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) JULY 21, 1999
Asset Backed Securities Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
333-64351 13-3354848
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(Commission File Number) (I.R.S. Employer Identification No.)
11 Madison Avenue, New York, New York 10010
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(Address of Principal Executive Offices) (Zip Code)
(212) 325-1811
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to Asset Backed Securities Corporation's (the "Depositor")
Registration Statement on Form S-3, Registration Number 333-64351, the Depositor
caused the issuance of $929,115,465 principal amount of Home Equity Loan
Pass-Through Certificates, Series 1999-LB1 (the "Certificates"), on July 21,
1999 (the "Closing Date"). This Current Report on Form 8-K is being filed to
file copies of the Pooling and Servicing Agreement and the Mortgage Loan
Purchase Agreement.
The Certificates were issued pursuant to a pooling and servicing
agreement (the "Pooling and Servicing Agreement"), dated as of June 1, 1999 (the
"Cut-Off Date"), among the Depositor, Long Beach Mortgage Company, as servicer
and The Chase Manhattan Bank, as trustee (the "Trustee").
Capitalized terms not defined herein have the meanings assigned in the
Pooling and Servicing Agreement attached hereto as Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
EXHIBIT NO. Document Description
99.1 Pooling and Servicing Agreement
99.2 Mortgage Loan Purchase Agreement
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASSET BACKED SECURITIES CORPORATION
(Registrant)
Dated: August 4, 1999 By: /S/ FIACHRA O'DRISCOLL
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Name: Fiachra O'Driscoll
Title: Authorized Officer
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INDEX TO EXHIBITS
EXHIBIT NO. Document Description
99.1 Pooling and Servicing Agreement
99.2 Mortgage Loan Purchase Agreement
<PAGE>
Exhibit 99.1
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Relating to
ASSET BACKED SECURITIES CORPORATION EQUITY LOAN TRUST 1999-LB1
Among
ASSET BACKED SECURITIES CORPORATION,
as Depositor,
LONG BEACH MORTGAGE COMPANY,
as Servicer
and
THE CHASE MANHATTAN BANK,
as Trustee
Dated as of June 1, 1999
<PAGE>
Table of Contents
PAGE
ARTICLE I RULES OF CONSTRUCTION
Section 1.01 Definitions.................................................2
Section 1.02 Use of Words and Phrases...................................37
Section 1.03 Captions; Table of Contents................................37
Section 1.04 Opinions...................................................37
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.................................38
Section 2.02 Office.....................................................38
Section 2.03 Purposes and Powers........................................38
Section 2.04 Appointment of the Trustee; Declaration of Trust...........38
Section 2.05 Expenses of the Trust......................................39
Section 2.06 Ownership of the Trust.....................................39
Section 2.07 Situs of the Trust.........................................39
Section 2.08 Designation of Interests in REMICs.........................39
Section 2.09 Miscellaneous REMIC Provisions.............................45
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
DEPOSITOR AND THE SERVICER; COVENANT OF DEPOSITOR TO CONVEY
HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor............45
Section 3.02 Representations and Warranties of the Servicer.............47
Section 3.03 Covenants of the Depositor.................................49
Section 3.04 Repurchase or Substitution of Home Equity Loans............49
Section 3.05 Sale treatment of the Initial Home Equity Loans and Qualified
Substitute Home Equity Loans...............................51
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity
Loans; Certification by Trustee............................54
Section 3.07 Conveyance of the Subsequent Home Equity Loans.............55
Section 3.08 Reserved...................................................58
Section 3.09 Cooperation Procedures.....................................58
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates...................................58
Section 4.02 Sale of Certificates.......................................58
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms......................................................59
Section 5.02 Forms......................................................59
Section 5.03 Execution, Authentication and Delivery.....................59
Section 5.04 Registration and Transfer of Certificates..................60
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates..........61
Section 5.06 Persons Deemed Owners......................................62
Section 5.07 Cancellation...............................................62
Section 5.08 Limitation on Transfer of Ownership Rights.................62
Section 5.09 Assignment of Rights.......................................64
ARTICLE VI COVENANTS
Section 6.01Distributions.................................................64
Section 6.02Money for Distributions to be Held in Trust; Withholding......64
Section 6.03Protection of Trust Estate....................................65
Section 6.04Performance of Obligations....................................66
Section 6.05Negative Covenants............................................66
Section 6.06No Other Powers...............................................66
Section 6.07Limitation of Suits...........................................66
Section 6.08Unconditional Rights of Owners to Receive Distributions.......67
Section 6.09Rights and Remedies Cumulative................................67
Section 6.10Delay or Omission Not Waiver..................................68
Section 6.11Control by Owners.............................................68
Section 6.12Reserved......................................................68
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money........................................68
Section 7.02 Establishment of Accounts..................................69
Section 7.03 Flow of Funds..............................................69
Section 7.04 Pre-Funding Account and Capitalized Interest Account.......74
Section 7.05 Investment of Accounts.....................................75
Section 7.06 Payment of Trust Expenses..................................75
Section 7.07 Eligible Investments.......................................76
Section 7.08 Accounting and Directions by Trustee.......................77
Section 7.09 Reports by Trustee to Owners and Certificate Insurer.......77
Section 7.10 Reports by Trustee.........................................80
Section 7.11 Allocation of Losses.......................................80
Section 7.12 LIBOR Carryover Fund.......................................80
Section 7.13 Cap Reserve Fund...........................................81
Section 7.14 Prepaid Home Equity Loan Account...........................82
ARTICLE VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.................................83
Section 8.02 Collection of Certain Home Equity Loan Payments............84
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-
Servicers..................................................84
Section 8.04 Successor Sub-Servicers....................................85
Section 8.05 Liability of Servicer; Indemnification.....................85
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or
the Owners.................................................86
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by
Trustee....................................................86
Section 8.08 Principal and Interest Account87
Section 8.09 Delinquency Advances and Servicing Advances88
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.....89
Section 8.11 Maintenance of Insurance...................................90
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.................................................91
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout of
Home Equity Loans..........................................92
Section 8.14 Trustee to Cooperate; Release of Files.....................93
Section 8.15 Servicing Compensation.....................................94
Section 8.16 Annual Statement as to Compliance..........................94
Section 8.17 Annual Independent Certified Public Accountants' Reports...94
Section 8.18 Access to Certain Documentation and Information Regarding
the Home Equity Loans......................................95
Section 8.19 Assignment of Agreement....................................95
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation of
Servicer...................................................95
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
Insurance.................................................100
Section 8.22 Voting Rights.............................................100
Section 8.23 The Group II Home Equity Loans............................101
Section 8.24 Merger, Conversion, Consolidation or Succession to Business
of Servicer...............................................101
Section 8.25 Notices of Material Events................................101
Section 8.26 Reserved..................................................102
Section 8.27 Purchase of Receivables upon Breach.......................102
ARTICLE IX TERMINATION OF TRUST
Section 9.01 Termination of Trust......................................102
Section 9.02 Termination Upon Option of the Holder of the Class X-F
Certificate...............................................102
Section 9.03 Termination Upon Loss of REMIC Status.....................103
Section 9.04 Disposition of Proceeds...................................104
Section 9.05 Netting of Amounts........................................105
ARTICLE X THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.......................105
Section 10.02 Removal of Trustee for Cause..............................107
Section 10.03 Certain Rights of the Trustee.............................108
Section 10.04 Not Responsible for Recitals or Issuance of Certificates..109
Section 10.05 May Hold Certificates.....................................109
Section 10.06 Money Held in Trust.......................................109
Section 10.07 Compensation and Reimbursement............................109
Section 10.08 Corporate Trustee Required; Eligibility...................110
Section 10.09 Resignation and Removal; Appointment of Successor.........110
Section 10.10 Acceptance of Appointment by Successor Trustee............111
Section 10.11 Merger, Conversion, Consolidation or Succession to Business
of the Trust..............................................112
Section 10.12 Reporting; Withholding....................................112
Section 10.13 Liability of the Trustee..................................112
Section 10.14 Appointment of Co-Trustee or Separate Trustee.............113
Section 10.15 Appointment of Custodians.................................114
Section 10.16 Maintenance of Trust......................................114
ARTICLE XI MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions......................114
Section 11.02 Form of Documents Delivered to the Trustee................115
Section 11.03 Acts of Owners............................................115
Section 11.04 Notices, etc. to Trustee..................................116
Section 11.05 Notices and Reports to Owners; Waiver of Notices..........116
Section 11.06 Rules by Trustee..........................................116
Section 11.07 Successors and Assigns....................................117
Section 11.08 Severability..............................................117
Section 11.09 Benefits of Agreement.....................................117
Section 11.10 Legal Holidays............................................117
Section 11.11 Governing Law; Submission to Jurisdiction.................117
Section 11.12 Counterparts..............................................118
Section 11.13 Usury.....................................................118
Section 11.14 Amendment.................................................118
Section 11.15 Paying Agent; Appointment and Acceptance of Duties........119
Section 11.16 REMIC Status..............................................119
Section 11.17 Additional Limitation on Action and Imposition of Tax.....121
Section 11.18 Appointment of Tax Matters Person.........................121
Section 11.19 The Certificate Insurer...................................121
Section 11.20 Reserved..................................................121
Section 11.21 Third Party Rights........................................121
Section 11.22 Notices...................................................122
Section 11.23 Rule 144A Information.....................................123
Section 11.24. No Petition...............................................123
ARTICLE XII CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01 Trust Estate and Accounts Held for Benefit of the Certificate
Insurer...................................................123
Section 12.02 Claims Upon the Policy; Policy Payments Account...........124
Section 12.03 Effect of Payments by the Certificate
Insurer; Subrogation......................................125
Section 12.04 Notices to the Certificate Insurer........................125
Section 12.05 Deficiency Claim Amounts..................................125
Section 12.06 Rights to the Certificate Insurer To Exercise
Rights of Owners..........................................126
Section 12.07 Trustee to Hold the Certificate Insurance Policies........126
Section 12.08 Trustee To Act Solely with Consent of the
Certificate Insurer.......................................126
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SCHEDULE I-A SCHEDULE OF THE GROUP Ia HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF THE GROUP Ib HOME EQUITY LOANS
SCHEDULE I-C SCHEDULE OF THE GROUP IIa HOME EQUITY LOANS
SCHEDULE I-D SCHEDULE OF THE GROUP IIb HOME EQUITY LOANS
EXHIBIT A-1 FORM OF CLASS A-1F CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2F CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3A CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4A CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5A CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-IO CERTIFICATE
EXHIBIT B-1 FORM OF CLASS B-1 CERTIFICATE
EXHIBIT B-2 FORM OF CLASS B-IOA CERTIFICATE
EXHIBIT B-3 FORM OF CLASS B-IOF CERTIFICATE
EXHIBIT C-1 FORM OF CLASS X-A CERTIFICATE
EXHIBIT C-2 FORM OF CLASS X-F CERTIFICATE
EXHIBIT C-3 FORM OF CLASS P-A CERTIFICATE
EXHIBIT C-4 FORM OF CLASS P-F CERTIFICATE
EXHIBIT C-5 FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT E FORM OF CERTIFICATE RE: HOME EQUITY LOANS PREPAID
IN FULL AFTER CUT-OFF DATE
EXHIBIT F FORM OF CUSTODIAN'S RECEIPT
EXHIBIT G FORM OF POOL CERTIFICATION
EXHIBIT H FORM OF DELIVERY ORDER
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J-1 FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
EXHIBIT J-2 FORM OF CERTIFICATE OF TRANSFER (RULE 144A)
EXHIBIT K HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
EXHIBIT L DEFINITION OF GROUP I SPECIFIED SUBORDINATED AMOUNT
EXHIBIT M DEFINITION OF GROUP II SPECIFIED SUBORDINATED AMOUNT
EXHIBIT N RESERVED
EXHIBIT O FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER
THE SECURITIES EXCHANGE ACT OF 1934
EXHIBIT P FORM FOR RELEASE OF DOCUMENTS
EXHIBIT Q FORM OF LIQUIDATION REPORT
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to ASSET BACKED SECURITIES
CORPORATION HOME EQUITY LOAN TRUST 1999-LB1, dated as of June 1, 1999 by and
among ASSET BACKED SECURITIES CORPORATION, a Delaware corporation, in its
capacity as Depositor (the "Depositor"), LONG BEACH MORTGAGE COMPANY, a Delaware
corporation in its capacity as Servicer (in such capacity, the "Servicer") and
THE CHASE MANHATTAN BANK, in its capacity as the trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and two subtrusts
and provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Trustee, valid instruments and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done;
WHEREAS, The Chase Manhattan Bank, is willing to serve in the capacity
of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Servicer, and the Trustee hereby
agree as follows:
CONVEYANCE
The Depositor hereby bargains, sells, conveys, assigns and transfers
to the Trustee, in trust, without recourse and for the exclusive benefit of the
Owners of the Certificates and the Certificate Insurer, all of the right, title
and interest in and to any and all benefits accruing from (a) the Home Equity
Loans (other than any principal payments due on or prior to the Cut-Off Date and
interest payments due on or prior to July 1, 1999) listed in Schedules I-A, I-B,
I-C and I-D to this Agreement which the Depositor is causing to be delivered to
the Trustee herewith and the Subsequent Home Equity Loans (other than any
principal and interest payments due thereon prior to the related Subsequent
Cut-Off Date) listed in Schedule I-A, I-B, I-C and I-D to any Subsequent
Transfer Agreement, which the Depositor will cause to be delivered to the
Trustee (and all substitutions for such Home Equity Loans as provided by
Sections 3.03, 3.04 and 3.06), together with the related Home Equity Loan
documents and the Depositor's interest in any Mortgaged Property, and all
payments thereon and proceeds of the conversion, voluntary or involuntary, of
the foregoing; (b) such amounts as may be held by the Trustee in the Certificate
Account, the Pre-Funding Account, the Prepaid Home Equity Loan Account, the
Capitalized Interest Account, the LIBOR Carryover Funds and the Cap Reserve
Fund, together with investment earnings on such amounts and such amounts as may
be held in the name of the Trustee in the Principal and Interest Account, if
any, inclusive of investment earnings thereon, whether in the form of cash,
instruments, securities or other properties (including any Eligible Investments
held by the Servicer) (c) the Depositor's rights (except with respect to Section
17 of the Mortgage Loan Purchase Agreement), but none of its obligations under
the Mortgage Loan Purchase Agreement; (d) the Cap Agreement and (e) proceeds of
all the foregoing (including, but not by way of limitation, all proceeds of any
mortgage insurance, flood insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing) to pay the Certificates as specified herein ((a)-(e) above
shall be collectively referred to herein as the "Trust Estate"). In addition to
the foregoing, the Depositor shall cause the Certificate Insurer to deliver two
Certificate Insurance Policies to the Trustee for the benefit of the Owners of
the Class A and Class A-IO Certificates.
The Trustee acknowledges such sale, accepts the trusts hereunder in
accordance with the provisions hereof and the Trustee agrees to perform the
duties herein to the best of its ability to the end that the interests of the
Owners may be adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. DEFINITIONS.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"ACCEPTED SERVICING PRACTICES": The Servicer's normal servicing
practices, which in all material respects will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service for their own
and others' account mortgage loans of the same type as the Home Equity Loans in
the jurisdictions in which the related Mortgaged Properties are located, which
are exercised with prudent and reasonable care and which give due consideration
to the Certificateholders' and the Certificate Insurer's reliance on the
Servicer.
"ACCOUNT": Any account established in accordance with Section 7.02,
8.08 or 12.02 hereof.
"ADDITION NOTICE": With respect to the transfer of Subsequent Home
Equity Loans to the Trust pursuant to Section 3.07 hereof, written notice given
not less than five Business Days prior to the related Subsequent Transfer Date
of the Depositor's designation of Subsequent Home Equity Loans to be sold to the
Trust and the aggregate Loan Balance of such Subsequent Home Equity Loans as of
the related Subsequent Cut-Off Date.
"ADJUSTED COUPON RATE": With respect to any Home Equity Loan means a
rate per annum equal to the Coupon Rate of such Home Equity Loan minus the sum
of (i) the per annum rate at which the Servicing Fee accrues, (ii) the per annum
rate at which the Trustee Fee accrues and (iii) the applicable Premium Amount
(expressed as a per annum percentage of the aggregate Loan Balance of the Home
Equity Loans in Group I or Group II, as applicable).
"AFFILIATE": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGGREGATE PRINCIPAL BALANCE": As of any time of determination, the
Certificate Principal Balance as of the Startup Day of all Certificates less the
aggregate of all amounts actually distributed on account of the related
Principal Distribution Amount pursuant to Section 7.03(g) hereof with respect to
principal thereon on all prior Distribution Dates; PROVIDED, HOWEVER, that
solely for purposes of determining the Certificate Insurer's rights, as
subrogee, the Aggregate Principal Balance shall not be reduced by any principal
amount paid to the Owner thereof from Insured Payments.
"AGREEMENT": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
"ANNUAL LOSS PERCENTAGE (ROLLING TWELVE MONTH)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses as of the last day of each
Prepayment Period for the twelve immediately preceding Prepayment Periods and
the denominator of which is the average Loan Balance of the Home Equity Loans as
of the last day of each of the twelve immediately preceding Prepayment Periods.
"APPLIED REALIZED LOSS AMOUNTS": As to each Group and any Distribution
Date, an amount equal to the excess, if any, of (i) the aggregate of the
Certificate Principal Balances of the Class A and Class B Component Certificates
related to such Group, after giving effect to all distributions on such
Distribution Date over (ii) the aggregate Loan Balance of the Home Equity Loans
in such Group as of the last day of the related Due Period. If the Certificate
Principal Balances of the Class B Component Certificates has been reduced to
zero, there shall be no additional Applied Realized Loss Amounts.
"APPRAISED VALUE": The appraised value of any Mortgaged Property based
upon the appraisal made at the time of the origination of the related Home
Equity Loan, or, in the case of a Home Equity Loan which is a purchase money
mortgage, the sales price of the Mortgaged Property at such time of origination,
if such sales price is less than such appraised value.
"ASSIGNMENT OF MORTGAGE": With respect to each Home Equity Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument, in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Trustee for the benefit of the Certificateholders and the
Certificate Insurer.
"AUTHORIZED OFFICER": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon such Person; with respect to the
Depositor and the Servicer, initially including those individuals whose names
appear on the lists of Authorized Officers delivered at the Closing; with
respect to the Trustee, any officer assigned to the Corporate Trust Department
(or any successor thereto), including any Vice President, Assistant Vice
President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement.
"AVAILABLE FUNDS": The Group I Available Funds or the Group II
Available Funds, as the case may be.
"AVAILABLE LIBOR CARRYOVER AMOUNT": Means with respect to any
Distribution Date and a Class of Certificates, the amount on deposit in the
related LIBOR Carryover Fund after giving effect to deposits thereto on such
Distribution Date
"BALLOON LOAN": A Home Equity Loan for which the Loan Balance does not
amortize over the term of the Home Equity Loan.
"BUSINESS DAY": Any day other than a Saturday, Sunday, a day on which
the Certificate Insurer is closed (as notified to the Trustee by the Certificate
Insurer) or a day on which commercial banking institutions in The City of New
York, Orange, California, Houston or Dallas, Texas or the city in which the
Corporate Trust Office is located are authorized or obligated by law or
executive order to be closed.
"CAP AGREEMENT": The interest rate cap agreement consisting of the
ISDA Master Agreement and the Schedule and Confirmation thereto, each dated as
of July 21, 1999 between the Trustee, on behalf of the Trust, and the Cap
Provider, as such agreement may be amended and supplemented in accordance with
its terms and any replacement interest rate cap agreement acceptable to the
Certificate Insurer.
"CAP PROVIDER": Westdeutsche Landesbank Girozentrale, New York Branch
and any successor thereto.
"CAP RESERVE FUND": The Cap Reserve Fund established in accordance
with Section 7.02(a) hereof and maintained by the Trustee. The Cap Reserve Fund
shall be an Eligible Account.
"CAP RESERVE FUND RELEASE DATE": The first Distribution Date occurring
more than one year after the later of (x) April 1, 2001 and (y) the payment in
full of all Reimbursement Amounts owed to the Certificate Insurer and all other
amounts payable to the Certificate Insurer under the Insurance Agreement.
"CAP RESERVE FUND TRANSFER AMOUNT": With respect to any Distribution
Date and each Home Equity Loan Group the lesser of (1) the amount to be on
deposit in the Cap Reserve Fund with respect to such Distribution Date and (2)
as of any Distribution Date, the excess, if any, of (a) the sum of (i) the
related Current Interest for the related Certificates for such Distribution
Date, (ii) the amounts described in clause (b) of the definition of Guaranteed
Principal Amount for the related Class A Certificates for such Distribution
Date, (iii) the amount by which the Certificate Principal Balance of the related
Group I or Group II Certificates, as applicable, after giving effect to all
payments on such Distribution Date except with respect to any Cap Reserve Fund
Transfer Amounts on such Distribution Date exceeds the Loan Balance of the Home
Equity Loans in the related Home Equity Loan Group as of the end of the related
Due Period, (iv) on the Cap Reserve Fund Release Date, an amount equal to the
excess of the Subordinated Amount for each Group over the Specified Subordinated
Amount for the related Group (after giving effect to all distributions on such
Distribution Date other than with respect to this clause (iv)), and (v) on the
Cap Reserve Fund Release Date, an amount equal to Principal Carryover Shortfalls
for the related Class B Component Certificates over (b) the related Total
Available Funds for such Distribution Date (net of the Premium Amount with
respect to the related Class A Certificates and Class A-IO Component
Certificates and the Trustee Fee with respect to the related Home Equity Loan
Group and excluding any transfers to be made from the Cap Reserve Fund for such
Distribution Date).
"CAPITALIZED INTEREST ACCOUNT": The Capitalized Interest Account
established in accordance with Section 7.02(a) hereof and maintained by the
Trustee. The Capitalized Interest Account shall be an Eligible Account.
"CARRY-FORWARD AMOUNT": With respect to any Class of the Class A,
Class A-IO Component, Class B Component, Class B-IOA, and Class B-IOF
Certificates and any Distribution Date, the sum of (x) the amount, if any, by
which (i) the related Current Interest for such Class for the immediately
preceding Distribution Date exceeded (ii) the amount of the actual distribution
with respect to interest made to the Owners of such Class of Certificates on
such immediately preceding Distribution Date pursuant to Section 7.03(b)(iii)
hereof plus (y) interest on such excess for the related Interest Period at the
Pass-Through Rate for the related Class of Certificates.
"CERTIFICATE": Any one of the Class A-1F, Class A-2F, Class A-3A,
Class A-4A, Class A-5A, Class A-IO, Class B-1, Class B-IOF, Class B-IOA, Class
P-F, Class P-A, Class X-F, Class X-A, Class R Certificates, each representing
the interests and the rights described in this Agreement.
"CERTIFICATE ACCOUNT": The segregated certificate account established
in accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "The Chase Manhattan Bank, as Trustee on behalf of the Owners of
the Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1, Home
Equity Loan Pass-Through Certificates." The Certificate Account shall be an
Eligible Account.
"CERTIFICATE INSURANCE POLICIES": The Certificate Guaranty Insurance
Policies (numbers: 29727 and 29728), each dated July 21, 1999, with respect to
the related Class A and Class A-IO Certificates and all endorsements thereto,
issued by the Certificate Insurer for the benefit of the Owners of the related
Class A and Class A-IO Certificates.
"CERTIFICATE INSURER": MBIA Insurance Corporation, a stock insurance
company organized under the laws of the State of New York, and any successor
thereto.
"CERTIFICATE INSURER DEFAULT": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required
under any of the Certificate Insurance Policies in accordance with their terms,
which failure continues unremedied for five Business Days; or
(b) the Certificate Insurer shall have (i) filed a petition
or commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance law or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York
Department of Insurance or any other competent regulatory authority shall have
entered a final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for the Certificate Insurer or for all or
any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent, or receiver of the Certificate
Insurer of all or any material portion of its property.
"CERTIFICATE PRINCIPAL BALANCE": As of the Startup Day as to each of
the following Classes of Certificates and Component Certificates, the
Certificate Principal Balances thereof, as follows:
Class A-lF Certificates - $166,900,000
Class A-2F Certificates - $48,600,000
Class A-3A Certificates - $292,900,000
Class A-4A Certificates - $164,850,000
Class A-5A Certificates - $200,000,000
Class B-1 Certificates - $55,865,465
Class B-1F Component - $13,364,763
Certificates
Class B-1A Component - $42,500,702
Certificates
Class P-F Certificates $100
Class P-A Certificates $100
As of any day after the Startup Day, the Class A-1F Certificate
Principal Balance, the Class A-2F Certificate Principal Balance, the Class A-3A
Certificate Principal Balance, the Class A-4A Certificate Principal Balance, the
Class A-5A Certificate Principal Balance, the Class B-1 Certificate Principal
Balance, the Class B-1F Component Certificate Principal Balance, the Class B-1A
Component Certificate Principal Balance, the Class P-F Certificate Principal
Balance or the Class P-A Certificate Principal Balance, as applicable.
The Class A-IOF Component Certificates, the Class A-IOA Component
Certificates, the Class B-IOF Certificates and the Class B-IOA Certificates, the
Class R Certificates, the Class X-F Certificates and the Class X-A Certificates
do not have a Certificate Principal Balance.
"CERTIFICATEHOLDERS' INTEREST INDEX CARRYOVER": The Class A-3A
Interest Index Carryover, Class A-4A Interest Index Carryover, Class A-5A
Interest Index Carryover, Class B-1F Component Interest Index Carryover or Class
B-1A Component Interest Index Carryover, as applicable.
"CIVIL RELIEF INTEREST SHORTFALLS": With respect to any Due Period,
for any Home Equity Loans as to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, the
amount, if any, by which (i) interest collectible on such Home Equity Loans
during the most recently ended Due Period is less than (ii) interest accrued
thereon for such Due Period pursuant to the Note at the related Coupon Rate
without application of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended. Civil Relief Interest Shortfalls with respect to any Distribution Date,
will be allocated to each Class of Certificates, pro rata, based on the amount
of interest due to such Class of Certificates on such Distribution Date.
"CLASS": Any class of the Certificates.
"CLASS A CERTIFICATE": Any one of the Class A-1F, Class A-2F, Class
A-3A, Class A-4A or Class A-5A Certificates.
"CLASS AI CERTIFICATE": Any one of the Class A-1F or Class A-2F
Certificates.
"CLASS AII CERTIFICATE": Any one of the Class A-3A, Class A-4A or
Class A-5A Certificates.
"CLASS A DISTRIBUTION AMOUNT": For each Group and Distribution Date
shall be the sum of (x) Current Interest for the Class A and Class A-IO
Component Certificates related to such Group, and (y) the Class A Principal
Distribution Amount for such Home Equity Loan Group.
"CLASS A PRINCIPAL DISTRIBUTION AMOUNT": For each Group and
Distribution Date shall be with respect to (a) any Distribution Date prior to
the Stepdown Date or during the continuation of a Trigger Event, the lesser of
(i) 100% of the related Group Principal Distribution Amount and (ii) the
aggregate Class Principal Balance of the related Class A Certificates, and (b)
any other Distribution Date, an amount equal to the excess, if any, of (i) the
aggregate Certificate Principal Balance of the related Class A Certificates
immediately prior to such Distribution Date over (ii) the lesser of (x) the
product of 82.50% with respect to Group I and 82.00% with respect to Group II
and the Loan Balance of the related Home Equity Loans as of the last day of the
related Due Period, (y) the aggregate Loan Balance of the related Home Equity
Loans as of the last day of the related Due Period minus the sum of (A)
$1,161,751 in the case of Group I and $3,541,987 in the case of Group II and (B)
the related 270-Day Delinquency Amount and (z) the outstanding aggregate Loan
Balance of the related Home Equity Loans as of the last day of the related Due
Period minus the outstanding Loan Balance of the three largest Home Equity Loans
of the related Home Equity Loan Group as of the last day of the related Due
Period; provided, however, on the Final Scheduled Distribution Date for each
class of Class A Certificates, the related Class A Principal Distribution Amount
shall equal the aggregate Certificate Principal Balance of the related Class A
Certificates, as applicable.
"CLASS A SUBORDINATION INCREASE AMOUNT": Means with respect to any
Distribution Date and Group, the portion of any Subordination Increase Amount
for such Home Equity Loan Group. The Class A Subordination Increase Amount with
respect to Group I will be allocated between the Class A-1F Certificates and
Class A-2F Certificates as follows; (1) first, pro rata, based on cumulative
Realized Losses in Group Ia and Group Ib, respectively until Class A
Subordination Increase Amounts in an amount equal to such cumulative Realized
Losses has been paid the Class A-1F Certificates and Class A-2F Certificates on
such Distribution Date or on prior Distribution Dates and (2) second, the
remainder, pro rata, based upon the percentage that the Loan Balance of Group Ia
or Group Ib represents of the Group I Home Equity Loans; provided, however, if
the Certificate Principal Balance of either the Class A-1F Certificates or the
Class A-2F Certificates has been reduced to zero, 100% of the Class A
Subordination Increase Amount with respect to Group I shall be allocated to the
outstanding Class A-1F Certificates or Class A-2F Certificates, as applicable.
The Class A Subordination Increase Amount with respect to Group II will be
allocated among the Class A-3A, Class A-4A and Class A-5A Certificates as
follows; (1) first, an amount equal to the product of (x) a fraction, the
numerator of which is the Certificate Principal Balance of the Class A-5A
Certificates immediately preceding such Distribution Date and the denominator of
which is the Certificate Principal Balance of the Group AII Certificates
immediately preceding such Distribution Date and (y) the related Class A
Subordination Increase Amount, will be paid to the Class A-5A Certificates, (2)
second, the remainder, pro rata, to the Class A-3A and Class A-4A Certificates,
based on cumulative Realized Losses in Group IIa and Group IIb, respectively
until Class A Subordination Increase Amounts in an amount equal to such
cumulative Realized Losses has been paid to the Class A-3A and Class A-4A
Certificates on such Distribution Date or on prior Distribution Dates and (3)
third, the remainder, pro rata, to the Class A-3A and Class A-4A Certificates
based upon the percentage that the Loan Balance of Group IIa or Group IIb
represents of the Group II Home Equity Loans; provided, however, if the
Certificate Principal Balance of either the Class A-3A Certificates or the Class
A-4A Certificates has been reduced to zero, the remainder of the Class A
Subordination Increase Amount with respect to Group II remaining after the
allocation in clause (1) shall be allocated to the outstanding Class A-3A
Certificates or Class A-4A Certificates, as applicable.
"CLASS A-1F CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-lF Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC Provisions.
"CLASS A-1F CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-lF Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-lF Principal Distribution Amount pursuant to Section
7.03(g) hereof on all prior Distribution Dates; PROVIDED, HOWEVER, that solely
for the purposes of determining the Certificate Insurer's rights, as subrogee,
the Class A-lF Certificate Principal Balance shall not be reduced by any
principal amounts paid to the Owners thereof from Insured Payments.
"CLASS A-1F CURRENT INTEREST": With respect to any Distribution Date,
an amount equal to the sum of (i) 30 days' interest accrued on the Class A-l
Certificate Principal Balance immediately prior to such Distribution Date during
the related Interest Period at the Class A-lF Pass-Through Rate and (ii) any
prior unpaid Carry Forward Amount, if any, with respect to the Class A-lF
Certificates; PROVIDED, HOWEVER, the amount described in clause (i) will be
reduced by the Class A-lF Certificates' pro rata share of any Civil Relief
Interest Shortfalls and Compensating Interest Default Amounts relating to Home
Equity Loans in Group I.
"CLASS A-1F DISTRIBUTION AMOUNT": With respect to any Distribution
Date, the sum of (x) the Class A-lF Current Interest and (y) the Class A-lF
Principal Distribution Amount payable to the Owners of the Class A-1F
Certificates pursuant to Section 7.03(g) for such Distribution Date.
"CLASS A-1F PASS-THROUGH RATE": 7.11% per annum.
"CLASS A-1F PRINCIPAL DISTRIBUTION AMOUNT": Means with respect to any
Distribution Date and the Class A-1F Certificates, the sum of (1) the product
of (x) the Class A Principal Distribution Amount (less any Class A Subordination
Increase Amount included therein) for Group I and (y) (A) if the Certificate
Principal Balance of the Class A-2F Certificates is not zero, a fraction (i) the
numerator of which is the sum of the amounts described in clauses (b) (A) - (D)
of the definition of Group I Principal Distribution Amount received with respect
to the Home Equity Loans in Group Ia and (ii) the denominator of which is the
sum of the amounts described in clauses (b) (A) - (D) of the definition of Group
I Principal Distribution Amount and (B) if the Certificate Principal Balance of
the Class A-2F Certificates is zero, 100%, and (2) the Class A Subordination
Increase Amount with respect to the Class A-1F Certificates for such
Distribution Date; provided, however, on the Final Scheduled Distribution Date
for the Class A-1F Certificates, the Class A-1F Principal Distribution Amount
shall equal the Certificate Principal Balance of the Class A-1F Certificates on
such Distribution Date, prior to giving effect to any distributions on such
date.
"CLASS A-2F CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-2F Certificate, substantially in the form annexed
hereto as Exhibit A-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC Provisions.
"CLASS A-2F CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2F Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-2F Principal Distribution Amount pursuant to Section
7.03(g) hereof on all prior Distribution Dates; PROVIDED, HOWEVER, that solely
for the purposes of determining the Certificate Insurer's rights, as subrogee,
the Class A-2F Certificate Principal Balance shall not be reduced by any
principal amounts paid to the Owners thereof from Insured Payments.
"CLASS A-2F CURRENT INTEREST": With respect to any Distribution Date,
an amount equal to the sum of (i) 30 days' interest accrued on the Class A-2
Certificate Principal Balance immediately prior to such Distribution Date during
the related Interest Period at the Class A-2F Pass-Through Rate and (ii) any
prior unpaid Carry Forward Amount, if any, with respect to the Class A-2F
Certificates; PROVIDED, HOWEVER, the amount described in clause (i) will be
reduced by the Class A-2F Certificates' pro rata share of any Civil Relief
Interest Shortfalls and Compensating Interest Default Amounts relating to Home
Equity Loans in Group I.
"CLASS A-2F DISTRIBUTION AMOUNT": With respect to any Distribution
Date, the sum of (x) the Class A-2F Current Interest and (y) the Class A-2F
Principal Distribution Amount payable to the Owners of the Class A-2F
Certificates pursuant to Section 7.03(g) for such Distribution Date.
"CLASS A-2F PASS-THROUGH RATE": 7.14% per annum.
"CLASS A-2F PRINCIPAL DISTRIBUTION AMOUNT": Means with respect to any
Distribution Date and the Class A- 2F Certificates, the sum of (1) the product
of (x) the Class A Principal Distribution Amount (less any Class A Subordination
Increase Amount included therein) for Group I and (y) (A) if the Certificate
Principal Balance of the Class A-1F Certificates is not zero, a fraction (i) the
numerator of which is the sum of the amounts described in clauses (b) (A) - (D)
of the definition of Group I Principal Distribution Amount received with respect
to the Home Equity Loans in Group Ib and (ii) the denominator of which is the
sum of the amounts described in clauses (b) (A) - (D) of the definition of Group
I Principal Distribution Amount and (B) if the Certificate Principal Balance of
the Class A-1F Certificates is zero, 100%, and (2) the Class A Subordination
Increase Amount with respect to the Class A-2F Certificates for such
Distribution Date; provided, however, on the Final Scheduled Distribution Date
for the Class A-2F Certificates, the Class A-2F Principal Distribution Amount
shall equal the Certificate Principal Balance of the Class A-2F Certificates on
such Distribution Date, prior to giving effect to any distributions on such
date.
"CLASS A-3A CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-3A Certificate, substantially in the form annexed
hereto as Exhibit A-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC provisions.
"CLASS A-3A CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3A Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-3A Principal Distribution Amount pursuant to Section
7.03(g) hereof on all prior Distribution Dates; PROVIDED, HOWEVER, that solely
for the purposes of determining the Certificate Insurer's rights, as subrogee,
the Class A-3A Certificate Principal Balance shall not be reduced by any
principal amounts paid to the Owners thereof from Insured Payments.
"CLASS A-3A INTEREST INDEX CARRYOVER": With respect to any Interest
Period and any related Distribution Date, an amount equal to the sum of (A) the
excess, if any, of (i) the amount of interest the Class A-3A Certificates would
otherwise be entitled to receive on such Distribution Date had such rate been
calculated at the Class A-3A Formula Rate for such Distribution Date over (ii)
the amount of interest payable on the Class A-3A Certificates at the Group II
Available Funds Cap Rate for such Distribution Date and (B) the Class A-3A
Interest Index Carryover for all previous Distribution Dates not previously paid
to Class A-3A Certificateholders (plus interest on such excess at the Class A-3A
Formula Rate).
"CLASS A-3A CURRENT INTEREST": With respect to any Distribution Date,
an amount equal to the sum of (i) the amount of interest accrued on the Class
A-3A Certificate Principal Balance immediately prior to such Distribution Date
during the related Interest Period at the Class A-3A Pass-Through Rate and (ii)
any prior unpaid Carry-Forward Amount, if any, with respect to the Class A-3A
Certificates; PROVIDED, HOWEVER, the amount described in clause (i) will be
reduced by the Class A-3A Certificate's pro rata share of the amount of any
Civil Relief Interest Shortfalls and Compensating Interest Default Amounts
relating to Home Equity Loans in Group II.
"CLASS A-3A DISTRIBUTION AMOUNT": With respect to any Distribution
Date, the sum of (x) Class A-3A Current Interest and (y) the Class A-3A
Principal Distribution Amount payable to the Owners of the Class A-3A
Certificates pursuant to Section 7.03(g) for such Distribution Date.
"CLASS A-3A FORMULA RATE": For any Distribution Date, the lesser of
(A) the sum of (1) LIBOR and (2) in any month up to and including the month in
which the Clean-Up Call Date occurs, 0.26% per annum (or for any month following
the month in which the Clean-Up Call Date occurs, 0.52% per annum) and (B) 14%
per annum.
"CLASS A-3A PASS-THROUGH RATE": For any Distribution Date, the lesser
of (A) the Class A-3A Formula Rate and (B) the Group II Available Funds Cap Rate
for such Distribution Date.
"CLASS A-3A PRINCIPAL DISTRIBUTION AMOUNT": Means with respect to any
Distribution Date and the Class A-3A Certificates, the sum of (1) the product
of (x) the Class A Principal Distribution Amount (less any Class A Subordination
Increase Amount included therein) for Group II, (y) (A) if the Certificate
Principal Balance of the Class A-4A Certificates is not zero a fraction (i) the
numerator of which is the sum of the amounts described in clauses (b) (A) - (D)
of the definition of Group II Principal Distribution Amount received with
respect to the Home Equity Loans in Group IIa and (ii) the denominator of which
is the sum of the amounts described in clauses (b) (A) - (D) of the definition
of Group II Principal Distribution Amount and (B) if the Certificate Principal
Balance of the Class A-4A Certificates is zero, 100% and (z) a fraction, (i) the
numerator of which is the Certificate Principal Balance of the Class A-3A and
Class A-4A Certificates immediately preceding such Distribution Date and (ii)
the denominator of which is the Certificate Principal Balance of the Group AII
Certificates immediately preceding such Distribution Date, and (2) the Class A
Subordination Increase Amount with respect to the Class A-3A Certificates for
such Distribution Date; provided, however, on the Final Scheduled Distribution
Date for the Class A-3A Certificates, the Class A-3A Principal Distribution
Amount shall equal the Certificate Principal Balance of the Class A-3A
Certificates on such Distribution Date, prior to giving effect to any
distributions on such date.
"CLASS A-4A CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-4A Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC provisions.
"CLASS A-4A CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4A Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-4A Principal Distribution Amount pursuant Section
7.03(g) hereof on all prior Distribution Dates; PROVIDED, HOWEVER, that solely
for the purposes of determining the Certificate Insurer's rights, as subrogee,
the Class A-4A Certificate Principal Balance shall not be reduced by any
principal amounts paid to the Owners thereof from Insured Payments.
"CLASS A-4A INTEREST INDEX CARRYOVER": With respect to any Interest
Period and any related Distribution Date, an amount equal to the sum of (A) the
excess, if any, of (i) the amount of interest the Class A-4A Certificates would
otherwise be entitled to receive on such Distribution Date had such rate been
calculated at the Class A-4A Formula Rate for such Distribution Date over (ii)
the amount of interest payable on the Class A-4A Certificates at the Group II
Available Funds Cap Rate for such Distribution Date and (B) the Class A-4A
Interest Index Carryover for all previous Distribution Dates not previously paid
to Class A-4A Certificateholders (plus interest on such excess at the Class A-4A
Formula Rate).
"CLASS A-4A CURRENT INTEREST": With respect to any Distribution Date,
an amount equal to the sum of (i) the amount of interest accrued on the Class
A-4A Certificate Principal Balance immediately prior to such Distribution Date
during the related Interest Period at the Class A-4A Pass-Through Rate and (ii)
any prior unpaid Carry-Forward Amount, if any, with respect to the Class A-4A
Certificates; PROVIDED, HOWEVER, the amount described in clause (i) will be
reduced by the Class A-4A Certificate's pro rata share of the amount of any
Civil Relief Interest Shortfalls and Compensating Interest Default Amounts
relating to Home Equity Loans in Group II.
"CLASS A-4A DISTRIBUTION AMOUNT": With respect to any Distribution
Date, the sum of (x) Class A-4A Current Interest and (y) the Class A-4A
Principal Distribution Amount payable to the Owners of the Class A-4A
Certificates pursuant to Section 7.03(g) for such Distribution Date.
"CLASS A-4A FORMULA RATE": For any Distribution Date, the lesser of
(A) the sum of (1) LIBOR and (2) in any month up to and including the month in
which the Clean-Up Call Date occurs, 0.37% per annum (or for any month following
the month in which the Clean-Up Call Date occurs, 0.74% per annum) and (B) 14%
per annum.
"CLASS A-4A PASS-THROUGH RATE": For any Distribution Date, the lesser
of (A) the Class A-4A Formula Rate and (B) the Group II Available Funds Cap Rate
for such Distribution Date.
"CLASS A-4A PRINCIPAL DISTRIBUTION AMOUNT": Means with respect to any
Distribution Date and the Class A-4A Certificates, the sum of (1) the product
of (x) the Class A Principal Distribution Amount (less any Class A Subordination
Increase Amount included therein) for Group II, (y) (A) if the Certificate
Principal Balance of the Class A-3A Certificates is not zero a fraction (i) the
numerator of which is the sum of the amounts described in clauses (b) (A) - (D)
of the definition of Group II Principal Distribution Amount received with
respect to the Home Equity Loans in Group IIb and (ii) the denominator of which
is the sum of the amounts described in clauses (b) (A) - (D) of the definition
of Group II Principal Distribution Amount and (B) if the Certificate Principal
Balance of the Class A-3A Certificates is zero, 100% and (z) a fraction, (i) the
numerator of which is the Certificate Principal Balance of the Class A-3A and
Class A-4A Certificates immediately preceding such Distribution Date and (ii)
the denominator of which is the Certificate Principal Balance of the Group AII
Certificates immediately preceding such Distribution Date, and (2) the Class A
Subordination Increase Amount with respect to the Class A-4A Certificates for
such Distribution Date; provided, however, on the Final Scheduled Distribution
Date for the Class A-4A Certificates, the Class A-4A Principal Distribution
Amount shall equal the Certificate Principal Balance of the Class A-4A
Certificates on such Distribution Date, prior to giving effect to any
distributions on such date.
"CLASS A-5A CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-5A Certificate, substantially in the form annexed
hereto as Exhibit A-5 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC provisions.
"CLASS A-5A CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5A Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-5A Principal Distribution Amount pursuant to Section
7.03(g) hereof on all prior Distribution Dates; PROVIDED, HOWEVER, that solely
for the purposes of determining the Certificate Insurer's rights, as subrogee,
the Class A-5A Certificate Principal Balance shall not be reduced by any
principal amounts paid to the Owners thereof from Insured Payments.
"CLASS A-5A INTEREST INDEX CARRYOVER": With respect to any Interest
Period and any related Distribution Date, an amount equal to the sum of (A) the
excess, if any, of (i) the amount of interest the Class A-5A Certificates would
otherwise be entitled to receive on such Distribution Date had such rate been
calculated at the Class A-5A Formula Rate for such Distribution Date over (ii)
the amount of interest payable on the Class A-5A Certificates at the Group II
Available Funds Cap Rate for such Distribution Date and (B) the Class A-5A
Interest Index Carryover for all previous Distribution Dates not previously paid
to Class A-5A Certificateholders (plus interest on such excess at the Class A-5A
Formula Rate).
"CLASS A-5A CURRENT INTEREST": With respect to any Distribution Date,
an amount equal to the sum of (i) the amount of interest accrued on the Class
A-5A Certificate Principal Balance immediately prior to such Distribution Date
during the related Interest Period at the Class A-5A Pass-Through Rate and (ii)
any prior unpaid Carry-Forward Amount, if any, with respect to the Class A-5A
Certificates; PROVIDED, HOWEVER, the amount described in clause (i) will be
reduced by the Class A-5A Certificate's pro rata share of the amount of any
Civil Relief Interest Shortfalls and Compensating Interest Default Amounts
relating to Home Equity Loans in Group II.
"CLASS A-5A DISTRIBUTION AMOUNT": With respect to any Distribution
Date, the sum of (x) Class A-5A Current Interest and (y) the Class A-5A
Principal Distribution Amount payable to the Owners of the Class A-5A
Certificates pursuant to Section 7.03(g) for such Distribution Date.
"CLASS A-5A FORMULA RATE": For any Distribution Date, the lesser of
(A) the sum of (1) LIBOR and (2) in any month up to and including the month in
which the Clean-Up Call Date occurs, 0.40% per annum (or for any month following
the month in which the Clean-Up Call Date occurs, 0.80% per annum) and (B) 14%
per annum.
"CLASS A-5A PASS-THROUGH RATE": For any Distribution Date, the lesser
of (A) the Class A-5A Formula Rate and (B) the Group II Available Funds Cap Rate
for such Distribution Date.
"CLASS A-5A PRINCIPAL DISTRIBUTION AMOUNT": Means with respect to any
Distribution Date and the Class A-5A Certificates, the sum of (1) the product
of (x) the Class A Principal Distribution Amount (less any Class A Subordination
Increase Amount included therein) for Group II, and (y) a fraction, (i) the
numerator of which is the Certificate Principal Balance of the Class A-5A
Certificates immediately preceding such Distribution Date and (ii) the
denominator of which is the Certificate Principal Balance of the Group AII
Certificates immediately preceding such Distribution Date, and (2) the Class A
Subordination Increase Amount with respect to the Class A-5A Certificates for
such Distribution Date; provided, however, on the Final Scheduled Distribution
Date for the Class A-5A Certificates, the Class A-5A Principal Distribution
Amount shall equal the Certificate Principal Balance of the Class A-5A
Certificates on such Distribution Date, prior to giving effect to any
distributions on such date.
"CLASS A-IO COMPONENT CERTIFICATE": Either the Class A-IOA Component
Certificate or the Class A-IOF Component Certificate
"CLASS A-IO COMPONENT PASS-THROUGH RATE": 5.50% per annum.
"CLASS A-IO CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class A-IO Certificate, substantially in the form annexed
hereto as Exhibit A-6 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC provisions.
"CLASS A-IO CURRENT INTEREST": With respect to any Distribution Date,
an amount equal to the sum of Class A-IOA Component Current Interest and Class
A-IOF Component Current Interest for such Distribution Date.
"CLASS A-IOA COMPONENT CERTIFICATE": One of the two components that
comprise the Class A-IO Certificates.
"CLASS A-IOA COMPONENT CURRENT INTEREST": With respect to any
Distribution Date, an amount equal to the sum of (i) the amount of interest
accrued on the Notional Amount of the Class A-IOA Component Certificates
immediately prior to such Distribution Date during the related Interest Period
at the Class A-IOA Component Pass-Through Rate and (ii) any prior unpaid
Carry-Forward Amount, if any, with respect to the Class A-IOA Component
Certificates; PROVIDED, HOWEVER, the amount described in clause (i) will be
reduced by the Class A-IOA Component Certificate's pro rata share of the amount
of any Civil Relief Interest Shortfalls and Compensating Interest Default
Amounts relating to Home Equity Loans in Group II.
"CLASS A-IOF COMPONENT CERTIFICATE": One of the two components that
comprise the Class A-IO Certificates.
"CLASS A-IOF COMPONENT CURRENT INTEREST": With respect to any
Distribution Date, an amount equal to the sum of (i) the amount of interest
accrued on the Notional Amount of the Class A-IOF Component Certificates
immediately prior to such Distribution Date during the related Interest Period
at the Class A-IOF Component Pass-Through Rate and (ii) any prior unpaid
Carry-Forward Amount, if any, with respect to the Class A-IOF Component
Certificates; PROVIDED, HOWEVER, the amount described in clause (i) will be
reduced by the Class A-IOF Component Certificate's pro rata share of the amount
of any Civil Relief Interest Shortfalls and Compensating Interest Default
Amounts relating to Home Equity Loans in Group I.
"CLASS B COMPONENT CERTIFICATE": Either the Class B-1A Component
Certificate or the Class B-1F Component Certificate.
"CLASS B COMPONENT DISTRIBUTION AMOUNT": Means for each Group and
Distribution Date shall be the sum of (x) Current Interest for the Class B
Component Certificates related to such Home Equity Loan Group and (y) the Class
B Component Principal Distribution Amount for such Group.
"CLASS B COMPONENT PRINCIPAL DISTRIBUTION AMOUNT": Means for each
Group and Distribution Date shall be (a) prior to the Stepdown Date or during
the occurrence of a Trigger Event, zero and (b) on any Distribution Date on and
after the Stepdown Date and so long as a Trigger Event is not in effect, an
amount equal to the excess of (i) the sum of (x) the aggregate Certificate
Principal Balance of the related Class A Certificates (after giving effect to
the distribution of the related Group Principal Distribution Amount on such
Distribution Date) and (y) the Class Principal Balance of the related Class B
Component Certificates immediately prior to such Distribution Date, over (ii)
the lesser of (x) the product of 94% and the Loan Balance of the related Home
Equity Loans as of the last day of the related Due Period and (y) the Loan
Balance of the related Home Equity Loans as of the last day of the related Due
Period minus $1,161,751 in the case of Group I and $3,541,987 in case of Group
II; provided, however, that if the aggregate Certificate Principal Balance of
the related Class A Certificates is reduced to zero, the related Class B
Component Certificates shall be entitled to all of the remaining related Group
Principal Distribution Amount, whether or not a Trigger Event is in effect.
"CLASS B COMPONENT REALLOCATED AMOUNT": Means for each Distribution
Date following the Stepdown Date, the lesser of (A) the Subordination Reduction
Amount remaining after the aplication of Section 7.03(b)(ii)(A) through (H)
(assuming that the related Total Monthly Excess Spread is applied prior to the
application of the related Subordination Reduction Amount) and (B) an amount
equal to the excess of (x) an amount equal to the related Class B Component
Principal Distribution Amount for such Distribution Date over (y) the amount to
be distributed with respect to the related Class B Component Certificate
pursuant to Section 7.03(g) on such Distribution Date.
"CLASS B DISTRIBUTION AMOUNT": Means for any Distribution Date the sum
of the Class B Component Distribution Amounts for such Distribution Date.
"CLASS B-1 CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class B-1 Certificate, substantially in the form annexed
hereto as Exhibit B-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC provisions.
"CLASS B-1 CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the sum of the Class B-1A Component Certificate Principal Balance
and the Class B-1F Component Certificate Principal Balance.
"CLASS B-1A COMPONENT CERTIFICATE": One of the two components that
comprise the Class B-1 Certificates.
"CLASS B-1A COMPONENT CERTIFICATE PRINCIPAL BALANCE": As of any time
of determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1A Component Certificates less the aggregate of all amounts actually
distributed to the Class B-1F Component Certificates with respect to the Class
BA Component Principal Distribution Amount pursuant to Section 7.03(g) hereof on
all prior Distribution Dates and less any Applied Realized Loss Amounts
allocated to the Class B-1A Component Certificates on prior Distribution Dates.
"CLASS B-1A INTEREST INDEX CARRYOVER": With respect to any Interest
Period and any related Distribution Date, an amount equal to the sum of (A) the
excess, if any, of (i) the amount of interest the Class B-1A Component
Certificates would otherwise be entitled to receive on such Distribution Date
had such rate been calculated at the Class B-1A Component Formula Rate for such
Distribution Date over (ii) the amount of interest payable on the Class B-1A
Component Certificates at the Group II Available Funds Cap Rate for such
Distribution Date and (B) the Class B-1A Interest Index Carryover for all
previous Distribution Dates not previously paid with respect to Class B-1A
Components (plus interest on such excess at the Class B-1A Component Formula
Rate).
"CLASS B-1A COMPONENT CURRENT INTEREST": With respect to any
Distribution Date, an amount equal to the sum of (i) the amount of interest
accrued on the Class B-1A Component Certificate Principal Balance immediately
prior to such Distribution Date during the related Interest Period at the Class
B-1A Component Pass-Through Rate and (ii) any prior unpaid Carry-Forward Amount,
if any, with respect to the Class B-1A Component Certificates; PROVIDED,
HOWEVER, the amount described in clause (i) will be reduced by the Class B-1A
Component Certificate's pro rata share of the amount of any Civil Relief
Interest Shortfalls and Compensating Interest Default Amounts relating to Home
Equity Loans in Group II.
"CLASS B-1A COMPONENT FORMULA RATE": For any Distribution Date, the
lesser of (A) the sum of (1) LIBOR and (2) in any month up to and including the
month in which the Clean-Up Call Date occurs, 2.75% per annum (or for any month
following the month in which the Clean-Up Call Date occurs, 3.25% per annum) and
(B) 14% per annum.
"CLASS B-1A COMPONENT PASS-THROUGH RATE": For any Distribution Date,
the lesser of (A) the Class B-1A Component Formula Rate and (B) the Group I
Available Funds Cap Rate for such Distribution Date.
<PAGE>
"CLASS B-1F COMPONENT CERTIFICATE": One of the two components that
comprise the Class B-1 Certificates.
"CLASS B-1F COMPONENT CERTIFICATE PRINCIPAL BALANCE": As of any time
of determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1F Component Certificates less the aggregate of all amounts actually
distributed to the Class B-1F Component Certificates with respect to the Class B
Component Principal Distribution Amount pursuant to Section 7.03(g) hereof on
all prior Distribution Dates and less any Applied Realized Loss Amounts
allocated to the Class B-1F Component Certificates on prior Distribution Dates.
"CLASS B-1F INTEREST INDEX CARRYOVER": With respect to any Interest
Period and any related Distribution Date, an amount equal to the sum of (A) the
excess, if any, of (i) the amount of interest the Class B-1F Component
Certificates would otherwise be entitled to receive on such Distribution Date
had such rate been calculated at the Class B-1F Component Formula Rate for such
Distribution Date over (ii) the amount of interest payable on the Class B-1F
Component Certificates at the Group I Available Funds Cap Rate for such
Distribution Date and (B) the Class B-1F Interest Index Carryover for all
previous Distribution Dates not previously paid with respect to Class B-1F
Components (plus interest on such excess at the Class B-1F Component Formula
Rate).
"CLASS B-1F COMPONENT CURRENT INTEREST": With respect to any
Distribution Date, an amount equal to the sum of (i) the amount of interest
accrued on the Class B-1F Component Certificate Principal Balance immediately
prior to such Distribution Date during the related Interest Period at the Class
B-1F Component Pass-Through Rate and (ii) any prior unpaid Carry-Forward Amount,
if any, with respect to the Class B-1F Component Certificates; PROVIDED,
HOWEVER, the amount described in clause (i) will be reduced by the Class B-1F
Component Certificate's pro rata share of the amount of any Civil Relief
Interest Shortfalls and Compensating Interest Default Amounts relating to Home
Equity Loans in Group I.
"CLASS B-1F COMPONENT FORMULA RATE": For any Distribution Date, the
lesser of (A) the sum of (1) LIBOR and (2) in any month up to and including the
month in which the Clean-Up Call Date occurs, 2.75% per annum (or for any month
following the month in which the Clean-Up Call Date occurs, 3.25% per annum) and
(B) 14% per annum.
"CLASS B-1F COMPONENT PASS-THROUGH RATE": For any Distribution Date,
the lesser of (A) the Class B-1F Component Formula Rate and (B) the Group I
Available Funds Cap Rate for such Distribution Date.
"CLASS B-IOA CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class B-IOA Certificate, substantially in the form annexed
hereto as Exhibit B-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC provisions.
"CLASS B-IOA CURRENT INTEREST": With respect to any Distribution Date,
an amount equal to the sum of (i) the amount of interest accrued on the Notional
Amount of the Class B-IOA Certificates immediately prior to such Distribution
Date during the related Interest Period at the Class B-IOA Pass-Through Rate and
(ii) any prior unpaid Carry-Forward Amount, if any, with respect to the Class
B-IOA Certificates; PROVIDED, HOWEVER, the amount described in clause (i) will
be reduced by the Class B-IOA Certificate's pro rata share of the amount of any
Civil Relief Interest Shortfalls and Compensating Interest Default Amounts
relating to Home Equity Loans in Group II.
"CLASS B-IOA PASS-THROUGH RATE": 7.00% per annum.
"CLASS B-IOF CERTIFICATE": Any one of the Certificates designated on
the face thereof as a Class B-IOF Certificate, substantially in the form annexed
hereto as Exhibit B-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC provisions.
"CLASS B-IOF CURRENT INTEREST": With respect to any Distribution Date,
an amount equal to the sum of (i) the amount of interest accrued on the Notional
Amount of the Class B-IOF Certificates immediately prior to such Distribution
Date during the related Interest Period at the Class B-IOF Pass-Through Rate and
(ii) any prior unpaid Carry-Forward Amount, if any, with respect to the Class
B-IOF Certificates; PROVIDED, HOWEVER, the amount described in clause (i) will
be reduced by the Class B-IOF Certificate's pro rata share of the amount of any
Civil Relief Interest Shortfalls and Compensating Interest Default Amounts
relating to Home Equity Loans in Group I.
"CLASS B-IOF PASS-THROUGH RATE": 7.00% per annum.
"CLASS P CERTIFICATE": Either or both of the Class P-A and Class P-F
Certificates.
"CLASS P DISTRIBUTION AMOUNT": For any Distribution Date, the sum of
the Class P-F and Class P-A Distribution Amounts.
"CLASS P-A CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class P-A Certificate, substantially in the form annexed
hereto as Exhibit C-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC provisions.
"CLASS P-A CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class P-A Certificates less the aggregate of all amounts actually distributed
with respect to the Class P-A Certificates pursuant to Section 7.03(g) hereof on
all prior Distribution Dates.
"CLASS P-A DISTRIBUTION AMOUNT": With respect to any Distribution
Date, the Prepayment Penalties for the related Prepayment Period with respect to
the Home Equity Loans in Group II.
"CLASS P-F CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class P-F Certificate, substantially in the form annexed
hereto as Exhibit C-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for purposes of
the REMIC provisions.
"CLASS P-F CERTIFICATE PRINCIPAL BALANCE": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class P-F Certificates less the aggregate of all amounts actually distributed
with respect to the Class P-F Certificates pursuant to Section 7.03(g) hereof on
all prior Distribution Dates.
"CLASS P-F DISTRIBUTION AMOUNT": With respect to any Distribution
Date, the Prepayment Penalties for the related Prepayment Period with respect to
the Home Equity Loans in Group I.
"CLASS PRINCIPAL BALANCE": With respect to each Class of Certificates
and Class B Component Certificates, the Certificate Principal Balance thereof.
"CLASS R CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit C-5, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein. The Class R Certificate shall
evidence (i) an interest designated as the Class R-1 Certificate which is the
"residual interest" in REMIC I and (ii) interests designated as the Class R-2
Certificate, the Class R-3 Certificate and the Class R-4 Certificate each of
which is a residual interest in REMIC II, REMIC III and REMIC IV, respectively,
with each of REMIC I, REMIC II, REMIC III and REMIC IV being created hereunder
for the purposes of the REMIC Provisions. The Owner of the Class R Certificate
shall be entitled to separate such Certificate into its component Class R-1,
Class R-2, Class R-3 and Class R-4 Certificate parts, as further described on
the Class R Certificate legend attached hereto as Exhibit C-5.
"CLASS X CERTIFICATE": Either or both of the Class X-A and Class X-F
Certificates.
"CLASS X-A CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class X-A Certificate, substantially in the form annexed
hereto as Exhibit C-1, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein, and evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for the
purposes of the REMIC Provisions.
<PAGE>
"CLASS X-A DISTRIBUTION AMOUNT": With respect to Group II and any
Distribution Date, the lesser of (i) the related aggregate Total Monthly Excess
Cashflow, if any, remaining after the making of all applications, transfers and
disbursements described in Sections 7.03(b)(i), 7.03(b)(ii), and 7.03(b)(iii)
hereof and (ii) the excess of the sum of (a) the sum of the amounts described in
footnotes (7) and (10) of Section 2.08(d) with respect to Group II for the
current and for all prior Distribution Dates and (b) the amount by which the
aggregate Loan Balance of the Home Equity Loans in Group II as of the Cut-Off
Date exceeds the Certificate Principal Balance of the Class AII Certificates and
the Class B-1A Component Certificates on the Closing Date over amounts
distributed with respect to the Class X-A Certificates on prior Distribution
Dates.
"CLASS X-F CERTIFICATE": Any one of the Certificates designated on the
face thereof as a Class X-F Certificate, substantially in the form annexed
hereto as Exhibit C-2, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein, and evidencing an interest
designated as a "regular interest" in REMIC IV created hereunder for the
purposes of the REMIC Provisions.
"CLASS X-F DISTRIBUTION AMOUNT": With respect to Group I and any
Distribution Date, the lesser of (i) the related aggregate Total Monthly Excess
Cashflow, if any, remaining after the making of all applications, transfers and
disbursements described in Sections 7.03(b)(i), 7.03(b)(ii), and 7.03(b)(iii)
hereof and (ii) the excess of the sum of (a) the sum of the amounts described in
footnotes (7), and (9) of Section 2.08(d) with respect to Group I for the
current and for all prior Distribution Dates and (b) the amount by which the
aggregate Loan Balance of the Home Equity Loans in Group I as of the Cut-Off
Date exceeds the Certificate Principal Balance of the Class AI Certificates and
the Class B-1F Component Certificates on the Closing Date over amounts
distributed with respect to the Class X-F Certificates on prior Distribution
Dates.
"CLEAN-UP CALL DATE": The first Monthly Remittance Date on which the
Aggregate Principal Balance of all of the Certificates as of the close of
business on the last day of the immediately preceding Due Period has declined to
10% or less of the Aggregate Principal Balance of all the Certificates on the
Startup Day.
"CLEAN-UP CALL PREMIUM": The sum of the Group I Clean-up Call Premium
and the Group II Clean-up Call Premium.
"CLOSING": As defined in Section 4.02 hereof.
"CODE": The Internal Revenue Code of 1986, as amended.
"COMMISSION": The Securities and Exchange Commission.
"COMPENSATING INTEREST": As defined in Section 8.10(a) hereof.
"COMPENSATING INTEREST DEFAULT AMOUNT": The excess, if any, of (a) the
aggregate Compensating Interest required to be paid by the Servicer pursuant to
Section 8.10(a) on the related Monthly Remittance Date over (b) the aggregate
Compensating Interest actually paid by the Servicer on such Monthly Remittance
Date.
"CORPORATE TRUST OFFICE": The principal office of the Trustee at The
Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New York, NY 10001-2697
or the principal office of any successor Trustee hereunder.
"COUPON RATE": The rate of interest borne by each Note from time to
time.
"CUMULATIVE LOSS PERCENTAGE": As of any date of determination thereof,
the aggregate of all Realized Losses since the Startup Day as a percentage of
the Maximum Collateral Amount.
"CURRENT INTEREST": With respect to any Distribution Date, (a) the
Class A-1F Current Interest, (b) the Class A-2F Current Interest, (c) the Class
A-3A Current Interest, (d) the Class A-4A Current Interest , (e) the Class A-5A
Current Interest, (f) the Class A-IOA Component Current Interest, (g) the Class
A-IOF Component Current Interest, (h) the Class B-1A Component Current Interest
(i) the Class B-1F Component Current Interest (j) the Class B-IOA Current
Interest or (k) the Class B-IOF Current Interest for such Distribution Date, as
applicable.
"CUT-OFF DATE": The close of business on June 1, 1999.
"DAILY COLLECTIONS": As defined in Section 8.08(c) hereof.
"DEFICIENCY CLAIM AMOUNT": Shall have the meaning set forth in Section
12.05(b) of this Agreement.
"DELINQUENCY ADVANCE": As defined in Section 8.09(a) hereof.
"DELINQUENCY AMOUNT": As to any date of determination, means the
product of the related Delinquency Percentage and the Loan Balance of the Home
Equity Loans in the related Home Equity Loan Group.
"DELINQUENCY PERCENTAGE": With respect to each Home Equity Loan Group,
the rolling three month average of the percentage equivalent of a fraction, the
numerator of which is (a) the sum (without duplication) of the (i) aggregate
Loan Balance of all Home Equity Loans in the related Home Equity Loan Group that
are 90 or more days delinquent, (ii) aggregate Loan Balance of all Home Equity
Loans in the related Home Equity Loan Group that are in foreclosure and (iii)
the aggregate Loan Balance of all Home Equity Loans in the related Home Equity
Loan Group that are relating to REO Mortgaged Properties, in each case, without
limitation, Home Equity Loans for which the related Mortgagor is in bankruptcy
and the denominator of which is (b) the aggregate Loan Balance of the Home
Equity Loans in the related Home Equity Loan Group, as of the end of the related
Due Period.
"DELINQUENT": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related Due
Date (without regard to whether the related Mortgagor is in bankruptcy). A Home
Equity Loan is deemed "30 days Delinquent" if such payment has not been received
by the close of business on the first day of the month immediately succeeding
the month in which such payment was due (without regard to whether the related
Mortgagor is in bankruptcy). Similarly for "60 days Delinquent," "90 days
Delinquent" and so on.
"DELIVERY ORDER": The delivery order in the form set forth as Exhibit
H hereto and delivered by the Depositor to the Trustee on the Startup Day
pursuant to Section 4.01 hereof.
"DEPOSITOR": Asset Backed Securities Corporation, a Delaware
corporation, or any successor thereto.
"DEPOSITORY": The Depository Trust Company, 7 Hanover Square, New
York, New York, 10004, and any successor depository.
"DESIGNATED DEPOSITORY INSTITUTION": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Certificate
Insurer, acting in its fiduciary capacity, having combined capital and surplus
of at least $100,000,000; PROVIDED, HOWEVER, that if the Principal and Interest
Account is not maintained with the Trustee, (i) such institution shall have a
long-term debt rating of at least "A" by Standard & Poor's and "A2" by Moody's
and (ii) the Servicer shall provide the Trustee and the Certificate Insurer with
a statement, which the Trustee will send to the Owners, identifying the location
and account information of the Principal and Interest Account upon a change in
the location of such account.
"DETERMINATION DATE": The 15th day of each month, or if such day is
not a Business Day, the next succeeding Business Day, commencing in August 1999.
"DIRECT PARTICIPANT" or "DTC PARTICIPANT": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"DISQUALIFIED ORGANIZATION": "Disqualified Organization" shall have
the meaning set forth from time to time in the definition thereof at Section
860E(e)(5) of the Code (or any successor statute thereto) and applicable to the
Trust.
"DISTRIBUTION DATE": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 21st day of each month or if any
such day is not a Business Day, then the next succeeding Business Day. The first
Distribution Date will be in August 1999.
"DUE DATE": With respect to any Home Equity Loan, the date on which
the Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Note exclusive of any days of grace.
"DRAW DATE": With respect to any Distribution Date, the third Business
Day immediately preceding such Distribution Date.
"DUE PERIOD": With respect to any Distribution Date, the period
beginning on the opening of business on the 2nd day of the calendar month
preceding the calendar month in which such Distribution Date occurs and ending
on the close of business on the 1st day of the month in which such Distribution
Date occurs.
"DUFF & PHELPS": Duff & Phelps Credit Rating Co. or any successor
thereto.
"ELIGIBLE ACCOUNT": Either (A) a segregated account or accounts
maintained with an institution whose deposits are insured by the FDIC, the
unsecured and uncollateralized long term date obligations of which institution
shall be rated AA or higher by Standard & Poor's and Aa2 or higher by Moody's
and in the highest short term rating category by each of the Rating Agencies,
and which is (i) a federal savings and loan association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Certificate Insurer and each of the Rating Agencies or (B) a
segregated trust account or accounts maintained with the trust department of a
federal or state chartered depository institution acceptable to each Rating
Agency and the Certificate Insurer (which shall include the Trustee and the
Custodian provided that each otherwise meets the applicable requirements),
having capital and surplus of not less than $100,000,000, acting in its
fiduciary capacity.
"ELIGIBLE INVESTMENTS": Those investments so designated pursuant to
Section 7.07 hereof.
"EXCESS SUBORDINATED AMOUNT": With respect to any Home Equity Loan
Group and Distribution Date, the excess, if any, of (x) the Subordinated Amount
that would apply to such Home Equity Loan Group on such Distribution Date after
taking into account the payment of the related Principal Distribution Amount on
such Distribution Date (except for any distributions of related Subordination
Reduction Amounts on such Distribution Date), over (y) the related Specified
Subordinated Amount for such Distribution Date.
"EXCHANGE ACT": The Securities and Exchange Act of 1934, as amended.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"FILE": The documents delivered to the Trustee pursuant to Section
3.05(b) hereof pertaining to a particular Home Equity Loan and any additional
documents required to be added to the File pursuant to this Agreement.
"FINAL CERTIFICATION": As defined in Section 3.06(c) hereof.
<PAGE>
"FINAL DETERMINATION": As defined in Section 9.03(a) hereof.
"FINAL RECOVERY DETERMINATION": With respect to any defaulted Home
Equity Loan or REO Mortgaged Property (other than a Home Equity Loan purchased
by the related Responsible Party, the holder of the applicable Class X
Certificate or the Servicer), a determination made by the Servicer that all
recoveries which the Servicer, in its reasonable business judgment, expects to
be finally recoverable in respect thereof have been so recovered or that the
Servicer believes in its reasonable business judgment the cost of obtaining any
additional recoveries therefrom would exceed the amount of such recoveries. The
Servicer shall maintain records of each Final Recovery Determination.
"FINAL SCHEDULED DISTRIBUTION DATE": As set out in Section 2.08(e)
hereof.
"FIRST PAYMENT DEFAULT": A condition whereby a Mortgagor has not paid
the initial Monthly Payment due on a Home Equity Loan within sixty (60) days of
the first Due Date for such Home Equity Loan.
"FIRST MORTGAGE LOAN": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to the related Mortgaged Property.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FNMA GUIDE": FNMA's Servicing Guide, as the same may be amended by
FNMA from time to time.
"FUNDING PERIOD": With respect to each Group, the period commencing on
the Startup Day and ending on the earliest to occur of (i) the date on which the
amount on deposit in the Pre-Funding Account (exclusive of any investment
earnings) allocable to such Group is less than $50,000, (ii) the date on which
the Servicer may be removed pursuant to Section 8.20(a) hereof and (iii)
September 1, 1999.
"GROUP PRINCIPAL DISTRIBUTION AMOUNT": The Group I Principal
Distribution Amount or the Group II Principal Distribution Amount as applicable.
"GUARANTEED PRINCIPAL AMOUNT": As defined in the Certificate Insurance
Policies.
"GROUP I": With respect to the Home Equity Loans, the Home Equity
Loans in Group Ia and Group Ib. With respect to the Certificates, the Group I
Certificates, the Class X-F, Class P-F, Class B-IOF and Class R Certificates.
"GROUP I CLOSING DATE DEPOSIT": The sum of the Group Ia Closing Date
Deposit and the Group Ib Closing Date Deposit.
"GROUP IA": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group I in Schedule I-A hereto or Schedule I-A of a Subsequent
Transfer Agreement, including any Qualified Substitute Home Equity Loan
delivered in replacement thereof.
"GROUP IA CLOSING DATE DEPOSIT": $1,253,095.40.
"GROUP IB": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group I in Schedule I-B hereto or Schedule I-B of a Subsequent
Transfer Agreement, including any Qualified Substitute Home Equity Loan
delivered in replacement thereof.
"GROUP IB CLOSING DATE DEPOSIT": $677,370.94.
<PAGE>
"GROUP I AVAILABLE FUNDS": As defined in Section 7.02(b) hereof.
"GROUP I AVAILABLE FUNDS CAP RATE": With respect to any Interest
Period and any Distribution Date, a rate per annum equal to the fraction,
expressed as a percentage, the numerator of which is (i) the excess of (a) an
amount equal to the product of (1) the weighted average of the Net Coupon Rates
of the Home Equity Loans in Group I (by Loan Balance) at the beginning of the
related Due Period, and (2) the aggregate Loan Balance of the Home Equity Loans
in Group I as of the beginning of the Due Period, over (b) the interest payable
on the Class A-IOF Component Certificates and Class B-IOF Certificates on the
related Distribution Date, and the denominator of which is (ii) the outstanding
Certificate Principal Balance of the Group I Certificates at the beginning of
such Interest Period such rate, as calculated on the basis of a 360 day year and
the actual number of days elapsed in the related Interest Period.
"GROUP I CAPITALIZED INTEREST REQUIREMENT": As to any Pre-Funding
Distribution Date, the excess, if any, of (x) the sum of (a) the interest due on
the Group I Certificates on such Distribution Date plus (b) the Premium Amount
allocable to Group I over (y) the sum of (i) one month's interest on the
aggregate Loan Balance of the Home Equity Loans in Group I as of the beginning
of business on the first day of the immediately preceding Due Period, calculated
at the Pass-Through Rate of the Group I Certificates as of such Distribution
Date and (ii) any Group I Pre-Funding Account Earnings to be transferred to the
Certificate Account for such Distribution Date, if any.
"GROUP I CERTIFICATES": The Class A-1F, Class A-2F, Class A-IOF
Component, Class B-IOF and the Class B-1F Component Certificates.
"GROUP I CLEAN-UP CALL PREMIUM": An amount determined in the
reasonable estimation of the Underwriter equal to the Total Monthly Excess
Spread with respect to the Home Equity Loans in the related Group calculated for
each future Distribution Date prior to the Class B-1 Final Scheduled
Distribution Date based on the remaining Home Equity Loans in Group I as of the
related Due Period assuming a constant prepayment rate (as calculated in
accordance with the Public Securities Association Standard Formulas for the
Analysis of Mortgage-Backed Securities and other Related Securities) of 23% with
respect to such Home Equity Loans, with no defaults and amortization in
accordance with the respective amortization schedules of such Home Equity Loans,
discounted at a rate of 7.00%; provided, however, that if the Servicer is the
entity exercising the clean-up call, the Group I Clean-up Call Premium shall be
such other amount, if any, as may be agreed to by the Seller, R.V.I. Guaranty
Co., Ltd. and the Servicer.
"GROUP I INTEREST REMITTANCE AMOUNT": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest received during the
related Due Period with respect to the Home Equity Loans in Group I (net of the
Group I Servicing Fee) and the related Delinquency Advances with respect to
interest for the related Due Period and Group I, (ii) all Compensating Interest
paid by the Servicer on such Monthly Remittance Date with respect to Group I,
(iii) the portions of the Loan Purchase Prices and the Substitution Amount
relating to interest on the Home Equity Loans in Group I paid by the applicable
Responsible Party, the holder of a Class X Certificate or the Servicer on or
prior to such Monthly Remittance Date and (iv) the interest portion of all Net
Liquidation Proceeds actually collected by the Servicer with respect to such
Home Equity Loans in Group I during the related Due Period.
"GROUP I MONTHLY REMITTANCE AMOUNT": As of any Monthly Remittance
Date, the sum of (i) the Group I Interest Remittance Amount for such Monthly
Remittance Date and (ii) the Group I Principal Remittance Amount for such
Monthly Remittance Date.
"GROUP I PRE-FUNDING ACCOUNT EARNINGS": As to any Pre-Funding Payment
Date, the actual investment earnings earned during the previous Due Period on
that portion of the Pre-Funding Account allocated to Group I during such period
hereof.
"GROUP I PRINCIPAL DISTRIBUTION AMOUNT": With respect to the Group I
Certificates (other than the Class A-IOF Component Certificates and the Class
B-IOF Certificates) for any Distribution Date, the lesser of:
(a) the Group I Total Available Funds plus any Insured
Payment with respect to the Group I Certificates (provided, however,
such amounts shall be payable solely to the related Class A Certificates and
Class A-IO Certificates) minus the sum of the Current Interest for the Group I
Certificates, the related Premium Amount and the related Trustee Fee allocable
to Group I for such Distribution Date; and
(b) the excess, if any, of (i) the sum of (without
duplication):
(A) the principal portion of all scheduled monthly
payments on the Home Equity Loans in Group I due on or prior
to the related Due Date thereof actually received by the
Servicer during the related Due Period, related Delinquency
Advances with respect to principal for the related Due
Period and any Prepayments made by the Mortgagors and
actually received by the Servicer during the related
Prepayment Period,
(B) the outstanding principal balance of each Home
Equity Loan in Group I that was repurchased by the
applicable Responsible Party or purchased by the applicable
Class X Certificateholder or the Servicer on or prior to the
related Monthly Remittance Date to the extent such amount is
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(C) any Substitution Amounts delivered by the
applicable Responsible Party on the related Monthly
Remittance Date in connection with a substitution of a Home
Equity Loan in Group I (to the extent such Substitution
Amounts relate to principal) to the extent such amount is
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(D) all Net Liquidation Proceeds actually collected by
the Servicer with respect to the Home Equity Loans in Group
I during the related Prepayment Period (to the extent such
Net Liquidation Proceeds relate to principal) to the extent
such amount is actually received by the Trustee on or prior
to the related Monthly Remittance Date,
(E) the amount of any Subordination Deficit with
respect to Group I for such Distribution Date,
(F) the principal portion of the proceeds received by
the Trustee with respect to Group I from any termination of
the Trust (to the extent such proceeds related to
principal),
(G) with respect to the Distribution Date immediately
following the last day of the Funding Period, all amounts
remaining on deposit in the Pre-Funding Account allocated to
Group I to the extent not used to purchase Subsequent Home
Equity Loans for inclusion in Group I during such Funding
Period,
(H) the amount of any Subordination Increase Amount
with respect to Group I for such Distribution Date to the
extent of any Total Monthly Excess Cashflow available for
such purpose, and
(I) the Group I Closing Date Deposit,
OVER
(ii) the amount of any Subordination Reduction Amount with respect to
Group I for such Distribution Date; provided, however, on the Final Scheduled
Distribution Date for the Class A-1F, the Class A-2F or the Class B-1F Component
Certificates, the Group I Principal Distribution Amount shall include the
applicable Certificate Principal Balance immediately prior to such Final
Scheduled Distribution Date.
"GROUP I PRINCIPAL REMITTANCE AMOUNT": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the scheduled principal payments
actually collected by the Servicer with respect to Home Equity Loans in Group I
during the related Due Period and related Delinquency Advances with respect to
principal for the related Due Period, (ii) the outstanding principal balance of
each such Home Equity Loan in Group I that was purchased from the Trustee on or
prior to such Monthly Remittance Date, to the extent such outstanding principal
balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by the applicable
Responsible Party in connection with a substitution of a Home Equity Loan in
Group I, to the extent such Substitution Amounts were actually deposited in the
Principal and Interest Account on or prior to such Monthly Remittance Date, (iv)
the principal portion of all Net Liquidation Proceeds actually collected by the
Servicer with respect to such Home Equity Loans in Group I during the related
Prepayment Period (to the extent such Net Liquidation Proceeds related to
principal), (v) the Prepayments actually collected by the Servicer with respect
to Home Equity Loans in Group I during the related Prepayment Period and (vi)
the amount of net investment losses required to be deposited pursuant to Section
8.08(b).
"GROUP I SERVICING FEE": With respect to any Home Equity Loan in Group
I (other than a Liquidated Loan) and each Due Period, an amount retained by the
Servicer or Special Servicer, as applicable, as compensation for servicing and
administration duties relating to such Home Equity Loan pursuant to Section 8.15
and equal to one-twelfth of 0.50% of the outstanding principal balance of such
Home Equity Loan as of the first day of each Due Period retainable on a monthly
basis; provided, however, that if a successor Servicer is appointed pursuant to
Section 8.20 hereof, the Group I Servicing Fee shall be the amount as agreed
upon by the Trustee, the Certificate Insurer and the successor Servicer, and the
per annum rate at which the Group I Servicing Fee is calculated shall not exceed
0.50% per annum.
"GROUP I SPECIFIED SUBORDINATED AMOUNT": As defined in Exhibit L.
"GROUP I SUBORDINATED AMOUNT": As of any Distribution Date, the
excess, if any, of (x) the sum of (i) the aggregate Loan Balances of the Home
Equity Loans in Group I as of the close of business on the last day of the
immediately preceding Due Period and (ii) any amount on deposit in the
Pre-Funding Account relating to Group I at the close of business on the last day
of the immediately preceding Due Period exclusive of any Group I Pre-Funding
Account Earnings over (y) the aggregate of the Class A-1F, and Class A-2F
Certificate Principal Balances for such Distribution Date (after taking into
account the payment of the Group I Principal Distribution Amount thereon (except
for any Subordination Reduction Amount relating to Group I and Subordination
Increase Amount relating to Group I) on such Distribution Date).
"GROUP I TOTAL AVAILABLE FUNDS": As defined in Section 7.02(b) hereof.
"GROUP I TOTAL MONTHLY EXCESS SPREAD": With respect to Group I and any
Distribution Date, the excess of (i) the aggregate of all interest which is
collected on the Home Equity Loans in Group I during the related Due Period (net
of the Group I Servicing Fee and the Trustee Fee with respect to Group I and net
of any reimbursement for Nonrecoverable Advances with respect to Group I) plus
the sum of (w) any Delinquency Advances with respect to interest and Group I,
(x) Compensating Interest, in each case paid by the Servicer with respect to
Group I for such Due Period and (y) Cap Reserve Fund Transfer Amount with
respect to Group I and (z) the Group I Capitalized Interest Requirement over
(ii) the sum of the Class A-1F, Class A-2F, Class A-IOF Component, Class B-1F
Component and Class B-IOF Current Interest and the Premium Amount relating to
Group I for such Distribution Date.
"GROUP II": With respect to Home Equity Loans, the Home Equity Loans
in Group IIa and Group IIb. With respect to the Certificates, the Group II
Certificates, the Class X-A, Class P-A, Class B-IOA and Class R Certificates.
"GROUP IIA": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group II in Schedule I-C hereto or Schedule I-C of a Subsequent
Transfer Agreement, including any Qualified Substitute Home Equity Loan
delivered in replacement thereof.
"GROUP IIA CLOSING DATE DEPOSIT": $6,327,553.92.
<PAGE>
"GROUP IIB": With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group II in Schedule I-D hereto or Schedule I-D of a Subsequent
Transfer Agreement, including any Qualified Substitute Home Equity Loan
delivered in replacement thereof.
"GROUP IIB CLOSING DATE DEPOSIT": $2,432,623.00.
"GROUP II AVAILABLE FUNDS": As defined in Section 7.02(c) hereof.
"GROUP II AVAILABLE FUNDS CAP RATE": With respect to any Interest
Period and any Distribution Date, a rate per annum equal to the fraction,
expressed as a percentage, the numerator of which is (i) the excess of (a) an
amount equal to the product of (1) the weighted average of the Net Coupon Rates
of the Home Equity Loans in Group II (by Loan Balance) at the beginning of the
related Due Period, and (2) the aggregate Loan Balance of the Home Equity Loans
in Group II as of the beginning of the Due Period, over (b) the interest payable
on the Class A-IOA Component Certificates and Class B-IOA Certificates on the
related Distribution Date, and the denominator of which is (ii) the outstanding
Certificate Principal Balance of the Group II Certificates at the beginning of
such Interest Period such rate, as calculated on the basis of a 360 day year and
the actual number of days elapsed in the related Interest Period.
"GROUP II CAPITALIZED INTEREST REQUIREMENT": As to any Pre-Funding
Distribution Date, the excess, if any, of (x) the sum of (a) the interest due on
the Group II Certificates on such Distribution Date plus (b) the Premium Amount
allocable to Group II over (y) the sum of (i) one month's interest on the
aggregate Loan Balance of the Home Equity Loans in Group II as of the beginning
of business on the first day of the immediately preceding Due Period, calculated
at the Pass-Through Rate of the Group II Certificates as of such Distribution
Date and (ii) any Group II Pre-Funding Account Earnings to be transferred to the
Certificate Account for such Distribution Date, if any.
"GROUP II CERTIFICATES": The Class A-3A, Class A-4A, Class A-5A, Class
A-IOA Component, Class B-IOA and the Class B-1A Component Certificates.
"GROUP II CLEAN-UP CALL PREMIUM": An amount determined in the
reasonable estimation of the Underwriter equal to the Total Monthly Excess
Spread with respect to the Home Equity Loans in the related Group calculated for
each future Distribution Date prior to the Class B-1 Final Scheduled
Distribution Date, based on the remaining Home Equity Loans in Group II as of
the related Due Period assuming a constant prepayment rate (as calculated in
accordance with the Public Securities Association Standard Formulas for the
Analysis of Mortgage-Backed Securities and other Related Securities) of 30% with
respect to such Home Equity Loans, with no defaults and amortization in
accordance with the respective amortization schedules of such Home Equity Loans,
discounted at a rate of 7.00%; PROVIDED, HOWEVER, that if the Servicer is the
entity exercising the clean-up call the Group II Clean-up Call Premium shall be
such other amount, if any, as may be agreed to by the Seller, R.V.I. Guaranty
Co., Ltd. and the Servicer.
"GROUP II CLOSING DATE DEPOSIT": The sum the Group IIa Closing Date
Deposit and the Group IIb Closing Date Deposit.
"GROUP II INTEREST REMITTANCE AMOUNT": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest received during the
related Due Period with respect to the Home Equity Loans in Group II (net of the
Group II Servicing Fee) and the related Delinquency Advances with respect to
interest for the related Due Period and Group II, (ii) all Compensating Interest
paid by the Servicer on such Monthly Remittance Date with respect to Group II
and (iii) the portion of the Loan Purchase Prices and Substitution Amount
relating to interest on the Home Equity Loans in Group II paid by the applicable
Responsible Party, the holder of the applicable Class X Certificate or the
Servicer on or prior to such Monthly Remittance Date and (iv) the interest
portion of all Net Liquidation Proceeds actually collected by the Servicer with
respect to the Home Equity Loans in Group II during the related Due Period.
"GROUP II MONTHLY REMITTANCE AMOUNT": As of any Monthly Remittance
Date, the sum of (i) the Group II Interest Remittance Amount for such Monthly
Remittance Date and (ii) the Group II Principal Remittance Amount for such
Monthly Remittance Date.
"GROUP II PRE-FUNDING ACCOUNT EARNINGS": As to any Pre-Funding Payment
Date, the actual investment earnings earned during the previous Due Period on
that portion of the Pre-Funding Account allocated to Group II during such
period.
"GROUP II PRINCIPAL DISTRIBUTION AMOUNT": With respect to the Group II
Certificates (other than the Class A-IOA Component and Class B-IOA Certificates)
for any Distribution Date, the lesser of:
(a) the Group II Total Available Funds plus any Insured
Payment with respect to the Group II Certificates (provided, however, such
amounts shall be payable solely to the related Class A Certificates and Class
A-IO Certificates) minus the sum of the Current Interest for Group II
Certificates, the related Premium Amount and the related Trustee Fee allocable
to Group II for such Distribution Date; and
(b) the excess, if any, of (i) the sum of (without
duplication):
(A) the principal portion of all scheduled monthly
payments on the Home Equity Loans in Group II due on or
prior to the related Due Date thereof actually received by
the Servicer during the related Due Period, related
Delinquency Advances with respect to principal for the
related Due Period, and any Prepayments made by the
Mortgagors and actually received by the Servicer during the
related Prepayment Period,
(B) the outstanding principal balance of each Home
Equity Loan in Group II that was repurchased by the
applicable Responsible Party or purchased by a Class X
Certificateholder or the Servicer on or prior to the related
Monthly Remittance Date to the extent such amount is
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(C) any Substitution Amounts delivered by the
applicable Responsible Party on the related Monthly
Remittance Date in connection with a substitution of a Home
Equity Loan in Group II (to the extent such Substitution
Amounts relate to principal) to the extent such amount is
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(D) all Net Liquidation Proceeds actually collected by
the Servicer with respect to the Home Equity Loans in Group
II during the related Prepayment Period (to the extent such
Net Liquidation Proceeds relate to principal) to the extent
such amount is actually received by the Trustee on or prior
to the related Monthly Remittance Date,
(E) the amount of any Subordination Deficit with
respect to Group II for such Distribution Date,
(F) the principal portion of the proceeds received by
the Trustee with respect to Group II from any termination of
the Trust (to the extent such proceeds related to
principal),
(G) with respect to the Distribution Date immediately
following the last day of the Funding Period, all amounts
remaining on deposit in the Pre-Funding Account allocated to
Group II to the extent not used to purchase Subsequent Home
Equity Loans for inclusion in Group II during such Funding
Period,
(H) the amount of any Subordination Increase Amount
with respect to Group II for such Distribution Date to the
extent of any Total Monthly Excess Cashflow available for
such purpose, and
(I) the Group II Closing Date Deposit,
OVER
(ii) the amount of any Subordination Reduction Amount with respect to
Group II for such Distribution Date; provided, however, on the Final Scheduled
Distribution Date for the Class A-3A, Class A-4A, Class A-5A or the Class B-1A
Component Certificates, the Group II Principal Distribution Amount shall include
the applicable Certificate Principal Balance immediately prior to such Final
Scheduled Distribution Date.
"GROUP II PRINCIPAL REMITTANCE AMOUNT": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the scheduled principal payments
actually collected by the Servicer with respect to Home Equity Loans in Group II
during the related Due Period and related Delinquency Advances with respect to
principal for the related Due Period, (ii) the outstanding principal balance of
each such Home Equity Loan in Group II that was purchased from the Trustee on or
prior to such Monthly Remittance Date, to the extent such outstanding principal
balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by the applicable
Responsible Party in connection with a substitution of a Home Equity Loan in
Group II, to the extent such Substitution Amounts were actually deposited in the
Principal and Interest Account on or prior to such Monthly Remittance Date, (iv)
the principal portion of all Net Liquidation Proceeds actually collected by the
Servicer with respect to such Home Equity Loans in Group II during the related
Prepayment Period (to the extent such Net Liquidation Proceeds related to
principal), (v) the Prepayments actually collected by the Servicer with respect
to Home Equity Loans in Group II during the related Prepayment Period and (vi)
the amount of net investment losses to be deposited pursuant to Section 8.08(b).
"GROUP II SERVICING FEE": With respect to any Home Equity Loan (other
than a Liquidated Loan) in Group II, an amount retained by the Servicer or
Special Servicer, as applicable, as compensation for servicing and
administration duties relating to such Home Equity Loan pursuant to Section 8.15
and equal to one-twelfth of 0.50% of the outstanding principal balance of such
Home Equity Loan as of the first day of each Due Period retainable on a monthly
basis, provided, however, that if a successor Servicer is appointed pursuant to
Section 8.20 hereof, the Group II Servicing Fee shall be such amount as agreed
upon by the Trustee, the Certificate Insurer and the successor Servicer, and the
per annum rate at which the Group II Servicing Fee is calculated shall not
exceed 0.50% per annum.
"GROUP II SPECIFIED SUBORDINATED AMOUNT": As defined in Exhibit M.
"GROUP II SUBORDINATED AMOUNT": As of any Distribution Date, the
excess, if any, of (x) the sum of (i) the aggregate Loan Balances of the Home
Equity Loans in Group II as of the close of business on the last day of the
immediately preceding Due Period and (ii) any amount on deposit in the
Pre-Funding Account relating to Group II at the close of business on the last
day of the immediately preceding Due Period exclusive of any Group II
Pre-Funding Account Earnings over (y) the aggregate of the Class A-3A, Class
A-4A, and Class A-5A Certificate Principal Balances for such Distribution Date
(after taking into account the payment of the Group II Principal Distribution
Amount thereon (except for any Subordination Reduction Amount relating to Group
II or Subordination Increase Amount relating to the Group II) on such
Distribution Date).
"GROUP II TOTAL AVAILABLE FUNDS": As defined in Section 7.02(c)
hereof.
"GROUP II TOTAL MONTHLY EXCESS SPREAD": With respect to Group II and
any Distribution Date, the excess of (i) the aggregate of all interest which is
collected on the Home Equity Loans in Group II during the related Due Period
(net of the Group II Servicing Fee and the Trustee Fee with respect to Group II
and net of any reimbursement for Nonrecoverable Advances with respect to Group
II) plus the sum of (w) any Delinquency Advances with respect to interest and
Group II, (x) Compensating Interest, in each case paid by the Servicer with
respect to Group II for such Due Period, (y) the Cap Reserve Fund Transfer
Amount with respect to Group II and (z) the Group II Capitalized Interest
Requirement over (ii) the sum of the Class A-3A, Class A-4A, Class A-5A, Class
A-IOA Component, Class B-1A Component and Class B-IOA Current Interest and the
Premium Amount relating to Group II for such Distribution Date.
"HIGHEST LAWFUL RATE": As defined in Section 11.13 hereof.
"HOME EQUITY LOAN GROUP" or "GROUP": Group I or Group II, as the case
may be. References herein to the related Class of Class A Certificates, when
used with respect to a Home Equity Loan Group, shall mean (A) in the case of
Group I, the Class A-1F, Class A-2F, Class A-IOF Component, Class B-1F
Component, Class B-IOF, Class X-F, Class P-F and Class R Certificates and (B) in
the case of Group II, the Class A-3A, Class A-4A, Class A-5A, Class A-IOA
Component, Class B-1A Component, Class B-IOA, Class X-A, Class P-A and Class R
Certificates.
"HOME EQUITY LOANS": Such home equity loans (including Initial Home
Equity Loans and Subsequent Home Equity Loans) transferred and assigned to the
Trust pursuant to the first paragraph under the caption "CONVEYANCE", which
appears after the whereas clauses in this Agreement, hereof, together with any
Qualified Substitute Home Equity Loans substituted therefor in accordance with
this Agreement, as from time to time are held as a part of the Trust Estate, the
Home Equity Loans originally so held being identified in the Schedules of Home
Equity Loans. The term "Home Equity Loan" includes any Home Equity Loan which is
Delinquent, which relates to a foreclosure or which relates to a Mortgaged
Property which is REO Mortgaged Property prior to such REO Mortgaged Property's
disposition by the Trust. Any home equity loan which, although intended by the
parties hereto to have been, and which purportedly was, transferred and assigned
to the Trust by the Depositor, in fact was not transferred and assigned to the
Trust for any reason whatsoever shall nevertheless be considered a "Home Equity
Loan" for all purposes of this Agreement.
"INDEMNIFICATION AGREEMENT": The Indemnification Agreement dated as of
July 9, 1999 between the Certificate Insurer and the Underwriter.
"INDIRECT PARTICIPANT": Any financial institution for whom any Direct
Participant holds an interest in an Offered Certificate.
"INITIAL HOME EQUITY LOANS": The Home Equity Loans to be conveyed by
the Depositor to the Trust on the Startup Day.
"INSURANCE AGREEMENT": The Insurance and Indemnity Agreement dated as
of June 1, 1999, among the Depositor, Long Beach, the Servicer, the Company, the
Trustee and the Certificate Insurer, as it may be amended from time to time.
"INSURANCE POLICY": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
"INSURED PAYMENT": As defined in the Certificate Insurance Policies.
"INTEREST PERIOD": With respect to the Class A-1F, Class A-2F, Class
A-IOF Component and Class A-IOA Component, Class B-IOF and Class B-IOA
Certificates and any Distribution Date, the calendar month immediately preceding
the month in which the Distribution Date occurs; calculations of interest on
such Certificates will be made on the basis of a 360-day year assumed to consist
of twelve 30-day months. A "calendar month" shall be deemed to be 30 days. With
respect to the Class A-3A, Class A-4A, Class A-5A, Class B-1F Component and
Class B-1A Component Certificates and any Distribution Date, the period from and
including the preceding Distribution Date (or in the case of the initial
Distribution Date, from July 21, 1999) to and including the day preceding the
related Distribution Date; calculations of interest on such Certificates will be
made on the basis of the actual number of days elapsed in the related Interest
Period and a year of 360 days.
<PAGE>
"INTEREST REMITTANCE AMOUNT": The sum of the Group I Interest
Remittance Amount and the Group II Interest Remittance Amount.
"LATE PAYMENT RATE": As defined in the Insurance Agreement.
"LIBOR": With respect to any Interest Period the rate determined by
the Trustee on the related LIBOR Determination Date on the basis of the offered
rate for one-month U.S. dollar deposits as such rate appears on Telerate Page
3750 as of 11:00 a.m. (London time) on such date; provided that if such rate
does not appear on Telerate Page 3750, the rate for such date will be determined
on the basis of the rates at which one-month U.S. dollar deposits are offered by
the Reference Banks at approximately 11:00 a.m. (London time) on such date to
prime banks in the London interbank market. In such event, the Trustee will
request the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
for that date will be the arithmetic mean of the quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If fewer than two quotations
are provided as requested, the rate for that date will be the arithmetic mean of
the rates quoted by major banks in New York City, selected by the Trustee, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.
"LIBOR CARRYOVER FUND": The LIBOR Carryover Fund established in
accordance with Section 7.02(a) hereof and maintained by the Trustee. The LIBOR
Carryover Fund shall be an Eligible Account.
"LIBOR CARRYOVER FUND DEPOSIT": With respect to each Distribution Date
and each Group, will equal (a) any related Certificateholders' Interest Index
Carryover for such Distribution Date, or (b) if no Certificateholders' Interest
Index Carryover is payable on such Distribution Date, an amount such that when
added to other amounts already on deposit in the applicable LIBOR Carryover
Fund, the aggregate amount on deposit therein is equal to $10,000.
"LIBOR DETERMINATION DATE": With respect to any Interest Period, the
second London Business Day preceding the commencement of such Interest Period
(or in the case of Closing Date, July 19, 1999).
"LIQUIDATED LOAN": A Home Equity Loan as to which a Final Recovery
Determination has been made.
"LIQUIDATION PROCEEDS": With respect to any Liquidated Loan, all
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"LOAN BALANCE": With respect to each Home Equity Loan and as of any
date of determination, the actual outstanding principal balance thereof on the
Cut-Off Date with respect to the Initial Home Equity Loans or relevant
Subsequent Cut-Off Date with respect to the Subsequent Home Equity Loans or
relevant Replacement Cut-Off Date with respect to the Qualified Substitute Home
Equity Loans excluding payments of principal due on or prior to the Cut-Off
Date, Subsequent Cut-Off Date or Replacement Cut-Off Date, as the case may be,
whether or not received, less, without duplication, any principal payments and
Delinquency Advances with respect to principal relating to such Home Equity Loan
included in previous Monthly Remittance Amounts, PROVIDED, HOWEVER, that the
Loan Balance for any Home Equity Loan that has become a Liquidated Loan shall be
deemed to be zero as of the first day of the Due Period following the Due Period
in which such Home Equity Loan becomes a Liquidated Loan, and at all times
thereafter.
"LOAN PURCHASE PRICE": With respect to any Home Equity Loan purchased
from the Trust on or prior to a Monthly Remittance Date pursuant to Section
3.04, 3.06(b) or 8.10(b) hereof, an amount equal to the outstanding principal
balance of such Home Equity Loan as of the date of purchase, plus all accrued
and unpaid interest on such Home Equity Loan at the Coupon Rate to the end of
the current Due Period of such purchase, in each case, determined without regard
to any prior Delinquency Advances, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Servicing Advances theretofore made
with respect to such Home Equity Loan, and (ii) all Servicing Advances to the
extent that reimbursement is not made from the Mortgagor or other collections or
recoveries on the related Home Equity Loan.
"LOAN-TO-VALUE RATIO": As of any particular date and any Home Equity
Loan, the percentage obtained by dividing the Appraised Value into the original
principal balance of the Note relating to such Home Equity Loan.
"LONDON BUSINESS DAY": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"LONG BEACH": Long Beach Mortgage Company, a Delaware corporation.
"MAXIMUM COLLATERAL AMOUNT": The Loan Balance of each Initial Home
Equity Loan as of the Cut-Off Date plus the Loan Balance of each Subsequent Home
Equity Loan (except for Subsequent Home Equity Loans acquired with funds from
the Prepaid Home Equity Loan Account) as of the related Subsequent Cut-Off Date.
"MAXIMUM RATE": With respect to any Home Equity Loan in Group II means
the maximum rate at which interest may accrue on such Home Equity Loan.
"MINIMUM SPREAD": Shall be a percentage per annum equal to 0.50%.
"MONTHLY PAYMENT": With respect to any Home Equity Loan and any Due
Period, the payment of principal and interest due on the Due Date in such Due
Period pursuant to the related Note.
"MONTHLY REMITTANCE AMOUNT": The sum of the Group I Monthly Remittance
Amount and the Group II Monthly Remittance Amount.
"MONTHLY REMITTANCE DATE": The 15th day of each month, or if such day
is not a Business Day, the next succeeding Business Day, commencing in August
1999.
"MOODY'S": Moody's Investors Service, Inc. or any successor thereto.
"MORTGAGE": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple interest in real property securing a Note.
"MORTGAGE LOAN PURCHASE AGREEMENT": The Mortgage Loan Purchase
Agreement dated as of June 1, 1999 among the Seller, Long Beach and the
Depositor, as it may be amended from time to time.
"MORTGAGED PROPERTY": The underlying property securing a Home Equity
Loan.
"MORTGAGOR": The obligor on a Note.
"NET COUPON RATE": With respect to any Home Equity Loan means a rate
per annum equal to the Coupon Rate of such Home Equity Loan minus the sum of (i)
the rate at which the Servicing Fee accrues, (ii) the rate at which the Trustee
Fee accrues, (iii) the applicable Premium Amount (expressed as a per annum
percentage of the aggregate Loan Balance of the related Home Equity Loans), and
(iv) in the case of any Group II Home Equity Loan, the Minimum Spread.
"NET INSURANCE PROCEEDS": Proceeds received by the Servicer from an
Insurance Policy, net of amounts remitted to the Mortgagor for repairs to the
Mortgaged Property.
"NET LIQUIDATION PROCEEDS": As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unpaid Servicing
Fees and unreimbursed Servicing Advances) in connection with the liquidation of
such Home Equity Loan and unreimbursed Delinquency Advances relating to such
Home Equity Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"90-DAY DELINQUENT LOAN": With respect to any Determination Date, all
REO Mortgaged Properties and each Home Equity Loan, with respect to which any
portion of a Monthly Payment is, as of the last day of the prior Prepayment
Period, three months (calculated from Due Date with respect to such Home Equity
Loan to Due Date) or more Delinquent (without giving effect to any grace
period).
"90+ DELINQUENCY PERCENTAGE (ROLLING THREE MONTH)": With respect to
any Determination Date, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Prepayment
Periods (or such fewer number of Prepayment Periods since the Cut-Off Date, in
the case of the first three Determination Dates) the numerator of each of which
is equal to the sum of (without duplication) (i) the aggregate Loan Balance of
90-Day Delinquent Loans, (ii) the aggregate outstanding principal balance of
Home Equity Loans in foreclosure and (iii) the aggregate outstanding principal
balance of Home Equity Loans relating to REO Mortgaged Properties as of the end
of such Prepayment Period (in each case, including, without limitation, such
Home Equity Loans for which the Mortgagor is in bankruptcy) and the denominator
of which is the Loan Balance of all of the Home Equity Loans as of the end of
such Due Period.
"NONRECOVERABLE ADVANCE" means with respect to any Home Equity Loan,
(a) any Delinquency Advance or Servicing Advance previously made and not
reimbursed from proceeds on the related Home Equity Loan or under Section
7.03(b)(iii)(I) hereof or (b) a Delinquency Advance or Servicing Advance
proposed to be made in respect of a Home Equity Loan or REO Mortgaged Property,
in each case which the Servicer has determined, in its good faith reasonable
business judgment, would not be ultimately recovered pursuant to Section
8.08(d)(D).
"NOTE": The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Home Equity Loan.
"NOTIONAL AMOUNT": As of the Startup Day as to each of the following
Classes of Certificates or Component Certificates, the Notional Amounts thereof,
as follows:
Class A-IOF Component -
Certificates (1)
Class A-IOA Component -
Certificates (1)
Class B-IOF Certificates - $ 11,000,000(2)
Class B-IOA Certificates - $27,000,000(2)
(1) The lesser of (a) in the case of the Class A-IOF Component
Certificates, $22,000,000 for the first twelve Distribution
Dates, $16,000,000 for the thirteenth through the
twenty-fourth Distribution Dates and $10,000,000 for the
twenty-fifth through the thirtieth Distribution Dates and in
the case of the Class A-IOA Component Certificates
$67,000,000 for the first twelve Distribution Dates,
$48,727,273 for the thirteenth through the twenty-fourth
Distribution Dates and $30,454,545 for the twenty-fifth
through the thirtieth Distribution Dates and (b) the
outstanding Loan Balance of the related Group. Each Notional
Amount will be $0 after the thirtieth Distribution Date.
(2) The lesser of (a) the amount stated above and (b) the
outstanding Loan Balance of the related Group. Each Notional
Amount will be $0 after the thirty-sixth Distribution Date.
As of any day after the Startup Day, the Class A-IOF Component
Notional Amount, the Class A-IOA Component Notional Amount, the Class B-IOF
Notional Amount or the Class B-IOA Notional Amount, as applicable.
"OFFERED CERTIFICATES": The Class A-1F, Class A-2F, Class A-3A, Class
A-4A, Class A-5A, Class A-IO and Class B-1 Certificates.
"OFFICER'S CERTIFICATE": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the Trustee
and the Certificate Insurer.
"OPERATIVE DOCUMENTS": Collectively, this Agreement, the Certificate
Insurance Policies, the Certificates, the Mortgage Loan Purchase Agreement, the
Indemnification Agreement and the Insurance Agreement.
"OPINION OF COUNSEL": A written Opinion of Counsel acceptable, in form
and substance, to the Trustee and the Certificate Insurer and delivered to the
Trustee and the Certificate Insurer.
"ORIGINAL AGGREGATE LOAN BALANCE": The sum of the Original Group I
Loan Balance and the Original Group II Loan Balance, which is $930,579,359.51.
"ORIGINAL AGGREGATE PRE-FUNDED AMOUNT": The amount deposited in the
Pre-Funding Account on the Startup Day from the proceeds of the sale of the
Certificates, which amount is equal to $0.
"ORIGINAL CAPITALIZED INTEREST DEPOSIT": The sum of the Original Group
I Capitalized Interest Deposit and the Group II Capitalized Interest Deposit.
"ORIGINAL GROUP I CAPITALIZED INTEREST DEPOSIT": $0.
"ORIGINAL GROUP I LOAN BALANCE": The sum of the Original Group Ia Loan
Balance and the Original Group Ib Loan Balance, which is $230,377,292.79.
"ORIGINAL GROUP IA LOAN BALANCE": The aggregate Loan Balances of all
Home Equity Loans in Group Ia as of the Cut-Off Date, which is $178,636,421.94.
"ORIGINAL GROUP IB LOAN BALANCE": The aggregate Loan Balances of all
Home Equity Loans in Group Ib as of the Cut-Off Date, which is $51,740,870.85.
"ORIGINAL GROUP I PRE-FUNDED AMOUNT": $0.
"ORIGINAL GROUP II CAPITALIZED INTEREST DEPOSIT": $0.
"ORIGINAL GROUP II LOAN BALANCE": The sum of the Original Group Ia
Loan Balance and the Original Group Ib Loan Balance, which is $700,202,066.72.
"ORIGINAL GROUP IIA LOAN BALANCE": The aggregate Loan Balances of all
Home Equity Loans in Group IIa as of the Cut-Off Date, which is $447,300,551.86.
"ORIGINAL GROUP IIB LOAN BALANCE": The aggregate Loan Balances of all
Home Equity Loans in Group IIb as of the Cut-Off Date, which is $252,901,514.86.
"ORIGINAL GROUP II PRE-FUNDED AMOUNT": $0.
"OUTSTANDING": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the
Registrar or delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full
and final payment of money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
in trust for the Owners of such Certificates;
(iii) Certificates in exchange for or in lieu of which
other Certificates have been executed and delivered pursuant
to this Agreement, unless proof satisfactory to the Trustee
is presented that any such Certificates are held by a bona
fide purchaser;
(iv) Certificates alleged to have been destroyed, lost
or stolen for which replacement Certificates have been
issued as provided for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the
final distribution thereon, whether or not such Certificate
is ever returned to the Trustee.
"OWNER": The Person in whose name a Certificate is registered in the
Register, and the Certificate Insurer, to the extent described in Section 12.06
hereof.
"PASS-THROUGH RATE": Means any of the Class A-1F Pass-Through Rate,
the Class A-2F Pass-Through Rate, the Class A-3A Pass-Through Rate, the Class
A-4A Pass-Through Rate, the Class A-5A Pass-Through Rate, the Class A-IO
Component Pass-Through Rate, the Class B-1A Component Pass-Through Rate, the
Class B-1F Component Pass-Through Rate, the Class B-IOA Pass-Through Rate or the
Class B-IOF Pass-Through Rate, as applicable.
"PAYING AGENT": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"PERCENTAGE INTEREST": With respect to a Class of Offered Certificates
(other than the Class A-IO Certificates), a fraction, expressed as a decimal,
the numerator of which is the initial Certificate Principal Balance represented
by such Class of Certificates and the denominator of which is the initial
Certificate Principal Balance represented by all the Certificates of such Class.
With respect to a Class R, Class A-IO, Class B-IOF, Class P-F, Class P-A, Class
X A and Class X-F Certificate, the percentage set forth on the face thereof.
"PERSON": Any individual, corporation, limited partnership, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"POLICY PAYMENTS ACCOUNT": The policy payments account maintained by
the Trustee pursuant to Section 12.02(b) hereof. The Policy Payments Account
shall be an Eligible Account.
"PREPAID HOME EQUITY LOAN ACCOUNT": The Prepaid Home Equity Loan
Account established in accordance with Section 7.02(a) hereof and maintained by
the Trustee. The Prepaid Home Equity Loan Account shall be an Eligible Account.
"PRE-FUNDED AMOUNT": With respect to any Determination Date, the
amount remaining on deposit in the Pre-Funding Account.
"PRE-FUNDING ACCOUNT": The Pre-Funding Account established in
accordance with Section 7.02(a) hereof and maintained by the Trustee. The
Pre-Funding Account shall be an Eligible Account.
"PRE-FUNDING ACCOUNT EARNINGS": The Group I Pre-Funding Account
Earnings or the Group II Pre-Funding Account Earnings, as the case may be.
"PRE-FUNDING DISTRIBUTION DATE": Each Distribution Date during the
Funding Period and the Distribution Date immediately following the Funding
Period.
"PREMIUM AMOUNT": With respect to each of Group I and Group II as
defined in the Insurance Agreement.
"PREPAYMENT": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment, Substitution Amounts, the
portion of the purchase price of any Home Equity Loan purchased from the Trust
pursuant to Section 3.04, 3.06(b) or 8.10(b) hereof representing principal and
the proceeds of any Insurance Policy which are to be applied as a payment of
principal on the related Home Equity Loan shall be deemed to be Prepayments for
all purposes of this Agreement.
"PREPAYMENT IN FULL": A Prepayment that reduces the outstanding
principal balance of the related Home Equity Loan to zero.
"PREPAYMENT PENALTIES": Any charges collected by the Servicer in
connection with certain Prepayments.
"PREPAYMENT PERIOD": With respect to any Distribution Date is the
calendar month preceding the calendar month in which such Distribution Date
occurs.
"PRESERVATION EXPENSES": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"PRINCIPAL CARRYOVER SHORTFALL": With respect to any Distribution Date
and any Class B Component Certificate is the excess, if any, of (1) the amount
of Applied Realized Loss Amounts allocated to such Class B Component Certificate
as provided in Section 7.11 on prior Distribution Dates over (2) the amount
distributed in respect thereof on prior Distribution Dates.
"PRINCIPAL DISTRIBUTION AMOUNT": The Group I Principal Distribution
Amount or the Group II Principal Distribution Amount.
"PRINCIPAL AND INTEREST ACCOUNT": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof. The Principal and
Interest Account shall be an Eligible Account.
"PRINCIPAL REMITTANCE AMOUNT": The Group I Principal Remittance Amount
or the Group II Principal Remittance Amount.
"PROHIBITED TRANSACTION": Shall have the meaning set forth from time
to time in the definition thereof at Section 860F(a)(2) of the Code (or any
successor statute thereto) and applicable to the Trust.
"PROSPECTUS": The Depositor's Prospectus dated December 17, 1998
constituting part of the Registration Statement.
"PROSPECTUS SUPPLEMENT": The Asset Backed Securities Corporation Home
Equity Loan Trust 1999-LB1 Prospectus Supplement dated July 9, 1999 to the
Prospectus.
"PURCHASE OPTION PERIOD": As defined in Section 9.03(a) hereof.
"QUALIFIED LIQUIDATION": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(4) of the Code (or any successor
statute thereto) and applicable to the Trust.
"QUALIFIED MORTGAGE": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"QUALIFIED SUBSTITUTE HOME EQUITY LOAN": A Home Equity Loan
substituted for another pursuant to Section 3.04 and 3.06(b) hereof, which (i)
has a Coupon Rate at least equal to the Coupon Rate of the Home Equity Loan
being replaced; (ii) is of the same or better property type or is a single
family dwelling and the same or better occupancy status or is a primary
residence as the Home Equity Loan being replaced, (iii) shall mature no later
than (and not more than one year less than) the Home Equity Loan being replaced
(iv) has a Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than
the Loan-to-Value Ratio of the replaced Home Equity Loan at such time, (v) shall
be of the same or higher credit quality classification (determined in accordance
with the Originator's credit underwriting guidelines set forth in the
Originator's underwriting manual) as the Home Equity Loan which such Qualified
Substitute Home Equity Loan replaces, (vi) shall be a First Mortgage Loan, (vii)
has an outstanding principal balance as of the related Replacement Cut-Off Date
equal to or less than the outstanding principal balance of the replaced Home
Equity Loan as of such Replacement Cut-Off Date, (viii) shall not provide for a
"balloon" payment if the related Home Equity Loan did not provide for a
"balloon" payment (and if such related Home Equity Loan provided for a "balloon"
payment, such Qualified Substitute Home Equity Loan shall have an original
maturity of not less than the original maturity of such related Home Equity
Loan), (ix) shall be a fixed rate Home Equity Loan if the Home Equity Loan being
replaced is in Group I or an adjustable rate Home Equity Loan if the Home Equity
Loan being replaced is in Group II, (x) satisfies the criteria set forth from
time to time in the definition thereof at Section 860G(a)(4) of the Code (or any
successor statute thereto) and applicable to the Trust, (xi) satisfies the
representations and warranties set forth in Sections 5(b)(viii), (xi), (xii),
(xiii), (xiv), (xv) and (xvi) and Section 6 of the Mortgage Loan Purchase
Agreement, (xii) shall not be 30 days or more delinquent, (xiii) if such Home
Equity Loan being replaced is in Group II shall adjust based on the same index,
have no lower margin, have the same interval between adjustment dates, have a
next adjustment date not more than two months later than the next adjustment
date of the Home Equity Loan being replaced and have a Maximum Rate no lower
than, and a minimum Coupon Rate no lower than the Home Equity Loan being
replaced, and (xiv) shall have the same Due Date as the Home Equity Loan being
replaced. In the event that one or more home equity loans are proposed to be
substituted for one or more Home Equity Loans, the Certificate Insurer may allow
the foregoing tests to be met on a weighted average basis or other aggregate
basis acceptable to the Certificate Insurer, as evidenced by a written approval
delivered to the Trustee by the Certificate Insurer, except that the
requirements of clauses (i), (iii), (iv), (vi), (ix), (x), (xi), (xii), (xiii)
and (xiv) hereof must be satisfied as to each Qualified Substitute Home Equity
Loan.
"RATING AGENCIES": Collectively, Duff & Phelps, Moody's and Standard &
Poor's.
"REALIZED LOSS": As to any Liquidated Loan, the amount (not less than
zero), if any, by which (A) the sum of (w) the Loan Balance thereof as of the
date of liquidation, (x) the amount of accrued but unpaid interest thereon and
(y) any reimbursed and unreimbursed Delinquency Advances and Servicing Advances
to the extent not paid by the related Mortgagor is in excess of (B) the Net
Liquidation Proceeds, if any, realized thereon applied in reduction of such Loan
Balance.
"RECORD DATE": With respect to each Distribution Date, the last
Business Day of the calendar month immediately preceding the calendar month in
which such Distribution Date occurs.
"REFERENCE BANKS": Bankers Trust Company, Barclays Bank PLC and
National Westminster Bank PLC, PROVIDED that if any of the foregoing banks are
not suitable to serve as a Reference Bank, then any leading banks selected by
the Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) which are not Affiliates of the Company, the Trustee or the
Servicer, (iii) whose quotations appear on Telerate Page 3750 on the relevant
LIBOR Determination Date and (iv) which have been designated as such by the
Trustee.
"REGISTER": The register maintained by the Registrar in accordance
with Section 5.04 hereof, in which the names of the Owners are set forth.
"REGISTRAR": The Trustee, acting in its capacity as Registrar
appointed pursuant to Section 5.04 hereof, or any duly appointed and eligible
successor thereto.
"REGISTRATION STATEMENT": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-64351), including all amendments thereto and including the Prospectus and
Prospectus Supplement relating to the Offered Certificates.
"REIMBURSEMENT AMOUNT": With respect to each Home Equity Loan Group
and any Distribution Date, the sum of (x)(i) all Insured Payments previously
paid to the Trustee by the Certificate Insurer and not previously repaid to the
Certificate Insurer pursuant to Section 7.03(b)(iii) hereof plus (ii) interest
accrued on each such Insured Payment not previously repaid calculated at the
Late Payment Rate and (y)(i) any amounts then due and owing to the Certificate
Insurer under the Insurance Agreement (including, without limitation, any unpaid
Premium Amount relating to such Distribution Date or an earlier Distribution
Date) plus (ii) interest on such amounts at the Late Payment Rate. The
Certificate Insurer shall notify the Trustee, the Depositor, the Servicer and
Long Beach in writing of the amount of any Reimbursement Amount.
<PAGE>
"RELATED PRINCIPAL CARRYOVER SHORTFALL": With respect to any
Distribution Date and any Class B Component Certificate is the Principal
Carryover Shortfall of such Class B Component Certificate to the extent that it
resulted from a loss in the related Group.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC CERTIFICATE": Any of a REMIC I Certificate, REMIC II
Certificate, REMIC III Certificate or REMIC IV Certificate.
"REMIC I": The segregated pool of assets referred to as the Trust
Estate (other than the LIBOR Carryover Funds, the Cap Reserve Fund, the
Pre-Funding Account, the Prepaid Home Equity Loan Account and the Capitalized
Interest Account) constituting a REMIC created hereunder. Expenses and fees of
the Trust Estate shall be paid from REMIC I.
"REMIC II": The segregated group of assets consisting of the REMIC I
Regular Interests as defined in Section 2.08, and constituting a REMIC
hereunder.
"REMIC III": The segregated group of assets consisting of the REMIC II
Regular Interests as defined in Section 2.08, and constituting a REMIC
hereunder.
"REMIC IV": The segregated group of assets consisting of the REMIC III
Regular Interests as defined in Section 2.08, and constituting a REMIC
hereunder.
"REMIC OPINION": As defined in Section 3.06 hereof.
"REMIC PROVISIONS": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"REO MORTGAGED PROPERTY": A Mortgaged Property acquired by the
Servicer on behalf of the Trust through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Home Equity Loan.
"REPLACEMENT CUT-OFF DATE": With respect to any Qualified Substitute
Home Equity Loan, the first day of the calendar month in which such Qualified
Substitute Home Equity Loan is conveyed to the Trust.
"REPRESENTATION LETTER": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Offered
Certificates registered in the Register under the nominee name of the
Depository.
"RESIDUAL NET MONTHLY EXCESS CASHFLOW": With respect to any
Distribution Date, the aggregate Total Monthly Excess Cashflow, if any,
remaining after the making of all applications, transfers and disbursements
described in Sections 7.03(b)(i), 7.03(b)(ii), 7.03(b)(iii) and 7.03(b)(iv)
hereof.
"RESPONSIBLE PARTY": Long Beach with respect to the Initial Home
Equity Loans it originated (other than with respect to the representations set
forth in Section 5(b) of the Mortgage Loan Purchase Agreement) and the Seller
with respect to the remaining Initial Home Equity Loans, with respect to the
Initial Home Equity Loans originated by Long Beach and the representations set
forth in Section 5(b)(viii), (xi), (xiii), (xiv), (xv) and (xvi) of the Mortgage
Loan Purchase Agreement and with respect to any Subsequent Home Equity Loans.
"SCHEDULE OF HOME EQUITY LOANS": The schedules of Home Equity Loans
with respect to the Home Equity Loans listing each Home Equity Loan to be
conveyed on the Startup Day and with respect to Subsequent Home Equity Loans,
listing each Subsequent Home Equity Loan conveyed to the Trust as of each
Subsequent Transfer Date. Such Schedule of Home Equity Loans shall identify each
Home Equity Loan by the Servicer's loan number, borrower's last name and address
(including the state and zip code) of the Mortgaged Property and shall set forth
as to each Home Equity Loan the lien status thereof, the Loan-to-Value Ratio and
the Loan Balance as of the Cut-Off Date, the Coupon Rate thereof, the original
loan balance thereof, the current scheduled monthly payment of principal and
interest and the maturity date of the related Note, the property type, occupancy
status, Appraised Value and the original term-to-maturity thereof, the terms of
any Prepayment Penalties that are applicable and whether or not such Home Equity
Loan (including the related Note) has been modified and in the case of the Group
II Home Equity Loans, the Maximum Rate, the minimum rate at which the interest
may accrue and the next adjustment date.
"SECURITIES ACT": The Securities Act of 1933, as amended.
"SELLER": Credit Suisse First Boston Mortgage Capital LLC, a Delaware
limited liability company.
"SENIOR ENHANCEMENT PERCENTAGE": As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the related
Subordinated Amount (in each case, prior to taking into account the distribution
of the related Group Principal Distribution Amount on such Distribution Date)
and the denominator of which is the outstanding Loan Balance of the related Home
Equity Loans as of the last day of the related Due Period.
"SERVICER": Long Beach Mortgage Company, a Delaware corporation and
any successor hereunder.
"SERVICER LOSS TEST": The Servicer Loss Test for any period set out
below is satisfied if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below:
CUMULATIVE LOSS
PERIOD PERCENTAGE
July 2, 1999 - July 1, 2000 1%
July 2, 2000 - July 1, 2001 2%
July 2, 2001 - July 1, 2002 3%
July 2, 2002 - July 1, 2003 4%
After July 1, 2003 5%
"SERVICER TERMINATION EVENT": As defined in Section 8.20(a) hereof.
"SERVICER TERMINATION TEST": The Servicer Termination Test is
satisfied for any date of determination thereof, if (x) the 90+ Delinquency
Percentage (Rolling Three Month) is less than or equal to 13.00%, (y) the
Servicer Loss Test is satisfied and (z) the Annual Loss Percentage (Rolling
Twelve Month) for the twelve month period immediately preceding the date of
determination thereof is not greater than 1.50%.
"SERVICING ADVANCE": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"SERVICING FEE": With respect to the Servicer and the Special
Servicer, the portion of each of the Group I Servicing Fee or the Group II
Servicing Fee, as the context may require, related to Home Equity Loans (other
than Liquidated Loans) serviced by such entity.
"SPECIAL SERVICER": As defined in Section 8.20(o) hereof.
"SPECIFIED SUBORDINATED AMOUNT": The Group I Specified Subordinated
Amount or the Group II Specified Subordinated Amount.
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. or any successor thereto.
"STARTUP DAY": July 21, 1999.
<PAGE>
"STEPDOWN DATE": With respect to a Group means the later to occur of
(x) the Distribution Date in August 2002 and (y) the Distribution Date on which
the Senior Enhancement Percentage is greater than or equal to 17.50% for Group I
or 18.00% for Group II.
"SUBORDINATED AMOUNT": The Group I Subordinated Amount or the Group II
Subordinated Amount as the case may be.
"SUBORDINATION DEFICIENCY AMOUNT": With respect to either Home Equity
Loan Group and any Distribution Date, the excess, if any, of (i) the Specified
Subordinated Amount applicable to such Home Equity Loan Group and Distribution
Date over (ii) the Subordinated Amount applicable to such Home Equity Loan Group
and Distribution Date prior to taking into account the payment of any related
Subordination Increase Amounts on such Distribution Date.
"SUBORDINATION DEFICIT": With respect to either Home Equity Loan Group
and any Distribution Date on and after the Distribution Date on which the
Certificate Principal Balance of the Class B-1 Certificates has been reduced to
zero, the amount, if any, by which (x) the aggregate Certificate Principal
Balance with respect to the Class A Certificates related to such Group, after
taking into account the payment of the related Class A Distribution Amount with
respect to such Group on such Distribution Date (without regard to any Insured
Payment to be made on such Distribution Date and except for any Subordination
Deficit with respect to such Group), exceeds (y) the sum of (a) the aggregate
Loan Balances of the Home Equity Loans in such Home Equity Loan Group as of the
close of business on the last day of the related Due Period and (b) the amount,
if any, on deposit in the Pre-Funding Account with respect to such Group on the
last day of the related Due Period exclusive of any Pre-Funding Account Earnings
with respect to such Group.
"SUBORDINATION INCREASE AMOUNT": With respect to either Home Equity
Loan Group and any Distribution Date, the lesser of (i) the related
Subordination Deficiency Amount as of such Distribution Date (after taking into
account the payment of the related Class A Distribution Amount on such
Distribution Date (except for any Subordination Increase Amount with respect to
such Group)) and (ii) the aggregate amount of Total Monthly Excess Cashflow
allocated to such Home Equity Loan Group pursuant to Section 7.03(b)(ii)(C) or
(E) on such Distribution Date.
"SUBORDINATION REDUCTION AMOUNT": With respect to either Home Equity
Loan Group and any Distribution Date, an amount equal to the lesser of (x) the
Excess Subordinated Amount for such Home Equity Loan Group and Distribution Date
and (y) the Principal Remittance Amount with respect to such Group for the
related Due Period.
"SUBSEQUENT CUT-OFF DATE": The later of (x) the close of business of
the first day of the month in which such Subsequent Home Equity Loan was
transferred to the Trust and (y) the date of origination of any such Home Equity
Loan which is originated in the month of the related Subsequent Transfer Date.
"SUBSEQUENT HOME EQUITY LOANS": The Home Equity Loans sold to the
Trust pursuant to Section 3.07 hereof, which shall be listed on the Schedule of
Home Equity Loans attached to a Subsequent Transfer Agreement.
"SUBSEQUENT TRANSFER AGREEMENT": Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee and the Depositor
substantially in the form of Exhibit D hereto, by which Subsequent Home Equity
Loans are sold and assigned to the Trust.
"SUBSEQUENT TRANSFER DATE": The date specified in each Subsequent
Transfer Agreement.
"SUB-SERVICER": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"SUB-SERVICING AGREEMENT": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"SUBSTITUTION AMOUNT": As defined in Section 3.06 hereof.
"TANGIBLE NET WORTH" means (a) tangible assets of the Servicer and its
subsidiaries, calculated in accordance with generally accepted accounting
principles, minus (b) all indebtedness (excluding subordinated debt) of the
Servicer and its subsidiaries; provided, however, that in no event shall there
be included in the above calculation any tangible assets such as residual
securities, patents, trademarks, trade names, copyrights, licenses, goodwill,
organizational costs, advances or loans to, or receivables from, directors,
officers, employees or affiliates, amounts relating to noncompete agreements,
pension assets, deferred charges or treasury stock or any securities of the
Servicer or any of its subsidiaries or any other securities unless the same are
readily marketable in the United States of America or entitled to be used as a
credit against federal income tax liabilities. Securities included as such
intangible assets shall be taken into account at their current market price or
cost, whichever is lower, and any write-up in the book value of any assets
shall not be taken into account.
"TANGIBLE NET WORTH REQUIREMENT" means, on any date of determination,
Tangible Net Worth of at least $50,000,000 plus 50% of the cumulative after tax
net income of the Servicer and its subsidiaries from January 1, 1999 to the date
of determination.
"TAX MATTERS PERSON": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code.
"TAX MATTERS PERSON RESIDUAL INTEREST": The 0.001% interest in each of
the Class R Certificates which shall be issued to and held by The Chase
Manhattan Bank throughout the term hereof unless another person shall accept an
assignment of such interest and the designation of Tax Matters Person pursuant
to Section 11.18 hereof.
"TELERATE PAGE 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"TERMINATION NOTICE": As defined in Section 9.03(a) hereof.
"TERMINATION PRICE": Means, with respect to Sections 9.02 and 9.03
hereof, and on any date of determination thereof, an amount equal to the sum,
without duplication, of (w) the greater of (i) 100% of the aggregate outstanding
principal balances of the Home Equity Loans plus the appraised value of each REO
Mortgaged Property as of such date of determination less amounts remitted to the
Principal and Interest Account representing collections of principal on the Home
Equity Loans during the current Due Period, and (ii) the greater of (A) the
outstanding Aggregate Principal Balance and (B) the fair market value of such
Home Equity Loans (disregarding accrued interest) plus the appraised value of
each REO Mortgaged Property, (x) Current Interest due to the Certificateholders
plus the Servicing Fee, the Trustee Fee and the Premium Amount due, (y) all
Reimbursement Amounts and other amounts owed to the Certificate Insurer and the
Trustee under this Agreement and without duplication (z) the sum of the
aggregate amount of any unpaid Servicing Fees and any unreimbursed Delinquency
Advances, and Servicing Advances, and any Delinquency Advances which the
Servicer has theretofore failed to remit.
"TOTAL AVAILABLE FUNDS": The Group I Total Available Funds and the
Group II Total Available Funds.
"TOTAL MONTHLY EXCESS CASHFLOW": As defined in Section 7.03(b)(ii)
hereof.
"TOTAL MONTHLY EXCESS SPREAD": The Group I Total Monthly Excess Spread
and the Group II Total Monthly Excess Spread.
"TRUST": Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, the trust created under this Agreement which shall be comprised of two
sub-trusts; one for Group I and any Trust assets allocable to Group I and one
for Group II and any Trust assets allocable to Group II.
<PAGE>
"TRIGGER EVENT": With respect to Group I or Group II, as applicable,
if at any time, (x) the product of (i) 125% and (ii) the percentage equivalent
of a fraction, the numerator of which is the Delinquency Amount for the related
Home Equity Loan Group and the denominator of which is the outstanding principal
balance of the related Home Equity Loans as of the last day of the related Due
Period for the related Home Equity Loan Group exceeds (y) the Senior Enhancement
Percentage for the related Home Equity Loan Group.
"TRUST ESTATE": As defined in the conveyance clause under this
Agreement.
"TRUSTEE": The Chase Manhattan Bank, not in its individual capacity
but solely as Trustee under this Agreement, and any successor hereunder.
"TRUSTEE FEE": With respect to each Home Equity Loan Group, the fee
payable monthly to the Trustee on each Distribution Date in an amount equal to
the product of (a) one-twelfth of 0.006% and (b) the sum of the outstanding
aggregate Loan Balances of the Home Equity Loans in such Home Equity Loan Group
as of the first day of the related Due Period plus the applicable Pre-Funded
Amount as of the first day of the related Due Period.
"TRUSTEE REIMBURSABLE EXPENSES": Any amounts payable pursuant to
Section 11.16(a)(v) and pursuant to the second sentence of Section 10.07.
"270-DAY DELINQUENCY AMOUNT": The aggregate Loan Balance of the Home
Equity Loans in the related Home Equity Loan Group that are 270 or more days
delinquent (including without limitation, Home Equity Loans in foreclosure, Home
Equity Loans relating to REO Mortgaged Properties and the Home Equity Loans for
which the related Mortgagor is in bankruptcy).
"UNDERWRITER": Credit Suisse First Boston Corporation.
"UNRELATED PRINCIPAL CARRYOVER SHORTFALL": With respect to any
Distribution Date and any Class B Component Certificate is the Principal
Carryover Shortfall of such Class B Component Certificate to the extent that it
resulted from a loss in the unrelated Group.
Section 1.02. USE OF WORDS AND PHRASES.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03. CAPTIONS; TABLE OF CONTENTS.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04. OPINIONS.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the of creditors' rights generally
and by general principles of equity (whether considered in a proceeding or
action in equity or at law) and may state that no opinion is expressed on the
availability of the remedy of specific enforcement, injunctive relief or any
other equitable remedy. Any opinion required to be furnished by any Person
hereunder must be delivered by counsel upon whose opinion the addressee of such
opinion may reasonably rely, and such opinion may state that it is given in
reasonable reliance upon an opinion of another, a copy of which must be
attached, concerning the laws of a foreign jurisdiction. Any opinion delivered
hereunder shall be addressed to the Rating Agencies, the Certificate Insurer and
the Trustee.
<PAGE>
END OF ARTICLE I
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. ESTABLISHMENT OF THE TRUST.
The parties hereto do hereby create and establish, pursuant to the
laws of the State of New York and this Agreement, the Trust, which, for
convenience, shall be known as "Asset Backed Securities Corporation Home Equity
Loan Trust 1999-LB1" and which shall contain two subtrusts.
Section 2.02. OFFICE.
The office of the Trust shall be in care of the Trustee, addressed to
The Chase Manhattan Bank, at the Corporate Trust Office, or at such other
address as the Trustee may designate by notice to the Depositor, the Servicer,
and the Certificate Insurer.
Section 2.03. PURPOSES AND POWERS.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; PROVIDED, HOWEVER, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of any REMIC as a REMIC.
Section 2.04. APPOINTMENT OF THE TRUSTEE; DECLARATION OF TRUST.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners and the Certificate Insurer.
Section 2.05. EXPENSES OF THE TRUST.
All expenses of the Trust, including (i) the fees and reimbursable
expenses of the Trustee in connection with the performance of its duties
hereunder, (including, but not limited to, any portion of the Trustee Fee and
Trustee Reimbursable Expenses not paid pursuant to Sections 7.03(b)(i)(A) and
7.03(b)(iv), respectively, hereof) and (ii) to the extent not set forth herein,
any other expenses of the Trustee that have been reviewed and approved by the
Depositor, which review shall not be required in connection with the enforcement
of a remedy by the Trustee resulting from a default under this Agreement shall
be paid directly by the Depositor or the Seller. Failure by the Depositor or the
Seller to pay any such fees or other expenses shall not relieve the Trustee of
its obligations hereunder.
Section 2.06. OWNERSHIP OF THE TRUST.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07. SITUS OF THE TRUST.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created in the
State of New York. The Trust's only office will be at the office of the Trustee
as set forth in Section 2.02 hereof.
Section 2.08 DESIGNATION OF INTERESTS IN REMICS.
(a) The Trustee shall elect that each of REMIC I, REMIC II, REMIC III
and REMIC IV (which together constitute the Trust) shall be treated as a REMIC
under Section 860D of the Code. Any inconsistencies or ambiguities in this
Agreement or in the administration of this Agreement shall be resolved in a
manner that preserves the validity of such REMIC elections. The assets of REMIC
I shall include the Home Equity Loans, the Accounts (other than the Pre-Funding
Account, LIBOR Carryover Funds, the Cap Reserve Funds, the Prepaid Home Equity
Loan Account and the Capitalized Interest Account), any REO Mortgaged Property,
and any proceeds of the foregoing. The REMIC I Regular Interests shall
constitute the assets of REMIC II; the REMIC II Regular Interests shall
constitute the assets of REMIC III and the REMIC III Regular Interests shall
constitute the assets of REMIC IV.
(b) REMIC I will be evidenced by (x) the Class IN1-F, Class IN2-F,
Class IN3-F, Class IM-F, Class IN1-A, Class IN2-A, Class IN3-A, Class IM-A
Class P-F and Class P-A Certificates (together, the "REMIC I Regular
Interests"), which (i) (except in the case of Class P-F and Class P-A
Certificates) will be uncertificated and non-transferable, and (ii) are hereby
designated as the "regular interests" in REMIC I and (y) the Class R-1
Certificates, which are hereby designated as the single "residual interest" in
REMIC I (the REMIC I Regular Interests, together with the Class R-1
Certificates, the "REMIC I Certificates"). The Class IN1-F, Class IN2-F, Class
IN3-F, Class IM-F and Class P-F Certificates will be referred to as the "REMIC
I Group I Regular Interests" and the Class IN1-A, Class IN2-A, Class IN3-A,
Class IM-A and Class P-A Certificates will be referred to as the "REMIC I Group
II Regular Interests." The REMIC I Regular Interests shall be recorded on the
records of REMIC I as being issued to and held by the Trustee on behalf of REMIC
II.
The REMIC I Certificates will have the following designations, initial
principal balances and pass-through rates:
PASS-
REMIC I INITIAL THROUGH
CERTIFICATES BALANCE RATE
P-F $ 100 0% (3)
P-A $ 100 0% (3)
IN1-F $ 6,000,000 (1)
IN2-F $ 6,000,000 (1)
IN3-F $ 10,000,000 (1)
IM-F $ 206,864,763 (1)
IN1-A $ 18,722,727 (2)
IN2-A $ 18,722,727 (2)
IN3-A $ 30,454,546 (2)
IM-A $ 633,250,702 (2)
R-1 $ 0 0%
(1) The pass-through rate on these REMIC I Regular Interests shall
at any time of determination equal the weighted average of the
Adjusted Coupon Rates of the Home Equity Loans in Group I.
(2) The pass-through rate on these REMIC I Regular Interests shall
at any time of determination equal the weighted average of the
Adjusted Coupon Rates of the Home Equity Loans in Group II.
(3) The Class P-F and Class P-A Certificates shall be entitled to
receive all Prepayment Penalties collected with respect to the
Home Equity Loans in each of Group I and Group II,
respectively. Such Prepayment Penalties shall not be available
for distribution with respect to any other Class of REMIC I
Certificates. The Prepayment Penalties received by the Class
P-F and Class P-A Certificates shall not be applied to the
principal balance of those Certificates.
On each Distribution Date, principal collections and Realized Losses
on the Home Equity Loans in Group I shall be allocated sequentially, in reverse
order to which they are listed above, to the REMIC I Group I Regular Interests
until the principal balance of each such class is reduced to zero. All principal
collections and Realized Losses on the Home Equity Loans in Loan Group II shall
be allocated sequentially, in reverse order to which they are listed above, to
the REMIC I Group II Regular Interests until the principal balance of each such
class is reduced to zero. Notwithstanding the above, the Class P-F and Class P-A
Certificates shall not be entitled to any principal collections so long as the
Class IM-F and Class IM-A Interests remain outstanding, respectively. Any
principal collections otherwise payable to the Class P-F and Class P-A
Certificates will instead be payable to the Class IM-F and Class IM-A Interests,
respectively, until the principal balance of the Class IM-F and Class IM-A
Interests, respectively, have been reduced to zero, and any remaining principal
collections on the Home Equity Loans in Group I and Group II, respectively,
shall be payable to the Class P-F and Class P-A Certificates, respectively, to
the extent of their respective Certificate Principal Balances. The Class R-1
Certificates shall have no principal balance and no pass-through rate and shall
be entitled to only those distributable assets, if any, remaining in REMIC I on
each Distribution Date after all amounts required to be distributed to the REMIC
I Regular Interests and applicable Trust expenses have been paid.
(c) REMIC II will be evidenced by (x) the Class II BIO-F, the Class II
M-F, the three components of the Class II AIO-F, described in note (2), the
Class II BIO-A, the Class II M-A and the three components of the Class II AIO-A
described in note (4) (collectively, the "REMIC II Regular Interests"), which
will be uncertificated and non-transferable and are hereby designated as the
"regular interests" in REMIC II and (y) the Class R-2 Certificates, which are
hereby designated as the single "residual interest" in REMIC II (the REMIC II
Regular Interests, together with the Class R-II Certificates, the "REMIC II
Certificates"). The Class II AIO-F, Class II BIO-F and Class II M-F will be
referred to as the REMIC II Group I Regular Interests and the Class II AIO-A,
Class II BIO-A and Class II M-A will be referred to as the REMIC II Group II
Regular Interests. The REMIC II Regular Interests shall be recorded on the
records of REMIC II as being issued to and held by the Trustee on behalf of
REMIC III.
The REMIC II Certificates will have the following designations,
initial principal balances and pass-through rates:
PASS-
REMIC II INITIAL THROUGH
CERTIFICATES BALANCE RATE
II BIO-F $ 11,000,000 (1)
II M-F $ 217,864,763 (1)
II AIO-F $ 0 (2)
II BIO-A $ 27,000,000 (3)
II M-A $ 673,250,702 (3)
II AIO-A $ 0 (4)
R-2 $ 0 0%
(1) The pass-through rate on these REMIC II Regular Interests
shall at any time of determination equal the weighted average
of the pass-through rates of the REMIC I Group I Regular
Interests (other than the Class P-F Certificates), after first
subtracting 5.5% from the pass-through rates of each of such
regular interests (other than the Class IM-F Interests) for
the following Distribution Dates for each of such regular
interests: the Class IN1-F, 1-12; Class IN2-F, 1-24 and the
Class IN3-F, 1-30.
(2) Interest on the Class II AIO-F will equal the sum of three
strips of interest, with each strip being a strip off the
principal balance of a REMIC I Group I Regular Interest (other
than the Class IM-F Interests and the Class P-F Certificates)
at 5.5% per annum for the Distribution Dates indicated in note
(1) for such regular interest, and 0.0% thereafter. Each of
the three interest strips comprising the interest on the Class
II AIO-F shall constitute a separate component of the Class II
AIO-F, which shall each be designated as a separate REMIC II
Regular Interest.
(3) The pass-through rate on these REMIC II Regular Interests
shall at any time of determination equal the weighted average
of the pass-through rates of the REMIC I Group II Regular
Interests (other than the Class P-A Certificates), after first
subtracting 5.5% from the pass-through rates of each of such
regular interests (other than the Class IM-A Interests) for
the following Distribution Dates for each of such regular
interests: the Class IN1-A, 1-12; Class IN2-A, 1-24 and the
Class IN3-A, 1-30.
(4) Interest on the Class II AIO-A will equal the sum of three
strips of interest, with each strip being a strip off the
principal balance of a REMIC I Group II Regular Interest
(other than the Class IM-A Interests and the Class P-A
Certificates) at 5.5% per annum for the Distribution Dates
indicated in note (1) for such regular interest, and 0.0%
thereafter. Each of the three interest strips comprising the
interest on the Class II AIO-A shall constitute a separate
component of the Class II AIO-A, which shall each be
designated as a separate REMIC II Regular Interest.
On each Distribution Date, principal collections and Realized Losses
on the Class I BIO-F and Class I M-F Interests shall be allocated sequentially
first to the Class I M-F Interests and then to the Class II BIO-F Interests
until the principal balance of each such Class is reduced to zero, and on each
Distribution Date, principal collections and Realized Losses on the Class II
BIO-A and Class II M-A Interests shall be allocated sequentially first to the
Class II M-A Interests and then to the Class II BIO-A. The Class R-2
Certificates shall have no principal balance and no pass-through rate and shall
be entitled to only those distributable assets, if any, remaining in REMIC II on
each Distribution Date after all amounts required to be distributed to the REMIC
II Regular Interests and applicable Trust expenses have been paid. It is
expected that there will not be any distributions on the Class R-2 Certificate.
(d) REMIC III will be evidenced by (x) the Class III A1-F, Class III
A2-F, Class III B-1-F, Class III AIO-F, Class III BIO-F, Class III M-F, Class
III A3-A, Class III A4-A, Class III A5-A, Class III B-1-A, Class III AIO-A,
Class III BIO-A and Class III M-A (the "REMIC III Regular Interests"), which
will be uncertificated and non-transferable and are hereby designated as the
"regular interests" in REMIC III and (y) the Class R-3 Certificates, which are
hereby designated as the single "residual interest" in REMIC III (the REMIC III
Regular Interests, together with the Class R-3 Certificates, the "REMIC III
Certificates"). The Class III A1-F, Class III A2-F, Class III B-1-F, Class III
AIO-F, Class III BIO-F and Class III M-F will be referred to as the REMIC III
Group I Regular Interests and the Class III A3-A, Class III A4-A, Class III
A5-A, Class III B-1-A, Class III AIO-A, Class III BIO-A and Class III M-A will
be referred to as the REMIC III Group II Regular Interests. The REMIC III
Regular Interests shall be recorded on the records of REMIC III as being issued
to and held by the Trustee on behalf of REMIC IV.
Any Total Monthly Excess Cashflow that is used to pay the
Subordination Increase Amount (the "Turbo Amount") and that is payable from
interest on the Home Equity Loans in Group I will not be paid directly as
principal to the REMIC III Group I Regular Interests, but instead a portion of
the interest payable with respect to the Class III M-F Interest which equals 1%
of the Turbo Amount will be payable as a reduction of the principal balances of
the Class III A1-F, Class III A2-F and Class III B-1-F Interests in the same
manner in which the Turbo Amount is allocated among the Class A-1F, Class A-2F,
and Class B-1F Certificates, respectively (and will be accrued and added to
principal on the Class III M-F Interests) and that is payable from interest on
the Home Equity Loans. Principal payments on the Home Equity Loans shall be
allocated 99% to the Class III M-F Interests, and 1% to the Class III A1-F,
Class III A2-F, and Class III B-1-F Interests, until paid in full. The aggregate
amount of principal allocated to the Class III A1-F, Class III A2-F and Class
III B-1-F Interests shall be apportioned among such classes in the same manner
as principal is payable with respect to the Class A-1F, Class A-2F, and Class
B-1F Certificates, respectively. Notwithstanding the above, principal payments
on REMIC III Group I Regular Interests that are attributable to the Excess
Subordinated Amount shall be allocated to the Class III M-F Interests. Realized
Losses shall be applied such that after all distributions have been made on such
Distribution Date (i) the principal balances of the Class III A1-F, Class III
A2-F, Class III B-1-F Interests are each 1% of the principal balances of the
Class A-1F, Class A-2F and Class B-1F Certificates, respectively; and (ii) the
aggregate principal balance of the Class III M-F Interests is equal to the Loan
Balance of the Group I Home Equity Loans, less an amount equal 1% of the
aggregate Certificate Principal Balances of the Group I Certificates.
The Turbo Amount that is payable from interest on the Home Equity
Loans in Group II will not be paid directly as principal to the REMIC III Group
II Regular Interests, but instead a portion of the interest payable with respect
to the Class III M-A Interest which equals 1% of the Turbo Amount will be
payable as a reduction of the principal balances of the Class III A3-A, Class
III A4-A, Class III A5-A and Class III B-1-A Interests in the same manner in
which the Turbo Amount is allocated among the Class A-3A, Class A-4A, Class A-5A
and Class B-1A Certificates, respectively (and will be accrued and added to
principal on the Class III M-A Interests). Principal payments on the Home Equity
Loans shall be allocated 99% to the Class III M-A Interests, and 1% to the Class
III A3-A, Class III A4-A, Class III A5-A and Class III B-1-A Interests, until
paid in full. The aggregate amount of principal allocated to the Class III A3-A,
Class III A4-A, Class III A5-A and Class III B-1-A Interests shall be
apportioned among such classes in the same manner as principal is payable with
respect to the Class A-3A, Class A-4A, Class A-5A and Class B-1A Certificates,
respectively. Notwithstanding the above, principal payments on REMIC III Group
II Regular Interests that are attributable to the Excess Overcollateralization
Amount shall be allocated to the Class III M-A Interests. Realized Losses shall
be applied such that after all distributions have been made on such Distribution
Date (i) the principal balances of the Class III A3-A, Class III A4-A, Class III
A5-A and Class III B-1-A Interests are each 1% of the principal balances of the
Class A-3A, Class A-4A, Class A-5A and Class B-1A Certificates, respectively;
and (ii) the aggregate principal balance of the Class III M-A Interests is equal
to the Loan Balance of the Home Equity Loans in Group II, less an amount equal
1% of the aggregate Certificate Principal Balances of the Group II Certificates.
The REMIC III Certificates will have the following designations and
pass-through rates, and distributions of principal and interest thereon shall be
allocated to the Certificates in the following manner:
PASS- ALLOCATION ALLOCATION
REMIC III INITIAL THROUGH OF OF
CERTIFICATES BALANCE RATE PRINCIPAL INTEREST
III A1-F $ 1,669,000 (1) (7) (8),(9)
III A2-F $ 486,000 (1) (7) (8),(9)
III B-1-F $ 133,648 (1) (7) (8),(9)
III AIO-F $ 0 (3) N/A A-IOF
III BIO-F $ 0 (4) N/A B-IOF
III M-F $ 230,066,130 (1) (7) (8),(9)
III A3-A $ 2,929,000 (2) (7) (8), (10)
III A4-A $ 1,648,500 (2) (7) (8),(10)
III A5-A $ 2,000,000 (2) (7) (8),(10)
III B-1-A $ 425,007 (2) (7) (8),(10)
III AIO-A $ 0 (5) N/A A-IOA
III BIO-A $ 0 (6) N/A B-IOA
III M-A $ 700,442,517 (2) (7) (8),(10)
R-3 $ 0 0% N/A N/A
- ---------------
(1) The pass-through rate on these REMIC III Regular Interests
shall at any time of determination equal the weighted
average of the pass-through rates of the REMIC III Group I
Regular Interests (other than the Class P-F Certificates),
after first subtracting 7.0% from the pass-through rates of
each of such regular interests (other than the Class II M-F
Interests) for the Distribution Dates 1-36.
(2) The Pass-Through Rate on these REMIC III Regular Interests
shall at any time of determination equal the weighted
average of the pass-through rates of the REMIC III Group II
Regular Interests (other than the Class P-A Certificates),
after first subtracting 7.0% from the pass-through rates of
each of such regular interests (other than the Class II M-A
Interests) for the Distribution Dates 1-36.
(3) Interest on the Class III AIO-F will be 100% of the interest
payable on the Class II AIO-F.
(4) Interest on the Class III BIO-F will equal a strip of
interest off the principal balance of the Class II BIO-F
Interest at 7.0% per annum for the first 36 Distribution
Dates and 0% thereafter.
(5) Interest on the Class III AIO-A will be 100% of the interest
payable on the Class II AIO-A.
(6) Interest on the Class III BIO-A will equal a strip of
interest off the principal balance of the Class II BIO-A
Interest at 7.0% per annum for the first 36 Distribution
Dates and 0% thereafter.
(7) Principal will be allocated to and apportioned among the
Class A-1F, Class A-2F, Class A-3A Class A-4A, Class A-5A,
Class B-1F Component and Class B-1A Component Certificates,
in the same proportion as principal is payable with respect
to such Certificates, except that a portion of such
principal in an amount up to the Excess Subordinated Amount
for each of the Group I and Group II Certificates shall
first be allocated as a payment of interest to the Class X-F
and Class X-A Certificates, respectively, and all of the
principal of each respective Group will be allocated as a
payment of interest to the Class X-F and Class X-A
Certificates, respectively, after the principal balances of
the Group I and Group II Certificates, respectively, have
each been reduced to zero.
(8) Except as provided in note (9), interest will be allocated
among the Class A-1F, Class A-2F, Class A-3A, Class A-4A,
Class A-5A, Class B-1F Component and Class B-1A Component
Certificates in the same proportion as interest is payable
on such Certificates.
(9) Any interest with respect to this REMIC III Group I Regular
Interest in excess of the product of (i) 100 times the
weighted average coupon of the Class III A1-F, Class III
A2-F, Class III B-1-F and Class III M-F Interests, where
each of such classes, other than the Class III M-F Interests
is first subject to a cap and floor equal to the Class A-1F,
Class A-2F, and Class B-1F Component Pass-Through Rates,
respectively, and the Class III M-F Interests are subject to
a cap equal to 0%, and (ii) the principal balance of this
REMIC III Regular Interest, will be allocated to the Class
X-F Certificates and not allocated to the Group I
Certificates. However, the Class X-F Certificates shall be
subordinated to the extent provided in Section 7.03.
(10) Any interest with respect to this REMIC III Group II Regular
Interest in excess of the product of (i) 100 times the
weighted average coupon of the Class III A3-A, Class III
A4-A, Class III A5-A, Class III B-1-A and Class III M-A
Interests, where each of such classes, other than the Class
III M-A Interests is first subject to a cap and floor equal
to the Class A-3A, Class A-4A, Class A-5A and Class B-1A
Component Pass-Through Rates, respectively, and the Class
III M-A Interests are subject to a cap equal to 0%, and (ii)
the principal balance of this REMIC III Regular Interest,
will be allocated to the Class X-A Certificates and not
allocated to the Group II Certificates. However, the Class
X-A Certificates shall be subordinated to the extent
provided in Section 7.03.
(11) On each Distribution Date, available funds, if any,
remaining in REMIC III after payments of interest and
principal, as designated above, will be distributed to the
Class R-3 Certificate. It is expected that there will not be
any distributions on the Class R-3 Certificates.
(e) The Class A-1F, Class A-2F, Class A-3A, Class A-4A, Class A-5A,
Class B-1F Component, Class B-1A Component, Class A-IOF Component, Class A-IOA
Component, Class B-IOF, Class B-IOA, Class X-F and Class X-A Certificates are
hereby designated as "regular interests" with respect to REMIC IV (the "REMIC IV
Regular Interests") and the Class R-4 Certificate is hereby designated as the
single "residual interest" with respect to REMIC IV. On each Distribution Date,
Available Funds, if any, remaining in REMIC IV after payments of interest and
principal as designated herein shall be distributed to the Class R-4
Certificates. It is expected that there will not be any distributions on the
Class R-4 Certificates.
The beneficial ownership interests in REMIC IV created hereunder shall
be evidenced by the interests having the following characteristics and terms as
follows, including for federal income tax purposes the months in which the Final
Scheduled Distribution Dates occur:
INITIAL CERTIFICATE FINAL SCHEDULED
CLASS DESIGNATION PRINCIPAL BALANCE DISTRIBUTION DATE
Class A-1F $166,900,000 June 2029
Class A-2F $ 48,600,000 June 2029
Class A-3A $292,800,000 June 2029
Class A-4A $164,900,000 June 2029
Class A-5A $200,000,000 June 2029
Class A-IO (1) February 2002
Class B-1 $ 55,860,000 June 2029
Class B-IOA $ 11,000,000(2) August 2002
Class B-IOF $27,000,000(2) August 2002
Class P-A $100 June 2029
Class P-F $100 June 2029
Class X-A $ June 2029
Class X-F $ June 2029
Class R-4 (1) June 2029
----------------
(1) The sum of the notional amounts for the Class A-IOF and
Class A-IOA Component Certificates. The notional amounts for
the Class A-IOF and Class A-IOA Component Certificates are
equal to the lesser of (a) in the case of the Class A-IOF
Certificates, $22,000,000 for the first twelve Distribution
Dates, $16,000,000 for the thirteenth through the
twenty-fourth Distribution Dates and $10,000,000 for the
twenty-fifth through the thirtieth Distribution Dates and in
the case of the Class A-IOA Certificates $67,000,000 for the
first twelve Distribution Dates, $48,727,273 for the
thirteenth through the twenty-fourth Distribution Dates and
$30,454,545 for the twenty-fifth through the thirtieth
Distribution Dates and (b) the outstanding Loan Balance of
the related Group. Each Notional amount will be $0 after the
thirtieth Distribution Date.
(2) The lesser of (a) the amount stated above and (b) the
outstanding Loan Balance of the related Group. Each notional
amount will be $0 after the thirty-sixth Distribution Date.
(3) R-4 Certificates do not have a Certificate Principal
Balance. Solely for the purposes of satisfying Treasury
Regulation 1.860G-1(a)(4)(iii) the "latest possible maturity
date" for each REMIC Certificate is June 2034.
Section 2.09. MISCELLANEOUS REMIC PROVISIONS.
(a) The Startup Day is hereby designated as the "startup day" of each
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
(b) The Owner of the Tax Matters Person Residual Interest in each
REMIC created hereunder is hereby designated as "tax matters person" as defined
in the REMIC Provisions with respect to the REMIC.
(c) The Trust and each REMIC created hereunder shall, for federal
income tax purposes, maintain books on a calendar year basis and report income
on an accrual basis.
(d) The Trustee shall cause each REMIC created hereunder to elect to
be treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such election to be treated
as a REMIC. The Trustee shall report all expenses of the Trust Estate (other
than those expenses related to the Pre-Funding Account, the Prepaid Home Equity
Loan Account, the Cap Reserve Fund, the LIBOR Carryover Funds and the
Capitalized Interest Account) to each REMIC created hereunder.
(e) For all federal tax law purposes, amounts transferred by the
Trustee to the Owners of the Class R Certificates shall be treated as
distributions by each respective REMIC created hereunder.
(f) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860E(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-l(b)(5)(ii), or any successor
regulation thereto with respect to each REMIC created hereunder. Such
information will be provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR AND THE SERVICER;
COVENANT OF DEPOSITOR TO CONVEY HOME EQUITY LOANS
Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the Trustee
and the Certificate Insurer that as of the Startup Day:
(a) The Depositor is a corporation duly formed and validly existing
under the laws governing its creation and existence, is in compliance with the
laws of each state in which any Mortgaged Property or the Depositor is located
or doing business and is in good standing in each jurisdiction in which the
nature of its business, or the properties owned or leased by it make such
qualification necessary. The Depositor has all requisite authority to own and
operate its properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations under
this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Depositor and its performance
and compliance with the terms of this Agreement and the other Operative
Documents to which it is a party have been duly authorized by all necessary
corporate action on the part of the Depositor and will not violate the
Depositor's Charter or Bylaws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or result
in a breach of, any material contract, agreement or other instrument to which
the Depositor is a party or by which the Depositor is bound or violate any
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Depositor or any of its
properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default could materially and adversely
affect the condition (financial or other) or operations of the Depositor or its
properties or the consequences of which could materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(e) No litigation, proceeding or investigation is pending with respect
to which the Depositor has received service of process or, to the best of the
Depositor's knowledge, threatened against the Depositor which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or might have
consequences that would materially and adversely affect the validity or
enforceability of the Home Equity Loans or the Depositor's performance hereunder
and under the other Operative Documents to which the Depositor is a party.
(f) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributed
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor or omit to state a material fact required to be
stated therein or necessary in order to make the statements contained therein
with respect to the Depositor not misleading.
(g) 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 subject to no prior lien,
claim, participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
(h) As of the Startup Day, the Depositor has transferred all right,
title and interest in the Home Equity Loans to the Trustee on behalf of the
Trust; and
(i) The Depositor is solvent and will not be made insolvent by the
transfer of the Home Equity Loans, and the Depositor is not aware of any
impending insolvency. 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.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
of any similar statutory provisions in effect in any applicable jurisdiction.
(l) No certificate of an officer, statement furnished in writing or
report delivered, or to be delivered pursuant to the terms hereof by the
Depositor contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the certificate,
statement or report not misleading.
Section 3.02. REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer hereby represents, warrants and covenants to the
Depositor, the Trustee, the Certificate Insurer and the Owners that as of the
Startup Day:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is duly authorized
and qualified to transact any and all business contemplated by this Agreement
and the other Operative Documents to which it is a party to be conducted by the
Servicer in any state in which a Mortgaged Property is located or is otherwise
not required under applicable law to effect such qualification and, in any
event, is in compliance with the doing business laws of any such State, to the
extent necessary to ensure its ability to enforce each Home Equity Loan and to
service the Home Equity Loans in accordance with the terms of this Agreement and
the other Operative Documents to which it is a party.
(b) The Servicer has the full corporate power and authority to service
each Home Equity Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by this Agreement and the other
Operative Documents to which it is a party and has duly authorized by all
necessary corporate action on the part of the Servicer the execution, delivery
and performance of this Agreement and the other Operative Documents to which it
is a party; and this Agreement and the other Operative Documents to which it is
a party, assuming the due authorization, execution and delivery thereof by the
other parties thereto, constitutes a legal, valid and binding obligation of the
Servicer, enforceable against the Servicer in accordance with its terms, except
to the extent that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(c) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Servicer, the servicing of the
Home Equity Loans by the Servicer, the consummation of any other of the
transactions herein contemplated, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of the Servicer and will not
(A) result in a breach of any term or provision of the charter or by-laws of the
Servicer or (B) conflict with, result in a breach, violation or acceleration of,
or result in a default under, the terms of any other material agreement or
instrument to which the Servicer is a party or by which it may be bound, or any
statute, order or regulation applicable to the Servicer of any court, regulatory
body, administrative agency or governmental body having jurisdiction over the
Servicer; and the Servicer is not a party to, bound by, or in breach or
violation of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it, which
materially and adversely affects or, to the Servicer's knowledge, would in the
future materially and adversely affect, (x) the ability of the Servicer to
perform its obligations under this Agreement and the other Operative Documents
to which it is a party or (y) the business, operations, financial condition,
properties or assets of the Servicer taken as a whole.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement and the other Operative Documents to which it is a party or the
consummation of the transactions contemplated hereby, or if any such consent,
approval, authorization or order is required, the Servicer has obtained the
same, provided that the Servicer makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution of
the Certificates.
(e) The Servicer is an approved seller/servicer for FNMA in good
standing and is a HUD approved mortgagee pursuant to Section 203 of the National
Housing Act.
(f) No litigation is pending or, to the best of the Server's
knowledge, threatened against the Servicer that would materially and adversely
affect the execution, delivery or enforceability of this Agreement or the other
Operative Documents to which it is a party or the ability of the Servicer to
service the Home Equity Loans or to perform any of its other obligations
hereunder in accordance with the terms hereof or would materially and adversely
affect the condition (financial or otherwise) or operations of the Servicer or
its properties.
(g) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the home equity mortgage servicing business.
(h) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
(i) The Servicer is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Servicer or legal
documents associated with the transaction contemplated by this Agreement.
(j) There are no Sub-Servicers as of the Startup Day.
(k) The Servicer covenants that it will terminate any Sub-Servicer
within ninety (90) days after being directed by the Certificate Insurer to do
so.
(l) The Servicer represents and warrants that its computer and other
systems used in servicing the Home Equity Loans currently are, or will be no
later than October 31, 1999, capable of operating in a manner so that on and
after January 1, 2000 (i) the Servicer can service the Home Equity Loans in
accordance with the terms of this Agreement and (ii) the Servicer can operate
its business in the same manner as it is operating on the date hereof.
It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive delivery of the Home Equity Loans
to the Trustee.
Upon discovery by any of the Depositor, the Servicer, any
Sub-Servicer, the Certificate Insurer, any Owner or the Trustee (each, for
purposes of this paragraph, a party) of a breach of any of the representations
and warranties set forth in this Section 3.02 which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the party
discovering such breach shall give prompt written notice (but in no event later
than two Business Days following such discovery) to the other parties. As
promptly as practicable, but in any event, within 45 days of its discovery or
its receipt of notice of breach, the Servicer shall cure such breach in all
material respects and, upon the Servicer's continued failure to cure such
breach, may thereafter be removed by the Certificate Insurer or by the Trustee
with the written consent of the Certificate Insurer pursuant to Section 8.20
hereof; PROVIDED, HOWEVER, that if the Servicer can establish to the reasonable
satisfaction of the Certificate Insurer that it is diligently pursuing remedial
action, then the cure period may be extended for an additional 90 days with the
written approval of the Certificate Insurer.
Section 3.03. COVENANTS OF THE DEPOSITOR.
The Depositor hereby covenants with the Trustee and the Certificate
Insurer that it shall from and after the Startup Day until the termination of
the Trust:
(a) The Depositor will not file for bankruptcy without the unanimous
vote of its Board of Directors.
(b) The Depositor will observe all corporate procedures required by
its Certificate of Incorporation.
(c) The Depositor does not commingle its assets with the assets of the
any other Person. The board of directors of the Depositor must duly authorize
all the corporate actions of the Depositor, to the extent required by the laws
of its state of incorporation. The Depositor will maintain separate and full
corporate records and financial records for itself only.
(d) The financial records and accounts of the Depositor will be
prepared and maintained in accordance with generally accepted accounting
principles and will be susceptible to audit.
(e) The Depositor conducts its business solely in its own name. In
that regard, all written and oral communications, including, without limitation,
letters, invoices, purchase orders and contracts, will be made solely in its
name.
(f) The Depositor will provide for its expenses and liabilities from
its own funds. The capitalization of the Depositor will be adequate in light of
its proposed business and purpose.
(g) The Depositor will not be liable for the payment of any liability
of any other Person. Neither the assets nor the creditworthiness of the
Depositor will be generally held out as being available for the payment of any
liability of any other Person. Assets will not be transferred from the Depositor
to another Person without fair consideration or reasonably equivalent value or
with the intent to hinder, delay or defraud the creditors of any other Person.
The Depositor's business is such that the daily conduct thereof does not require
the management thereof by any other Person.
(h) The Depositor shall not incur any subordinated debt without the
prior written consent of the Certificate Insurer and notice to the Rating
Agencies.
Section 3.04. REPURCHASE OR SUBSTITUTION OF HOME EQUITY LOANS .
(a)(i) Upon the discovery by the Depositor, the Servicer, the
Certificate Insurer, any Sub-Servicer, any Owner or the
Trustee that the representations and warranties set forth in
Section 5(b)(viii), (xi), (xiii), (xiv), (xv) or (xvi) or
Section 6 of the Mortgage Loan Purchase Agreement were
untrue in any material respect, without regard to any
limitation set forth therein concerning the knowledge of the
Responsible Party as to the facts stated therein as of the
Startup Day (or in the case of the Subsequent Home Equity
Loans, as of the respective Subsequent Transfer Date or in
the case of a Qualified Substitute Home Equity Loan, as of
the respective replacement date) or the occurrence of a
First Payment Default with respect to a Home Equity Loan,
with the result that the interests of the Owners or of the
Certificate Insurer in the related Home Equity Loan are, or
may be, materially and adversely affected, the party
discovering such breach or First Payment Default shall give
prompt written notice to the other parties. Upon the
earliest to occur of the Responsible Party's discovery or
its receipt of notice of breach or First Payment Default
from any one of the other parties which materially and
adversely affects the interests of the Owners or of the
Certificate Insurer, without regard to any limitation set
forth in the Mortgage Loan Purchase Agreement concerning the
knowledge of the Responsible Party as to the facts stated
therein, the Servicer or the Trustee shall enforce the
obligation of the Responsible Party under the Mortgage Loan
Purchase Agreement to promptly cure such breach in all
material respects within 60 days (or 90 days if the
Responsible Party is attempting in good faith to cure the
breach as determined by the Certificate Insurer in its sole
discretion) following such discovery or receipt of notice or
(i) substitute in lieu of each Home Equity Loan which has
given rise to the requirement for action by the Responsible
Party a Qualified Substitute Home Equity Loan and deliver
the Substitution Amount to the Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Home
Equity Loan from the Trust at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be
delivered to the Servicer for deposit in the Principal and
Interest Account; PROVIDED, HOWEVER, that if the Responsible
Party can establish to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial
action, the period of time in which the Responsible Party
must substitute a Qualified Substitute Home Equity Loan or
purchase such Home Equity Loan may be extended with the
written approval of the Certificate Insurer. It is
understood and agreed that the obligation of the Responsible
Party under the Mortgage Loan Purchase Agreement to so
substitute or purchase any Home Equity Loan as to which such
a statement set forth therein is untrue in any material
respect and has not been remedied shall constitute the sole
remedy respecting a discovery of any such statement which is
untrue in any material respect therein available to the
Owners and the Trustee on behalf of the Owners.
(ii) The Depositor hereby represents and warrants that each
Initial Home Equity Loan in Group Ia and IIa has an original
Loan Balance of up to $240,000 except for Home Equity Loans
for which the related Mortgaged Property (a) is a two-family
property in which case the Loan Balance may be up to
$307,100, (b) is a three-family property in which case the
Loan Balance may be up to $371,200 or (c) is a four-family
property in which case the Loan Balance may be up to
$461,350; provided that the original Loan Balance for an
Initial Home Equity Loan in Alaska, Hawaii, Guam and the
U.S. Virgin Islands may be up to 50% higher than the limits
previously described. Upon the discovery by the Depositor,
the Servicer, the Certificate Insurer, any Sub-Servicer, any
Owner or the Trustee that such representation were untrue
with respect to a Home Equity Loan, the party discovering
such breach shall give prompt written notice to the other
parties. Upon the earliest to occur of the Depositor's
discovery or its receipt of notice of breach from any one of
the other parties, the Servicer or the Trustee shall enforce
the obligation of the Depositor to (i) substitute in lieu of
each Home Equity Loan which has given rise to the
requirement for action by the Depositor a Qualified
Substitute Home Equity Loan and deliver the Substitution
Amount to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan from
the Trust at a purchase price equal to the Loan Purchase
Price thereof, which purchase price shall be delivered to
the Servicer for deposit in the Principal and Interest
Account. It is understood and agreed that the obligation of
the Depositor to so substitute or purchase any such Home
Equity Loan shall constitute the sole remedy respecting a
discovery of a breach of the Depositor's representation in
the first sentence above available to the Owners and the
Trustee on behalf of the Owners.
(b) In the event of any such repurchase pursuant to this Section, an
Opinion of Counsel experienced in federal income tax matters shall be delivered
to the effect that such a repurchase or substitution would not constitute a
Prohibited Transaction for the Trust or a REMIC created hereunder or otherwise
subject the Trust or the REMICs created hereunder to tax and would not
jeopardize the status of the REMICs created hereunder as REMICs (a "REMIC
Opinion"). In the event that any such repurchase results in a Prohibited
Transaction, the Trustee shall immediately notify the Responsible Party in
writing thereof and the Responsible Party will, pursuant to the Mortgage Loan
Purchase Agreement, within 10 days of receiving notice thereof from the Trustee,
deposit the amount due from the Trust with the Trustee for the payment thereof,
including any interest and penalties, in immediately available funds. In the
event that any Qualified Substitute Home Equity Loan is delivered by the
Responsible Party to the Trust pursuant to the Mortgage Loan Purchase Agreement
and Section 3.04 or Section 3.06 hereof, the Responsible Party shall be
obligated to take the actions described in Section 3.04(a) with respect to such
Qualified Substitute Home Equity Loan upon the discovery by any of the Owners,
the Responsible Party, the Servicer, the Certificate Insurer, any Sub-Servicer
or the Trustee that the statements set forth in 5(b)(viii), (xi), (xiii), (xiv),
(xv) or (xvi) or Section 6 of the Mortgage Loan Purchase Agreement are untrue in
any material respect, without regard to any limitation set forth therein
concerning the knowledge of the Responsible Party as to facts stated therein, on
the date such Qualified Substitute Home Equity Loan is conveyed to the Trust or
the occurrence of a First Payment Default with respect to such Qualified
Substitute Home Equity Loan such that the interests of the Owners or the
Certificate Insurer in the related Qualified Substitute Home Equity Loan are, or
may be, materially and adversely affected; provided, however, that for the
purposes of this subsection (b) the statements in subsection (a) above referring
to items "as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to
refer to such items as of the date such Qualified Substitute Home Equity Loan is
conveyed to the Trust.
(c) It is understood and agreed that the representations, warranties
and covenants set forth or referred to in this Section 3.04 shall survive
delivery of the respective Home Equity Loans (including Qualified Substitute
Home Equity Loan) to the Trustee.
(d) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05. SALE TREATMENT OF THE INITIAL HOME EQUITY LOANS AND
QUALIFIED SUBSTITUTE HOME EQUITY LOANS.
(a) The transfer by the Depositor of the Home Equity Loans set forth
on the Schedule of Home Equity Loans to the Trustee is absolute and is intended
by the Owners and all parties hereto to be treated as a sale by the Depositor.
In the event that such conveyance or a conveyance pursuant to Section
3.07 and any Subsequent Transfer Agreement is deemed to be a loan, the parties
intend that the Depositor shall be deemed to have granted to the Trustee a
security interest in the Trust Estate, and that this Agreement shall constitute
a security agreement under applicable law.
(b) In connection with the transfer and assignment of the Initial Home
Equity Loans or on each Subsequent Transfer Date with respect to the Subsequent
Home Equity Loans the Depositor agrees to:
(i) deliver or cause to be delivered without recourse to the
Trustee, on the Startup Day with respect to each Initial Home Equity
Loan or on each Subsequent Transfer Date with respect to the
Subsequent Home Equity Loans, (A) the original Notes endorsed in blank
or to the order of the Trustee ("Pay to the order of The Chase
Manhattan Bank, as Trustee for Asset Backed Securities Corporation
Home Equity Loan Trust 1999-LB1, without recourse") and signed by
manual or facsimile signature, (B) an original or certified copy of
the title search and the original title insurance commitment or a copy
thereof certified as a true copy by the closing agent or the
Responsible Party, or the original title insurance policy or a copy
certified by the issuer of the title insurance policy, (C) originals
of all intervening assignments, if any showing a complete chain of
title from origination to the applicable Originator, including
warehousing assignments, if recorded, (D) originals of all assumption,
modification, consolidation or extension agreements, if any, (E)
either: (1) the original Mortgage, with evidence of recording thereon
(if such original Mortgage has been returned to the Responsible Party
from the applicable recording office) or a copy of the Mortgage
certified as a true copy by the closing attorney or an Authorized
Officer of the Responsible Party, or (2) a copy of the Mortgage
certified by the public recording office in those instances where the
original recorded Mortgage has been lost and (F) the original
Assignments of Mortgages (as described in clause (b)(ii)) in
recordable form (other than with respect to recording information not
yet received and the assignee's name) and acceptable for recording in
the state or other jurisdiction where the Mortgaged Property is
located.
(ii) with respect to each Home Equity Loan as to which the
Responsible Party has received recording information by the Startup
Day or the Subsequent Transfer Date, cause, within 30 days following
the Startup Day with respect to the Initial Home Equity Loans or by
the Subsequent Transfer Date with respect to the Subsequent Home
Equity Loans and with respect to each other Home Equity Loan, within
30 days following receipt of recording information, Assignments of the
Mortgages to "The Chase Manhattan Bank, as Trustee of Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 under the
Pooling and Servicing Agreement dated as of June 1, 1999" to be
submitted for recording in the appropriate jurisdictions; PROVIDED,
FURTHER, that the Depositor shall not be required to record an
assignment of a Mortgage if the Depositor furnishes to the Trustee and
the Certificate Insurer, on or before the Startup Day with respect to
the Initial Home Equity Loans or on each Subsequent Transfer Date with
respect to the Subsequent Home Equity Loans, at the Depositor's
expense, an Opinion of Counsel with respect to the relevant
jurisdiction that such recording is not necessary to protect the
Trustee's interest in the related Home Equity Loans (in form and
substance satisfactory to the Trustee, the Certificate Insurer and the
Rating Agencies); PROVIDED FURTHER, HOWEVER, notwithstanding the
delivery of any legal opinions, each assignment of Mortgage shall be
recorded by the Trustee upon the earliest to occur of: (i) reasonable
direction by the Certificate Insurer, (ii) the occurrence of a
Servicer Termination Event, or (iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Responsible Party; and
(iii) deliver the title insurance policy or title searches,
the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments
(other than unrecorded warehouse assignments), to the Trustee, within
15 days of receipt thereof by the Responsible Party (but in any event,
with respect to any Mortgage as to which original recording
information has been made available to the Responsible Party, within
12 months after the Startup Day with respect to the Initial Home
Equity Loans or on each Subsequent Transfer Date with respect to the
Subsequent Home Equity Loans).
In instances where the original recorded Mortgage or intervening
assignment (other than the Assignment of Mortgage) cannot be delivered to the
Trustee prior to or concurrently with the execution and delivery of this
Agreement due to a delay in connection with recording, the Depositor may in lieu
of delivering such original recorded Mortgage, or intervening assignment (other
than the Assignment of Mortgage), deliver to the Trustee a copy thereof,
provided that the Responsible Party provides a copy of such document and
certifies that the original Mortgage, or intervening assignment (other than the
Assignment of Mortgage) has been delivered to a title insurance company for
recordation after receipt of its policy of title insurance or binder therefor.
In all such instances, the Depositor will deliver or cause to be delivered the
original recorded Mortgage, or intervening assignment (other than the Assignment
of Mortgage) to the Trustee promptly upon receipt by the Responsible Party of
the original recorded Mortgage, or intervening assignment (other than the
Assignment of Mortgage) but in no event later than 12 months after the Startup
Day or Subsequent Transfer Date, as applicable.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the Assignment of Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder (and the Responsible Party shall be deemed
to have satisfied its obligations under the Mortgage Loan Purchase Agreement)
upon delivery to the Trustee of a copy of such Mortgage, such assignment or
assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Not later than forty days following the Startup Day, the Responsible
Party, shall deliver to the Trustee a list of all Mortgages for which no
Assignment of Mortgage has yet been submitted for recording by the Responsible
Party, which list shall state the reason why the Responsible Party has not yet
submitted such Mortgage assignments for recording. With respect to any
Assignment of Mortgage disclosed on such list as not yet submitted for recording
for a reason other than a lack of original recording information, the Trustee
shall make an immediate demand on the Responsible Party to prepare such
Assignments of Mortgage, and shall inform the Certificate Insurer, in writing,
of the Responsible Party's failure to prepare such Assignments of Mortgage.
Thereafter, the Trustee, shall cooperate in executing any documents prepared by
the Certificate Insurer and submitted to the Trustee in connection with this
provision. Following the Startup Day, the Responsible Party shall promptly
prepare an Assignment of Mortgage for any Mortgage for which original recording
information is subsequently received by the Responsible Party, and shall
promptly deliver a copy of such Assignment of Mortgage to the Trustee. The
Responsible Party shall follow its normal servicing procedures and attempt to
obtain the original recording information necessary to complete an Assignment of
Mortgage. In the event that the Responsible Party is unable to obtain such
recording information with respect to any Mortgage prior to the end of the 18th
calendar month following the Startup Day with respect to the Initial Home Equity
Loans and the relevant Subsequent Transfer Date with respect to Subsequent Home
Equity Loans and has not provided to the Trustee an Assignment of Mortgage with
evidence of recording thereon relating to the assignment of such Mortgage to the
Trustee, the Trustee shall notify the Responsible Party of the Responsible
Party's obligation pursuant to the Mortgage Loan Purchase Agreement to provide a
completed assignment (with evidence of recording thereon) on or before the end
of the 20th calendar month following the Startup Day with respect to the Initial
Home Equity Loans and the relevant Subsequent Transfer Date with respect to
Subsequent Home Equity Loans. A copy of such notice shall be sent by the Trustee
to the Certificate Insurer. If no such completed assignment (with evidence of
recording thereon) is provided before the end of such 20th calendar month, the
related Home Equity Loan shall be deemed to have breached the representations
contained in Section 6 of the Mortgage Loan Purchase Agreement; PROVIDED,
HOWEVER, that if as of the end of such 20th calendar month the Responsible Party
demonstrates to the satisfaction of the Certificate Insurer that it is
exercising its best efforts to obtain such completed assignment and, during each
month thereafter until such completed assignment is delivered to the Trustee,
the Responsible Party continues to demonstrate to the satisfaction of the
Certificate Insurer that it is exercising its best efforts to obtain such
completed assignment, the related Home Equity Loan will not be deemed to have
breached such representation. The requirement to deliver a completed assignment
with evidence of recording thereon will be deemed satisfied upon delivery of a
copy of the completed assignment certified by the applicable public recording
office.
Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Servicer.
(c) In the case of Initial Home Equity Loans which have been prepaid
in full on or after the Cut-Off Date and prior to the Startup Day, the
Depositor, in lieu of the foregoing, will deliver on or before the Startup Day
to the Trustee a certification of an Authorized Officer in the form set forth in
Exhibit E.
(d) The Depositor shall transfer, assign, set over and otherwise
convey without recourse, to the Trustee all right, title and interest of the
Depositor in and to any Qualified Substitute Home Equity Loan delivered to the
Trustee on behalf of the Trust by the Depositor pursuant to Section 3.04 or 3.06
hereof and all its right, title and interest to principal and interest due on
such Qualified Substitute Home Equity Loan on and after the applicable
Replacement Cut-Off Date; PROVIDED, HOWEVER, that the Depositor shall reserve
and retain all right, title and interest in and to payments of principal and
interest due on such Qualified Substitute Home Equity Loan prior to the
applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with a repurchase or the conveyance of a Qualified Substitute Home Equity Loan
therefor, the Trustee will transfer, assign, set over and otherwise convey
without recourse or representation, on the Responsible Party's order, all of its
right, title and interest in and to such released Home Equity Loan and all the
Trust's right, title and interest to principal and interest due on such released
Home Equity Loan after the applicable Replacement Cut-Off Date, as the case may
be; PROVIDED, HOWEVER, that the Trust shall reserve and or and retain all right,
title and interest in and to payments of principal and interest due on such
released Home Equity Loan prior to such repurchase or the applicable Replacement
Cut-Off Date, as the case may be.
(f) In connection with any transfer and assignment of a Qualified
Substitute Home Equity Loan to the Trustee on behalf of the Trust, the
Responsible Party has agreed pursuant to the Mortgage Loan Purchase Agreement to
deliver without recourse to the Trustee on the date of delivery of such
Qualified Substitute Home Equity Loan the documents required to be delivered
pursuant to Section 3.05(b)(i).
(g) As to each Home Equity Loan released from the Trust in connection
with a repurchase or the conveyance of a Qualified Substitute Home Equity Loan
the Trustee shall deliver on the date of such repurchase or conveyance of such
Qualified Substitute Home Equity Loan and on the order of the Responsible Party
(i) the original Note relating thereto, endorsed without recourse or
representation, in blank or to the order of, to the Responsible Party, (ii) the
original Mortgage so released and all assignments relating thereto and (iii)
such other documents as constituted the File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Trustee shall cause the Responsible Party to prepare, pursuant to the
Mortgage Loan Purchase Agreement a substitute assignment or cure such defect, as
the case may be, and thereafter cause each such assignment to be duly recorded.
Section 3.06. ACCEPTANCE BY TRUSTEE; CERTAIN SUBSTITUTIONS OF HOME
EQUITY LOANS; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by or on behalf of the
Depositor in the form attached as Exhibit F hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definition of Trust Estate and
delivered to the Trustee, in trust upon and subject to the conditions set forth
herein for the benefit of the Owners and the Certificate Insurer. The Trustee
agrees, for the benefit of the Owners and the Certificate Insurer, to review
such items on or before the Startup Day (or, with respect to any document
delivered after the Startup Day, on the day of receipt and with respect to any
Subsequent Home Equity Loan or Qualified Substitute Home Equity Loan, on or
before the assignment thereof) and to deliver to the Depositor, the Responsible
Party, the Servicer and the Certificate Insurer a certification in the form
attached hereto as Exhibit G (a "Pool Certification") to the effect that, as to
each Home Equity Loan listed in the Schedule of Home Equity Loans (other than
any Home Equity Loan paid in full or any Home Equity Loan specifically
identified in the exception report annexed to such Pool Certification as not
covered by such Pool Certification), (i) all documents required to be delivered
to it pursuant to Section 3.05(b)(i) of this Agreement have been executed and
are in its possession and that the Notes have been endorsed as set forth in
Section 3.05(b)(i) hereof, (ii) such documents have been reviewed by it and have
not been mutilated, damaged or torn and relate to such Home Equity Loan and
(iii) based on its examination and only as to the foregoing documents, the
information set forth on the Schedule of Home Equity Loans accurately reflects
the information set forth in the File with respect to the Servicer's loan
number, maturity date, original principal balance, first payment date and
original term to maturity. The Trustee shall have no responsibility for
reviewing any File except as expressly provided in this subsection 3.06(a).
Without limiting the effect of the preceding sentence, in reviewing any File,
the Trustee shall have no responsibility for determining whether any document is
valid and binding, whether the text of any assignment is in proper form (except
to determine if the Trustee is the assignee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction or
whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded. The Trustee shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face, nor shall the Trustee be under any duty to determine independently whether
there are any intervening assignments or assumption or modification agreements
with respect to any Home Equity Loan.
(b) In addition to the foregoing, the Trustee also agrees to make a
review on or before 180 days after the Startup Day (to be updated quarterly)
indicating the current status of the exceptions previously indicated on the Pool
Certification (the "Final Certification"). After delivery of the Final
Certification, the Trustee and the Servicer shall provide to the Certificate
Insurer no less frequently than quarterly updated certifications indicating the
then current status of exceptions, until all such exceptions have been
eliminated.
(c) If the Trustee during such review of the Files for the Pool
Certification and the Final Certification and making or preparing the
certifications referred to above finds any document constituting a part of a
File which is not executed, has not been received, or is unrelated to the Home
Equity Loans identified in the Schedule of Home Equity Loans, or that any Home
Equity Loan does not conform to the description thereof as set forth in the
Schedule of Home Equity Loans, the Trustee shall promptly so notify the
Depositor, the Responsible Party, the Seller and the Certificate Insurer. In
performing any such review, the Trustee may conclusively rely on the Responsible
Party as to the purported genuineness of any such document and any signature
thereon. It is understood that the scope of the review of the items delivered by
the Depositor pursuant to Section 3.05(b)(i) is limited solely to confirming
that the documents listed in Section 3.05(b)(i) have been executed and received,
relate to the Files identified in the Schedule of Home Equity Loans and conform
to the description thereof in the Schedule of Home Equity Loans solely with
respect to the Servicer's loan number, the maturity date, original principal
balance, first payment date, and original term to maturity. The Responsible
Party has agreed pursuant to the Mortgage Loan Purchase Agreement to use
reasonable efforts to remedy a material defect in a document constituting part
of a File of which it is so notified by the Trustee. If, however, within 60 days
(or 90 days if the Responsible Party is attempting in good faith to cure such
defect as determined by the Certificate Insurer in its sole discretion) after
such notice to it respecting such defect the Responsible Party has not remedied
the defect and the defect materially and adversely affects the interest in the
related Home Equity Loan of the Owners or the Certificate Insurer, the Trustee
will cause the Responsible Party pursuant to the Mortgage Loan Purchase
Agreement within 60 days (or 90 days if the Responsible Party is attempting in
good faith to cure such defect as determined by the Certificate Insurer in its
sole discretion) to (i) substitute in lieu of such Home Equity Loan a Qualified
Substitute Home Equity Loan and, if the outstanding principal amount of such
Qualified Substitute Home Equity Loan as of the applicable Replacement Cut-Off
Date is less than the outstanding principal balance of such Home Equity Loan as
of such Replacement Cut-Off Date, deliver an amount (a "Substitution Amount")
equal to such difference together with the aggregate amount of (A) all
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan and (B) all accrued and unpaid interest with respect to
such Home Equity Loan to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. In connection with
any proposed purchase or substitution of a Home Equity Loan, the Responsible
Party has agreed pursuant to the Mortgage Loan Purchase Agreement to cause at
the Responsible Party's expense to be delivered to the Trustee and to the
Certificate Insurer an Opinion of Counsel experienced in federal income tax
matters stating whether or not such a proposed purchase or substitution would
constitute a Prohibited Transaction for the Trust or would jeopardize the status
any REMIC created hereunder as a REMIC, and the Responsible Party shall only be
required to take either such action to the extent such action would not
constitute a Prohibited Transaction for the Trust or would not jeopardize the
status of any REMIC created hereunder as a REMIC. Any required purchase or
substitution, if delayed by the absence of such opinion, shall nonetheless occur
upon the earlier of (i) the occurrence of a default or imminent default with
respect to the Home Equity Loan or (ii) the delivery of such opinion.
Section 3.07 CONVEYANCE OF THE SUBSEQUENT HOME EQUITY LOANS.
(a) Subject to the satisfaction of the conditions set forth in Section
3.05 and paragraphs (b), (c) and (d) below (based on the Trustee's review of
such conditions) in consideration of the Trustee's delivery on the relevant
Subsequent Transfer Dates to or upon the order of the Depositor of all or a
portion of the balance of funds in the Pre-Funding Account or the Prepaid Home
Equity Loan Account, the Depositor shall on each Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey without recourse, to the
Trustee, and the Trustee shall purchase on behalf of the Trust all of the
Depositor's right, title and interest in and to any and all benefits accruing to
the Depositor from the Subsequent Home Equity Loans (other than any principal
and interest due on or prior to the relevant Subsequent Cut-Off Date) which the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.04 and 3.06), together with the related
Subsequent Home Equity Loan documents and the Depositor's interest in any
Mortgaged Property which secures a Subsequent Home Equity Loan and all payments
thereon the Depositor's rights but none of its obligations under the related
Subsequent Transfer Agreement and proceeds of the conversion, voluntary or
involuntary, of the foregoing and proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, flood
insurance, hazard insurance and title insurance policy relating to the
Subsequent Home Equity Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing). Notwithstanding anything to the contrary herein, there
shall be no more than three Subsequent Transfer Dates.
The transfer by the Depositor of the Subsequent Home Equity Loans set
forth on the related Schedule of Home Equity Loans to the Trustee shall be
absolute and shall be intended by the Owners and all parties hereto to be
treated as a sale by the Depositor. Any Subsequent Home Equity Loan transferred
shall be included in one and only one of Group Ia, Group Ib, Group IIa or Group
IIb. The amount released from the Pre-Funding Account or the Prepaid Home Equity
Loan Account, as applicable, shall be one-hundred percent (100%) of the
aggregate principal balances of the Subsequent Home Equity Loans so transferred.
Upon the transfer by the Depositor of the Subsequent Home Equity Loans
hereunder, such Subsequent Home Equity Loans (and all principal and interest due
thereon on and subsequent to the Subsequent Cut-Off Date) and all other rights
and interests with respect to such Subsequent Home Equity Loans transferred
pursuant to a Subsequent Transfer Agreement shall be deemed for all purposes
hereunder to be part of the Trust Estate.
(b) The obligation of the Trustee to accept the transfer of the
Subsequent Home Equity Loans and the other property and rights related thereto
described in paragraph (a) above is subject to the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the Trustee and the
Certificate Insurer with an Addition Notice not less than 5 Business
Days prior to the proposed Subsequent Transfer Date (unless the
Trustee and the Certificate Insurer shall agree to a shorter period of
time) and shall have provided any information reasonably requested by
any of the foregoing with respect to the Subsequent Home Equity Loans;
(ii) the Depositor shall have delivered to the Trustee (with
a copy to the Certificate Insurer) a duly executed written Subsequent
Transfer Agreement (including an acceptance by the Trustee) in
substantially the form of Exhibit D hereto, which shall indicate
whether such Subsequent Home Equity Loan is to be assigned to Group I
or Group II and which shall include a Schedule of Home Equity Loans,
listing the Subsequent Home Equity Loans and any other exhibits listed
thereon;
(iii) the Depositor shall have delivered to the Servicer for
deposit in the Principal and Interest Account all principal and
interest due in respect of such Subsequent Home Equity Loans on and
after the related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, none of the
Responsible Party, the Seller the Depositor was insolvent, nor will
any of them be made insolvent by such transfer, nor is any of them
aware of any pending insolvency;
(v) with respect to Subsequent Home Equity Loans to be
purchased with funds from a Pre-Funding Account, the Funding Period
with respect to the related Group shall not have ended:
(vi) the Depositor shall have delivered to the Trustee and
the Certificate Insurer an Officer's Certificate confirming the
satisfaction of each condition precedent specified in this paragraph
(b) and paragraphs (c), (d) and (e) below and in the related
Subsequent Transfer Agreement and the Certificate Insurer shall have
consented to such transfer;
(vii) such purchase of the Subsequent Home Equity Loans will
not result in a material adverse tax consequence to the Trust or the
Owners of the Certificates; and
(viii) the Depositor shall have delivered to the Trustee and
the Certificate Insurer Opinions of Counsel with respect to the
transfer of the Subsequent Home Equity Loans substantially in the form
of the Opinions of Counsel delivered to the Trustee and the
Certificate Insurer on the Startup Day with respect to the Initial
Home Equity Loans (bankruptcy, corporate and tax).
(c) The obligation of the Trust to purchase a Subsequent Home Equity
Loan for addition to Group I on any Subsequent Transfer Date is subject to the
following requirements any of which may, at the Depositor's request, be waived
or modified by the Certificate Insurer by a written waiver (a copy of which
waiver shall be delivered to the Trustee and the Rating Agencies): (i) such
Subsequent Home Equity Loan will be a fixed-rate Home Equity Loan; (ii) the
average Loan Balance of such Subsequent Home Equity Loans will be less than
$90,000; (iii) such Subsequent Home Equity Loan will not be more than 30 days
contractually Delinquent as of the Subsequent Cut-Off Date; (iv) the weighted
average remaining term to maturity of such Subsequent Home Equity Loan may not
exceed 357 months; (v) at least 90% of such Subsequent Home Equity Loans will be
owner occupied; (vi) the weighted average Loan-to-Value Ratio of such Subsequent
Home Equity Loans shall not exceed 80%; (vii) the weighted average Coupon Rate
of such Subsequent Home Equity Loans shall not be less than 9.50%; (viii) at
least 80% of such Subsequent Home Equity Loans shall be single family; (ix) not
more than 35% of the Mortgaged Properties relating to Subsequent Home Equity
Loans are located in California and (x) the characteristics of the Subsequent
Home Equity Loans with respect to the related Group, in aggregate, shall not be
materially different from the characteristics of the Home Equity Loans with
respect to the related Group relating to Prepayments in Full deposited in the
Prepaid Home Equity Loan Account and used to acquire such Subsequent Home Equity
Loans. In addition, the Subsequent Home Equity Loans with respect to Group I and
the final pool of Home Equity Loans in Group I shall conform to the requirements
in the Insurance Agreement and (x) such Subsequent Home Equity Loans with
respect to Group Ia will have an original Loan Balance of less than $240,000
except for Home Equity Loans for which the related Mortgaged Property (a) is a
two-family property in which case the Loan Balance may be up to $307,100, (b) is
a three-family property in which case the Loan Balance may be up to $371,200 or
(c) is a four-family property in which case the Loan Balance may be up to
$461,350 provided that the original Loan Balance for an Initial Home Equity Loan
in Alaska, Hawaii, Guam and the U.S. Virgin Islands may be up to 50% higher than
the limits previously described.
(d) The obligation of the Trust to purchase a Subsequent Home Equity
Loan for addition to Group II on any Subsequent Transfer Date is subject to the
following requirements any of which may, at the Seller's request, be waived or
modified by the Certificate Insurer by a written waiver (a copy of which waiver
shall be delivered to the Trustee and the Rating Agencies): (i) such Subsequent
Home Equity Loan will be an adjustable-rate Home Equity Loan; (ii) the average
Loan Balance of such Subsequent Home Equity Loans will be less than $105,000;
(iii) such Subsequent Home Equity Loan will be in a first lien position; (iv)
such Subsequent Home Equity Loan will not be more than 30 days contractually
Delinquent as of the Subsequent Cut-Off Date; (v) the weighted average remaining
term to maturity of such Subsequent Home Equity Loans may not exceed 360 months;
(vi) such Subsequent Home Equity Loan will have a weighted average lifetime
minimum Coupon Rate of not less than 9.00% and a weighted average maximum rate
of at least 15%; (vii) such Subsequent Home Equity Loans with respect to Group
IIa will have an original Loan Balance of less than $240,000 except for Home
Equity Loans for which the related Mortgaged Property (a) is a two-family
property in which case the Loan Balance may be up to $307,100, (b) is a
three-family property in which case the Loan Balance may be up to $371,200 or
(c) is a four-family property in which case the Loan Balance may be up to
$461,350 provided that the original Loan Balance for an Initial Home Equity Loan
in Alaska, Hawaii, Guam and the U.S. Virgin Islands may be up to 50% higher than
the limits previously described; (viii) such Subsequent Home Equity Loans will
have a weighted average Coupon Rate of at least 9.00%; (ix) such Subsequent Home
Equity Loans will have a weighted average original Loan-to-Value Ratio of not
more than 80%; (x) at least 7% of such Subsequent Home Equity Loans shall be
six-month adjustable rate loans; (xi) such Subsequent Home Equity Loans will
have a weighted gross average margin of no less than 6.00%; (xii) at least 90%
of such Subsequent Home Equity Loans will be owner occupied; (xiii) at least 75%
of such Subsequent Home Equity Loans will be single family; (xiv) not more than
35% of the Mortgaged Properties relating to Subsequent Home Equity Loans are
located in California and (xv) the characteristics of the Subsequent Home Equity
Loans with respect to the related Group, in aggregate, shall not be materially
different from the characteristics of the Home Equity Loans with respect to the
related Group relating to Prepayments in Full deposited in the Prepaid Home
Equity Loan Account and used to acquire such Subsequent Home Equity Loans. In
addition, the Subsequent Home Equity Loans with respect to Group II and the
final pool of Home Equity Loans in Group II shall conform to the requirements in
the Insurance Agreement.
(e) Reserved.
(f) In connection with each Subsequent Transfer Date and, if
applicable, on the final Pre-Funding Distribution Date, the Trustee shall
determine based on information provided to the Trustee by the Depositor on or
prior to such Subsequent Transfer Date: (i) the amount and correct dispositions
of Group I Capitalized Interest Requirement and Group II Capitalized Interest
Requirement, of amounts in the Prepaid Home Equity Loan Account, Pre-Funding
Account Earnings and the Pre-Funded Amount and (ii) any other necessary matters
in connection with the administration of the Pre-Funding Account, the Prepaid
Home Equity Loan Account and of the Capitalized Interest Account. In the event
that any amounts are released as a result of an error in calculation to the
Owners or Depositor from the Pre-Funding Account or from the Capitalized
Interest Account, such Owners or the Depositor shall immediately repay such
amounts to the Trustee or the Trustee shall have the right to withhold such
amounts from future distributions on such Certificates or the Depositor.
On the final Pre-Funding Distribution Date, the Certificate Insurer
may modify the related Specified Subordinated Amount as provided in Exhibits L
and M.
Section 3.08. RESERVED.
Section 3.09. COOPERATION PROCEDURES. The Depositor shall, and shall
cause the Responsible Party to, in connection with the delivery of each
Qualified Substitute Home Equity Loan to the Trustee, provide the Trustee with
information set forth in the Schedules of Home Equity Loans with respect to such
Qualified Substitute Home Equity Loan.
(a) The Depositor, the Servicer and the Trustee covenant to provide
each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required to
be obtained by any of them in connection with their respective duties hereunder.
(b) The Servicer shall maintain such accurate and complete accounts,
records and computer systems pertaining to each File as shall enable it and the
Trustee to comply with this Agreement. In performing its recordkeeping duties
the Servicer shall act in accordance with Accepted Servicing Practices and the
terms of this Agreement. The Servicer shall conduct, or cause to be conducted,
periodic audits of its accounts, records and computer systems as set forth in
Section 8.16 and 8.17 hereof. The Servicer shall promptly report to the Trustee
and the Certificate Insurer any failure on its part to maintain its accounts,
records and computer systems herein provided and promptly take appropriate
action to remedy any such failure.
(c) The Servicer further confirms to the Trustee and the Certificate
Insurer that it has caused the portions of the electronic ledger relating to the
Home Equity Loans to be clearly and unambiguously marked to indicate that such
Home Equity Loans are property of the Trust.
END OF ARTICLE III
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. ISSUANCE OF CERTIFICATES.
On the Startup Day, upon the Trustee's receipt from the Depositor of
an executed Delivery Order in the form set forth as Exhibit H hereto, the
Trustee shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02. SALE OF CERTIFICATES.
At 10 a.m. New York City time on the Startup Day, at the offices
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038 (or at
such other location acceptable to the Depositor), the Seller will sell and
convey the Initial Home Equity Loans and the money, instruments and other
property related thereto to the Depositor and the Depositor will convey the
Initial Home Equity Loans and the money, instruments and other property related
thereto to the Trustee, and the Trustee will deliver (i) to the Underwriter (as
designee of the Depositor), the Offered Certificates with an aggregate
Percentage Interest in each Class equal to 100% registered in the name of Cede &
Co. or in such other names as the Underwriter shall direct, against payment to
the Depositor of the purchase price thereof by wire transfer of immediately
available funds to the Trustee as designee of the Depositor and (ii) to the
respective registered owners thereof (as designees of the Depositor), Class R
Certificates with a Percentage Interest equal to 99.999%, Class X-A, Class X-F,
Class B-IOA, Class B-IOF, Class P-A and Class P-F Certificates with an aggregate
Percentage Interest in each Class equal to 100%, registered in the name of the
initial purchasers thereof and Class R Certificates with a Percentage Interest
equal to 0.001%, registered in the name of the Tax Matters Person (all such
events shall be referred to herein as the "Closing").
Upon the Depositor's receipt of the entire net proceeds of the sale of
the Offered Certificates, the Depositor shall deposit an amount equal to the
Original Aggregate Pre-Funded Amount in the Pre-Funding Account and the Original
Capitalized Interest Deposit in the Capitalized Interest Account.
END OF ARTICLE IV
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. TERMS.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" thereof, no debt of
any Person is represented thereby, nor are the Certificates or the underlying
Notes guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and the terms of the related
Note and except for the rights of the Trustee on behalf of the Owners of the
Class A and Class A-IO Certificates with respect to the Certificate Insurance
Policies). The Certificates are payable solely from payments received on or with
respect to the Home Equity Loans (net of the Servicing Fees, Trustee Fees and
Premium Amounts), moneys in the Principal and Interest Account, except as
otherwise provided herein monies in the Pre-Funding Account, the Prepaid Home
Equity Loan Account, the Cap Reserve Fund, the LIBOR Carryover Funds, the
Capitalized Interest Account from earnings on moneys and the proceeds of
property held as a part of the Trust Estate and, upon the occurrence of certain
events, from Insured Payments. Each Certificate entitles the Owner thereof to
receive monthly on each Distribution Date, in order of priority of distributions
with respect to such Class of Certificates as set forth in Section 7.03, a
specified portion of such payments with respect to the Home Equity Loans,
certain related Insured Payments, PRO RATA in accordance with such Owner's
Percentage Interest and certain amounts payable from the Capitalized Interest
Account and from the Pre-Funding Account.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee, any Certificate prior to the Trustee making the final distribution due
thereon. Any such Certificate as to which the Trustee has made the final
distribution thereon shall be deemed canceled and shall no longer be Outstanding
for any purpose of this Agreement.
Section 5.02. FORMS.
The Certificates shall be in substantially the forms set forth in the
Exhibits hereof.
Section 5.03. EXECUTION, AUTHENTICATION AND DELIVERY.
Each Certificate shall be executed on behalf of the Trust, by the
manual signature of one of the Trustee's Authorized Officers. In addition, each
Certificate shall be authenticated by the manual signature of one of the
Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Trustee shall, upon proper authentication by
the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04. REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Owners and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates then Outstanding with the consent of the Certificate
Insurer or if there are no longer any Class A Certificates then Outstanding, by
such majority of the Percentage Interests represented by the Class B-1
Certificates, or if there are no longer any Class B-1 Certificates then
Outstanding, by such majority of the Percentage Interests represented by the
Class X-A and Class X-F Certificates, such Owners shall give the Trustee, the
Certificate Insurer and the Owners prompt written notice of the appointment of
such Registrar and of the location, and any change in the location, of the
Register. In connection with any such appointment the reasonable fees of the
Registrar shall be paid, as expenses of the Trust, pursuant to Section 7.06
hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
outstanding principal amount or Percentage Interest of the Certificate so
surrendered.
(c) At the option of any Owner, Certificates of any Class owned by
such Owner may be exchanged for other Certificates authorized of like Class and
tenor and a like aggregate outstanding principal amount or Percentage Interest
and bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration
of transfer or exchange of Certificates, but the Registrar or Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Offered Certificates be registered so as
to participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Certificate of such Class. Upon initial issuance, the ownership of each such
Certificate shall be registered in the Register in the name of Cede & Co., or
any successor thereto, as nominee for the Depository.
On the Startup Day, the Offered Certificates shall be issued in
denominations of $1,000 Certificate Principal Balance or Notional Amount, as
applicable, and integral multiples of $1 in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository in the form provided to
the Trustee by the Depositor.
With respect to the Offered Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Certificate Insurer and the Trustee shall have no responsibility
or obligation to Direct or Indirect Participants or beneficial owners for which
the Depository holds Offered Certificates from time to time as a Depository.
Without limiting the immediately preceding sentence, the Depositor, the
Servicer, the Certificate Insurer and the Trustee shall have no responsibility
or obligation with respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to the ownership
interest in the Offered Certificates, (ii) the delivery to any Direct or
Indirect Participant or any other Person, other than a registered Owner of an
Offered Certificate as shown in the Register, of any notice with respect to the
Offered Certificates or (iii) the payment to any Direct or Indirect Participant
or any other Person, other than a registered Owner of an Offered Certificate as
shown in the Register, of any amount with respect to any distribution of
principal or interest on the Offered Certificates. No Person other than a
registered Owner of an Offered Certificate as shown in the Register shall
receive a certificate evidencing such Offered Certificate.
Upon delivery by the Depository to the Trustee of written notice to
the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the registered Owners
of Offered Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Offered Certificates and the Depositor or the Trustee is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to terminate
the book-entry system through the Depository, the Offered Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository or (iii) after the
occurrence of a Servicer Termination Event, the beneficial owners of each Class
of Offered Certificates representing Percentage Interests aggregating not less
than 51% advises the Trustee and Depository through the Direct or Indirect
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 Owners is no longer in the best interests of the
Owners. In the case of (i) and (ii) above, the Depositor may determine that the
Offered Certificates shall be registered in the name of and deposited with a
successor depository operating a global book-entry system, as may be acceptable
to the Depositor and at the Depositor's expense, or such depository's agent or
designee but, if the Depositor does not select such alternative global
book-entry system and in the case of (iii) above, then the Offered Certificates
may be registered in whatever name or names registered Owners of Offered
Certificates transferring Offered Certificates shall designate, in accordance
with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Offered Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Offered Certificates and all notices with respect to such Offered
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless (PROVIDED, THAT with
respect to an Owner which is an institutional investor with a long-term credit
rating of "A" or the equivalent thereof or better by the Rating Agencies, a
letter of indemnity furnished by it shall be sufficient for this purpose), then,
in the absence of notice to the Trustee or the Registrar that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment from the transferor or transferee
of the related Certificate of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; any other expenses
in connection with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06. PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer of any
Certificate, the Certificate Insurer, the Trustee and any agent of the Trustee
may treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice to
the contrary.
Section 5.07. CANCELLATION.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy.
Section 5.08. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificate nor authenticate and make
available any new Class R Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit I.
Each holder of a Class R Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
(b) No other sale or other transfer of record or beneficial ownership
of a Class R, Class P-A, Class P-F, Class X-A, Class X-F, Class B-IOA or Class
B-IOF Certificate shall be made unless such transfer is exempt from the
registration requirements of the Securities Act, and any applicable state
securities laws or is made in accordance with said Securities Act and laws. In
the event of any such a transfer: (i) in the case of transfers for which an
investment letter in the form of Exhibit J-1 is provided by the transferee to
the Trustee and the Certificate Insurer, the Trustee and the Depositor shall
require a written Opinion of Counsel acceptable to and in form and substance
satisfactory to the Depositor, the Trustee and the Certificate Insurer to the
effect that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from said Securities Act and laws
or is being made pursuant to said Securities Act and laws, which Opinion of
Counsel shall not be an expense of the Depositor, the Trustee, the Trust Estate
or the Certificate Insurer; and (ii) in the case of transfers for which an
investment letter in the form of Exhibit J-1 or J-2 is provided, the investment
letter shall not be an expense of the Depositor, the Trustee, the Trust Estate
or the Certificate Insurer. The Owner of a Class R, Class P-A, Class P-F, Class
X-A, Class X-F, Class B-IOA or Class B-IOF Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Certificate Insurer 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. Notwithstanding the foregoing, no
transfer restrictions pursuant to this clause (b) shall apply to the transfer of
any Certificates on the Startup Day.
(c) No transfer of a Class B-1, Class R, Class P-A, Class P-F, Class
X-A, Class X-F, Class B-IOA or Class B-IOF Certificate shall be made unless the
Trustee shall have received either: (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Certificate Insurer (which may be combined
with the investment letter required by subsection (b) above), to the effect that
such transferee is not an employee benefit plan subject to Section 406 of ERISA
nor a plan or other arrangement subject to Section 406 of ERISA nor a plan or
other arrangement subject to Section 4975 of the Code (collectively, a "Plan"),
nor is acting on behalf of any Plan nor using the assets of any Plan to effect
such transfer or (ii) in the event that any such Certificate is purchased by a
Plan, or by a person or entity acting on behalf of any Plan or using the assets
of any Plan to effect such transfer (including the assets of any Plan held in an
insurance company separate or general account), either a representation that the
source of funds used to acquire such Certificates is an insurance company
general account within the meaning of Section V(e) of Prohibited Transaction
Exemption 95-60 or an Opinion of Counsel, acceptable to and in form and
substance satisfactory to the Trustee and the Certificate Insurer, which Opinion
of Counsel shall not be at the expense of either the Trustee, the Certificate
Insurer or the Trust, to the effect that the purchase or holding of any such
Certificates will not result in the assets of the Trust being deemed to be "plan
assets," will not cause the Trust to be subject to the fiduciary requirements
and prohibited transaction provisions of ERISA and the Code, and will not
subject the Trustee to any obligation or liability in addition to those
expressly undertaken under this Agreement. Notwithstanding anything else to the
contrary herein, any purported transfer of a Certificate to or on behalf of any
Plan without the delivery to the Trustee and the Certificate Insurer of such
representation or an Opinion of Counsel as described above shall be null and
void and of no effect. Notwithstanding the foregoing, no transfer restrictions
pursuant to this clause (c) shall apply to the transfer of any Certificates on
the Startup Day. The acquirer of a Class B-1 Certificate by, or on behalf of or
with the assets of, a Plan shall be deemed to have made the representation
referred to in clause (ii) of this subsection (c).
(d) No sale or other transfer of any Offered Certificate may be made
to the Depositor, the Servicer or any of their respective Affiliates (other than
in the case of the Depositor, the Underwriter).
(e) No sale or other transfer of any Class R Certificate shall be made
to Long Beach or the Servicer.
(f) Notwithstanding anything to the contrary contained in this Section
5.08, the Class R, Class P-A, Class P-F, Class X-A, Class X-F, Class B-IOA or
Class B-IOF Certificates may be transferred to the Depositor or an affiliate of
the Depositor without regard to Sections 5.08(b), (c) or (e) above.
Section 5.09. ASSIGNMENT OF RIGHTS.
Other than with respect to any Class R Certificates (unless the
Trustee shall have received a satisfactory Opinion of Counsel to the effect that
such action with respect to a Class R Certificate will not have an adverse
effect on the status of any REMIC as a "REMIC") an Owner may pledge, encumber,
hypothecate or assign all or any part of its right to receive distributions
hereunder, but such pledge, encumbrance, hypothecation or assignment shall not
constitute a transfer of an ownership interest sufficient to render the
transferee an Owner of the Trust without compliance with the provisions of
Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
ARTICLE VI
COVENANTS
Section 6.01. DISTRIBUTIONS.
On each Distribution Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) in the case of the Offered Certificates
registered in the name of the Depository, by wire transfer to the Depository or
(ii) in each other case, by check or draft mailed on each Distribution Date or,
if requested by any Owner (other than the Depository) of (A) an Offered
Certificate having an original principal balance or notional amount of not less
than $1,000,000 or (B) a Class P-A, Class P-F, Class B-IOA, Class B-IOF, Class
X-A, Class X-F or Class R Certificate having a Percentage Interest of not less
than 10%, in writing not later than one Business Day prior to the applicable
Record Date (which request does not have to be repeated unless it has been
withdrawn), to such Owner by wire transfer to an account within the United
States designated no later than five Business Days prior to the related Record
Date, made on each Distribution Date, in each case to each Owner of record on
the immediately preceding Record Date.
Section 6.02. MONEY FOR DISTRIBUTIONS TO BE HELD IN TRUST;
WITHHOLDING.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee
or by a Paying Agent, and no amounts so withdrawn from the Certificate Account
for payments of Certificates and no Insured Payment shall be paid over to the
Trustee except as provided in this Section.
(b) If the Depositor has appointed a Paying Agent pursuant to Section
11.15 hereof, the Trustee will, on the Business Day immediately preceding each
Distribution Date, deposit with such Paying Agent in immediately available funds
an aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the Certificate Account for the
Class to which such amounts are due) such sum to be held in trust for the
benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to
the Trustee all sums held in trust by such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require the Paying Agent, including the
Trustee on behalf of the Trust, to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Offered Certificate remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid first to the Certificate
Insurer on account of any Reimbursement Amount and second to the Owners of the
related Class X and Class R Certificates; and the Owner of such Offered
Certificate shall thereafter, as an unsecured general creditor, look only to the
Owners of the related Class X and Class R Certificates and not to the
Certificate Insurer for payment thereof (but only to the extent of the amounts
so paid to the Owners of the related Class X and Class R Certificates) and all
liability of the Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent
before being required to make any such payment, may at the expense of the Trust
cause to be published once, in the eastern edition of THE WALL STREET JOURNAL,
notice that such money remains unclaimed and that, after a date specified
therein, which shall be not fewer than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be paid to
the Certificate Insurer on account of any Reimbursement Amount or to the Owners
of the related Class X and Class R Certificates. The Trustee shall, at the
direction of the Servicer, also adopt and employ, at the expense of the
Servicer, any other reasonable means of notification of such payment (including
but not limited to mailing notice of such payment to Owners whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Registrar, the Trustee or any Paying Agent, at the last address
of record for each such Owner).
Section 6.03. PROTECTION OF TRUST ESTATE.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer, at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor (with the consent of the Certificate Insurer) or
the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of all
Persons and parties.
To the extent not covered by the indemnity or other security
contemplated by 10.01(e) and 10.01(g), the Trustee shall be reimbursed for any
costs or expenses associated with this section pursuant to Section
7.03(b)(iv)hereof.
(b) The Trustee shall have the power to enforce, with the prior
written consent of the Certificate Insurer, and shall enforce the obligations
and rights of the other parties to this Agreement, and of the Certificate
Insurer or the Owners, by action, suit or proceeding at law or equity, and shall
also have the power to enjoin, by action or suit in equity, any acts or
occurrences which may be unlawful or in violation of the rights of the
Certificate Insurer or the Owners as such rights are set forth in this
Agreement; PROVIDED, HOWEVER, that nothing in this Section shall require any
action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and (ii) when required by this Agreement, have been
requested by the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A and Class A-IO Certificates then
Outstanding with the consent of the Certificate Insurer (unless a Certificate
Insurer Default under clause (a) of the definition thereof has occurred and is
continuing) or, if there are no longer any Class A or Class A-IO Certificates
then outstanding, by such majority of the Percentage Interests represented by
the Class B-1 Certificates, or, if there are no longer any Class B-1
Certificates then outstanding, by such majority of the Percentage Interests
represented by the related Class X and Class R Certificates; PROVIDED, FURTHER,
HOWEVER, that if there is a dispute with respect to payments under the
Certificate Insurance Policies, the Trustee's first responsibility is to the
Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04. PERFORMANCE OF OBLIGATIONS.
The Trustee will not take any action that would release any Person
from any of such Person's covenants or obligations under any instrument or
document relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g); provided, that the Trustee
shall remain liable for the performance of any such duties notwithstanding any
such contractual arrangement.
Section 6.05. NEGATIVE COVENANTS.
The Trustee will not:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty, on behalf of the Trust, any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust in whole or in part,
except pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenant or obligation with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly
permitted hereby or (B) permit any lien, charge, adverse claim,
security interest, mortgage or other encumbrance to be created on or
extend to or otherwise arise upon or burden the Trust Estate or any
part thereof or any interest therein or the proceeds thereof.
Section 6.06. NO OTHER POWERS.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07. LIMITATION OF SUITS.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policies,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor, the Certificate Insurer and the Trustee of such
Owner's intention to institute such proceeding;
(2) the Owners of not less than 51% of the Percentage Interests
represented by the Class A and Class A-IO Certificates then
Outstanding or, if there are no Class A or Class A-IO
Certificates then Outstanding, the Owners of not less than
51% of the Percentage Interests represented by the Class B-1
Certificates then Outstanding or, if there are no Class B-1
Certificates then Outstanding by a majority of the
Percentage Interests represented by the related Class X and
Class R Certificates, shall have made written request to the
Trustee to institute such proceeding in its own name as
Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) as long as any Class A or Class A-IO Certificates are
Outstanding or any Reimbursement Amounts are owed to the
Certificate Insurer, the Certificate Insurer has consented
in writing thereto (unless a Certificate Insurer Default as
defined in clause (a) of the definition thereof has occurred
and is continuing); and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the
Owners of a majority of the Percentage Interests represented
by the Class A and Class A-IO Certificates or, if there are
no Class A or Class A-IO Certificates then Outstanding, by
the Owners of a majority of the Percentage Interests
represented by the Class B-1 Certificates or, if there are
no Class B-1 Certificates then Outstanding, by such majority
of the Percentage Interests represented by the related Class
X and the Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Trustee shall so notify the
Certificate Insurer and the Certificate Insurer in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provision of this Agreement.
Section 6.08. UNCONDITIONAL RIGHTS OF OWNERS TO RECEIVE DISTRIBUTIONS.
Notwithstanding any other provision in this Agreement, the Owner of
any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or to the
Owners is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. Except as otherwise provided herein, the
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.10. DELAY OR OMISSION NOT WAIVER.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement shall impair
any such right or remedy or constitute a waiver of such right or remedy. Every
right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or to the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer, or by
the Owners, as the case may be.
Section 6.11. CONTROL BY OWNERS.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A and Class A-IO Certificates then
Outstanding with the consent of the Certificate Insurer or, if there are no
longer any Class A or Class A-IO Certificates then Outstanding, or any
Reimbursement Amounts owed to the Certificate Insurer, by or the Owners of a
majority of the Percentage Interests represented by the Class B-1 Certificates
then Outstanding or, if there are no longer any Class B-1 Certificates then
Outstanding, by such majority of the Percentage Interests represented by the
related Class X and the Class R Certificates then Outstanding may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.03 and
Section 8.20 hereof, PROVIDED THAT:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction (and which does not require Certificate
Insurer consent or direction pursuant to the terms of this
Agreement); PROVIDED, HOWEVER, that the Trustee need not
take any action which it determines might involve it in
liability or may be unjustly prejudicial to the Owners not
so directing.
Section 6.12. Reserved.
END OF ARTICLE VI
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Trustee shall
demand payment or delivery of all money and other property payable to or
receivable by the Trustee pursuant to this Agreement or the Certificate
Insurance Policies, including (a) all payments due on the Home Equity Loans in
accordance with the respective terms and conditions of such Home Equity Loans
and required to be paid over to the Trustee by the Servicer or by any Sub-
Servicer and (b) Insured Payments. The Trustee shall hold all such money and
property received by it as part of the Trust Estate and shall apply it as
provided in this Agreement.
<PAGE>
Section 7.02. ESTABLISHMENT OF ACCOUNTS.
(a) The Depositor shall cause to be established on the Startup Day,
and the Trustee shall maintain, at the Corporate Trust Office, the Certificate
Account, the LIBOR Carryover Funds, the Cap Reserve Fund, a Pre-Funding Account,
the Prepaid Home Equity Loan Account, and a Capitalized Interest Account, in
each case, as an Eligible Account to be held by the Trustee in the name of the
Trust on behalf of the Owners of the Certificates and the Certificate Insurer.
The LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account, the
Prepaid Home Equity Loan Account and the Capitalized Interest Account are not
assets of any REMIC created hereunder.
(b) On each Determination Date the Trustee shall determine (subject to
the terms of Section 10.03(j) hereof, based solely on information provided to it
in writing by the Servicer) with respect to the immediately following
Distribution Date, the amounts that are expected to be on deposit in the
Certificate Account (exclusive of any Prepayment Penalties and any deposits from
the LIBOR Carryover Fund, Cap Reserve Fund, Pre-Funding Account and the
Capitalized Interest Account expected to be made) as of such Distribution Date
with respect to Group I (disregarding the amounts of any Insured Payments) and
equal to the sum of (x) such amounts on deposit therein excluding the amount of
any Total Monthly Excess Cashflow from Group I and any Cap Reserve Fund Transfer
Amounts included in such amounts (but including investment earnings on such
amounts) plus (y) any amounts of Total Monthly Excess Cashflow from Group I or
Group II to be applied on such Distribution Date to the Group I Certificates and
any Cap Reserve Fund Transfer Amounts to the Certificate Account relating to
Group I and such Distribution Date plus (z) any deposit to the Certificate
Account relating to Group I from the LIBOR Carryover Fund, the Pre-Funding
Account and the Capitalized Interest Account expected to be made with respect to
Group I on such Distribution Date. The sum of the amounts described in clauses
(x) and (z) of the preceding sentence with respect to each Distribution Date is
the "Group I Available Funds" and the sum of the amounts described in clauses
(x), (y) and (z) of the preceding sentence with respect to each Distribution
Date is the "Group I Total Available Funds."
(c) On each Determination Date the Trustee shall determine (subject to
the terms of Section 10.03(j) hereof, based solely on information provided to it
in writing by the Servicer) with respect to the immediately following
Distribution Date, the amounts that are expected to be on deposit in the
Certificate Account (exclusive of any Prepayment Penalties and any deposits from
the LIBOR Carryover Fund, Cap Reserve Fund deposits from the LIBOR Carryover
Fund, Pre-Funding Account and the Capitalized Interest Account expected to be
made) as of such Distribution Date with respect to Group II (disregarding the
amounts of any Insured Payments) and equal to the sum of (x) such amounts on
deposit therein excluding the amount of any Total Monthly Excess Cashflow for
Group II and any Cap Reserve Fund Transfer Amounts included in such amounts
(including investment earnings on such amounts) plus (y) any amounts of Total
Monthly Excess Cashflow from either of Group I or Group II to be applied on such
Distribution Date to the Group II Certificates and any Cap Reserve Fund Transfer
Amounts plus (z) any deposit to the Certificate Account relating to Group II
from the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account and
the Capitalized Interest Account expected to be made with respect to Group II on
such Distribution Date. The sum of the amounts described in clauses (x) and (z)
of the preceding sentence with respect to each Distribution Date is the "Group
II Available Funds" and the sum of the amounts described in clauses (x),(y) and
(z) of the preceding sentence with respect to each Distribution Date is the
"Group II Total Available Funds."
(d) On the Startup Day, the Group I Closing Date Deposit and the Group
II Closing Date Deposit, which amounts represent the outstanding principal
balance of mortgage loans that were expected to be conveyed to the Trust on the
Startup Day but which were not so conveyed, shall be deposited in the
Certificate Account from the proceeds of the sale of the Certificates.
Section 7.03. FLOW OF FUNDS.
(a) (i) The Trustee shall deposit in the Certificate Account without
duplication, upon receipt, with respect to Group I, the proceeds of any
liquidation of the assets of the Trust insofar as such assets relate to Group I,
all remittances made to the Trustee pursuant to Section 8.08(d)(i) with respect
to Group I and the Group I Monthly Remittance Amount remitted by the Servicer
and amounts transferred from the Cap Reserve Fund and applicable to Group I, the
LIBOR Carryover Fund applicable to Group I, the Pre-Funding Account applicable
to Group I and the Group I Capitalized Interest Requirement.
(ii) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, with respect to Group II, the
proceeds of any liquidation of the assets of the Trust insofar as such
assets relate to Group II, all remittances made to the Trustee
pursuant to Section 8.08(d)(i) with respect to Group II and the Group
II Monthly Remittance Amount remitted by the Servicer and amounts
transferred from the Cap Reserve Fund and applicable to Group II, the
LIBOR Carryover Fund applicable to Group II, the Pre-Funding Account
applicable to Group II and the Group II Capitalized Interest
Requirement.
(b) Subject to the provisions of clause (c) below, on each
Distribution Date, the Trustee shall make the following allocations,
disbursements and transfers (based solely on information provided by the
Servicer in writing), for each Home Equity Loan Group from amounts deposited in
the Certificate Account pursuant to subsections (a) and (e) for the related Home
Equity Loan Group in the following order of priority, and each such allocation,
transfer and disbursement shall be treated as having occurred only after all
preceding allocations, transfers and disbursements have occurred:
(i) FIRST, on each Distribution Date from amounts then on
deposit in the Certificate Account for the related Home
Equity Loan Groups, (A) the Trustee Fee allocable to the
related Home Equity Loan Group shall be paid to the Trustee
and (B) provided that no Certificate Insurer Default as
defined in clause (a) of the definition thereof has occurred
and is continuing, the Premium Amount for the related Class
of Class A and Class A-IO Certificates for such Distribution
Date shall be paid to the Certificate Insurer;
(ii) SECOND, on each Distribution Date, the Trustee shall
allocate and distribute, as applicable, an amount equal to
the sum of (x) the Total Monthly Excess Spread with respect
to the related Home Equity Loan Group and Distribution Date
plus (y) any Subordination Reduction Amount with respect to
the related Home Equity Loan Group and Distribution Date
(such sum being the "Total Monthly Excess Cashflow" for the
related Home Equity Loan Group and Distribution Date) in the
following order of priority:
(A) FIRST, such Total Monthly Excess Cashflow with respect
to each Group shall be allocated to the payment of the
related Class A Distribution Amount pursuant to clause
(b)(iii) below (excluding any related Subordination
Increase Amount) in an amount equal to the amount, if
any, by which (x) the related Class A Distribution
Amount (excluding any related Subordination Increase
Amount) exceeds (y) the Available Funds with respect to
such Home Equity Loan Group (net of the related Trustee
Fee and the related Premium Amount) and shall be paid
as part of the Class A Distribution Amount, first
pursuant to clause (b)(iii)(A) below, and then as
applicable pursuant to clause (b)(iii) (B) and (D)
below;
(B) SECOND, provided that no Certificate Insurer Default as
defined in clause (a) of the definition thereof has
occurred and is continuing, any portion of the Total
Monthly Excess Cashflow with respect to a Home Equity
Loan Group remaining after the allocations described in
clause (b)(ii)(A) above shall be allocated to the
Certificate Insurer in respect of amounts owed on
account of any Reimbursement Amount with respect to the
related Class of Class A and Class A-IO Certificates;
(C) THIRD, any portion of the Total Monthly Excess Cashflow
with respect to a Home Equity Loan Group remaining
after the allocation described in clauses (b)(ii)(A)
and (B) above shall be used to reduce to zero, through
the payment to the Owners of the related Class of Class
A and Class B Component Certificates of a Subordination
Increase Amount included in the related Group Principal
Distribution Amount, which shall be paid pursuant to
clause (b)(iii)(D) below and pursuant to the priorities
in Section 7.03(g) any Subordination Deficiency Amount
with respect to the related Home Equity Loan Group as
of such Distribution Date;
(D) FOURTH, if a Certificate Insurer Default, as defined in
clause (a) of the definition thereof has occurred and
is continuing, then any portion of the Total Monthly
Excess Cashflow with respect to a Home Equity Loan
Group remaining after the allocations described in
clauses (b)(ii)(A), (B) and (C) above shall be paid to
the Certificate Insurer in respect of amounts owed on
account of any Reimbursement Amount with respect to the
related Classes of Class A and Class A-IO Certificates;
(E) FIFTH, if the Subordinated Amount for Group II has
never equaled the Specified Subordinated Amount for
Group II, any portion of the Total Monthly Excess
Cashflow with respect to Group I remaining after the
allocation described in clauses (ii) (A), (B), (C) and
(D) above shall be used to reduce to zero, through the
payment to the Certificateholders of the Class A and
Class B Component Certificates of Group II of a
Subordination Increase Amount included in the Group II
Principal Distribution Amount which shall be paid
pursuant to clause (iii) (D) below and pursuant to the
priorities in Section 7.03(g), an amount, if any, equal
to the Subordination Deficiency Amount for Group II as
of such Distribution Date;
(F) SIXTH, any Total Monthly Excess Cashflow with respect
to such Home Equity Loan Group remaining after the
allocations described in clauses (ii) (A), (B), (C),
(D) and (E) above shall be allocated to the unrelated
Class B Component Certificates and paid pursuant to
clause (iii)(E) below, to the extent of any
unreimbursed Unrelated Principal Carryover Shortfalls;
(G) SEVENTH, any Total Monthly Excess Cashflow with respect
to such Home Equity Loan Group remaining after the
allocations described in clauses (ii) (A), (B), (C),
(D), (E) and (F) above shall be allocated to the
related Class B Component Certificates and paid
pursuant to clause (iii)(F) below, to the extent of any
unreimbursed Related Principal Carryover Shortfalls;
(H) EIGHTH, any portion of Total Monthly Excess Cashflow
with respect to such Home Equity Loan Group remaining
after the allocation described in clauses (b)(ii)(A),
(B), (C), (D), (E), (F), and (G) above shall be
allocated to the Owners of the related Class X
Certificates and paid to the applicable LIBOR Carryover
Fund pursuant to clause (b)(iii)(G) below, to the
extent of any related LIBOR Carryover Fund Deposit;
(I) NINTH, any Total Monthly Excess Cashflow remaining
after the application described in clauses (b)(ii)(A),
(B), (C), (D), (E), (F), (G) and (H) above shall be
allocated to the Servicer and paid pursuant to clause
(b)(iii)(I) below to the extent of any unreimbursed
Delinquency Advances, unreimbursed Servicing Advances
and any amounts owing to the Servicer pursuant to
Section 8.05(c); and
(J) TENTH, any Total Monthly Excess Cashflow remaining
after the application described in clauses (b)(ii)(A),
(B), (C), (D), (E), (F), (G), (H) and (I) above shall
be allocated to the related Class B Component
Certificates to the extent of any related Class B
Component Reallocated Amount;
(iii) THIRD, following the making by the Trustee of all
allocations, transfers and disbursements described in clause
(b)(ii) above from amounts (including any related Insured
Payment which shall be used only to make the payments set
forth in clauses (iii)(A) and (D) to the Owners of the Class
A Certificates and Class A-IO Certificates then on deposit
in the Certificate Account for the related Home Equity Loan
Group, (the Trustee shall distribute based on and after
giving effect to the allocations provided in clause (ii)
above):
(A) to the Owners of each Class of related Class A and
Class A-IO Component Certificates, the related Current
Interest for each Class (including the proceeds of any
related Insured Payments made by the Certificate
Insurer in respect of such related Current Interest);
(B) to the Owners of each Class of related Class B
Component Certificates and the Class B-IOA or Class
B-IOF Certificates, the related Current Interest for
each Class;
(C) to the Certificate Insurer the amounts described in
clauses (b)(ii)(B) and (D) above;
(D) the Group Principal Distribution Amount applicable to
each of the Group I and Group II Certificates shall be
distributed as described under clause (g) below;
(E) to the unrelated Class B Component Certificate the
amounts described in clause (ii)(F) above until its
Unrelated Principal Carryover Shortfall is reduced to
zero;
(F) to the related Class B Component Certificate the
amounts described in clause (ii)(G) above until its
Related Principal Carryover Shortfall is reduced to
zero;
(G) from the amounts described in clause (ii) (H) above
the related LIBOR Carryover Fund Deposit to the
related Class X Certificates for concurrent deposit in
the related LIBOR Carryover Fund;
(H) from amounts on deposit in the LIBOR Carryover Fund,
the lesser of the related Certificateholders' Interest
Index Carryover and the Available LIBOR Carryover
Amount (1) first, pro rata based on
Certificateholders' Interest Index Carryover, an
amount up to the related outstanding
Certificateholders' Interest Index Carryover to the
related Class A Certificates, and (2) second, to the
related Class B Component Certificates, an amount up
to the related outstanding Certificateholders'
Interest Index Carryover to the related Class B
Component Certificates;
(I) to the Servicer the amounts described in clause
(ii)(I) above;
(J) to the related Class B Component Certificates the
amounts described in clause (ii)(J) above;
(iv) FOURTH, from remaining amounts on deposit in the Certificate
Account following the making by the Trust of all
allocations, transfers and disbursements described above,
the Trustee shall distribute (A) with respect to Group I (1)
first to the Trustee any unreimbursed Trustee Reimbursable
Expenses, and to any successor Servicer, amounts owed
pursuant to Section 8.20 and (2) second to the Owners of the
Class X-F Certificates, the Class X-F Distribution Amount,
if any, for such Distribution Date and (B) with respect to
Group II (1) first to the Owners of the Class X-A
Certificates, the Class X-A Distribution Amount, if any, for
such Distribution Date and (2) second to the Trustee any
unreimbursed Trustee Reimbursable Expenses, and to any
successor Servicer, amounts owed pursuant to Section 8.20;
(v) FIFTH, from remaining amount on deposit in the Certificate
Account following the making by the Trustee of all
allocations, transfers and disbursements described above,
the Trustee shall distribute to the Owners of the Class R
Certificates, the related Residual Net Monthly Excess
Cashflow, if any, for such Distribution Date.
(c) Reserved.
(d) Notwithstanding any of the foregoing provisions, the aggregate
amounts distributed on all Distribution Dates to the Owners of the related
Certificates on account of principal pursuant to clause (b)(iii), (C), (D) and
(E) shall not exceed the original Certificate Principal Balance of the related
Certificates.
(e) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A or Class A-IO Certificates, the Trustee shall
deposit such Insured Payments in the Policy Payments Account. On each
Distribution Date, pursuant to Section 12.02(b) hereof, such amounts will be
transferred from the Policy Payments Account to the Certificate Account and the
Trustee shall distribute such Insured Payments, or the proceeds thereof in
accordance with Section 7.03(b), to the Owners of such Class A or Class A-IO
Certificates.
(f) The Trustee or Paying Agent shall (i) receive for each Owner of
the Class A or Class A-IO Certificates any Insured Payment from the Certificate
Insurer and (ii) disburse the same to the Owners of the related Class A or Class
A-IO Certificates as set forth in Section 7.03(b). Insured Payments disbursed by
the Trustee or Paying Agent from proceeds of the related Certificate Insurance
Policy shall not be considered payment by the Trust, nor shall such payments
discharge the obligation of the Trust with respect to such Class A or Class A-IO
Certificates and the Certificate Insurer shall be entitled to receive the
Reimbursement Amount pursuant to Section 7.03(b)(iii)(C) hereof. Nothing
contained in this paragraph shall be construed so as to impose duties or
obligations on the Trustee that are different from or in addition to those
expressly set forth in this Agreement.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class X, Class B-IOA, Class B-IOF and Class R
Certificates to receive distributions in respect of their Certificates shall be
subject and subordinate to the preferential rights of the holders of the Class A
and Class A-IO Certificates to receive distributions thereon and the ownership
interests of such Owners in such distributions, as described herein. In
accordance with the foregoing, the ownership interests of the Owners of the
related Class X and the Class R Certificates in amounts deposited in the
Accounts from time to time shall not vest unless and until such amounts are
distributed in respect of the related Class X and Class R Certificates in
accordance with the terms of this Agreement. Notwithstanding anything contained
in this Agreement to the contrary, and the Owners of the related Class X and the
Class R Certificates shall not be required to refund any amount properly
distributed on the related Class X and the Class R Certificates pursuant to this
Section 7.03.
(g) (i) On each Distribution Date, the Trustee shall distribute the
Group I Principal Distribution Amount in the following order of priority, to the
extent of the funds remaining therefor:
(A) to the Class AI Certificateholders, the related Class A
Principal Distribution Amount for Group I concurrently, as follows:
(i) an amount equal to the Class A-1F Principal Distribution
Amount to the Class A-1F Certificates until the principal balance of
such Class is reduced to zero; and
(ii) an amount equal to the Class A-2F Principal
Distribution Amount to the Class A-2F Certificates until the principal
balance of such Class is reduced to zero;
(B) to the Class B-1F Component Certificates, the related
Class B Component Principal Distribution Amount, until the principal
balance of such Class is reduced to zero;
(C) to the Class P-F Certificates, until the principal
balance of such Class is reduced to zero; and
(D) to the Class X-F Certificates, any remaining amounts.
(ii) on each Distribution Date, the Trustee will distribute the Group
II Principal Distribution Amount in the following order of priority, to the
extent of the funds remaining therefor:
(A) to the Class AII Certificateholders, the related Class A
Principal Distribution Amount for Group II, concurrently, as follows:
(i) an amount equal to the Class A-3A Principal Distribution
Amount to the Class A-3A Certificates until the principal balance of
such Class is reduced to zero;
(ii) an amount equal to the Class A-4A Principal
Distribution Amount to the Class A-4A Certificates until the principal
balance of such Class is reduced to zero; and
(iii) an amount equal to the Class A-5A Principal
Distribution Amount to the Class A-5A Certificates until the principal
balance of such Class is reduced to zero;
(B) to the Class B-1A Component Certificates, the related
Class B Component Principal Distribution Amount, until the principal
balance of such Class is reduced to zero; and
(C) to the Class P-A Certificates, until the principal
balance of such Class is reduced to zero; and
(D) to the Class X-A Certificates, any remaining amounts.
To the extent that the Trustee receives an Insured Payment with
respect to any Distribution Date, the Trustee will distribute any portion of
such Insured Payment with respect to the related Guaranteed Principal Amount to
the related Class A Certificates in the same manner as the Class A Principal
Distribution Amount for the related Group is allocated to the related Class A
Certificates.
(h) With respect to each Distribution Date, all of the funds to be
distributed on the Class A-IOA and Class A-IOF Component Certificates shall
together be distributed on the Class A-IO Certificates. With respect to each
Distribution Date, all of the funds to be distributed on the Class B-1A and
Class B-1F Component Certificates shall together be distributed on the Class B-1
Certificates.
(i) On each Distribution Date, the Trustee shall make distributions to
the Class P-A and Class P-F Certificates of all Prepayment Penalties on deposit
in the Certificate Account with respect to the Home Equity Loans in the related
Group with respect to the related Due Period. Such Prepayment Penalties will not
be available for distributions to the other Classes of Certificates and shall
not reduce the Certificate Principal Balance of the Class P Certificates.
Section 7.04. PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST ACCOUNT.
(a) On the Startup Day, the Trustee will deposit, on behalf of the
Owners of the Certificates and the Certificate Insurer, (i) in the Pre-Funding
Account (A) the Original Group I Pre-Funded Amount and (B) the Original Group II
Pre-Funded Amount and (ii) in the Capitalized Interest Account, (A) the Original
Group I Capitalized Interest Deposit and (B) the Original Group II Capitalized
Interest Deposit.
(b) on any Subsequent Transfer Date, the Depositor shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Home Equity Loans to be purchased by
the Trust from funds on deposit in the Pre-Funding Account on such Subsequent
Transfer Date and pay such amount to or upon the order of the Depositor upon
satisfaction of the conditions set forth in Sections 3.05 and 3.07 hereof with
respect to such transfer; in connection with such instructions, the Depositor
shall additionally inform the Trustee and the Certificate Insurer whether such
Subsequent Home Equity Loans are being transferred to Group Ia, Group Ib, Group
IIa or Group IIb. In no event shall the Depositor be permitted to instruct the
Trustee to release from the Pre-Funding Account with respect to the aggregate
Subsequent Home Equity Loans to be transferred to Group I an aggregate amount in
excess of the Original Group I Pre-Funded Amount or to release from the
Pre-Funding Account with respect to the aggregate Subsequent Home Equity Loans
to be transferred to Group II an aggregate amount in excess of the Original
Group II Pre-Funded Amount.
(c) After giving effect to any reductions in the Pre-Funded Amount
with respect to a Group on or before the Monthly Remittance Date relating to the
final Pre-Funding Distribution Date, the Trustee shall withdraw from the
Pre-Funding Account the amount (exclusive of any related Pre-Funding Account
Earnings still on deposit therein) remaining in the Pre-Funding Account with
respect to such Group on such Monthly Remittance Date relating to the final
Pre-Funding Distribution Date and deposit such amount to the Certificate Account
on such Monthly Remittance Date.
(d) RESERVED.
(e) On each Pre-Funding Distribution Date, the Trustee shall transfer
from the Capitalized Interest Account to the Certificate Account, the Group I
Capitalized Interest Requirement and the Group II Capitalized Interest
Requirement for such Pre-Funding Distribution Date.
(f) The Capitalized Interest Account shall be closed on the final
Pre-Funding Distribution Date after any transfers to the Certificate Account
required on such Distribution Date. All amounts, if any, remaining in the
Capitalized Interest Account on such day after giving effect to all transfers
pursuant to Section 7.04(e) shall be transferred to the holder of the Class R
Certificate.
(g) On each Pre-Funding Distribution Date, the Trustee shall transfer
from the Pre-Funding Account to the Certificate Account all Pre-Funding Account
Earnings for the related Due Period.
(h) The Pre-Funding Account and the Capitalized Interest Account shall
not be assets of the REMIC Estate.
Section 7.05. INVESTMENT OF ACCOUNTS.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners may (i) remain
uninvested or (ii) be invested and reinvested by the Trustee in the name of the
Trustee for the benefit of the Owners and the Certificate Insurer in one or more
Eligible Investments bearing interest or sold at a discount. The bank serving as
Trustee or any affiliate thereof may be the obligor on any investment which
otherwise qualifies as an Eligible Investment. No investment in any Account
shall mature later than the Business Day immediately preceding the next
Distribution Date or, with respect to the Principal and Interest Account, no
later than the Business Day immediately preceding the Monthly Remittance Date.
Amounts held in the Certificate Account shall be invested in Eligible
Investments described in clause (h) of Section 7.07, which Eligible Investments
shall mature no later than the Business Day preceding the immediately following
Distribution Date or, if such Eligible Investments are an obligation of the
Trustee or are money market funds for which the Trustee or any affiliate is the
manager or the adviser, such Eligible Investments shall mature no later than the
following 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 investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) All income or other gain from investment in the Certificate
Account held by the Trustee shall be treated as Available Funds and Total
Available Funds, pro rata, among the Groups.
Section 7.06. PAYMENT OF TRUST EXPENSES.
(a) The Trustee shall make demand on the Depositor and the Seller to
pay and the Depositor or the Seller shall pay the amount of the expenses of the
Trust referred to in Section 2.05 (other than payments of premiums to the
Certificate Insurer) (including Trustee's fees and expenses not covered by
Sections 7.03(b)(i)(A) and 7.03(b)(iv), respectively), and the Depositor shall
promptly pay such expenses directly to the Persons to whom such amounts are due.
(b) The Depositor shall pay directly on the Startup Day the reasonable
fees and expenses of counsel to the Trustee.
Section 7.07. ELIGIBLE INVESTMENTS.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States, FHLMC
senior debt obligations, and FNMA senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) FNMA mortgage-backed securities (other than stripped mortgage
securities) and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and
bankers' acceptances (having original maturities of not more than 365 days) of
any domestic bank, the short-term debt obligations of which have been rated A-l
by Standard & Poor's and P-l by Moody's; provided that any such certificates of
deposit must be secured at all times by collateral described in clause (a) or
(b) above, such collateral must be held by a third party and the Trustee must
have a perfected first priority security interest in such collateral;
(g) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is Baa3 or better by Moody's and BBB by
Standard & Poor's) which has combined capital, surplus and undivided profits of
at least $50,000,000 which deposits are insured by the FDIC and held up to the
limits insured by the FDIC;
(h) Any money market fund rated AAAm or AAAm-G by Standard & Poor's
and Aaa by Moody's which funds are registered under the Investment Company Act
of 1940 and whose shares are registered under the Securities Act of 1933,
including any such fund that is managed by the Trustee or any affiliate of the
Trustee or for which the Trustee or any of its affiliates acts as an adviser;
and
(i) Any other investment permitted by each of the Rating Agencies and
the Certificate Insurer;
provided that no instrument described above shall evidence either the
right to receive (a) only interest with respect to the obligations underlying
such instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provided a yield to maturity at par greater than
120% of the yield to maturity at par of the underlying obligations; and
provided, further, that all instruments described hereunder shall mature at par
on or prior to the next succeeding Distribution Date unless otherwise provided
in this Agreement and that no instrument described hereunder may be purchased at
a price greater than par if such instrument may be prepaid or called at a price
less than its purchase price prior to stated maturity.
Section 7.08. ACCOUNTING AND DIRECTIONS BY TRUSTEE.
By 12:00 noon New York time, on each Distribution Date (or such
earlier period as shall be agreed by the Depositor and the Trustee), the Trustee
shall notify (subject to the terms of Section 10.03(j) hereof, based solely on
information provided to the Trustee by the Servicer and upon which the Trustee
may rely) the Depositor, each Owner and the Certificate Insurer, of the
following information with respect to such Distribution Date (which notification
may be given by facsimile, or by telephone promptly confirmed in writing):
(1) The aggregate amount on deposit in the Certificate Account
as of the related Determination Date;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes in the aggregate for each
Group on the next Distribution Date;
(3) The Class P-F Distribution Amount and the Class P-F
Distribution Amount on the next Distribution Date;
(4) The Class B Distribution Amount on the next Distribution
Date;
(5) The amount of any Subordination Increase Amount and Class A
Subordination Increase Amount for each Group and each Class
of Class A Certificates;
(6) The amount of any Insured Payment to be made by the
Certificate Insurer on such Distribution Date;
(7) The application of the amounts described in clauses (1), (4)
and (5) above in respect of the distribution of the Class A
Distribution Amount and Class B Distribution Amount on such
Distribution Date in accordance with Section 7.03 hereof;
(8) The Aggregate Principal Balance, the aggregate amount of the
principal of each Class of the Class A and Class B-1
Certificates to be paid on such Distribution Date and the
remaining Certificate Principal Balance of each Class of
Class A and Class B-1 Certificates following any such
payment;
(9) The amount, if any, of any Realized Losses for each Group
for the related Due Period;
(10) The amount of any Subordination Deficit, any Subordination
Reduction Amount and the Specified Subordination Amount for
each Group;
(11) For the Distribution Dates during the Funding Period, (A)
the Pre-Funded Amount previously used to purchase Subsequent
Home Equity Loans, (B) the Pre-Funded Amount distributed as
either a Group I Principal Distribution Amount or a Group II
Principal Distribution Amount, (C) the Group I Pre-Funding
Account Earnings and Group II Pre-Funding Account Earnings
transferred to the Certificate Account, (D) the amounts
transferred from the Capitalized Interest Account to the
Certificate Account and the amount transferred to the holder
of the Class R Certificate, each Class X Certificate, each
Class P Certificate, the Class B-IOA Certificate and the
Class B-IOF Certificate, if any and (E) the remaining
Pre-Funded Amount; and
(12) For the first three Distribution the amounts from the
Prepaid Home Equity Loan Account used to purchase Subsequent
Home Equity Loans.
Section 7.09. REPORTS BY TRUSTEE TO OWNERS AND CERTIFICATE INSURER.
(a) On each Distribution Date the Trustee shall transmit a
report in writing to each Owner, the Depositor, the
Certificate Insurer, and the Rating Agencies setting forth:
(i) the amount of the distribution with respect to such
Owners' Certificates included therein with respect to Group Ia, Group
Ib, Group IIa and Group IIb (based on a Certificate in the original
principal amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments in Full or other Prepayments or other recoveries of
principal included therein with respect to Group Ia, Group Ib, Group
IIa and Group IIb and any Pre-Funded Amounts distributed as a
prepayment (based on a Certificate in the original principal amount of
$1,000) and any related Subordination Increase Amount;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) if the distribution to the Owners of any Class of the
Class A, Class A-IO or Class B-1 Certificates on such Distribution
Date was less than the related Class A Distribution Amount on such
Distribution Date, the related Carry Forward Amount and the allocation
thereof to the related Classes of Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the
amounts distributed to the Owners of Class A or Class A-IO
Certificates on such Distribution Date;
(vi) the principal amount of each Class of Class A and Class
B-1 Certificate which will be Outstanding and the aggregate Loan
Balance of each Group with respect to such Distribution Date;
(vii) the Subordinated Amount, Specified Subordinated Amount
and Subordination Deficit for each Group, if any, remaining after
giving effect to all distributions and transfers on such Distribution
Date;
(viii) based upon information furnished by the Servicer,
such information as may be required by Section 6049(d)(7)(C) of the
Code and the regulations promulgated thereunder to assist the Owners
in computing their market discount;
(ix) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to
each Group;
(x) the weighted average Coupon Rate of the Home Equity
Loans in each Group;
(xi) the amount of any Carry-Forward Amounts;
(xii) during the Funding Period, the Loan Balance of the
Subsequent Home Equity Loans purchased by the Trust from funds on
deposit in a Pre-Funding Account in aggregate and by Group during the
related Due Period and any amounts with respect to each Group
remaining in the Pre-Funding Account and with respect to the first
three Distribution Dates, the Loan Balance of the Subsequent Home
Equity Loans added to the Trust from funds on deposit in the Prepaid
Home Equity Loan Account in aggregate and by Group during the related
Due Period;
(xiii) such other information as the Certificate Insurer or
any Owner may reasonably request with respect to Delinquent Home
Equity Loans;
(xiv) the weighted average gross margin of the Home Equity
Loans in Group II;
(xv) the Loan Balances for the three largest Home Equity
Loans outstanding in each Group;
(xvi) for Distribution Dates during the Funding Period, the
remaining Pre-Funded Amount for each Group;
(xvii) the Class A-3A Pass-Through Rate, the Class A-4A
Pass-Through Rate, the Class A-5A Pass-Through Rate, the Class B-1F
Pass-Through Rate and the Class B-1A Pass-Through Rate for the related
Distribution Date;
(xviii) the Certificateholders' Interest Index Carryover for
each Class of Certificates for the related Distribution Date; and
(xix) the Loan Balance of the Home Equity Loans in each of
Group IIa and Group IIb for which to Coupon Rates are fixed for two
years or three years.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(ii) and in clause (b) below to enable the Trustee to perform its
reporting obligations under this Section, and such obligations of the Trustee
under this Section are conditioned upon such information being received and the
information provided in clauses (ii) (solely with respect to the principal
received), (ix) and (x) above shall be based solely upon information contained
in the monthly servicing report provided by the Servicer to the Trustee pursuant
to Section 8.08 hereof.
(b) In addition, on each Distribution Date the Trustee will distribute
to each Owner, the Certificate Insurer, the Underwriter and the Rating Agencies,
together with the information described in Subsection (a) preceding, the
following information with respect to each Home Equity Loan Group and for all
Groups in the aggregate which is hereby required to be prepared by the Servicer
and furnished to the Trustee for such purpose on or prior to the related Monthly
Remittance Date:
(i) the number and aggregate principal balances of Home
Equity Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and
(c) 90 or more days Delinquent, as of the close of business on the
last Business Day of the calendar month immediately preceding the
Distribution Date, (d) related to REO Mortgaged Properties, (e) the
number and aggregate Loan Balances of all Home Equity Loans as of the
last day of the Due Period immediately preceding the Distribution Date
and (f) the percentage that each of the amounts represented by clauses
(a), (b), (c) and (d) represent as a percentage of the respective
amounts in clause (e);
(ii) the status and the number and dollar amounts of all
Home Equity Loans in foreclosure proceedings as of the close of
business on the last Business Day of the calendar month immediately
preceding such Distribution Date, separately stating, for this
purpose, all Home Equity Loans with respect to which foreclosure
proceedings were commenced in the immediately preceding calendar
month;
(iii) the number of Mortgagors and the Loan Balances of (a)
the related Mortgages involved in bankruptcy proceedings as of the
close of business on the last Business Day of the calendar month
immediately preceding such Distribution Date and (b) Home Equity Loans
that are "balloon" loans;
(iv) the existence and status of any REO Mortgaged
Properties, as of the close of business of the last Business Day of
the month immediately preceding the Distribution Date;
(v) the book value of any REO Mortgaged Property as of the
close of business on the last Business Day of the calendar month
immediately preceding the Distribution Date;
(vi) cumulative Realized Losses, incurred on the Home Equity
Loans from the Startup Day to and including the Prepayment Period
immediately preceding the Distribution Date;
(vii) the amount of Net Liquidation Proceeds realized on the
Home Equity Loans during the Prepayment Period immediately preceding
the Distribution Date;
(viii) the Annual Loss Percentage (Rolling Twelve Month)
with respect to such Distribution Date;
(ix) the 90+ Delinquency Percentage (Rolling Three Month)
with respect to such Distribution Date; and
(x) the Cumulative Loss Percentage with respect to such
Distribution Date.
(c) The Trustee shall, on behalf of the Trust, cause to be filed with
the Commission any periodic reports required to be filed on behalf of the Trust
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 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.
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 Startup Day,
the Depositor shall provide the Trustee with a letter at Closing, substantially
in the form attached hereto as Exhibit O, instructing the Trustee, as filing
agent, to comply with the reporting obligations for the Trust under the Exchange
Act.
Section 7.10. REPORTS BY TRUSTEE.
(a) The Trustee shall report to the Depositor, the Certificate Insurer
and each Owner, with respect to the amount on deposit in the Certificate Account
(including the amount therein relating to each Group) and the identity of the
investments included therein, as the Depositor, any Owner or the Certificate
Insurer may from time to time reasonably request. Without limiting the
generality of the foregoing, the Trustee shall, at the reasonable request of the
Depositor, any Owner or the Certificate Insurer transmit promptly to the
Depositor, any Owner and the Certificate Insurer copies of all accountings of
receipts in respect of the Home Equity Loans furnished to it by the Servicer and
shall notify the Certificate Insurer if any Monthly Remittance Amount has not
been received by the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 5 or Section 6 of the Mortgage Loan Purchase Agreement are
inaccurate or the occurrence of a First Payment Default with respect to a Home
Equity Loan.
Section 7.11. ALLOCATION OF LOSSES. On each Distribution Date, the
Servicer shall determine the total of the Applied Realized Loss Amounts for each
Group and such Distribution Date. The Applied Realized Loss Amount for each
Group and for any Distribution Date shall be applied by (i) first, reducing the
Certificate Principal Balance of the related Class B Component Certificates
until the Certificate Principal Balance of the related Class B Component
Certificates has been reduced to zero and (ii) second, if the Certificate
Principal Balance of the related Class B Component Certificates has been reduced
to zero, reducing the Certificate Principal Balance of the unrelated Class B
Component Certificates until the Certificate Principal Balance of the unrelated
Class B Component Certificates has been reduced to zero. Any Applied Realized
Loss Amount allocated to a Class of Class B Component Certificates shall be
allocated among such Class in proportion to their respective Percentage
Interests.
Section 7.12. LIBOR CARRYOVER FUND. (a) On the Startup Day, the
Trustee shall establish and maintain in its name, in trust for the benefit of
the related Certificateholders, one LIBOR Carryover Fund with respect to Group I
and one LIBOR Carryover Fund with respect to Group II and deposit in each the
amount of $10,000 paid to the Trustee by the Depositor therefor. Each LIBOR
Carryover Fund shall be an Eligible Account, and funds on deposit therein shall
be held separate and apart from, and shall not be commingled with, any other
moneys, including without limitation, other moneys held by the Trustee pursuant
to this Agreement. Each LIBOR Carryover Fund shall be treated as an "outside
reserve fund" under applicable Treasury regulations and will not be part of any
REMIC. Any investment earnings on any LIBOR Carryover Fund will be treated as
owned by the Class R Certificateholder and will be taxable to the Class R
Certificateholder. Distributions made to any outside reserve fund under this
document shall be treated as made to the owner of such fund.
(b) On each Distribution Date, the Trustee shall deposit amounts from
the Certificate Account to each LIBOR Carryover Fund pursuant to Section
7.03(b)(iii)(G). The amount required to be deposited into each LIBOR Carryover
Fund on any Distribution Date shall equal the LIBOR Carryover Fund Deposit. The
Trustee shall make withdrawals from the LIBOR Carryover Fund to make
distributions pursuant to Section 7.03(b)(iii)(H).
(c) Funds in the LIBOR Carryover Funds may be invested in Eligible
Investments. Any earnings on such amounts shall be payable to the Class X-A
Certificates. The Class R Certificates shall evidence ownership of the LIBOR
Carryover Funds for federal tax purposes and shall direct the Trustee in writing
as to the investment of amounts therein.
(d) Upon termination of the Trust, any amounts remaining in the LIBOR
Carryover Fund shall be distributed to the Certificateholders of the Class X-A
Certificates in the same manner as if distributed pursuant to Section
7.03(b)(iv).
Section 7.13. CAP RESERVE FUND. (a) On the Startup Day, the Trustee
shall enter into the Cap Agreement, on behalf of the Trust, with the Cap
Provider and establish and maintain in its name, in trust for the benefit of the
Certificateholders and the Certificate Insurer, the Cap Reserve Fund. The Cap
Reserve Fund shall be an Eligible Account, and funds on deposit therein shall be
held separate and apart from, and shall not be commingled with, any other
moneys, including without limitation, other moneys held by the Trustee pursuant
to this Agreement. The Cap Reserve Fund shall be treated as an "outside reserve
fund" under applicable Treasury regulations and will not be part of any REMIC.
For tax purposes, any investment earnings on the Cap Reserve Fund will be
treated as owned by the Class R Certificateholder and will be taxable to the
Class R Certificateholder. For tax purposes, distributions made to any outside
reserve fund under this document shall be treated as made to the owner of such
fund.
(b) Funds in the Cap Reserve Fund may be invested in Eligible
Investments. Any earnings on such amounts shall be treated as any other amounts
deposited to the Cap Reserve Fund. The Class R Certificates shall evidence
ownership of the Cap Reserve Fund for federal tax purposes only and shall direct
the Trustee in writing as to the investment of amounts therein.
(c) Upon receipt of a notice from the Certificate Insurer that a
Reimbursement Amount is owed to the Certificate Insurer, the Trustee shall
withdraw from the Cap Reserve Fund and immediately pay to the Certificate
Insurer an amount equal to the lesser of (x) the amount then on deposit in the
Cap Reserve Fund and (y) the outstanding Reimbursement Amount.
(d) The Trustee shall deposit all amount received with respect to the
Cap Agreement in the Cap Reserve Fund.
(e) Upon the deposit to the Cap Reserve Fund of amounts paid under the
Cap Agreement following the occurrence of an early termination date under the
Cap Agreement and the receipt of written notice from the Certificate Insurer,
the Trustee shall withdraw from the Cap Reserve Fund and immediately pay to the
successor cap provider indicated by the Certificate Insurer an amount equal to
the fee for entering into a replacement interest rate cap agreement. Any amounts
paid by a successor cap provider shall be deposited into the Cap Reserve Fund in
accordance with this Agreement, and all references to "Cap Agreement" herein
shall be deemed to refer to any related interest rate cap agreement.
(f) With respect to any Distribution Date upon which a Deficiency
Claim Amount will occur, the Trustee shall withdraw from the Cap Reserve Fund
and deposit into the Certificate Account on the fourth Business Day preceding a
Distribution Date, an amount equal to the lesser of (x) the amount then on
deposit in the Cap Reserve Fund and (y) the Deficiency Claim Amounts with
respect to such Distribution Date. The Trustee shall immediately notify the
Certificate Insurer of the amount of any Cap Reserve Fund Transfer Amount.
(g) On the Cap Reserve Fund Release Date, the amounts in the Cap
Reserve Fund shall be first used to pay any Cap Reserve Fund Transfer Amounts
and second, the Trustee shall pay any amounts remaining in the Cap Reserve Fund
to the Certificateholders of the Class X-A Certificates; provided, however,
that, if any insolvency event occurs with respect to the Cap Provider prior to
such date (the "Potential Preference Parties"), then all funds shall remain on
deposit in the Cap Reserve Fund until the date that all applicable limitation
periods with respect to all applicable preferential transfer or other payment
avoidance statutes relating to any of the Potential Preference Parties have
expired and if no proceeding at law or in equity is commenced during any such
period based upon any such statute, all such amounts remaining on deposit in the
Cap Reserve Fund shall be released at the end of all such periods as provided
above; provided, further, however, that if any such proceeding is commenced
during any applicable limitation period, all funds on deposit in the Cap Reserve
Fund shall remain on deposit therein until the date on which there is a final
determination by a court of competent jurisdiction as to whether any payment or
payments made pursuant to this Agreement, the Certificate Insurance Policies or
the Insurance Agreement is recoverable from either the Certificate Insurer or
the Certificateholders. If such a court determines that a payment is so
recoverable, all funds on deposit in the Cap Reserve Fund shall remain on
deposit in the Cap Reserve Fund and shall be applied to the payment of amounts
payable as provided in clauses (c) and (f) above. If such a court determines
that such payment is not recoverable, all funds on deposit in the Cap Reserve
Fund shall be released as provided above. The foregoing notwithstanding, if (i)
amounts payable with respect to the Class A and Class A-IO Certificates have
been fully paid to the holders of the Class A and Class A-IO Certificates and
(ii) the Reimbursement Amount payable to the Certificate Insurer and all other
amounts payable to the Certificate Insurer under the Insurance Agreement have
been paid in full, and (iii) no insolvency event has occurred with respect to
the Potential Preference Parties, and (iv) (A) the Certificate Insurer shall
have received a favorable opinion or opinions, satisfactory in form and
substance to the Certificate Insurer, from counsel to the Cap Provider, to the
effect that in the event that an insolvency event were to occur with respect to
the Potential Preference Parties, no payment pursuant to this Agreement, the
Certificate Insurance Policies or the Insurance Agreement would be recoverable
from either the Certificate Insurer or the holders of the Class A or Class A-IO
Certificates, and such other matters as the Certificate Insurer may reasonably
request; or (B) the Certificate Insurer, in its sole discretion, elects to
release the Cap Reserve Fund to then, and in any such event, upon the written
direction of the Certificate Insurer, the Trustee shall pay all remaining
amounts in the Cap Reserve Fund as provided above.
(h) On or before each Monthly Remittance Date, the Trustee shall
deliver to the Certificate Insurer and the Certificateholders of the Class X-A
Certificates a statement setting forth, as of such date, (i) the amount on
deposit in the Cap Reserve Fund, (ii) deposits into and withdrawals from the Cap
Reserve Fund since the preceding Monthly Remittance Date (or since the Startup
Day in the case of the first Monthly Remittance Date), (iii) the amount of any
income or gain (or loss) on amounts held in the Cap Reserve Fund and (iv) the
Cap Reserve Fund Transfer Amount for the related Distribution Date.
(i) Each Class X Certificateholder, by its acceptance of the related
Class X Certificate, acknowledges and agrees that it has no present interest in
the Cap Reserve Fund and the amounts on deposit or to be deposited therein, but
shall have only a contingent interest in related amounts distributable on the
Class X Certificates as provided in this Agreement. The Depositor, the Seller
and each Class R Certificateholder, by its acceptance of the Class R
Certificate, acknowledges and agrees that it has no interest in the Cap Reserve
Fund and the amounts on deposit or to be deposited therein.
Section 7.14. PREPAID HOME EQUITY LOAN ACCOUNT.
(a) On each of the first three Monthly Remittance Dates, the Servicer
shall deposit all Prepayments in Full in the Prepaid Home Equity Loan Account;
provided that the Servicer shall not deposit any Prepayments in Full into the
Prepaid Home Equity Loan Account to the extent that the Servicer has deposited
into the Prepaid Home Equity Loan Account a cumulative amount on such Monthly
Remittance Date and on prior Monthly Remittance Dates equal to 1% of the
Original Aggregate Loan Balance of the Home Equity Loans as of the Cut-Off Date.
(b) On each Monthly Remittance Date, the Depositor shall instruct the
Trustee in writing to withdraw from the Prepaid Home Equity Loan Account an
amount equal to 100% of the aggregate Loan Balances of the Subsequent Home
Equity Loans to be purchased by the Trust from funds on deposit in the Prepaid
Home Equity Loan Account on such Monthly Remittance Date, which shall be the
Subsequent Transfer Date and pay such amount to or upon the order of the
Depositor upon satisfaction of the conditions set forth in Sections 3.05 and
3.07 hereof with respect to such transfer; in connection with such instructions,
the Depositor shall additionally inform the Trustee and the Certificate Insurer
in writing whether such Subsequent Home Equity Loans are being transferred to
Group Ia, Group Ib, Group IIa or Group IIb. In no event shall the Depositor be
permitted to instruct the Trustee to release from the Prepaid Home Equity Loan
Account with respect to the aggregate Subsequent Home Equity Loans to be
purchased by the Trust from funds on deposit in the Prepaid Home Equity Loan
Account to be transferred to Group Ia in an aggregate amount in excess of the
Prepayments in Full deposited to the Prepaid Home Equity Loan Account from Home
Equity Loans in Group Ia, to be transferred to Group Ib in an aggregate amount
in excess of the Prepayments in Full deposited to the Prepaid Home Equity Loan
Account from Home Equity Loans in Group Ib, to be transferred to Group IIa in an
aggregate amount in excess of the Prepayments in Full deposited to the Prepaid
Home Equity Loan Account from Home Equity Loans in Group IIa or to be
transferred to Group IIb in an aggregate amount in excess of the Prepayments in
Full deposited to the Prepaid Home Equity Loan Account from Home Equity Loans in
Group IIb.
(c) At the close of business on each Monthly Remittance Date, the
Trustee shall withdraw all amounts on deposit in the Prepaid Home Equity Loan
Account and deposit such amount to the Certificate Account.
(d) The Prepaid Home Equity Loan Account shall not be an asset of any
REMIC.
END OF ARTICLE VII
ARTICLE VIII
SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01. SERVICER AND SUB-SERVICERS.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans on
behalf of the Trustee and in the best interests of and for the benefit of the
holders of Certificates and the Certificate Insurer in accordance with this
Agreement and the terms of the respective Home Equity Loans, and Accepted
Servicing Practices and shall have full power and authority, acting alone, to do
or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or any Affiliate of the
Servicer or any Sub-Servicer may have with the related Mortgagor; (ii) the
ownership of any Certificate by the Servicer or any Affiliate of the Servicer;
(iii) the Servicer's obligation to make Delinquency Advances or Servicing
Advances; or (iv) the Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any particular
transaction.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have the rights and powers of the Servicer which have been
delegated to such Sub-Servicer with respect to such Home Equity Loans under this
Agreement; provided, however, the Servicer shall remain primarily liable for all
duties and obligations of the Servicer hereunder.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer is hereby authorized and empowered to execute and deliver, on
behalf of itself, the Owners and the Trustee or any of them, (i) any and all
instruments of satisfaction or cancellation or of partial or full release or
discharge and all other comparable instruments with respect to the Home Equity
Loans and with respect to the Mortgaged Properties, (ii) to institute
foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect
ownership of any Mortgaged Property in the name of the Servicer on behalf of the
Trustee, and (iii) to hold title to any Mortgaged Property upon such foreclosure
or deed in lieu of foreclosure on behalf of the Trustee; PROVIDED, HOWEVER, that
to the extent any instrument described in clause (i) preceding would be
delivered by the Servicer outside of its usual procedures for home equity loans
held in its own portfolio the Servicer shall, prior to executing and delivering
such instrument, obtain the prior written consent of the Certificate Insurer.
The Trustee hereby grants to the Servicer, and this Agreement shall constitute,
a power of attorney to execute all documents on its behalf under this Agreement
as may be necessary or desirable to effectuate the provisions of this paragraph;
provided however, that instruments of satisfaction, cancellation, release or
discharge shall only be executed with respect to Home Equity Loans paid in full
or foreclosed (or with respect to which payment in full has been escrowed).
Revocation of the power of attorney created by the final proviso of the
preceding sentence shall take effect upon (i) the receipt by the Servicer of
written notice thereof from the Trustee, (ii) a Servicer Termination Event or
(iii) the termination of the Trust. The Trustee shall execute any documentation
furnished to it by the Servicer for recordation by the Servicer in the
appropriate jurisdictions, as shall be necessary to effectuate the foregoing.
Subject to Sections 8.13 and 8.14, the Trustee shall, if necessary, execute a
power of attorney to the Servicer or any Sub-Servicer and furnish them with any
other documents as the Servicer or such Sub-Servicer shall reasonably request to
enable the Servicer and such Sub-Servicer to carry out their respective
servicing and administrative duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the
Trustee and, if requested by the Certificate Insurer, the Certificate Insurer,
the details concerning the servicing of the Home Equity Loans on computer
generated tape, diskette or other machine readable format which is mutually
agreeable.
The Servicer shall give prompt written notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust or (ii) assert jurisdiction over the
Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Mortgaged Property shall be recoverable by the Servicer or such Sub-Servicer
to the extent described in Section 8.09(b) hereof.
Section 8.02. COLLECTION OF CERTAIN HOME EQUITY LOAN PAYMENTS.
(a) The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow Accepted
Servicing Practices.
(b) Consistent with the foregoing, the Servicer may in its discretion
(i) waive or permit to be waived any late payment charge, assumption fee or any
other fee or charge which the Servicer would be entitled to retain hereunder as
servicing compensation, (ii) extend the due dates for the Monthly Payments due
on a Note for a period of not greater than 90 days or (iii) if the Servicer
provides prior written notice to the Certificate Insurer to which the
Certificate Insurer does not object within two Business Days, extend the due
dates for Monthly Payments due on a Home Equity Loan for a period of not greater
than 180 days; provided that any extension pursuant to clause (ii) or clause
(iii) above shall not affect the amortization schedule of any Home Equity Loan
for purposes of any computation hereunder; provided further that the Certificate
Insurer's and R.V.I. Guaranty Co. Ltd.'s prior written consent shall be required
for any modification, waiver or amendment if the aggregate number of outstanding
Home Equity Loans which have been modified, waived or amended exceeds 5% of the
number of Home Equity Loans as of the Cut-Off Date. Notwithstanding the
foregoing, the Servicer may not waive any Prepayment Penalties unless required
to do so by law or unless such waiver would maximize recovery of total proceeds,
taking into account the value of such Prepayment Penalty and the related Home
Equity Loan and doing so is standard and customary in servicing similar Home
Equity Loans, including any waiver of any Prepayment Penalty in connection with
a refinancing of a Home Equity Loan that is related to a default or reasonably
foreseeable default.
Section 8.03. SUB-SERVICING AGREEMENTS BETWEEN SERVICER AND
SUB-SERVICERS.
The Servicer may, with the prior written consent of the Certificate
Insurer, enter into Sub-Servicing Agreements for any servicing and
administration of Home Equity Loans with any institution which is acceptable to
the Certificate Insurer and which, (v) an institution approved as a mortgage
loan originator by the Federal Housing Administration or an institution, the
deposit accounts of which are insured by the FDIC, (w) a FHLMC or FNMA approved
mortgage servicer, (x) is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Sub-Servicing Agreement, (y) has
experience servicing home equity loans that are similar to the Home Equity Loans
and (z) has equity of not less than $5,000,000 (as determined in accordance with
generally accepted accounting principles). The Servicer shall give written
notice to the Trustee, the Owners, the Certificate Insurer and the Rating
Agencies of the appointment of any Sub-Servicer (and shall receive the
confirmation of the Rating Agencies that such Sub-Servicer shall not result in a
withdrawal or downgrading by any Rating Agency of the rating or the shadow
rating of the Class A, Class A-IO, Class B-1, Class B-IOA or Class B-IOF
Certificates). For purposes of this Agreement, the Servicer shall be deemed to
have received payments on Home Equity Loans when any Sub-Servicer has received
such payments. Each Sub-Servicer shall be required to service the Home Equity
Loans in accordance with this Agreement and any such Sub-Servicing Agreement
shall be consistent with and not violate the provisions of this Agreement. The
Servicer shall not amend any such Sub-Servicing Agreement without the
Certificate Insurer's prior written consent. Each Sub-Servicing Agreement shall
provide that the Trustee (if acting as successor Servicer) or any other
successor Servicer shall have the option to terminate such agreement without
payment of any fees if the original Servicer is terminated or resigns. The
Servicer shall deliver to the Trustee and the Certificate Insurer copies of all
Sub-Servicing Agreements, and any amendments or modifications thereof promptly
upon the Servicer's execution and delivery of such instrument.
Section 8.04. SUCCESSOR SUB-SERVICERS.
The Servicer shall be entitled to terminate any Sub-Servicing
Agreement in accordance with the terms and conditions of such Sub-Servicing
Agreement and to either itself directly service the related Home Equity Loans or
enter into a Sub-Servicing Agreement with a successor Sub-Servicer which
qualifies under Section 8.03.
As part of its servicing activities hereunder, the Servicer (except as
otherwise provided in the last sentence of this paragraph), for the benefit of
the Trustee, the Certificateholders and the Certificate Insurer, shall enforce
the obligations of each Sub-Servicer under the related Sub-Servicing Agreement
and of Long Beach and the Seller under the Mortgage Loan Purchase Agreement,
including, without limitation, any obligation to make advances in respect of
delinquent payments as required by a Sub-Servicing Agreement, or to purchase a
Home Equity Loan on account of missing or defective documentation or on account
of a breach of a representation, warranty or covenant, as described in Section
3.04 hereof and Section 7 of the Mortgage Loan Purchase Agreement. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreement, and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Servicer, in its good faith business judgment, would require were it
the owner of the related Home Equity Loans. The Servicer shall pay the costs of
such enforcement at its own expense, and shall be reimbursed therefor only (i)
from a general recovery resulting from such enforcement, to the extent, if any,
that such recovery exceeds all amounts due in respect of the related Home Equity
Loans, or (ii) from a specific recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is directed. Enforcement of the
Mortgage Loan Purchase Agreement against Long Beach shall be affected by the
Servicer to the extent it is not Long Beach, and otherwise by the Trustee, in
accordance with the foregoing provisions of this paragraph.
Section 8.05. LIABILITY OF SERVICER; INDEMNIFICATION.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer agrees to indemnify and hold the Trustee, the
Depositor, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Depositor, the Certificate Insurer and any Owner may sustain in any way related
to the failure of the Servicer to perform its duties and service the Home Equity
Loans in compliance with the terms of this Agreement. The Servicer shall
immediately notify the Trustee, the Depositor, the Certificate Insurer and each
Owner if a claim is made by a third party arising out of or based upon the
alleged actions of the Servicer or alleged failure of the Servicer to perform
its duties and service the Home Equity Loans in compliance with the terms of
this Agreement, and the Servicer shall assume (with the consent of the Trustee
and the Certificate Insurer) the defense of any such claim and pay all expenses
in connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Trustee, the Depositor, the Certificate Insurer and/or Owner in
respect of such claim. Notwithstanding the foregoing, the Servicer shall not be
obligated to indemnify the Trust or assume the defense for any claim by a third
party that does not arise out of and is not based upon the alleged actions of
the Servicer or alleged failure of the Servicer to perform its duties and
service the Home Equity Loans in compliance with the terms of this Agreement.
(c) The Trustee shall, in accordance with instructions received from
the Servicer, reimburse the Servicer only from amounts otherwise distributable
on the Class R Certificates for all amounts advanced by it pursuant to Section
8.05(b), except when evidence has been delivered to the Trustee that a final
nonappealable adjudication determines that the claim relates directly to actions
of the Servicer or the failure of the Servicer to perform its duties in
compliance with the terms of this Agreement. To the extent the Servicer has been
reimbursed for amounts in connection with a claim for which such a final
nonappealable adjudication determines that the claim relates directly to actions
of the Servicer or the failure of the Servicer to perform its duties in
compliance with the terms of this Agreement, the Servicer shall, on the
immediately succeeding Distribution Date pay such amounts to the holder of the
Class R Certificates. The provisions of this Section 8.05(c) shall survive the
termination of this Agreement and the payment of the outstanding Certificates.
Section 8.06. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER,
TRUSTEE OR THE OWNERS.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee and the Owners
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer except as
set forth in Section 8.07. The Servicer shall be solely liable for all fees and
expenses owed by it to any Sub-Servicer, irrespective of whether the Servicer's
compensation pursuant to this Agreement is sufficient to pay such fees and
expenses.
Section 8.07. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
TRUSTEE.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20 or another successor Servicer, it is
understood and agreed that the Servicer's rights and obligations under any
Sub-Servicing Agreement then in force between the Servicer and a Sub-Servicer
shall be assumed simultaneously by the Trustee or another successor Servicer
without act or deed on part of the Trustee except that (i) the Servicer shall
not thereby be relieved of any liability or obligations under any Sub-Servicing
Agreement and (ii) none of the Trustee, its designee or any successor Servicer
shall be deemed to have assumed any liability or obligation of the Servicer that
arose before it ceased to be the Servicer; PROVIDED, HOWEVER, that the Trustee
(if acting as successor Servicer) or any other successor Servicer may, with the
consent of the Certificate Insurer, and shall, at the direction of the
Certificate Insurer, terminate the Sub-Servicer as provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08. PRINCIPAL AND INTEREST ACCOUNT.
(a) The Servicer shall establish and maintain at one or more
Designated Depository Institutions the Principal and Interest Account to be held
as a trust account. The Principal and Interest Account shall be an Eligible
Account. Each Principal and Interest Account shall be identified on the records
of the Designated Depository Institution as follows: The Chase Manhattan Bank,
as Trustee on behalf of MBIA Insurance Corporation and the Owners of the Asset
Backed Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates. If the institution at any time holding the Principal
and Interest Account ceases to be eligible as a Designated Depository
Institution hereunder, then the Servicer shall immediately be required to name a
successor institution meeting the requirements for a Designated Depository
Institution hereunder. If the Servicer fails to name such a successor
institution, then the Principal and Interest Account shall thenceforth be held
as a trust account with a qualifying Designated Depository Institution selected
by the Trustee. The Servicer shall notify the Trustee, the Certificate Insurer
and the Owners if there is a change in the name, account number or institution
holding the Principal and Interest Account.
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested up to the amount insured by the FDIC or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the Business Day prior to
the immediately succeeding Monthly Remittance Date. The Principal and Interest
Account shall be held in trust in the name of the Trust for the benefit of the
Owners and the Certificate Insurer. The Trust shall be divided into two separate
sub-trusts; one for Group I and any Trust assets allocable to such Group I and
one for Group II and any Trust assets allocable to such Group II. Any net
investment earnings on funds held in the Principal and Interest Account shall be
for the account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount and the Prepayment Penalties with respect to the
related Prepayment Period (and the Total Monthly Excess Spread included therein)
by the Servicer in accordance with the terms hereof. Any investment losses on
amounts held in the Principal and Interest Account shall be for the account of
the Servicer and promptly upon the realization of such net loss shall be
contributed by the Servicer to the Principal and Interest Account. Any
references herein to amounts on deposit in the Principal and Interest Account
shall refer to amounts net of such investment earnings.
(c) The Servicer (or, with respect to collections in June and July
previously remitted to the Depositor, the Depositor) shall deposit to the
Principal and Interest Account on the third Business Day after receipt by it or
a Sub-Servicer, all principal and interest collected on the Home Equity Loans
after the Cut-Off Date, the related Subsequent Cut-Off Date and the Replacement
Cut-Off Date, as applicable, including any Prepayments received during the
related Prepayment Period, Prepayment Penalties and Net Liquidation Proceeds,
other recoveries, Net Insurance Proceeds or amounts related to the Home Equity
Loans received by the Servicer and any income from REO Mortgaged Properties, but
net of (i) principal (including Prepayments) and due on the Home Equity Loans on
or prior to the Cut-Off Date and interest due on the Home Equity Loans on or
prior to the July 1, 1999, the related Subsequent Cut-Off Date or the related
Replacement Cut-Off Date, as the case may be, (ii) reimbursements for
unreimbursed Delinquency Advances and Servicing Advances (but solely from
amounts received on the related Home Equity Loan) and (iii) reimbursements for
amounts deposited in the Principal and Interest Account representing payments of
principal and/or interest on a Note by a Mortgagor which are subsequently
returned by a depository institution as unpaid (all such net amounts herein
referred to as "Daily Collections").
(d) The Servicer may make withdrawals from the Principal and Interest
Account, with respect to each Home Equity Loan Group, only for the following
purposes:
(A) to remit to the Trustee amounts to be deposited in the
Certificate Account;
(B) to withdraw net investment earnings on amounts on
deposit in the Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the
Principal and Interest Account in error;
(D) to reimburse itself pursuant to Section 8.09(a) for
non-retained and unrecovered Delinquency Advances and
unrecovered Servicing Advances (in each case, solely
from amounts recovered on the related Home Equity Loan
and to the extent deposited in the Principal and
Interest Account);
(E) to reimburse itself for Nonrecoverable Advances; and
(F) to clear and terminate the Principal and Interest
Account following the termination of the Trust pursuant
to Article IX;
In addition, if (a) there has been a draw on any Certificate Insurance
Policy for which Long Beach or the Servicer is required to reimburse the
Certificate Insurer pursuant to the Insurance Agreement; (b) Long Beach or the
Servicer has reimbursed the Certificate Insurer for all such amounts required by
the Insurance Agreement, (c) the Certificate Insurer has paid the draw amount to
the Trustee for the benefit of the Certificateholders and (d) the Servicer has
received late payments on the related Home Equity Loans in respect of which such
draw was made, then the Servicer may, upon notice to the Trustee and the
Certificate Insurer, reimburse itself or Long Beach, as applicable, from such
late payments for the draw amount.
(i) The Servicer shall (a) remit to the Trustee for deposit in
the Certificate Account by wire transfer, or otherwise make funds
available in immediately available funds, without duplication, the
Monthly Remittance Amount allocable to a Due Period not later than the
related Monthly Remittance Date, and (b) on each Monthly Remittance
Date, deliver to the Trustee, the Depositor and the Certificate
Insurer, a monthly servicing report, with respect to each Home Equity
Loan Group, containing (without limitation) the following information:
principal and interest collected in respect of the Home Equity Loans,
scheduled principal and interest that was due on the Home Equity
Loans, relevant information with respect to Liquidated Loans, if any,
summary and detailed delinquency reports, Liquidation Proceeds and
other similar information concerning the servicing of the Home Equity
Loans and any other information requested by the Certificate Insurer
(including, without limitation, a liquidation report with respect to
each Liquidated Loan). In addition, the Servicer shall inform the
Trustee and the Certificate Insurer on each Monthly Remittance Date,
with respect to each Home Equity Loan Group, of the amounts of any
Loan Purchase Prices or Substitution Amounts so remitted during the
related Due Period, and of the Loan Balance of the Home Equity Loan
having the largest Loan Balance as of such date. The Servicer shall
report to the Trustee and the Certificate Insurer on each Monthly
Remittance Date (commencing in August 1999) all amounts netted against
collections during the preceding Prepayment Period (or in the case of
the first report, two Prepayment Periods), including, without
limitation, the Servicing Fees retained, the amounts described in
Section 8.08(c)(ii) and the expenses (including unreimbursed Servicing
Advances and unreimbursed Delinquency Advances) retained from
Liquidation Proceeds.
(ii) The Servicer shall provide on or before each Monthly
Remittance Date to the Trustee the information described in Section
8.08(d)(i)(b) and in Section 7.09(b) to enable the Trustee to perform
its reporting requirements under Sections 7.08 and 7.09 and to make
the allocations and disbursements set forth in Sections 7.02 and 7.03.
Section 8.09. DELINQUENCY ADVANCES AND SERVICING ADVANCES.
(a) On or before each Monthly Remittance Date, the Servicer shall be
required to remit to the Trustee for deposit to the Certificate Account out of
the Servicer's own funds or from collections on any Home Equity Loans that are
not required to be distributed on the Distribution Date occurring during the
month in which such reimbursement is made (all or any portion of such amount to
be replaced on future Monthly Remittance Dates) any Delinquent payment of
interest (net of the Servicing Fee) and principal with respect to each
Delinquent Home Equity Loan other than with respect to the last payment due on a
Balloon Loan, which payment was not received on or prior to the last day of the
related Due Period. Such amounts of the Servicer's own funds so deposited are
"Delinquency Advances".
The Servicer shall be permitted to reimburse itself on any Business
Day for any Delinquency Advances paid from the Servicer's own funds, from late
collections on the related Home Equity Loan or as provided in Section
7.03(b)(iii)(I).
Notwithstanding the foregoing, in the event that the Servicer
determines in accordance with Accepted Servicing Practices that any proposed
Delinquency Advance would be a Nonrecoverable Advance, the Servicer shall not be
required to make Delinquency Advances with respect to such Home Equity Loan. To
the extent that the Servicer previously has made a Delinquency Advance with
respect to a Home Equity Loan that the Servicer subsequently determines is a
Nonrecoverable Advance, the Servicer shall be entitled to reimbursement for such
aggregate Nonrecoverable Advances from collections on any Home Equity Loan on
deposit in the Principal and Interest Account. The Servicer shall give written
notice of such determination as to why such amount would not be recoverable to
the Trustee and the Certificate Insurer; the Trustee shall promptly furnish a
copy of such notice to the Owners of the Class R Certificates; PROVIDED,
FURTHER, that the Servicer shall be entitled to recover any unreimbursed
Delinquency Advances in accordance with Section 8.08(d)(D).
(b) The Servicer will pay all "out-of-pocket" costs and expenses
relating to a Mortgagor delinquency, or default or other unanticipated event
incurred in the performance of its servicing obligations, including, but not
limited to, (i) Preservation Expenses, (ii) the cost of any enforcement or
judicial proceedings, including foreclosures, (iii) the cost of the management
and liquidation of REO Mortgaged Property, and (iv) advances required by Section
8.13(a), except to the extent that such amounts are determined by the Servicer
in its reasonable business judgment not to be recoverable. Such costs will
constitute "Servicing Advances" and will be recoverable by the Servicer. If the
Servicer determines that a Servicing Advance, if made, would be a Nonrecoverable
Advance, the Servicer shall make such a Servicing Advance only if, in the good
faith business judgment of the Servicer, the making of such Servicing Advance is
in the best interests of the Certificateholders and the Certificate Insurer. To
the extent that the Servicer previously has made a Servicing Advance with
respect to a Home Equity Loan that the Servicer subsequently determines is a
Nonrecoverable Advance, the Servicer shall be entitled to reimbursement for such
aggregate Nonrecoverable Advances from collections on any Home Equity Loan on
deposit in the Principal and Interest Account. The Servicer shall give written
notice of such determination as to why such amount would not be recoverable to
the Trustee and the Certificate Insurer; the Trustee shall promptly furnish a
copy of such notice to the Owners of the Class R Certificates; PROVIDED,
FURTHER, that the Servicer shall be entitled to recover any unreimbursed
Servicing Advances from the related Liquidated Loan in accordance with Section
8.08(d) (D) and 7.03(b).
(c) In accordance with the standards of the preceding clauses (a) and
(b), the Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the timely payment of taxes and assessments on the
Mortgaged Properties, which advances shall be Servicing Advances reimbursable in
the first instance from related collections from the Mortgagors pursuant to
clause (b) of this Section 8.09, and further as provided in Section 8.08(d). Any
cost incurred by the Servicer or by Sub-Servicers in effecting the timely
payment of taxes and assessments on a Mortgaged Property shall not, for the
purpose of calculating distributions to Certificateholders, be added to the
unpaid principal balance of the related Home Equity Loan, notwithstanding that
the terms of such Home Equity Loan so permit.
Section 8.10. COMPENSATING INTEREST; REPURCHASE OF HOME EQUITY LOANS.
(a) If a Prepayment in full of a Home Equity Loan occurs during any calendar
month, any shortfall between (x) the interest collected from the Mortgagor in
connection with such payoff, and (y) the full months interest at the Coupon Rate
(net of the Servicing Fee) that would be due on the related Due Date for such
Home Equity Loan ("Compensating Interest") (but not in excess of the aggregate
Servicing Fee for the related Due Period) shall be deposited by the Servicer
from its own funds to the Principal and Interest Account (or if such difference
is an excess, the Servicer shall retain such excess) on the next succeeding
Monthly Remittance Date and shall be included in the Monthly Remittance Amount
to be made available to the Trustee on such Monthly Remittance Date.
(b) Subject to the clause (c) below, each of the Servicer and the
majority holder of the related Class X Certificates has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which becomes a 90-Day Delinquent Loan, in whole or in part, as to at least
three consecutive monthly installments or any Home Equity Loan as to which
enforcement proceedings have been brought by the Servicer pursuant to Section
8.13; PROVIDED, HOWEVER, that neither the Servicer nor the majority holder of
the related Class X Certificates may purchase any such Home Equity Loan unless
the Servicer or the majority holder of the related Class X Certificates has
delivered to the Trustee and the Certificate Insurer at the Servicer's expense,
an Opinion of Counsel acceptable to the Certificate Insurer and to the Trustee
to the effect that such a purchase would not constitute a Prohibited Transaction
for the Trust or otherwise subject the Trust to tax and would not jeopardize the
status of any REMIC created hereunder as a REMIC; PROVIDED, FURTHER, that the
majority holder of the related Class X Certificates may not purchase any such
Home Equity Loan unless the majority holder of the related Class X Certificates
has delivered to the Trustee and the Certificate Insurer a certificate to the
effect that the fair market value of the Home Equity Loan to be purchased is
less than the applicable Loan Purchase Price. Any such Home Equity Loan so
purchased shall be purchased by the Servicer or the majority holder of the
related Class X Certificates on or prior to a Monthly Remittance Date at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be deposited in the Principal and Interest Account.
(c) If a Home Equity Loan to be purchased by the Servicer or the
majority holder of the related Class X Certificates pursuant to clause (b) above
is the greatest number of days Delinquent of all then Delinquent Home Equity
Loans (including Home Equity Loans relating to REO Mortgaged Property), the
Servicer or the majority holder of the related Class X Certificates may purchase
such Home Equity Loan without having first notified the Certificate Insurer of
such purchase. In all other cases, the Servicer or the majority holder of the
related Class X Certificates must notify the Certificate Insurer and the
Trustee, in writing, of its intent to purchase a Home Equity Loan and neither
the Servicer nor the majority holder of the related Class X Certificates may
purchase such Home Equity Loan without the written consent of the Certificate
Insurer.
(d) The Net Liquidation Proceeds from the disposition of any REO
Mortgaged Property shall be deposited in the Principal and Interest Account and
remitted to the Trustee as part of the Monthly Remittance Amount remitted by the
Servicer to the Trustee.
Section 8.11. MAINTENANCE OF INSURANCE.
(a) The Servicer shall cause to be maintained with respect to each
Home Equity Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the least of (i) the current
principal balance of such Home Equity Loan, (ii) the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis and (iii) the maximum insurable value of
the improvements which are a part of such Mortgaged Property, in each case in an
amount not less than such amount as is necessary to avoid the application of any
coinsurance clause contained in the related hazard insurance policy. The
Servicer shall also cause to be maintained fire insurance with extended coverage
on each REO Mortgaged Property in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements which are a part
of such property and (ii) the outstanding principal balance of the related Home
Equity Loan at the time it became an REO Mortgaged Property, plus accrued
interest at the Coupon Rate and related Servicing Advances. The Servicer will
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any such hazard policies. The Servicer shall
maintain the insurance policies required hereunder in the name of the mortgagee,
its successors and assigns, and shall be named as loss payee. Any cost incurred
by the Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders and the Certificate Insurer, be
added to the unpaid principal balance of the related Home Equity Loan,
notwithstanding that the terms of such Home Equity Loan so permit. It is
understood and agreed that no earthquake or other additional insurance is to be
required of any Mortgagor other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property or REO Mortgaged Property is at
any time in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Servicer will cause to be
maintained a flood insurance policy in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the unpaid principal balance of
the related Home Equity Loan and (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program). The Insurance Policies shall require the insurer
to provide the mortgagee with 30 days' notice prior to any cancellation or as
otherwise required by law.
(b) In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of A:X or better in Best's
Key Rating Guide insuring against hazard losses on all of the Home Equity Loans,
it shall conclusively be deemed to have satisfied its obligations as set forth
in the first two sentences of this Section 8.11, it being understood and agreed
that such policy may contain a deductible clause, in which case the Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Mortgaged Property a policy complying with the first
two sentences of this Section 8.11, and there shall have been one or more losses
which would have been covered by such policy, deposit to the Principal and
Interest Account from its own funds the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as administrator and servicer of the Home Equity Loans, the Servicer
agrees to prepare and present, on behalf of itself, the Trustee,
Certificateholders and the Certificate Insurer, claims under any such blanket
policy in a timely fashion in accordance with the terms of such Insurance
Policy.
(c) Amounts collected by the Servicer under any Insurance Policies net
of amounts remitted to the Mortgagor for repairs shall be deposited into the
Principal and Interest Account, subject to withdrawal pursuant to Section 8.08.
Section 8.12. DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION
AGREEMENTS.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; PROVIDED, HOWEVER, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. In such event, the Servicer
shall enter into an assumption and modification agreement with the person to
whom such property has been or is about to be conveyed, pursuant to which such
person becomes liable under the Note and, unless prohibited by applicable law or
the Mortgage documents, the Mortgagor remains liable thereon. If the foregoing
is not permitted under applicable law, the Servicer is authorized to enter into
a substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note. In connection with any assumption
or substitution, the Servicer shall apply such underwriting standards and follow
such practices and procedures as shall be normal and usual in its general
mortgage servicing activities and as it applies to other mortgage loans owned
solely by it. The Servicer shall not take or enter into any assumption and
modification agreement, however, unless (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable hazard insurance policy, or a new policy meeting
the requirements of this Section is obtained. The Servicer shall notify the
Trustee that any such assumption or substitution agreement has been completed by
forwarding to the Trustee the original copy of such assumption or substitution
agreement (indicating the File to which it relates) which copy shall be added by
the Trustee to the related File and which shall, for all purposes, be considered
a part of such File to the same extent as all other documents and instruments
constituting a part thereof. The Servicer shall be responsible for recording any
such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, no material term of the Home Equity Loan
(including, without limitation, the required monthly payment on the related Home
Equity Loan, the stated maturity, the outstanding principal amount or the Coupon
Rate) shall be changed nor shall any required monthly payments of principal or
interest be deferred or forgiven. Any fee collected by the Servicer or the Sub-
Servicer for consenting to any such conveyance or entering into an assumption or
substitution agreement shall be retained by or paid to the Servicer as
additional servicing compensation.
<PAGE>
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13. REALIZATION UPON DEFAULTED HOME EQUITY LOANS; WORKOUT OF
HOME EQUITY LOANS.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Trustee on behalf of the Trust of Mortgaged
Properties relating to defaulted Home Equity Loans as to which no satisfactory
arrangements can be made for collection of Delinquent payments and which the
Servicer has not purchased pursuant to Section 8.10(b). In connection with such
foreclosure or other conversion, the Servicer shall use Accepted Servicing
Practices. Any amounts so advanced including any amounts described below
regarding environmental inspections shall constitute "Servicing Advances" within
the meaning of Section 8.09(b) hereof. The Servicer shall sell any REO Mortgaged
Property within 35 months from the close of the taxable year of its acquisition
by the Trust, at such price as the Servicer in good faith deems necessary to
comply with this covenant unless the Servicer obtains for the Certificate
Insurer and the Trustee, an Opinion of Counsel (the expense of which opinion
shall be a Servicing Advance) experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee, addressed to the
Certificate Insurer, the Trustee and the Servicer, to the effect that the
holding by the Trust of such REO Mortgaged Property for any greater period will
not result in the imposition of taxes on "Prohibited Transactions" of the Trust
or any REMIC created hereunder as defined in Section 860F of the Code or cause
any REMIC created hereunder to fail to qualify as a REMIC under the REMIC
Provisions at any time that any Certificates are Outstanding. Notwithstanding
the generality of the foregoing provisions, the Servicer shall manage, conserve,
protect and operate each REO Mortgaged Property for the Owners solely for the
purpose of its prompt disposition and sale in a manner which does not cause such
REO 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 any REMIC
created hereunder of any "income from non-permitted assets" within the meaning
of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. Pursuant to
its efforts to sell such REO Mortgaged Property, the Servicer shall either
itself or through an agent selected by the Servicer protect and conserve such
REO Mortgaged Property in the same manner and to such extent as is customary in
the locality where such REO Mortgaged Property is located and may, incident to
its conservation and protection of the interests of the Owners, rent the same,
or any part thereof, as the Servicer deems to be in the best interest of the
Owners for the period prior to the sale of such REO Mortgaged Property. If the
Servicer has actual knowledge of any environmental or hazardous waste risk with
respect to the Mortgaged Property that the Servicer is contemplating acquiring
in foreclosure or deed in lieu of foreclosure, the Servicer will cause an
environmental inspection of the Mortgaged Property in accordance with Accepted
Servicing Practices. If such environmental audit or report reveals or if the
Servicer has knowledge or notice that such Mortgage Property contains such
wastes or substances or are within one mile of the site of such wastes or
substances, the Servicer shall not foreclose or accept deed in lieu of
foreclosure without the prior written consent of the Certificate Insurer.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan, when it has recovered, whether through trustee's sale, foreclosure
sale or otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan" and the Servicer shall promptly submit a liquidation report to
the Certificate Insurer in form acceptable to the Certificate Insurer, in the
form attached hereto as Exhibit Q.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and the Servicer shall not: (i) permit (unless the Mortgagor is in default with
respect to the Home Equity Loan or such default is, in the judgment of the
Servicer, reasonably foreseeable) any modification with respect to any Home
Equity Loan that would change the Coupon Rate, reduce or increase the Loan
Balance (except for reductions resulting from actual payments of principal) or
extend the maturity date of such Home Equity Loan or (ii) permit any
modification, waiver or amendment of any term of any Home Equity Loan that would
both (A) effect an exchange or reissuance of such Home Equity Loan under Section
1001 of the Code (or Treasury regulations promulgated thereunder) and (B) cause
any REMIC created hereunder to fail to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited transactions" or "contributions after the
Startup Day" under the REMIC Provisions; provided that the Certificate Insurer's
prior written consent shall be required for any modification, waiver or
amendment if the aggregate number of Home Equity Loans outstanding which have
been modified, waived or amended exceeds 5% of the number of Home Equity Loans
as of the Cut-Off Date. Notwithstanding anything set out in this Section 8.13(c)
or elsewhere in this Agreement to the contrary, the Servicer shall be permitted
to modify, waive or amend any provision of a Home Equity Loan if required by
statute or a court of competent jurisdiction to do so.
(d) The Servicer has no intent to foreclose on any Mortgage based on
the delinquency characteristics as of the Startup Day; provided, that the
foregoing does not prevent the Servicer from initiating foreclosure proceedings
on any date hereafter if the facts and circumstances of such Mortgage including
delinquency characteristics in the Servicer's discretion so warrant such action.
Section 8.14. TRUSTEE TO COOPERATE; RELEASE OF FILES.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Trustee a written request and certification of the Servicer in the form attached
hereto as Exhibit P signed by an Authorized Officer which states the purpose of
the release of a File. Upon receipt of such written request and certification,
the Trustee shall promptly release the related File, in trust, to (i) the
Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of the
Trustee. Upon any such payment in full, or the receipt of such notification that
such funds have been placed in escrow, the Servicer is authorized to give, as
attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Mortgaged Property relating to such Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor of
payment in full, it being understood and agreed that no expense incurred in
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Principal and Interest Account or to the Trustee.
In lieu of executing any such satisfaction or assignment, as the case may be,
the Servicer may prepare and submit to the Trustee a satisfaction (or assignment
without recourse, if requested by the Person or Persons entitled thereto) in
form for execution by the Trustee with all requisite information completed by
the Servicer; in such event, the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with the
related File, as aforesaid.
(b) Reserved.
(c) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall release the related File to the Servicer, promptly
upon a written request and certification of the Servicer in form attached hereto
as Exhibit P signed by an Authorized Officer, which states the purpose of the
release of a File; provided, however, that no more than 10% of the outstanding
Home Equity Loans (by number) shall be released to the Servicer at any time.
Such receipt shall obligate the Servicer to return the File to the Trustee when
the need therefore by the Servicer no longer exists.
(d) In all cases where the Servicer needs the Trustee to sign any
document or to release a File within a particular period of time, the Servicer
shall notify an Authorized Officer of the Trustee by telephone of such need and
the Trustee shall thereon use its best efforts to comply with the Servicer's
needs, but in any event will comply within two Business Days of such request.
(e) No costs associated with the procedures described in this Section
8.14 shall be an expense of the Trust.
(f) Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Servicer, with copies to the Certificate
Insurer, any court pleadings, requests for trustee's sale or other documents
reasonably necessary to the foreclosure or trustee's sale in respect of a
Mortgaged Property or to any legal action brought to obtain judgment against any
Mortgagor on the Note or Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by the Note or Mortgage or
otherwise available at law or in equity. Each such certification shall include a
request that such pleadings or documents be executed by the Trustee and a
statement as to the reason such documents or pleadings are required.
Section 8.15. SERVICING COMPENSATION.
As compensation for its activities hereunder, each of the Servicer and
any Special Servicer shall be entitled to retain the amount of the related
Servicing Fee with respect to each Home Equity Loan it services. Additional
servicing compensation in the form of release fees, bad check charges,
assumption fees, late payment charges, or any other servicing-related fees
(other than Prepayment Penalties), and similar items may, to the extent
collected from Mortgagors, be retained by the Servicer, unless a successor
Servicer is appointed pursuant to Section 8.20 hereof, in which case the
successor Servicer shall be entitled to such fees as are agreed upon by the
Trustee, the Certificate Insurer and the successor Servicer. In addition, the
Servicer will be entitled to retain, as additional servicing compensation,
investment earnings, net of losses, on amounts on deposit in the Principal and
Interest Account.
The right to receive the Servicing Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations with respect to a Home Equity Loan under this
Agreement.
Section 8.16. ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies, on or before April
15 of each year, commencing in 2000, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer during
such preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
The Servicer shall deliver to the Trustee, the Depositor, the
Certificate Insurer and the Rating Agencies, promptly after having obtained
knowledge thereof but in no event later than five Business Days thereafter,
written notice by means of an Officer's Certificate of any event which with the
giving of notice or the lapse of time would become a Servicer Termination Event.
Section 8.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORTS.
On or before April 15 of each year, commencing in 2000, the Servicer,
at its own expense, shall cause to be delivered to the Trustee, the Certificate
Insurer, the Depositor, and the Rating Agencies a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Certificate Insurer stating that (i) it has obtained a letter
of representation regarding certain matters from the management of the Servicer
which includes an assertion that the Servicer has complied with certain minimum
residential mortgage loan servicing standards, identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America, with respect to the servicing of residential mortgage
loans during the most recently completed calendar year and (ii) on the basis of
an examination conducted by such firm in accordance with standards established
by the American Institute of Certified Public Accountants, such representation
is fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. In rendering its report such firm may
rely, as to matters relating to the direct servicing of residential mortgage
loans by Sub-Servicers, upon comparable reports of firms of independent
certified public accountants rendered on the basis of examinations conducted in
accordance with the same standards (rendered within one year of such report)
with respect to those Sub-Servicers. Immediately upon receipt of such report,
the Servicer shall furnish a copy of such report to the Trustee, the Certificate
Insurer and each Rating Agency. Copies of such statement shall be provided by
the Trustee to any Certificateholder upon request at the Servicer's expense,
provided that such statement is delivered by the Servicer to the Trustee.
Section 8.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE HOME EQUITY LOANS. The Servicer shall provide to the Trustee, the
Depositor and the Certificate Insurer access to the documentation regarding the
Home Equity Loans, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Home Equity Loans, the Servicer shall deliver a copy
of such computer tape to the Trustee and in addition shall provide a copy of
such computer tape to the Trustee, and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably request.
The Servicer shall deliver to the Depositor, the Seller and the
Certificate Insurer, monthly, on or before each Monthly Remittance Date, a
report containing the following information: (1) loan number, (2) scheduled Loan
Balance at the first day of the related Due Period and at the last day of the
related Due Period, (3) the Servicing Fee, (4) the Coupon Rate, (5) the Adjusted
Coupon Rate, (6) scheduled monthly payment (separately specifying principal
due), (7) principal curtailments, curtail adjustments, payoff amount and payoff
date, (8) Prepayment Penalty due, (9) net remittance amount, and (10) unpaid
Loan Balance at foreclosure, Servicing Advances incurred, unpaid Delinquency
Advances, Liquidation Proceeds and Realized Losses. Upon the request of the
Depositor or the Seller, the Servicer shall deliver copies of any Mortgages or
Notes.
Section 8.19. ASSIGNMENT OF AGREEMENT.
Other than with respect to entering into Sub-Servicing Agreements
pursuant to Section 8.03 hereof, the Servicer may not assign its obligations
under this Agreement, in whole or in part, unless it shall have first obtained
the written consent of the Trustee and the Certificate Insurer; PROVIDED,
HOWEVER, that any assignee must meet the eligibility requirements set forth in
Section 8.20(h) hereof for a successor servicer.
Section 8.20. REMOVAL OF SERVICER; RETENTION OF SERVICER; RESIGNATION
OF SERVICER.
(a) The Certificate Insurer or the Trustee (with the prior written
consent of the Certificate Insurer) may remove the Servicer upon the occurrence
of any of the following events (each a "Servicer Termination Event"):
(i) any failure by the Servicer to remit to the Trustee for
distribution to the Certificateholders any payment or deposit
(other than a Delinquency Advance required to be made from its
own funds on any Monthly Remittance Date) required to be made by
the Servicer under the terms of this Agreement which continues
unremedied for a period of one Business Day after the date upon
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Depositor,
the Certificate Insurer or the Trustee (in which case notice
shall be provided by telecopy), or to the Servicer, the
Depositor, the Certificate Insurer and the Trustee by the holders
of Certificates entitled to at least 25% of the Percentage
Interest of the Class A Certificates or failure of the Servicer
to provide the reports and information to the Trustee as provided
in Section 8.08(d)(ii) which results in a draw on any of the
Certificate Insurance Policies; or
(ii) any failure on the part of the Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of the Servicer contained in this
Agreement (or, if the Servicer is Long Beach, the failure of Long
Beach to repurchase a Home Equity Loan as to which a breach has
been established that requires a repurchase pursuant to the terms
of the Mortgage Loan Purchase Agreement) which continues
unremedied for a period of 45 days after the earlier of (i) the
date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the
Depositor, the Certificate Insurer or the Trustee, or to the
Servicer, the Depositor, the Certificate Insurer and the Trustee
by the holders of Certificates entitled to at least 25% of the
Percentage Interest of the Class A Certificates and (ii) actual
knowledge of such failure by an Authorized Officer of the
Servicer; provided, however, that if, prior to a Certificate
Insurer Default, the Servicer shall have given notice to the
Certificate Insurer of corrective action it proposes to take,
which corrective action is agreed in writing by the Certificate
Insurer to be satisfactory, such period may be extended by the
Certificate Insurer; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary
case under any present or future federal or state bankruptcy,
insolvency or similar law or the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceeding, or
for the winding-up or liquidation of its affairs, shall have been
entered against the Servicer and, if such proceeding is being
contested by the Servicer in good faith, such decree or order
shall have remained in force undischarged or unstayed for a
period of 60 days or results in the entry of an order for relief
or any such adjudication or appointment; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to it or of or relating to all
or substantially all of its property; or
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(vi) the Servicer Termination Test is not satisfied, or the
Tangible Net Worth of the Servicer shall fall below the Tangible
Net Worth Requirement and remain below the Tangible Net Worth
Requirement for a period of 30 days;
(vii) any failure of the Servicer to make any Delinquency
Advance on any Monthly Remittance Date required to be made which
continues unremedied until 3:00 p.m. New York time on the
Business Day immediately following the Monthly Remittance Date;
or
(viii) the Certificate Insurer notifies the Trustee of an
Event of Default with respect to the Servicer under the Insurance
Agreement, or
(ix) The Servicer shall fail to have (a) at any time from
the Startup Day through January 31, 2000, committed warehouse
facilities in a total amount of at least $300 million, (b) as of
the first Business Day of each calendar month beginning on
February 1, 2000, committed warehouse facilities in a total
amount of at least 125% of the Servicer's average monthly loan
originations funded during the three calendar months immediately
preceding such Business Day, and the Servicer does not cure such
failure during such month of determination by increasing the
amount of its committed warehouse facilities, or (c) as of the
first Business Day of each calendar month beginning February 1,
2000, committed warehouse facilities in a total amount equal to
at least 80% of the amount of borrowings under its warehouse
facilities (committed and uncommitted), and the Servicer does not
cure such failure during such month of determination by
increasing the amount of its committed warehouse facilities or by
reducing the amount of its borrowings; or
<PAGE>
(x) The Servicer or Long Beach Financial Corporation (or any
successor in interest) shall fail to have positive net income,
calculated in accordance with generally accepted accounting
principals, in any two consecutive quarters; or
(xi) The Servicer shall incur unsecured indebtedness in an
aggregate amount in excess of $2,000,000, as such amount may be
increased from time to time by the Certificate Insurer in its
reasonable discretion upon Servicer's request; provided, however,
that the foregoing restriction on unsecured debt shall not apply
to the following debt:
(A) debt for taxes (including payroll taxes),
assessments, governmental charges and levies to the extent that
payment is not due at the time, including debt for deferred taxes
arising from capitalized excess servicing fees;
(B) unsecured accounts payable, not the result of
borrowing of money, to vendors, suppliers and persons providing
services, for expenditures for goods and services normally
required by it in the ordinary course of business and on ordinary
trade terms; and
(C) unsecured debt that is:
1. to the Servicer's or its Affiliate's officers
and employees for salary, bonuses or other compensation;
2. wholly nonrecourse to the Servicer or any of
its subsidiaries (whether under repurchase agreements or
otherwise), and
3. incurred in the ordinary course of business
pursuant to servicing agreements, information service contracts
or other contractual agreements between the Servicer and any
subservicer, information services provider or other vendor or
provider of goods or services; or
(xii) The Servicer shall default in any payment on
indebtedness, which indebtedness is in excess of $100,000.00
(after giving effect to all applicable cure periods in any
agreements governing such indebtedness).
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall continue to act as servicer under this Agreement until removed as set
forth in this Section 8.20 and a successor Servicer has assumed the servicing
obligations. After the occurrence of a Servicer Termination Event, the
Certificate Insurer or the Trustee (with the prior written consent of the
Certificate Insurer) may remove the Servicer by written notice to the Servicer.
Such termination shall be effective on the date specified in such notice,
provided that a successor Servicer or the Trustee has assumed the servicing
obligations. Upon the effective date of termination of the Servicer, the Trustee
(or another successor Servicer appointed by the Certificate Insurer) shall
assume the servicing obligations hereunder. The Certificate Insurer may appoint
a successor Servicer other than the Trustee. Until a successor Servicer has been
appointed by the Certificate Insurer, the Trustee shall be the successor
Servicer in all respects without further action, and all authority and power of
the Servicer under this agreement shall pass to and be vested in the Trustee on
and after the effective date of termination.
(c) Between the Startup Day and September 30, 1999, the Certificate
Insurer may cause a review of the operations of the Servicer. The Certificate
Insurer shall bear all costs and expenses of the Certificate Insurer in
connection with such review, including (without limitation) fees and expenses of
accountants of the Certificate Insurer. On or before September 30, 1999, the
Certificate Insurer may, in its sole discretion, remove the Servicer, without
cause, by providing written notice to the Servicer.
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon (i) determination that its duties hereunder
are no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer at the date of this Agreement or (ii) prior written
consent of the Certificate Insurer and the Trustee. Any such determination under
clause (i) shall be evidenced by an Opinion of Counsel acceptable to the Trustee
and the Certificate Insurer at the expense of the Servicer to such effect which
shall be delivered to the Trustee and the Certificate Insurer.
(e) No removal or resignation of the Servicer shall become effective
until the Trustee, a successor Servicer or a Special Servicer shall have assumed
the Servicer's responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer, the Special Servicer or the Trustee, as applicable, all the books and
records (including, without limitation, records kept in electronic form) that
the Servicer has maintained for the Home Equity Loans (or with respect to the
Special Servicer, the applicable Home Equity Loans), including all tax bills,
assessment notices, insurance premium notices and all other documents as well as
all original documents then in the Servicer's possession.
(g) Any collections due to the Trust then being held by the Servicer
prior to its removal and any collections received by the Servicer after removal
or resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer other than in the case
of clause (o) below, the Trustee shall (A) solicit bids for a successor servicer
as described in clause (i) below and (B) until such time as another successor
Servicer is appointed by the Certificate Insurer, assume the duties and
obligations of the Servicer hereunder. The Trustee agrees to act as Servicer
during the solicitation process and shall assume all duties and obligations of
the Servicer. The Certificate Insurer may appoint a successor Servicer other
than the Trustee. If the Certificate Insurer fails to appoint a successor
Servicer, the Trustee shall, if it is unable to obtain a qualifying bid and is
prevented by law from acting as Servicer, appoint, or petition a court of
competent jurisdiction to appoint, any housing and home finance institution,
bank or mortgage servicing institution which has been designated as an approved
seller-servicer by FNMA or FHLMC for first and second home equity loans and
having equity of not less than $5,000,000 (or such lower level as may be
acceptable to the Certificate Insurer), as determined in accordance with
generally accepted accounting principles and acceptable to the Certificate
Insurer as the successor to the Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder. The compensation of any successor Servicer (other than the Trustee in
its capacity as successor Servicer) so appointed shall be the amount agreed to
between the successor Servicer, the Certificate Insurer and the Trustee (up to a
maximum of 0.50% per annum on the outstanding principal balance of each Home
Equity Loan), together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided in Sections 8.08
and 8.15; PROVIDED, HOWEVER, that if the Trustee becomes the successor Servicer
it shall receive as its compensation the same compensation paid to the Servicer
immediately prior to the Servicer's removal or resignation. The successor
Servicer shall be entitled to set-up expenses, if any, in connection with
becoming Servicer pursuant to Section 7.03(b)(iv) hereof. The Trustee shall be
obligated to serve as successor Servicer whether or not the fee described in
this section is paid by the predecessor Servicer, but shall in any event be
entitled to receive, and to enforce payment of, such fee from the predecessor
Servicer.
(i) Notwithstanding anything to the contrary contained in this Article
VIII, upon removal or resignation of the Servicer, the Trustee shall solicit, by
public announcement, bids from housing and home finance institutions, banks and
mortgage servicing institutions from a list of one or more institutions
(provided that the Certificate Insurer shall use its best efforts to provide a
list of three institutions) acceptable to the Certificate Insurer which
acceptance shall not be unreasonably withheld or delayed. Such public
announcement shall specify that the successor Servicer shall be entitled to
servicing compensation in accordance with clause (h) above, together with the
other servicing compensation in the form of assumption fees, late payment
charges or otherwise as provided in Sections 8.08 and 8.15. Within thirty days
after the Certificate Insurer has provided the list of eligible institutions as
provided above, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price it will
pay to obtain servicing provided that the Certificate Insurer has given its
prior written consent. The Trustee shall deduct from any sum received by the
Trustee from the successor to the Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum less any amounts due the
Trustee or the Trust from the Servicer shall be paid by the Trustee to the
predecessor Servicer at the time of such sale, transfer and assignment to the
Servicer's successor.
(j) The Trustee, such successor Servicer and any Special Servicer
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession, including the notification to all Mortgagors of
the transfer of servicing. The predecessor Servicer agrees to cooperate with the
Trustee, any successor Servicer and any Special Servicer in effecting the
termination of the predecessor Servicer's servicing responsibilities and rights
hereunder and shall promptly provide the Trustee, such successor Servicer or
Special Servicer, as applicable, all documents and records reasonably requested
by it to enable it to assume the Servicer's functions hereunder with respect to
the Home Equity Loans for which servicing is transferred and shall promptly also
transfer to the Trustee, such successor Servicer or any Special Servicer, as
applicable, all amounts which then have been or should have been deposited in
the Principal and Interest Account by the Servicer with respect to the Home
Equity Loans for which servicing is transferred or which are thereafter received
with respect to the Home Equity Loans for which servicing is transferred. Any
amounts and documents which are property of the Trust held by the predecessor
Servicer shall be held in trust on behalf of the Trustee until transferred to
the successor Servicer, Special Servicer or Trustee. Neither the Trustee, any
other successor Servicer or any Special Servicer shall be held liable by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it, or (ii) restrictions
imposed by any regulatory authority having jurisdiction over the Servicer. If
the Servicer resigns or is replaced hereunder, the costs and expenses of the
successor Servicer and any Special Servicer relating to the transfer of
servicing rights and responsibilities remaining after deduction from the sale
price as described in clause (i) above, if any, shall be payable to the
successor Servicer and any Special Servicer pursuant to Section 7.03(b)(iv)
hereof.
(k) The Trustee, any other successor Servicer and any Special
Servicer, upon assuming the duties of Servicer hereunder, shall immediately (i)
record all assignments of Home Equity Loans for which servicing is transferred
not previously recorded in the name of the Trustee pursuant to Section
3.05(b)(ii) as a result of an Opinion of Counsel and (ii) make all Delinquency
Advances and Compensating Interest payments and deposit them to the Principal
and Interest Account which the Servicer has theretofore failed to remit with
respect to the Home Equity Loans for which servicing is transferred.
(l) The Servicer that is being removed or is resigning shall give
notice to the Mortgagors and to the Rating Agencies of the transfer of the
servicing to the successor.
(m) The Trustee shall give notice to the Certificate Insurer, the
Depositor, the Owners, the Trustee and the Rating Agencies of the occurrence of
any event described in paragraphs (a) above of which the Trustee is aware.
(n) Upon appointment, the successor Servicer or any Special Servicer
shall be the successor in all respects to the predecessor Servicer with respect
to the Home Equity Loans for which servicing is transferred and shall be subject
to all the responsibilities, duties and liabilities of the predecessor Servicer
including, but not limited to, the maintenance of the hazard insurance policies,
the fidelity bond and an errors and omissions policy pursuant to Section 8.21(b)
and shall be entitled to the Servicing Fee and all of the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement. The
appointment of a successor Servicer or any Special Servicer shall not affect any
liability of the predecessor Servicer which may have arisen under this Agreement
prior to its termination as Servicer (including, without limitation, any
deductible under an insurance policy) nor shall any successor Servicer or any
Special Servicer be liable for any acts or omissions of the predecessor Servicer
or for any breach by such predecessor Servicer or predecessor Special Servicer
of any of its representations or warranties contained herein or in any related
document or agreement.
(o) The majority holder of the related Class X Certificates (with the
prior written consent of the Certificate Insurer) may remove the Servicer, as
servicer of any Home Equity Loan that is a 90-Day Delinquent Loan and appoint a
special servicer acceptable to the Certificate Insurer (a "Special Servicer") to
service such Home Equity Loans by giving written notice to the Servicer. Upon
the appointment of a Special Servicer, the Servicer shall continue to act as
servicer for such Home Equity Loans under this Agreement until the Special
Servicer has assumed the servicing obligations and paid to the Servicer the
amounts set forth below pursuant to a written agreement reasonably acceptable to
the Certificate Insurer. Such transfer of servicing shall be effective on the
date specified in such notice, provided that a Special Servicer has assumed the
servicing obligations with respect to such Home Equity Loan pursuant to a
written agreement reasonably acceptable to the Certificate Insurer. The majority
holder of the related Class X Certificates shall pay to the Servicer a one time
fee of $250 for each Home Equity Loan transferred to a Special Servicer. The
Special Servicer shall pay to the Servicer an amount equal to the unreimbursed
Servicing Fees, Servicing Advances and Delinquency Advances with respect to each
Home Equity Loan being transferred to the Special Servicer and the Special
Servicer shall be entitled to reimbursement of such amounts in the same manner
that the Servicer was entitled to be reimbursed. Any expenses of the Special
Servicer and the Certificate Insurer (including, without limitation, any legal
fees of the Certificate Insurer) associated with the transfer of servicing of
any Home Equity Loan to a Special Servicer or a successor Special Servicer shall
be paid by the majority holder of the related Class X Certificates. Any
compensation payable to a Special Servicer in excess of the Servicing Fee
payable to such Special Servicer shall be paid by the majority holder of the
related Class X Certificates. Upon the effective date of the transfer of
servicing with respect to such Home Equity Loan, the Special Servicer shall
assume the servicing obligations with respect to such Home Equity Loan and shall
comply with all the terms and provisions of this Agreement. The majority holder
of the related Class X Certificates (with the prior written consent of the
Certificate Insurer) may remove any Special Servicer, as servicer of any Home
Equity Loan and appoint a different Special Servicer to service a Home Equity
Loan. The Special Servicer shall, with respect to all Home Equity Loans that it
is servicing, be deemed to be, for all purposes of this Agreement and the
Insurance Agreement, the "Servicer" with respect to such Home Equity Loans and
shall be obligated to perform all of the duties of the Servicer with respect to
such Home Equity Loans and shall be subject to the same terms as is set forth in
this Agreement and the Insurance Agreement, except such additional terms
(including, without limitation, termination tests) as may be agreed to by the
Certificate Insurer; the Servicer shall be released from any and all liability,
responsibility, duties and rights with respect to each Home Equity Loan under
this Agreement and the Insurance Agreement that the Special Servicer is
servicing, other than those arising or accruing prior to the transfer of
servicing to the Special Servicer. In addition to the Certificate Insurer's
rights to terminate the Special Servicer following a Servicer Termination Event
with respect to the Special Servicer, upon termination of the Servicer pursuant
to this Agreement, the Certificate Insurer may terminate the Special Servicer
and appoint another Servicer or Special Servicer to service the Home Equity
Loans. Notwithstanding the appointment of any Special Servicer, for all purposes
of this Agreement, the 90+ Delinquency Percentage (Rolling Three Month), the
Cumulative Loss Percentage, the Servicer Loss Test, the Annual Loss Percentage
(Rolling Twelve Month) and the Servicer Termination Test shall be calculated on
an aggregate basis for all applicable Home Equity Loans regardless of whether
such Home Equity Loans are serviced by the Servicer or a Special Servicer, and
if the Servicer Termination Test is not satisfied, the Certificate Insurer or
the Trustee (with the prior written consent of the Certificate Insurer) may
remove the Servicer and/or any Special Servicer. If the Servicer Termination
Test is not satisfied, prior to terminating either the Servicer or any Special
Servicer, the Certificate Insurer shall consider each of the Servicer's and any
Special Servicer's role in the failure of the Servicer Termination Test.
Section 8.21. INSPECTIONS BY CERTIFICATE INSURER; ERRORS AND OMISSIONS
INSURANCE.
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, the Certificate Insurer, any Owner of a Class R
Certificate, or any agents thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer during the
Servicer's normal business hours with any of its officers or directors;
PROVIDED, HOWEVER, that the costs and expenses incurred by the Servicer or its
agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer.
(b) The Servicer (including the Trustee if it shall become the
Servicer hereunder) agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
FNMA Guide or any successor provision thereof; PROVIDED, HOWEVER, that in any
event that the fidelity bond or the errors and omissions coverage is no longer
in effect, the Servicer shall notify the Trustee and the Trustee shall promptly
give such notice to the Certificate Insurer and the Owners and shall secure
replacement coverage in conformity with this Section.
Section 8.22. VOTING RIGHTS. The Certificate Insurer or the Holders
representing at least 66% of the Percentage Interests evidenced by all Classes
of Class A-IO and Class A Certificates affected by any default or Servicer
Termination Event hereunder, with the written consent of the Certificate
Insurer, may waive such default or Servicer Termination Event; PROVIDED,
HOWEVER, that a default or Servicer Termination Event under clause (i) or (vi)
of Section 8.20(a) may be waived only by the Certificate Insurer or all of the
Holders of the Class A Certificates and Class A-IO Certificates with the written
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates or Class A-IO Certificates then outstanding, by such majority of
the Percentage Interests represented by the Class B-1 Certificates, or, if there
are no longer any Class B-1 Certificates then outstanding, by such majority of
the Percentage Interests represented by the related Class X Certificates and the
Class R Certificates. Upon any such waiver of a default or Servicer Termination
Event, such default or Servicer Termination Event shall cease to exist and shall
be deemed to have been remedied for every purpose hereunder or as specified in
such waiver. No such waiver shall extend to any subsequent or other default or
Servicer Termination Event or impair any right consequent thereon except to the
extent expressly so waived.
Section 8.23. THE GROUP II HOME EQUITY LOANS.
The Servicer shall enforce each adjustable rate Home Equity Loan in
Group II in accordance with its terms and shall timely calculate, record, report
and apply all interest rate adjustments in accordance with the related Note. The
Servicer's records shall, at all times, reflect the then Coupon Rate and monthly
payment and the Servicer shall timely notify the Mortgagor of any changes to the
Coupon Rate or the Mortgagor's monthly payment. If the Servicer fails to make
either a timely or accurate adjustment to the Coupon Rate or monthly payment or
to notify the Mortgagor of such adjustments, upon the Servicer's discovery of
such error and such continued failure, the Servicer shall pay from its own funds
any shortage. If the Servicer's continued failure after notice thereof to make a
scheduled change affects the Trust's rights to make future adjustments under the
terms of such Home Equity Loan, the Servicer shall repurchase such Home Equity
Loan in accordance with the provisions hereof by depositing the Loan Purchase
Price in the Principal and Interest Account. Any amounts paid by the Servicer
pursuant to this Section shall not be an advance and shall not be reimbursable
from the proceeds of any Home Equity Loan.
Section 8.24. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF SERVICER. Any corporation into which the Servicer may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Servicer shall be a
party or any corporation succeeding to all or substantially all of the business
or assets of the Servicer shall be the successor of the Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto provided that such corporation meets the
qualifications set forth in Section 8.20(h) (including, without limitation, such
entity is acceptable to the Certificate Insurer) and the resulting corporation
has a Tangible Net Worth of at least the Tangible Net Worth Requirement.
Section 8.25. NOTICES OF MATERIAL EVENTS. The Servicer shall give
prompt written notice to the Certificate Insurer, the Trustee and the Rating
Agencies of the occurrence of any of the following events:
(a) Any default or any fact or event of which the Servicer has
knowledge which results, or which with notice or the passage of time, or both,
would result in the occurrence of a default by the Servicer under any Operative
Document or would constitute a material breach of a representation, warranty or
covenant under any Operative Document;
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Servicer to which the Servicer has knowledge in any federal, state or local
court or before any governmental body or agency or before any arbitration board
or any such proceedings threatened by any governmental agency, which, if
adversely determined, would have a material adverse effect upon the Servicer's
ability to perform its obligations under any Operative Document;
(c) The commencement of any proceedings by or against the Servicer
under any applicable bankruptcy, reorganization, liquidation, insolvency or
other similar law now or hereafter in effect or of any proceeding in which a
receiver, liquidator, trustee or other similar official shall have been, or may
be, appointed or requested for the Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of the Servicer's business that the Servicer is to
cease or desist, or to undertake any practice, program, procedure or policy
employed by the Servicer in the conduct of the business of any of them, and such
cessation or undertaking will materially and adversely affect the conduct of the
Servicer's business or its ability to perform under the Operative Documents or
materially and adversely affect the financial affairs of the Servicer.
Section 8.26. RESERVED.
Section 8.27. PURCHASE OF RECEIVABLES UPON BREACH. The Depositor, the
Servicer, the Trustee and the Certificate Insurer shall inform the Servicer
promptly, in writing, upon the discovery of any breach pursuant to Section
8.02(b) or 8.13(c). Unless the breach shall have been cured within 60 days
following such discovery thereof by the Servicer or the receipt by the Servicer
of written notice of such breach, the Servicer shall be obligated to purchase
any Home Equity Loan in which the interests of the Certificateholders or the
Certificate Insurer are materially and adversely affected by such breach as of
the first day succeeding the end of such 60 day period that is the last day of a
Due Period. In the event of any such repurchase pursuant to this Section, a
REMIC Opinion shall be required to be delivered by the Servicer. Any required
purchase or substitution, if delayed by the absence of such opinion, shall
nonetheless occur upon the earlier of (i) the occurrence of a default or
imminent default with respect to the Home Equity Loan or (ii) the delivery of
such opinion.. In the event that any such repurchase results in a Prohibited
Transaction, the Trustee shall immediately notify the Servicer in writing
thereof and the Servicer shall, within 10 days of receiving notice thereof from
the Trustee, deposit the amount due from the Trust with the Trustee for the
payment thereof, including any interest and penalties, in immediately available
funds. In consideration of the purchase of any such Home Equity Loan pursuant to
the preceding sentence, the Servicer shall remit the Loan Purchase Price to the
Principal and Interest Account. The sole remedy of the Trustee or the
Certificateholders with respect to such a breach shall be to require the
Servicer to purchase Home Equity Loans pursuant to this Section and the
provisions of Section 11.16(g). The Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
purchase of any Home Equity Loan pursuant to this Section.
END OF ARTICLE VIII
ARTICLE IX
TERMINATION OF TRUST
Section 9.01. TERMINATION OF TRUST.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policies of
all amounts held by the Trustee and required to be paid to such Owners pursuant
to this Agreement and payment in full of all amounts owed to the Certificate
Insurer upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate, (b) the disposition of all property acquired in respect of any
Home Equity Loan remaining in the Trust Estate and (c) at any time if a
Qualified Liquidation of all Home Equity Loan Groups within the Trust is
effected as described in Section 9.02. In no event, however, will the Trust
created by this Agreement continue beyond the expiration of twenty-one (21)
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the United Kingdom, living
on the date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02. TERMINATION UPON OPTION OF THE HOLDER OF THE CLASS X-F
CERTIFICATE.
(a) On any Monthly Remittance Date after the Clean-Up Call Date, the
majority holder of the Class X-F Certificate may determine to purchase, in whole
only, and may cause the purchase from the Trust of all (but not fewer than all)
Home Equity Loans and all property theretofore acquired in respect of any Home
Equity Loan by foreclosure, deed in lieu of foreclosure, or otherwise then
remaining in the Trust Estate at a price equal to the Termination Price and upon
payment of the applicable Clean-up Call Premium to the Class X-A and Class X-F
Certificates. If the Class X-F Certificateholder (or the Certificate Insurer
pursuant to Section 9.02(f) makes such a purchase, the Servicer shall continue
to be the servicer of the Home Equity Loans after such purchase, unless
otherwise agreed between the Servicer and the holder of the Class X-F
Certificates (or the Certificate Insurer if it purchases the Home Equity Loans
pursuant to Section 9.02(f)). In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the Certificate Account, which deposit shall be
deemed to have occurred immediately preceding such purchase.
(b) In the event that the majority holder of the Class X-F Certificate
purchases all Home Equity Loans and each REO Mortgaged Property remaining in the
Trust Estate pursuant to Section 9.02(a), the Trust Estate shall be terminated
in accordance with the following additional requirements:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return of
the REMICs created hereunder pursuant to Treasury regulation Section
1.860F-1 and shall satisfy all requirements of a qualified liquidation
under Section 860F of the Code and any regulations thereunder;
(ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Trustee
shall sell all of the assets of the Trust Estate to the majority
holder of the Class X-F Certificate for cash; and
(iii) At the time of the making of the final payment on the
Certificates and payment of all amounts owed to the Certificate
Insurer, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Owners of the Class X-F Certificates
all cash on hand in the Trust Estate (other than cash retained to meet
claims), and the Trust Estate shall terminate at that time.
(c) By their acceptance of the Certificates, the Owners thereof hereby
agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final Tax
Return, which shall be binding upon all successor Owners.
(d) In connection with any such purchase, the majority holder of the
Class X-F Certificate shall provide to the Trustee and the Certificate Insurer
an Opinion of Counsel at the expense of the majority holder of the Class X-F
Certificate experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that such purchase and
liquidation constitutes a Qualified Liquidation of REMIC IV.
(e) If the majority holder of the Class X-F Certificate does not
exercise its option pursuant to this Section 9.02 with respect to the Trust
Estate within 90 days following the Clean-up Call Date, then the Servicer may
purchase the Trust Estate pursuant to and under all of the terms of this Section
9.02.
(f) If neither the majority holder of the Class X-F Certificate nor
the Servicer exercises their option pursuant to this Section 9.02, within 120
days following the Clean-up Call Date, then the Certificate Insurer may purchase
the Trust Estate pursuant to and under all of the terms of this Section 9.02.
(g) Promptly following any purchase described in this Section 9.02,
the Trustee will release the Files to the majority holder of the Class X-F
Certificate, the Servicer, or the Certificate Insurer, as the case may be, or
otherwise upon their order, in a manner similar to that described in Section
8.14 hereof.
Section 9.03. TERMINATION UPON LOSS OF REMIC STATUS.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that each REMIC created hereunder does not and will no
longer qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination (i) the Certificate Insurer or the Owners of
a majority in Percentage Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer may direct the Trustee,
in writing, on behalf of the Trust to adopt a plan of complete liquidation, as
contemplated by Section 860F(a)(4) of the Code and (ii) the Certificate Insurer
may notify the Trustee of the Certificate Insurer's determination to purchase
from the Trust all (but not fewer than all) Home Equity Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Home Equity Loan then remaining in the Trust Estate at a price
equal to the Termination Price.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. If, during
the Purchase Option Period, the Owners of the Class R Certificates have not
exercised the option described in the immediately preceding paragraph, then upon
the expiration of the Purchase Option Period (i) in the event that the
Certificate Insurer or the Owners of the Class A Certificates with the consent
of the Certificate Insurer have given the Trustee the written direction
described in clause (a)(i) above, the Trustee shall sell the Home Equity Loans
and distribute the proceeds of the liquidation of the Trust Estate, each in
accordance with the plan of complete liquidation, such that, if so directed, the
liquidation of the Trust Estate, the distribution of the proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 60th day, or such later day as the Certificate Insurer or the Owners of
the Class A Certificates with the consent of the Certificate Insurer shall
permit or direct in writing, after the expiration of the Purchase Option Period
and (ii) in the event that the Certificate Insurer has given the Trustee notice
of the Certificate Insurer's determination to purchase the Trust Estate
described in clause (a)(ii) preceding the Certificate Insurer shall, within 60
days, purchase all (but not fewer than all) Home Equity Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure or otherwise in
respect of any Home Equity Loan then remaining in the Trust Estate. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an Opinion of Counsel
experienced in federal income tax matters, acceptable to the Certificate Insurer
and selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer, to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase. The foregoing opinion shall be deemed satisfactory
unless the Certificate Insurer gives the Owners of a majority of the Percentage
Interest of the Class R Certificates notice that such opinion is not
satisfactory within thirty days after receipt by the Certificate Insurer of such
opinion.
Section 9.04. DISPOSITION OF PROCEEDS.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
Termination Price or other liquidation of the Trust Estate pursuant to this
Article IX to the Certificate Account for distribution in accordance with the
priorities set forth in Section 7.03(b) hereof; provided, however, that any
amounts representing unreimbursed Delinquency Advances and Servicing Advances
theretofore funded by the Servicer from the Servicer's own funds shall be paid
by the Trustee to the Servicer from the proceeds of the Trust Estate.
Notwithstanding the foregoing, no distribution of the proceeds of any
Termination Price shall be made to the Owners of the Class R Certificates until
all such amounts have been applied in reduction of any amounts owed to the
Certificate Insurer, any outstanding Certificates and any Certificateholders
Interest Index Carryover.
Section 9.05. NETTING OF AMOUNTS.
If any Person paying the Termination Price would receive a portion of
the amount to be paid, such Person may net any such amount against the
Termination Price otherwise payable.
END OF ARTICLE IX
ARTICLE X
THE TRUSTEE
Section 10.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Trustee (i) (A) undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee
and (B) the banking institution that is the Trustee shall serve as the Trustee
at all times under this Agreement, and (ii) in the absence of bad faith on its
part, may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions or
any other resolutions, statements, reports, documents, orders or other
instruments furnished pursuant to and conforming to the requirements of this
Agreement; but in the case of any such certificates or opinions or any other
resolutions, statements, reports, documents, orders or other instruments which
by any provision hereof are specifically required to be furnished to the
Trustee, shall be under a duty to examine the same to determine whether or not
on their face they conform to the requirements of this Agreement; PROVIDED,
HOWEVER, that the Trustee shall not be responsible for the accuracy or content
of any resolution, Certificate, statement, opinion, report, document, order or
other instrument furnished by the Servicer, the Certificate Insurer, or the
Depositor hereunder. If any such instrument is found not to conform in any
material respect to the requirements of this Agreement, the Trustee shall notify
the Certificate Insurer of such instrument in the event that the Trustee, after
so requesting does not receive a satisfactorily corrected instrument.
Notwithstanding the foregoing, if a Servicer Termination Event of which a
responsible officer of the Trustee shall have actual knowledge has occurred and
has not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee (unless the Servicer shall have resigned or been
terminated and a successor Servicer shall not have been appointed pursuant to
the terms of this Agreement), and that all parties hereto agree that, prior to
any termination of the Servicer, the Servicer and, thereafter, the Trustee or
any other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicer, and pending the appointment of any other Person as successor
Servicer have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to
pay Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) This subsection shall not be construed to limit the effect
of subsection (a) of this Section;
(ii) The Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or
of the Owners of a majority in Percentage Interest of the
Certificates of the affected Class or Classes and the
Certificate Insurer relating to the time, method and place
of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement relating to such Certificates;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any default unless an
Authorized Officer of the Trustee shall have received
written notice thereof or an Authorized Officer shall have
actual knowledge thereof. In the absence of receipt of such
notice, the Trustee may conclusively assume that there is no
default; and
(v) Subject to the other provisions of this Agreement and
without limiting the generality of this Section 10.01, the
Trustee shall have no duty (A) except as provided in Section
10.16, to see to any recording, filing, or depositing of
this Agreement or any agreement referred to herein (other
than recording assignments of Mortgage) or any financing
statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording
or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance or
(C) other than as provided herein, to see to the payment or
discharge of any tax, assessment, or other governmental
charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the
Trust Estate from funds available in the Certificate
Account.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) The Trustee hereby undertakes to provide the Servicer with notice
of any correspondence relating to any Mortgaged Property.
Section 10.02. REMOVAL OF TRUSTEE FOR CAUSE.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners entitled
hereto on any Distribution Date any amounts available for distribution
that it has received in accordance with the terms hereof; (PROVIDED,
HOWEVER, that any such failure which is due to circumstances beyond
the control of the Trustee shall not be a cause for removal
hereunder); or
(2) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material
respect as of the time when the same shall have been made, and such
failure or breach shall continue or not be cured for a period of 30
days after there shall have been given, by registered or certified
mail, to the Trustee by the Certificate Insurer, or by the Owners of
at least 25% of the aggregate Percentage Interests in the Trust Estate
represented by the Class A Certificates then Outstanding or, if there
are no Class A Certificates then Outstanding, of at least 25% of the
aggregate Percentage Interests in the Trust Estate represented by the
Class B-1 Certificates then Outstanding, or, if there are no Class B-1
Certificates then Outstanding, by such Percentage Interests
represented by the Class R Certificates, a written notice specifying
such failure or breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Trustee or
relating to all or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing; or
(6) the Trustee shall fail to meet the eligibility requirements
set forth in Section 10.08.
The Depositor shall give to the Certificate Insurer, Moody's and
Standard & Poor's notice of the occurrence of any such event of which the
Depositor is aware.
(b) If any event described an Paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent of the Certificate Insurer, the Depositor and the Owners of a
majority of the Percentage Interests represented by the Class A Certificates or,
if there are no Class A Certificates then Outstanding or any Reimbursement
Amounts owed to the Certificate Insurer, of a majority of the Percentage
Interests represented by the Class B-1 Certificates then Outstanding by such
majority of the Percentage Interests represented by the Class R Certificates,
may, whether or not the Trustee resigns pursuant to Section l0.09(b) hereof,
immediately, concurrently with the giving of notice to the Trustee, and without
delaying the 30 days required for notice therein, appoint a successor Trustee
pursuant to the terms of Section l0.09 hereof.
Section 10.03. CERTAIN RIGHTS OF THE TRUSTEE.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee (acting as Trustee or Tax Matters Person) may request
and may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Depositor, the Certificate
Insurer, or the Owners of any Class of Certificates mentioned herein shall be
sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reasonable
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, unless requested in writing to do so by the Owners; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such cost, expense or liability
as a condition to taking any such action;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent appointed and supervised, or attorney
appointed, with due care by it hereunder; PROVIDED, HOWEVER, that any agreement
with an agent or attorney shall provide for the exercise of due care by such
agent or attorney in respect of the Trust;
(h) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person and within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner or the Certificate Insurer (either in writing or orally
with prompt written or telecopy confirmations), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information;
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder; and
(l) the Trustee shall have no obligation or responsibility for the
accuracy of the records of the Depository and shall have no liability for the
acts or omissions of the Depository; provided, that neither the Trustee nor the
Paying Agents shall be relieved from liability if any such act or omission of
the Depository or the Clearing System was caused by its own negligent action,
its own negligent failure to act, or its own willful misconduct.
Section 10.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
CERTIFICATES.
The recitals and representations contained herein and in the
Certificates, except the execution and authentication of the Certificates, shall
be taken as the statements of the Depositor, and the Trustee assumes no
responsibility for their correctness (other than with respect to such execution
and authentication). The Trustee makes no representation as to the validity or
sufficiency of this Agreement, of the Certificates, or any Home Equity Loan or
document related thereto other than as to validity and sufficiency of its
authentication of the Certificates. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor, or the Servicer in respect of the Home Equity Loans or
deposited into or withdrawn from the Principal and Interest Account or the
Certificate Account by the Depositor or the Servicer and shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or otherwise to perfect or maintain the perfection of any
security interest or lien or to prepare or file any tax returns or Securities
and Exchange Commission filings for the Trust or to record this Agreement.
Section 10.05. MAY HOLD CERTIFICATES.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledged
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06. MONEY HELD IN TRUST.
The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Depositor and
except to the extent of income or other gain on investments which are deposits
in or certificates of deposit of the Trustee in its commercial capacity and
income or other gain actually received by the Trustee on Eligible Investments.
Section 10.07. COMPENSATION AND REIMBURSEMENT.
The Trustee shall receive compensation for fees pursuant to Section
7.03(b)(i)(A) and reimbursement for expenses pursuant to Section 2.05, Section
7.03(b)(iv), Section 7.06 and Section 10.13 hereof. Except as otherwise provided
in this Agreement, the Trustee and any director, officer, employee or agent of
the Trustee shall be indemnified by the Trust and held harmless against any
loss, liability, or "unanticipated out-of-pocket" expense incurred or paid to
third parties (which expenses shall not include salaries paid to employees, or
allocable overhead, of the Trustee) in connection with or any claim or legal
action or any pending or threatened claim or legal action arising out of or in
connection with the acceptance or administration of its trusts hereunder or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. All such amounts described in the preceding sentence shall be payable
as provided in Section 7.03(b)(iv) or Section 2.05. The Trustee shall have no
lien on the Trust Estate for the payment of such fees and expenses. The Trustee
and any director, officer, employee or agent of the Trustee shall be indemnified
by the Depositor and held harmless against any loss, liability or reasonable
expenses incurred by the Trustee in performing its duties as Tax Matters Person
for each REMIC created under this Agreement, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of its duties as Tax Matters Person for each REMIC created
hereunder. The provisions of this Section 10.07 shall survive the termination of
this Agreement.
Section 10.08. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, or any state, acceptable to the Certificate Insurer and having a
deposit rating of at least A- from Standard & Poor's and A2 by Moody's. If such
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of the Certificate
Insurer, resign immediately in the manner and with the effect hereinafter
specified in this Article X.
Section 10.09. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Certificate Insurer and the Owners at their addresses appearing on the Register.
A copy of such notice shall be sent by the resigning Trustee to the Rating
Agencies. Upon receiving notice of resignation, the Depositor shall promptly
appoint a successor Trustee or Trustees acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor Trustee or
Trustees. If no successor Trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor Trustee.
(c) If at any time the Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written request therefor by
the Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may remove the
Trustee and appoint a successor Trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee.
(d) The Owners of a majority of the Percentage Interests represented
by the Class A Certificates with the prior written consent of the Certificate
Insurer, or, if there are no Class A Certificates then Outstanding or any
Reimbursement Amounts owed to the Certificate Insurer, by the Owners of a
majority of the Percentage Interests represented by the Class B-1 Certificates,
or, if there are no Class B-1 Certificates then Outstanding by such majority of
the Percentage Interests represented by the Class R Certificates, may at any
time remove the Trustee and appoint a successor Trustee acceptable to the
Certificate Insurer by delivering to the Trustee to be removed, to the successor
Trustee so appointed, to the Depositor, to the Servicer and to the Certificate
Insurer, copies of the record of the act taken by the Owners, as provided for in
Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor Trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Depositor shall promptly appoint a successor Trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, the successor Trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
Trustee and supersede the successor Trustee appointed by the Depositor. If no
successor Trustee shall have been so appointed by the Depositor or the Owners
and shall have accepted appointment in the manner hereinafter provided, any
Owner may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(g) The Servicer shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, to the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust to the Certificate Insurer
and to its predecessor Trustee an instrument accepting such appointment
hereunder and stating its eligibility to serve as Trustee hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts, duties and
obligations of its predecessor hereunder; but, on request of the Depositor, the
Certificate Insurer or the successor Trustee, such predecessor Trustee shall,
upon payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor Trustee all of the rights, powers and trusts of
the Trustee so ceasing to act, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such Trustee so ceasing to
act hereunder. Upon request of any such successor Trustee, the Depositor on
behalf of the Trust shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register and to the Certificate Insurer. The Depositor shall send a copy of such
notice to the Rating Agencies. If the Depositor fails to mail such notice within
ten days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Trust.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF THE TRUSTEE.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the pan of any of the parties hereto; PROVIDED, HOWEVER,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12. REPORTING; WITHHOLDING.
(a) The Trustee shall timely provide to the Owners the Internal
Revenue Service's Form 1099 and any other statement required by applicable
Treasury regulations as determined by the Tax Matters Person, and shall
withhold, as required by applicable law, federal, state or local taxes, if any,
applicable to distributions to the Owners, including but not limited to backup
withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in (a) preceding, the Trustee shall
timely file all reports prepared by the Servicer and required to be filed by the
Trust, including other reports that must be filed with the Owners, such as the
Internal Revenue Service's Form 1066 and Schedule Q. The Trustee shall, upon
request of the Servicer, collect any forms or reports from the Owners determined
by the Servicer to be required under applicable federal, state and local tax
laws.
(c) Except as otherwise provided, the Trustee shall have the
responsibility for preparation and execution of those returns, forms, reports
and other documents referred to in this Section.
(d) The Servicer covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a), (b) and (c) above.
Section 10.13. LIABILITY OF THE TRUSTEE.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Certificate Account, the Depositor, the Servicer or any Owner
for any action taken or for refraining from the taking of any action in good
faith pursuant to this Agreement, or for errors in judgment; PROVIDED, HOWEVER,
that this provision shall not protect the Trustee, its directors, officers,
employees or agents or any such Person against any liability which would
otherwise be imposed by reason of negligent action, negligent failure to act or
willful misconduct in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Subject to the foregoing
sentence, the Trustee shall not be liable for losses on investment of amounts in
the Certificate Account (except for any losses on obligations on which the
Person serving as the Trustee is the obligor). In addition, the Depositor
covenants and agrees to indemnify the Trustee from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses (including
legal fees and expenses) of whatsoever kind arising out of or in connection with
the performance of its duties hereunder other than those resulting from the
negligence or bad faith of the Trustee, and the Depositor shall pay all amounts
not otherwise paid or reimbursed pursuant to Sections 2.05, 7.06 and 10.07
hereof. The Trustee and any director, officer, employee or agent of the Trustee
may rely and shall be protected in acting or refraining from acting in good
faith on any Certificate, notice or other document of any kind PRIMA FACIE
properly executed and submitted by the Authorized Officer of any Person
respecting any matters arising hereunder. The provisions of this Section 10.13
shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 10.14. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Mortgaged Property may at the time be located,
the Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners and the Certificate Insurer, such title to the Trust
Estate, or any part thereof, and, subject to the other provisions of this
Section 10.14, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in the case any event indicated in Section 8.20(a)
shall have occurred and be continuing, the Trustee subject to reasonable
approval of the Certificate Insurer alone shall have the power to make such
appointment. No co-Trustee or separate Trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 10.08 and no
notice to Owner of the appointment of any co-Trustee or separate Trustee shall
be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable by
reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer and the Certificate Insurer and the Trustee
acting jointly may at any time accept the resignation of or remove any
separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Certificate Insurer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15. APPOINTMENT OF CUSTODIANS.
The Trustee may, with the consent of the Certificate Insurer, appoint
one or more Custodians to hold all or a portion of the Files as agent for the
Trustee. The Trustee shall pay any and all fees and expenses of any Custodian in
accordance with each custodial agreement. The Trustee initially appoints [Chase
Bank of Texas, N.A.] as Custodian, and the Depositor, the Servicer and the
Certificate Insurer consent to such appointment. Subject to the terms of this
Agreement, the Trustee agrees to comply with the terms of each custodial
agreement, if any, and to enforce the terms and provisions thereof against the
Custodian for the benefit of the Certificate Insurer and the Certificateholders
having an interest in any File held by such Custodian. Each Custodian shall be a
depository institution or trust company subject to supervision by federal or
state authority, shall have combined capital and surplus of at least $10,000,000
and shall be qualified to do business in the jurisdiction in which it holds any
File. Each custodial agreement may be amended only as provided in Section 11.14.
In no event shall the appointment of any Custodian pursuant to a Custodial
Agreement diminish the obligations of the Trustee hereunder.
Section 10.16. MAINTENANCE OF TRUST. Not less than ninety days prior
to the date on which continuation statements relating to the UCC financing
statements filed in connection with the Closing (i) naming Long Beach as debtor
and the Depositor as secured party and (ii) naming the Depositor as debtor and
the Trustee as secured party, are required to be filed under the applicable
Uniform Commercial Code, the Trustee shall notify the Depositor, Long Beach and
the Certificate Insurer of the date by which such continuation statements are
required to be filed. Upon receipt of the continuation statements required to be
filed, prepared and executed by the Depositor or Long Beach, as applicable, the
Trustee shall cause such continuation statements to be filed as instructed by
the Depositor. The Depositor agrees to prepare, execute (with respect to
continuation statements that it is required to execute) and deliver to the
Trustee the continuation statements. The Trustee shall deliver to the
Certificate Insurer copies of the continuation statements as filed and stamped
by the appropriate filing office.
END OF ARTICLE X
ARTICLE XI
MISCELLANEOUS
Section 11.01. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Depositor, the Certificate
Insurer or the Owners to the Trustee to take any action under any provision of
this Agreement, the Depositor, the Certificate Insurer or the Owners, as the
case may be, shall furnish to the Trustee a certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 11.02. FORM OF DOCUMENTS DELIVERED TO THE TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any Opinion of Counsel may be based, insofar as it
relates to factual matter upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, or the Servicer, stating
that the information with respect to such factual matters is in the possession
of the Depositor, or the Servicer, unless such Authorized Officer or counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous. Any
Opinion of Counsel may also be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an Authorized Officer
of the Trustee, stating that the information with respect to such matters is in
the possession of the Trustee, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Opinion of Counsel may be based
on the written opinion of other counsel, in which event such Opinion of Counsel
shall be accompanied by a copy of such other counsel's opinion and shall include
a statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03. ACTS OF OWNERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the Owners
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Owners in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the Owners
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee and the Trust,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.04. NOTICES, ETC. TO TRUSTEE.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Certificate Insurer, or the Depositor, shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and received
by the Trustee at its Corporate Trust Office as set forth in Section 2.02
hereof.
Section 11.05. NOTICES AND REPORTS TO OWNERS; WAIVER OF NOTICES.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigned or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any Rating Agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06. RULES BY TRUSTEE.
The Trustee may make reasonable rules for any meeting of Owners.
<PAGE>
Section 11.07. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08. SEVERABILITY.
In case any provision in this Agreement or in the Certificates shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 11.09. BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Owners, the Certificate
Insurer and the parties hereto and their successors hereunder, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
Section 11.10. LEGAL HOLIDAYS.
In any case where the date of any Distribution Date, any other date on
which any distribution to any Owner is proposed to be paid, or any date on which
a notice is required to be sent to any Person pursuant to the terms of this
Agreement (with the exception of any Determination Date or any Monthly
Remittance Date) shall not be a Business Day, then (notwithstanding any other
provision of the Certificates or this Agreement) payment or mailing need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made or mailed on the nominal date of any such
Distribution Date, or such other date for the payment of any distribution to any
Owner or the mailing of such notice, as the case may be, and no interest shall
accrue for the period from and after any such nominal date, provided such
payment is made in full on such next succeeding Business Day. In any case where
the date of any Determination Date or any Monthly Remittance Date shall not be a
Business Day, then payment or mailing need not be made on such date, but must be
made on the preceding Business Day.
Section 11.11. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction
of the United States District Court for the Southern District of New York and
any court in the State of New York located in the City and County of New York,
and any appellate court from any thereof, in any action, suit or proceeding
brought against it or in connection with this Agreement or any of the related
documents or the transactions contemplated hereunder or for recognition or
enforcement of any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. The parties hereto agree that a
final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. To the extent permitted by applicable law, the parties
hereto hereby waive and agree not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or the subject
matter thereof may not be litigated in or by such courts.
(c) Each of the Depositor, and the Servicer hereby irrevocably
appoints and designates the Trustee as its true and lawful attorney and duly
authorized agent for acceptance of service of legal process with respect to any
action, suit or proceeding set forth in paragraph (b) hereof. Each of the
Depositor and the Servicer agrees that service of such process upon the Trustee
shall constitute personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the
right of the Depositor, the Servicer or the Certificate Insurer or third-party
beneficiary hereunder, as the case may be, to serve process in any other manner
permitted by law or to start legal proceedings relating to any of the Home
Equity Loans against any Mortgagor in the courts of any jurisdiction.
Section 11.12. COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13. USURY.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14. AMENDMENT.
(a) The Trustee, the Depositor and the Servicer, may at any time and
from time to time, with the prior written approval of the Certificate Insurer
but without the giving of notice to or the receipt of the consent of the Owners,
amend this Agreement, and the Trustee shall consent to the amendment for the
purposes of (i) if accompanied by an approving Opinion of Counsel which shall
not be at the expense of the Trustee experienced in federal income tax matters,
removing the restriction against the transfer of a Class R Certificate to a
Disqualified Organization (as such term is defined in the Code), (ii) complying
with the requirements of the Code including any amendments necessary to maintain
REMIC status of each REMIC created hereunder, (iii) curing any ambiguity, (iv)
correcting or supplementing any provisions of this Agreement which are
inconsistent with any other provisions of this Agreement or (v) for any other
purpose, provided that in the case of clause (v), such amendment shall not
adversely affect in any material respect any Owner. Any such amendment shall be
deemed not to adversely affect in any material respect any Owner if such Owner
shall have consented thereto in writing or if there is delivered to the Trustee
written notification from each Rating Agency that such amendment will not cause
such Rating Agency to reduce its then current rating assigned to any of the
Certificates without regard to the Certificate Insurance Policies.
Notwithstanding anything to the contrary, no such amendment shall (a) change in
any manner the amount of, or delay the timing of, payments which are required to
be distributed to any Owner without the consent of the Owner of such
Certificate, or (b) change the percentages of Percentage Interest which are
required to consent to any such amendments, without the consent of the Owners of
all Certificates of the Class or Classes affected then outstanding.
Notwithstanding the foregoing, the Trustee will not be required to enter into
any amendment which it determines in good faith would adversely affect its
interests hereunder.
(b) The Certificate Insurer and the Rating Agencies shall be provided
by the Depositor with copies of any amendments to this Agreement, together with
copies of any opinions or other documents or instruments executed in connection
therewith.
(c) Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust pursuant to the REMIC Provisions or cause any
REMIC created hereunder to fail to qualify as a REMIC at any time that any of
the Certificates are outstanding.
Section 11.15. PAYING AGENT; APPOINTMENT AND ACCEPTANCE OF DUTIES.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, including, without limitation, the prior written consent of the
Certificate Insurer, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointments shall signify
its acceptance of the duties and obligations imposed upon it by this Agreement
by written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree with
the Trustee, subject to the provisions of Section 6.02, that such Paying Agent
will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on
each Distribution Date among such Owners in the proportion specified
by the Trustee; and
(b) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners
or otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16. REMIC STATUS.
(a) The parties hereto intend that each REMIC created hereunder shall
constitute, and that the affairs of each REMIC created hereunder shall be
conducted so as to qualify as a REMIC in accordance with the REMIC Provisions.
In furtherance of such intention, The Chase Manhattan Bank or such other person
designated pursuant to Section 11.18 hereof shall act as agent for the Trust and
as Tax Matters Person for the Trust and that in such capacity it shall: (i)
prepare or cause to be prepared and filed, at its own expense, in a timely
manner, annual tax returns and any other tax return required to be filed by each
REMIC created hereunder using a calendar year as the taxable year for such
REMIC; (ii) in the related first such tax return, make (or cause to be made) an
election satisfying the requirements of the REMIC Provisions, on behalf of each
REMIC created hereunder, for it to be treated as a REMIC; (iii) at the Tax
Matters Person's expense, prepare and forward, or cause to be prepared and
forwarded, to the Owners all information, reports or tax returns required with
respect to each REMIC created hereunder, including Schedule Q to Form 1066, as,
when and in the form required to be provided to the Owners, and to the Internal
Revenue Service and any other relevant governmental taxing authority in
accordance with the REMIC Provisions and any other applicable federal, state or
local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; PROVIDED
that the tax return filed on Schedule Q to Form 1066 shall be prepared and
forwarded to the Owners of the Class R Certificates no later than 50 days after
the end of the period to which such tax return was due; (iv) not take any action
or omit to take any action that would cause the termination of the REMIC status
of any REMIC created hereunder, except as provided under this Agreement; (v)
represent, the Trust or each REMIC created hereunder in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to a taxable year of
the Trust or each REMIC created hereunder, enter into settlement agreements with
any governmental taxing agency, extend any statute of limitations relating to
any tax item of the Trust or each REMIC created hereunder, and otherwise act on
behalf of the Trust or each REMIC created hereunder in relation to any tax
matter involving the Trust or each REMIC created hereunder (the legal expenses
and costs of any such action described in this subsection (v) and any liability
resulting therefrom shall constitute expenses of the Trust and the Trustee shall
be entitled to reimbursement therefor as provided in Section 7.03(b)(iv) unless
such legal expenses and costs are incurred by reason of the Trustee's willful
misfeasance, bad faith or negligence); (vi) comply with all statutory or
regulatory requirements with regard to its conduct of activities pursuant to the
foregoing clauses of this Section 11.16, including, without limitation,
providing all notices and other information to the Internal Revenue Service and
Owners of Class R Certificates required of a "tax matters person" pursuant to
subtitle F of the Code and the Treasury Regulations thereunder; (vii) make
available information necessary for the computation of any tax imposed (A) on
transferor of residual interests to certain Disqualified Organizations or (B) on
pass-through entities, any interest in which is held by a Disqualified
Organization; and (viii) acquire and hold the Tax Matters Person Residual
Interest. The obligations of the Trustee or such other designated Tax Matters
Person pursuant to this Section 11.16 shall survive the termination or discharge
of this Agreement.
(b) The Depositor, the Trustee and the Servicer covenant and agree for
the benefit of the Owners and the Certificate Insurer (i) to take no action
which would result in the termination of REMIC status for each REMIC created
hereunder, (ii) not to engage in any "prohibited transaction", as such term is
defined in Section 860F(a)(2) of the Code, (iii) not to engage in any other
action which may result in the imposition on the Trust of any other taxes under
the Code and (iv) to cause the Servicer not to take or engage in any such
action.
(c) Each REMIC created hereunder shall, for federal income tax
purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) None of the Depositor or the Trustee shall enter into any
arrangement by which the Trustee will receive a fee or other compensation for
services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee may
engage in any of the transactions prohibited by such clauses, provided that the
Trustee shall have received an Opinion of Counsel experienced in federal income
tax matters acceptable to the Certificate Insurer to the effect that such
transaction does not result in a tax imposed on the Trustee or cause a
termination of REMIC status for each REMIC created hereunder; PROVIDED, HOWEVER,
that such transaction is otherwise permitted under this Agreement.
(g) In the event that any tax is imposed on "prohibited transactions"
of the Trust created hereunder as defined in Section 860F(a)(2) of the Code, on
"net income from foreclosure property" of the Trust as defined in Section
860G(c) of the Code, on any contributions to the Trust after the Startup Day
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Trustee if such tax arises out of or results from the
willful misfeasance, bad faith or negligence in performance by the Trustee of
any of its obligations under Article X, (ii) to the Servicer if such tax arises
out of or results from a breach by the Servicer of any of its obligations under
Article VIII or otherwise.
Section 11.17. ADDITIONAL LIMITATION ON ACTION AND IMPOSITION OF TAX.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer at the expense
of the party seeking to take such action but in no event at the expense of the
Trust to the effect that such transaction does not result in a tax imposed on
the Trust or any REMIC created hereunder or cause a termination of REMIC status
for each REMIC created hereunder, (i) sell any assets in the Trust Estate, (ii)
accept any contribution of assets after the Startup Day (other than Subsequent
Home Equity Loans), (iii) allow the Servicer to foreclose upon any Home Equity
Loan if such foreclosure would result in a tax on the Trust or each REMIC
created hereunder or cause termination of each REMIC status for each REMIC
created hereunder or (iv) agree to any modification of this Agreement. To the
extent that sufficient amounts cannot be so retained to pay or provide for the
payment of such tax, the Trustee is hereby authorized to and shall segregate,
into a separate non-interest bearing account, the net income from any such
Prohibited Transactions of each REMIC created hereunder and use such income, to
the extent necessary, to pay such tax; PROVIDED THAT, to the extent that any
such income is paid to the Internal Revenue Service, the Trustee shall retain an
equal amount from future amounts otherwise distributable to the Owners of Class
R Certificates and shall distribute such retained amounts to the Owners of
Certificates other than the Class R Certificates to the extent they are fully
reimbursed and then to the Owners of the Class R Certificates. If any tax,
including interest penalties or assessments, additional amounts or additions to
tax, is imposed on the Trust, such tax shall be charged against amounts
otherwise distributable to the owners of the Class R Certificates on a PRO RATA
basis. The Trustee is hereby authorized to and shall retain from amounts
otherwise distributable to the Owners of the Class R Certificates sufficient
funds to pay or provide for the payment of, and to actually pay, such tax as is
legally owed by the Trust (but such authorization shall not prevent the Trustee
from contesting any such tax in appropriate proceedings, and withholding payment
of such tax, if permitted by law, pending the outcome of such proceedings).
Section 11.18. APPOINTMENT OF TAX MATTERS PERSON.
A Tax Matters Person will be appointed for each REMIC created
hereunder for all purposes of the Code and such Tax Matters Person will perform,
or cause to be performed, such duties and take, or cause to be taken, such
actions as are required to be performed or taken by the Tax Matters Person under
the Code. The Tax Matters Person for each REMIC created hereunder shall be the
Trustee as long as it owns a Class R Certificate. If the Trustee does not own a
Class R Certificate, the Tax Matters Person may be any other entity that owns a
Class R Certificate and accepts a designation hereunder as Tax Matters person by
delivering an affidavit in the form of Exhibit I.
Section 11.19. THE CERTIFICATE INSURER.
Any right conferred to the Certificate Insurer hereunder (except for
the Certificate Insurer's right of prior approval of amendments to this
Agreement pursuant to Section 11.14 hereof), including but not limited to
consent rights, shall be suspended and shall run to the benefit of the Owners
and shall be exercisable by a vote of Owners holding certificates representing
at least a 51% Percentage Interest of all Class A Certificates during any period
in which there exists a Certificate Insurer Default; PROVIDED, that the right of
the Certificate Insurer to receive the Premium Amount shall not be suspended if
such Certificate Insurer Default was a default other than a default under clause
(a) of the definition thereof. If a Certificate Insurer Default shall cease to
exist, the rights of the Certificate Issuer shall be immediately restored. At
such time as the Class A and Class A-IO Certificates are no longer Outstanding
hereunder and the Certificate Insurer has received all Reimbursement Amounts,
the Certificate Insurer's rights hereunder shall terminate.
Section 11.20. RESERVED.
Section 11.21. THIRD PARTY RIGHTS.
The Trustee, the Servicer, the Depositor and the Owners agree that
each of the Certificate Insurer and R.V.I. Guaranty Co., Ltd. shall be deemed a
third-party beneficiary of this Agreement as if it were a party hereto and that
the Seller shall be deemed a third-party beneficiary of Section 8.18 of this
Agreement as if it were a party hereto. This provision shall not limit waiver,
enforcement and consent powers that the Certificate Insurer has except as
specifically agreed in a separate letter agreement between such parties or as
otherwise agreed between the Certificate Insurer and R.V.I. Guaranty Co., Ltd.
and the parties may perform in accordance with such powers.
Section 11.22. NOTICES.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
THE TRUSTEE: The Chase Manhattan Bank
450 West 33rd Street
14th Floor
New York, New York
10001-2697
Attention: Structured Finance Services
Tel. (212) 946-3246
Fax: (212) 946-8191
THE DEPOSITOR: Asset Backed Securities Corporation
11 Madison Avenue
New York, New York 10010
Attention: Rhonda Matty
Tel. (212) 325-2822
Fax: (212) 325-6424
THE SERVICER: Long Beach Mortgage Company
1100 Town and Country Rd., Suite 160
Orange, CA 92868
Attention: James R. Guerin
Telecopy No.: 714-541-4586,
Telephone: 714-514-4586
Confirmation: James J. Sullivan
Tel: (714) 541-5378
Fax: (714) 835-4927
THE CERTIFICATE INSURER: MBIA Insurance Corporation
113 King Street
Armonk, New York, 10504
Attention: Insured Portfolio Management-
Structured Finance (IPM-SF)
Re: Asset Backed Securities Corporation
Home Equity Loan Trust 1999-LB1
Tel: (914) 765-3808
Fax: (914) 765-3810
MOODY'S: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: The Residential Mortgage
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-0355
STANDARD & POOR'S: Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.
26 Broadway
15th Floor
New York, New York 10004
Attention: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 208-8365
Section 11.23. RULE 144A INFORMATION. For so long as any of the Class
R, Class P, Class B-IOA, Class B-IOF or Class X Certificates are "restricted
securities" within the meaning of Rule 144A under the Securities Act, the
Servicer agrees to provide to any Owner of such Certificates and to any
prospective purchaser of such Certificates designated by such an Owner, upon the
request of such Owner or prospective purchaser, the information necessary to
satisfy the conditions set forth in Rule 144A(d)(4) under the Securities Act;
PROVIDED that this Section 11.23 shall require, as to the Trustee or the
Servicer, only that the Servicer provide publicly available information
regarding it or the Trustee in response to any such request. Any recipient of
information provided pursuant to this Section 11.23 shall agree that such
information shall not be disclosed or used for any purpose other than the
evaluation of such Certificates by the prospective purchaser. The Trustee shall
have no responsibility for the sufficiency under Rule 144A of any information so
provided by the Servicer to any Owner or prospective purchaser of such
Certificates.
Section 11.24. NO PETITION. The Trustee and the Servicer, by entering
into this Agreement and each Certificateholder, by accepting a Certificate
hereby covenants and agrees that they will not at any time institute against the
Depositor, or join in any institution against the holder of the Depositor of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Certificates, this Agreement or any related agreement.
END OF ARTICLE XI
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01. TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT OF THE
CERTIFICATE INSURER.
The Trustee shall hold the Trust Estate for the benefit of the related
Owners and the Certificate Insurer and all references in this Agreement and in
the Certificates to the benefit of Owners of the Certificates shall be deemed to
include the Certificate Insurer. The Trustee shall cooperate in all reasonable
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Mortgaged Properties, and shall
maintain the Principal and Interest Account, for the benefit of the Owners and
for the benefit of the Certificate Insurer, and all references in this Agreement
to the benefit of or actions on behalf of the Owners shall be deemed to include
the Certificate Insurer. Unless a Certificate Insurer Default exists, the
Servicer shall not terminate any Sub-Servicing Agreements without the prior
consent of the Certificate Insurer. Any such action shall not be an expense of
the Trustee.
<PAGE>
Section 12.02. CLAIMS UPON THE POLICY; POLICY PAYMENTS ACCOUNT.
(a) If, by 10:00 a.m. New York time on the third Business Day prior to
a Distribution Date, the Trustee determines, based on the information furnished
pursuant to Section 7.08 and as a result of Section 12.05 that the related Total
Available Funds (net of the Premium Amount with respect to the related Class of
Class A and Class A-IO Certificates and the Trustee Fee for the related Group)
will not be sufficient to pay the Class A and Class A-IO Certificateholders the
related Current Interest and Guaranteed Principal Amount for such Distribution
Date, the Trustee shall give notice to the Certificate Insurer, the Servicer and
the Fiscal Agent (if any) (separately for each Class A and Class A-IO
Certificate) in the form set forth as Exhibit A to the Certificate Insurance
Policies. Following Receipt (as defined in the Certificate Insurance Policies)
by the Certificate Insurer of such notice in such form, the Certificate Insurer
or the Fiscal Agent will pay any amount payable under the Certificate Insurance
Policies on the later to occur of (i) 12:00 noon New York time on the third
Business Day following such Receipt and (ii) 12:00 noon New York time on the
Distribution Date to which such deficiency relates.
(b) The Trustee shall establish and maintain a separate special
purpose trust account for the benefit of the Owners of the Class A and Class
A-IO Certificates and the Certificate Insurer referred to herein as the "Policy
Payments Account" over which the Trustee shall have exclusive control and sole
right of withdrawal. The Policy Payments Account shall be an Eligible Account.
The Trustee shall deposit any amount paid under the Certificate Insurance
Policies into the Policy Payments Account and distribute such amount only for
purposes of payment to the Owners of the related Class A and Class A-IO
Certificates of the Insured Payments for which a claim was made and such amount
may not be applied to satisfy any costs, expenses or liabilities of the
Servicer, the Depositor, the Trustee or the Trust. Amounts paid under the
related Certificate Insurance Policy shall be transferred to the Certificate
Account in accordance with the next succeeding paragraph and disbursed by the
Trustee to Owners of the related Class A and Class A-IO Certificates in
accordance with Section 7.03. It shall not be necessary for such payments to be
made by checks or wire transfers separate from the checks or wire transfers used
to pay the Insured Payments with other funds available to make such payment.
However, the amount of any payment of principal of or interest on the related
Class A Certificates to be paid from funds transferred from the Policy Payments
Account shall be noted as provided in paragraph (c) below in the Register and in
the statement to be furnished to Owners of the Class A and Class A-IO
Certificates pursuant to Section 7.08. Funds held in the Policy Payments Account
shall not be invested by the Trustee.
On any Distribution Date with respect to which a claim has been made
under the related Certificate Insurance Policy, the amount of funds received by
the Trustee as a result of any claim under the related Certificate Insurance
Policy, to the extent required to make the Insured Payment on such Distribution
Date shall be withdrawn from the Policy Payments Account and deposited in the
Certificate Account and applied by the Trustee, together with the other funds to
be withdrawn from the Certificate Account, directly to the payment in full of
the Insured Payment due on the related Class of Class A and Class A-IO
Certificates. Funds received by the Trustee as a result of any claim under any
Certificate Insurance Policy shall be deposited by the Trustee in the Policy
Payments Account and used solely for payment to the Owners of the Class A and
Class A-IO Certificates and may not be applied to satisfy any costs, expenses or
liabilities of the Servicer, the Depositor, the Trustee or the Trust. Any funds
remaining in the Policy Payments Account on the first Business Day following a
Distribution Date shall be remitted to the Certificate Insurer, pursuant to the
instructions of the Certificate Insurer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Class A or Class A-IO
Certificate from moneys received under the Certificate Insurance Policies. The
Certificate Insurer shall have the right to inspect such records at reasonable
times during normal business hours upon one Business Day's prior notice to the
Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and
Fiscal Agent (as defined in the Certificate Insurance Policies) of any
proceeding or the institution of any action, of which an Authorized Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Class A or
Class A-IO Certificates. Each Owner of a Class A or Class A-IO Certificate by
its purchase of such Certificate, the Servicer and the Trustee hereby agree
that, the Certificate Insurer (so long as no Certificate Insurer Default exists)
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim, including
without limitation, (i) the direction of any appeal of any order relating to
such Preference Claim and (ii) the posting of any surety, supersede as or
performance bond pending any such appeal. In addition and without limitation of
the foregoing, the Certificate Insurer shall be subrogated to the rights of the
Servicer, the Trustee and each Owner of a Class A or Class A-IO Certificate in
the conduct of any such Preference Claim, including, without limitation, all
rights of any party to an adversary proceeding action with respect to any court
order issued in connection with any such Preference Claim.
Section 12.03. EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER;
SUBROGATION.
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A or Class A-IO
Certificates which is made with moneys received pursuant to the terms of the
Certificate Insurance Policies shall not be considered payment of such
Certificates from the Trust and shall not result in the payment of or the
provision for the payment of the principal of or interest on such Certificates
within the meaning of Section 7.03. The Depositor, the Servicer and the Trustee
acknowledge, and each Owner by its acceptance of a Certificate agrees, that
without the need for any further action on the part of the Certificate Insurer,
the Depositor, the Servicer, the Trustee or the Registrar (a) to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on any Class A or Class A-IO Certificates to the Owners
of such Certificates, the Certificate Insurer will be fully subrogated to the
rights of such holders to receive such principal and interest from the Trust and
(b) the Certificate Insurer shall be paid such principal and interest but only
from the sources and in the manner provided herein for the payment of such
principal and interest.
The Trustee, the Depositor and the Servicer shall cooperate in all
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the Owners
as otherwise set forth therein.
Section 12.04. NOTICES TO THE CERTIFICATE INSURER.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the Owners
shall also be sent to the Certificate Insurer.
Section 12.05. DEFICIENCY CLAIM AMOUNTS.
(a) Reserved.
(b) If, by 10:00 a.m. on the fifth Business Day prior to a
Distribution Date, the Trustee determines that the related Total Available Funds
(excluding any Cap Reserve Fund Transfer Amounts and net of the Premium Amount
with respect to the related Class of Class A and Class A-IO Certificates and the
Trustee Fee with respect to the related Group) will be less than the related
Current Interest and the Guaranteed Principal Amount with respect to the related
Class of Class A and Class A-IO Certificates (such deficiency being a
"Deficiency Claim Amount", then on or before 12:00 p.m. on such date, the
Trustee shall deliver to the Certificate Insurer, by hand delivery or facsimile
transmission, a written notice (a "Deficiency Claim Notice") specifying the
Deficiency Claim Amount for such Distribution Date.
(c) Reserved.
(d) If Cap Reserve Fund Transfer Amounts for a Distribution Date are
sufficient to satisfy in full the Deficiency Claim Amounts for such Distribution
Date, such amounts shall be allocated among the Groups based on the Deficiency
Claim Amount for each Group. Otherwise, the Certificate Insurer shall direct the
Trustee as to which Group or Groups should be allocated any such amounts and the
amounts to be allocated to each Group.
<PAGE>
Section 12.06. RIGHTS TO THE CERTIFICATE INSURER TO EXERCISE RIGHTS OF
OWNERS.
By accepting its Certificate, each Owner of a Class A or Class A-IO
Certificate agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of the Owners of
the Class A and Class A-IO Certificates as specified under this Agreement
without any further consent of the Owners of the Class A and Class A-IO
Certificates and that the Owners of Class A and Class A-IO Certificates may not
exercise such rights except with the written consent of the Certificate Insurer.
Section 12.07. TRUSTEE TO HOLD THE CERTIFICATE INSURANCE POLICIES. The
Trustee will hold the Certificate Insurance Policies in trust as agent for the
Owners of the Class A and Class A-IO Certificates for the purpose of making
claims thereon and distributing the proceeds thereof. Neither the Certificate
Insurance Policies nor the amounts paid on the Certificate Insurance Policies
will constitute part of the Trust created by this Agreement. Each Owner of Class
A or Class A-IO Certificates, by accepting its Class A or Class A-IO
Certificates, appoints the Trustee as attorney-in-fact for the purpose of making
claims on the Certificate Insurance Policies.
Section 12.08. 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:
(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 8.20 hereof;
(b) agree to any amendment pursuant to Section 11.14 hereof; or
(c) undertake any litigation.
END OF ARTICLE XII
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee have
caused this Agreement to be duly executed their respective officers thereunto
duly authorized, all as of the day and year first above written.
ASSET BACKED SECURITIES CORPORATION,
as Depositor
By: /s/ Fiachra O'Driscoll
---------------------------
Title: Vice President
LONG BEACH MORTGAGE COMPANY,
as Servicer
By: /s/ Jeffrey A. Sorensen
---------------------------
Title: Vice President
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Thomas J. Provenzano
--------------------------
Title: Vice Presient
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of July 1999, before me personally came Fiachra
O'Driscoll, to me known that he is a Vice President of Asset Backed Securities
Corporation, a Delaware corporation; and that he signed his name thereto by
order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of July 1999, before me personally came Jeffrey A.
Sorrensen to me known that he is Vice President of Long Beach Mortgage Company,
a Delaware corporation and that he signed his name thereto by order of the
respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 21st day of July 1999, before me personally came Thomas J.
Provenzano to me, known that he is a Trust Officer of The Chase Manhattan
Bank described in and that executed the above instrument as Trustee; and that
he signed his name thereto by order of the Board of Directors of said
national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
-----------------
Notary Public
<PAGE>
SCHEDULE I-A
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
<PAGE>
SCHEDULE I-B
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
<PAGE>
SCHEDULE I-C
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
<PAGE>
SCHEDULE I-D
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1F CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-1F
(7.11% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Group I Home
Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation (the "Depositor") or Long Beach Mortgage Company
(the "Servicer"). This Certificate represents a fractional ownership interest in
the Group Ia Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1") 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.
NO: A-1F-__ 04541G ________
------
CUSIP
JULY 21, 1999 JUNE 21, 2029
- ------------------------------- ------------- --------------
Original Class A-1F Certificate Date Final Scheduled
Principal Balance Distribution Date
CEDE & CO.
----------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group Ia (other
than any principal due thereon on or prior to the Cut-Off Date and interest due
thereon on or prior to July 1, 1999) listed in SCHEDULE I-A to the Pooling and
Servicing Agreement which the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in Group Ia (other than any
principal and interest payments due thereon on or prior to the related
Subsequent Cut-Off Date) listed in SCHEDULE I-A to any Subsequent Transfer
Agreement which the Depositor will cause to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.04 and 3.06 of the Pooling and
Servicing Agreement), together with the related Home Equity Loan documents and
the Depositor's interest in any Mortgaged Property, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts allocable to Group I as may be held by the Trustee in the Certificate
Account, the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account
and the Capitalized Interest Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer), (c) the Depositor's rights, but none
of its obligations, under the Mortgage Loan Purchase Agreement (except with
respect to Section 17), (d) the Cap Agreement and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
original Class A-1F Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Distribution Date for the
Class A-1F Certificates. Therefore, the actual Outstanding principal amount of
this Certificate may, on any date subsequent to August 21, 1999 (the first
Distribution Date) be less than the original Certificate Principal Balance set
forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO AUGUST 21, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class A-1F (the "Class
A-1F Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as and as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor (the "Depositor") and The
Chase Manhattan Bank in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-2F (the "Class A-2F Certificates"), Class
A-3A (the "Class A-3A Certificates"), Class A-4A (the "Class A-4A
Certificates"), Class A-5A (the "Class A-5A Certificates"), Class A-IO (the
"Class A-IO Certificates"), Class B-1 (the "Class B-1 Certificates"), Class
B-IOA (the "Class B-IOA Certificates"), Class B-IOF (the "Class B-IOF
Certificates") certain Class X Certificates (the "Class X Certificates"),
certain Class P Certificates (the "Class P Certificates") and certain Class R
Certificates (the "Class R Certificates"). The Class A-1F Certificates, the
Class A-2F Certificates, the Class A-3A Certificates, the Class A-4A
Certificates and the Class A-5A Certificates shall be together referred to as
the "Class A Certificates." All of the certificates issued by Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 21, 1999 the Owners of the Class A-1F Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-1F Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-1F Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-1F Certificates. The Percentage Interest of
each Class A-1F Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-1F Certificate on the Startup Day by the aggregate Class A-lF
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer by
the Trustee. "Insured Payments" shall have the meaning as provided therefor in
the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A and Class A-IO Certificates, the Trustee
shall distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A and Class A-IO Certificates.
<PAGE>
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account, the Principal and Interest Account and
certain other accounts (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-lF
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-lF Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-1F Certificates and shall receive all future distributions of the Class
A-lF Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-1F Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-1F Certificates are exchangeable
for new Class A-1F Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------
Title:
------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
---------------------------
Title:
-------------------------
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2F CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2F
(7.14% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Group I Home
Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation (the "Depositor") or Long Beach Mortgage Company
(the "Servicer"). This Certificate represents a fractional ownership interest in
the Group Ia Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1") 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.
NO: A-2F-___ 04541G ___
------
CUSIP
JULY 21, 1999 JUNE 21, 2029
- ------------------------------- ------------- --------------
Original Class A-2F Certificate Date Final Scheduled
Principal Balance Distribution Date
CEDE & CO.
--------------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group Ia (other
than any principal due thereon on or prior to the Cut-Off Date and interest due
thereon on or prior to July 1, 1999) listed in SCHEDULE I-B to the Pooling and
Servicing Agreement which the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in Group I (other than any
principal and interest payments due thereon on or prior to the related
Subsequent Cut-Off Date) listed in SCHEDULE I-B to any Subsequent Transfer
Agreement which the Depositor will cause to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.04 and 3.06 of the Pooling and
Servicing Agreement), together with the related Home Equity Loan documents and
the Depositor's interest in any Mortgaged Property, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts allocable to Group I as may be held by the Trustee in the Certificate
Account, the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account
and the Capitalized Interest Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer), (c) the Depositor's rights, but none
of its obligations, under the Mortgage Loan Purchase Agreement (except with
respect to Section 17), (d) the Cap Agreement and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
original Class A-2F Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Distribution Date for the
Class A-2F Certificates. Therefore, the actual Outstanding principal amount of
this Certificate may, on any date subsequent to August 21, 1999 (the first
Distribution Date) be less than the original Certificate Principal Balance set
forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO AUGUST 21, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class A-2F (the "Class
A-2F Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as and as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor (the "Depositor") and The
Chase Manhattan Bank in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-2F Certificates"), Class
A-3A (the "Class A-3A Certificates"), Class A-4A (the "Class A-4A
Certificates"), Class A-5A (the "Class A-5A Certificates"), Class A-IO (the
"Class A-IO Certificates"), Class B-1 (the "Class B-1 Certificates"), Class
B-IOA (the "Class B-IOA Certificates"), Class B-IOF (the "Class B-IOF
Certificates") certain Class X Certificates (the "Class X Certificates"),
certain Class P Certificates (the "Class P Certificates") and certain Class R
Certificates (the "Class R Certificates"). The Class A-1F Certificates, the
Class A-2F Certificates, the Class A-3A Certificates, the Class A-4A
Certificates and the Class A-5A Certificates shall be together referred to as
the "Class A Certificates." All of the certificates issued by Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 21, 1999 the Owners of the Class A-2F Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-2F Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-2F Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-2F Certificates. The Percentage Interest of
each Class A-2F Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-2F Certificate on the Startup Day by the aggregate Class A-2F
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer by
the Trustee. "Insured Payments" shall have the meaning as provided therefor in
the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A and Class A-IO Certificates, the Trustee
shall distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A and Class A-IO Certificates.
<PAGE>
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account, the Principal and Interest Account and
certain other accounts (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-2F
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-2F Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-2F Certificates and shall receive all future distributions of the Class
A-2F Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-2F Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-2F Certificates are exchangeable
for new Class A-2F Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------------
Title:
---------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------
Title:
------------------------------
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3A CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-3A
(VARIABLE PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Group II Home
Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation (the "Depositor") or Long Beach Mortgage Company
(the "Servicer"). This Certificate represents a fractional ownership interest in
the Group Ia Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1") 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.
NO: A-3A-___ 04541G ___
------
CUSIP
JULY 21, 1999 JUNE 21, 2029
- ------------------------------- ------------- --------------
Original Class A-3A Certificate Date Final Scheduled
Principal Balance Distribution Date
CEDE & CO.
-------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group IIa (other
than any principal due thereon on or prior to the Cut-Off Date and interest due
thereon on or prior to July 1, 1999) listed in SCHEDULE I-C to the Pooling and
Servicing Agreement which the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in Group II (other than any
principal and interest payments due thereon on or prior to the related
Subsequent Cut-Off Date) listed in SCHEDULE I-C to any Subsequent Transfer
Agreement which the Depositor will cause to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.04 and 3.06 of the Pooling and
Servicing Agreement), together with the related Home Equity Loan documents and
the Depositor's interest in any Mortgaged Property, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts allocable to Group II as may be held by the Trustee in the Certificate
Account, the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account
and the Capitalized Interest Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer), (c) the Depositor's rights, but none
of its obligations, under the Mortgage Loan Purchase Agreement (except with
respect to Section 17), (d) the Cap Agreement and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
original Class A-3A Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Distribution Date for the
Class A-3A Certificates. Therefore, the actual Outstanding principal amount of
this Certificate may, on any date subsequent to August 21, 1999 (the first
Distribution Date) be less than the original Certificate Principal Balance set
forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO AUGUST 21, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class A-3A (the "Class
A-3A Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as and as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor (the "Depositor") and The
Chase Manhattan Bank in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-1F Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-4A (the "Class A-4A
Certificates"), Class A-5A (the "Class A-5A Certificates"), Class A-IO (the
"Class A-IO Certificates"), Class B-1 (the "Class B-1 Certificates"), Class
B-IOA (the "Class B-IOA Certificates"), Class B-IOF (the "Class B-IOF
Certificates") certain Class X Certificates (the "Class X Certificates"),
certain Class P Certificates (the "Class P Certificates") and certain Class R
Certificates (the "Class R Certificates"). The Class A-1F Certificates, the
Class A-2F Certificates, the Class A-3A Certificates, the Class A-4A
Certificates and the Class A-5A Certificates shall be together referred to as
the "Class A Certificates." All of the certificates issued by Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 21, 1999 the Owners of the Class A-3A Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-3A Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-3A Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-3A Certificates. The Percentage Interest of
each Class A-3A Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-3A Certificate on the Startup Day by the aggregate Class A-3A
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer by
the Trustee. "Insured Payments" shall have the meaning as provided therefor in
the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A and Class A-IO Certificates, the Trustee
shall distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A and Class A-IO Certificates.
<PAGE>
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account, the Principal and Interest Account and
certain other accounts (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-3A
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-3A Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-3A Certificates and shall receive all future distributions of the Class
A-3A Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-3A Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-3A Certificates are exchangeable
for new Class A-3A Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------------
Title:
----------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-------------------------------
Title:
-----------------------------
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4A CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-4A
(VARIABLE PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Group II Home
Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation (the "Depositor") or Long Beach Mortgage Company
(the "Servicer"). This Certificate represents a fractional ownership interest in
the Group Ia Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1") 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.
NO: A-4A-___ 04541G ___
------
CUSIP
JULY 21, 1999 JUNE 21, 2029
- -------------------------------- ------------- --------------
Original Class A-4A Certificate Date Final Scheduled
Principal Balance Distribution Date
CEDE & CO.
-------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group IIb (other
than any principal due thereon on or prior to the Cut-Off Date and interest due
thereon on or prior to July 1, 1999) listed in SCHEDULE I-D to the Pooling and
Servicing Agreement which the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in Group IIb (other than any
principal and interest payments due thereon on or prior to the related
Subsequent Cut-Off Date) listed in SCHEDULE I-D to any Subsequent Transfer
Agreement which the Depositor will cause to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.04 and 3.06 of the Pooling and
Servicing Agreement), together with the related Home Equity Loan documents and
the Depositor's interest in any Mortgaged Property, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts allocable to Group II as may be held by the Trustee in the Certificate
Account, the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account
and the Capitalized Interest Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer), (c) the Depositor's rights, but none
of its obligations, under the Mortgage Loan Purchase Agreement (except with
respect to Section 17), (d) the Cap Agreement and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
original Class A-4A Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Distribution Date for the
Class A-4A Certificates. Therefore, the actual Outstanding principal amount of
this Certificate may, on any date subsequent to August 21, 1999 (the first
Distribution Date) be less than the original Certificate Principal Balance set
forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO AUGUST 21, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class A-4A (the "Class
A-4A Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as and as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor (the "Depositor") and The
Chase Manhattan Bank in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-1F Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-5A (the "Class A-5A Certificates"), Class A-IO (the
"Class A-IO Certificates"), Class B-1 (the "Class B-1 Certificates"), Class
B-IOA (the "Class B-IOA Certificates"), Class B-IOF (the "Class B-IOF
Certificates") certain Class X Certificates (the "Class X Certificates"),
certain Class P Certificates (the "Class P Certificates") and certain Class R
Certificates (the "Class R Certificates"). The Class A-1F Certificates, the
Class A-2F Certificates, the Class A-3A Certificates, the Class A-4A
Certificates and the Class A-5A Certificates shall be together referred to as
the "Class A Certificates." All of the certificates issued by Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 21, 1999 the Owners of the Class A-4A Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-4A Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-4A Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-4A Certificates. The Percentage Interest of
each Class A-4A Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-4A Certificate on the Startup Day by the aggregate Class A-4A
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer by
the Trustee. "Insured Payments" shall have the meaning as provided therefor in
the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A and Class A-IO Certificates, the Trustee
shall distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A and Class A-IO Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account, the Principal and Interest Account and
certain other accounts (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-4A
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-4A Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-4A Certificates and shall receive all future distributions of the Class
A-4A Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-4A Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-4A Certificates are exchangeable
for new Class A-4A Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
-----------------------------
Title:
-----------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-------------------------
Title:
-------------------------
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5A CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-5A
(VARIABLE PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Group II Home
Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation (the "Depositor") or Long Beach Mortgage Company
(the "Servicer"). This Certificate represents a fractional ownership interest in
the Group Ia Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1") 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.
NO: A-5A-____ 04541G ___
------
CUSIP
JULY 21, 1999 JUNE 21, 2029
- ------------------------------- ------------- --------------
Original Class A-5A Certificate Date Final Scheduled
Principal Balance Distribution Date
CEDE & CO.
---------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group IIa and
Group IIb (other than any principal due thereon on or prior to the Cut-Off Date
and interest due thereon on or prior to July 1, 1999) listed in SCHEDULE I-C and
SCHEDULE I-D to the Pooling and Servicing Agreement which the Depositor is
causing to be delivered to the Trustee and the Subsequent Home Equity Loans in
Group II and Group IIb (other than any principal and interest payments due
thereon on or prior to the related Subsequent Cut-Off Date) listed in SCHEDULE
I-C and SCHEDULE I-D to any Subsequent Transfer Agreement which the Depositor
will cause to be delivered to the Trustee (and all substitutions therefor as
provided by Section 3.04 and 3.06 of the Pooling and Servicing Agreement),
together with the related Home Equity Loan documents and the Depositor's
interest in any Mortgaged Property, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group II as may be held by the Trustee in the Certificate Account,
the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account and the
Capitalized Interest Account, together with investment earnings on such amounts
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, inclusive of investment earnings thereon (except as
otherwise provided in the Pooling and Servicing Agreement), whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer), (c) the Depositor's rights, but none of its
obligations, under the Mortgage Loan Purchase Agreement (except with respect to
Section 17), (d) the Cap Agreement and (e) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
original Class A-5A Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Distribution Date for the
Class A-5A Certificates. Therefore, the actual Outstanding principal amount of
this Certificate may, on any date subsequent to August 21, 1999 (the first
Distribution Date) be less than the original Certificate Principal Balance set
forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO AUGUST 21, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class A-5A (the "Class
A-5A Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as and as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor (the "Depositor") and The
Chase Manhattan Bank in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-1F Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-IO (the
"Class A-IO Certificates"), Class B-1 (the "Class B-1 Certificates"), Class
B-IOA (the "Class B-IOA Certificates"), Class B-IOF (the "Class B-IOF
Certificates") certain Class X Certificates (the "Class X Certificates"),
certain Class P Certificates (the "Class P Certificates") and certain Class R
Certificates (the "Class R Certificates"). The Class A-1F Certificates, the
Class A-2F Certificates, the Class A-3A Certificates, the Class A-4A
Certificates and the Class A-5A Certificates shall be together referred to as
the "Class A Certificates." All of the certificates issued by Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 21, 1999 the Owners of the Class A-5A Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A-5A Distribution
Amount relating to such Certificate on such Distribution Date. Distributions
will be made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-5A Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-5A Certificates. The Percentage Interest of
each Class A-5A Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-5A Certificate on the Startup Day by the aggregate Class A-5A
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer by
the Trustee. "Insured Payments" shall have the meaning as provided therefor in
the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A and Class A-IO Certificates, the Trustee
shall distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A and Class A-IO Certificates.
<PAGE>
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account, the Principal and Interest Account and
certain other accounts (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-5A
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-5A Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-5A Certificates and shall receive all future distributions of the Class
A-5A Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-5A Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-5A Certificates are exchangeable
for new Class A-5A Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------
Title:
-----------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
---------------------------
Title:
---------------------------
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-IO CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CLASS A-IO CERTIFICATE HAS NO PRINCIPAL BALANCE.
THIS CERTIFICATE WAS ISSUED ON JULY 21, 1999 AT A PRICE (INCLUSIVE OF
ACCRUED INTEREST AT CLOSING) EQUAL TO ____ % OF ITS INITIAL NOTIONAL AMOUNT.
UNDER TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), ALL
INTEREST PAYMENTS TO BE RECEIVED ON THIS CERTIFICATE ARE TREATED AS PART OF THE
CERTIFICATE'S STATED REDEMPTION PRICE AT MATURITY. ACCORDINGLY, THE CERTIFICATE
WAS ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO
APPROXIMATELY $_____ PER $1,000 OF ITS INITIAL NOTIONAL AMOUNT. THE MONTHLY
YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS
APPROXIMATELY ____ %, AND THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL
PERIOD (JULY 21, 1999 THROUGH AUGUST 21, 1999) IS APPROXIMATELY $____ PER $1,000
OF THE INITIAL NOTIONAL AMOUNT OF THIS CERTIFICATE. THE COMPUTATION OF THE
MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS SPECIFIED ABOVE WAS BASED ON: (I)
A METHOD EMBODYING AN ECONOMIC ACCRUAL OF INCOME, (II) A PREPAYMENT ASSUMPTION
OF ____ % PPC FOR THE GROUP I MORTGAGE LOANS AND ___% CPR FOR THE GROUP II
MORTGAGE LOANS AND (III) A 30 DAYS PER MONTH/360 DAYS PER YEAR ACCOUNTING
CONVENTION. THE ACTUAL YIELD TO MATURITY, PREPAYMENT EXPERIENCE, AND OID AMOUNTS
MAY DIFFER FROM THOSE SET FORTH ABOVE. CERTIFICATEHOLDERS SHOULD BE AWARE THAT
THE METHODOLOGY FOR ACCRUING OID ON THIS CLASS OF CERTIFICATES IS NOT ENTIRELY
CLEAR UNDER CURRENT LAW.
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-IO
(5.50% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Home
Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation (the "Depositor") or Long Beach Mortgage Company
(the "Servicer"). This Certificate represents a fractional ownership interest in
the Group Ia Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1") 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.
NO: A-IO-___ 04541G _____
------
CUSIP
JULY 21, 1999
- ----------------------------- -------------
Original Class A-IO Component Date FEBRUARY 21, 2002
Certificate Combined Notional -----------------
Amounts Final Scheduled
Distribution Date
CEDE & CO.
--------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group Ia, Group
Ib, Group IIa and Group IIb (other than any principal due thereon on or prior to
the Cut-Off Date and interest due thereon on or prior to July 1, 1999) listed in
SCHEDULE I-A, SCHEDULE I-B, SCHEDULE I-C and SCHEDULE I-D to the Pooling and
Servicing Agreement which the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in Group Ia, Group Ib, Group IIa
and Group IIb (other than any principal and interest payments due thereon on or
prior to the related Subsequent Cut-Off Date) listed in SCHEDULE I-A, SCHEDULE
I-B, SCHEDULE I-C and SCHEDULE I-D to any Subsequent Transfer Agreement which
the Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Mortgaged Property, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts allocable to Group I and Group II as may be held by the Trustee in the
Certificate Account, the LIBOR Carryover Fund, the Cap Reserve Fund, the
Pre-Funding Account and the Capitalized Interest Account, together with
investment earnings on such amounts and such amounts as may be held in the name
of the Trustee in the Principal and Interest Account, if any, inclusive of
investment earnings thereon (except as otherwise provided in the Pooling and
Servicing Agreement), whether in the form of cash, instruments, securities or
other properties (including any Eligible Investments held by the Servicer), (c)
the Depositor's rights, but none of its obligations, under the Mortgage Loan
Purchase Agreement (except with respect to Section 17), (the Cap Agreement and
(e) proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (e) above shall be
collectively referred to herein as the "Trust Estate").
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class A-IO (the "Class
A-IO Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as and as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor (the "Depositor") and The
Chase Manhattan Bank in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-IF (the "Class A-IF Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-5A (the
"Class A-5A Certificates"), Class B-1 (the "Class B-1 Certificates"), Class
B-IOA (the "Class B-IOA Certificates"), Class B-IOF (the "Class B-IOF
Certificates") certain Class X Certificates (the "Class X Certificates"),
certain Class P Certificates (the "Class P Certificates") and certain Class R
Certificates (the "Class R Certificates"). The Class A-1F Certificates, the
Class A-2F Certificates, the Class A-3A Certificates, the Class A-4A
Certificates and the Class A-5A Certificates shall be together referred to as
the "Class A Certificates." All of the certificates issued by Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 21, 1999 the Owners of the Class A-IO Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificate on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-IO Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class A-IO Certificates. The Percentage Interest of
each Class A-IO Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Notional Amount of the Class A-IO
Component Certificates represented by such Class A-IO Certificate on the Startup
Day by the aggregate original Notional Amount of the Class A-IO Component
Certificates represented by such Class A-IO Certificate on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Distribution Date for distribution to the
Owners provided that timely notice has been given to the Certificate Insurer by
the Trustee. "Insured Payments" shall have the meaning as provided therefor in
the related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A and Class A-IO Certificates, the Trustee
shall distribute in accordance with the Pooling and Servicing Agreement such
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A and Class A-IO Certificates.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account, the Principal and Interest Account and
certain other accounts (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-IO
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-IO Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-IO Certificates and shall receive all future distributions of the Class
A Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owner of the Class X-F Certificate may, at its option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean-Up Call Date. Under certain circumstances, the
Certificate Insurer or the Servicer may also exercise such purchase rights if
such Owner does not do so. In addition, under certain circumstances relating to
the qualification of the REMIC as a REMIC under the Code, the Home Equity Loans
may be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class A-IO Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Notional Amount. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-IO Certificates are exchangeable for new
Class A-IO Certificates of authorized denominations evidencing the same
aggregate notional amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------------
Title:
----------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------
Title:
------------------------------
<PAGE>
EXHIBIT B-1
FORM OF CLASS B-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
EACH PURCHASER OF THIS CERTIFICATE IS DEEMED TO HAVE REPRESENTED THAT EITHER (1)
IT IS NOT A PLAN, AND IS NOT A PERSON OR ENTITY ACTING ON BEHALF OF ANY PLAN OR
USING THE ASSETS OF ANY PLAN TO EFFECT SUCH PURCHASE (INCLUDING THE ASSETS OF
ANY PLAN HELD IN AN INSURANCE COMPANY SEPARATE OR GENERAL ACCOUNT),OR (2) THAT
THE SOURCE OF FUNDS USED TO ACQUIRE THIS CERTIFICATE IS AN INSURANCE COMPANY
GENERAL ACCOUNT WITHIN THE MEANING OF SECTION V(E) OF PROHIBITED TRANSACTION
EXEMPTION 95-60.
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS B-1
(VARIABLE PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Home
Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation (the "Depositor") or Long Beach Mortgage Company
(the "Servicer"). This Certificate represents a fractional ownership interest in
the Group Ia Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1") 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.
NO: B-1-___ 04541G ___
------
CUSIP
JULY 21, 1999 JUNE 21, 2029
- ------------------------------ ------------- --------------
Original Class B-1 Certificate Date Final Scheduled
Principal Balance Distribution Date
CEDE & CO.
------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group Ia, Group
Ib, Group IIa and Group IIb (other than any principal due thereon on or prior to
the Cut-Off Date and interest due thereon on or prior to July 1, 1999) listed in
SCHEDULE I-A, SCHEDULE I-B, SCHEDULE I-C and SCHEDULE I-D to the Pooling and
Servicing Agreement which the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in Group Ia, Group Ib, Group IIa
and Group IIb(other than any principal and interest payments due thereon on or
prior to the related Subsequent Cut-Off Date) listed in SCHEDULE I-A, SCHEDULE
I-B, SCHEDULE I-C and SCHEDULE I-D to any Subsequent Transfer Agreement which
the Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Mortgaged Property, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts as may be held by the Trustee in the Certificate Account, the LIBOR
Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account and the
Capitalized Interest Account, together with investment earnings on such amounts
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, inclusive of investment earnings thereon (except as
otherwise provided in the Pooling and Servicing Agreement), whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer), (c) the Depositor's rights, but none of its
obligations, under the Mortgage Loan Purchase Agreement (except with respect to
Section 17), (d) the Cap Agreement and (e) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each
Distribution Date, as hereinafter described, which will fully amortize such
original Class B-1 Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Distribution Date for the
Class B-1 Certificates. Therefore, the actual Outstanding principal amount of
this Certificate may, on any date subsequent to August 21, 1999 (the first
Distribution Date) be less than the original Certificate Principal Balance set
forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO AUGUST 21, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class B-1 (the "Class B-1
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as and as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor (the "Depositor") and The
Chase Manhattan Bank in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-1F Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-5A (the
"Class A-5A Certificates"), Class A-IO (the "Class A-IO Certificates"), Class
B-IOA (the "Class B-IOA Certificates"), Class B-IOF (the "Class B-IOF
Certificates") certain Class X Certificates (the "Class X Certificates"),
certain Class P Certificates (the "Class P Certificates") and certain Class R
Certificates (the "Class R Certificates"). The Class A-1F Certificates, the
Class A-2F Certificates, the Class A-3A Certificates, the Class A-4A
Certificates and the Class A-5A Certificates shall be together referred to as
the "Class A Certificates." All of the certificates issued by Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 21, 1999 the Owners of the Class B-1 Certificates as of
the close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Distribution Date occurs (the "Record
Date") will be entitled to receive the Class B Distribution Amount relating to
such Certificate on such Distribution Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Certificate Principal Balance of at least $1,000,000 (by wire transfer
or otherwise) to the account of an Owner at a domestic bank or other entity
having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class B-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class B-1 Certificates. The Percentage Interest of
each Class B-1 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class B-1 Certificate on the Startup Day by the aggregate Class B-1
Certificate Principal Balance on the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account, the Principal and Interest Account and
certain other accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class B-1 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class B-1 Certificates are exchangeable
for new Class B-1 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
-------------------------
Title:
------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-------------------------
Title:
------------------------
<PAGE>
EXHIBIT B-2
FORM OF CLASS B-IOA CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CLASS B-IOA CERTIFICATE HAS NO PRINCIPAL BALANCE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CERTIFICATE IS RESTRICTED AS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT.
THIS CERTIFICATE WAS ISSUED ON JULY 21, 1999 AT A PRICE (INCLUSIVE OF ACCRUED
INTEREST AT CLOSING) EQUAL TO ____ % OF ITS INITIAL NOTIONAL AMOUNT. UNDER
TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), ALL INTEREST
PAYMENTS TO BE RECEIVED ON THIS CERTIFICATE ARE TREATED AS PART OF THE
CERTIFICATE'S STATED REDEMPTION PRICE AT MATURITY. ACCORDINGLY, THE CERTIFICATE
WAS ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO
APPROXIMATELY $______ PER $1,000 OF ITS INITIAL NOTIONAL AMOUNT. THE MONTHLY
YIELD TO MATURITY OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS
APPROXIMATELY ____ %, AND THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL
PERIOD (JULY 21, 1999 THROUGH AUGUST 21, 1999) IS APPROXIMATELY $___ PER $1,000
OF THE INITIAL NOTIONAL AMOUNT OF THIS CERTIFICATE. THE COMPUTATION OF THE
MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS SPECIFIED ABOVE WAS BASED ON: (I)
A METHOD EMBODYING AN ECONOMIC ACCRUAL OF INCOME, (II) A PREPAYMENT ASSUMPTION
OF ____ % CPR AND (III) A 30 DAYS PER MONTH/360 DAYS PER YEAR ACCOUNTING
CONVENTION. THE ACTUAL YIELD TO MATURITY, PREPAYMENT EXPERIENCE, AND OID AMOUNTS
MAY DIFFER FROM THOSE SET FORTH ABOVE. CERTIFICATEHOLDERS SHOULD BE AWARE THAT
THE METHODOLOGY FOR ACCRUING OID ON THIS CLASS OF CERTIFICATES IS NOT ENTIRELY
CLEAR UNDER CURRENT LAW.
<PAGE>
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS B-IOA
(7.00% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Group II Home
Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation (the "Depositor") or Long Beach Mortgage Company
(the "Servicer"). This Certificate represents a fractional ownership interest in
the Group Ia Home Equity Loans and certain other property held by the Trust.)
NO: B-IOA-___ ----------------
Percentage Interest
JULY 21, 1999
- ------------------------------ -------------
Original Class B-IOA Notional Date AUGUST 21, 2002
Amount ---------------
Final Scheduled
Distribution Date
The Chase Manhattan Bank, as Indenture Trustee under the Indenture, dated as
of July 21, 1999, relating TO ABSC NIMS TRUST 1999-3, ABSC NIMS CLASS A-LGIIG
NOTES, SERIES 1999-3
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group IIa and
Group IIb (other than any principal due thereon on or prior to the Cut-Off Date
and interest due thereon on or prior to July 1, 1999) listed in SCHEDULE I-C and
SCHEDULE I-D to the Pooling and Servicing Agreement which the Depositor is
causing to be delivered to the Trustee and the Subsequent Home Equity Loans in
Group IIa and Group IIb (other than any principal and interest payments due
thereon on or prior to the related Subsequent Cut-Off Date) listed in SCHEDULE
I-C and SCHEDULE I-D to any Subsequent Transfer Agreement which the Depositor
will cause to be delivered to the Trustee (and all substitutions therefor as
provided by Section 3.04 and 3.06 of the Pooling and Servicing Agreement),
together with the related Home Equity Loan documents and the Depositor's
interest in any Mortgaged Property, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group II as may be held by the Trustee in the Certificate Account,
the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account and the
Capitalized Interest Account, together with investment earnings on such amounts
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, inclusive of investment earnings thereon (except as
otherwise provided in the Pooling and Servicing Agreement), whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer), (c) the Depositor's rights, but none of its
obligations, under the Mortgage Loan Purchase Agreement (except with respect to
Section 17), (the Cap Agreement and (e) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class B-IOA (the "Class
B-IOA Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as and as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor (the "Depositor") and The
Chase Manhattan Bank in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-IF (the "Class A-IF Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-5A (the
"Class A-5A Certificates") Class A-IO (the "Class A-IO Certificates"),, Class
B-1 (the "Class B-1 Certificates"), Class B-IOA (the "Class B-IOA
Certificates"), Class B-IOF (the "Class B-IOF Certificates") certain Class X
Certificates (the "Class X Certificates"), certain Class P Certificates (the
"Class P Certificates") and certain Class R Certificates (the "Class R
Certificates"). The Class A-1F Certificates, the Class A-2F Certificates, the
Class A-3A Certificates, the Class A-4A Certificates and the Class A-5A
Certificates shall be together referred to as the "Class A Certificates." All of
the certificates issued by Asset Backed Securities Corporation Home Equity Loan
Trust 1999-LB1 are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 21, 1999 the Owners of the Class B-IOA Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificate on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class B-IOA Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class B-IOA Certificates. The Percentage Interest of
each Class B-IOA Certificate as of any date of determination will be equal to
the percentage obtained by dividing the original Notional Amount of the Class
B-IOA Certificates represented by such Class B-IOA Certificate on the Startup
Day by the aggregate original Notional Amount of the Class B-IOA Certificates on
the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account, the Principal and Interest Account and
certain other accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class B-IOA Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Notional Amount. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class B-IOA Certificates are exchangeable for new
Class B-IOA Certificates of authorized denominations evidencing the same
aggregate notional amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
-------------------------
Title:
-------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------
Title:
------------------------------
<PAGE>
EXHIBIT B-3
FORM OF CLASS B-IOF CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CLASS B-IOF CERTIFICATE HAS NO PRINCIPAL BALANCE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CERTIFICATE IS RESTRICTED AS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT.
THIS CERTIFICATE WAS ISSUED ON JULY 21, 1999 AT A PRICE (INCLUSIVE OF ACCRUED
INTEREST AT CLOSING) EQUAL TO ____ % OF ITS INITIAL NOTIONAL AMOUNT. UNDER
TREASURY REGULATIONS RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), ALL INTEREST
PAYMENTS TO BE RECEIVED ON THIS CERTIFICATE ARE TREATED AS PART OF THE
CERTIFICATE'S STATED REDEMPTION PRICE AT MATURITY. ACCORDINGLY, THE CERTIFICATE
WAS ISSUED WITH OID FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO
APPROXIMATELY $____ PER $1,000 OF ITS INITIAL NOTIONAL AMOUNT. THE MONTHLY YIELD
TO MATURITY OF THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY
____ %, AND THE AMOUNT OF OID ALLOCABLE TO THE SHORT FIRST ACCRUAL PERIOD (JULY
21, 1999 THROUGH AUGUST 21, 1999) IS APPROXIMATELY $____ PER $1,000 OF THE
INITIAL NOTIONAL AMOUNT OF THIS CERTIFICATE. THE COMPUTATION OF THE MONTHLY
YIELD TO MATURITY AND THE OID AMOUNTS SPECIFIED ABOVE WAS BASED ON: (I) A METHOD
EMBODYING AN ECONOMIC ACCRUAL OF INCOME, (II) A PREPAYMENT ASSUMPTION OF ____ %
PPC AND (III) A 30 DAYS PER MONTH/360 DAYS PER YEAR ACCOUNTING CONVENTION. THE
ACTUAL YIELD TO MATURITY, PREPAYMENT EXPERIENCE, AND OID AMOUNTS MAY DIFFER FROM
THOSE SET FORTH ABOVE. CERTIFICATEHOLDERS SHOULD BE AWARE THAT THE METHODOLOGY
FOR ACCRUING OID ON THIS CLASS OF CERTIFICATES IS NOT ENTIRELY CLEAR UNDER
CURRENT LAW.
<PAGE>
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS B-IOF
(7.00% PASS-THROUGH RATE)
Representing Certain Interests in a Pool of Group I Home
Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation (the "Depositor") or Long Beach Mortgage Company
(the "Servicer"). This Certificate represents a fractional ownership interest in
the Group Ia Home Equity Loans and certain other property held by the Trust.)
NO: B-IOF-___ --------------
Percentage Interest
JULY 21, 1999
- ------------------------------ -------------
Original Class B-IOF Notional Date AUGUST 21, 2002
Amount ---------------
Final Scheduled
Distribution Date
The Chase Manhattan Bank, as Indenture Trustee under the Indenture, dated as of
July 21, 1999, relating TO ABSC NIMS TRUST 1999-1, ABSC NIMS CLASS
A-LGI NOTES, SERIES 1999-1
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group Ia and Group
Ib (other than any principal due thereon on or prior to the Cut-Off Date and
interest due thereon on or prior to July 1, 1999) listed in SCHEDULE I-A and
SCHEDULE I-B to the Pooling and Servicing Agreement which the Depositor is
causing to be delivered to the Trustee and the Subsequent Home Equity Loans in
Group IIa and Group IIb (other than any principal and interest payments due
thereon on or prior to the related Subsequent Cut-Off Date) listed in SCHEDULE
I-A and SCHEDULE I-B to any Subsequent Transfer Agreement which the Depositor
will cause to be delivered to the Trustee (and all substitutions therefor as
provided by Section 3.04 and 3.06 of the Pooling and Servicing Agreement),
together with the related Home Equity Loan documents and the Depositor's
interest in any Mortgaged Property, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to Group I as may be held by the Trustee in the Certificate Account,
the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account and the
Capitalized Interest Account, together with investment earnings on such amounts
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, inclusive of investment earnings thereon (except as
otherwise provided in the Pooling and Servicing Agreement), whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer), (c) the Depositor's rights, but none of its
obligations, under the Mortgage Loan Purchase Agreement (except with respect to
Section 17), (the Cap Agreement and (e) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class B-IOF (the "Class
B-IOF Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as and as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor (the "Depositor") and The
Chase Manhattan Bank in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-IF (the "Class A-IF Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-5A (the
"Class A-5A Certificates") Class A-IO (the "Class A-IO Certificates"),, Class
B-1 (the "Class B-1 Certificates"), Class B-IOA (the "Class B-IOA
Certificates"), Class B-IOF (the "Class B-IOF Certificates") certain Class X
Certificates (the "Class X Certificates"), certain Class P Certificates (the
"Class P Certificates") and certain Class R Certificates (the "Class R
Certificates"). The Class A-1F Certificates, the Class A-2F Certificates, the
Class A-3A Certificates, the Class A-4A Certificates and the Class A-5A
Certificates shall be together referred to as the "Class A Certificates." All of
the certificates issued by Asset Backed Securities Corporation Home Equity Loan
Trust 1999-LB1 are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 21, 1999 the Owners of the Class B-IOF Certificates as
of the close of business on the last Business Day of the calendar month
immediately preceding the calendar month in which a Distribution Date occurs
(the "Record Date") will be entitled to receive the Class A Distribution Amount
relating to such Certificate on such Distribution Date. Distributions will be
made in immediately available funds to Owners of Certificates having an
aggregate original Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class B-IOF Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Distribution
Date to the Owners of the Class B-IOF Certificates. The Percentage Interest of
each Class B-IOF Certificate as of any date of determination will be equal to
the percentage obtained by dividing the original Notional Amount of the Class
B-IOF Certificates represented by such Class B-IOF Certificate on the Startup
Day by the aggregate original Notional Amount of the Class B-IOF Certificates on
the Startup Day.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans and amounts
on deposit in the Certificate Account, the Principal and Interest Account and
certain other accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendments. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class B-IOF Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Notional Amount. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class B-IOF Certificates are exchangeable for new
Class B-IOF Certificates of authorized denominations evidencing the same
aggregate notional amount.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------------
Title:
---------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-----------------------------
Title:
-----------------------------
<PAGE>
EXHIBIT C-1
FORM OF CLASS X-A CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CERTIFICATE IS RESTRICTED AS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE WAS ISSUED ON JULY 21, 1999 AT A PRICE (INCLUSIVE OF ACCRUED
INTEREST AT CLOSING) EQUAL TO _____ % OF THE PRESENT VALUE OF THE EXPECTED CASH
FLOWS FROM THIS CERTIFICATE DISCOUNTED AT ____ %. UNDER TREASURY REGULATIONS
RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), ALL INTEREST PAYMENTS TO BE
RECEIVED ON THIS CERTIFICATE ARE TREATED AS PART OF THE CERTIFICATE'S STATED
REDEMPTION PRICE AT MATURITY. ACCORDINGLY, THE CERTIFICATE WAS ISSUED WITH OID
FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO APPROXIMATELY $____ PER
$1000 OF SUCH PRESENT VALUE AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS
CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY ___ %. THE COMPUTATION
OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS SPECIFIED ABOVE WAS BASED
ON: (I) A METHOD EMBODYING AN ECONOMIC ACCRUAL OF INCOME, (II) A PREPAYMENT
ASSUMPTION OF ___ % CPR AND (III) A 30 DAYS PER MONTH / 360 DAYS PER YEAR
ACCOUNTING CONVENTION. THE ACTUAL YIELD TO MATURITY, PREPAYMENT EXPERIENCE AND
OID AMOUNTS MAY DIFFER FROM THOSE SET FORTH ABOVE. CERTIFICATEHOLDERS SHOULD BE
AWARE THAT THE METHODOLOGY FOR ACCRUING OID ON THIS CLASS OF CERTIFICATES IS NOT
ENTIRELY CLEAR UNDER CURRENT LAW.
<PAGE>
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS X-A
(REGULAR INTEREST)
Representing Certain Interests Relating to a Pool of Group II
Home Equity Loans Originated and Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation or Long Beach Mortgage Company This Certificate
represents a fractional ownership interest in the Trust Estate as defined
below.)
NO: X-A-__
Date: July 21, 1999
Percentage Interest: ____%
The Chase Manhattan Bank, as Indenture Trustee under the Indenture, dated as
of July 21, 1999, RELATING TO ABSC NIMS TRUST 1999-3, ABSC NIMS
CLASS A-LGIIG NOTES, SERIES 1999-3
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group IIa and
Group IIb (other than any principal due thereon on or prior to the Cut-Off Date
and any interest due thereon on or prior to July 1, 1999) listed in SCHEDULE I-C
and SCHEDULE I-D to the Pooling and Servicing Agreement which the Depositor is
causing to be delivered to the Trustee and the Subsequent Home Equity Loans in
Group IIa and Group IIb (other than any principal and interest payments due
thereon on or prior to the related Subsequent Cut-Off Date) listed in SCHEDULE
I-C and SCHEDULE I-D to any Subsequent Transfer Date which the Depositor will
cause to be delivered to the Trustee (and all substitutions therefor as provided
by Section 3.04 and 3.06 of the Pooling and Servicing Agreement), together with
the related Home Equity Loan documents and the Depositor's interest in any
Mortgaged Property which secured a Home Equity Loan but which has been acquired
by foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts allocable to Group II as may be held by the Trustee in the Certificate
Account, the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account
and the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer), (c) the Depositor's rights, but none
of its obligations under the Mortgage Loan Purchase Agreement (except with
respect to Section 17), (d) the Cap Agreement and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class X-A (the "Class X-A
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor, (the "Depositor") and The
Chase Manhattan Bank, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-1F Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-5A (the
"Class A-5A Certificates"), Class A-IO (the "Class A-IO Certificates"), Class
B-IOA (the "Class B-IOA Certificates"), Class B-IOF (the "Class B-IOF
Certificates") Class X-F Certificates (the "Class X-F Certificates" and together
with the Class X-A Certificates, the "Class X Certificates"), certain Class P
Certificates (the "Class P Certificates") and certain Class R Certificates (the
"Class R Certificates"). All of the certificates issued by Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 1999, each owner of a Class X-A Certificate as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Distribution Date occurs (the "Record Date") will
be entitled to receive the Class X-A Distribution Amount relating to such
Certificate on such Distribution Date. Distributions will be made in immediately
available funds to Owners of Class X-A Certificates having an aggregate
Percentage Interest of at least 10% (by wire transfer or otherwise) to the
account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to the
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if the majority Owner of the Class X-F Certificates does not do
so. In addition, under certain circumstances relating to the qualification of
the REMICs as REMICs under the Code, the Home Equity Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided, that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendment. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class X-A Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class X-A Certificates are exchangeable
for new Class X-A Certificates evidencing the same Percentage Interest as the
Class X-A Certificates exchanged.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------
Title:
-----------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------
Title:
------------------------------
<PAGE>
EXHIBIT C-2
FORM OF CLASS X-F CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CERTIFICATE IS RESTRICTED AS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE WAS ISSUED ON JULY 21, 1999 AT A PRICE (INCLUSIVE OF ACCRUED
INTEREST AT CLOSING) EQUAL TO ___% OF THE PRESENT VALUE OF THE EXPECTED CASH
FLOWS FROM THIS CERTIFICATE DISCOUNTED AT __%. UNDER TREASURY REGULATIONS
RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), ALL INTEREST PAYMENTS TO BE
RECEIVED ON THIS CERTIFICATE ARE TREATED AS PART OF THE CERTIFICATE'S STATED
REDEMPTION PRICE AT MATURITY. ACCORDINGLY, THE CERTIFICATE WAS ISSUED WITH OID
FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO APPROXIMATELY $____ PER
$1000 OF SUCH PRESENT VALUE AMOUNT. THE MONTHLY YIELD TO MATURITY OF THIS
CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY __%. THE COMPUTATION
OF THE MONTHLY YIELD TO MATURITY AND THE OID AMOUNTS SPECIFIED ABOVE WAS BASED
ON: (I) A METHOD EMBODYING AN ECONOMIC ACCRUAL OF INCOME, (II) A PREPAYMENT
ASSUMPTION OF __% PPC AND (III) A 30 DAYS PER MONTH/360 DAYS PER YEAR ACCOUNTING
CONVENTION. THE ACTUAL YIELD TO MATURITY, PREPAYMENT EXPERIENCE AND OID AMOUNTS
MAY DIFFER FROM THOSE SET FORTH ABOVE. CERTIFICATEHOLDERS SHOULD BE AWARE THAT
THE METHODOLOGY FOR ACCRUING OID ON THIS CLASS OF CERTIFICATES IS NOT ENTIRELY
CLEAR UNDER CURRENT LAW.
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS X-F
(REGULAR INTEREST)
Representing Certain Interests Relating to a Pool of Group I
Home Equity Loans Originated and Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation or Long Beach Mortgage Company This Certificate
represents a fractional ownership interest in the Trust Estate as defined
below.)
NO: X-F-__
Date: July 21, 1999
Percentage Interest: ____%
The Chase Manhattan Bank, as Indenture Trustee under the Indenture, dated as of
July 21, 1999, relating TO ABSC NIMS TRUST 1999-1, ABSC NIMS
CLASS A-LGI NOTES, SERIES 1999-1
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group Ia and Group
Ib (other than any principal due thereon on or prior to the Cut-Off Date and any
interest due thereon on or prior to July 1, 1999) listed in SCHEDULE I-A and
SCHEDULE I-B to the Pooling and Servicing Agreement which the Depositor is
causing to be delivered to the Trustee and the Subsequent Home Equity Loans in
Group Ia and Group Ib (other than any principal and interest payments due
thereon on or prior to the related Subsequent Cut-Off Date) listed in SCHEDULE
I-A and SCHEDULE I-B to any Subsequent Transfer Date which the Depositor will
cause to be delivered to the Trustee (and all substitutions therefor as provided
by Section 3.04 and 3.06 of the Pooling and Servicing Agreement), together with
the related Home Equity Loan documents and the Depositor's interest in any
Mortgaged Property which secured a Home Equity Loan but which has been acquired
by foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts allocable to Group I as may be held by the Trustee in the Certificate
Account, the LIBOR Carryover Fund, the Cap Reserve Fund, the Pre-Funding Account
and the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, inclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer), (c) the Depositor's rights, but none
of its obligations under the Mortgage Loan Purchase Agreement (except with
respect to Section 17), (d) the Cap Agreement and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (e) above shall be collectively referred to herein as the
"Trust Estate").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class X-F (the "Class X-F
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor, (the "Depositor") and The
Chase Manhattan Bank, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-1F Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-5A (the
"Class A-5A Certificates"), Class A-IO (the "Class A-IO Certificates"), Class
B-IOA (the "Class B-IOA Certificates"), Class B-IOF (the "Class B-IOF
Certificates") Class X-F Certificates (the "Class X-F Certificates" and together
with the Class X-A Certificates, the "Class X Certificates"), certain Class P
Certificates (the "Class P Certificates") and certain Class R Certificates (the
"Class R Certificates"). All of the certificates issued by Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 are together referred to
herein as the "Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 1999, each owner of a Class X-F Certificate as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Distribution Date occurs (the "Record Date") will
be entitled to receive the Class X-F Distribution Amount relating to such
Certificate on such Distribution Date. Distributions will be made in immediately
available funds to Owners of Class X-F Certificates having an aggregate
Percentage Interest of at least 10% (by wire transfer or otherwise) to the
account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to the
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if the majority Owner of the Class X-F Certificates does not do
so. In addition, under certain circumstances relating to the qualification of
the REMICs as REMICs under the Code, the Home Equity Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided, that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendment. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class X-F Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class X-F Certificates are exchangeable
for new Class X-F Certificates evidencing the same Percentage Interest as the
Class X-F Certificates exchanged.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
-------------------------
Title:
------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------------
Title:
----------------------------
<PAGE>
EXHIBIT C-3
FORM OF CLASS P-A CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY DISTRIBUTIONS
EXCEPT AS PROVIDED HEREIN.
TRANSFER OF THIS CERTIFICATE IS RESTRICTED AS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE CERTIFICATE WAS ISSUED ON JULY 21, 1999 AT A PRICE EQUAL TO __% OF
THE PRESENT VALUE OF THE EXPECTED CASH FLOWS FROM THIS CERTIFICATE, DISCOUNTED
AT __%. BASED ON THAT ISSUE PRICE, THIS CERTIFICATE WAS ISSUED WITH ORIGINAL
ISSUE DISCOUNT ("OID") FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO
APPROXIMATELY $____ PER $1000 OF SUCH PRESENT VALUE AMOUNT. THE MONTHLY YIELD TO
MATURITY ON THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY __%.
NO INTEREST IS PAYABLE ON THIS CERTIFICATE. THE COMPUTATION OF THE MONTHLY YIELD
TO MATURITY AND THE OID AMOUNTS SPECIFIED ABOVE WAS BASED ON: (I) A METHOD
EMBODYING AN ECONOMIC ACCRUAL OF INCOME, (II) A PREPAYMENT ASSUMPTION OF __% CPR
AND (III) A 30 DAYS PER MONTH/360 DAYS PER YEAR ACCOUNTING CONVENTION. THE
ACTUAL YIELD TO MATURITY AND PREPAYMENT EXPERIENCE MAY DIFFER FROM THOSE SET
FORTH ABOVE.
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS P-A
Representing Certain Interests Relating to a Pool of
Group II Home Equity Loans Originated by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation or Long Beach Mortgage Company This Certificate
represents a fractional ownership interest in the Trust Estate as defined
below.)
NO: P-A-__
Date: July 21, 1999
Percentage Interest _____%
Certificate Principal Balance: $100
The Chase Manhattan Bank, as Indenture Trustee under the Indenture, dated as
of July 21, 1999, relating TO ABSC NIMS TRUST 1999-3, ABSC NIMS
CLASS A-LGIIG NOTES, SERIES 1999-3
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in Prepayment Penalties with respect to the Initial Home
Equity Loans listed in SCHEDULE I-C and SCHEDULE I-D to the Pooling and
Servicing Agreement which the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans listed on SCHEDULE I-C and SCHEDULE
I-D to each Subsequent Transfer Agreement.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate does not have a pass-through rate and will be
entitled to distributions only to the extent set forth in the Pooling and
Servicing 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 agency maintained by the
Trustee in New York, New York.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class P-A (the "Class P-A
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor, (the "Depositor") and The
Chase Manhattan Bank, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-1F Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-5A (the
"Class A-5A Certificates"), Class A-IO (the "Class A-IO Certificates"), Class
B-1 (the "Class B-1 Certificates"), Class B-IOA (the "Class B-IOA
Certificates"), Class B-IOF (the "Class B-IOF Certificates"), certain Class X
Certificates (the "Class X Certificates"), Class P-F Certificates (the "Class
P-F Certificates," and together with the Class P-A Certificates, the "Class P
Certificates") and certain Class R Certificates (the "Class R Certificates").
The Class A-1F Certificates, the Class A-2F Certificates, the Class A-3A
Certificates, the Class A-4A Certificates and the Class A-5A Certificates shall
be together referred to as the "Class A Certificates". All of the certificates
issued by Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1
are together referred to herein as the "Certificates". Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 1999, each owner of a Class P-A Certificate as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Distribution Date occurs (the "Record Date") will
be entitled to receive the Class P-A Distribution Amount relating to such
Certificate on such Distribution Date. Distributions will be made in immediately
available funds to Owners of Class P-A Certificates having an aggregate
Percentage Interest of at least 10% (by wire transfer or otherwise) to the
account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to the
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMICs as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided, that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendment. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class P-A Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class P-A Certificates are exchangeable
for new Class P-A Certificates evidencing the same Percentage Interest as the
Class P-A Certificates exchanged.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
---------------------
Title:
---------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
---------------------------
Title:
---------------------------
<PAGE>
EXHIBIT C-4
FORM OF CLASS P-F CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT BEAR INTEREST AND WILL NOT RECEIVE ANY DISTRIBUTIONS
EXCEPT AS PROVIDED HEREIN.
TRANSFER OF THIS CERTIFICATE IS RESTRICTED AS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE WAS ISSUED ON JULY 21, 1999 AT A PRICE EQUAL TO __% OF THE
PRESENT VALUE OF THE EXPECTED CASH FLOWS FROM THIS CERTIFICATE, DISCOUNTED AT
__%. BASED ON THE ISSUE PRICE, THIS CERTIFICATE WAS ISSUED WITH ORIGINAL ISSUE
DISCOUNT ("OID") FOR FEDERAL INCOME TAX PURPOSES IN AN AMOUNT EQUAL TO
APPROXIMATELY $____ PER $1000 OF SUCH PRESENT VALUE AMOUNT. THE MONTHLY YIELD TO
MATURITY ON THIS CERTIFICATE EXPRESSED ON AN ANNUAL BASIS IS APPROXIMATELY __%.
NO INTEREST IS PAYABLE ON THIS CERTIFICATE. THE COMPUTATION OF THE MONTHLY YIELD
TO MATURITY AND THE OID AMOUNTS SPECIFIED ABOVE WAS BASED ON: (I) A METHOD
EMBODYING AN ECONOMIC ACCRUAL OF INCOME, (II) A PREPAYMENT ASSUMPTION OF __% PPC
AND (III) A 30 DAYS PER MONTH/360 DAYS PER YEAR ACCOUNTING CONVENTION. THE
ACTUAL YIELD TO MATURITY AND PREPAYMENT EXPERIENCE MAY DIFFER FROM THOSE SET
FORTH ABOVE.
<PAGE>
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS P-F
Representing Certain Interests Relating to a Pool of
Group I Home Equity Loans Originated by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation or Long Beach Mortgage Company This Certificate
represents a fractional ownership interest in the Trust Estate as defined
below.)
NO: P-F-__
Date: July 21, 1999
Percentage Interest _____%
Certificate Principal Balance: $100
The Chase Manhattan Bank, as Indenture Trustee under the Indenture, dated as
of July 21, 1999, relating TO ABSC NIMS TRUST 1999-1, ABSC NIMS
CLASS A-LGI NOTES, SERIES 1999-1
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in Prepayment Penalties with respect to the Initial Home
Equity Loans listed in SCHEDULE I-A and SCHEDULE I-B to the Pooling and
Servicing Agreement which the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans listed on SCHEDULE I-A and SCHEDULE
I-B to each Subsequent Transfer Agreement.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate does not have a pass-through rate and will be
entitled to distributions only to the extent set forth in the Pooling and
Servicing 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 agency maintained by the
Trustee in New York, New York.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class P-F (the "Class P-F
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor, (the "Depositor") and The
Chase Manhattan Bank, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-1F Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-5A (the
"Class A-5A Certificates"), Class A-IO (the "Class A-IO Certificates"), Class
B-1 (the "Class B-1 Certificates"), Class B-IOA (the "Class B-IOA
Certificates"), Class B-IOF (the "Class B-IOF Certificates"), certain Class X
Certificates (the "Class X Certificates"), Class P-A Certificates (the "Class
P-A Certificates," and together with the Class P-F Certificates, the "Class P
Certificates") and certain Class R Certificates (the "Class R Certificates").
The Class A-1F Certificates, the Class A-2F Certificates, the Class A-3A
Certificates, the Class A-4A Certificates and the Class A-5A Certificates shall
be together referred to as the "Class A Certificates". All of the certificates
issued by Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1
are together referred to herein as the "Certificates". Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 1999, each owner of a Class P-F Certificate as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Distribution Date occurs (the "Record Date") will
be entitled to receive the Class P-F Distribution Amount relating to such
Certificate on such Distribution Date. Distributions will be made in immediately
available funds to Owners of Class P-F Certificates having an aggregate
Percentage Interest of at least 10% (by wire transfer or otherwise) to the
account of an Owner at a domestic bank or other entity having appropriate
facilities therefor, if such Owner has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to the
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if such Owner does not do so. In addition, under certain
circumstances relating to the qualification of the REMICs as REMICs under the
Code, the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided, that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendment. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class P-F Certificates are issuable only as registered
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class P-F Certificates are exchangeable
for new Class P-F Certificates evidencing the same Percentage Interest as the
Class P-F Certificates exchanged.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------
Title:
---------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
---------------------
Title:
---------------------
EXHIBIT C-5
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CERTIFICATE IS RESTRICTED AS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE MADE TO A
"DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(E)(5) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE UNITED
STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CERTIFICATE WILL BE
REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS
DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THE
PROPOSED TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE
CLASS R CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF
THE FORM OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND
AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A
SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE HOME EQUITY LOANS ARE INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE REPRESENTS A RESIDUAL INTEREST IN EACH OF REMIC II, REMIC III
AND REMIC IV FOR FEDERAL INCOME TAX PURPOSES.
<PAGE>
ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST 1999-LB1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(RESIDUAL INTEREST)
Representing Certain Interests Relating to a Pool of
Group I and Group II Home Equity Loans Serviced by
LONG BEACH MORTGAGE COMPANY
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by Asset
Backed Securities Corporation or Long Beach Mortgage Company This Certificate
represents a fractional ownership interest in the Trust Estate as defined
below.)
NO: R-A-__
Date: July 21, 1999
Percentage Interest _____%
CREDIT SUISSE FIRST BOSTON CORPORATION
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans (other than any
principal due thereon on or prior to the Cut-Off Date and any interest due
thereon on or prior to July 1, 1999) listed in SCHEDULE I-A, SCHEDULE I-B,
Schedule I-C and SCHEDULE I-D to the Pooling and Servicing Agreement which the
Depositor is causing to be delivered to the Trustee and the Subsequent Home
Equity Loans (other than any principal and interest payments due thereon on or
prior to the related Subsequent Cut-Off Date) listed in SCHEDULE I-A, SCHEDULE
I-B, SCHEDULE I-C and SCHEDULE I-D to any Subsequent Transfer Date which the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Mortgaged Property which secured a Home Equity Loan
but which has been acquired by foreclosure or deed in lieu of foreclosure, and
all payments thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee in the
Certificate Account, the LIBOR Carryover Fund, the Cap Reserve Fund, the
Pre-Funding Account and the Capitalized Interest Account together with
investment earnings on such amounts and such amounts as may be held in the name
of the Trustee in the Principal and Interest Account, if any, inclusive of
investment earnings thereon (except as otherwise provided in the Pooling and
Servicing Agreement), whether in the form of cash, instruments, securities or
other properties (including any Eligible Investments held by the Servicer), (c)
the Depositor's rights, but none of its obligations under the Mortgage Loan
Purchase Agreement (except with respect to Section 17), (d) the Cap Agreement
and (e) proceeds of all the foregoing (including, but not by way of limitation,
all proceeds of any mortgage insurance, hazard insurance and title insurance
policy relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing) to pay the Certificates as specified in the
Pooling and Servicing Agreement ((a) - (e) above shall be collectively referred
to herein as the "Trust Estate").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Asset Backed Securities Corporation Home Equity Loan Trust
1999-LB1, Home Equity Loan Pass-Through Certificates, Class R (the "Class R
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") by and among Long Beach Mortgage
Company, in its capacity as the Servicer (the "Servicer"), Asset Backed
Securities Corporation, in its capacity as Depositor, (the "Depositor") and The
Chase Manhattan Bank, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Asset Backed
Securities Corporation Home Equity Loan Trust 1999-LB1 Home Equity Loan
Pass-Through Certificates, Class A-1F (the "Class A-1F Certificates"), Class
A-2F (the "Class A-2F Certificates"), Class A-3A (the "Class A-3A
Certificates"), Class A-4A (the "Class A-4A Certificates"), Class A-5A (the
"Class A-5A Certificates"), Class A-IO (the "Class A-IO Certificates"), Class
B-1 (the "Class B-1 Certificates"), Class B-IOA (the "Class B-IOA
Certificates"), Class B-IOF (the "Class B-IOF Certificates"), certain Class X
Certificates (the "Class X Certificates") and certain Class P Certificates (the
"Class P Certificates"). The Class A-1F Certificates, the Class A-2F
Certificates, the Class A-3A Certificates, the Class A-4A Certificates and the
Class A-5A Certificates shall be together referred to as the "Class A
Certificates". All of the certificates issued by Asset Backed Securities
Corporation Home Equity Loan Trust 1999-LB1 are together referred to herein as
the "Certificates". Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 21st day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Distribution
Date") commencing August 1999, each owner of a Class R Certificate as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Distribution Date occurs (the "Record Date") will
be entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Distribution Date. Distributions will be made in immediately
available funds to Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (by wire transfer or otherwise) to the account of an
Owner at a domestic bank or other entity having appropriate facilities therefor,
if such Owner has so notified the Trustee, or by check mailed to the address of
the person entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and
punctually pay distributions with respect to this Certificate in accordance with
the terms hereof and the Pooling and Servicing Agreement. Amounts properly
withheld under the Code by any Person from a distribution to any Owner shall be
considered as having been paid by the Trustee to such Owner for all purposes of
the Pooling and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by Asset Backed Securities Corporation or Long Beach Mortgage Company
or any of their affiliates. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Equity Loans, all as
more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to the
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
majority Owner of the Class X-F Certificate may, at its option, purchase from
the Trust all remaining Home Equity Loans and other property then constituting
the Trust Estate, and thereby effect early retirement of the Certificates, on
any Monthly Remittance Date after the Clean-Up Call Date. Under certain
circumstances, the Certificate Insurer or the Servicer may also exercise such
purchase rights if the majority Owner of the Class X Certificates does not do
so. In addition, under certain circumstances relating to the qualification of
the REMICs as a REMIC under the Code, the Home Equity Loans may be sold, thereby
effecting the early retirement of the Certificates.
The registered Owner of a Class R Certificate will be entitled to
separate such Certificate into its component parts. The Trustee shall, upon
delivery to it of this Class R Certificate and a written request of the
registered Owner thereof to separate such Certificate into its component parts,
issued to such registered Owner in exchange for such Class R Certificate (i) a
separately transferable, certified and fully registered security (a "Class R-1
Certificate") that will, from the date of its issuance, represent the Owner's
Percentage Interest in the residual interest in the related REMIC, (ii) a
separately transferable, certified and fully registered security (a "Class R-2
Certificate") that will, from the date of its issuance, represent the Owner's
Percentage Interest in the residual interest in the related REMIC, (iii) a
separately transferable, certified and fully registered security (a "Class R-3
Certificate") that will, from the date of its issuance, represent the Owner's
Percentage Interest in the residual interest in the related REMIC and (iv) a
separately transferable, certified and fully registered security (a "Class R-4
Certificate") that will, from the date of its issuance, represent the Owner's
Percentage Interest in the residual interest in the related REMIC. The Trustee
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection with such exchange of this Class R Certificate.
The Trustee shall give written notice of termination of the Pooling
and Servicing Agreement to each Owner in the manner set forth therein.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions
as therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, and
the Servicer at any time and from time to time, with the prior written approval
of the Certificate Insurer and without the consent of the Owners; provided, that
in certain other circumstances provided for in the Pooling and Servicing
Agreement such consent of the Owners will be required prior to amendment. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Distribution Date to the Owner of this Certificate, as more fully described in
the Pooling and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer
or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------
Title:
----------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-----------------------
Title:
-----------------------
<PAGE>
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
Asset Backed Securities Corporation (the "Depositor") and The Chase
Manhattan Bank (the "Trustee"), as trustee, pursuant to the Pooling and
Servicing Agreement dated as of June 1, 1999 among the Depositor, Long Beach
Mortgage Company (the "Servicer") and the Trustee (the "Pooling and Servicing
Agreement"), hereby confirm their understanding with respect to the sale by the
Depositor and the purchase by the Trustee on behalf of the Trust of those Home
Equity Loans (the "Subsequent Home Equity Loans") listed on the attached
Schedule of Home Equity Loans.
The Depositor does hereby irrevocably transfer, assign, set over and
otherwise convey to the Trustee, without recourse (except as otherwise
explicitly provided for herein) all right, title and interest in and to any and
all benefits accruing from each Subsequent Home Equity Loan (other than any
principal received and interest due thereon prior to the later of (x) the date
of origination of such Subsequent Home Equity Loan and (y) ______ 1, 199_ (the
"Subsequent Cut-Off Date")) which are delivered to the Trustee herewith (and all
substitutions therefor as provided by Sections 3.04 and 3.06 of the Pooling and
Servicing Agreement), together with the related Subsequent Home Equity Loan
documents and the interest in any Mortgaged Property which secured a Subsequent
Home Equity Loan, and all payments thereon and proceeds of the conversion,
voluntary or involuntary, of the foregoing; and proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Subsequent Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing). The Depositor shall deliver or cause to be
delivered the original Mortgage or mortgage assignment with evidence of
recording thereon (except as otherwise provided by the Pooling and Servicing
Agreement) and other required documentation in accordance with the terms set
forth in Sections 3.05 and 3.07 of the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Depositor.
Additional terms of the sale, if any, are attached hereto as
Attachment A.
The Depositor hereby delivers notice and confirms that each of the
conditions set forth in Sections 3.07(b), 3.07(c), 3.07(d) and 3.07(e) to the
Pooling and Servicing Agreement are satisfied as of the date hereof.
All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified, confirmed and incorporated herein, PROVIDED that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Pooling and Servicing Agreement.
This Subsequent Transfer Agreement shall be construed in accordance
with the laws of the State of New York and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws,
without giving effect to principles of conflicts of law.
This Subsequent Transfer Agreement may be signed in counterparts, each
of which shall be an original but all of which, taken together, shall constitute
one and the same instrument.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement.
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
ASSET BACKED SECURITIES CORPORATION,
as Depositor
By:
------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee for
Asset Backed Securities Corporation Home
Equity Loan Trust 1999-LB1
By:
--------------------------
Name:
Title:
Dated: ________________ (the "Subsequent Transfer Date")
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, ______________________ of Asset Backed
Securities Corporation (the "Depositor"), hereby certify that between the
"Cut-Off Date" (as defined in the Pooling and Servicing Agreement dated as of
June 1, 1999 among Asset Backed Securities Corporation, as Depositor, Long Beach
Mortgage Company, as Servicer, and The Chase Manhattan Bank, as Trustee) and the
"Startup Day," the following schedule of "Home Equity Loans" (each as defined in
the Pooling and Servicing Agreement) have been prepaid in full.
Account Original Current Date
Number Name Amount Balance Paid Off
Dated: July 21, 1999
ASSET BACKED SECURITIES CORPORATION
By:
---------------------------
Title:
---------------------------
<PAGE>
EXHIBIT F
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
The Chase Manhattan Bank, in its capacity as Trustee (the "Trustee")
under that certain Pooling and Servicing Agreement dated as of June 1, 1999 (the
"Pooling and Servicing Agreement") among Asset Backed Securities Corporation, as
Depositor (the "Depositor"), Long Beach Mortgage Company, a Delaware
corporation, as servicer, and the Trustee, hereby acknowledges receipt (subject
to review as required by Section 3.06(a) of the Pooling and Servicing Agreement)
of the items delivered to it by or on behalf of the Depositor with respect to
the Home Equity Loans pursuant to Section 3.05(b)(i) of the Pooling and
Servicing Agreement.
The Schedule of Home Equity Loans is attached to this Receipt.
The Trustee hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement and
shall otherwise comply with Section 3.06(b) and 3.06(c) of the Pooling and
Servicing Agreement as required thereby.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
Dated: July 21, 1999
<PAGE>
EXHIBIT G
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of The Chase
Manhattan Bank acting in its capacity as trustee (the "Trustee") of a certain
pool of mortgage loans (the "Pool") heretofore conveyed in trust to the Trustee,
pursuant to that certain Pooling and Servicing Agreement dated as of June 1,
1999 (the "Pooling and Servicing Agreement") among Asset Backed Securities
Corporation, as Depositor (the "Depositor"), Long Beach Mortgage Company, as
servicer ("LBMC"), and the Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Files relating to the Home Equity
Loans within a specified period following the Startup Day and to notify the
Depositor and LBMC promptly of any defects with respect to the Home Equity
Loans, and LBMC is required to remedy such defects or take certain other action,
all as set forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement
requires the Trustee to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Trustee hereby certifies that, subject to the
exceptions listed on Schedule A attached hereto. (i) all documents required to
be delivered to it pursuant to Section 3.05(b)(i) of the Agreement have been
executed and are in its possession and that the Notes have been endorsed as set
forth in Section 3.05(b)(i) of the Agreement, (ii) such documents have been
reviewed by it and have not been mutilated, damaged or torn and relate to such
Home Equity Loan and (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Schedule of Home Equity Loans
accurately reflects the information set forth in the File with respect to the
Servicer's loan number, maturity date, original principal balance, first payment
date and original term to maturity.
THE CHASE MANHATTAN BANK, as Trustee
By:
-------------------------
Title:
-------------------------
Dated: July 21, 1999
<PAGE>
EXHIBIT H
FORM OF DELIVERY ORDER
DELIVERY ORDER
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
15th Floor
New York, NY 10001-2697
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated
as of June 1, 1999 (the "Pooling and Servicing Agreement") among Asset Backed
Securities Corporation, as Depositor (the "Depositor"), Long Beach Mortgage
Company, a Delaware corporation, as Servicer, and The Chase Manhattan Bank, as
Trustee (the "Trustee"), the Depositor HEREBY CERTIFIES that all conditions
precedent to the issuance of the Asset Backed Securities Corporation Home Equity
Loan Trust 1999-LB1 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2, Class A-3 and Class R (the "Certificates"), HAVE BEEN SATISFIED, and HEREBY
REQUESTS YOU TO AUTHENTICATE AND DELIVER said Certificates, and to RELEASE said
Certificates to the owners thereof, or otherwise upon their order. Instructions
regarding the registration of the Certificates are attached hereto.
Very truly yours,
ASSET BACKED SECURITIES CORPORATION
By:
------------------------
Title:
------------------------
Dated: July 21, 1999
<PAGE>
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will
not be a "disqualified organization" as of [date of transfer] (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ___ day of __________, ____.
[NAME OF INVESTOR]
By:
--------------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
Attest:
- ------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known
or proved to be the same person who executed the foregoing instrument and to be
the [Title of Officer] of the Investor, and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this __ day of ____________, ____.
- -----------------
NOTARY PUBLIC
COUNTY OF __________________
STATE OF ____________________
My commission expires the _ day of _______________, ____.
<PAGE>
EXHIBIT J-1
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
The Chase Manhattan Bank as Trustee
450 West 33rd Street
15th Floor
New York, NY 10001-2697
Attention: ___________________
Re: Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1
Home Equity Loan Pass-Through Certificates
("Certificates")
Gentlemen:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ___________________ ("Seller"), [PURCHASER]
(the "Purchaser") hereby certifies that:
1. The Purchaser is acquiring the Certificates for [investment
purposes only for]1 the Purchaser's own account and not with a view to or for
sale or transfer in connection with any distribution thereof in any manner which
would violate Section 5 of the Securities Act of 1933, as amended (the "Act"),
provided that the disposition of its property shall at all times be and remain
within its control;
2. The Purchaser understands that the Certificates have not been and
will not be registered under the Act and may not be resold or transferred unless
they are (a) registered pursuant to the Act or (b) sold or transferred in
transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing
Agreement dated as of June 1, 1999 (the "Pooling and Servicing Agreement")
pursuant to which the Certificates are being sold, and such other documents and
information concerning the Certificates and the home equity loans in which the
Certificates represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates and that it is able to bear the
economic risks of such an investment;
5. [The Purchaser is not an "employee benefit plan," within the
meaning of Section 3(3) of the Employment Retirement Income Security Act of
1974, as amended ("ERISA") that is subject to the provisions of Title I of ERISA
or a "plan" described in Section 4975(e)(1) of the Internal Revenue Code of
1986] OR [The source of funds to be used by the Purchaser to purchase the
Certificates is a general account and either (i) no part of such assets
constitutes assets of an "employee benefit plan," within the meaning of Section
3(3) of the Employment Retirement Income Security Act of 1974, as amended
("ERISA") that is subject to the provisions of Title I of ERISA or a "plan"
described in Section 4975(e)(1) of the Internal Revenue Code of 1986, or (ii) to
the extent that such assets constitute assets of an "employee benefits plan"
within the meaning of Section 3(3) of ERISA, or a "plan" within the meaning of
Section 4975(e)(1) of the Code, it acknowledges that in the discharge of its
duty as a plan fiduciary in connection with the purchase of the Certificates it
has concluded that such purchase will not constitute a violation of Section
404(a) of ERISA];
- --------
1 Not required if the Purchaser is a broker/dealer.
<PAGE>
6. If the Purchaser sells any of the Certificates at its option, it
will (i) obtain from any investor that purchases any Certificate from it a
letter substantially in the form of Exhibit J-1 or J-2 to the Pooling and
Servicing Agreement and (ii) to the extent required by the Pooling and Servicing
Agreement, cause an Opinion of Counsel to be delivered, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws; and
7. The Purchaser certifies that for purposes of the Certificate
Register, its address, including telecopier number and telephone number, is as
follows:
telecopier:
telephone:
8. The purchase of the Certificates by the Purchaser does not violate
the provisions of the first sentence of Section 5.08(d) of the Pooling and
Servicing Agreement.
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this letter to be
executed by its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By:
---------------------
Name:
---------------------
Title:
---------------------
<PAGE>
EXHIBIT J-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10001-2697
Attention: _________________
Re: Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1
Home Equity Loan Pass-Through Certificates,
Class __-______ ("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ______________________ ("Seller") hereby
certify that:
1. We are acquiring the Certificates for our own account for
investment and not with a view to or for sale or transfer in connection with any
distribution thereof in any manner which would violate the Securities Act of
1933, as amended (the "Act"), provided that the disposition of our property
shall at all times be and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement
dated as of June 1, 1999 (the "Pooling and Servicing Agreement") pursuant to
which the Certificates are being sold, and such other documents and information
concerning the Certificates and the home equity loans in which the Certificates
represent interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic risks
of such an investment;
5. If we sell any of the Certificates at our option, we will either
(i) obtain from any institutional investor that purchases any Certificate from
us a certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1, 2 through 4 and this paragraph 5 or
(ii) deliver an Opinion of Counsel to such institutional investor, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws;
6. We are acquiring the Certificates for our own account and the
source of funds to be used by us to purchase the Certificates is a general
account and either (i) no part of such assets constitutes assets of an "employee
benefit plan," within the meaning of Section 3(3) of the Employment Retirement
Income Security Act of 1974, as amended ("ERISA") that is subject to the
provisions of Title I of ERISA or a "plan" described in Section 4975(e)(1) of
the Internal Revenue Code of 1986, or (ii) to the extent that such assets
constitute assets of an "employee benefits plan" within the meaning of Section
3(3) of ERISA, or a "plan" within the meaning of Section 4975(e)(1) of the Code,
we acknowledge that in the discharge of our duty as a plan fiduciary in
connection with the purchase of the Certificates we have concluded that such
purchase will not constitute a violation of Section 404(a) of ERISA;
7. We certify that for purposes of the Certificate Register, our
address, including telecopier number and telephone number, is as follows:
-----------------------------------------
-----------------------------------------
-----------------------------------------
telecopier: ________________________________
telephone: _________________________________
8. If we sell any of the Certificates, we will obtain from any
purchaser from us the same representations contained in the foregoing paragraph
6 and this paragraph 7; and
9. Our purchase of the Certificates does not violate the provisions of
the first sentence of Section 5.08(d) of the Pooling and Servicing Agreement.
<PAGE>
IN WITNESS WHEREOF, we have signed this certificate as of the date first written
above.
By:
-------------------------
Name:
-------------------------
Title:
------------------------
<PAGE>
EXHIBIT K TO THE POOLING AND SERVICING AGREEMENT
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
LOAN NUMBER BORROWER NAME ORIGINAL LOAN AMOUNT EXCEPTION
[NOT INCLUDED HEREIN]
<PAGE>
EXHIBIT L
DEFINITION OF GROUP I SPECIFIED SUBORDINATED AMOUNT
(AND RELATED DEFINITIONS)
The "Group I Specified Subordinated Amount" means:
(a) for any Distribution Date prior to the Stepdown Date,
the sum of (x) the product of (i) 8.75% and (ii) the
Original Group I Pool Balance and (y) the amount of
Unrelated Principal Carryover Shortfalls applied to the
Class B-1F Component Certificates;
(b) for any Distribution Date occurring on or after the
Stepdown Date, the greater of (i) the lesser of (x) the
amount specified in clause (a) above and (y) the sum of (A)
the product of the 17.50% and the Group I Pool Balance and
(B) the amount of Unrelated Principal Carryover Shortfalls
applied to the Class B-1F Component Certificates, (ii) the
sum of $1,161,751 and the 270-Day Delinquency Amount for
Group I and (iii) the sum of the Loan Balances of the Home
Equity Loans with the three largest Loan Balances of the
Home Equity Loans in Group I;
provided that during the continuation of a Trigger Event,
the Group I Specified Subordinated Amount shall equal the
greater of (1) the amount specified pursuant to clause (a)
or (b), as applicable, above and (2) 125% of the Group I
Delinquency Amount
"Original Group I Pool Balance" means the sum of the
aggregate Loan Balance of the Initial Home Equity Loans in
Group I as of the Cut-Off Date plus the Original Group I
Pre-Funded Amount.
"Group I Pool Balance" means the sum of the aggregate Loan
Balance of the Home Equity Loans in Group I as of the end of
the related Due Period plus the Pre-Funded Amount with
respect to Group I as of the end of the related Due Period.
"Group I Delinquency Amount" means the product of the Group
I Delinquency Percentage and the sum of the Group I Pool
Balance.
"Group I Delinquency Percentage" means with respect to the
Group I, the rolling three month average of the percentage
equivalent of a fraction, the numerator of which is (x) the
sum (without duplication) of (i) the aggregate Loan Balances
of all Home Equity Loans in Group I which are 90 or more
days delinquent, (ii) the aggregate Loan Balance of all Home
Equity Loans in Group I in foreclosure and (iii) the
aggregate Loan Balance of all Home Equity Loans in Group I
relating to REO Mortgaged Properties (in each case,
including, without limitation, Home Equity Loans for which
the related Mortgagor is in bankruptcy) and the denominator
of which is (y) the aggregate Loan Balance of the Home
Equity Loans in Group I as of the end of the related Due
Period.
<PAGE>
EXHIBIT M
DEFINITION OF GROUP II SPECIFIED SUBORDINATED AMOUNT
(AND RELATED DEFINITIONS)
The "Group II Specified Subordinated Amount" means:
(a) for any Distribution Date prior to the Stepdown Date,
the sum of (x) the product of (i) 9.00% and (ii) the
Original Group II Pool Balance and (y) the amount of
Unrelated Principal Carryover Shortfalls applied to the
Class B-1A Component Certificates;
(b) for any Distribution Date on or after the Stepdown Date,
the greater of (i) the lesser of (x) the amount specified in
clause (a) above and (y) the sum of (A) the product of the
18.00% and the Group II Pool Balance and (B) the amount of
Unrelated Principal Carryover Shortfalls applied to the
Class B-1A Component Certificates, (ii) the sum of
$3,541,987 and the 270-Day Delinquency Amount for Group II
and (iii) the sum of the Loan Balances of the Home Equity
Loans with the three largest Loan Balances of the Home
Equity Loans in Group II;
provided that during the continuation of a Trigger Event,
the Group II Specified Subordinated Amount shall equal the
greater of (1) the amount specified pursuant to clause (a)
or (b), as applicable, above and (2) 125% of the Group II
Delinquency Amount
"Original Group II Pool Balance" means the sum of the
aggregate Loan Balance of the Initial Home Equity Loans in
Group II as of the Cut-Off Date plus the Original Group II
Pre-Funded Amount.
"Group II Pool Balance" means the sum of the aggregate Loan
Balance of the Home Equity Loans in Group II as of the end
of the related Due Period plus the Pre-Funded Amount with
respect to Group II as of the end of the related Due Period.
"Group II Delinquency Amount" means the product of the Group
II Delinquency Percentage and the sum of the Group II Pool
Balance.
"Group II Delinquency Percentage" means with respect to the
Group II, the rolling three month average of the percentage
equivalent of a fraction, the numerator of which is (x) the
sum (without duplication) of (i) the aggregate Loan Balances
of all Home Equity Loans in Group II which are 90 or more
days delinquent, (ii) the aggregate Loan Balance of all Home
Equity Loans in Group II in foreclosure and (iii) the
aggregate Loan Balance of all Home Equity Loans in Group II
relating to REO Mortgaged Properties (in each case,
including, without limitation, Home Equity Loans for which
the related Mortgagor is in bankruptcy) and the denominator
of which is (y) the aggregate Loan Balance of the Home
Equity Loans in Group II as of the end of the related Due
Period.
<PAGE>
EXHIBIT N
RESERVED
<PAGE>
EXHIBIT O
FORM OF LETTER REGARDING REPORTING OBLIGATIONS UNDER THE SECURITIES
EXCHANGE ACT OF 1934
July 21, 1999
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10001-2697
Re: Asset Backed Securities Corporation Home Equity Loan Trust 1999-LB1
Home Equity Loan Asset-Backed Certificates,
Series 1999-LB1
Ladies and Gentlemen:
Pursuant to and in reference to Section 7.09(c) 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 Asset Backed Securities Corporation Home Equity
Loan Trust 1999-LB1 (the "Trust"): ______________ .
(b) CCC 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
Trustee must file within 15 days following each Distribution Date a copy of the
report distributed by the Trustee to the Certificateholders in a current report
on Form 8-K. Such reports provide all current information ordinarily of interest
to the Certificateholders. The Trustee 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 Trustee
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 Servicer, and any Subservicer and the
audit of the servicing by the independent accounting
firm.
<PAGE>
Promptly after filing the Form 10-K, the Trustee should file a Form 15 in
accordance with Section 7.09(c) 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.
ASSET BACKED SECURITIES CORPORATION
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT P
FORM FOR REQUEST FOR RELEASE OF DOCUMENTS
To: The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10001-2697
Re: Pooling and Servicing Agreement, dated as of June 1, 1999 among
Long Beach Mortgage Company, The Chase Manhattan Bank and Asset
Backed Securities Corporation
In connection with the administration of the pool of Home Equity Loans
held by you, we request the release, and acknowledge receipt, of the
(File/[specify documents]) for the Home Equity Loan described below, for the
reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
HOME EQUITY LOAN NUMBER:
HOME EQUITY LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
______1. Home Equity Loan Paid in Full
(Servicer hereby certifies that all amounts received in
connection therewith have been credited to the Certificate
Account as provided in the Pooling and Servicing Agreement.)
______2. Home Equity Loan Repurchased or Substituted
Pursuant to the [Mortgage Loan Purchase Agreement][Pooling and
Servicing Agreement] (Servicer hereby certifies that any
applicable Loan Purchase Price and any Substitution Amounts
have been finally received and credited to the Certificate
Account as provided in the Pooling and Servicing Agreement.)
______3. Home Equity Loan Liquidated By
(Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and
credited to the Certificate Account pursuant to the Pooling
and Servicing.)
______4. Home Equity Loan in Foreclosure
______5. Other (explain)
------------------------------
-----------------------------
If box 1 or 2 above is checked, and if all or part of the File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Home Equity Loan.
If box 3, 4 or 5 above is checked, upon our return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
[SPECIAL SERVICER]
By:
---------------------------
Date:
---------------------------
LONG BEACH MORTGAGE COMPANY
By:
---------------------------
Date:
--------------------------
Documents returned to Trustee
THE CHASE MANHATTAN BANK
as Trustee
By:
---------------------
Date:
---------------------
<PAGE>
EXHIBIT Q
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Loan Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off)
Date last paid
Date of foreclosure
Date of REO
Date of REO Disposition
Property Sale Price/Estimated Market Value at disposition
2. Liquidation Proceeds
Principal Prepayment $____________
Property Sale Proceeds ____________
Net Insurance Proceeds ____________
Other (itemize) ____________
Total Proceeds $____________
3. Liquidation Expenses
Servicing Advances $____________
Delinquency Advances ____________
Servicing Fees ____________
Total Advances $____________
4. Net Liquidation Proceeds $____________
(Item 2 minus Item 3)
5. Loan Balance of Home Equity Loan $____________
6. Loss, if any (Item 5 minus Item 4) $____________
Exhibit 99.2
EXECUTION COPY
MORTGAGE LOAN PURCHASE AGREEMENT
This is a Mortgage Loan Purchase Agreement (the "Agreement"), dated as
of June 1, 1999, among Asset Backed Securities Corporation, a Delaware
corporation (the "Purchaser"), Long Beach Mortgage Company, a Delaware
corporation ("Long Beach") and Credit Suisse First Boston Mortgage Capital LLC,
a Delaware limited liability company (the "Seller").
PRELIMINARY STATEMENT
The Seller intends to sell the Home Equity Loans (as hereinafter
defined) to the Purchaser on the terms and subject to the conditions set forth
in this Agreement. The Home Equity Loans originated by Long Beach (the "Long
Beach Loans") were purchased by the Seller from Long Beach pursuant to a certain
Master Loan Purchase Agreement, dated as of September 1, 1998 (the "Purchase
Agreement"), among the Seller, as initial purchaser and Long Beach, as seller.
The Purchaser intends to deposit the Home Equity Loans into a mortgage pool
constituting the trust fund. The trust fund will be evidenced by a single series
of asset backed certificates designated as Series 1999-LB1, (the
"Certificates"). The Certificates will consist of fifteen classes of
certificates, two of which are further divided into two component classes each.
The Certificates will be issued pursuant to a Pooling and Servicing Agreement,
dated as of June 1, 1999 (the "Pooling and Servicing Agreement"), among the
Purchaser, as depositor, The Chase Manhattan Bank, as trustee, and Long Beach,
as servicer (in such capacity, the "Servicer"). Capitalized terms used but not
defined herein shall have the meanings set forth in the Pooling and Servicing
Agreement.
The parties hereto agree as follows:
SECTION 1. AGREEMENT TO PURCHASE.
(a) The Seller agrees to sell, and the Purchaser agrees to purchase,
on or before July 21, 1999 (the "Closing Date"), certain sub-prime residential
home equity loans (the "Initial Home Equity Loans"), having an aggregate
principal balance as of the close of business on June 1, 1999 (the "Initial
Cut-Off Date") of $930,579,359.51 (the "Initial Closing Balance"), after giving
effect to all principal payments due on the Home Equity Loans on or before the
Initial Cut-Off Date, whether or not received.
(b) Subject to the conditions set forth in paragraph (c) below, in
consideration of the delivery on the related Subsequent Transfer Dates to or
upon the order of the Seller of all or a portion of the balance of funds in the
Pre-Funding Account and in the Prepaid Home Equity Loan Account, the Seller
shall on any Subsequent Transfer Date sell, transfer, convey and assign to the
Purchaser, without recourse (but subject to the terms of this Agreement), all
right, title and interest of the Seller in and to each Subsequent Home Equity
Loan listed on the Schedule of Home Equity Loans delivered on such Subsequent
Transfer Date, including its Loan Balance, all items constituting part of the
Trust with respect to the Subsequent Home Equity Loans and all collections in
respect of such Subsequent Home Equity Loans due after the related Subsequent
Cut-Off Date.
The amount released from the Pre-Funding Account or the Prepaid Home
Equity Loan Account, as applicable, shall be one-hundred percent (100%) of the
aggregate outstanding principal balances as of the applicable Subsequent Cut-Off
Date of the Subsequent Home Equity Loans so transferred.
(c) Each of the following conditions shall be satisfied on or prior to
the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee and the
Certificate Insurer with an Addition Notice not less than 5 Business
Days prior to the proposed Subsequent Transfer Date (unless the
Trustee and the Certificate Insurer shall agree to a shorter period of
time) and shall have provided any information reasonably requested by
either of the foregoing with respect to the Subsequent Home Equity
Loans;
(ii) the Seller shall have executed and delivered a
Subsequent Transfer Agreement to the Trustee (substantially in the
form of Exhibit D to the Pooling and Servicing Agreement) with all
required schedules and exhibits;
(iii) the Seller shall have delivered to the Servicer for
deposit in the Principal and Interest Account all collections in
respect of the Subsequent Home Equity Loans received after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither Long Beach
nor the Seller is insolvent and neither will become insolvent by such
transfer and the Seller and Long Beach are not aware of any pending
insolvency;
(v) such purchase and sale of Subsequent Home Equity Loans
will not result in a material adverse tax consequence to the Trust or
the Owners of the Certificates;
(vi) with respect to Home Equity Loans to be purchased from
the Pre-Funding Account, the Funding Period shall not have terminated
and with respect to Home Equity Loans purchased with Prepaid Home
Equity Account, the related Subsequent Transfer Date is on or before
October 15, 1999;
(vii) the Seller shall have delivered to the Trustee and the
Certificate Insurer an Officer's Certificate confirming the
satisfaction of each condition precedent in this Section 1 and Section
3.07 of the Pooling and Servicing Agreement and the Certificate
Insurer shall have consented to such transfer; and
(viii) there shall have been delivered to the Certificate
Insurer, the Rating Agencies and the Trustee Opinions of Counsel (or
updates thereof) with respect to the transfer of the Subsequent Home
Equity Loans substantially in the form of the Opinions of Counsel
delivered to the Certificate Insurer, the Rating Agencies and the
Trustee on the Closing Date (bankruptcy, perfection, corporate and tax
opinions).
(d) In connection with the transfer and assignment of the Subsequent
Home Equity Loans, the Seller agrees to satisfy the obligations set forth in
Section 4 hereof with respect to such Subsequent Home Equity Loans, the Seller
shall be deemed to have made the representations and warranties set forth in
Section 5(b) hereof and Section 6 hereof, Long Beach shall be deemed to have
made the representations and warranties set forth in Section 5(a) hereof and the
Seller shall take the action, if any, required by Section 7 hereof, in each case
with respect to the Subsequent Home Equity Loans except that references in said
Sections to Initial Home Equity Loans, the Closing Date, this Agreement and the
Cut-Off Date shall refer to the applicable Subsequent Home Equity Loans,
Subsequent Transfer Date, Subsequent Transfer Agreement and Subsequent Cut-Off
Date, respectively.
SECTION 2. SCHEDULE OF HOME EQUITY LOANS. The Purchaser and the Seller
have agreed upon which of the Home Equity Loans owned by the Seller are to be
purchased by the Purchaser pursuant to this Agreement on the Closing Date and
the Seller will prepare or cause to be prepared on or prior to the Closing Date
a schedule (the "Closing Schedule") that together shall describe such Initial
Home Equity Loans and set forth all of the Initial Home Equity Loans to be
purchased under this Agreement. On or prior to each Subsequent Transfer Date,
the Seller will prepare or cause to be prepared a schedule (each a "Subsequent
Schedule") of the Subsequent Home Equity Loans to be transferred to the
Purchaser on the related Subsequent Transfer Date. The Closing Schedule and each
Subsequent Schedule will conform to the requirements set forth in this Agreement
and in the definition of "Schedule of Home Equity Loans" under the Pooling and
Servicing Agreement. The Closing Schedule and each Subsequent Schedule shall be
used as the Schedule of Home Equity Loans under the Pooling and Servicing
Agreement.
SECTION 3. CONSIDERATION.
(a) In consideration for the Initial Home Equity Loans to be purchased
hereunder on the Closing Date, the Purchaser shall, as described in Section 8,
pay to or upon the order of the Seller in immediately available funds an amount
(the "Purchase Price") equal to approximately 100.74% times the Closing Balance,
plus accrued interest thereon from the Cut-Off Date up to but not including the
Closing Date.
(b) The Purchaser or any assignee, transferee or designee of the
Purchaser shall be entitled to all scheduled payments of principal due after the
Initial Cut-Off Date or Subsequent Cut-Off Date, as applicable, all other
payments of principal due and collected after the Initial Cut-Off Date or the
related Subsequent Cut-Off Date and all payments of interest due and collected
after July 1, 1999 with respect to the Initial Home Equity Loans or the related
Subsequent Cut-Off Date with respect to the Subsequent Home Equity Loans. All
scheduled payments of principal due on or before the Initial Cut-Off Date or the
related Subsequent Cut-Off Date, as applicable shall belong to the Seller. All
scheduled payments of interest due on or before July 1, 1999 or the related
Subsequent Cut-Off Date, as applicable shall belong to the Seller.
(c) Pursuant to the Pooling and Servicing Agreement, the Purchaser
will assign all of its right, title and interest in and to the Home Equity
Loans, together with its rights under this Agreement, to the Trustee for the
benefit of the Certificateholders and the Certificate Insurer.
SECTION 4. TRANSFER OF THE HOME EQUITY LOANS.
(a) POSSESSION OF FILES. The Seller does hereby sell, transfer,
assign, set over and convey to the Purchaser, without recourse but subject to
the terms of this Agreement, all of its right, title and interest in, to and
under the Initial Home Equity Loans. On each Subsequent Transfer Date the Seller
will sell, transfer, assign, set over and convey to the Purchaser, without
recourse but subject to the terms of this Agreement, all of its right, title and
interest in, to and under the Subsequent Home Equity Loans, the contents of each
File relating to Home Equity Loans not delivered to the Purchaser or to any
assignee, transferee or designee of the Purchaser on or prior to the Closing
Date or Subsequent Transfer Date, as applicable, which shall be held in trust by
the Seller for the benefit of the Purchaser or any assignee, transferee or
designee of the Purchaser and immediately transferred to the Trustee. Upon the
sale of the Home Equity Loans the ownership of each Note, the related Mortgage
and the other contents of the related File is vested in the Purchaser and the
ownership of all records and documents with respect to the related Home Equity
Loan prepared by or that come into the possession of the Seller on or after the
Closing Date shall immediately vest in the Purchaser and shall be delivered
immediately to the Purchaser or as otherwise directed by the Purchaser.
(b) DELIVERY OF HOME EQUITY LOAN DOCUMENTS. The Seller will, on or
prior to the Closing Date or Subsequent Transfer Date, as applicable, deliver or
cause to be delivered to the Purchaser or any assignee, transferee or designee
of the Purchaser for each Home Equity Loan each of the documents listed in
Section 3.05(b)(i) through (iii) of the Pooling and Servicing Agreement.
(c) ACCEPTANCE OF HOME EQUITY LOANS. The documents delivered pursuant
to Section 4(b) hereof shall be reviewed by the Purchaser or any assignee,
transferee or designee of the Purchaser at any time before, on and after the
Closing Date or Subsequent Transfer Date, as applicable in accordance with
Section 3.06 of the Pooling and Servicing Agreement to ascertain that all
required documents have been executed and received and that such documents
relate to the Home Equity Loans identified on the Schedule of Home Equity Loans.
(d) TRANSFER OF INTEREST IN AGREEMENTS. The Purchaser has the right to
assign its interest under this Agreement, in whole or in part (except for
Section 17 hereof), to the Trustee, as may be required to effect the purposes of
the Pooling and Servicing Agreement, without the consent of the Seller or Long
Beach, and the assignee shall succeed to the rights and obligations hereunder of
the Purchaser. Any expense reasonably incurred by or on behalf of the Purchaser
or the Trustee in connection with enforcing any obligations of the Seller or
Long Beach under this Agreement will be promptly reimbursed by the Seller or
Long Beach, as applicable.
(e) INCORPORATION BY REFERENCE. Long Beach and the Seller hereby agree
to fulfill each and every obligation to repurchase, substitute, deliver and
record, as and to the extent required of Long Beach or the Seller by Section
3.04, Section 3.05, Section 3.06 and Section 3.09 of the Pooling and Servicing
Agreement, which obligations are incorporated by reference herein as if fully
stated herein.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER AND
LONG BEACH.
(a) Long Beach hereby represents and warrants to the Seller and the
Purchaser, as of the date hereof, and as of the Closing Date, and covenants,
that:
(i) Long Beach is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
authorized and qualified to transact any and all business contemplated by this
Agreement to be conducted by Long Beach in any state in which a Mortgaged
Property is located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing business
laws of any such state, to the extent necessary to ensure its ability to enforce
each Home Equity Loan and to service the Home Equity Loans in accordance with
the terms of the Pooling and Servicing Agreement;
(ii) Long Beach had the full corporate power and authority to
originate, hold and sell each Long Beach Loan and has the full corporate power
and authority to service each Home Equity Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions contemplated by this
Agreement and has duly authorized by all necessary corporate action on the part
of Long Beach the execution, delivery and performance of this Agreement; and
this Agreement, assuming the due authorization, execution and delivery thereof
by the Purchaser and the Seller, constitutes a legal, valid and binding
obligation of Long Beach, enforceable against Long Beach in accordance with its
terms, except to the extent that (a) the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(iii) The sale of the Long Beach Loans by Long Beach to the
Seller under the Purchase Agreement, the execution and delivery of this
Agreement by Long Beach, the servicing of the Home Equity Loans by Long Beach
under the Pooling and Servicing Agreement, the consummation of any other of the
transactions herein contemplated, and the fulfillment of or compliance with the
terms hereof are in the ordinary course of business of Long Beach and will not
(A) result in a breach of any term or provision of the charter or by-laws of
Long Beach or (B) conflict with, result in a breach, violation or acceleration
of, or result in a default under, the terms of any other material agreement or
instrument to which Long Beach is a party or by which it may be bound, or any
statute, order or regulation applicable to Long Beach of any court, regulatory
body, administrative agency or governmental body having jurisdiction over Long
Beach; and Long Beach is not a party to, bound by, or in breach or violation of
any indenture or other agreement or instrument, or subject to or in violation of
any statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which materially and
adversely affects or, to Long Beach's knowledge, would in the future materially
and adversely affect, (x) the ability of Long Beach to perform its obligations
under this Agreement or (y) the business, operations, financial condition,
properties or assets of Long Beach taken as a whole;
(iv) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Long Beach of, or compliance by Long Beach with, this Agreement
or the consummation of the transactions contemplated hereby, or if any such
consent, approval, authorization or order is required, Long Beach has obtained
the same provided that Long Beach makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution of
the Certificates;
(v) Long Beach is an approved seller/servicer for FNMA in good
standing and is a HUD approved mortgagee pursuant to Section 203 of the National
Housing Act;
(vi) No litigation or proceeding is pending or, to the best of
Long Beach's knowledge, threatened against Long Beach that would materially and
adversely affect the execution, delivery or enforceability of this Agreement or
the ability of Long Beach to service the Home Equity Loans or to perform any of
its other obligations hereunder in accordance with the terms hereof or would
result in a material adverse change in the financial or operating condition of
Long Beach; and
(vii) Long Beach (A) is a solvent entity and is paying its debts
as they become due and (B) after giving effect to the transfer of the Home
Equity Loans, will be a solvent entity and will have sufficient resources to pay
its debts as they become due.
(b) The Seller hereby represents and warrants, as of the date hereof
and as of the Closing Date and as of each Subsequent Transfer Date, and
covenants, that:
(i) The Seller is a limited liability company, duly organized
under the laws of the State of Delaware with full power and authority to conduct
its business as presently conducted by it to the extent material to the
consummation of the transactions contemplated herein. The Seller had the full
corporate power and authority to acquire the Home Equity Loans. The Seller has
the full corporate power and authority to own the Home Equity Loans and to
transfer and convey the Home Equity Loans to the Purchaser and has the full
corporate power and authority to execute and deliver, engage in the transactions
contemplated by, and perform and observe the terms and conditions of this
Agreement;
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Seller, all requisite action having been taken,
and (assuming the due authorization, execution and delivery hereof by the
Purchaser and Long Beach) constitutes the valid, legal and binding obligation of
the Seller, enforceable in accordance with its terms, except as such enforcement
may be limited by (A) bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, (B) general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law) or (C) 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) No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or court is
required, under federal laws or the laws of the State of New York, for the
execution, delivery and performance by the Seller of, or compliance by the
Seller with, this Agreement or the consummation by the Seller of any other
transaction contemplated hereby and by the Pooling and Servicing Agreement;
provided, however, that the Seller makes no representation or warranty regarding
federal or state securities laws in connection with the sale or distribution of
the Certificates;
(iv) No certificate of an officer, statement or other information
furnished in writing or report delivered by the Seller to the Purchaser, any
affiliate of the Purchaser, the Certificate Insurer or the Trustee for use in
connection with the purchase of the Home Equity Loans and the transactions
contemplated hereunder and under the Pooling and Servicing Agreement will
contain any untrue statement of a material fact, or omit a material fact
necessary to make the information, certificate, statement or report not
misleading in any material respect.
(v) Neither the sale of the Home Equity Loans to the Purchaser,
nor the execution, delivery or performance of this Agreement by the Seller,
conflicts or will conflict with or results or will result in a breach of or
constitutes or will constitute a default (or an event, which with notice or
lapse of time or both, would constitute a default) under (A) any terms or
provisions of the formation documents of the Seller, (B) any term or provision
of any material agreement, contract, instrument or indenture, to which the
Seller is a party or by which the Seller or any of its property is bound, or (C)
any law, rule, regulation, order, judgment, writ, injunction or decree of any
court or governmental authority having jurisdiction over the Seller or any of
its property or results or will result in the creation or imposition of any
lien, charge or encumbrance which would have a material adverse effect upon the
Home Equity Loans or any documents or instruments evidencing or securing the
Home Equity Loans;
(vi) The Seller has not dealt with any broker, investment banker,
agent or other person, except for the Purchaser or any of its affiliates, that
may be entitled to any commission or compensation in connection with the sale of
the Initial Home Equity Loans;
(vii) There is no litigation or proceedings currently pending or,
to the best of the Seller's knowledge, threatened against the Seller that would
reasonably be expected to adversely affect the transfer of the Home Equity
Loans, the issuance of the Certificates, the execution, delivery, performance or
enforceability of this Agreement or that would result in a material adverse
change in the financial condition of the Seller;
(viii) Each Note, each Mortgage, each assignment of mortgage and
any other document required to be delivered by or on behalf of the Seller under
this Agreement or the Pooling and Servicing Agreement to the Purchaser or any
assignee, transferee or designee of the Purchaser for each Home Equity Loan has
been or will be, in accordance with Section 4(b) hereof, delivered to the
Purchaser or any such assignee, transferee or designee. With respect to each
Home Equity Loan, the Seller is in possession of a complete File in compliance
with the Pooling and Servicing Agreement, except for such documents that have
been delivered (1) to the Purchaser or any assignee, transferee or designee of
the Purchaser or (2) for recording to the appropriate public recording office
and have not yet been returned;
(ix) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Seller pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any relevant
jurisdiction, except any as may have been complied with;
(x) The Seller (A) is a solvent entity and is paying its debts as
they become due and (B) after giving effect to the transfer of the Home Equity
Loans, will be a solvent entity and will have sufficient resources to pay its
debts as they become due;
(xi) The form of endorsement of each Note satisfied or will
satisfy the requirement, if any, of endorsement in order to transfer all right,
title and interest of the party so endorsing, as noteholder or assignee thereof,
in and to that Note; and each assignment of mortgage to be delivered hereunder
is or will be in recordable form and is sufficient to effect the assignment of
and to transfer to the assignee thereunder the benefits of the assignor, as
mortgagee or assignee thereof, under each Mortgage to which that assignment of
mortgage relates;
(xii) The transfer of the Home Equity Loans to the Purchaser on
the Closing Date or the applicable Subsequent Transfer Date will be treated by
the Seller for financial accounting and reporting purposes as a sale of assets;
and
(xiii) Immediately prior to the sale of the Home Equity Loans to
the Purchaser as herein contemplated and in any Subsequent Transfer Agreement,
as applicable, the Seller had good title to, and was the sole owner of, the Home
Equity Loans, and such sale will validly transfer the Home Equity Loans to the
Purchaser free and clear of any pledge, lien, encumbrance or security interest
and upon transfer of the Home Equity Loans by the Purchaser to the Trustee as
provided in the Pooling and Servicing Agreement, the Trustee shall have good
title to the Home Equity Loans, free and clear of any pledge, lien, encumbrance
or security interest.
(xiv) With respect to the Home Equity Loans, the Seller hereby
represents and warrants, as of the date hereof and as of the Closing Date or
Subsequent Transfer Date, as applicable, that each Home Equity Loan constitutes
a "qualified mortgage" within the meaning of Section 860(G)(a)(3) of the Code.
(xv) The characteristics of the Initial Home Equity Loans as set
forth on Exhibit 1 hereto are true and correct in all material respects.
(xvi) Each Subsequent Home Equity Loan will comply with the
requirements of Section 3.07(c) or Section 3.07(d), as applicable, of the
Pooling and Servicing Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE RESPONSIBLE PARTY
RELATING TO THE HOME EQUITY LOANS.
(a) REPRESENTATIONS AND WARRANTIES AS TO INDIVIDUAL HOME EQUITY LOANS.
The "Responsible Party" is Long Beach with respect to the Initial Home Equity
Loans it originated (other than with respect to the representations set forth in
Section 5(b) of this Agreement) and the Seller with respect to the remaining
Initial Home Equity Loans, with respect to the Initial Home Equity Loans
originated by Long Beach and the representations set forth in Section
5(b)(viii), (xi), (xiii), (xiv) and (xv) of this Agreement and with respect to
any Subsequent Home Equity Loans. The Responsible Party hereby represents and
warrants to the Purchaser, that as to each Initial Home Equity Loan for which it
is the Responsible Party, as of the Closing Date:
(i) The information set forth on the related Schedule of Home
Equity Loans with respect to each Home Equity Loan is true and correct in all
material respects;
(ii) Except as set forth on Exhibit 1, all payments due prior to
the Initial Cut-Off Date have been made with respect to the Initial Home Equity
Loans. Other than up to 1.00% of the Initial Home Equity Loans (based upon
outstanding Loan Balance as of the Cut-Off Date) which are 30 days Delinquent,
no Home Equity Loan is 30 days or more Delinquent as of the Cut-Off Date, none
of the Home Equity Loans will have been Delinquent for more than one calendar
month more than once since the origination thereof, and no Home Equity Loan has
experienced a delinquency of 60 days or more in the payment of its first payment
due;
(iii) Each Mortgage is a valid and enforceable first lien on the
Mortgaged Property, including all improvements thereon, subject only to (a) the
lien of nondelinquent current real property taxes and assessments, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording of such Mortgage, such
exceptions appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection with the
origination of the related Home Equity Loan, and (c) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage;
(iv) Immediately prior to the assignment of the Home Equity Loans
to the Seller, Long Beach or WMC Mortgage Corp., as applicable (the
"Originator") had good title to, and was the sole legal and beneficial owner of,
each Home Equity Loan free and clear of any pledge, lien, encumbrance or
security interest and has full right and authority, subject to no interest or
participation of, or agreement with, any other party to sell and assign the
same;
(v) To the best of the Responsible Party's knowledge, there is no
delinquent tax or assessment lien against any Mortgaged Property;
(vi) There is no valid offset, defense or counterclaim to any
Note or Mortgage, including the obligation of the Mortgagor to pay the unpaid
principal of or interest on such Note, nor will the operation of any of the
terms of the Note and the Mortgage, or the exercise of any right thereunder,
render the Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(vii) To the best of the Responsible Party's knowledge, there are
no mechanics' liens or claims for work, labor or material affecting any
Mortgaged Property which are or may be a lien prior to, or equal with, the lien
of the related Mortgage, except those which are insured against by the title
insurance policy referred to in (xi) below;
(viii) To the best of the Responsible Party's knowledge, each
Mortgaged Property is free of material damage and is in average repair;
(ix) Each Home Equity Loan at origination complied in all
material respects with applicable local, state and federal laws, including,
without limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of the
transactions contemplated hereby will not involve the violation of any such
laws;
(x) Neither the Responsible Party nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that a Home
Equity Loan may have been modified by a written instrument which has been
recorded, if necessary, to protect the interests of the Seller and the Purchaser
and which has been delivered to the Trustee); satisfied, cancelled or
subordinated such Mortgage in whole or in part; released the related Mortgaged
Property in whole or in part from the lien of such Mortgage; or executed any
instrument of release, cancellation, modification or satisfaction with respect
thereto;
(xi) A lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable, and an
adjustable rate mortgage endorsement in an amount at least equal to the Loan
Balance of each Home Equity Loan as of the Cut-off Date or a commitment (binder)
to issue the same was effective on the date of the origination of each Home
Equity Loan, each such policy is valid and remains in full force and effect, the
transfer of the related Home Equity Loan to the Seller, Purchaser and Trustee
will not affect the validity or enforceability of such policy and each such
policy was issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located and acceptable to FNMA or
FHLMC and in a form acceptable to FNMA or FHLMC, which policy insures the
applicable Originator and successor owners of indebtedness secured by the
insured Mortgage, as to the first priority lien of the Mortgage; to the best of
the Responsible Party's knowledge, no claims have been made under such mortgage
title insurance policy and no prior holder of the related Mortgage, including
the Responsible Party, has done, by act or omission, anything which would impair
the coverage of such mortgage title insurance policy;
(xii) Each Home Equity Loan was originated by the applicable
Originator or by a savings and loan association, savings bank, commercial bank,
credit union, insurance company or similar institution which is supervised and
examined by a federal or state authority, or by a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to sections 203 and 211 of
the National Housing Act and, if originated on behalf of the applicable
Originator by a Person other than the applicable Originator, is subject to the
same standards and procedures used by the applicable Originator in originating
home equity loans directly;
(xiii) With respect to each Home Equity Loan on each Adjustment
Date, if any, the Coupon Rate will be adjusted to equal LIBOR plus the margin,
rounded to the nearest 0.125%, subject to the periodic rate cap, the Maximum
Rate and the Minimum Rate. Except for Balloon Loans, the related Note is payable
on the first day of each month in self-amortizing monthly installments of
principal and interest, with interest payable in arrears, and requires a Monthly
Payment which is sufficient to fully amortize the outstanding principal balance
of the Home Equity Loan over its remaining term and to pay interest at the
applicable Coupon Rate. No Home Equity Loan is subject to negative amortization.
All rate adjustments have been performed in accordance with the terms of the
related Note or subsequent modifications, if any.
(xiv) To the best of the Responsible Party's knowledge, all of
the improvements which were included for the purpose of determining the
Appraised Value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of such property, and no improvements on adjoining
properties encroach upon the Mortgaged Property;
(xv) All inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied under
applicable law;
(xvi) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located;
(xvii) The Note and the related Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms and with applicable laws. All parties to the Note and
the Mortgage had legal capacity to execute the Note and the Mortgage and each
Note and Mortgage have been duly and properly executed by such parties;
(xviii) With the exception of the Hold-back Loans, the proceeds
of each Home Equity Loan have been fully disbursed, there is no requirement for
future advances thereunder and any and all requirements as to completion of any
on-site or off-site improvements and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred in
making, closing or recording the Home Equity Loans were paid. A "Hold-back Loan"
means a Home Equity Loan with respect to which a portion of the loan proceeds
are held back from the Mortgagor until required repairs or improvements on the
Mortgaged Property are completed. All proceeds not disbursed to the Mortgagor
with respect to a Hold-back Loan have been held back and any disbursements made
have been carried out in accordance with a written agreement between the
Mortgagor and the applicable Originator and in accordance with applicable law.
All such proceeds for each Hold-back Loan are held in an escrow account and are
to be released in accordance with the applicable Originator's written agreement
with the Mortgagor;
(xix) The related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. There is
no homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
(xx) With respect to each Mortgage constituting a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage, and
no fees or expenses are or will become payable by the Purchaser to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(xxi) Each Note and each Mortgage is in substantially one of the
forms attached hereto as Exhibit 2;
(xxii) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary arrangements
for repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the applicable Originator have been capitalized
under the Mortgage or the related Note;
(xxiii) The origination and underwriting practices used by the
applicable Originator with respect to each Home Equity Loan have been in all
respects legal, proper, prudent and customary in the mortgage servicing
business;
(xxiv) There is no pledged account or other security other than
real estate securing the Mortgagor's obligations;
(xxv) No Home Equity Loan has a shared appreciation feature, or
other contingent interest feature;
(xxvi) No Home Equity Loan provides for primary mortgage
insurance;
(xxvii) The improvements upon each Mortgaged Property are covered
by a valid and existing hazard insurance policy with a generally acceptable
carrier that provides for fire extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located representing
coverage not less than the lesser of the outstanding principal balance of the
related Home Equity Loan or the minimum amount required to compensate for damage
or loss on a replacement cost basis. All individual insurance policies and flood
policies referred to in clause (xxviii) below contain a standard mortgagee
clause naming the applicable Originator or the original mortgagee, and its
successors in interest, as mortgagee, and the Responsible Party has received no
notice that any premiums due and payable thereon have not been paid; the
Mortgage obligates the Mortgagor thereunder to maintain all such insurance,
including flood insurance, at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain
and maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
(xxviii) If the Mortgaged Property is in an area identified in
the Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance Administration is
in effect with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (A) the
outstanding principal balance of the Home Equity Loan, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis or (C) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973;
(xxix) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Note; and Responsible
Party has not waived any default, breach, violation or event of acceleration;
(xxx) Each Mortgaged Property is improved by a one- to
four-family residential dwelling, including condominium units and dwelling units
in planned unit developments, which, to the best of Responsible Party's
knowledge, does not include cooperatives or mobile homes and does not constitute
other than real property under state law; and the Mortgaged Property is either a
fee simple estate or a long-term residential lease;
(xxxi) If the Home Equity Loan is secured by a long term
residential lease, (1) the lessor under the lease holds a fee simple interest in
the land; (2) the terms of such lease expressly permit the mortgaging of the
leasehold estate, the assignment of the lease without the lessor's consent and
the acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the
Mortgage with substantially similar protections; (3) the terms of such lease do
not (a) allow the termination thereof upon the lessee's default without the
holder of the Mortgage being entitled to receive written notice of, and
opportunity to cure, such default, (b) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence, (c)
prohibit the holder of the Mortgage from being insured (or receiving proceeds of
insurance) under the hazard insurance policy or policies relating to the
Mortgaged Property or (d) permit any increase in rent other than pre established
increases set forth in the lease; (4) the original term of such lease is not
less than 15 years; (5) the term of such lease does not terminate earlier than
five years after the maturity date of the Note; and (6) the Mortgaged Property
is located in a jurisdiction in which the use of leasehold estates in
transferring ownership in residential properties is a widely accepted practice.
(xxxii) Reserved.
(xxxiii) There is no obligation on the part of the applicable
Originator or any other party under the terms of the Mortgage or related Note to
make payments in addition to those made by the Mortgagor;
(xxxiv) Any future advances made prior to the Cut-Off Date have
been consolidated with the outstanding principal amount secured by the Mortgage,
and the secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the related Schedule of Home Equity
Loans. The consolidated principal amount does not exceed the original principal
amount of the Home Equity Loan;
(xxxv) Each Long Beach Loan was underwritten in accordance with
Long Beach's underwriting guidelines as described in the Prospectus Supplement
and each Home Equity Loan that is not a Long Beach Loan was underwritten in a
manner that is materially consistent with the manner in which the Long Beach
Loans were underwritten;
(xxxvi) The File contains an appraisal which was performed by an
appraiser who satisfied, and which was conducted in accordance with, all of the
applicable requirements of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended;
(xxxvii) None of the Home Equity Loans is a graduated payment
Home Equity Loan, nor is any Home Equity Loan subject to a temporary buydown or
similar arrangement;
(xxxviii) With respect to each Home Equity Loan, no loan junior
in lien priority to such Home Equity Loan and secured by the related Mortgaged
Property was originated by the applicable Originator at the time of origination
of such Home Equity Loan;
(xxxix) 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;
(xl) The applicable Originator 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;
(xli) There is no proceeding pending, or to best of the
Responsible Party's knowledge threatened, for the total or partial condemnation
of the Mortgaged Property or the taking by eminent domain of any Mortgaged
Property;
(xlii) None of the Home Equity Loans are classified as "high
cost" loans under Section 32 of the Home Ownership and Equity Protection Act of
1994;
(xliii) With respect to any Home Equity Loan which is a Home
Equity Loan originated in the State of Texas, any and all requirements of
Section 50, Article XVI of the Texas Constitution applicable to Texas Home
Equity Loans which were in effect at the time of the origination of the Home
Equity Loan have been complied with. Specifically, without limiting the
generality of the foregoing,
a. all fees paid by the owner of the Mortgaged Property or such
owner's spouse, to any person, that were necessary to originate,
evaluate, maintain, record, insure or service the Home Equity Loan are
reflected in the closing statement for such Home Equity Loan;
b. the Home Equity Loan was closed only at the office of the
originating lender, an attorney at law, or a title company;
c. the originating lender has not been found by a federal regulatory
agency to have engaged in the practice of refusing to make loans
because the applicants for the loans reside or the Mortgaged Property
proposed to secure the loans is located in a certain area;
d. the owner of the Mortgaged Property was not required to apply the
proceeds of the Home Equity Loan to repay another debt except debt
secured by the Mortgaged Property or debt to a lender other than the
originating lender;
e. the owner of the Mortgaged Property did not sign any documents or
instruments relating to the Home Equity Loan in which blanks were left
to be filled in; and
f. if discussions between the originating lender and the borrower were
conducted primarily in a language other than English, the originating
lender provided to the owner of the Mortgaged Property, prior to
closing, a copy of the notice required by Section 50(g), Article XVI
of the Texas Constitution translated into the written language in
which the discussions were conducted;
(xliv) The Loan to Value Ratio for each Home Equity Loan was no
greater than 90%, at the time of origination; and
(xlv) The first date on which each Mortgagor must make a payment
on the related Home Equity Loan is no later than August 1, 1999.
SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION AND FOR
BREACH OF REPRESENTATION AND WARRANTY.
(a) The representations and warranties contained in Sections
5(b)(viii), (xi), (xiii), (xiv), (xv), (xvi) and 6 hereof shall not be impaired
by any review and examination of Files or other documents evidencing or relating
to the Home Equity Loans or any failure on the part of the Seller or the
Purchaser to review or examine such documents and shall inure to the benefit of
any assignee, transferee or designee of the Purchaser, including the Trustee for
the benefit of holders of asset backed certificates evidencing an interest in
all or a portion of the Home Equity Loans and the Certificate Insurer. With
respect to the representations and warranties contained herein which are made to
the knowledge or the best of knowledge of the Responsible Party, or as to which
the Responsible Party has no knowledge, if it is discovered that the substance
of any such representation and warranty was inaccurate as of the date such
representation and warranty was made or deemed to be made, and such inaccuracy
materially and adversely affects the value of the related Home Equity Loan or
the interest therein of the Purchaser, the Purchaser's assignee, transferee or
designee or the Certificate Insurer, then notwithstanding the lack of knowledge
by the Responsible Party with respect to the substance of such representation
and warranty being inaccurate at the time the representation and warranty was
made, the Responsible Party shall take such action described in the following
paragraph in respect of such Home Equity Loan.
Upon discovery by Long Beach, the Seller, the Certificate Insurer, the
Purchaser or any assignee, transferee or designee of the Purchaser of any
materially defective document in, or that any material document was not
transferred by the Seller (as listed on the Trustee's Pool Certification or
otherwise), as part of, any File, of a breach of any of the representations and
warranties contained in Section 5(a) or Section 6 hereof or of a First Payment
Default with respect to any Home Equity Loan, that materially and adversely
affects the value of any Home Equity Loan or the interest of the Certificate
Insurer, the Purchaser or the Purchaser's assignee, transferee or designee, the
party discovering the breach shall give prompt written notice to the others.
With respect to any Home Equity Loan for which Long Beach is the Responsible
Party, within 60 days (or 90 days if Long Beach is attempting in good faith to
cure the defect as determined by the Certificate Insurer in its sole discretion)
of its discovery or its receipt of notice of any such missing documentation,
which documentation was not previously transferred to the Seller, or materially
defective documentation or any such breach of a representation and warranty in
Section 5(a) or Section 6 hereof, Long Beach promptly shall deliver such missing
document or cure such defect or breach in all material respects, or in the event
Long Beach has not delivered such missing document, such defect or breach has
not been cured or with respect to the occurrence of a First Payment Default with
respect to any such Home Equity Loan, Long Beach shall, within 60 days (or 90
days if Long Beach is attempting in good faith to cure the defect as determined
by the Certificate Insurer in its sole discretion) of its discovery or receipt
of notice, either (i) repurchase the affected Home Equity Loan at the Loan
Purchase Price (as such term is defined in the Pooling and Servicing Agreement)
or (ii) pursuant to the provisions of the Pooling and Servicing Agreement, cause
the removal of such Home Equity Loan from the Trust and substitute one or more
Qualified Substitute Home Equity Loans. With respect to (A) Home Equity Loans
(i) for which the Seller is the Responsible Party or (ii) for which Long Beach
is the Responsible Party and the File is missing a material document that was
transferred from Long Beach to the Seller or (B) a discovery by Long Beach, the
Seller, the Certificate Insurer, the Purchaser or any assignee, transferee or
designee of the Purchaser of a breach of any of the representations and
warranties contained in Section 5(b)(viii), (xi), (xiii), (xiv), (xv) or (xvi)
or with respect to a Home Equity Loan for which the Seller is the Responsible
Party, Section 6 hereof that materially and adversely affects the value of any
Home Equity Loan or the interest therein of the Certificate Insurer, the
Purchaser or the Purchaser's assignee, transferee or designee, the party
discovering such breach shall give prompt written notice to the others. Within
(60) days (or 90 days if the Seller is attempting in good faith to cure defect
as determined by the Certificate Insurer in its sole discretion) of its
discovery or its receipt of notice of any such missing document or any such
breach of a representation and warranty the Seller promptly shall deliver such
missing document or cure such defect or breach in all material respects, or in
the event the Seller has not delivered such missing document or such defect or
breach has not been cured or with respect to the occurrence of a First Payment
Default with respect to any such Home Equity Loan, the Seller shall, within 60
(or 90 days if the Seller is attempting in good faith to cure the defect as
determined by Certificate Insurer in its sole discretion) days of its discovery
or receipt of notice, either (i) repurchase the affected Home Equity Loan at the
Loan Purchase Price (as such term is defined in the Pooling and Servicing
Agreement) or (ii) pursuant to the provisions of the Pooling and Servicing
Agreement, cause the removal of such Home Equity Loan from the Trust and
substitute one or more Qualified Substitute Home Equity Loans. Long Beach or the
Seller, as the case may be, shall amend the Closing Schedule or Subsequent
Schedule, as applicable, to reflect the withdrawal of such Home Equity Loan from
the terms of this Agreement and the Pooling and Servicing Agreement and the
addition, if any, of a Qualified Substitute Home Equity Loan. Long Beach or the
Seller, as the case may be, shall deliver to the Purchaser such amended Closing
Schedule or Subsequent Schedule, as applicable, and shall deliver such other
documents as are required by this Agreement or the Pooling and Servicing
Agreement within five (5) days of any such amendment. Any repurchase pursuant to
this Section 7(a) shall be accomplished by deposit in the Principal and Interest
Account of the amount of the Loan Purchase Price in accordance with Sections
3.04 and 3.06 as of the Pooling and Servicing Agreement. Any repurchase or
substitution or delivery of documents required by this Section and Section 3.04,
Section 3.05, Section 3.06 and Section 3.09 of the Pooling and Servicing
Agreement shall be made in a manner consistent with Section 3.04, Section 3.05,
Section 3.06 and Section 3.09 of the Pooling and Servicing Agreement.
In addition, upon discovery by the Seller, the Purchaser, the
Certificate Insurer, or any assignee, transferee or designee of the Purchaser
that any Home Equity Loan does not constitute a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code, the party discovering the breach
shall give prompt written notice within two Business Days to the others. Within
60 days (or 90 days if the Seller is attempting in good faith to cure the defect
as determined by the Certificate Insurer in its sole discretion) of its
discovery or its receipt of notice, the Seller promptly shall either (i)
repurchase the affected Home Equity Loan at the Loan Purchase Price (as such
term is defined in the Pooling and Servicing Agreement) or (ii) pursuant to the
provisions of the Pooling and Servicing Agreement, cause the removal of such
Home Equity Loan from the Trust and substitute one or more Qualified Substitute
Home Equity Loans.
(b) It is understood and agreed that the obligations of Long Beach or
the Seller, as the case may be, set forth in this Section 7 to cure, repurchase
or substitute for a defective Home Equity Loan constitute, except as provided in
the Insurance Agreement the sole remedies of the Seller, the Purchaser and the
Certificate Insurer against Long Beach and the Seller respecting a missing or
defective document, a breach of the representations and warranties contained in
Section 5 or Section 6 hereof or with respect to the occurrence of a First
Payment Default with respect to any Home Equity Loan.
SECTION 8. CLOSING; PAYMENT FOR THE HOME EQUITY LOANS. The closing of
the purchase and sale of the Home Equity Loans shall be held at the New York
City office of Stroock & Stroock & Lavan LLP at 10:00 AM New York City time on
the Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller under
this Agreement shall be true and correct in all material respects
as of the date as of which they are made and no event shall have
occurred which, with notice or the passage of time, would
constitute a default under this Agreement;
(b) All of the representations and warranties of Long Beach under
this Agreement shall be true and correct in all material respects
as of the date as of which they are made and no event shall have
occurred which, with notice or the passage of time, would
constitute a default under this Agreement;
(c) The Purchaser shall have received, or the attorneys of the
Purchaser shall have received in escrow (to be released from
escrow at the time of closing), all Closing Documents as
specified in Section 9 of this Agreement, in such forms as are
agreed upon and acceptable to the Purchaser, duly executed by all
signatories other than the Purchaser as required pursuant to the
respective terms thereof;
(d) The Seller shall have delivered or caused to be delivered and
released to the Purchaser or to its designee, all documents
(including without limitation, the Initial Home Equity Loans)
required to be so delivered by the Purchaser pursuant to Section
3.05(b) of the Pooling and Servicing Agreement; and
(e) All other terms and conditions of this Agreement shall have been
complied with.
Subject to the foregoing conditions, the Purchaser shall deliver or
cause to be delivered to the Seller on the Closing Date, against delivery and
release by the Seller to the Trustee of all documents required pursuant to the
Pooling and Servicing Agreement, the consideration for the Home Equity Loans as
specified in Section 3 of this Agreement, by delivery to the Seller of the
Purchase Price in immediately available funds.
SECTION 9. CLOSING DOCUMENTS. Without limiting the generality of
Section 8 hereof, the closing shall be subject to delivery of each of the
following documents:
(a) An Officers' Certificate of the Seller, dated the Closing Date,
upon which Long Beach, the Purchaser, MBIA Insurance Corporation
("MBIA") and Credit Suisse First Boston Corporation (the
"Underwriter") may rely, and attached thereto copies of the
certificate of formation under the laws of Delaware;
(b) An Opinion of Counsel of the Seller, dated the Closing Date and
addressed to Long Beach, the Purchaser, MBIA, the Rating Agencies
and the Underwriter;
(c) An Officer's Certificate of Long Beach, dated the Closing Date,
upon which the Seller, the Purchaser, MBIA, the Rating Agencies
and the Underwriter may rely, in the form of Exhibit 6 hereto,
and attached thereto copies of the certificate of incorporation,
by-laws and certificate of good standing of Long Beach under the
laws of Delaware;
(d) An Opinion of Counsel of Long Beach, dated the Closing Date and
addressed to the Seller, the Purchaser, MBIA, the Rating Agencies
and the Underwriter, substantially in the form attached hereto as
Exhibit 7;
(e) Such opinions of counsel as the Rating Agencies, MBIA or the
Trustee may request in connection with the sale of the Home
Equity Loans by Long Beach to the Seller or by the Seller to the
Purchaser or Long Beach's or Seller's execution and delivery of,
or performance under, this Agreement;
(f) A letter from Deloitte & Touche L.L.P., certified public
accountants, dated the date hereof and to the effect that they
have performed certain specified procedures as a result of which
they determined that certain information of an accounting,
financial or statistical nature set forth in the Purchaser's
Prospectus Supplement, dated July 9, 1999 agrees with the records
of Long Beach;
(g) Long Beach shall deliver to the Seller for inclusion in the
Prospectus Supplement for Asset Backed Securities Corporation,
Asset Backed Certificates, Series 1999-LB1, under the captions
"The Servicer" and "Origination of the Home Equity Loans--Long
Beach Home Equity Loans", or for inclusion in other offering
material such publicly available information regarding Long
Beach, its underwriting standards, lending activities and loan
sales, production, and servicing and collection practices, and
any similar nonpublic, unaudited financial information and a
computer tape with respect to the pool information;
(h) Letters from at least two nationally recognized statistical
rating agencies rating the Class A and Class A-IO Certificates in
the highest rating category; and
(i) Such further information, certificates, opinions and documents as
the Purchaser, MBIA, the Rating Agencies or the Underwriter may
reasonably request.
SECTION 10. COSTS. The Responsible Party shall pay (or shall reimburse
the Purchaser or any other Person to the extent that the Purchaser or such other
Person shall pay) all costs and expenses incurred in connection with the
transfer and delivery of the Home Equity Loans, including without limitation,
recording fees, fees for title policy endorsements and continuations and the
fees for recording assignments of mortgage. Long Beach shall pay the fees and
expenses of Long Beach's in-house accountants and in-house attorneys, the costs
and expenses incurred in connection with producing Long Beach's loan loss,
foreclosure and delinquency experience, and the costs and expenses incurred in
connection with obtaining the documents referred to in Sections 9(d) and 9(e)
hereof. The Seller shall pay (or shall reimburse the Purchaser or any other
Person to the extent that the Purchaser or such other Person shall pay) the
costs and expenses of printing (or otherwise reproducing) and delivering this
Agreement, the Pooling and Servicing Agreement, the Certificates, the
prospectus, prospectus supplement, the Insurance Agreement and other related
documents, the initial fees, costs and expenses of the Trustee, the initial
fees, costs and expenses of MBIA, the fees and expenses of the Seller's counsel
in connection with the preparation of all documents relating to the
securitization of the Home Equity Loans, the filing fee charged by the
Securities and Exchange Commission for registration of the Certificates, the
cost of outside special counsel that may be required for Long Beach, the cost of
obtaining the documents referred to in Section 9(g) hereof and the fees charged
by any rating agency to rate the Certificates. All other costs and expenses in
connection with the transactions contemplated hereunder shall be borne by the
party incurring such expense. The Seller shall pay to the Trustee any amounts
payable by it pursuant to Section 2.05 of the Pooling and Servicing Agreement.
SECTION 11. SERVICING. The Seller has represented to the Purchaser
that the Home Equity Loans are being serviced under the Servicing Agreement (the
"Servicing Agreement") dated as of September 1, 1998 between the Seller and Long
Beach, and it is understood and agreed by and among the Seller, Long Beach and
the Purchaser that the interim servicing arrangements under the Servicing
Agreement will be superseded by the servicing arrangements set forth in the
Pooling and Servicing Agreement.
SECTION 12. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The sale
and delivery on the Closing Date of the Initial Home Equity Loans and on each
Subsequent Transfer Date of the related Subsequent Home Equity Loans described
on the Schedule of Home Equity Loans in accordance with the terms and conditions
of this Agreement is mandatory. It is specifically understood and agreed that
each Home Equity Loan is unique and that an award of money damages would be
insufficient to compensate the Purchaser for the losses and damages incurred by
the Purchaser in the event of the Seller's failure to deliver the Home Equity
Loans on or before the Closing Date or Subsequent Transfer Date, as applicable.
The Seller hereby grants to the Purchaser a lien on and a continuing security
interest in the Seller's interest in each Home Equity Loan and each document and
instrument evidencing each such Home Equity Loan to secure the performance by
the Seller of its obligation hereunder, and the Seller agrees that it holds such
Home Equity Loans in custody for the Purchaser, subject to the Purchaser's (i)
right to reject any Home Equity Loan to the extent permitted by this Agreement,
and (ii) obligation to deliver or cause to be delivered the consideration for
the Home Equity Loans pursuant to Section 8 hereof. Any Home Equity Loans
rejected by the Purchaser shall concurrently therewith be released from the
security interest created hereby. The Seller agrees that, upon acceptance of the
Home Equity Loans by the Purchaser or its designee and delivery of payment to
the Seller, that its security interest in the Home Equity Loans shall be
released. All rights and remedies of the Purchaser under this Agreement are
distinct from, and cumulative with, any other rights or remedies under this
Agreement or afforded by law or equity and all such rights and remedies may be
exercised concurrently, independently or successively.
Notwithstanding the foregoing, if on the Closing Date, each of the
conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or caused to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Home Equity Loans, if delivery to
the Purchaser has occurred and the security interest created by this Section 12
shall be deemed to have been released.
SECTION 13. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered to or mailed by registered mail, postage prepaid, or transmitted by
telex or telegraph and confirmed by a similar mailed writing, if to the
Purchaser, addressed to the Purchaser at 11 Madison Avenue, New York, New York
10010, Attention: Secretary, or such other address as may hereafter be furnished
to the Seller and Long Beach in writing by the Purchaser; if to the Seller,
addressed to the Seller at 11 Madison Avenue, New York, New York 10010,
Attention: Secretary, or to such other address as the Seller may designate in
writing to the Purchaser and Long Beach; and if to Long Beach, addressed to Long
Beach at 1100 Town and Country Road, Orange, California 92668, Attention: James
J. Sullivan, or to such other address as Long Beach may designate in writing to
the Purchaser and the Seller.
SECTION 14. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement which is prohibited or which is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement which
is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Home Equity Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
SECTION 15. AGREEMENT OF PARTIES. Long Beach, the Seller and the
Purchaser each agree to execute and deliver such instruments (including, without
limitation, UCC financing statements and continuation statements) and take such
actions as either of the others may, from time to time, reasonably request in
order to effectuate the purpose and to carry out the terms of this Agreement and
the Pooling and Servicing Agreement.
SECTION 16. SURVIVAL. (a) The Seller agrees that the representations,
warranties and agreements made by it herein and in any certificate or other
instrument delivered pursuant hereto shall be deemed to be relied upon by the
Purchaser and the Certificate Insurer, notwithstanding any investigation
heretofore or hereafter made by the Purchaser or the Certificate Insurer or on
either of their behalf, and that the representations, warranties and agreements
made by the Seller herein or in any such certificate or other instrument shall
survive the delivery of and payment for the Home Equity Loans and shall continue
in full force and effect, notwithstanding any restrictive or qualified
endorsement on the Notes and notwithstanding subsequent termination of this
Agreement, the Pooling and Servicing Agreement or the Trust.
(b) Long Beach agrees that the representations, warranties and
agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the Seller, the
Purchaser and the Certificate Insurer, notwithstanding any investigation
heretofore or hereafter made by the Seller, the Purchaser or the Certificate
Insurer or on the behalf of any of them, and that the representations,
warranties and agreements made by Long Beach herein or in any such certificate
shall continue in full force and effect, notwithstanding subsequent termination
of this Agreement, the Pooling and Servicing Agreement or the Trust.
SECTION 17. INDEMNIFICATION. (a) (i) Long Beach agrees to indemnify
and hold harmless the Purchaser, each of its directors, each of its officers who
have signed the Registration Statement on Form S-3, Registration Statement
number 333-64351 (the "Registration Statement"), each person, if any, who
controls the Purchaser within the meaning of the Securities Act of 1933, as
amended (the "1933 Act") (each an "Indemnified Party"), against any and all
losses, claims, damages or liabilities, joint and several, to which any
Indemnified Party may become subject, under the 1933 Act or otherwise, and will
reimburse each Indemnified Party for any legal or other expenses incurred by the
Indemnified Party in connection with investigating or defending any such loss,
claim, damage, liability or action insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Prospectus Supplement dated July 9, 1999 (the "Prospectus Supplement"),
as amended or supplemented, relating to the public offering of the Certificates,
representing interests in the Home Equity Loans, or in any other offering
document (the "Private Placement Memorandum") relating to the offering by the
Purchaser or an affiliate thereof, of the Certificates, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission relates to information set forth in the Prospectus Supplement
under the captions "The Servicer" and "Origination of the Home Equity
Loans--Long Beach Home Equity Loans" (the "Long Beach Information") or (ii)
errors in the pool information provided on the computer tape delivered by Long
Beach to the Seller or the Purchaser (the "Pool Information"). Long Beach's
liability under this Section 17 shall be in addition to any other liability Long
Beach may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless Long Beach,
its officers and its directors, and each person who controls the Seller within
the meaning of either the 1933 Act against any and all losses, claims, damages
or liabilities, joint or several, to which they may become subject under the
1933 Act or otherwise, and will reimburse Long Beach and each such controlling
person for any legal or other expenses reasonably incurred by such Long Beach
and each such controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Purchaser Information in the Prospectus Supplement, the
Prospectus or any Purchaser Information in any Private Placement Memorandum, or
in any revision or amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading. The "Purchaser Information" shall
consist of all information in the Prospectus Supplement or any Private Placement
Memorandum other than Long Beach Information or any statements derived from an
inaccuracy in the Pool Information. The Purchaser's liability under this Section
17 shall be in addition to any other liability the Purchaser may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either Section 17(a) or 17(b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm for all such indemnified parties.
Such firm shall be designated in writing by the Purchaser, in the case of
parties indemnified pursuant to clause 17(a) and by Long Beach, in the case of
parties indemnified pursuant to clause 17(b). The indemnifying party may, at its
option, at any time upon written notice to the indemnified party, assume the
defense of any proceeding and may designate counsel satisfactory to the
indemnified party in connection therewith provided that the counsel so
designated would have no actual or potential conflict of interest in connection
with such representation. Unless it shall assume the defense of any proceeding,
the indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. If the indemnifying party assumes the defense of
any proceeding, it shall be entitled to settle such proceeding with the consent
of the indemnified party or, if such settlement provides for release of the
indemnified party in connection with all matters relating to the proceeding
which have been asserted against the indemnified party in such proceeding by the
other parties to such settlement, without the consent of the indemnified party.
(d) If the indemnification provided for in this Section 17 is
unavailable to an indemnified party under Section 17(a) or 17(b) hereof or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities, in
such proportion as is appropriate to reflect the relative fault of the
indemnified and indemnifying parties in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
indemnified and indemnifying parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Purchaser and Long Beach agree that it would not be just and
equitable if contribution pursuant to Section 17 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the considerations referred to in Section 17(d) above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in this Section 17 shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim, except where the indemnified party is required to bear
such expenses pursuant to this Section 17, which expenses the indemnifying party
shall pay as and when incurred, at the request of the indemnified party, to the
extent that the indemnifying party will be ultimately obligated to pay such
expenses. In the event that any expenses so paid by the indemnifying party are
subsequently determined to not be required to be borne by the indemnifying party
hereunder, the party which received such payment shall promptly refund the
amount so paid to the party which made such payment. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 17 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by the Purchaser
or any person controlling the Purchaser or by or on behalf of Long Beach and
their respective directors or officers or any person controlling Long Beach, and
(iii) acceptance of and payment for any of the Certificates.
SECTION 18. TERMINATION OF OBLIGATIONS. The Purchaser may terminate
its obligations hereunder by notice to the Seller at any time before delivery of
and payment of the purchase price for the Home Equity Loans and prior to the
issuance of the Certificate Insurance Policies if: (i) any of the conditions set
forth in Section 8 and 9 hereof are not satisfied when and as provided therein;
(ii) there shall have been the entry of a decree or order by a court or agency
or supervisory authority having jurisdiction in the premises for the appointment
of a conservator, receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or relating
to the Seller or Long Beach, or for the winding up or liquidation of the affairs
of the Seller or Long Beach; (iii) there shall have been the consent by the
Seller or Long Beach to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Seller or Long Beach or
of or relating to substantially all of the Mortgaged Property of the Seller or
Long Beach; (iv) any purchase and assumption agreement with respect to the
Seller or substantially all of the assets and Mortgaged Properties of the Seller
shall have been entered into; or (v) a Termination Event shall have occurred.
The termination of the Purchaser's obligations hereunder shall not terminate the
Purchaser's rights hereunder or its right to exercise any remedy available to it
at law or inequity. A "Termination Event" means the existence of any one or more
of the following conditions:
(a) a stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose
shall have been initiated or threatened by the Securities and Exchange
Commission; or
(b) subsequent to the execution and delivery of this Agreement, a
downgrading, or public notification of a possible change, without
indication of direction, shall have occurred in the rating afforded
any of the debt securities or claims paying ability of any person
providing any form of credit enhancement for any of the Certificates,
by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2)
under the 1933 Act; or
(c) subsequent to the execution and delivery of this Agreement, there
shall have occurred an adverse change in the condition, financial or
otherwise, in the earnings, affairs, regulatory situation or business
prospects of the Seller or Long Beach reasonably determined by the
Purchaser to be material;
(d) or subsequent to the date of this Agreement there shall have
occurred any of the following: (i) any suspension or limitation of
trading in securities generally on the New York Stock Exchange or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of Long Beach on any exchange
or in the over-the-counter market or a suspension or material
limitation in trading in securities substantially similar to the
Certificates; (ii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State
authorities; or (iii) the engagement by the United States in
hostilities, or the escalation of such hostilities, or any calamity or
crisis, if the effect of any such event specified in this clause (iii)
in the reasonable judgment of the Purchaser makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Certificates on the terms and in the manner contemplated in the
Prospectus Supplement.
SECTION 19. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES,
OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF) AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES
HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.
SECTION 20. MISCELLANEOUS. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto, the Certificate Insurer and their respective successors and
assigns. This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought and with the prior written
consent of the Certificate Insurer. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
It is the express intent of the parties hereto that the conveyance of
the Home Equity Loans by the Seller to the Purchaser as provided in Section 4
hereof be, and be construed as, a sale of the Home Equity Loans by the Seller to
the Purchaser and not as a pledge of the Home Equity Loans by the Seller to the
Purchaser to secure a debt or other obligation of the Seller. However, in the
event that, notwithstanding the aforementioned intent of the parties, the Home
Equity Loans are held to be property of the Seller, then, (a) it is the express
intent of the parties that such conveyance be deemed a pledge of the Home Equity
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller and (b) (1) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (2) the conveyance provided for in Section 4 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the Home Equity Loans
and all amounts payable to the holders of the Home Equity Loans in accordance
with the terms thereof and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Principal and Interest
Account whether in the form of cash, instruments, securities or other property;
(3) the possession by the Purchaser or its agent of Notes, the related Mortgages
and such other items of property that constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the New York Uniform Commercial Code; and (4) notifications to persons
holding such property, and acknowledgments, receipts or confirmations from
persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Purchaser for the purpose of perfecting
such security interest under applicable law. Any assignment of the interest of
the Purchaser pursuant to Section 4(d) hereof shall also be deemed to be an
assignment of any security interest created hereby. The Seller and the Purchaser
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Home Equity Loans, such security interest would be deemed to be
a perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement and the Pooling and
Servicing Agreement.
SECTION 21. THIRD PARTY BENEFICIARY. Each of the Certificate Insurer,
the Trustee and R.V.I Guaranty Co., Ltd. shall be a third party beneficiary
hereof and shall be entitled to enforce the provisions hereof as if a party
hereto, except the provisions of Section 17. This provision shall not limit
waiver, enforcement and consent powers that the Certificate Insurer has except
as specifically agreed in a separate letter agreement between such parties or as
otherwise agreed between the Certificate Insurer and R.V.I. Guaranty Co., Ltd.
and the parties may perform in accordance with such powers.
<PAGE>
IN WITNESS WHEREOF, the Purchaser, the Seller and Long Beach have
caused their names to be signed by their respective officers thereunto duly
authorized as of the date first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE
CAPITAL LLC
By: /s/ Fiachra O'Driscoll
-------------------------
Name: Fiachra O'Driscoll
Title: Vice President
ASSET BACKED SECURITIES CORPORATION
By: /s/ Fiachra O'Driscoll
--------------------------
Name: Fiachra O'Driscoll
Title: Vice President
LONG BEACH MORTGAGE COMPANY
By: /s/ Jeffrey A. Sorensen
-----------------------------
Name: Jeffrey A. Sorensen
Title: Vice President
<PAGE>
EXHIBIT 1
Pool Characteristics of the Initial Home Equity Loans as delivered on
the Closing Date:
All percentages set forth herein are based upon the aggregate unpaid
principal balances of the Initial Home Equity Loans as of the Initial Cut-Off
Date.
(1) No Home Equity Loan had a Loan-to-Value Ratio at origination in
excess of 90.000%;
(2) Reserved;
(3) Each Mortgaged Property is located in one of the states of
Alabama, Alaska, Arizona, Arkansas, California, Colorado,
Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri,
Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico,
New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon,
Pennsylvania, Rhode Island, South Carolina, South Dakota,
Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington
D.C., West Virginia, Wisconsin and Wyoming;
(4) None of the Home Equity Loans (measured by outstanding Loan
Balance as of the Cut-Off Date) are secured by a leasehold
estate;
(5) No more than 4.00% of the Home Equity Loans (measured by
outstanding Loan Balance as of the Cut-Off Date) are secured by
condominium units; and all condominium Home Equity Loans have
been originated on a form acceptable to FNMA or FHLMC with such
riders as have been acceptable to FNMA or FHLMC, as the case may
be;
(6) No more than 3.22% of the Home Equity Loans (measured by
outstanding Loan Balance as of the Cut-Off Date) are secured by
two- to four-family dwellings. No more than .15% of the Home
Equity Loans (measured by outstanding Loan Balance as of the
Cut-Off Date) are secured by town houses. No more than 1.70% of
the Home Equity Loans (measured by outstanding Loan Balance as of
the Cut-Off Date) are secured by Manufactured Housing. No more
than 6.55% of the Home Equity Loans (measured by outstanding Loan
Balance as of the Cut-Off Date) are secured by dwelling units in
PUDs. Approximately 83.50% of the Home Equity Loans (measured by
outstanding Loan Balance as of the Cut-Off Date) are secured by
one-family dwellings;
(7) No Home Equity Loan had a principal balance in excess of $875,000
at origination;
(8) Each Home Equity Loan was originated on or after September 1997
and each Home Equity Loan has a next Adjustment Date no later
than April 2002;
(9) On the basis of representations made by the Mortgagors in their
loan applications, no more than 5.47% of the Home Equity Loans
are secured by investor Mortgaged Properties and at least 93.83%
of the owner-occupied Home Equity Loans are secured by
owner-occupied Mortgaged Properties which are primary residences
(in each case measured by outstanding Loan Balance as of the
Cut-Off Date);
(10) The Coupon Rates borne by the Home Equity Loans as of the Cut-Off
Date ranged from 6.49% per annum to 14.25% per annum and the
weighted average Coupon as of the Cut-Off Date was 9.74% per
annum;
(11) As of the Cut-Off Date, 23.47% of the Home Equity Loans were
rate/term refinancings, 40.42% of the Home Equity Loans were cash
out refinancings and 36.10% of the Home Equity Loans were made to
purchase the related Mortgaged Properties, in each case measured
by outstanding Loan Balance as of the Cut-Off Date;
(12) The margins on the Home Equity Loans range from 4.00% to 10.90%
and the weighted average Margin as of the Cut-Off Date was
approximately 6.76%;
(13) At least 74.33% of the Home Equity Loans (measured by outstanding
Loan Balance as of the Cut-Off Date) were originated by Long
Beach under Long Beach's "Full Documentation" Home Equity Loan
program, no more than 6.17% of the Home Equity Loans (measured by
outstanding Loan Balance as of the Cut-Off Date) were originated
by Long Beach under Long Beach's "Fast Trac" Home Equity Loan
program, and no more than 19.50% of the Home Equity Loans
(measured by outstanding Loan Balance as of the Cut Off Date)
were originated by Long Beach under Long Beach's "Stated Income
Documentation" Home Equity Loan program;
(14) With respect to Long Beach's underwriting risk categories,
56.15%, 14.01%, 12.84%, 11.07% and 5.94% of the Home Equity Loans
constitute A- Risk Home Equity Loans, B Risk Home Equity Loans,
B- Risk Home Equity Loans, C Risk Home Equity Loans and D Risk
Home Equity Loans, respectively, in each case measured by
outstanding Loan Balance as of the Cut-Off Date; and
(15) Home Equity Loan exceptions referred to in Section 6(a)(ii) are
set forth below:
None.
<PAGE>
EXHIBIT 2
FORM OF MORTGAGE NOTE AND MORTGAGE/DEED OF TRUST
[NOT INCLUDED HEREIN]
<PAGE>
EXHIBIT 3
[RESERVED]
<PAGE>
EXHIBIT 4
[RESERVED]
<PAGE>
EXHIBIT 5
[RESERVED]
<PAGE>
EXHIBIT 6
[FORM OF OFFICER'S CERTIFICATE OF THE ORIGINATOR]
Long Beach Mortgage Company
Officer's Certificate
I, ____________________________, hereby certify that I am the duly
elected _____________________________________, of Long Beach Mortgage Company, a
Delaware corporation (the "Company"), and further certify, on behalf of the
Company as follows:
1. Attached hereto as Attachment I is a true and correct copy of the
Certificate of Incorporation and By-laws of the Company as in full force and
effect on the date hereof. No event has occurred since ________________ which
has affected the good standing of the Company under the laws of the State of
Delaware
2. No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Company are pending or contemplated.
3. Each person who, as an officer or attorney-in-fact of the Company,
signed (a) the Mortgage Loan Purchase Agreement (the "Mortgage Loan Purchase
Agreement") dated as of June 1, 1999 among the Company, Credit Suisse First
Boston Mortgage Capital LLC and Asset Backed Securities Corporation (the
"Purchaser"), or (b) any other document delivered prior hereto or on the date
hereof in connection with the transactions contemplated by the Mortgage Loan
Purchase Agreement and the Pooling and Servicing Agreement dated as of June 1,
1999 among Purchaser, the Company and The Chase Manhattan Bank (the "Pooling
Agreement") was, at the respective times of such signing and delivery, and is as
of the date hereof, duly elected or appointed, qualified and acting as such
officer or attorney-in-fact, and the signatures of such persons appearing on
such documents are their genuine signatures.
4. Attached hereto as Attachment II is a true and correct copy of the
resolutions duly adopted by the board of directors of the Company on , 1999 (the
"Resolutions") with respect to the transactions contemplated by the Mortgage
Loan Purchase Agreement and the Pooling Agreement; said Resolutions have not
been amended or modified, annulled or revoked and are in full force and effect
on the date hereof.
5. All of the representations and warranties of the Company contained
in the Mortgage Loan Purchase Agreement are true and correct in all material
respects as of the Closing Date, and no event has occurred which, with notice or
the passage of time or both, would constitute a default under the Mortgage Loan
Purchase Agreement.
6. The Company has performed all of its duties and has satisfied all
of the material conditions on its part to be performed or satisfied prior to the
Closing Date.
All capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Pooling Agreement.
<PAGE>
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated: July 21, 1999
(Seal) LONG BEACH MORTGAGE COMPANY
By:
-----------------------------
Name:
Title:
I, ________________________________, [Assistant] Secretary of Loan
Beach Mortgage Company, hereby certify that
_____________________________________ is the duly elected, qualified and acting
______________________________________________ of Long Beach Mortgage Company
and that the signature appearing above is his genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: July 21, 1999
LONG BEACH MORTGAGE COMPANY
By:
----------------------------
Name:
Title:
<PAGE>
EXHIBIT 7
[FORM OF OPINION OF COUNSEL TO THE ORIGINATOR]
TO: Addressees on Schedule A
July 21, 1999
Re: Asset Backed Securities Corporation
ASSET BACKED CERTIFICATES' SERIES 1999-LB1
Ladies and Gentlemen:
I am General Counsel of Long Beach Mortgage Company (the "Company")
and have acted as counsel to the Company in connection with the servicing by the
Company of residential first lien Home Equity Loans pursuant to the Pooling and
Servicing Agreement, dated as of June 1, 1999 (the "Pooling and Servicing
Agreement"), among Asset Backed Securities Corporation, as depositor (the
"Purchaser"), the Company, and The Chase Manhattan Bank, as trustee (the
"Trustee"), relating to the issuance and sale by the Purchaser of Asset Backed
Certificates, Series 1999-LB1 (the "Certificates"). In connection with the sale
and servicing of the Home Equity Loans, the Company has entered into the
Servicer Insurance Agreement, dated as of ________ __, 1999, between MBIA
Insurance Corporation ("MBIA") and the Company (the "Insurance Agreement"), the
Master Loan Purchase Agreement , dated as of September 1, 1998 between the
Company and the Seller (the "Master Agreement") and the Mortgage Loan Purchase
Agreement , dated as of June 1, 1999, among the Purchaser, the Company and
Credit Suisse First Boston Mortgage Capital LLC (the "Mortgage Loan Purchase
Agreement"); the Mortgage Loan Purchase Agreement, the Master Agreement, the
Insurance Agreement and the Pooling and Servicing Agreement, the "Agreements").
Capitalized terms not defined herein have the meanings set forth in the
Agreements.
As such counsel, I have examined original or reproduced or certified
copies of the certificate of incorporation and bylaws of the Company, as amended
to date, records of actions taken by the Board of Directors of the Company and
copies of the Agreements, the Prospectus Supplement, dated July 9, 1999 (the
"Prospectus Supplement"), to the Prospectus, dated December 17, 1998, relating
to the Offered Certificates. I have also examined such other documents, papers,
statutes and authorities as I deem necessary as a basis for the opinions
hereinafter set forth. In all such examinations made by me in connection with
this opinion, I have assumed the genuineness of all signatures and the
completeness and authenticity of all records and all documents submitted to me
as copies thereof. As to various matters of fact relevant to the opinions
hereinafter expressed, I have relied upon the representations and warranties
contained in the Agreements and statements and certificates of officers and
representatives of the Company. As to matters in Paragraph 5 below with respect
to which I opine based on my knowledge, I have relied solely upon inquiries made
to and responses received from officers and representatives of the Company and
the documents furnished to me by representatives of the Company, which documents
such representatives have informed me include the only material indentures,
agreements and instruments to which the Company is a party or by which it or any
of its properties or assets are bound.
In addition to the foregoing, I have assumed that, if the Trustee, the
Company or any Certificateholder seeks to enforce any of their respective rights
under the Agreements, they will do so only in good faith and only in
circumstances and in a manner in which it is commercially reasonable to do so.
In addition to rendering legal advice and assistance to the Company in
the course of the negotiation and preparation of the Agreements, involving,
among other things, discussions and inquiries concerning various legal matters
and the review of certain corporate records, documents and proceedings, I also
participated in conferences with representatives of the Purchaser and the
Company's independent certified public accountants, at which the contents of the
Prospectus Supplement and related matters were discussed and revised. I have
not, however, except with respect to matters expressly covered by this opinion,
independently verified the accuracy, completeness or fairness of the statements
contained in the Prospectus Supplement, and, due to the limitations inherent in
the information available to me and the nature and extent of my participation in
such conferences, I am unable to assume, and I do not assume, any responsibility
for the accuracy, completeness or fairness of such statements.
I express no opinion except as to (i) United States federal law and
(ii) the laws of the State of California.
Based upon and subject to the foregoing, I am of the opinion that:
1. The Company is duly authorized and qualified to transact any and
all business contemplated by the Agreements in any state in which a Mortgaged
Property securing a Home Equity Loan is located or is otherwise not required
under applicable law to effect such qualification and, in any event, is in
compliance with the doing business laws of any such State, to the extent
necessary to ensure the enforceability of each Home Equity Loan and the
servicing of the Home Equity Loans in accordance with the terms of the Pooling
and Servicing Agreement.
2. The Company has the power to engage in the transactions
contemplated by each and all of the Agreements and has all requisite power,
authority and legal right to execute and deliver the Agreements and any other
documents delivered in connection therewith and to perform and observe the terms
and conditions of such instruments.
3. Each of the Agreements has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement enforceable
in accordance with its respective terms against the Company, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally and by general equity principles regardless of whether such
enforcement is considered in a proceeding in equity or at law.
4. No consent, approval, authorization, license, permit or order of
any court or governmental agency or body is required for the execution, delivery
and performance by the Company of, or compliance by the Company with, any or all
of the Agreements or the consummation of the transactions contemplated by the
Agreements.
5. The execution and delivery of the Agreements by the Company, the
servicing of the Home Equity Loans by the Company, the consummation of any other
of the transactions contemplated by the Agreements and the fulfillment of or
compliance with the terms of the Agreements are in the ordinary course of
business of the Company and will not (A) result in a material breach of any term
or provision of the charter or by-laws of the Company or (B) materially conflict
with, result in a material breach, violation or acceleration of or result in a
material default under the terms of any other material agreement or instrument
of which I have knowledge, after due inquiry, to which the Company is a party or
by which it may be bound, or any statute, order or regulation applicable to the
Company of any court, regulatory body, administrative agency or governmental
body having jurisdiction over the Company; and the Company is not a party to,
bound by or in material breach or violation of any material indenture or other
material agreement or instrument of which I have knowledge, after due inquiry,
or subject to or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over it, which materially and adversely affects or, to the best of my knowledge,
will in the future materially and adversely affect, (x) the ability of the
Company to perform its obligations under the Agreements or (y) the business,
operations, financial condition, properties or assets of the Company taken as a
whole.
6. To the best of my knowledge, after due inquiry, there is no action,
suit, proceeding or investigation pending or threatened against the Company
which, in my judgment, either in any one instance or in the aggregate, may
result in any material adverse change in the business, operations, financial
condition, properties or assets of the Company or in any material impairment of
the right or ability of the Company to carry on its business substantially as
now conducted or in any material liability on the part of the Company or which
would draw into question the validity of the Agreements, the Certificates or the
Home Equity Loans or of any action taken or to be taken in connection with the
transactions contemplated thereby, or which would be likely to impair materially
the ability of the Company to perform its obligations under the terms of the
Agreements.
7. Based upon my participation, nothing has come to my attention that
has caused me to believe that the information contained in the Prospectus
Supplement in the Summary under the subheading "The Home Equity Loans" and under
the captions "The Servicer" and "Origination of The Home Equity Loans - Long
Beach Home Equity Loans" (but excluding the financial statements, the schedules
and other financial and statistical data included therein as to which I express
no opinion) includes an untrue statement of a material fact, or omits to state a
material fact as of the date hereof, necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
This opinion is solely for the benefit of the addressees hereof, and
may not be relied upon in any manner by any other person or entity.
Respectfully submitted,
<PAGE>
SCHEDULE A
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Standard and Poor's Rating Services, a division
of The McGraw-Hill Companies, Inc.
55 Water Street
New York, New York 10041-0003
Duff & Phelps Credit Rating Co.
55 East Monroe
Chicago, Illinois 60603
Asset Backed Securities Corporation
Credit Suisse First Boston Mortgage Capital LLC
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Long Beach Mortgage Company
1100 Town & Country Road
Orange, California 92868
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001-2697
R.V.I. Guaranty Co., Ltd.
20 Reid Street, 3rd Floor
Williams House
Hamilton HM HX, Bermuda
<PAGE>
Exhibit 8
SCHEDULE OF HOME EQUITY LOANS
[NOT INCLUDED HEREIN]
<PAGE>
Exhibit 9
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT, dated __________, 199_ (the "Subsequent
Transfer Date"), among Asset Backed Securities Corporation, a Delaware
corporation (the "Purchaser"), Long Beach Mortgage Company, a Delaware
corporation (the "Long Beach") and Credit Suisse First Boston Mortgage Capital
LLC, a Delaware limited liability company (the "Seller").
WITNESSETH:
WHEREAS, the Mortgage Loan Purchase Agreement, dated June 1, 1999 (the
"Mortgage Loan Purchase Agreement"), among the Seller, Long Beach and the
Purchaser contemplated the sale of Subsequent Home Equity Loans to the Purchaser
by the Seller; and
WHEREAS, the parties desire to consummate the purchase and sale of the
Subsequent Home Equity Loans identified on the related Schedule of Home Equity
Loans;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. For the consideration set forth in Paragraph 2 below, the Seller
does hereby sell, transfer, convey and assign to the Purchaser, without recourse
as to payment and without any representations or warranties express or implied
except as set forth in Paragraph 3 and Paragraph 4 hereof, and the Purchaser
does hereby purchase and acquire from the Seller, all right, title and interest
of the Seller in and to each Subsequent Home Equity Loan identified in the
Schedule of Home Equity Loans delivered by the Seller on the Subsequent Transfer
Date, including its Loan Balance, all items constituting a part of the Trust
with respect to the Subsequent Home Equity Loans and all collections in respect
of such Subsequent Home Equity Loans due after the first day of the month of the
Subsequent Transfer Date (the "Subsequent Cut-Off Date"). The transfer by the
Seller of the Subsequent Home Equity Loans set forth on the Schedule of Home
Equity Loans to the Purchaser is absolute and is intended by all parties hereto
to be treated as a sale by the Seller.
2. The cash consideration for the Subsequent Home Equity Loans sold
hereby shall be $__________, and representing the aggregate outstanding
principal balance of the Subsequent Home Equity Loans added to the Trust, as of
the Subsequent Cut-Off Date.
3. The Seller hereby makes the representations and warranties set
forth in Sections 5(b)(viii), (xi), (xiii), (xiv), (xv) and (xvi) and 6 of the
Mortgage Loan Purchase Agreement as of the Subsequent Transfer Date with respect
to the Subsequent Home Equity Loans being conveyed hereby except that references
in said Sections 5(b)(viii), (xi), (xiii), (xiv), (xv) and (xvi) and 6 to
Initial Home Equity Loans, the Closing Date and the Cut-Off Date shall refer to
the applicable Subsequent Home Equity Loans, Subsequent Transfer Date and
Subsequent Cut-Off Date, respectively.
4. The Seller hereby represents that (a) it is solvent, will not be
rendered insolvent as a result of the sale of the Subsequent Home Equity Loans
sold pursuant to this Subsequent Transfer Agreement and is not aware of any
pending insolvency and (b) all of the conditions precedent to the transfer
accomplished hereby set forth in Section 1(c) of the Mortgage Loan Purchase
Agreement and Section 3.07 of the Pooling and Servicing Agreement have been
satisfied.
5. Long Beach and the Seller acknowledge and agree that the Purchaser
intends to assign the Purchaser's rights hereunder to the Trustee pursuant to
the Pooling and Servicing Agreement. Long Beach and the Seller hereby consent to
such assignment and agree that the Trustee, as ultimate assignee, may enforce
the rights of the Purchaser hereunder directly against Long Beach and the Seller
for the benefit of the Certificateholders and the Certificate Insurer and that
the Certificate Insurer may enforce such rights directly.
6. This Subsequent Transfer Agreement shall be construed in accordance
with the laws of the State of New York and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws,
without giving effect to principles of conflicts of law.
7. This Subsequent Transfer Agreement may be signed in counterparts,
each of which shall be an original but all of which, taken together, shall
constitute one and the same instrument.
8. Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Mortgage Loan Purchase Agreement.
9. The Certificate Insurer shall be a third-party beneficiary of this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement by their duly authorized officers as of the date first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE
CAPITAL LLC
By:_______________________________
Name:
Title:
ASSET BACKED SECURITIES CORPORATION
By:_______________________________
Name:
Title:
LONG BEACH MORTGAGE COMPANY
By:_______________________________
Name:
Title:
