eligible Substitute Home Equity Loans to be
substituted for the Defective Home Equity Loans, (2) a list of the Defective
Home Equity Loans to be substituted for by such Eligible Substitute Home Equity
Loans, (3) an Officer's Certificate (A) stating that no failure by the Master
Servicer described in Section 8.01 shall have occurred and be continuing, (B)
stating that the aggregate Principal Balance of all Eligible Substitute Home
Equity Loans (determined with respect to each Eligible Substitute Home Equity
Loan as of the Determination Date on which it was substituted) including the
principal balance of Eligible Substitute Home Equity Loans being substituted on
such Determination Date does not exceed an amount equal to 5% of the Pool
Principal Balance as of the Closing Date, (C) stating that all conditions
precedent to such substitution specified in subsection (a) have been satisfied
and attaching as an exhibit a supplemental Home Equity Loan schedule (the
"Supplemental Home Equity Loan Schedule") setting forth the same type of
information as appears on the Home Equity Loan Schedule and representing as to
the accuracy thereof and (D) confirming that the representations and warranties
contained in Section 2.05 are true and correct in all material respects with
respect to the Eligible Substitute Home Equity Loans on and as of such
Determination Date, provided that remedies for the inaccuracy of such
representations are limited as set forth in Sections 2.02, 2.05 and this Section
2.06, (4) an Opinion of Counsel (which shall also be delivered to the
Certificate Insurer) to the effect set forth in Clause (d) below and (5) a
certificate stating that cash in the amount of the related Substitution
Adjustment, if any, has been deposited to the Collection Account. Upon receipt
of the foregoing, the Trustee shall release such Defective Home Equity Loans to
the Seller without recourse, representation or warranty.
(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.06(a) and (b) above and the transfer of such Eligible Substitute Home
Equity Loans to the Trustee on behalf of the Trust pursuant to Section 2.06(a),
the Seller shall deliver to the Trustee a revised Exhibit C to this Agreement
amended to exclude all Home Equity Loans being replaced by such Eligible
Substitute Home Equity Loans and to include the information set forth on the
Supplemental Home Equity Loan Schedule with respect to such Eligible Substitute
Home Equity Loans, and all references in this Agreement to Home Equity Loans
shall include such Eligible Substitute Home Equity Loans and be deemed to be
made on or after the related Substitution Date, as the case may be, as to such
Eligible Substitute Home Equity Loans.
(d) In connection with any Home Equity Loan that the Seller is required
to purchase or replace, the Seller shall deliver to the Trustee and the
Certificate Insurer an Opinion of Counsel to the effect that such purchase or
substitution will not cause (x) any federal tax to be imposed on the Trust,
including, without limitation, any Federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the start-up day" under Section 860G(d)(1) of the Code or (y) the Trust to fail
to qualify as a REMIC at any time that any Certificate is outstanding. In the
event that such opinion indicates that a repurchase or substitution will result
in the imposition of a prohibited transaction tax, give rise to net taxable
income or be deemed a contribution to the REMIC after the Start-up Day, the
Seller shall not be required to repurchase or replace any such Home Equity Loan
unless and until the Master Servicer has determined there is an actual or
imminent default with respect thereto or that such defect or breach adversely
affects the enforceability of such Home Equity Loan.
Section 2.07. Execution and Authentication of Certificates. The Trustee
--------------------------------------------
on behalf of the Trust shall cause to be executed, authenticated and delivered
on the Closing Date to or upon the order of the Depositor, in exchange for the
Home Equity Loans, concurrently with the sale, assignment and conveyance to the
Trustee of the Home Equity Loans, each Class of Class A Certificates in
authorized denominations and the Class R Certificates, together evidencing the
ownership of the entire Trust.
Section 2.08. Designation of Interests in the REMIC. Each Class of
-------------------------------------
Class A Certificates is hereby designated as a "regular interest" in the REMIC
and the Class R Certificates are hereby designated as the single "residual
interest" in the REMIC.
Section 2.09. Designation of Start-up Day. The Closing Date is hereby
---------------------------
designated as the "start-up day" of the REMIC within the meaning of Section
860G(a)(9) of the Code.
Section 2.10. REMIC Certificate Maturity Date. Solely for purposes of
-------------------------------
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of the REMIC is the Distribution Date in June 2029.
Section 2.11. Tax Returns and Reports to Certificateholders.
---------------------------------------------
(a) For federal income tax purposes, the Trust shall have a fiscal year
ending December 31 and shall maintain its books on the accrual method of
accounting.
(b) The Trustee shall prepare, or cause to be prepared, execute and
deliver to the Master Servicer or Certificateholders, as applicable, any income
tax information returns for each taxable year with respect to the Trust
containing such information at the times and in the manner as may be required by
the Code or state or local tax laws, regulations, or rules, and shall furnish or
cause to be furnished to the Trust and the Certificateholders the schedules,
statements or information at such times and in such manner as may be required
thereby. Within thirty (30) days of the Closing Date, the Trustee shall furnish
or cause to be furnished to the Internal Revenue Service, on Form 8811 or as
otherwise required by the Code, the name, title, address and telephone number of
the person that Holders of the Certificates may contact for tax information
relating thereto, together with such additional information at the time or times
and in the manner required by the Code. Such federal, state or local income tax
or information returns shall be signed by the Trustee or such other Person as
may be required to sign such returns by the Code or state or local tax laws,
regulations or rules.
(c) In the first federal income tax return of the Trust for its short
taxable year ending December 31, 1999, a REMIC election shall be made with
respect to the Trust for such taxable year and all succeeding taxable years.
(d) The Trustee will maintain or cause to be maintained such records
relating to the Trust, including, but not limited to, the income, expenses,
assets and liabilities of the Trust, and such other information as may be
required by the Code, as may be necessary to prepare the foregoing returns,
schedules, statements or information.
(e) Each of the Master Servicer, the Seller and the Depositor, upon
request, shall promptly furnish the Trustee with all such information in its
control as may be required in connection with the Trustee's REMIC reporting
obligations pursuant to this Agreement.
Section 2.12. Tax Matters Person. The tax matters person with respect
------------------
to the REMIC shall be the Holder of the Tax Matters Person Residual Interest
(the "Tax Matters Person"). The Holder of the Tax Matters Person Residual
Interests shall have the same duties with respect to the Trust as those of a
"tax matters partner" under Subchapter C of Chapter 63 of Subtitle F of the
Code. Each holder of a Class R Certificate shall be deemed to have agreed, by
acceptance thereof, to be bound by this Section. The Trustee shall hold the Tax
Matters Person Residual Interest.
Section 2.13. REMIC Related Covenants. For as long as the REMIC shall
-----------------------
exist, the Trustee shall act in accordance herewith to assure continuing
treatment of the Trust as a REMIC and avoid the imposition of tax on the Trust.
In particular:
(a) The Trustee shall not create, or permit the creation of, any
"interests" within the meaning of Code Section 860D(a)(2) other than the
interests represented by the Class A Certificates and the Class R Certificates.
(b) Except as otherwise provided in the Code, neither the Depositor nor
the Seller shall grant and the Trustee shall not accept property unless (i)
substantially all of the property held in the REMIC constitutes either
"qualified mortgages" or "permitted investments" as defined in Code Sections
860G(a)(3) and (5), respectively and (ii) no property shall be contributed to
the REMIC after the Start-up Day unless such grant would not subject the REMIC
to the 100% tax on contributions to the REMIC after the Start-up Day imposed by
Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the REMIC any fee or
other compensation for services (other than as otherwise provided herein) and
shall not accept on behalf of the REMIC any income from assets other than those
permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or any portion
of the Home Equity Loans (other than in accordance with Section 2.02, 2.05 or
3.01), unless such sale is pursuant to a "qualified liquidation" as defined in
Code Section 860F(a)(4)(A) and in accordance with Article X.
(e) The Trustee shall apply to the Internal Revenue Service for an EIN
for all tax entities of the Trust via Form SS-4 or any other acceptable method.
The Trustee shall maintain books with respect to the REMIC on a calendar year
basis and report income on an accrual basis.
(f) The Master Servicer shall furnish to the Trustee the information
necessary for the Trustee to prepare and file with the Internal Revenue Service
Form 1066 for the REMIC and to prepare and furnish to the Holders of the Class R
Certificates Form 1066Q for the REMIC and, based on information received from
the Master Servicer, the Trustee will respond promptly to written requests made
not more frequently than quarterly by any Holder of a Class R Certificate for
the following information:
(i) The original projected principal and interest cash flows on
the Closing Date on each class of regular and residual interests created
hereunder and on the Home Equity Loans, based on a 120% Prepayment
Assumption percentage;
(ii) The projected remaining principal and interest cash flows as
of the end of any calendar quarter with respect to each class of regular
and residual interests created hereunder and the Home Equity Loans, based
on a 120% Prepayment Assumption percentage;
(iii) The Prepayment Assumption percentage and any interest rate
assumptions used in determining the projected principal and interest cash
flows described above;
(iv) The original issue discount (or, in the case of the Home
Equity Loans, market discount) or premium accrued or amortized through the
end of such calendar quarter with respect to each class of regular or
residual interests created hereunder and with respect to the Home Equity
Loans, together with each constant yield to maturity used in computing the
same;
(v) The treatment of losses realized with respect to the Home
Equity Loans or the regular interests created hereunder, including the
timing and amount of any cancellation of indebtedness income of the REMIC
with respect to such regular interests or bad debt deductions claimed with
respect to the Home Equity Loans;
(vi) The amount and timing of any non-interest expenses of the
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on the
REMIC, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or local
income or franchise taxes;
provided, that the information to be provided with respect to the foregoing
clauses (i) through (vi) shall be based on projections, assumptions and facts as
they shall have existed on the Closing Date.
In the event that any tax is imposed on "prohibited transactions" of
the Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of the REMIC as defined in Section 860G(c) of the Code, on
any contribution to the REMIC after the Start-up Day pursuant to Section 860G(d)
of the Code, or any other tax is imposed, such tax shall be paid by (i) the
Trustee, if such tax arises out of or results from the willful malfeasance, bad
faith or negligence of the Trustee with respect to any of its obligations under
this Agreement, (ii) the Master Servicer, if such tax arises out of or results
from a breach by the Master Servicer of any of its obligations under this
Agreement or (iii) otherwise by the Holders of the Class R Certificates in
proportion to their Percentage Interests. To the extent any tax is chargeable
against the Holders of the Class R Certificates, notwithstanding anything to the
contrary contained herein, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Holders of the Class R Certificates on
any Distribution Date sufficient funds to reimburse the Trustee for the payment
of such tax (to the extent that the Trustee has not been previously reimbursed
or indemnified therefor).
The Trustee shall not engage in a "prohibited transaction" (as defined
in Code Section 860F(a)(2)), except that, with the prior written consent of the
Seller, the Trustee may engage in the activities otherwise prohibited by the
foregoing clauses (b), (c) and (d), provided that the Seller shall have
delivered to the Trustee and the Certificate Insurer an Opinion of Counsel to
the effect that such transaction will not result in the imposition of a
contribution or prohibited transaction tax on the Trust and will not disqualify
the REMIC from treatment as a REMIC; and provided that the Seller shall have
delivered to the Trustee an Officer's Certificate to the effect that such action
will not adversely affect the rights of the holders of the Certificates or the
Certificate Insurer and that such action will not adversely impact the rating of
the Certificates.
(g) The Trustee shall pay out of its own funds, without any right of
reimbursement, any and all routine tax related expenses of the Trust (including,
but not limited to, tax return preparation and filing expenses), other than the
expense of obtaining any Opinion of Counsel required pursuant to Sections
2.06(d), 2.13(f), 9.02(b) and 10.02 and other than taxes except as specified
herein. The Trustee not in its individual capacity but solely as Trustee shall
represent the Trust in any administrative or judicial proceeding relating to an
examination or audit by any governmental taxing authority with respect thereto.
The expenses of any such contest, audit, controversy or proceeding, including
but not limited to the fees and expenses of the Trustee, its attorneys, its
accountants and its financial advisors, except any such expenses caused by the
Trustee's negligence or willful misconduct, shall be the obligations of the
Trust created hereunder.
ARTICLE III
Administration and Servicing
of Home Equity Loans
Section 3.01. The Master Servicer.
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(a) It is intended that the Trust formed hereunder shall constitute,
and that the affairs of the Trust shall be conducted so as to qualify the Trust
as a, "real estate mortgage investment conduit" ("REMIC") as defined in and in
accordance with the REMIC Provisions. In furtherance of such intentions, the
Master Servicer covenants and agrees that it shall not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the status of the Trust as a REMIC.
(b) The Master Servicer, as independent contract servicer, shall
service and administer the Home Equity Loans and shall have full power and
authority, acting alone, to do any and all things in connection with such
servicing and administration which the Master Servicer may deem necessary or
desirable and consistent with the terms of this Agreement. The Master Servicer
may enter into Servicing Agreements for any servicing and administration of Home
Equity Loans with Banc One Financial Services, Inc., or any other institution
which (i) is in compliance with the laws of each state necessary to enable it to
perform its obligations under such Servicing Agreement and (ii) (x) has been
designated an approved Seller-Servicer by Freddie Mac or Fannie Mae for first
and second mortgage loans or (y) is an affiliate of the Master Servicer or (z)
is acceptable to the Certificate Insurer. As of the Closing Date, the Master
Servicer will enter into a Servicing Agreement with Banc One Financial Services,
Inc. Except in the case of the appointment of Banc One Financial Services, Inc.
as initial Servicer, the Master Servicer shall give written notice to the
Trustee of the appointment of any Servicer. Any such Servicing Agreement shall
be consistent with and not violate the provisions of this Agreement. The Master
Servicer shall be entitled to terminate any Servicing Agreement in accordance
with the terms and conditions of such Servicing Agreement and either itself
directly service the related Home Equity Loans or enter into a Servicing
Agreement with a successor subservicer which qualifies hereunder.
(c) Notwithstanding any Servicing Agreement or any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Servicer or reference to actions taken through a Servicer or
otherwise, the Master Servicer shall remain obligated and primarily liable for
the servicing and administering of the Home Equity Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Servicing Agreements or arrangements or by virtue of
indemnification from the Servicer and to the same extent and under the same
terms and conditions as if the Master Servicer alone were servicing and
administering the Home Equity Loans. For purposes of this Agreement, the Master
Servicer shall be deemed to have received payments on Home Equity Loans when the
Servicer has received such payments. The Master Servicer shall be entitled to
enter into any agreement with a Servicer for indemnification of the Master
Servicer by such Servicer, and nothing contained in this Agreement shall be
deemed to limit or modify such indemnification.
(d) Any Servicing Agreement that may be entered into and any
transactions or services relating to the Home Equity Loans involving a Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Servicer and the Master Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Servicer except
as set forth in Section 3.01(e). The Master Servicer shall be solely liable for
all fees owed by it to any Servicer irrespective of whether the Master
Servicer's compensation pursuant to this Agreement is sufficient to pay such
fees. For purposes of this Agreement, as of the Closing Date, each of the
parties hereto acknowledge that Banc One Financial Services, Inc., shall act
initially as a Servicer.
(e) Except with respect to any merger, consolidation or other
transaction permitted under Section 7.02, in the event the Master Servicer shall
for any reason no longer be the Master Servicer (including by reason of a
Servicer Default), the Trustee or its designee approved by the Certificate
Insurer shall, pursuant to the provisions of Section 8.02, assume all of the
rights and obligations of the Master Servicer under each Servicing Agreement
that the Master Servicer may have entered into, unless the Trustee or designee
approved by the Certificate Insurer elects to terminate any Servicing Agreement.
Any fee payable in connection with such a termination will be payable by the
outgoing Master Servicer. If the Trustee does not terminate a Servicing
Agreement, the Trustee, its designee or the successor servicer for the Trustee
shall, pursuant to the provisions of Section 8.02, be deemed to have assumed all
of the Master Servicer's interest therein and to have replaced the Master
Servicer as a party to each Servicing Agreement to the same extent as if the
Servicing Agreements had been assigned to the assuming party, except that the
Master Servicer shall not thereby be relieved of any liability or obligations
under the Servicing Agreements with regard to events that occurred prior to the
date the Master Servicer ceased to be the Master Servicer hereunder. The Master
Servicer shall, upon the request of the Trustee, deliver to the assuming party
all documents and records relating to each Servicing Agreement and the Home
Equity Loans then being serviced and an accounting of amounts collected and held
by it and otherwise use its best efforts to effect the orderly and efficient
transfer of the Servicing Agreements to the assuming party. The Trustee shall be
entitled to be reimbursed by the Master Servicer for all costs associated with
the transfer of servicing, including, without limitation, any costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to service the Home Equity Loans properly and
effectively.
(f) Consistent with the terms of this Agreement and except as otherwise
provided in the following sentence, upon the request of a Mortgagor or at the
Master Servicer's own initiative, the Master Servicer may waive, modify or vary
any term of any Home Equity Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Master Servicer's good faith determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Certificateholders and the Certificate Insurer. Notwithstanding the foregoing,
unless (1) the Mortgagor is in default with respect to the Home Equity Loan, or
such default is, in the judgment of the Master Servicer, imminent and (2) such
waiver, modification, postponement or indulgence would not cause the Trust to be
disqualified as a REMIC or otherwise cause a tax to be imposed on the Trust, the
Master Servicer may not permit any such waiver, modification, postponement or
indulgence that would constitute a significant modification of the Loan Rate
(except as required by law or as contemplated by the Mortgage Note), constitute
a cancellation or discharge of the Principal Balance (unless in connection with
the liquidation of the related Home Equity Loan), or constitute an extension of
the scheduled maturity date of the Home Equity Loan. No costs incurred by the
Master Servicer or any Servicer in respect of Servicing Advances shall, for the
purposes of distributions to Certificateholders, be added to the amount owing
under the related Home Equity Loan. Without limiting the generality of the
foregoing, the Master Servicer shall continue, and is hereby authorized and
empowered to execute and deliver on behalf of the Trustee and each
Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments with
respect to the Home Equity Loans and with respect to the Mortgaged Properties.
If reasonably required by the Master Servicer, the Trustee shall execute any
powers of attorney prepared by the Master Servicer and other documents necessary
or appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement.
Notwithstanding anything to the contrary contained herein, the Master
Servicer, in servicing and administering the Home Equity Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
Property management procedures) and exercise the same care that it customarily
employs and exercises in servicing and administering home equity loans for its
own account, in accordance with accepted mortgage servicing practices of prudent
lending institutions servicing home equity loans similar to the Home Equity
Loans and giving due consideration to the Certificate Insurer's and the
Certificateholders' reliance on the Master Servicer.
(g) On and after such time as the Trustee receives the written
resignation of, or notice of the removal of, the Master Servicer from its rights
and obligations under this Agreement, and with respect to resignation pursuant
to Section 7.04, after receipt by the Trustee and the Certificate Insurer of the
Opinion of Counsel required pursuant to Section 7.04, the Trustee or its
designee approved by the Certificate Insurer shall, assume all of the rights and
obligations of the Master Servicer, subject to the provisions of Section 8.02.
The Master Servicer shall, upon request of the Trustee but at the expense of the
Master Servicer, deliver to the Trustee all documents and records relating to
the Home Equity Loans and an accounting of amounts collected and held by the
Master Servicer and otherwise use its best efforts to effect the orderly and
efficient transfer of servicing rights and obligations to the assuming party.
The Trustee shall be entitled to be reimbursed by the Master Servicer for all
costs associated with the transfer of servicing, including, without limitation,
any costs or expenses associated with the complete transfer of all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the Trustee to correct any errors or insufficiencies in the
servicing data or otherwise to enable the Trustee to service the Home Equity
Loans properly and effectively.
(h) The Master Servicer shall deliver a list of Servicing Officers to
the Trustee and the Certificate Insurer on or before the Closing Date.
(i) Consistent with the terms of this Agreement, the Master Servicer
may consent to the placing of a lien senior to that of the Mortgage on the
related Mortgaged Property; provided that such senior lien secures a mortgage
loan that refinances a First Lien and the combined loan-to-value ratio of the
related Home Equity Loan immediately following the refinancing (based on the
outstanding principal balance of the Home Equity Loan and the original principal
balance of such refinanced mortgage loan) is not greater than the Combined
Loan-to-Value Ratio of such Home Equity Loan as of the Cut-Off Date.
(j) In the event that the Master Servicer desires to consent to any
waiver, modification, postponement, indulgence or placing of a senior lien that
would otherwise violate the requirements of Section 3.01(f) or (i), the Master
Servicer may take such actions only if it purchases the related Home Equity Loan
from the Trust. Any such purchase by the Master Servicer shall be at the
Purchase Price and in each case shall be accomplished in the manner set forth in
Section 2.02. An Opinion of Counsel to the effect set forth in Section 2.06(d)
shall be delivered to the Trustee in connection with any such purchase.
Section 3.02. Collection of Certain Home Equity Loan Payments.
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(a) The Master 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,
follow such collection procedures as it follows with respect to home equity
loans in its servicing portfolio comparable to the Home Equity Loans. Consistent
with the foregoing, and without limiting the generality of the foregoing, the
Master Servicer may in its discretion (i) waive any prepayment penalty or late
payment charge or any assumption fees or other fees which may be collected in
the ordinary course of servicing such Home Equity Loan and (ii) arrange with a
Mortgagor a schedule for the payment of interest due and unpaid; provided that
such arrangement is consistent with the Master Servicer's policies with respect
to the home equity loans it owns or services; provided, further, that
notwithstanding such arrangement such Home Equity Loans will be included in the
monthly information delivered by the Master Servicer to the Trustee pursuant to
Section 5.02.
(b) The Trustee shall establish and maintain a separate trust account
(the "Collection Account") titled "Norwest Bank Minnesota, National Association,
as Trustee, of Banc One Financial Services Home Equity Loan Trust 1999-2,
Collection Account." The Collection Account shall be an Eligible Account and may
be established with the Trustee. On the Closing Date, the Seller shall deposit
$68,172.41 into the Collection Account. No later than 12:00 noon New York time
two Business Days prior to each Distribution Date (or, if a Deposit Event has
occurred, within two Business Days following receipt thereof), the Master
Servicer shall deposit or cause to be deposited into the Collection Account the
following payments and collections received or made by it with respect to each
Home Equity Loan (without duplication):
(i) all payments received on or after the Cut-Off Date on account
of principal and interest on the Home Equity Loans, and all Principal
Prepayments In Full and Curtailments collected on and after the Cut-Off
Date;
(ii) all Net Liquidation Proceeds net of related Foreclosure
Profits;
(iii) all Insurance Proceeds to the extent not included in Net
Liquidation Proceeds;
(iv) any amounts payable in connection with the repurchase of any
Home Equity Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.02, 2.05, 2.06 and 3.01;
(v) all Released Mortgaged Property Proceeds; and
(vi) any amount required to be deposited in the Collection Account
pursuant to Sections 3.07, 3.18 or 5.04(e);
provided, however, that with respect to each Collection Period, the Master
Servicer shall be permitted to retain (x) from payments in respect of interest
on the Home Equity Loans, the Master Servicing Fee for such Collection Period
and (y) from payments from Mortgagors, Liquidation Proceeds, Insurance Proceeds
and Released Mortgaged Property Proceeds, any unreimbursed Servicing Advances,
Monthly Advances and Nonrecoverable Advances related thereto in accordance with
Section 3.03 hereof. The foregoing requirements respecting deposits to the
Collection Account are exclusive, it being understood that, without limiting the
generality of the foregoing, the Master Servicer need not deposit in the
Collection Account amounts representing Foreclosure Profits, fees (including
annual fees) or late charge penalties payable by Mortgagors or amounts received
by the Master Servicer or any Servicer for the accounts of Mortgagors for
application toward the payment of taxes, insurance premiums, assessments and
similar items.
(c) All funds (except for the funds deposited in the Collection Account
on the Closing Date) in the Collection Account shall be invested as provided in
Section 5.04, including Eligible Investments which are obligations of the Master
Servicer or any of its Affiliates if such Eligible Investments otherwise qualify
as Eligible Investments.
Section 3.03. Withdrawals from the Collection Account. The Master
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Servicer shall withdraw or cause to be withdrawn funds from the Collection
Account for the following purposes:
(i) no later than 2:00 p.m. New York time one Business Day prior
to each Distribution Date or, if the Collection Account shall be maintained
by the Trustee, with respect to funds invested in Eligible Investments
permitted to mature not later than 9:00 a.m. on such Distribution Date
pursuant to the last sentence of Section 5.04(a), no later than 9:00 a.m.
New York time on such Distribution Date, to withdraw the portion of
Available Funds then in the Collection Account and remit such funds to the
Trustee for deposit into the Certificate Account;
(ii) to reimburse the Master Servicer for any accrued unpaid
Master Servicing Fees and for unreimbursed Monthly Advances and Servicing
Advances to the extent not otherwise retained. The Master Servicer's right
to reimbursement for unpaid Master Servicing Fees and unreimbursed
Servicing Advances shall be limited to late collections on the related Home
Equity Loan, including Liquidation Proceeds, Insurance Proceeds, Released
Mortgaged Property Proceeds and such other amounts as may be collected by
the Master Servicer from the related Mortgagor or otherwise relating to the
Home Equity Loan in respect of which such reimbursed amounts are owed. The
Master Servicer's right to reimbursement for unreimbursed Monthly Advances
shall be limited to late collections of interest on any Home Equity Loan
and to Liquidation Proceeds, Insurance Proceeds and Released Mortgaged
Property Proceeds on related Home Equity Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction;
(iv) subject to Section 5.04 hereof, to make investments in
Eligible Investments and to pay to the Master Servicer interest earned in
respect of Eligible Investments or on funds deposited in the Collection
Account;
(v) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein or were deposited therein in
error and to pay such funds to the appropriate Person;
(vi) to pay the Master Servicer servicing compensation pursuant to
Section 3.09 to the extent not retained or paid pursuant to Sections
3.02(b);
(vii) to reimburse the Master Servicer for Nonrecoverable Advances
and expenses incurred pursuant to Section 7.03(a);
(viii) to withdraw funds necessary for the conservation,
operation, management, maintenance and disposition of REO Property pursuant
to Section 3.07 to the extent not advanced by the Master Servicer; and
(ix) to clear and terminate the Collection Account upon the
termination of this Agreement and to pay any amounts remaining therein to
the Class R Certificateholders.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
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Expenses. The Master Servicer shall cause to be maintained a blanket policy
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providing fire and hazard insurance (excluding flood insurance) naming the
Master Servicer and the Servicer as named insured parties and their designee as
loss payee thereunder, and providing coverage in an amount which is at least
equal to the unpaid principal balance owing on each Home Equity Loan without
coinsurance. The Master Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance (excluding
flood insurance) with extended coverage in an amount which is at least equal to
the unpaid principal balance owing on each Home Equity Loan without coinsurance.
Amounts collected by the Master Servicer under any such policies in connection
with the Home Equity Loans, together with the deductible amounts which are
applicable pursuant to the terms of such policy, shall be deposited in the
Collection Account to the extent called for by Section 3.02. The Master Servicer
shall (i) not monitor whether or not any Mortgagor maintains hazard insurance,
(ii) be under no obligation to require that any Mortgagor maintain earthquake or
other additional insurance and (iii) be under no obligation itself to maintain
any such additional insurance on property acquired in respect of a Home Equity
Loan, other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance.
Section 3.05. Maintenance of Mortgage Impairment Insurance. In the
--------------------------------------------
event that the Master Servicer shall obtain and maintain a blanket policy
consistent with prudent industry standards with an insurer either (A) having a
General Policy rating of A.VIII or better in Best's Key Rating Guide, or (B)
approved by the Certificate Insurer, such approval not to be unreasonably
withheld, insuring against fire and hazards of extended coverage on all of the
Home Equity Loans that complies with the requirements of Section 3.04, the
Master Servicer shall be deemed conclusively to have satisfied its obligations
with respect to fire and hazard insurance coverage under Section 3.04. Upon the
request of the Certificate Insurer or the Trustee, the Master Servicer shall
cause to be delivered to the Certificate Insurer or the Trustee, as the case may
be, a certificate of insurance evidencing such policy. In connection with its
activities as administrator and servicer of the Home Equity Loans, the Master
Servicer agrees to prepare and present, on behalf of itself, the Trustee, the
Certificate Insurer and Certificateholders, claims under any such policy in a
timely fashion in accordance with the terms of such policy.
Section 3.06. Fidelity Bond. The Master Servicer shall maintain with a
-------------
responsible company, and at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, in a minimum amount acceptable to Fannie
Mae or Freddie Mac or otherwise in an amount as is commercially available at a
cost that is not generally regarded as excessive by industry standards, with
broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the Home Equity Loans ("Servicer Employees"). Any such fidelity bond
and errors and omissions insurance shall protect and insure the Master Servicer
against losses, including losses resulting from forgery, theft, embezzlement,
errors and omissions and negligent acts of such Servicer Employees. Such
fidelity bond shall also protect and insure the Master Servicer against losses
in connection with the release or satisfaction of a Home Equity Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 3.06 requiring such fidelity bond and errors and
omissions insurance shall diminish or relieve the Master Servicer from its
duties and obligations as set forth in this Agreement. Upon the request of the
Trustee, the Certificate Insurer or any Certificateholder, the Master Servicer
shall cause to be delivered to the Trustee, the Certificate Insurer and such
Certificateholder a certificate of insurance evidencing such fidelity bond and
insurance policy.
Section 3.07. Management and Realization Upon Defaulted Home Equity
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Loans. The Master Servicer shall manage, conserve, protect and operate each REO
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Property for the Certificateholders solely for the purpose of its prudent and
prompt disposition and sale. The Master Servicer shall, either itself or through
an agent selected by the Master Servicer, manage, conserve, protect and operate
the REO Property in the same manner that it manages, conserves, protects and
operates other foreclosed property for its own account, and in the same manner
that similar property in the same locality as the REO Property is managed. The
Master Servicer shall attempt to sell the same (and may temporarily rent the
same) on such terms and conditions as the Master Servicer deems to be in the
best interest of the Certificateholders and the Certificate Insurer.
If a Deposit Event has occurred, the Master Servicer shall cause to be
deposited, within two Business Days of receipt thereof or if a Deposit Event has
not occurred, the Master Servicer shall cause to be deposited two Business Days
prior to the related Distribution Date, in the Collection Account, all revenues
received with respect to the related REO Property and shall retain, or cause the
Trustee to withdraw therefrom, funds necessary for the proper operation,
management and maintenance of the REO Property and the fees of any managing
agent acting on behalf of the Master Servicer.
The disposition of REO Property shall be carried out by the Master
Servicer for cash at such price, and upon such terms and conditions, as the
Master Servicer deems to be in the best interest of the Certificateholders and,
as soon as practicable thereafter, the expenses of such sale shall be paid. The
cash proceeds of sale of the REO Property shall be promptly deposited in the
Collection Account in accordance with Section 3.02, net of Foreclosure Profits
and of any related unreimbursed Servicing Advances, accrued and unpaid Master
Servicing Fees and unreimbursed Monthly Advances payable to the Master Servicer
in accordance with Section 3.03, for distribution to the Certificateholders in
accordance with Section 5.01.
The decision of the Master Servicer to foreclose on a defaulted Home
Equity Loan shall be subject to a determination by the Master Servicer that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding and if such determination cannot be made, the Master Servicer
shall deal with such Home Equity Loan in a manner consistent with the servicing
standard in Section 3.01 hereof.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee or its nominee on behalf of Certificateholders
and the Certificate Insurer.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Home Equity
Loan, the Master Servicer shall (i) dispose of such Mortgaged Property within
three years after its acquisition or (ii) prior to the expiration of any
extension to such three-year grace period which is requested on behalf of the
Trust by the Master Servicer (at the expense of the Trust) more than 60 days
prior to the end of such three-year grace period and granted by the Internal
Revenue Service, unless the Master Servicer shall have received an Opinion of
Counsel, with a copy to the Certificate Insurer, to the effect that the holding
of such Mortgaged Property subsequent to three years after its acquisition will
not result in the imposition of taxes on "prohibited transactions" as defined in
Section 860F of the Code or cause the Trust to fail to qualify as a REMIC at any
time that any Class A Certificates are outstanding. Notwithstanding any other
provision of this Agreement, (i) no Mortgaged Property acquired by the Master
Servicer pursuant to this Section shall be rented (or allowed to continue to be
rented) or otherwise used for the production of income by or on behalf of the
Trust and (ii) no construction shall take place on such Mortgaged Property in
such a manner or pursuant to any terms, in either case, that would cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by the Trust
of any "net income from foreclosure property" which is subject to taxation
within the meaning of Sections 860G(c) and 857(b)(4)(B) of the Code. If a period
greater than three years is permitted under this Agreement and is necessary to
sell any REO Property, the Master Servicer shall give appropriate notice to the
Trustee and the Certificate Insurer and shall report monthly to the Trustee as
to the progress being made in selling such REO Property.
If the Master Servicer has actual knowledge that a Mortgaged Property
which the Master Servicer is acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Master Servicer, the Master Servicer will
notify the Trustee and the Certificate Insurer prior to acquiring the Mortgaged
Property. Nothing in this Section 3.07 shall affect the Master Servicer's right
to deem certain advances proposed to be made Nonrecoverable Advances. For the
purpose of this Section 3.07, actual knowledge of the Master Servicer means
actual knowledge of a Responsible Officer of the Master Servicer involved in the
servicing of the relevant Home Equity Loan. Actual knowledge of the Master
Servicer does not include knowledge imputable by virtue of the availability of
or accessibility to information relating to environmental or hazardous waste
sites or the locations thereof.
Section 3.08. Trustee to Cooperate. Upon any Principal Prepayment In
--------------------
Full, the Master Servicer is authorized, on behalf of the Trustee, to execute,
pursuant to the authorization contained in Section 3.01(e), an instrument of
satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Master Servicer if required by applicable law and be
delivered to the Person entitled thereto. It is understood and agreed that no
expenses incurred in connection with such instrument of satisfaction or transfer
shall be reimbursed from amounts deposited in the Collection Account. If the
Trustee is holding the Mortgage Files, from time to time and as appropriate for
the servicing or foreclosure of any Home Equity Loan, the Trustee shall, upon
request of the Master Servicer and delivery to the Trustee of two (2) copies of
a Request for Release (in the form attached hereto as Exhibit G) signed by a
Servicing Officer, or as a substitute therefor, the delivery to the Trustee of a
request in a mutually agreeable electronic format which will, in lieu of a
signature on its face, be sent by a Servicing Officer, release the related
Mortgage File to the Master Servicer. The Trustee shall execute such documents,
in the forms provided by the Master Servicer, as shall be necessary for the
prosecution of any such proceedings or the taking of other servicing actions.
Such Request for Release shall obligate the Master Servicer to return the
Mortgage File to the Trustee when the need therefor by the Master Servicer no
longer exists unless the Home Equity Loan shall be liquidated, in which case,
upon receipt of a certificate of a Servicing Officer similar to that hereinabove
specified, the Request for Release shall be released by the Trustee to the
Master Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Home Equity Loan that is in default following recordation of the related
Assignment of Mortgage in accordance with the provisions hereof, the Trustee
shall, if so requested in writing by the Master Servicer, execute an appropriate
assignment in the form provided to the Trustee by the Master Servicer to assign
such Home Equity Loan for the purpose of collection to the Master Servicer (any
such assignment shall unambiguously indicate that the assignment is for the
purpose of collection only) and, upon such assignment, such assignee for
collection will thereupon bring all required actions in its own name and
otherwise enforce the terms of the Home Equity Loan and deposit or credit the
Net Liquidation Proceeds, exclusive of Foreclosure Profits, received with
respect thereto in the Collection Account. In the event that all delinquent
payments due under any such Home Equity Loan are paid by the Mortgagor and any
other defaults are cured then the assignee for collection shall promptly
reassign such Home Equity Loan to the Trustee and return it to the place where
the related Mortgage File was being maintained.
Section 3.09. Servicing Compensation; Payment of Certain Expenses by
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Master Servicer. The Master Servicer shall be entitled to retain the Master
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Servicing Fee in accordance with Section 3.02 as compensation for its services
in connection with servicing the Home Equity Loans. Moreover, additional
servicing compensation in the form of prepayment penalties, late payment
charges, bad check charges or assumption fees or other receipts not required to
be deposited in the Collection Account, including, without limitation,
Foreclosure Profits and, subject to Section 5.04(e), investment income on the
Certificate Account and the Collection Account shall be retained by the Master
Servicer. The Master Servicer shall be required to pay all expenses incurred by
it in connection with its activities hereunder (including payment of all other
fees and expenses not expressly stated hereunder to be for the account of the
Trust or the Certificateholders) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
Section 3.10. Annual Statement as to Compliance.
---------------------------------
(a) The Master Servicer will deliver to the Trustee, the Certificate
Insurer and the Rating Agencies, on or before May 31st of each year, beginning
in 2000 (for the fiscal year ending December 1999), an Officer's Certificate
stating that (i) a review of the activities of the Master Servicer during the
preceding fiscal year (or such shorter period as is applicable in the case of
the first report) and of its performance under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Master Servicer has fulfilled all its
material obligations under this Agreement throughout such fiscal year or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. The
Master Servicer shall promptly notify the Trustee, the Certificate Insurer and
the Rating Agencies upon any change in the basis on which its fiscal year is
determined.
(b) The Master Servicer shall deliver to the Trustee, the Depositor,
the Certificate Insurer and each of the Rating Agencies, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice by means of an Officer's Certificate of any event
which, with the giving of notice or the lapse of time or both, would become a
Servicer Default.
Section 3.11. Annual Servicing Report. On or before May 31st of each
-----------------------
year, beginning in 2000 (for the fiscal year ending December 1999), the Master
Servicer, at its expense, shall cause a firm of independent public accountants
to furnish a letter or letters to the Depositor, the Trustee, the Certificate
Insurer and the Rating Agencies to the effect that such firm has, with respect
to the Master Servicer's overall servicing operations, examined such operations
in accordance with the requirements of the Uniform Single Attestation Program
for Mortgage Bankers, and stating such firm's conclusions relating thereto.
Section 3.12. Access to Certain Documentation and Information Regarding
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the Home Equity Loans. The Master Servicer shall provide to the Trustee, the
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Certificate Insurer and Certificateholders which are federally insured savings
and loan associations, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of the Office of Thrift Supervision access to
the documentation regarding the Home Equity Loans required by applicable
regulations of the Office of Thrift Supervision and the FDIC (acting as operator
of the SAIF or the BIF), such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the Master
Servicer. Nothing in this Section shall derogate from the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors and the failure of the Master Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
Section 3.13. Reports of Foreclosures and Abandonments of Mortgaged
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Properties, Returns Relating to Mortgage Interest Received from Individuals and
- -------------------------------------------------------------------------------
Returns Relating to Cancellation of Indebtedness. The Master Servicer shall make
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reports of foreclosures and abandonments of any Mortgaged Property for each year
beginning in 2000. The Master Servicer shall file reports relating to each
instance occurring during the previous calendar year in which the Master
Servicer (i) on behalf of the Trust acquires an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or partial
satisfaction of a Home Equity Loan or (ii) knows or has reason to know that any
Mortgaged Property has been abandoned. The reports from the Master Servicer
shall be in form and substance sufficient to meet the reporting requirements
imposed by Sections 6050J, 6050H and 6050P of the Code.
Section 3.14. Advances by the Master Servicer.
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(a) Not later than the close of business on the second Business Day
prior to each Distribution Date, the Master Servicer shall remit to the Trustee
for deposit in the Certificate Account an amount to be distributed on such
Distribution Date pursuant to Section 5.01, equal to the sum of 30 days of
interest on each Home Equity Loan for which a monthly payment has not been
received by the Master Servicer with respect to the related Collection Period
(net of the Master Servicing Fee) by the close of business on the related
Determination Date; such amount being defined herein as the "Monthly Advance".
The Master Servicer may fund all or a portion of the Monthly Advance with
respect to the Home Equity Loans by instructing the Trustee on the related
Determination Date to use funds deposited in the Collection Account which are
not part of Available Funds for the related Distribution Date; provided that if
such funds are so used the Master Servicer on notice to the Trustee shall
replace such funds on or before any subsequent Determination Date on which such
funds are required to be part of the Available Funds.
(b) Notwithstanding anything herein to the contrary, no Servicing
Advance or Monthly Advance shall be required to be made hereunder if the Master
Servicer determines in its good faith business judgment that such Servicing
Advance or Monthly Advance would, if made, constitute a Nonrecoverable Advance.
Section 3.15. Superior Liens. To the extent not previously filed by the
--------------
related original lenders, the Master Servicer shall file (or cause to be filed)
a request for notice of any action by a superior lienholder under a First Lien
for the protection of the Trustee's interest, where permitted by local law and
whenever applicable state law does not require that a junior lienholder be named
as a party defendant in foreclosure proceedings in order to foreclose such
junior lienholder's equity of redemption.
If the Master Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Master Servicer shall take,
on behalf of the Trust, whatever actions are necessary to protect the interests
of the Certificateholders and the Certificate Insurer, and/or to preserve the
security of the related Home Equity Loan, subject to the application of the
REMIC Provisions in accordance with the terms of this Agreement. The Master
Servicer shall immediately notify the Trustee and the Certificate Insurer in
writing of any such action or circumstances. The Master Servicer shall advance
the necessary funds to cure the default or reinstate the superior lien, if such
advance is in the best interests of the Certificateholders. Such advance shall
be a Servicing Advance. Any action or inaction on the part of the Master
Servicer in accordance with such written instructions shall be deemed to be in
the best interests of the Certificateholders. The Master Servicer shall not make
such an advance except to the extent that it determines in its reasonable good
faith judgment that the advance would be recoverable from Liquidation Proceeds
on the related Home Equity Loan and in no event in an amount that is greater
than the Principal Balance of the related Home Equity Loan, except with consent
of the Certificate Insurer, which consent shall not be unreasonably withheld.
The Master Servicer shall thereafter take such action as is necessary to recover
the amount so advanced.
Notwithstanding the foregoing, the Master Servicer may change, modify
or amend any or all of the foregoing procedures if such change, modification or
amendment is applicable to the Home Equity Loans and all other home equity loans
serviced by the Master Servicer and is otherwise in accordance with Section
3.01.
Section 3.16. Assumption Agreements. When a Mortgaged Property has been
---------------------
or is about to be conveyed by the Mortgagor, the Master Servicer shall, to the
extent it has knowledge of such conveyance or prospective conveyance, exercise
its right to accelerate the maturity of the related Home Equity Loan under any
"due-on-sale" clause contained in the related Mortgage or Mortgage Note;
provided, however, that the Master Servicer shall not exercise any such right if
the "due-on-sale" clause, in the reasonable belief of the Master Servicer, is
not enforceable under applicable law or, in the commercially reasonable judgment
of the Master Servicer, such conveyance would not be materially adverse to the
interests of the Certificateholders or the Certificate Insurer. The Master
Servicer shall to the extent it has knowledge of such conveyance or prospective
conveyance, be authorized to 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 shall become liable under the Mortgage Note and,
unless prohibited by applicable law, the Mortgagor shall remain liable thereon.
The Master Servicer, in accordance with accepted mortgage loan servicing
standards for mortgage loans similar to the Home Equity Loans, is also
authorized to enter into a substitution of liability whereby such person is
substituted as Mortgagor and becomes liable under the Mortgage Note. The Master
Servicer shall notify the Trustee and the Certificate Insurer that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which
original shall be added by the Trustee to the related Mortgage File and shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. In
connection with any assumption or substitution agreement entered into pursuant
to this Section, the Master Servicer shall not change the Loan Rate or the
Monthly Payment, defer or forgive the payment of principal or interest, reduce
the outstanding principal amount or extend the final maturity date on such Home
Equity Loan. Any fee collected by the Master Servicer for consenting to such
conveyance or entering into such modification shall be retained by or paid to
the Master Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master 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 Master
Servicer may be restricted by law from preventing, for any reason whatsoever.
Section 3.17. Payment of Taxes, Insurance and Other Charges. With
---------------------------------------------
respect to each Home Equity Loan, the Master Servicer shall not be required to
maintain records relating to payment of taxes or insurance (including hazard
insurance).
Section 3.18. Compensating Interest. Not later than the close of
---------------------
business on the second Business Day prior to each Distribution Date, the Master
Servicer shall remit to the Collection Account an amount equal to the
Compensating Interest for such Distribution Date. Except for any distributions
to the Master Servicer pursuant to Section 5.01(a)(xi), the Master Servicer
shall not have the right to reimbursement for any amounts deposited to the
Collection Account pursuant to this Section.
ARTICLE IV
The Certificate Insurance Policy
Section 4.01. The Certificate Insurance Policy. As soon as possible,
--------------------------------
and in no event later than 12:00 noon, New York time, on the second Business Day
immediately preceding each Distribution Date, the Trustee shall, based on
information provided to it by the Master Servicer, determine the amount of
Available Funds (net of any Insured Payments) for such Distribution Date minus
the amount of any Premium Amount and Trustee Fee to be paid on such Distribution
Date.
If for any Distribution Date an Insured Payment is due, the Trustee
shall complete a notice in the form set forth as Exhibit A to the Certificate
Insurance Policy (the "Notice") and shall submit such Notice to the Certificate
Insurer no later than 12:00 noon, New York time, on the second Business Day
immediately preceding such Distribution Date. The Notice shall constitute a
claim for an Insured Payment in an amount equal to the Insured Payment due with
respect to the Class A Certificates for and on such Distribution Date. Upon
receipt of the Insured Payments, at or prior to the latest time payments of the
Insured Payments are to be made by the Certificate Insurer pursuant to the
Certificate Insurance Policy, on behalf of the Class A Certificateholders, the
Trustee shall deposit such Insured Payments in the Certificate Account in
accordance with the Notice and the Certificate Insurance Policy and shall
distribute such Insured Payments only in accordance with Section 5.01(a)(iii),
(iv) and (v).
Insured Payments disbursed by the Trustee from proceeds of the
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 Certificate, and the Certificate Insurer shall become the owner of such
unpaid amounts due from the Trust in respect of such Insured Payments as the
deemed assignee of such Holder and shall be entitled to be reimbursed therefore
in accordance with Section 5.01. The Trustee hereby agrees on behalf of each
Holder of a Class A Certificate for the benefit of the Certificate Insurer that
it and they recognize that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the Trustee), to
the Class A Certificateholders, the Certificate Insurer will be entitled to be
reimbursed therefore in accordance with Section 5.01.
Section 4.02. Claims Upon the Certificate Insurance Policy. The Trustee
--------------------------------------------
shall comply with the provisions of the Certificate Insurance Policy with
respect to claims upon the Certificate Insurance Policy.
The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Class A Certificate from moneys
received under the Certificate Insurance Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon two Business Day's prior written notice to the Trustee.
In the event that the Trustee has received a certified copy of an order
of the appropriate court that any amount distributed on the Class A
Certificates, including any amounts represented by an Insured Payment, has been
voided in whole or in part as a preference payment under applicable bankruptcy
law, the Trustee shall so notify the Certificate Insurer, shall comply with the
provisions of the Certificate Insurance Policy to obtain payment by the
Certificate Insurer of such voided amount distributed, and shall, at the time it
provides notice to the Certificate Insurer, notify, by mail to
Certificateholders of the affected Class A Certificates that, in the event any
such Certificateholder's amount distributed is so recovered, such
Certificateholder will be entitled to payment pursuant to the Certificate
Insurance Policy, a copy of which shall be made available through the Trustee or
the Certificate Insurer, and the Trustee shall furnish to the Certificate
Insurer its records evidencing the payments which have been made by the Trustee
and subsequently recovered from such Certificateholders, and dates on which such
payments were made.
The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Class A
Certificates. Each Certificateholder of Class A Certificates, by its purchase of
Class A Certificates, the Master Servicer, the Seller and the Trustee agree
that, the Certificate Insurer (so long as no Certificate Insurer Default exists)
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim,
including, without limitation, (i) the direction of any appeal of any order
relating to such Preference Claim and (ii) the posting of any surety, supersedes
or performance bond pending any such appeal. In addition and without limitation
of the foregoing, the Certificate Insurer shall be subrogated to, and each Class
A Certificateholder, the Master Servicer, the Seller and the Trustee hereby
delegate and assign to the Certificate Insurer, to the fullest extent permitted
by law, the rights of the Master Servicer, the Seller, the Trustee and each
Class A Certificateholder in the conduct of any such Preference Claim,
including, without limitation, all rights of any party to any adversary
proceeding or action with respect to any court order issued in connection with
any such Preference Claim.
ARTICLE V
Payments and Statements to Certificateholders;
Rights of Certificateholders
Section 5.01. Distributions.
-------------
(a) On each Distribution Date, the Trustee shall withdraw from the
Certificate Account the Available Funds, together with any Insured Payments
under the Certificate Insurance Policy, and make distributions thereof as
described below and to the extent of such amounts in the following order of
priority:
(i) to the Trustee, the Trustee Fee for such Distribution Date and
to the Certificate Insurer, the Premium Amount owing to the Certificate
Insurer under the Insurance Agreement;
(ii) to the Master Servicer, the amount of any accrued and unpaid
Master Servicing Fee for such Distribution Date;
(iii) concurrently to the holders of each Class of Class A
Certificates pro rata, the Current Monthly Interest Amount for such Class
for such Distribution Date;
(iv) concurrently to the holders of each Class of Class A
Certificates pro rata, any Unpaid Interest Shortfalls, together with any
Interest on Unpaid Interest Shortfalls, for such Class for such
Distribution Date;
(v) to the holders of the Class A Certificates in reduction of
their Class Principal Balances, an aggregate amount equal to the Formula
Principal Distribution Amount for such Distribution Date (but not in excess
of the Certificate Principal Balance or in excess of the aggregate amount,
if any, necessary to be distributed on such Distribution Date so that the
Overcollateralization Amount equals the Required Overcollateralization
Amount), such amount to be allocated among the Class A Certificates as
follows;
(a) to the Class A-7 Certificateholders, up to the Priority
Amount for such Distribution Date;
(b) sequentially, to the holders of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5 and Class A-6 Certificates, in that
order, until the Class Principal Balance of each such Class has been
reduced to zero; and
(c) to the Class A-7 Certificateholders, without regard to
the Priority Amount for such Distribution Date, until the Class
Principal Balance of such Class has been reduced to zero;
(vi) to the Certificate Insurer, the Reimbursement Amount owing to
the Certificate Insurer hereunder;
(vii) to the Master Servicer, the amount of Nonrecoverable
Advances not previously reimbursed;
(viii) to the holders of the Class A Certificates in reduction of
their Class Principal Balances, an aggregate amount equal to the
Distributable Excess Spread for such Distribution Date (but not in excess
of the Certificate Principal Balance), such amount to be allocated among
the Class A Certificates as follows;
(a) to the Class A-7 Certificateholders, after taking into
account the amount paid pursuant to clause (v)(a) up to the Priority
Amount for such Distribution Date;
(b) sequentially, to the holders of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5 and Class A-6 Certificates, in that
order, until the Class Principal Balance of each such Class has been
reduced to zero; and
(c) to the Class A-7 Certificateholders, without regard to
the Priority Amount for such Distribution Date, until the Class
Principal Balance of such Class has been reduced to zero;
(ix) to the Certificate Insurer, any other amounts owing to the
Certificate Insurer under the Insurance Agreement;
(x) concurrently, to the holders of each Class of Class A
Certificates pro rata, any Prepayment Interest Shortfall for such
Distribution Date and any Prepayment Interest Shortfalls that were not paid
on prior Distribution Dates pursuant to this clause (x), with interest
thereon (to the extent permitted by applicable law) at the applicable
Certificate Rate that accrued during the related Interest Period on the
amount of any unpaid Prepayment Interest Shortfalls from prior Distribution
Dates;
(xi) to the Master Servicer, first to the reimbursement for any
Compensating Interest, second, to the reimbursement of any unreimbursed
Servicing Advances and third, to the reimbursement of any unreimbursed
Monthly Advances;
(xii) to the Trustee, (A) any fee payable in connection with a
termination of any Servicing Agreement pursuant to Section 3.01(e), (B) all
costs or expenses associated with any transfer of servicing pursuant to
Section 3.01(e), 3.01(g) or 8.01(b) and (C) to the extent not paid by the
Master Servicer, any indemnification for Losses pursuant to Section 9.05.
(xiii) to the holder of the Class R Certificate, any remaining
balance (after deducting and paying to the Master Servicer the amounts, if
any, necessary to reimburse the Master Servicer pursuant to Section
7.03(b)).
Notwithstanding the foregoing, on any Distribution Date during the
continuance of a Certificate Insurer Default, all distributions pursuant to
clauses (v) and (viii) above shall be made pro rata on such Classes of
Certificates, based on their respective Class Principal Balances on such
Distribution Date.
(b) Method of Distribution. The Trustee shall make distributions in
----------------------
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution) by wire transfer to an account with a banking or financial
institution in the United States or check or money order mailed to such
Certificateholder at the address appearing in the Certificate Register.
Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.
(c) Distributions on Book-Entry Certificates. Each distribution with
----------------------------------------
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Paying Agent, the Certificate Registrar,
the Depositor, the Master Servicer, the Certificate Insurer or the Seller shall
have any responsibility therefor except as otherwise provided by applicable law.
(d) Distribution of Insured Payments. With respect to any Distribution
--------------------------------
Date, in the event of an Insured Payment, the Trustee shall make such payments
from the amount drawn under the Certificate Insurance Policy pursuant to Section
4.01 for such Distribution Date in accordance with Section 5.01(a)(iii), (iv)
and (v). The Certificate Insurer shall be deemed to be the assignee of the
Holders of the Class A Certificates to the extent of any amount of Insured
Payments disbursed by the Trustee from proceeds of the Certificate Insurance
Policy and to such extent, shall be the subrogee of each such Holder of the
Class A Certificates; provided, however, that any such right of subrogation
inuring to the Certificate Insurer hereunder or otherwise shall be and is
subordinated to the rights under this Agreement of the Holders of the Class A
Certificates and in accordance with Section 5.01(a).
Section 5.02. Statements.
----------
(a) Not later than 12:00 noon, New York time, on each Determination
Date, the Master Servicer shall deliver to the Trustee a monthly report (the
"Monthly Report") in a form and format mutually agreeable to the Master Servicer
and the Trustee containing the information set forth in Exhibit D hereto as to
each Home Equity Loan as of the end of the preceding Collection Period and such
other information as the Trustee shall reasonably require, including, without
limitation, all information necessary to enable the Trustee to make the payments
required by Section 5.01(a). Each Monthly Report shall be accompanied by an
Officer's Certificate of the Master Servicer. On the Business Day preceding the
Distribution Date, the Trustee shall deliver to the Certificate Insurer and the
Depositor, by telecopy, with a hard copy thereof to be delivered on such
Distribution Date, a copy of the Monthly Report containing the information set
forth below with respect to such Distribution Date:
(i) The Available Funds and the amount of the Insured Payment, if
any, for the related Distribution Date;
(ii) The Class Principal Balance of each Class, the Pool Principal
Balance as reported in the prior Monthly Report or, in the case of the
first Determination Date, the Class Principal Balance of each Class and the
Cut-Off Date Pool Principal Balance;
(iii) The aggregate amount of collections received on the Home
Equity Loans on or prior to such Determination Date in respect of the
preceding Collection Period, separately stating the amounts received in
respect of principal and interest;
(iv) The number and Principal Balances of all Home Equity Loans
that were the subject of Principal Prepayment In Full during the related
Collection Period;
(v) The amount of all Curtailments that were received during the
Collection Period;
(vi) The principal portion of all Monthly Payments received during
the Collection Period;
(vii) The interest portion of all Monthly Payments received on the
Home Equity Loans during the Collection Period;
(viii) The amount required to be paid by the Seller or the Master
Servicer (reported separately) pursuant to Sections 2.02, 2.05, 2.06 or
3.01(j);
(ix) The amount of the Monthly Advances and the Compensating
Interest payment to be made with respect to such Distribution Date;
(x) The Formula Principal Distribution Amount for the related
Distribution Date, the portion thereof to be distributed on each Class of
Certificates then entitled to distributions of principal;
(xi) The Class Interest Distribution for the related Distribution
Date to be distributed on each Class of Certificates;
(xii) The amount to be distributed to the Class R
Certificateholders for the related Distribution Date;
(xiii) The Certificate Principal Balance (after giving effect to
any distributions of principal to be made on the Class A Certificates on
the related Distribution Date);
(xiv) The weighted average remaining term to maturity of the Home
Equity Loans and the weighted average Loan Rate;
(xv) (a) The Master Servicing Fee to be retained by the Master
Servicer and (b) the amounts paid to the Certificate Insurer, separately
stated, and the Reimbursement Amount to be paid to the Certificate Insurer
pursuant to Section 5.01(a)(v) and other amounts due and owing to the
Certificate Insurer under the Insurance Agreement and to be paid pursuant
to Section 5.01(a)(ix);
(xvi) The amount of all payments or reimbursements to the Master
Servicer pursuant to Section 3.03;
(xvii) The Overcollateralization Amount, the Required
Overcollateralization Amount and the Distributable Excess Spread for such
Distribution Date;
(xviii) The number of Home Equity Loans outstanding at the
beginning and at the end of the related Collection Period;
(xix) The Pool Principal Balance and the aggregate Principal
Balance of the three (3) largest Home Equity Loans as of the end of the
Collection Period related to such Distribution Date;
(xx) The number and aggregate Principal Balances of Home Equity
Loans (w) as to which the Monthly Payment is delinquent for 30-59 days,
60-89 days and 90 or more days, respectively, (x) that have become REO
Properties, in each case as of the end of the preceding Collection Period,
(y) that are in foreclosure and (z) the Mortgagor of which is the subject
of any bankruptcy or insolvency proceeding;
(xxi) The unpaid principal amount of all Home Equity Loans that
became Liquidated Home Equity Loans during such Collection Period;
(xxii) The Net Liquidation Proceeds received during such
Collection Period;
(xxiii) The book value (within the meaning of 12 C.F.R. Section
571.13 or comparable provision) of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure;
(xxiv) Whether a Servicer Default has occurred or is continuing;
(xxv) Such other information as is required by the Code and
regulations thereunder to be made available to Holders of the Class A
Certificates;
(xxvi) The aggregate Premium Amount to be paid to the Certificate
Insurer pursuant to Section 5.01(a)(i); and
(xxvii) The cumulative amount of Liquidation Loan Losses since the
Cut-Off Date.
(xxviii) The Monthly Loss Rate and the Rolling Twelve Month Loss
Rate for such Distribution Date.
The Trustee shall forward such report concurrently with each
distribution to the Certificateholders, the Rating Agencies, the Certificate
Insurer, Bloomberg (at 499 Park Avenue, New York, New York 10022, Attention:
Mike Geller) and Intex Solutions (at 35 Highland Circle, Needham, Massachusetts
02144, Attention: Harold Brennman) on the related Distribution Date. The Trustee
may fully rely upon and shall have no liability with respect to information
provided by the Master Servicer.
To the extent that there are inconsistencies between the telecopy of
the Monthly Report and the hard copy thereof, the Master Servicer may rely upon
the latter.
The delivery of such Monthly Report to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Master Servicer's compliance with
any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officer's Certificates).
In the case of information furnished pursuant to subclauses (x) and
(xi) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each Class for each $1,000 original dollar amount as of
the Cut-Off Date.
(b) Within 60 days after the end of each calendar year, the Trustee
shall furnish to each Person who at any time during the calendar year was a
Certificateholder of a Class A Certificate, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information set forth in subclauses (x) and (xi) above,
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be prepared and furnished by the Trustee to Certificateholders
pursuant to any requirements of the Code as are in force from time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Class A
Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.
(e) The Master Servicer and the Trustee shall furnish to the
Certificate Insurer during the term of this Agreement, such periodic, special or
other reports or information, whether or not provided for herein, as shall be
necessary, reasonable or appropriate with respect to 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 (if requested in writing) as the
Certificate Insurer as the case may be, may reasonably require; provided that
the Master Servicer and the Trustee shall be entitled to be reimbursed by the
Certificate Insurer, for their respective fees and actual expenses associated
with providing such reports, if such reports are not generally produced in the
ordinary course of their respective businesses or readily obtainable.
(f) Reports and computer tapes furnished by the Master Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent provided in
this Agreement and to the extent required by law or to the Rating Agencies, the
Depositor, the Certificate Insurer, and to the extent the Seller instructs the
Trustee in writing to furnish information regarding the Trust or the Home Equity
Loans to third-party information providers. No Person entitled to receive copies
of such reports or tapes or lists of Certificateholders shall use the
information therein for the purpose of soliciting the customers of the Seller or
for any other purpose except as set forth in this Agreement.
Section 5.03. Certificate Account. The Trustee shall establish with
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Norwest Bank Minnesota, National Association a separate trust account (the
"Certificate Account") titled "Norwest Bank Minnesota, National Association, as
Trustee, of Banc One Financial Services Home Equity Loan Trust 1999-2
Certificate Account." The Certificate Account shall be an Eligible Account. The
Trustee shall deposit amounts representing payments on and any collections in
respect of the Home Equity Loans received by it, if any, immediately following
receipt thereof, including, without limitation, all amounts withdrawn from the
Collection Account pursuant to Section 3.03 for deposit to the Certificate
Account. Amounts on deposit in the Certificate Account may be invested in
Eligible Investments pursuant to Section 5.04.
Section 5.04. Investment of Accounts.
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(a) So long as no Servicer Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any Account (other than the amounts deposited in the Collection Account on
the Closing Date) held by or in the name of the Trustee shall be invested and
reinvested by the Trustee, as directed in writing by the Master Servicer, in one
or more Eligible Investments (including Eligible Investments which are
obligations of the Master Servicer or any of its Affiliates if such Eligible
Investments otherwise qualify as Eligible Investments) bearing interest or sold
at a discount; such direction to be signed by a Servicing Officer. If a Servicer
Default shall have occurred and be continuing or if the Master Servicer does not
provide investment directions, the Trustee shall invest all Accounts in Eligible
Investments described in paragraphs (v) or (vi) of the definition of Eligible
Investments. No such investment in any Account shall mature later than the
Business Day immediately preceding the next Distribution Date; provided, that
with respect to any Account maintained by the Trustee, investments that are
obligations of the Trustee shall mature on the Distribution 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 liquidation of
amounts of investments in an Account will be required prior to maturity unless
the proceeds are needed for disbursements.
(c) The Trustee shall not in any way be held liable for the selection
of Eligible Investments to be purchased or sold pursuant to this Section or by
reason of any investment loss or charge or any insufficiency in any Account held
by or in the name of the Trustee resulting from any investment loss on any
Eligible Investment included therein unless the Trustee's failure to perform in
accordance with this Section is the cause of such loss or charge except to the
extent that the Trustee is the obligor and has defaulted thereon. The Trustee
shall have no liability in respect of losses incurred as a result of the
liquidation of any Eligible Investment prior to its stated maturity or the
failure of the Master Servicer to provide timely written investment direction.
(d) The Trustee shall invest and reinvest funds in the Accounts held by
or in the name of the Trustee, to the fullest extent practicable, in such manner
as the Master Servicer shall from time to time direct as set forth in Section
5.04(a), but only in one or more Eligible Investments.
(e) So long as no Servicer Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
realized earnings on, funds deposited in the Collection Account and the
Certificate Account shall be for the benefit of the Master Servicer as servicing
compensation (in addition to the Master Servicing Fee), and shall be subject to
withdrawal on or before the fourth Business Day of the month following the month
in which such income or gain is received. In the case of investments in Eligible
Investments made at the written direction of the Master Servicer for which there
is a loss in excess of the income and gain thereon, the Master Servicer shall
deposit in the Collection Account or the Certificate Account, as applicable, the
amount of such net loss immediately upon realization from the Master Servicer's
own funds, without any right to reimbursement therefor.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. Each of the Class A Certificates and
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Class R Certificates shall be substantially in the forms set forth in Exhibits A
and B hereto, respectively, and shall, on original issue, be executed,
authenticated and delivered by the Trustee to or upon the order of the Depositor
concurrently with the sale and assignment to the Trustee of the Trust. Each
Class of Class A Certificates shall be initially evidenced by one or more
certificates representing a fraction of the Original Class Principal Balance and
shall be held in minimum dollar denominations of $1,000 and dollar multiples in
excess thereof, except that one Class of each Class of the Class A Certificate
may be in a different denomination so that the sum of the denominations of all
outstanding Class A Certificates shall equal the Original Class Principal
Balance.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by an authorized officer of the Trustee substantially in
the form provided for herein, and such authentication upon any Certificate shall
be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication. Subject to Section 6.02(c), the Class A
Certificates shall be Book-Entry Certificates. The Class R Certificates shall
not be Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Certificates.
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(a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph and, in the case of a Class R Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute on behalf of the Trust and authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall (if so required by the Trustee or the Certificate
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer satisfactory to the Trustee and the Certificate Registrar duly executed
by, the Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of such Certificates may not
be transferred by the Trustee except to another Depository or its nominee; (ii)
the Depository shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such Certificates; (iii)
ownership and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository as representative of the Certificate Owners of the Certificates for
purposes of exercising the rights of Holders under this Agreement, and requests
and directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and Persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners; and (vii) the
direct and indirect participants of the Depository shall have no rights under
this Agreement under or with respect to any of the Certificates held on their
behalf by the Depository, and the Depository may be treated by the Trustee and
its agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement the terms of this Agreement
shall control.
(c) If (i) (x) 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 Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Default, the
Certificate Owners of each Class of Class A Certificates representing Percentage
Interests aggregating not less than 51% advises the Trustee and Depository
through the Financial Intermediaries and the Depository Participants in writing
that the continuation of a book-entry system through the Depository to the
exclusion of definitive, fully registered certificates (the "Definitive
Certificates") to Certificate Owners is no longer in the best interests of the
Certificate Owners, upon surrender to the Certificate Registrar of each Class of
Class A Certificates by the Depository, accompanied by registration instructions
from the Depository for registration, the Trustee shall, at the Depositor's
expense, in the case of (ii) above, or the Seller's expense, in the case of (i)
and (iii) above, execute on behalf of the Trust and authenticate the Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Certificate Registrar, the Master Servicer, any
Paying Agent and the Depositor shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
(d) Except with respect to the initial transfer of the Class R
Certificates by the Depositor to or upon the order of the Seller or its
Affiliate, no transfer, sale, pledge or other disposition of any Class R
Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, other than the
transfer of the Tax Matters Person Residual Interest to the Trustee (i) unless
such transfer is made in reliance upon Rule 144A (as evidenced by the investment
letter delivered to the Trustee, in substantially the form attached hereto as
Exhibit H) under the 1933 Act, the Trustee and the Depositor shall require a
written Opinion of Counsel (which may be in-house counsel) acceptable to and in
form reasonably satisfactory to the Trustee and the Depositor that such transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from the 1933 Act or is being made pursuant to the 1933 Act,
which Opinion of Counsel shall not be an expense of the Trustee or the Depositor
or (ii) the Trustee shall require the transferee to execute a certificate (in
substantially the form attached hereto as Exhibit E) and an investment letter
(in substantially the form attached hereto as Exhibit H) acceptable to and in
form reasonably satisfactory to the Depositor and the Trustee certifying to the
Depositor and the Trustee the facts surrounding such transfer, which investment
letter shall not be an expense of the Trustee or the Depositor. The Holder of a
Class R Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Depositor 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.
No transfer of a Class R Certificate or a Class A Certificate of a
Class of Class A Certificates with respect to which a Widely-Held Certification
was not delivered (each, an "ERISA-Restricted Certificate") shall be made unless
the Trustee shall have received either (i) a representation from the transferee
of such Certificate, acceptable to and in form satisfactory to the Trustee and
the Depositor, (such requirement is satisfied by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit E
hereto, as appropriate), to the effect that such transferee is not an employee
benefit plan or arrangement subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code, nor a person acting on behalf of any such plan or
arrangement nor using the assets of any such plan or arrangement to effect such
transfer or (ii) in the case of any such ERISA-Restricted Certificate presented
for registration in the name of an employee benefit plan subject to ERISA or a
plan or arrangement subject to Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan or arrangement or using such
plan's or arrangement's assets, an Opinion of Counsel in form satisfactory to
the Trustee which Opinion of Counsel shall not be an expense of either the
Trustee or the Trust, addressed to the Trustee, to the effect that the purchase
or holding of such ERISA-Restricted Certificate will not result in the assets of
the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those expressly undertaken in this Agreement or to
any liability. For purposes of clause (i) of the preceding sentence, such
representation shall be deemed to have been made to the Trustee by the
transferee's acceptance of an ERISA-Restricted Certificate (or the acceptance by
a Certificate Owner of the beneficial interest in any such Class of
ERISA-Restricted Certificates) unless the Trustee shall have received from the
transferee an alternative representation acceptable in form and substance to the
Depositor. Notwithstanding anything else to the contrary herein, any purported
transfer of an ERISA-Restricted Certificate to or on behalf of an employee
benefit plan subject to Section 406 of ERISA or a plan subject to Section 4975
of the Code without the delivery to the Trustee of an Opinion of Counsel in form
satisfactory to the Trustee as described above shall be void and of no effect;
provided, however, that the restriction set forth in this sentence shall not be
applicable if there has been delivered to the Trustee an Opinion of Counsel in
form satisfactory to the Trustee to the effect that the purchase or holding of
an ERISA-Restricted Certificate will not result in the assets of the Trust Fund
being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee to any
obligation in addition to those expressly undertaken in this Agreement. The
Trustee shall be under no liability to any Person for any registration of
transfer of any ERISA-Restricted Certificate that is in fact not permitted by
this Section 6.02(d) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was registered by the
Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA-Restricted
Certificate that was in fact an employee benefit plan subject to Section 406 of
ERISA or a plan subject to Section 4975 of the Code or a Person acting on behalf
of any such plan at the time it became a Holder or, at such subsequent time as
it became such a plan or Person acting on behalf of such a plan, all payments
made on such ERISA-Restricted Certificate at and after either such time. Any
such payments so recovered by the Trustee shall be paid and delivered by the
Trustee to the last preceding Holder of such Certificate that is not such a plan
or Person acting on behalf of a plan.
Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Class R Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form satisfactory
to it, of each of the following:
A. an affidavit in the form of Exhibit I hereto from the
proposed transferee to the effect that such transferee is a Permitted
Transferee and that it is not acquiring its Ownership Interest in the
Class R Certificate that is the subject of the proposed transfer as a
nominee, trustee or agent for any Person who is not a Permitted
Transferee; and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Class R Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
shall be absolutely null and void and shall vest no rights in the purported
transferee. If any purported transferee shall, in violation of the
provisions of this Section, become a Holder of a Class R Certificate, then
the prior Holder of such Class R Certificate that is a Permitted Transferee
shall, upon discovery that the registration of transfer of such Class R
Certificate was not in fact permitted by this Section, be restored to all
rights as Holder thereof retroactive to the date of registration of
transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section or for making any
distributions due on such Class R Certificate to the Holder thereof or
taking any other action with respect to such Holder under the provisions of
this Agreement so long as the Trustee received the documents specified in
clause (iii). The Trustee shall be entitled to recover from any Holder of a
Class R Certificate that was in fact not a Permitted Transferee at the time
such distributions were made all distributions made on such Class R
Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such Class
R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee shall have the right but not
the obligation, without notice to the Holder of such Class R Certificate or
any other Person having an Ownership Interest therein, to notify the
Depositor to arrange for the sale of such Class R Certificate. The proceeds
of such sale, net of commissions (which may include commissions payable to
the Depositor or its affiliates in connection with such sale), expenses and
taxes due, if any, will be remitted by the Trustee to the previous Holder
of such Class R Certificate that is a Permitted Transferee, except that in
the event that the Trustee determines that the Holder of such Class R
Certificate may be liable for any amount due under this Section or any
other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim. The
terms and conditions of any sale under this clause (v) shall be determined
in the sole discretion of the Trustee and it shall not be liable to any
Person having an Ownership Interest in a Class R Certificate as a result of
its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section, then the Trustee will receive reasonable
compensation from the party making such request and will provide to the
Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause the Trust to fail to qualify as a REMIC.
The Trustee shall be the initial holder of the Tax Matter Person Residual
Interest.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
-------------------------------------------------
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate and (ii) there is delivered to the Trustee and
the Certificate Registrar such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of notice to the Trustee or
the Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute on behalf of the Trust, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section, shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Master Servicer, the Depositor,
the Trustee, the Certificate Registrar, the Certificate Insurer, any Paying
Agent and any agent of the Master Servicer, the Depositor, the Certificate
Registrar, any Paying Agent, the Certificate Insurer or the Trustee may (subject
to Section 5.01(b)) treat the Person, including a Depository, in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.01 and for all other purposes
whatsoever, and none of the Master Servicer, the Trust, the Trustee, the
Certificate Insurer, the Depositor, the Certificate Registrar, the Paying Agent
nor any agent of any of them shall be affected by notice to the contrary.
Section 6.05. Appointment of Paying Agent.
---------------------------
(a) The Paying Agent shall make distributions to Certificateholders
from the Certificate Account pursuant to Section 5.01 and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent may
include the obligation (i) to withdraw funds from the Certificate Account
pursuant to Section 5.01 and for the purpose of making the distributions
referred to in Section 5.01 and (ii) to distribute statements and provide
information to Certificateholders as required hereunder. The Paying Agent
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authorities. The Paying Agent
shall initially be the Trustee. The Trustee may appoint a successor to act as
Paying Agent, which appointment shall be reasonably satisfactory to the
Depositor and the Certificate Insurer.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders and shall agree that it shall comply with all
requirements of the Code regarding the withholding of payments in respect of
Federal income taxes due from Certificate Owners and otherwise comply with the
provisions of this Agreement applicable to it.
ARTICLE VII
The Seller, the Master Servicer and the Depositor
Section 7.01. Liability of the Seller, the Master Servicer and the
----------------------------------------------------
Depositor. The Seller and the Master Servicer shall be liable in accordance
- ---------
herewith only to the extent of the obligations specifically imposed upon and
undertaken by the Seller or the Master Servicer, as the case may be, herein. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken herein by the Depositor.
Section 7.02. Merger or Consolidation of, or Assumption of the
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Obligations of, the Seller, the Master Servicer, or the Depositor. Any Person
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into which the Seller, the Master Servicer or Depositor may be merged or
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Seller, the Master Servicer or the Depositor shall be
a party, or any Person succeeding to the business of the Seller, the Master
Servicer or the Depositor, shall be the successor of the Seller, the Master
Servicer or the Depositor, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor Master Servicer shall satisfy all the requirements of Section 8.02
with respect to the qualifications of a successor Master Servicer.
Section 7.03. Limitation on Liability of the Master Servicer and
--------------------------------------------------
Others.
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(a) Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Trust or the Certificateholders for any action taken or for refraining from the
taking of any action by the Master Servicer 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
which would otherwise be imposed by reason of its willful misfeasance, bad faith
or negligence in the performance of duties of the Master Servicer or by reason
of its reckless disregard of its obligations and duties of the Master Servicer
hereunder; provided, further, that this provision shall not be construed to
entitle the Master Servicer to indemnity in the event that amounts advanced by
the Master Servicer to retire any senior lien exceed Net Liquidation Proceeds
realized with respect to the related Home Equity Loan. The preceding sentence
shall not limit the obligations of the Master Servicer pursuant to Section 9.05.
The Master Servicer and any director or officer or 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. The Master Servicer and any director or officer or employee or agent
of the Master Servicer shall be indemnified by the Trust and held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to this Agreement or the Certificates, other than any loss,
liability or expense related to any specific Home Equity Loan or Home Equity
Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) and any loss, liability or expense
incurred by reason of its willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of its reckless disregard of
obligations and duties hereunder; and such amounts shall be payable only
pursuant to Section 3.03(vii).
(b) The Master Servicer may undertake any such action which it may deem
necessary or desirable in respect of this Agreement, and the rights and duties
of the parties hereto and the interests of the Certificateholders hereunder. In
such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust and the Master Servicer shall be entitled to be reimbursed therefor only
from amounts distributable pursuant to Section 5.01(a)(xii). The Master
Servicer's right to indemnity or reimbursement pursuant to this Section shall
survive any resignation or termination of the Master Servicer pursuant to
Section 7.04 or 8.01 with respect to any losses, expenses, costs or liabilities
arising prior to such resignation or termination (or arising from events that
occurred prior to such resignation or termination). This paragraph shall apply
to the Master Servicer solely in its capacity as Master Servicer hereunder and
in no other capacities.
Section 7.04. Master Servicer Not to Resign. Subject to the provisions
-----------------------------
of Section 7.02, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor master servicer to
the Trustee in writing and such proposed successor master servicer is reasonably
acceptable to the Trustee; (b) each Rating Agency shall have delivered a letter
to the Trustee prior to the appointment of the successor master servicer stating
that the proposed appointment of such successor master servicer as Master
Servicer hereunder will not result in the reduction or withdrawal of the then
current ratings of the Class A Certificates; and (c) such proposed successor
master servicer is reasonably acceptable to the Certificate Insurer, as
evidenced by a letter to the Trustee; provided, however, that no such
resignation by the Master Servicer shall become effective until such successor
master servicer or, in the case of (i) above, the Trustee shall have assumed the
Master Servicer's responsibilities and obligations hereunder or the Trustee
shall have designated a successor servicer in accordance with Section 8.02; and
provided, further, that any Affiliate of the Master Servicer whose senior,
unsecured long-term debt rating is at least "Baa2" by Moody's or "BBB" by S&P at
the time of appointment shall be deemed to be reasonably acceptable to the
Trustee. Any such resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in Sections 8.01 and 8.02 as
obligations that survive the resignation or termination of the Master Servicer.
Any such determination permitting the resignation of the Master Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the Certificate Insurer.
Section 7.05. Delegation of Duties. In the ordinary course of business,
--------------------
the Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards comparable to those set forth in Section 3.01. Such
delegation shall not relieve the Master Servicer of its liabilities and
responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 7.04. The Master Servicer shall
provide the Trustee and the Certificate Insurer with written notice prior to the
delegation of any of its duties to any Person other than to Banc One Financial
Services, Inc., or any of the Master Servicer's Affiliates or their respective
successors and assigns.
Section 7.06. Indemnification of the Trust by the Master Servicer. The
---------------------------------------------------
Master Servicer shall indemnify and hold harmless the Trust and the Trustee and
its officers, directors, agents and employees from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of the
Master Servicer's willful misfeasance, bad faith or gross negligence in the
performance of its activities in servicing or administering the Home Equity
Loans pursuant to this Agreement, including, but not limited to, any judgment,
award, settlement, reasonable fees of counsel of its selection and other costs
or expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim related to the Master Servicer's misfeasance, bad
faith or gross negligence. Any such indemnification shall be payable by the
Master Servicer and shall not be payable from the assets of the Trust. The
provisions of this Section 7.06 shall survive termination of the Agreement or
the earlier of the resignation or removal of the Trustee.
Section 7.07. Inspection. The Master Servicer shall (and shall require
----------
any Servicer in the related Servicing Agreement to) afford the Certificate
Insurer, upon reasonable notice, during normal business hours, access to all
records maintained by the Master Servicer in respect of its rights and
obligations hereunder and access to officers of the Master Servicer and each
Servicer responsible for such obligations. Upon request, the Master Servicer
shall furnish to the Certificate Insurer the Master Servicer's most recent
publicly available financial statements and each Servicer's most recent
financial statements (annual or quarterly statements, as the case may be) and
such other information relating to their capacity to perform their obligations
under this Agreement as the Master Servicer or such Servicer possesses.
ARTICLE VIII
Default
Section 8.01. Servicer Default.
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If any one of the following events ("Servicer Default") shall occur and
be continuing:
(i) (A) The failure by the Master Servicer to make any Monthly
Advance (other than a Nonrecoverable Advance); or (B) any other failure by
the Master Servicer to deposit in the Collection Account or the Certificate
Account any deposit required to be made under the terms of this Agreement
which continues unremedied for a period of two Business Days after the date
upon which written notice of such failure shall have been given to the
Master Servicer by the Trustee or to the Master Servicer and the Trustee by
the Certificate Insurer or holders of Class A Certificates evidencing a
Percentage Interest of at least 25%;
(ii) The failure by the Master Servicer to make any required
Servicing Advance which failure continues unremedied for a period of 30
days, or the failure by the Master Servicer duly to observe or perform, in
any material respect, any other covenants, obligations or agreements of the
Master Servicer as set forth in this Agreement, which failure continues
unremedied for a period of 30 days, after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given
to the Master Servicer by the Trustee or to the Master Servicer and the
Trustee by the Certificate Insurer or holders of Class A Certificates
evidencing a Percentage Interest of at least 25%;
(iii) The entry against the Master Servicer of a decree or order
by a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership, readjustment
of debt, marshalling of assets and liabilities or similar proceedings, or
for the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60
consecutive days; provided, however, that if the Master Servicer
voluntarily elects not to contest or challenge such decree or order, such
60 day period shall not apply, and a Servicer Default shall be deemed to
have occurred upon the entry of such decree or order;
(iv) The Master Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator or
similar person in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Master
Servicer or of or relating to all or substantially all of its property, or
a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Master Servicer and such decree or order shall have remained in
force undischarged, unbonded or unstayed for a period of 60 days; or the
Master Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations;
or
(v) The occurrence of a Master Servicer Termination Delinquency
Rate Trigger or a Master Servicer Termination Loss Trigger;
then, and in each and every such case, so long as a Servicer Default shall not
have been remedied within the applicable grace period, (x) with respect solely
to clause (i) (A) above, if such Monthly Advance is not made by 4:00 P.M., New
York time, on the second Business Day following written notice to the Master
Servicer of such event given to the Master Servicer by the Trustee, the Trustee
shall terminate by written notice to the Master Servicer all of the rights and
obligations of the Master Servicer under this Agreement and the Trustee, or a
successor master servicer appointed in accordance with the terms of Section
8.02, shall immediately make such Monthly Advance and assume, pursuant to the
terms of Section 8.02, the duties of a successor Master Servicer and (y) in the
case of (i) (B), (ii), (iii) and (iv) above, the Trustee shall, at the direction
of the Certificate Insurer or the Holders of each Class of Class A Certificates
evidencing Percentage Interests aggregating not less than 51% (with the consent
of the Certificate Insurer so long as no Certificate Insurer Default exists), by
notice then given in writing to the Master Servicer, terminate all of the rights
and obligations of the Master Servicer as servicer under this Agreement. Upon
the written notice to the Master Servicer of the occurrence of clause (v) above,
the Trustee at the direction of the Certificate Insurer may declare a Servicer
Default and may terminate all of the rights and obligations of the Master
Servicer hereunder by giving written notice of such action to the Seller, the
Master Servicer, the Depositor and the Trustee. The Certificate Insurer agrees
that, in making its decision to remove the Master Servicer under clause (v)
above, it shall consider, among other factors, whether the Master Servicer's
servicing practices have been in compliance with the servicing standards set
forth herein. Any notice given pursuant to this Section to the Master Servicer
shall also be given to each Rating Agency and the Depositor. On or after the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the
Certificates or the Home Equity Loans or otherwise, shall pass to and be vested
in the Trustee or a duly appointed successor master servicer pursuant to and
under this Section; and, without limitation, the Trustee or such successor
master servicer is hereby authorized and empowered to execute and deliver, on
behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Home
Equity Loan and related documents or otherwise. The Master Servicer agrees to
cooperate with the Trustee in effecting the termination of the responsibilities
and rights of the Master Servicer hereunder, including, without limitation, the
transfer to the Trustee for the administration by it of all cash amounts that
shall at the time be held by the Master Servicer and to be deposited by it in
the Collection Account, or that have been deposited by the Master Servicer in
the Collection Account or thereafter received by the Master Servicer with
respect to the Home Equity Loans. The Trustee shall be entitled to be reimbursed
by the Master Servicer for all costs associated with the transfer of servicing,
including, without limitation, any costs or expenses associated with the
complete transfer of all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the Trustee to correct
any errors or insufficiencies in the servicing data or otherwise to enable the
Trustee to service the Home Equity Loans properly and effectively.
Section 8.02. Trustee to Act; Appointment of Successor.
----------------------------------------
(a) On and after the time the Master Servicer receives a notice of
termination pursuant to Section 8.01 or on or after any resignation pursuant to
Section 7.04(i) provided, that in the case of Section 7.04(i) the Opinion of
Counsel required by that Section shall have been received, the Trustee shall
immediately make any Monthly Advances which are then due and, within 90 days of
receipt of the notice of termination or resignation of the Master Servicer, will
become the successor in all respects to the Master Servicer in its capacity as
Master 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 Master Servicer by the terms and
provisions hereof arising on and after its succession. As compensation therefor,
the Trustee shall be entitled to such compensation as the Master Servicer would
have been entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Trustee is unwilling to act as successor
Master Servicer or (ii) if the Trustee is legally unable so to act, the Trustee
shall appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan or
home equity loan Master Servicer having a net worth of not less than $50,000,000
as the successor to the Master Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Master Servicer
hereunder; provided that any such successor Master Servicer shall be acceptable
to the Certificate Insurer, as evidenced by the Certificate Insurer's prior
written consent which consent shall not be unreasonably withheld; provided,
further, that any Affiliate of the Master Servicer whose senior, unsecured
long-term debt rating is at least "Baa2" by Moody's or "BBB" by S&P at the time
of appointment shall be deemed to be reasonably acceptable to the Trustee; and
provided, further, that the appointment of any such successor Master Servicer
will not result in the qualification, reduction or withdrawal of the ratings
assigned to the Certificates by the Rating Agencies. Pending appointment of a
successor to the Master Servicer hereunder, unless the Trustee is prohibited by
law from so acting, the Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the successor
shall be entitled to receive compensation out of payments on Home Equity Loans
in an amount equal to the compensation which the Master Servicer would otherwise
have received pursuant to Section 3.09 (or such lesser compensation as the
Trustee and such successor shall agree). The appointment of a successor Master
Servicer shall not affect any liability of the predecessor Master Servicer which
may have arisen under this Agreement prior to its termination as Master Servicer
to pay any deductible under an insurance policy pursuant to Section 3.05 or to
indemnify the Trustee pursuant to Section 7.06), nor shall any successor Master
Servicer be liable for any acts or omissions of the predecessor Master Servicer
or for any breach by such Master Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
(b) Any successor, including the Trustee, to the Master Servicer as
Master Servicer shall during the term of its service as Master Servicer (i)
continue to service and administer the Home Equity Loans for the benefit of
Certificateholders and the Certificate Insurer, (ii) maintain in force a policy
or policies of insurance covering errors and omissions in the performance of its
obligations as Master Servicer hereunder and a fidelity bond in respect of its
officers, employees and agents to the same extent as the Master Servicer is so
required pursuant to Section 3.06.
Section 8.03. Waiver of Defaults. The Majority Certificateholders with
------------------
the consent of the Certificate Insurer (a copy of which shall be delivered to
the Trustee) or the Certificate Insurer may, on behalf of all
Certificateholders, waive any events permitting removal of the Master Servicer
as Master Servicer pursuant to this Article VIII, provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist and any Servicer Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies.
Section 8.04. Notification to Certificateholders. Upon any termination
----------------------------------
or appointment of a successor to the Master Servicer pursuant to this Article
VIII or Section 7.04, the Trustee shall give prompt written notice thereof to
the Certificateholders at their respective addresses appearing in the
Certificate Register, the Certificate Insurer and each Rating Agency.
Section 8.05. Rights of the Certificate Insurer to Exercise Rights of
-------------------------------------------------------
Class A Certificateholders. By accepting its Certificate, each Class A
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Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall be subrogated to the rights of the Certificateholders
and shall be deemed to be the Certificateholders for all purposes (other than
with respect to payment on the Certificates) and shall have the right to
exercise all rights of the Class A Certificateholders under this Agreement and
under each Class of Class A Certificates without any further consent of the
Class A Certificateholders, including, without limitation:
(i) the right to require the Seller to repurchase Home Equity
Loans pursuant to Section 2.02 or 2.05;
(ii) the right to give notices of breach or to terminate the
rights and obligations of the Master Servicer as servicer pursuant to
Section 8.01 and to consent to or direct waivers of Master Servicer
defaults pursuant to Section 8.03;
(iii) the right to direct actions of the Trustee pursuant to
Section 8.01;
(iv) the right to direct the Trustee to investigate certain
matters pursuant to Section 9.02;
(v) the right to remove the Trustee pursuant to Section 9.07;
(vi) the right to direct foreclosures upon the failure of the
Master Servicer to do so in accordance with this Agreement; and
(vii) any rights or remedies expressly given the Majority
Certificateholders.
In addition, each Certificateholder agrees that unless a Certificate Insurer
Default exists, the rights specifically enumerated in this Agreement may be
exercised by the Certificateholders only with the prior written consent of the
Certificate Insurer.
Section 8.06. Trustee to Act Solely with Consent of the Certificate
-----------------------------------------------------
Insurer. Unless a Certificate Insurer Default exists, the Trustee shall not,
- -------
without the Certificate Insurer's consent or unless directed by the Certificate
Insurer:
(i) terminate the rights and obligations of the Master Servicer as
Master Servicer pursuant to Section 8.01;
(ii) agree to any amendment pursuant to Article XI, provided,
however, that such consent shall not be unreasonably withheld; or
(iii) undertake any litigation.
The Certificate Insurer may, in writing delivered to the Trustee and in
its sole discretion renounce all or any of its rights under Section 8.05, 8.06
or 8.07 or any requirement for the Certificate Insurer's consent for any period
of time.
Section 8.07. Home Equity Loans, Trust and Accounts Held for Benefit of
---------------------------------------------------------
the Certificate Insurer. The Trustee shall hold the Trust and the Mortgage Files
- -----------------------
(as set forth in Section 2.01) for the benefit of the Certificateholders and the
Certificate Insurer and all references in this Agreement and in the Certificates
to the benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. The Trustee shall cooperate in all reasonable respects with
any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement and
the Certificates unless, as stated in an Opinion of Counsel addressed to the
Trustee and the Certificate Insurer, such action is adverse to the interests of
the Certificateholders or diminishes the rights of the Certificateholders or
imposes additional burdens or restrictions on the Certificateholders.
The Master Servicer hereby acknowledges and agrees that it shall
service the Home Equity Loans for the benefit of the Certificateholders and for
the benefit of the Certificate Insurer, and all references in this Agreement to
the benefit of or actions on behalf of the Certificateholders shall be deemed to
include the Certificate Insurer.
Section 8.08. Certificate Insurer Default. Notwithstanding anything
---------------------------
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of its rights, the provisions of
this Article VIII and all other provisions of this Agreement which (a) permit
the Certificate Insurer to exercise rights of the Certificateholders, (b)
restrict the ability of the Certificateholders, the Master Servicer or the
Trustee to act without the consent or approval of the Certificate Insurer, (c)
provide that a particular act or thing must be acceptable to the Certificate
Insurer, (d) permit the Certificate Insurer to direct (or otherwise to require)
the actions of the Trustee, the Master Servicer or the Certificateholders, (e)
provide that any action or omission taken with the consent, approval or
authorization of the Certificate Insurer shall be authorized hereunder or shall
not subject the party taking or omitting to take such action to any liability
hereunder or (f) which have a similar effect, shall be of no further force and
effect and the Trustee shall administer the Trust and perform its obligations
hereunder solely for the benefit of the Holders of the Certificates. Nothing in
the foregoing sentence, nor any action taken pursuant thereto or in compliance
therewith, shall be deemed to have released the Certificate Insurer from any
obligation or liability it may have to any party or to the Certificateholders
hereunder, under any other agreement, instrument or document (including, without
limitation, the Certificate Insurance Policy) or under applicable law. At such
time as the Class A Certificates are no longer outstanding hereunder and no
amounts owed to the Certificate Insurer hereunder remain unpaid, the Policy
shall be terminated and returned to the Certificate Insurer, whereupon the
Certificate Insurer's rights hereunder shall terminate.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence
-----------------
of a Servicer Default and after the curing or waiver of all Servicer Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If a Servicer Default has
occurred (which has not been cured or waived) of which a Responsible Officer of
the Trustee at the Corporate Trust Office has actual knowledge, the Trustee
shall exercise such of the rights and powers vested in it by this Agreement, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs, unless it is acting as successor Master Servicer in which case it
shall use, when acting in such capacity, the same degree of care and skill
required of the Master Servicer hereunder.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any such
resolution, certificate, statement, opinion, report, document, order or other
instrument. If any such instrument is found not be in the form specified in this
Agreement, on its face, the Trustee shall take action as it deems appropriate to
have the instrument corrected, and if the instrument is not corrected to the
Trustee's reasonable satisfaction, the Trustee will provide notice thereof to
the Certificate Insurer and will, at the expense of the Seller, which expense
shall be reasonable given the scope and nature of the action required, take such
further action as directed by the Certificate Insurer.
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 misconduct; provided, however, that:
(i) prior to the occurrence of a Servicer Default of which a
Responsible Officer of the Trustee shall have actual knowledge, and after
the curing or waiver of all such Servicer Default which may have occurred,
the duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee, unless
it shall be proved that the Trustee was negligent in ascertaining or
investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or the Holders of
Class A Certificates evidencing Percentage Interests aggregating not less
than 51% (with the consent of the Certificate Insurer, so long as no
Certificate Insurer Default exists (a copy of which consent shall be
delivered to the Trustee)) relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising or omitting to exercise any trust or power conferred upon the
Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any
failure by the Master Servicer to comply with the obligations of the Master
Servicer referred to in clauses (i) and (ii) of Section 8.01(a) or of a
Servicer Default under Sections 8.01(v) or (vi), of an Assignment Event or
of a Deposit Event unless a Responsible Officer of the Trustee at the
Corporate Trust Office obtains actual knowledge of such failure or event or
the Trustee receives written notice of such failure or event from the
Master Servicer, the Certificate Insurer or the Holders of Class A
Certificates evidencing Percentage Interests aggregating not less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
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 Master 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 Master Servicer in accordance
with the terms of this Agreement.
Subject to the other provisions of this Agreement and without limiting
the generality of this Section, the Trustee shall have no duty (A) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust from funds available in the Collection Account or
any other source or (B) to confirm or verify the contents of any reports or
certificates of the Master Servicer delivered to the Trustee pursuant to this
Agreement believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties.
Section 9.02. Certain Matters Affecting the Trustee.
-------------------------------------
(a) Except as otherwise provided in Section 9.01:
(i) the Trustee may request and conclusively rely upon, and shall
be fully protected in acting or refraining from acting upon, any
resolution, Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) the Trustee may consult with counsel of its selection and any
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance with
such advice or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders or the
Certificate Insurer, pursuant to the provisions of this Agreement, unless
such Certificateholders or the Certificate Insurer shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; 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 any
such act; nothing contained herein shall, however, relieve the Trustee of
the obligations, upon the occurrence of a Servicer Default (which has not
been cured or waived) of which a Responsible Officer at the Corporate Trust
Office has actual knowledge, to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in their exercise (unless it is acting as Master Servicer) as a
prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) prior to the occurrence of a Servicer Default and after the
curing or waiver of all Servicer Default which may have occurred, 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, consent, order, approval, bond or other
paper or documents, unless requested in writing to do so by the Certificate
Insurer or Holders of Certificates evidencing Percentage Interests
aggregating not less than 51% (with the consent of the Certificate Insurer,
so long as no Certificate Insurer Default exists (a copy of which consent
shall be delivered to the Trustee)); provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such cost, expense or liability as a
condition to such proceeding. Nothing in this clause (v) shall derogate
from the obligation of the Master Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability
and makes no representation as to any acts or omissions hereunder of the
Master Servicer until such time as the Trustee may be required to act as
Master Servicer pursuant to Section 8.02;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, attorneys, nominees or a custodian;
(viii) the Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the
powers granted herein; and
(ix) 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.
(b) It is intended that the Trust formed hereunder shall constitute,
and that the affairs of the Trust shall be conducted so as to qualify the Trust
as a REMIC as defined in and in accordance with the REMIC Provisions. In
furtherance of such intention, the Trustee covenants and agrees that it shall
act as agent (and the Trustee is hereby appointed to act as agent) and as Tax
Matters Person on behalf of the REMIC, and that in such capacities, it shall:
(i) prepare, sign and file, or cause to be prepared and filed, in
a timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax
Return (Form 1066) and any other Tax Return required to be filed by the
Trust, using a calendar year as the taxable year for the Trust;
(ii) make, or cause to be made, an election, on behalf of the
Trust, to be treated as a REMIC on the federal tax return of the REMIC for
their first taxable year;
(iii) prepare and forward, or cause to be prepared and forwarded,
to the Master Servicer, the Depositor, the Certificateholders and the
Internal Revenue Service and any other relevant governmental taxing
authority all information returns or reports as and when required to be
provided to them in accordance with the REMIC Provisions;
(iv) to the extent that the affairs of the Trust are within its
control, conduct such affairs of the Trust at all times that any
Certificates are outstanding so as to maintain the status of the Trust as a
REMIC under the REMIC Provisions and any other applicable federal, state
and local laws, including, without limitation, information reports relating
to "original issue discount," as defined in the Code, based upon a 120%
Prepayment Assumption percentage and calculated by using the issue price of
the Certificates;
(v) not knowingly or intentionally take any action or omit to take
any action that would cause the termination of the REMIC status of the
Trust;
(vi) pay the amount of any and all federal, state and local taxes
and prohibited transaction taxes as defined in Section 860F of the Code,
other than any amount due as a result of a transfer or attempted or
purported transfer in violation of Section 6.02, imposed on the Trust when
and as the same shall be due and payable (but such obligation shall not
prevent the Trustee or any other appropriate Person from contesting any
such tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome
of such proceedings). The Trustee shall be entitled to reimbursement in
accordance with Section 9.05;
(vii) ensure that any such returns or reports filed on behalf of
the Trust by the Trustee are properly executed by the appropriate person;
(viii) represent the Trust in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to any taxable year of
the Trust, enter into settlement agreements with any government taxing
agency, extend any statute of limitations relating to any item of the Trust
and otherwise act on behalf of the Trust in relation to any tax matter
involving the Trust;
(ix) as provided in Section 2.12, make available information
necessary for the computation of any tax imposed (1) on transferors of
residual interests to transferees that are not Permitted Transferees or (2)
on pass-through entities, any interest in which is held by an entity which
is not a Permitted Transferee. The Trustee covenants and agrees that it
will cooperate with the Master Servicer in the foregoing matters and that
it will sign, as Trustee, any and all Tax Returns required to be filed by
the Trust. Notwithstanding the foregoing, at such time as the Trustee
becomes the successor Master Servicer, the holder of the largest percentage
of the Class R Certificates shall serve as Tax Matters Person until such
time as an entity is appointed to succeed the Trustee as Master Servicer;
(x) upon receipt of written request and reasonable compensation,
make available to the Internal Revenue Service and those Persons specified
by the REMIC Provisions all information necessary to compute any tax
imposed (A) as a result of the Transfer of an Ownership Interest in a Class
R Certificate to any Person who is not a Permitted Transferee, including
the information described in Treasury regulations sections 1.860D-1(b)(5)
and 1.860E-2(a)(5) with respect to the "excess inclusions" of such Class R
Certificate and (B) as a result of any regulated investment company, real
estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Class R Certificate having as among its record holders at any
time any Person that is not a Permitted Transferee;
(xi) Following the Closing Date, and except as otherwise provided
in this Agreement, the Trustee shall not knowingly accept any contribution
of assets to the Trust unless it shall have been provided with an Opinion
of Counsel at the expense of the party delivering such assets acceptable to
it and the Certificate Insurer to the effect that the inclusion of such
assets in the Trust will not cause the Trust to fail to qualify as a REMIC
at any time that any Certificates are outstanding or subject the Trust to
any tax under the REMIC Provisions or other applicable provisions of
federal, state and local law or ordinances; and
(xii) The Trustee agrees to indemnify the Trust, the Certificate
Insurer and the Master Servicer for any taxes and costs, including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the
Trust, the Certificate Insurer or the Master Servicer, as a result of a
negligent or willful breach of the Trustee's covenants set forth in this
Section.
Section 9.03. Trustee Not Liable for Certificates or Home Equity Loans.
--------------------------------------------------------
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller and the Depositor, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature and authentication of the Trustee on the
Certificates) or of any Home Equity Loan or related document. The Trustee shall
not be accountable for the use or application by the Master Servicer or for the
use or application of any funds paid to the Master Servicer in respect of the
Home Equity Loans or deposited in or withdrawn from the Collection Account by
the Master Servicer. The Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Mortgage or any Home Equity Loan, or the perfection and priority of any
Mortgage or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Trust or its ability to generate the payments
to be distributed to Certificateholders under this Agreement, including, without
limitation: the existence, condition and ownership of any Mortgaged Property;
the existence and enforceability of any hazard insurance thereon (other than the
Trustee acting as Master Servicer if the Trustee shall assume the duties of the
Master Servicer pursuant to Section 8.02); the validity of the assignment of any
Home Equity Loan to the Trustee or of any intervening assignment; the
completeness of any Home Equity Loan; the performance or enforcement of any Home
Equity Loan (other than the Trustee acting as Master Servicer if the Trustee
shall assume the duties of the Master Servicer pursuant to Section 8.02); the
compliance by the Depositor, the Seller or the Master Servicer with any warranty
or representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Master Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Master Servicer (other than the
Trustee as Master Servicer if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 8.02), any Master Servicer or any Mortgagor; any
action of the Master Servicer (other than if the Trustee shall assume the duties
of the Master Servicer pursuant to Section 8.02), or any Master Servicer taken
in the name of the Trustee; the failure of the Master Servicer or any Master
Servicer to act or perform any duties required of it as a third-party
independent contractor of the Trustee hereunder; or any action by the Trustee
taken at the instruction of the Master Servicer (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 8.02); provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement, including, without limitation, the
Trustee's duty to review the Mortgage File pursuant to Section 2.01. The Trustee
shall have no responsibility for filing any financing or continuation statement
in any public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder (unless the
Trustee shall have become the successor Master Servicer).
Section 9.04. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee and may transact
any banking and trust business with the Seller, the Certificate Insurer, the
Master Servicer or the Depositor and their Affiliates.
Section 9.05. Trustee Fees and Expenses. The Trustee Fee shall be
-------------------------
payable to the Trustee pursuant to Section 5.01(a)(1). Without prejudice to any
other rights available to the Trustee under applicable law, when the Trustee
incurs expenses or renders services in connection with a Servicer Default
described in Sections 8.01(a)(iii) or 8.01(a)(iv) such expenses (including the
fees and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy law or
law relating to creditors' rights generally. In addition, the Master Servicer
covenants and agrees to indemnify the Trustee and its officers, directors,
employees and agents from, and hold it harmless against, any and all claims,
demands, losses, penalties, liabilities, damages, injuries or expenses
including, without limitation, reasonable attorney's fees and expenses
("Losses") arising out of the acceptance or administration of its trusts
hereunder, including, without limitation, Losses resulting from any error in any
tax or information return prepared from information provided by the Master
Servicer. To the extent such Losses are not paid by the Master Servicer, they
will be paid, to the extent funds are available therefor, pursuant to Section
5.01(a)(xii) hereunder. This Section shall survive termination of this Agreement
or the resignation or removal of any Trustee hereunder.
If and so long as the successor Master Servicer is the Trustee, all
references in this Section 9.05 to the Master Servicer shall be deemed to refer
to Bank One, Indiana, National Association or any successor Master Servicer
thereto other than the Trustee.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, have a combined
capital and surplus of at least $50,000,000 and a minimum long-term debt rating
of "Baa3" by Moody's and "BBB" by S&P, and be subject to supervision or
examination by federal or state authority. If such corporation 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 shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. The principal office of the Trustee (other than the
initial Trustee) shall be in a state with respect to which an Opinion of Counsel
has been delivered to such Trustee at the time such Trustee is appointed Trustee
to the effect that the Trust will not be a taxable entity under the laws of such
state. In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
---------------------------------
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Depositor, the Master Servicer, the Certificate Insurer
and each Rating Agency. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor Trustee (approved in writing by the
Certificate Insurer, so long as such approval shall not be unreasonably
withheld) by written instrument, copies of which instrument shall be delivered
to the resigning Trustee and the successor Trustee; provided, however, that any
such successor Trustee shall be subject to the prior written approval of the
Master Servicer. If no successor Trustee shall have been so appointed and having
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.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Depositor with the consent of the Certificate Insurer
(so long as no Certificate Insurer Default exists) or the Certificate Insurer,
or if at any time the Trustee shall be legally unable to act, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor, the Master Servicer or the
Certificate Insurer may remove the Trustee. If the Depositor, the Master
Servicer or the Certificate Insurer removes the Trustee under the authority of
the immediately preceding sentence, the Depositor or the Master Servicer shall
promptly appoint a successor Trustee (approved in writing by the Certificate
Insurer, so long as such approval is not unreasonably withheld) by written
instrument, copies of which instrument shall be delivered to the resigning
Trustee and the successor Trustee. If the Master Servicer fails to appoint a
successor Trustee within 30 days after the giving of such notice of removal to
the Trustee, the Trustee being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the Trustee may not be removed by the
Depositor or the Certificateholders without the prior written consent of the
Certificate Insurer, which consent shall not be unreasonably withheld.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
-----------------
provided in Section 9.07 shall execute, acknowledge and deliver to the
Depositor, the Master Servicer and to its predecessor Trustee and the
Certificate Insurer an instrument accepting such appointment 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 fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Depositor, the Master Servicer, the Certificate Insurer
and the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Master Servicer shall mail notice of the succession of such
Trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register and to each Rating Agency. If the Master Servicer fails
to mail such notice within 30 days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Master Servicer.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the appointment of any successor Trustee
pursuant to any provision of this Agreement will be subject to the prior written
consent of the Certificate Insurer, which consent shall not be unreasonably
withheld.
Section 9.09. Merger or Consolidation of Trustee. Any Person into which
----------------------------------
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be eligible under the provisions of
Section 9.06, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
Section 9.10. 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 or any Mortgaged Property may at the time be located, the Depositor
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 the Certificate Insurer to act as co-trustee or co-trustees, jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Master Servicer and the Trustee may
consider necessary or desirable. Any such co-trustee or separate trustee shall
be subject to the written approval of the Master Servicer and the Certificate
Insurer. If the Master Servicer shall not have joined in such appointment within
15 days after the receipt by it of a request so to do, or, in the case a
Servicer Default shall have occurred and be continuing, the Trustee 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 9.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 9.08. The Master Servicer shall be responsible for the fees of any
co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised
or performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Master 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 or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Master Servicer and the Trustee acting jointly with the
consent of the Certificate Insurer, so long as no Certificate Insurer
Default exists, may at any time accept the resignation of or remove any
separate trustee or co-trustee except that following the occurrence of a
Servicer Default, the Trustee acting alone may accept the resignation 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 Article IX. 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
Depositor, the Certificate Insurer and the Master 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.
Section 9.11. Limitation of Liability. The Certificates are executed by
-----------------------
the Trustee, not in its individual capacity but solely as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates; Inspection.
- ------------------------
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses and disbursements of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders and the Certificate Insurer in respect
of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Master
Servicer, the Certificate Insurer and each Certificateholder upon reasonable
notice during normal business hours, access to all records maintained by the
Trustee in respect of its duties hereunder and access to officers of the Trustee
responsible for performing such duties. Upon request, the Trustee shall furnish
the Depositor, the Master Servicer, the Certificate Insurer and any requesting
Certificateholder with its most recent financial statements. The Trustee shall
cooperate fully with the Seller, the Master Servicer, the Depositor, the
Certificate Insurer and such Certificateholder and shall make available to the
Seller, the Master Servicer, the Depositor, the Certificate Insurer and such
Certificateholder for review and copying, at such party's sole cost and expense,
such books, documents or records as may be requested with respect to the
Trustee's duties hereunder. The Seller, the Depositor, the Master Servicer, the
Certificate Insurer and the Certificateholders shall not have any responsibility
or liability for any action or failure to act by the Trustee and are not
obligated to supervise the performance of the Trustee under this Agreement or
otherwise.
Section 9.13. Suits for Enforcement. In case a Servicer Default or
---------------------
other default by the Master Servicer, the Certificate Insurer or the Depositor
hereunder shall occur and be continuing, the Trustee, in its discretion, may
proceed to protect and enforce its rights and the rights of the
Certificateholders or, if such default is not a Certificate Insurer Default, the
Certificate Insurer under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee, the
Certificate Insurer and the Certificateholders.
Section 9.14. Reports to the Commission.
-------------------------
(a) The Trustee shall, on behalf of the Trust, cause to be filed with
the Commission any periodic reports required to be filed under the provisions of
the Exchange Act, and the rules and regulations of the Commission thereunder.
Upon the request of the Trustee, each of the Seller, the Master Servicer and the
Depositor shall cooperate with the Trustee in the preparation of any such report
and shall provide to the Trustee in a timely manner all such information or
documentation as is in the possession of such Person and that the Trustee may
reasonably request in connection with the performance of its duties and
obligations under this Section.
(b) The Trustee shall file with the Commission a Form 15 with respect
to the Trust as soon as practicable following the first date on which the
conditions to filing thereof have been satisfied. Following the filing of such
Form 15, the Trustee will submit a certificate addressed to an officer of the
Depositor certifying that all filings under the Exchange Act have been made and
shall attach a copy of acceptance slips for such filings. On the Closing Date,
the Depositor shall provide the Trustee with a letter at closing, substantially
in the form attached hereto as Exhibit K, instructing the Trustee, as filing
agent, to comply with the reporting obligations for the Trust under the Exchange
Act.
ARTICLE X
Termination
Section 10.01. Termination.
-----------
(a) The respective obligations and responsibilities of the Seller, the
Master Servicer, the Depositor and the Trustee created hereby (other than the
obligation of the Trustee to make certain payments to Certificateholders after
the final Distribution Date and the obligation of the Master Servicer to send
certain notices as hereinafter set forth and all other obligations which
pursuant to this Agreement survive the termination hereof) shall terminate upon
notice to the Trustee by the Master Servicer of the later of (A) payment in full
of all amounts owing to the Certificate Insurer, unless the Certificate Insurer
shall otherwise consent and (B) the earliest of (i) the Distribution Date on
which the Certificate Principal Balance has been reduced to zero, (ii) the final
payment or other liquidation of the last Home Equity Loan in the Trust, (iii)
the optional purchase by the Class R Certificateholder, the Master Servicer or
the Certificate Insurer of the Home Equity Loans as described below and (iv) the
Distribution Date in June 2029. Notwithstanding the foregoing, in no event shall
the trust created hereby continue beyond the expiration of 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 St. James's, living on the date
hereof.
Subject to the consent of the Certificate Insurer if and only if the
termination would result in a draw on the Certificate Insurance Policy, the
holder of the largest Percentage Interest of the Class R Certificates may, at
its option, terminate this Agreement on any date on which the Pool Principal
Balance is 5% or less of the Cut-Off Date Pool Principal Balance, by purchasing,
on the next succeeding Distribution Date, all of the outstanding Home Equity
Loans and REO Properties at a price equal to the sum of the outstanding Pool
Principal Balance and accrued and unpaid interest thereon at the weighted
average of the Loan Rates through the end of the Collection Period preceding the
final Distribution Date together with all amounts due and owing the Certificate
Insurer and any amounts owed to the Master Servicer (the "Termination Price").
If the holder of the largest Percentage Interest of the Class R Certificates
opts not to exercise such right, the Master Servicer may exercise such Class R
Certificateholder's right to terminate the Agreement and purchase the
outstanding Home Equity Loans at the Termination Price. If the Master Servicer
opts not to exercise such right, the Certificate Insurer may exercise such Class
R Certificateholder's right to terminate the Agreement and purchase the
outstanding Home Equity Loans at the Termination Price.
In connection with any such purchase pursuant to the preceding
paragraph, the holder of the largest Percentage Interest of the Class R
Certificates or, if applicable, the Master Servicer or the Certificate Insurer
shall deposit in the Certificate Account all amounts then on deposit in the
Collection Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
Any such purchase shall be accomplished by deposit into the Certificate
Account on the Determination Date before such Distribution Date of the
Termination Price.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee to the Certificate Insurer and by letter to Class A Certificateholders
mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the month of such final distribution specifying (i) the
Distribution Date upon which final distribution of the Class A Certificates will
be made upon presentation and surrender of Class A Certificates at the office or
agency of the Trustee therein designated, (ii) the amount of any such final
distribution and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Class A Certificates at the office or agency
of the Trustee therein specified.
(c) Upon presentation and surrender of the Class A Certificates, the
Trustee shall cause to be distributed to the holders of Class A Certificates on
the Distribution Date for such final distribution, in proportion to the
Percentage Interests of their respective Class A Certificates and to the extent
that funds are available for such purpose, an amount equal to the amount
required to be distributed to holders of Class A Certificates pursuant to
Section 5.01 for such Distribution Date. On the final Distribution Date, the
Trustee will withdraw from the Certificate Account and remit to the Certificate
Insurer the lesser of (x) the amount available for distribution on such final
Distribution Date, net of any portion thereof necessary to pay holders of Class
A Certificates pursuant to Section 5.01(a) and any amounts owing to the Trustee
in respect of the Trustee Fee and due and unpaid Monthly Advances and Master
Servicing Fees, and (y) the unpaid amounts due and owing to the Certificate
Insurer pursuant to Section 5.01(a).
(d) In the event that all of the Class A Certificateholders shall not
surrender their Class A Certificates for final payment and cancellation on or
before such final Distribution Date, the Trustee shall promptly following such
date cause all funds in the Certificate Account not distributed in final
distribution to Class A Certificateholders to be withdrawn therefrom and
credited to the remaining Class A Certificateholders by depositing such funds in
a separate escrow account for the benefit of such Class A Certificateholders and
the Master Servicer (if the Master Servicer has exercised its right to purchase
the Home Equity Loans) or the Trustee (in any other case) shall give a second
written notice to the remaining Class A Certificateholders to surrender their
Class A Certificates for cancellation and receive the final distribution with
respect thereto. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholder shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds and the Certificateholders shall
look to the Class R Certificateholder for payment.
Section 10.02. Additional Termination Requirements.
-----------------------------------
(a) In the event that the holder of the largest Percentage Interest of
the Class R Certificates exercises its purchase option as provided in Section
10.01, the Trust shall be terminated in accordance with the following additional
requirements, unless the Trustee shall have been furnished with an Opinion of
Counsel to the effect that the failure of the Trust to comply with the
requirements of this Section will not (i) result in the imposition of taxes on
"prohibited transactions" of the Trust as defined in Section 860F of the Code or
(ii) cause the Trust to fail to qualify as a REMIC at any time that any Class A
Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the
Master Servicer shall adopt and the Trustee shall sign a plan of complete
liquidation for the REMIC meeting the requirements of a "Qualified
Liquidation" under Section 860F of the Code and any regulations thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust to the Master Servicer for cash;
and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited to (A) the Trustee, as holder of the Regular
Interests, the unpaid principal balance thereof plus accrued interest
thereon, (B) each Class of Class A Certificates the related Class Principal
Balance, plus one month's interest thereon at the applicable Certificate
Rate, (C) to the Certificate Insurer, all amounts owing to the Certificate
Insurer under this Agreement or under the Insurance Agreement and (D) to
the Class R Certificateholders, all cash on hand after such payment to the
Regular Interest Class A Certificateholders (other than cash retained to
meet claims) and the Trust shall terminate at such time.
(b) By their acceptance of the Class A Certificates, the Holders
thereof hereby agree to appoint the Trustee as their attorney in fact to: (i)
sign such a plan of complete liquidation (and the Certificateholders hereby
appoint the Trustee as their attorney in fact to sign such plan) as appropriate
or upon the written request of the Certificate Insurer and (ii) to take such
other action in connection therewith as may be reasonably required to carry out
such plan of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time to
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time by the Seller, the Master Servicer, the Depositor and the Trustee, in each
case without the consent of any of the Certificateholders, but only with the
consent of the Certificate Insurer (a copy of which shall be delivered to the
Trustee), (i) to cure any ambiguity, (ii) to correct any defective provisions or
to correct or supplement any provisions herein that may be inconsistent with any
other provisions herein, (iii) to add to the duties of the Depositor, the Seller
or the Master Servicer, (iv) to add any other provisions with respect to matters
or questions arising under this Agreement or the Certificate Insurance Policy
which shall not be inconsistent with the provisions of this Agreement, (v) to
add or amend any provisions of this Agreement as required by any Rating Agency
or any other nationally recognized statistical rating agency in order to
maintain or improve any rating of each Class of Class A Certificates (it being
understood that, after obtaining the ratings in effect on the Closing Date,
neither the Trustee, the Seller, the Depositor nor the Master Servicer is
obligated to obtain, maintain or improve any such rating) or (vi) to add or
amend any provisions of this Agreement to such extent as shall be necessary to
maintain the qualification of the Trust as a REMIC; provided, however, that (x)
in each case such action shall not, as evidenced by an Opinion of Counsel (a
copy of which shall be delivered to the Trustee) (at the expense of the party
requesting the amendment), adversely affect in any material respect the interest
of any Certificateholder, (y) in each case such action is necessary or
desirable, as evidenced by an Opinion of Counsel (a copy of which shall be
delivered to the Trustee) (at the expense of the party requesting the
amendment), to maintain the qualification of the Trust as a REMIC or shall not
adversely affect such qualification and (z) if the opinion called for in clause
(x) cannot be delivered with regard to an amendment pursuant to clause (vi)
above, such amendment is necessary to maintain the qualification of the Trust as
a REMIC; and provided, further, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the Certificateholders
and no Opinion of Counsel to that effect shall be required if the Person
requesting the amendment obtains a letter from each Rating Agency (a copy of
which shall be delivered to the Certificate Insurer) stating that the amendment
would not result in the downgrading or withdrawal of the respective ratings then
assigned to the Class A Certificates.
This Agreement also may be amended from time to time by the Seller, the
Depositor, the Trustee and the Master Servicer and the Master Servicer and the
Certificate Insurer may from time to time consent to the amendment of the
Certificate Insurance Policy, in each case with the consent of the Holders of
each Class of Class A Certificates which is affected by such amendment,
evidencing Percentage Interests aggregating not less than 51% in Percentage
Interests of such Class or in the case of an amendment which affects all
classes, evidencing Percentage Interests aggregating not less than 51% of all
Classes, and in the case of an amendment to this Agreement, with the consent of
the Certificate Insurer, (a copy of which shall be delivered to the Trustee) for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Certificateholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments on the
Certificates or distributions or payments under the Certificate Insurance Policy
which are required to be made on any Certificate without the consent of the
Holder of such Certificate or (ii) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of the Trust as a REMIC and notice of
the conclusion expressed in such Opinion of Counsel shall be included with any
such solicitation. An amendment made with the consent of all Certificateholders
and executed in accordance with this Section shall be permitted or authorized by
this Agreement notwithstanding that such Opinion of Counsel may conclude that
such amendment would adversely affect the qualification of the Trust as a REMIC.
Prior to the execution of any such amendment, the Trustee shall furnish
written notification of the substance of such amendment to each Rating Agency.
In addition, promptly after the execution of any such amendment made with the
consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
the fully executed original counterparts of the instruments effecting such
amendment to the Certificate Insurer.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement.
Section 11.02. Recordation of Agreement. This Agreement is subject to
------------------------
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon written direction of Holders of Certificates evidencing
Percentage Interests aggregating at least 51% or the Certificate Insurer
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of Certificateholders or the
Certificate Insurer. The Certificateholders or the Certificate Insurer
requesting such recordation shall bear all costs and expenses of such
recordation. The Trustee shall have no obligation to ascertain whether such
recordation so affects the interests of the Certificateholders.
Section 11.03. Limitation on Rights of Certificateholders. The death or
------------------------------------------
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
in Sections 8.01, 9.01, 9.02 and 11.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Class A Certificates evidencing Percentage Interests
aggregating not less than 51% shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES AND THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION) AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.05. Notices.
-------
(a) All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by certified mail, return receipt requested, to (a) in the case of the
Depositor, 1585 Broadway, 37th Floor, New York, New York 10036, Attention:
President, (b) in the case of the Seller, 8604 Allisonville Road, Indianapolis,
Indiana 46250, Attention: Chief Financial Officer, (c) in the case of the Master
Servicer, 111 Monument Circle, Indianapolis, IN 46277, Attention: Chief
Operating Officer, with a copy to BANK ONE CORPORATION Law Department, One First
National Plaza, Chicago, Illinois 60670, Attention: Corporate Securities, (d) in
the case of the Trustee, to 11000 Broken Land Parkway, Columbia, Maryland
21044-3562, Attention: Trust Department, with a copy to the Corporate Trust
Office, (e) in the case of Moody's, ABS Monitoring Department, 4th Floor, 99
Church Street, New York, New York 10007, (f) in the case of S&P, Debt Rating
Division, 25 Broadway, 20th Floor, New York, New York 10004, Attention:
Asset-Backed Surveillance Group, and (g) in the case of the Certificate Insurer,
One State Street Plaza, New York, New York 10004, Attention: Structured Finance
Department, MBS Surveillance, or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party. Any
notice required or permitted to be mailed to a Certificateholder shall be given
by first class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder receives such notice. Any notice or other document
required to be delivered or mailed by the Trustee to any Rating Agency shall be
given on a best efforts basis and only as a matter of courtesy and accommodation
and the Trustee shall have no liability for failure to deliver such notice or
document to any Rating Agency.
(b) Notice to the Rating Agencies. The Trustee and the Master Servicer
-----------------------------
shall each be obligated to use its best efforts promptly to provide notice, at
the expense of the Master Servicer, to the Rating Agencies with respect to each
of the following of which a Responsible Officer of the Trustee or Master
Servicer, as the case may be, has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Servicer Default that has not been
cured or waived;
(iii) The resignation or termination of the Master Servicer or the
Trustee;
(iv) The final payment to Holders of the Certificates of any
Class;
(v) Any change in the location of any Account; and
(vi) Any event that would result in the inability of the Master
Servicer to make Monthly Advances.
(c) In addition, (i) the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual report to Certificateholders described in
Section 5.02; and
(B) Each Monthly Report described in Section 5.02; and
(ii) The Master Servicer shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual statement as to compliance described in
Section 3.10;
(B) Each annual independent public accountants' servicing
report described in Section 3.11; and
(C) Each notice delivered pursuant to Section 8.01(b) which
relates to the fact that the Master Servicer has not made a Monthly
Advance.
Any such notice pursuant to this Section shall be in writing and shall
be deemed to have been duly given if personally delivered or mailed by first
class mail, postage prepaid, or by express delivery service to the addresses
specified above for each such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Sections 7.02, 7.04 and 7.05 (or 3.01),
this Agreement may not be assigned by the Depositor or the Master Servicer
without the prior written consent of the Certificate Insurer and Holders of the
Certificates evidencing Voting Rights aggregating not less than 66-2/3%. The
Master Servicer may assign the right to reimbursement for Servicing Advances and
Monthly Advances without the consent of any Person but with the prior written
notice to the Certificate Insurer.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
-----------------------------------------
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 6.01 and
6.02 are and shall be deemed fully paid.
Section 11.09. Third-Party Beneficiaries. This Agreement will inure to
-------------------------
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Certificate Owners, the Certificate Insurer and their respective successors
and permitted assigns. Except as otherwise provided in this Agreement, no other
person will have any right or obligation hereunder.
Section 11.10. Counterparts. This Agreement 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 11.11. Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Master Servicer and
the Trustee have caused this Agreement to be duly executed by their respective
officers all as of the day and year first above written.
MORGAN STANLEY CAPITAL I INC.,
as Depositor
By /s/ Sunjeev Khanna
------------------
Name: Sunjeev Khanna
Title: Principal
BANC ONE FINANCIAL SERVICES, INC.
as Seller
By /s/ Jeffrey P. Smith
--------------------
Name: Jeffrey P. Smith
Title: Executive Vice President
BANK ONE, INDIANA, NATIONAL ASSOCIATION
as Master Servicer
By /s/ Jeffrey P. Smith
--------------------
Name: Jeffrey P. Smith
Title: Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By /s/ Amy Wahl
------------
Name: Amy Wahl
Title: Assistant Vice President
<PAGE>
State of New York )
) ss.:
County of New York )
On the 17th day of June, 1999 before me, a notary public in and for the
State of New York, personally appeared Sunjeev Khanna, known to me to be a
Principal of MORGAN STANLEY CAPITAL I INC., a Delaware corporation, one of the
parties that executed the foregoing instrument; and also known to me to be the
person who executed it on behalf of such corporation, and acknowledged to me
that such corporation executed the foregoing instrument.
/s/ James M. Wulffleff
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of New York )
) ss.:
County of New York )
On the 17th day of June, 1999 before me, a notary public in and for the
State of New York, personally appeared Jeffrey P. Smith, known to me to be an
Executive Vice President of BANC ONE FINANCIAL SERVICES, INC., an Indiana
corporation, one of the parties that executed the foregoing instrument; and also
known to me to be the person who executed it on behalf of such corporation, and
acknowledged to me that such corporation executed the foregoing instrument.
/s/ James M. Wulffleff
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of New York )
) ss.:
County of New York )
On the 17th day of June, 1999 before me, a notary public in and for the
State of New York, personally appeared Jeffrey P. Smith, known to me to be a
Vice President of BANK ONE, INDIANA, NATIONAL ASSOCIATION, a national banking
association, one of the parties that executed the foregoing instrument; and also
known to me to be the person who executed it on behalf of such corporation, and
acknowledged to me that such corporation executed the foregoing instrument.
/s/ James M. Wulffleff
---------------------------------------
Notary Public
[Notarial Seal]
<PAGE>
State of New York )
) ss.:
County of New York )
On the 17th day of June, 1999 before me, a notary public in and for the
State of New York, personally appeared Amy Wahl, known to me to be an Assistant
Vice President of NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national
banking association, one of the parties that executed the foregoing instrument;
and also known to me to be the person who executed it on behalf of such
corporation, and acknowledged to me that such corporation executed the foregoing
instrument.
/s/ James M. Wulffleff
---------------------------------------
Notary Public
[Notarial Seal]
EXHIBIT A
FORM OF CLASS A CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. : R-A-___
Cut-Off Date : June 1, 1999
First Distribution Date : July 26, 1999
Class Principal
Balance of this Certificate
("Denomination") : $_________
Class Principal
Balance : $_________
Certificate Rate: : ____%
CUSIP : _____________
Class : A-____
<PAGE>
Banc One Financial Services Home Equity Loan Trust 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
Class A-___
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Home Equity
Loans")
MORGAN STANLEY CAPITAL I INC., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Class Principal Balance of this Class A-___
Certificate at any time may be less than the Class Principal Balance set forth
on the face hereof, as described herein. This Class A-___ Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Seller, the Master Servicer or the Trustee referred to below or
any of their respective affiliates. Neither this Class A-___ Certificate nor the
Home Equity Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Class A-___ Certificate (obtained by
dividing the Denomination of this Class A-___ Certificate by the Class Principal
Balance) in certain monthly distributions with respect to a Trust consisting
primarily of the Home Equity Loans deposited by Morgan Stanley Capital I Inc.
(the "Depositor"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of the Cut-Off Date specified above (the "Agreement") among
the Depositor, Banc One Financial Services, Inc., as Seller (the "Seller"), Bank
One, Indiana, National Association, as Master Servicer (the "Master Servicer"),
and Norwest Bank Minnesota, National Association, as Trustee (the "Trustee"). To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Class A-___ Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Class A-___ Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class A-___
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class A-___ Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 17, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: ________________________________________
Name:
Title:
This is one of the Class A-___ Certificates
referenced in the within-mentioned Agreement
By: _____________________________________________
Authorized Officer of Norwest Bank
Minnesota, National Association, as
Trustee
<PAGE>
[Reverse of Class A-___ Certificate]
Banc One Financial Services Home Equity Loan Trust 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as Banc One Financial Services Home Equity Loan Trust 1999-2, Home
Equity Loan Asset-Backed Certificates, Series 1999-2 (herein collectively called
the "Certificates"), and representing a beneficial ownership interest in the
Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate will have the benefit of an irrevocable and
unconditional certificate guaranty insurance policy issued by Ambac Assurance
Corporation (the "Certificate Insurer").
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement. The Record Date applicable to
each Distribution Date is the last Business Day of the month preceding the month
of such Distribution Date.
The Trustee shall make distributions in respect of a Distribution Date
to each Certificateholder of record on the related Record Date (other than as
provided below respecting the final distribution) by wire transfer to an account
with a banking or financial institution in the United States or check or money
order mailed to such Certificateholder at the address appearing in the
Certificate Register. Distributions among Certificateholders shall be made in
proportion to the Percentage Interests evidenced by the Certificates held by
such Certificateholders. The final distribution on each Certificate will be made
in like manner, but only upon presentment and surrender of such Certificate at
the office or agency of the Trustee specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor and the Trustee with the consent of the Certificate Insurer and
of Holders of the requisite percentage of the Percentage Interests of each Class
of Certificates affected by such amendment, as specified in the Agreement. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations and evidencing the same aggregate
Percentage Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Seller and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.
Subject to provisions in the Agreement concerning adopting a plan of
complete liquidation and to the consent of the Certificate Insurer if the
termination would result in any draw under the Policy, the Holder of the Class R
Certificate (other than the Tax Matters Person Residual Interest) may, at its
option, terminate the Agreement on any date on which the aggregate Principal
Balance of the Home Equity Loans is 5% or less of the Cut-Off Date Pool
Principal Balance by purchasing, on the next succeeding Distribution Date, all
of the outstanding Home Equity Loans at a price equal to the outstanding
aggregate Principal Balance of the Home Equity Loans (subject to reduction as
provided in the Agreement if the purchase price is based in part on the
appraised value of any REO Property included in the Trust and such appraised
value is less than the Principal Balance of the related Home Equity Loan) and
accrued and unpaid interest thereon at the weighted average of the Loan Rates
through the end of the Collection Period preceding the final Distribution Date
together with all amounts due and owing to the Certificate Insurer and any
amounts owed to the Master Servicer.
The obligations and responsibilities created by the Agreement will
terminate upon notice to the Trustee by the Master Servicer of the later of (A)
payment in full of all amounts owing to the Certificate Insurer, unless the
Certificate Insurer shall otherwise consent and (B) the earliest of (i) the
Distribution Date on which the Certificate Principal Balance has been reduced to
zero, (ii) the final payment or other liquidation of the last Home Equity Loan
in the Trust, (iii) the optional purchase by the Class R Certificateholder, the
Master Servicer or the Certificate Insurer of the Home Equity Loans as described
above and (iv) the Distribution Date in July 2026. Notwithstanding the
foregoing, in no event shall the Trust continue beyond the expiration of 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 St. James's,
living on the date of the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________________________________________________
________________________________________________________________________________
Dated: ______________________
_____________________________________________
Signature by or on behalf of assignor
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of ____________________________________________________________,
account number _____________, or, if mailed by check, to________________________
________________________________________________________________________________
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by_______________________________________,
the assignee named above, or __________________________________________________,
as its agent.
<PAGE>
EXHIBIT B
FORM OF CLASS R CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF CERTAIN DUTIES
SPECIFIED IN THE AGREEMENT.]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS SUCH
TRANSFER IS MADE IN COMPLIANCE WITH THE PROVISIONS OF THIS CERTIFICATE AND
SECTION 6.02(d) OF THE AGREEMENT. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE NOT IN COMPLIANCE WITH SUCH
PROVISIONS SHALL BE VOID AND OF NO EFFECT.
<PAGE>
Certificate No.: _______
Percentage Interest
evidenced by this
Certificate : [0.000001%][99.999999%]
Banc One Financial Services Home Equity Loan Trust 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
Class R
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of pool of closed-end fixed rate home equity loans
(the "Home Equity Loans")
Morgan Stanley Capital I Inc., as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Seller or the Trustee referred to
below or any of their respective affiliates. Neither this Certificate nor the
Home Equity Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that [Finance One Corporation] [Norwest Bank Minnesota,
National Association] is the registered owner of the Percentage Interest
evidenced by this Certificate specified above in the interest represented by all
Certificates of the Class to which this Certificate belongs in a Trust
consisting primarily of the Home Equity Loans deposited by Morgan Stanley
Capital I Inc. (the "Depositor"). The Trust was created pursuant to a Pooling
and Servicing Agreement dated as of June 1, 1999 (the "Agreement") among the
Depositor, Banc One Financial Services, Inc., as Seller (the "Seller"), Bank
One, Indiana, National Association, as Master Servicer (the "Master Servicer"),
and Norwest Bank Minnesota, National Association, as Trustee (the "Trustee"). To
the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee.
No transfer, sale, pledge or other disposition of this Certificate
shall be made unless such disposition is exempt from the registration
requirements of the Securities Act of 1933, as amended (the "1933 Act"), and any
applicable state securities laws or is made in accordance with the 1933 Act and
laws. In the event of any such transfer, other than the transfer of the Tax
Matters Person Residual Interest to the Trustee, (i) unless such transfer is
made in reliance upon Rule 144A (as evidenced by the investment letter delivered
to the Trustee, in substantially the form attached to the Agreement as Exhibit
H) under the 1933 Act, the Trustee and the Depositor shall require a written
Opinion of Counsel (which may be in-house counsel) acceptable to and in form
reasonably satisfactory to the Trustee and the Depositor that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from the 1933 Act or is being made pursuant to the 1933 Act,
which Opinion of Counsel shall not be an expense of the Trustee or the Depositor
or (ii) the Trustee shall require the transferee to execute a certificate (in
substantially the form attached to the Agreement as Exhibit E) and the
transferee to execute an investment letter (in substantially the form attached
to the Agreement as Exhibit H) acceptable to and in form reasonably satisfactory
to the Depositor and the Trustee certifying to the Depositor and the Trustee the
facts surrounding such transfer, which investment letter shall not be an expense
of the Trustee or the Depositor. The Holder of this Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee and
the Depositor 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
No transfer of this Certificate shall be made unless the Trustee shall
have received either (i) a representation from the transferee of such
Certificate, acceptable to and in form satisfactory to the Trustee and the
Depositor (such requirement is satisfied by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit E
to the Agreement, as appropriate), to the effect that such transferee is not an
employee benefit plan or arrangement subject to Section 406 of ERISA or a plan
subject to Section 4975 of the Code, nor a person acting on behalf of any such
plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) in the case of this Certificate presented for
registration in the name of an employee benefit plan subject to ERISA or a plan
or arrangement subject to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan or any other person
acting on behalf of any such plan or arrangement or using such plan's or
arrangement's assets, an Opinion of Counsel in form satisfactory to the Trustee,
which Opinion of Counsel shall not be an expense of either the Trustee or the
Trust, addressed to the Trustee, to the effect that the purchase or holding of
this Certificate will not result in the assets of the Trust being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee to any obligation in addition to those
expressly undertaken in the Agreement or to any liability.
For purposes of clause (i) of the preceding paragraph, such
representation shall be deemed to have been made to the Trustee by the
transferee's acceptance of this Certificate, unless the Trustee shall have
received from the transferee an alternative representation acceptable in form
and substance to the Depositor. Notwithstanding anything else to the contrary
herein or in the Agreement, any purported transfer of this Certificate to or on
behalf of an employee benefit plan subject to Section 406 of ERISA or a plan
subject to Section 4975 of the Code without the delivery to the Trustee of an
Opinion of Counsel in form satisfactory to the Trustee as described above shall
be void and of no effect; provided, however, that the restriction set forth in
this sentence shall not be applicable if there has been delivered to the Trustee
an Opinion of Counsel in form satisfactory to the Trustee to the effect that the
purchase or holding of this Certificate will not result in the assets of the
Trust Fund being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those expressly undertaken in the Agreement.
The Trustee shall be under no liability to any Person for any
registration of transfer of this Certificate that is in fact not permitted by
Section 6.02(d) of the Agreement or for making any payments due on this
Certificate to the Holder hereof or taking any other action with respect to such
Holder under the provisions of the Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements. The
Trustee shall be entitled, but not obligated, to recover from any Holder of this
Certificate that was in fact an employee benefit plan subject to Section 406 of
ERISA or a plan subject to Section 4975 of the Code or a Person acting on behalf
of any such plan at the time it became a Holder or, at such subsequent time as
it became such a plan or Person acting on behalf of such a plan, all payments
made on this Certificate at and after either such time. Any such payments so
recovered by the Trustee shall be paid and delivered by the Trustee to the last
preceding Holder of this Certificate that is not such a plan or Person acting on
behalf of a plan.
Each Person who has or who acquires any Ownership Interest in this
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in this Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
this Certificate shall be a Permitted Transferee and shall promptly notify
the Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Person shall acquire an Ownership Interest in this
Certificate unless such Ownership Interest is a pro rata undivided
interest.
In connection with any proposed transfer of any Ownership Interest in
this Certificate, the Trustee shall as a condition to registration of the
transfer, require delivery to it, in form satisfactory to it, of each of the
following:
A. an affidavit in the form of Exhibit I to the Agreement
from the proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its Ownership
Interest in this Certificate that is the subject of the proposed
transfer as a nominee, trustee or agent for any Person who is not a
Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that
the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to this Certificate.
Any attempted or purported transfer of any Ownership Interest in this
Certificate in violation of the foregoing provisions shall be absolutely null
and void and shall vest no rights in the purported transferee. If any purported
transferee shall, in violation of the foregoing provisions, become a Holder of
this Certificate, then the prior Holder of this Certificate that is a Permitted
Transferee shall, upon discovery that the registration of transfer of this
Certificate was not in fact permitted by the Agreement, be restored to all
rights as Holder thereof retroactive to the date of registration of transfer of
this Certificate.
The Trustee shall be under no liability to any Person for any
registration of transfer of this Certificate that is in fact not permitted by
the Agreement or for making any distributions due on this Certificate to the
Holder hereof or taking any other action with respect to such Holder under the
provisions of the Agreement so long as the Trustee received the documents
specified in clauses A. and B. above and in Section 6.02(d)(iii) of the
Agreement. The Trustee shall be entitled to recover from any Holder of this
Certificate that was in fact not a Permitted Transferee at the time such
distributions were made all distributions made on this Certificate. Any such
distributions so recovered by the Trustee shall be distributed and delivered by
the Trustee to the prior Holder of this Certificate that is a Permitted
Transferee.
If any Person other than a Permitted Transferee acquires any Ownership
Interest in this Certificate in violation of the above restrictions, then the
Trustee shall have the right but not the obligation, without notice to the
Holder of this Certificate or any other Person having an Ownership Interest
herein, to notify the Depositor to arrange for the sale of this Certificate. The
proceeds of such sale, net of commissions (which may include commissions payable
to the Depositor or its affiliates in connection with such sale), expenses and
taxes due, if any, will be remitted by the Trustee to the previous Holder of
this Certificate that is a Permitted Transferee, except that in the event that
the Trustee determines that the Holder of this Certificate may be liable for any
amount due under Section 6.02(d) of the Agreement or any other provisions
thereof, the Trustee may withhold a corresponding amount from such remittance as
security for such claim. The terms and conditions of any sale hereunder and
under Section 6.02(d)(v) of the Agreement shall be determined in the sole
discretion of the Trustee, and the Trustee shall not be liable to any Person
having an Ownership Interest in this Certificate as a result of its exercise of
such discretion.
If any Person other than a Permitted Transferee acquires any Ownership
Interest in a this Certificate in violation of the restrictions in this Section,
then the Trustee will provide to the Internal Revenue Service, and to the
persons specified in Sections 860E(e)(3) and (6) of the Code, information needed
to compute the tax imposed under Section 860E(e)(5) of the Code on transfers of
residual interests to disqualified organizations.
The foregoing provisions shall cease to apply to transfers occurring on
or after the date on which there shall have been delivered to the Trustee, in
form satisfactory to the Trustee, (i) written notification from each Rating
Agency that the removal of the restrictions on transfer set forth in Section
6.02 of the Agreement will not cause such Rating Agency to downgrade its rating
of the Certificates and (ii) an Opinion of Counsel to the effect that such
removal will not cause the Trust to fail to qualify as a REMIC.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
* * *
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: June 17, 1999
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: _________________________________________
Name:
Title:
This is one of the Class R Certificates
referenced in the within-mentioned Agreement
By: __________________________________________
Authorized Officer of Norwest Bank
Minnesota, National Association, as
Trustee
<PAGE>
[Reverse of Class R Certificate]
Banc One Financial Services Home Equity Loan Trust 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
This Certificate is one of a duly authorized issue of Certificates
designated as Banc One Financial Services Home Equity Loan Trust 1999-2, Home
Equity Loan Asset-Backed Certificates, Series 1999-2 (herein collectively called
the "Certificates"), and representing a beneficial ownership interest in the
Trust created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Holders of Certificates of the Class to which this Certificate belongs on
such Distribution Date pursuant to the Agreement. The Record Date applicable to
each Distribution Date is the last Business Day of the month preceding the month
of such Distribution Date.
The Trustee shall make distributions in respect of a Distribution Date
to each Certificateholder of record on the related Record Date (other than as
provided below respecting the final distribution) by wire transfer to an account
with a banking or financial institution in the United States or check or money
order mailed to such Certificateholder at the address appearing in the
Certificate Register. Distributions among Certificateholders shall be made in
proportion to the Percentage Interests evidenced by the Certificates held by
such Certificateholders. The final distribution on each Certificate will be made
in like manner, but only upon presentment and surrender of such Certificate at
the office or agency of the Trustee specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor and the Trustee with the consent of the Certificate Insurer and
of Holders of the requisite percentage of the Percentage Interests of each Class
of Certificates affected by such amendment, as specified in the Agreement. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange therefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Seller and the Trustee and any agent of the
Depositor or the Trustee may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Depositor, the
Trustee nor any such agent shall be affected by any notice to the contrary.
Subject to provisions in the Agreement concerning adopting a plan of
complete liquidation and to the consent of the Certificate Insurer if the
termination would result in any draw under the Policy, the holder of the Class R
Certificate (other than the Tax Matters Person Residual Interest) may, at its
option, terminate the Agreement on any date on which the aggregate Principal
Balance of the Home Equity Loans is 5% or less of the Cut-Off Date Pool
Principal Balance by purchasing, on the next succeeding Distribution Date, all
of the outstanding Home Equity Loans at a price equal to the outstanding
aggregate Principal Balance of the Home Equity Loans (subject to reduction as
provided in the Agreement if the purchase price is based in part on the
appraised value of any REO Property included in the Trust and such appraised
value is less than the Principal Balance of the related Home Equity Loan) and
accrued and unpaid interest thereon at the weighted average of the Loan Rates
through the end of the Collection Period preceding the final Distribution Date
together with all amounts due and owing to the Certificate Insurer and any
amounts owed to the Master Servicer.
The obligations and responsibilities created by the Agreement will
terminate upon notice to the Trustee by the Master Servicer of the later of (A)
payment in full of all amounts owing to the Certificate Insurer, unless the
Certificate Insurer shall otherwise consent and (B) the earliest of (i) the
Distribution Date on which the Certificate Principal Balance has been reduced to
zero, (ii) the final payment or other liquidation of the last Home Equity Loan
in the Trust, (iii) the optional purchase by the Class R Certificateholder, the
Master Servicer or the Certificate Insurer of the Home Equity Loans as described
above and (iv) the Distribution Date in July 2026. Notwithstanding the
foregoing, in no event shall the Trust continue beyond the expiration of 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 St. James's,
living on the date of the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________________________________________________
_______________________________________________________________________________.
Dated: _____________________
_____________________________________________
Signature by or on behalf of assignor
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
for the account of ____________________________________________________________,
account number _______________, or, if mailed by check, to______________________
________________________________________________________________________________
Applicable statements should be mailed to ______________________________________
_______________________________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.
<PAGE>
EXHIBIT C
HOME EQUITY LOAN SCHEDULE
<PAGE>
EXHIBIT D
MONTHLY INFORMATION DELIVERED TO TRUSTEE
<PAGE>
EXHIBIT E
ERISA REPRESENTATION LETTER
Norwest Bank Minnesota, National Association
Sixth and Marquette Street
Minneapolis, Minnesota 55479
Re: Banc One Financial Services Home Equity Loan Trust 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2, Class R
------------------------------------------------------------------
Ladies and Gentlemen:
Reference is made to the pooling and servicing agreement, dated as of
June 1, 1999 (the "Pooling and Servicing Agreement") by and among Morgan Stanley
Capital I Inc., as Depositor (the "Depositor"), Banc One Financial Services,
Inc., as Seller (the "Seller"), Bank One, Indiana, National Association, as
Master Servicer (the "Master Servicer"), and Norwest Bank Minnesota, National
Association, as Trustee (the "Trustee"), pursuant to which the Banc One Home
Equity Loan Trust 1999-2, Home Equity Loan Asset Backed Certificates, Series
1999-2, Class R (the "Class R Certificates") were issued. Capitalized terms used
herein but not defined shall have the meanings given them in the Pooling and
Servicing Agreement.
The undersigned acknowledges that the Class R Certificates may not be
transferred except in accordance with the transfer provisions of the Pooling and
Servicing Agreement.
Pursuant to Section 6.02 of the Pooling and Servicing Agreement, the
undersigned hereby represents and warrants:
[ ] that it is not an employee benefit plan or arrangement subject to
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, or a plan subject to Section 4975 of the Code, nor a person
acting on behalf of any such plan or arrangement nor using the assets
of any such plan or arrangement to effect the transfer of the Class R
Certificates.
[ ] that it is an employee benefit plan subject to ERISA, or a plan or
arrangement subject to Section 4975 of the Code, or a trustee of any
such plan or any other person acting on behalf of any such plan or
arrangement or using such plan's or arrangement's assets; however, the
undersigned has provided an Opinion of Counsel satisfactory to the
Trustee to the effect that the purchase or holding of the Class R
Certificates by the undersigned will not result in the assets of the
Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the
Trustee to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to
those undertaken in the Pooling and Servicing Agreement.
_____________________________________________
By: _________________________________________
Name:
Title:
<PAGE>
EXHIBIT F
LETTER OF REPRESENTATIONS
<PAGE>
EXHIBIT G
FORM OF REQUEST FOR RELEASE
[DATE]
Norwest Bank Minnesota, National Association
1015 10th Ave. S.E.
Minneapolis, Minnesota 55414-0031
Atten: Inventory Control
Re: Banc One Financial Services Home Equity Loan Trust 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2
---------------------------------------------------------
Ladies and Gentlemen:
In connection with the administration of the Home Equity Loans held by
you as Trustee under the Pooling and Servicing Agreement dated as of June 1,
1999, among Morgan Stanley Capital I Inc., as depositor (the "Depositor"), Banc
One Financial Services, Inc., as seller (the "Seller"), Bank One, Indiana,
National Association, as master servicer (the "Master Servicer"), and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee") (the
"Agreement"), we hereby request a release of the Mortgage File held by you as
Trustee with respect to the following described Home Equity Loan for the reason
indicated below.
Loan No.: _____
- -------
Mortgagor Name _____
Address & Zip Code.: _____
- ------------------ _____
Reason for requesting file:
_____ 1. Home Equity Loan paid in full. (The Master Servicer hereby
certifies that all amounts received in connection with the
payment in full of the Home Equity Loan which are required to
be deposited in the Collection Account pursuant to Section
3.02 of the Agreement have been so deposited).
_____ 2. The Home Equity Loan is being foreclosed.
_____ 3. Retransfer of Home Equity Loan. (The Master Servicer
hereby certifies that the Substitution Adjustment has been
deposited in the Collection Account pursuant to the
Agreement).
_____ 4. The Home Equity Loan is being re-financed by another
depository institution. (The Master Servicer hereby certifies
that all amounts received in connection with the payment in
full of the Home Equity Loan which are required to be
deposited in the Collection Account pursuant to Section 3.02
of the Agreement have been so deposited).
_____ 5. Other (Describe).
Address to which Trustee
Should Deliver the Trustee's
Mortgage File: _____________________________________________
_____________________________________________
_____________________________________________
By:__________________________________________
(authorized signer)
Issuer:______________________________________
Address:_____________________________________
_____________________________________
Date:________________________________________
Trustee
- -------
Norwest Bank Minnesota, N.A.
Please acknowledge the execution of the above request by your signature and date
below:
_____________________________________ ______________________
Signature Date
Documents returned to Trustee:
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
promptly be returned to the Trustee when the need therefor by the Master
Servicer no longer exists unless the Home Equity Loan has been liquidated.
Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.
BANK ONE, INDIANA, NATIONAL ASSOCIATION,
as Master Servicer
By: _________________________________________
Name:
Servicing Officer
<PAGE>
EXHIBIT H
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Morgan Stanley Capital I Inc.
1585 Broadway, 37th Floor
New York, New York 10036
Norwest Bank Minnesota, National Association
Sixth and Marquette Street
Minneapolis, Minnesota 55479
Re: Banc One Financial Services Home Equity Loan Trust 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2, Class R
------------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned Certificates,
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are acquiring the Certificates for investment
for our own account and not with a view to any distribution of such Certificates
(but without prejudice to our right at all times to sell or otherwise dispose of
the Certificates in accordance with clause (g) below), (f) we have not offered
or sold any Certificates to, or solicited offers to buy any Certificates from,
any person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this Certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such Certificate has executed
and delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By: _________________________________________
Authorized Officer
<PAGE>
FORM OF RULE 144A LETTER
[DATE]
Morgan Stanley Capital I Inc.
1585 Broadway, 37th Floor
New York, New York 10036
Norwest Bank Minnesota, National Association
Sixth and Marquette Street
Minneapolis, Minnesota 55479
Re: Banc One Financial Services Home Equity Loan Trust 1999-2
Home Equity Loan Asset-Backed Certificates, Series 1999-2, Class R
------------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we certify
that (a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, (e) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Securities Act.
<PAGE>
ANNEX 1 TO EXHIBIT H
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
i. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
ii. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $ 1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
----------------
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
----
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
----------------
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
_________________________
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own
and/or invest on a discretionary basis at least $10,000,000 in securities.
___ Broker-dealer. The Buyer is a dealer registered pursuant
-------------
to Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
-----------------
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
-------------------
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within
----------
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
------------------
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small
---------------------------------
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
----------------------------
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
iii. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
iv. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
v. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
vi. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
_____________________________________________
Print Name of Buyer
By: _________________________________________
Name:
Title:
Date: _______________________________________
<PAGE>
ANNEX 2 TO EXHIBIT H
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $_____ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $_____ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and under-stands that
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
_____________________________________________
Print Name of Buyer or Adviser
By: _________________________________________
Name:
Title:
IF AN ADVISER:
_____________________________________________
Print Name of Buyer
Date: _______________________________________
<PAGE>
EXHIBIT I
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES PURSUANT TO SECTION
6.02(d) OF THE AGREEMENT AND PURSUANT TO SECTION 860E(e)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
Banc One Financial Services Home Equity Loan Trust 1999-2
Home Equity Loan Asset-Backed Certificates,
Series 1999-2
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of ____________________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the "Certificate")
issued pursuant to the Pooling Agreement, (the "Agreement"), relating to the
above-referenced Series, among Morgan Stanley Capital I Inc., as Depositor (the
"Depositor"), Banc One Financial Services, Inc., as Seller (the "Seller"), Bank
One, Indiana, National Association, as Master Servicer (the "Master Servicer"),
and Norwest Bank Minnesota, National Association, as Trustee (the "Trustee").
Capitalized terms used, but not defined herein or in Exhibit 1 hereto, shall
have the meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 6.02(d) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 6.02(d) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate (a "Transferor
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is ___________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
* * *
<PAGE>
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ________ day of _______________, ____.
[NAME OF TRANSFEREE]
By: _________________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
___________________________________
[Assistant] Secretary
Personally appeared before me the above-named __________________, known
or proved to me to be the same person who executed the foregoing instrument and
to be the _________________ of the Transferee, and acknowledged that he executed
the same as his free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this ______ day of ______________, ____.
_____________________________________________
NOTARY PUBLIC
My Commission expires the ______ day of
________________, _____.
<PAGE>
EXHIBIT 1 to EXHIBIT I
Certain Definitions
-------------------
"Ownership Interest": As to any Certificate or security interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial as owner or pledge.
"Permitted Transferee": Any Person other than (i) the United States,
any State or political subdivision thereof or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by Code Section 511 on unrelated business taxable income) on any excess
inclusions (as defined in Code Section 860E(c)(1)) with respect to any Class R
Certificate, (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(c), (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership, or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
or an estate whose income from sources without the United States is includible
in gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States, and
(vi) any other Person so designated by the Trustee based upon an Opinion of
Counsel that the transfer to such Person may cause the Trust to fail to qualify
as a REMIC at any time that certain Certificates are Outstanding. The terms
"United States," "State" and "international organization" shall have the
meanings set forth in Code Section 7701 or successor provisions. A corporation
will not be treated as an instrumentality of the United States or of any State
or political subdivision thereof if all of its activities are subject to tax,
and, with the exception of Freddie Mac, a majority of its board of directors is
not selected by such governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
bank, joint-stock company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
<PAGE>
EXHIBIT 2 to EXHIBIT I
Section 6.02(d) of the Agreement
--------------------------------
(d) Except with respect to the initial transfer of the Class R
Certificates by the Depositor to or upon the order of the Seller, no transfer,
sale, pledge or other disposition of any Class R Certificate shall be made
unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable state
securities laws or is made in accordance with the 1933 Act and laws. In the
event of any such transfer, other than the transfer of the Tax Matters Person
Residual Interest to the Trustee (i) unless such transfer is made in reliance
upon Rule 144A (as evidenced by the investment letter delivered to the Trustee,
in substantially the form attached hereto as Exhibit H) under the 1933 Act, the
Trustee and the Depositor shall require a written Opinion of Counsel (which may
be in-house counsel) acceptable to and in form reasonably satisfactory to the
Trustee and the Depositor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall not be an expense of the Trustee or the Depositor or (ii) the Trustee
shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit E) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit H) acceptable to and in form reasonably satisfactory to the Depositor
and the Trustee certifying to the Depositor and the Trustee the facts
surrounding such transfer, which investment letter shall not be an expense of
the Trustee or the Depositor. The Holder of a Class R Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee and
the Depositor 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.
No transfer of a Class R Certificate or of any Class A Certificate in a
Class of Class A Certificates with respect to which a Widely-Held Certification
was not delivered on the Closing Date (each, an "ERISA-Restricted Certificate")
shall be made unless the Trustee shall have received either (i) a representation
from the transferee of such Certificate, acceptable to and in form satisfactory
to the Trustee and the Depositor, (such requirement is satisfied by the
Trustee's receipt of a representation letter from the transferee substantially
in the form of Exhibit E hereto, as appropriate), to the effect that such
transferee is not an employee benefit plan or arrangement subject to Section 406
of ERISA or a plan subject to Section 4975 of the Code, nor a person acting on
behalf of any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such transfer or (ii) in the case of any such
ERISA-Restricted Certificate presented for registration in the name of an
employee benefit plan subject to ERISA or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets, an
Opinion of Counsel in form satisfactory to the Trustee which Opinion of Counsel
shall not be an expense of either the Trustee or the Trust, addressed to the
Trustee, to the effect that the purchase or holding of such ERISA-Restricted
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
expressly undertaken in this Agreement or to any liability. For purposes of
clause (i) of the preceding sentence, such representation shall be deemed to
have been made to the Trustee by the transferee's acceptance of an
ERISA-Restricted Certificate (or the acceptance by a Certificate Owner of the
beneficial interest in any such Class of ERISA-Restricted Certificates) unless
the Trustee shall have received from the transferee an alternative
representation acceptable in form and substance to the Depositor.
Notwithstanding anything else to the contrary herein, any purported transfer of
an ERISA-Restricted Certificate to or on behalf of an employee benefit plan
subject to Section 406 of ERISA or a plan subject to Section 4975 of the Code
without the delivery to the Trustee of an Opinion of Counsel in form
satisfactory to the Trustee as described above shall be void and of no effect;
provided, however, that the restriction set forth in this sentence shall not be
applicable if there has been delivered to the Trustee an Opinion of Counsel in
form satisfactory to the Trustee to the effect that the purchase or holding of
an ERISA-Restricted Certificate will not result in the assets of the Trust Fund
being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee to any
obligation in addition to those expressly undertaken in this Agreement. The
Trustee shall be under no liability to any Person for any registration of
transfer of any ERISA-Restricted Certificate that is in fact not permitted by
this Section 6.02(d) or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was registered by the
Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of any ERISA-Restricted
Certificate that was in fact an employee benefit plan subject to Section 406 of
ERISA or a plan subject to Section 4975 of the Code or a Person acting on behalf
of any such plan at the time it became a Holder or, at such subsequent time as
it became such a plan or Person acting on behalf of such a plan, all payments
made on such ERISA-Restricted Certificate at and after either such time. Any
such payments so recovered by the Trustee shall be paid and delivered by the
Trustee to the last preceding Holder of such Certificate that is not such a plan
or Person acting on behalf of a plan.
Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Class R Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status as a Permitted
Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a pro rata undivided interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form satisfactory to
it, of each of the following:
A. an affidavit in the form of Exhibit I hereto from
the proposed transferee to the effect that such transferee is
a Permitted Transferee and that it is not acquiring its
Ownership Interest in the Class R Certificate that is the
subject of the proposed transfer as a nominee, trustee or
agent for any Person who is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect
that the proposed transferee agrees to be bound by and to
abide by the transfer restrictions applicable to the Class R
Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest in a
Class R Certificate in violation of the provisions of this Section shall be
absolutely null and void and shall vest no rights in the purported transferee.
If any purported transferee shall, in violation of the provisions of this
Section, become a Holder of a Class R Certificate, then the prior Holder of such
Class R Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Class R Certificate was not in fact
permitted by this Section, be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Class R Certificate.
The Trustee shall be under no liability to any Person for any registration of
transfer of a Class R Certificate that is in fact not permitted by this Section
or for making any distributions due on such Class R Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Trustee received the documents
specified in clause (iii). The Trustee shall be entitled to recover from any
Holder of a Class R Certificate that was in fact not a Permitted Transferee at
the time such distributions were made all distributions made on such Class R
Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such Class R
Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the restrictions in
this Section, then the Trustee shall have the right but not the obligation,
without notice to the Holder of such Class R Certificate or any other Person
having an Ownership Interest therein, to notify the Depositor to arrange for the
sale of such Class R Certificate. The proceeds of such sale, net of commissions
(which may include commissions payable to the Depositor or its affiliates in
connection with such sale), expenses and taxes due, if any, will be remitted by
the Trustee to the previous Holder of such Class R Certificate that is a
Permitted Transferee, except that in the event that the Trustee determines that
the Holder of such Class R Certificate may be liable for any amount due under
this Section or any other provisions of this Agreement, the Trustee may withhold
a corresponding amount from such remittance as security for such claim. The
terms and conditions of any sale under this clause (v) shall be determined in
the sole discretion of the Trustee and it shall not be liable to any Person
having an Ownership Interest in a Class R Certificate as a result of its
exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the restrictions in
this Section, then the Trustee will provide to the Internal Revenue Service, and
to the persons specified in Sections 860E(e)(3) and (6) of the Code, information
needed to compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations.
The foregoing provisions of this Section shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
transfer set forth in this Section will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause the Trust to fail to qualify as a REMIC.
The Trustee shall be the initial holder of the Tax Matter Person Residual
Interest.
<PAGE>
EXHIBIT J
LIST OF SERVICING OFFICERS
<PAGE>
EXHIBIT K
FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
June 17, 1999
Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, IN 46250
Re: Banc One Financial Services Home Equity Loan Trust 1999-2,
Home Equity Loan Asset Backed Certificates, Series 1999-2
----------------------------------------------------------
Ladies and Gentlemen:
Pursuant to and in reference to Section 9.14 of the Pooling and
Servicing Agreement dated as of June 1, 1999 relating to the above referenced
Certificates, please note the following:
(a) CIK Number for Banc One Financial Services Home Equity Loan Trust
1999-2 (the "Trust"): [_________].
(b) CCC Number for the Trust: [_________].
In order to comply with the reporting obligations for the Trust under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the
Master Servicer must file within 15 days following each Distribution Date a copy
of the report distributed by the Master Servicer to the Certificateholders in a
current report on Form 8-K. Such reports provide all current information
ordinarily of interest to the Certificateholders. The Master Servicer must also
report on a current report on Form 8-K any significant occurrences during the
reporting period that would be reportable under Item 1, Item 2, Item 4 and Item
5. In addition, the Master Servicer should cause the filing of an annual report
on Form 10-K within 90 days following the end of the Trust's fiscal year
containing the following information:
Part I, Item 3. A description of any material pending litigation;
Part I, Item 4. A description of any submission matters to vote of
Certificateholders;
Part II, Item 5. A statement of the number of Certificateholders and
the principal market, if any, in which the
Certificates trade;
Part II, Item 9. A statement as to any changes in or disagreements
with the independent public accounts for the Trust;
Part IV, Item 14. A copy of the annual certificate of compliance by
an officer of the Master Servicer, and any
Subservicer and the audit of the servicing by the
independent accounting firm.
No later than January 30 following the end of the fiscal year of the
Trust during which there were 300 or fewer Certificate Owners, the Master
Servicer should file a Form 15 in accordance with Section 9.14 of the Pooling
and Servicing Agreement, deregistering the Trust and terminating the reporting
obligations under the Exchange Act. All filings must be made through the EDGAR
System and all acceptance slips from the filings should be saved as they will be
needed for the annual certificate.
<PAGE>
MORGAN STANLEY CAPITAL I INC.
By: _________________________________________
Name:
Title:
<PAGE>
EXHIBIT M-1
FORM OF TRUSTEE'S INITIAL CERTIFICATION AS TO MORTGAGE NOTES
June 17, 1999
Morgan Stanley Capital I Inc.
1585 Broadway, 37th Floor
New York, New York 10036
Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, Indiana 46250
Bank One, Indiana, National Association
111 Monument Circle
Indianapolis, Indiana 46277
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Banc One Financial Services Home Equity Loan Trust 1999-2,
Home Equity Loan Asset Backed Certificates, Series 1999-2
----------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.01 of the Pooling and Servicing Agreement dated
as of June 1, 1999 (the "Pooling Agreement"), among Morgan Stanley Capital I
Inc., as Depositor, Bank One, Indiana, National Association, as Master Servicer,
Banc One Financial Services, Inc., as Seller, and Norwest Bank Minnesota,
National Association, as Trustee, we certify that, as to each Home Equity Loan
listed in the Home Equity Loan Schedule (other than any Home Equity Loan paid in
full or any Home Equity Loan specifically identified in the exception report
annexed hereto as Annex I), (i) the original Mortgage Note (or a Lost Note
Affidavit with a copy of the related Mortgage Note) included in each Mortgage
File required to be delivered to us pursuant to the Pooling Agreement is in our
possession and (ii) such Mortgage Note has been reviewed by us and appears
regular on its face and relates to such Home Equity Loan.
Attached is the Trustee's exceptions in accordance with Section 2.02 of
the Pooling Agreement. Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Pooling Agreement.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability due authorization,
recordability or genuineness of any of the documents contained in the Mortgage
File of any of the Home Equity Loans identified on the Home Equity Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Home Equity Loan.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: _________________________________________
Name:
Title:
<PAGE>
ANNEX I TO EXHIBIT M-1
TRUSTEE'S EXCEPTIONS
<PAGE>
EXHIBIT M-2
FORM OF TRUSTEE'S INITIAL CERTIFICATION
[DATE]
Morgan Stanley Capital I Inc.
1585 Broadway, 37th Floor
New York, New York 10036
Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, Indiana 46250
Bank One, Indiana, National Association
111 Monument Circle
Indianapolis, Indiana 46277
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Banc One Financial Services Home Equity Loan Trust 1999-2,
Home Equity Loan Asset Backed Certificates, Series 1999-2
----------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 2.01 of the Pooling and
Servicing Agreement, dated as of June 1, 1999 (the "Pooling Agreement"), among
Morgan Stanley Capital I Inc., as depositor (the "Depositor"), Banc One
Financial Services, Inc., as seller (the "Seller"), Bank One, Indiana, National
Association, as master servicer (the "Master Servicer"), and Norwest Bank
Minnesota, National Association, as trustee, the undersigned, as Trustee, hereby
certifies that:
[we have reviewed each Mortgage and Assignment of Mortgage delivered to us, and
with respect to each Home Equity Loan listed on the Home Equity Loan Schedule
(other than any Home Equity Loan paid in full or any Home Equity Loan
specifically identified in Annex I hereto):]
[in connection with the occurrence of an Assignment Event, we have reviewed the
Mortgage Files, and with respect to each Home Equity Loan listed on the Home
Equity Loan Schedule (other than any Home Equity Loan paid in full or any Home
Equity Loan specifically identified in Annex I hereto):]
1. all documents constituting part of such Mortgage File required
to be delivered to it pursuant to Section 2.01 of the Pooling Agreement are
in our possession;
2. such documents have been reviewed by us, appear to be what they
purport to be and relate to such Home Equity Loan; and
3. based on our examination and only as to the foregoing, the
information set forth in the Home Equity Loan Schedule which corresponds to
items (ii), (iii), (iv), (v), (vi), (vii) and (viii) of the definition of
"Home Equity Loan Schedule" in the Pooling Agreement accurately reflects
information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability due authorization,
recordability or genuineness of any of the documents contained in the Mortgage
File of any of the Home Equity Loans identified on the Home Equity Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Home Equity Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling Agreement.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: _________________________________________
Name:
Title:
<PAGE>
ANNEX I TO EXHIBIT M-2
TRUSTEE'S EXCEPTIONS
<PAGE>
EXHIBIT M-3
FORM OF TRUSTEE'S FINAL CERTIFICATION AS TO MORTGAGE FILE
[DATE]
Morgan Stanley Capital I Inc.
1585 Broadway, 37th Floor
New York, New York 10036
Banc One Financial Services, Inc.
8604 Allisonville Road
Indianapolis, Indiana 46250
Bank One, Indiana, National Association
111 Monument Circle
Indianapolis, Indiana 46277
Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Re: Banc One Financial Services Home Equity Loan Trust 1999-2,
Home Equity Loan Asset Backed Certificates, Series 1999-2
----------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 2.01 of the Pooling and
Servicing Agreement, dated as of June 1, 1999 (the "Pooling Agreement"), among
Morgan Stanley Capital I Inc., as depositor (the "Depositor"), Banc One
Financial Services, Inc., as seller (the "Seller"), Bank One, Indiana, National
Association, as master servicer (the "Master Servicer"), and Norwest Bank
Minnesota, National Association, as trustee, the undersigned, as Trustee, hereby
certifies that it has reviewed each Mortgage File delivered to it and that with
respect to each Home Equity Loan listed on the Home Equity Loan Schedule (other
than any Home Equity Loan paid in full or any Home Equity Loan specifically
identified in Annex I hereto), and as to any document noted in an exception
included in the Trustee's initial certification:
1. all documents constituting part of such Mortgage File required to be
delivered to it pursuant to Section 2.01 of the Pooling Agreement are in its
possession;
2. such documents have been reviewed by us, appear to be what they purport
to be and relate to such Home Equity Loan; and
3. based on our examination and only as to the foregoing, the information
set forth in the Home Equity Loan Schedule which corresponds to items (ii),
(iii), (iv), (v), (vi), (vii) and (viii) of the definition of "Home Equity Loan
Schedule" in the Pooling Agreement accurately reflects information set forth in
the Mortgage File.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the
above-referenced Pooling Agreement. The Trustee makes no representations as to:
(i) the validity, legality, sufficiency, enforceability due authorization,
recordability or genuineness of any of the documents contained in the Mortgage
File of any of the Home Equity Loans identified on the Home Equity Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Home Equity Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling Agreement.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By: _________________________________________
Name:
Title:
<PAGE>
ANNEX I TO EXHIBIT M-3
TRUSTEE'S EXCEPTIONS
