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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest Event
Reported) December 20, 1996
LEHMAN ABS CORPORATION, (as depositor under the Pooling and Servicing
Agreement, dated as of November 30, 1996, which forms Champion Home
Equity Loan Trust 1996-4 which will issue the Champion Home Equity
Loan Trust 1996-4, Home Equity Loan Asset-Backed Certificates, Series
1996-4).
LEHMAN ABS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 333-14293 13-3447441
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Three World Financial Center
200 Vesey Street
New York, New York 10285
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 526-7000
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Item 5. Other Events.
Filing of Capital Markets Assurance Corporation Policy
Reference is made to the Champion Home Equity Loan Trust 1996-4, Home
Equity Loan Asset-Backed Certificates, Series 1996-4, Class A-1, Class A-2,
Class A-3, Class A-4 and Class A-5 (the "Class A Certificates") issued pursuant
to a pooling and servicing agreement, dated as of November 30, 1996 by and
among the Registrant, as Depositor, Champion Mortgage Co., Inc., as Seller,
Champion Mortgage Servicing Corp., as Servicer and The Bank of New York, as
Trustee. Principal payments and accrued and unpaid interest due on the Class A
Certificates will be unconditionally and irrevocably guaranteed by a policy
issued by Capital Markets Assurance Corporation (the "CapMAC Policy").
The Registrant is filing a form of the CapMAC Policy in connection
with the Class A Certificates. The form of CapMAC Policy is attached hereto as
Exhibit 1.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1. Form of Policy.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LEHMAN ABS CORPORATION
By: /s/ Martin P. Harding
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Martin P. Harding
Managing Director
Dated: December 20, 1996
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Exhibit Index
Exhibit Page
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1. Form of CapMAC Policy. 5
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CAPITAL MARKETS ASSURANCE CORPORATION
[FORM OF SURETY BOND]
[DATE]
Surety Bond No.SB10928
Re: CHAMPION HOME EQUITY LOAN TRUST 1996-4 (the
"Trust"), Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4
Certificates and Class A-5 Certificates
(collectively, the "Class A Certificates")
Insured Obligation: Obligation of the Trust to pay up to $100,000,000
in aggregate principal amount of the Class A
Certificates, plus accrued and unpaid interest on
the Class A Certificates
Beneficiary: The Bank of New York and its permitted successors
and assigns, as Trustee of the Trust
For consideration received, CAPITAL MARKETS ASSURANCE CORPORATION
("CapMAC"), hereby unconditionally and irrevocably guarantees to the
Beneficiary, payment of the Insured Obligation, subject to the terms of this
surety bond (the "Surety Bond"). CapMAC agrees to pay to the Beneficiary an
amount (the "Payment Amount") equal to the sum of:
(a) on any Distribution Date, the amount by which
the aggregate of the Class Interest Distributions with
respect to the Class A Certificates for such Distribution
Date exceeds the amount on deposit in the Distribution
Account available to be distributed therefor (excluding
Insured Payments) on such Distribution Date pursuant to
Sections 5.01(a)(i)(2), 5.01(a)(ii)(2) and 5.01(a)(iii), plus
(b) on any Distribution Date other than the Final
Scheduled Distribution Date, the amount by which the
Aggregate Class A Principal Balance for each Certificate
Group as of such Distribution Date (after taking into account
distributions (excluding Insured Payments) allocable to
principal on such Distribution Date pursuant to Sections
5.01(a)(i)(3), 5.01(a)(ii)(3) and 5.01(a)(iii)) exceeds
the sum
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of (i) the related Loan Group Principal Balance and (ii)
the amount on deposit in the Pre-Funding Account (exclusive
of any reinvestment earnings) allocable to such Loan Group,
each as of the end of the related Due Period;
(c) on the Final Scheduled Distribution Date, with
respect to the Group 1 Certificates, an amount equal to the
Aggregate Class A Principal Balance for such Group 1
Certificates and with respect to the Group 2 Certificates, an
amount equal to the Aggregate Class A Principal Balance for
such Group 2 Certificates (in each case, after taking into
account distributions allocable to principal on such
Distribution Date).
(the amount set forth in (a), the "Guaranteed Interest Payment Amount") and
(the sum of the amounts set forth in (b) and (c) the "Guaranteed Principal
Payment Amount").
If the payment of the Guaranteed Interest Payment Amount or the
Guaranteed Principal Payment Amount pursuant hereto is voided (a "Preference
Event") under any applicable bankruptcy, insolvency, receivership or similar
law in an Insolvency Proceeding, and, as a result of such a Preference Event,
the Beneficiary is required to return such voided payment, or any portion of
such voided payment, made in respect of the Certificates (an "Avoided
Payment"), CapMAC will pay on the guarantee described in the first paragraph
hereof, an amount equal to such Avoided Payment, irrevocably, absolutely and
unconditionally and without the assertion of any defenses to payment, including
fraud in inducement or fact or any other circumstances that would have the
effect of discharging a surety in law or in equity, upon receipt by CapMAC from
the Beneficiary of (x) a certified copy of a final order of a court exercising
jurisdiction in such Insolvency Proceeding to the effect that the Beneficiary
is required to return any such payment or portion thereof prior to the
Termination Date (as defined below) of this Surety Bond because such payment
was voided under applicable law, with respect to which order the appeal period
has expired without an appeal having been filed (the "Final Order"), (y) an
assignment, in form reasonably satisfactory to CapMAC, irrevocably assigning to
CapMAC all rights and claims of such Beneficiary relating to or arising under
such Avoided Payment and (z) a Notice for Payment in the form of Exhibit A
hereto appropriately completed and executed by the Beneficiary. Such payment
shall be disbursed to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy named in the Final Order and not to the Beneficiary
directly.
Notwithstanding the foregoing, in no event shall CapMAC be obligated
to make any payment in respect of any Avoided Payment, which payment represents
a payment of the principal amount of the Class A Certificates, prior to the
time CapMAC would have been required to make a payment in respect of such
principal pursuant to the first paragraph of this Surety Bond.
CapMAC shall make payments due in respect of Avoided Payments prior to
1:00 p.m. New York City time on the second Business Day following CapMAC's
receipt of the documents required under clauses (x) through (z) of the second
preceding paragraph. Any such documents received by CapMAC after 3:00 p.m. New
York City time on any Business Day or on any day that is not a Business Day
shall be deemed to have been received by CapMAC prior to 3:00 p.m.
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on the next succeeding Business Day. All payments made by CapMAC hereunder in
respect of Avoided Payments will be made with CapMAC's own funds.
In no event shall CapMAC be obligated to make any payments in respect
of principal on the Class A Certificates pursuant to any Notice for Payment (as
defined below) presented hereunder in an amount in excess of the $100,000,000
less the sum of all amounts theretofore paid in respect of principal on the
Class A Certificates pursuant to all Notices for Payment hereunder.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Pooling and Servicing Agreement,
dated as of November 30, 1996, by and among Lehman ABS Corporation, as
Depositor, Champion Mortgage Co., Inc., as Seller, Champion Mortgage Servicing
Corp., as Servicer and The Bank of New York, as Trustee (the "Pooling and
Servicing Agreement").
"Insolvency Proceeding" means the commencement, after the date hereof,
of any bankruptcy, insolvency, readjustment of debt, reorganization,
marshalling of assets and liabilities or similar proceedings by or against any
Person, or the commencement, after the date hereof, of any proceedings by or
against any Person for the winding up or liquidation of its affairs, or the
consent after the date hereof to the appointment of a trustee, conservator,
receiver or liquidator in any bankruptcy, insolvency, readjustment of debt,
reorganization, marshalling of assets and liabilities or similar proceedings of
or relating to any person.
CapMAC will pay or cause to be paid to the Beneficiary, irrevocably
and unconditionally and without the prior assertion of any defenses to payment,
including fraud in inducement or fact, the amount demanded in a Notice for
Payment (as defined below), not to exceed the Payment Amount on the
Distribution Date relating to such Notice for Payment, in immediately available
funds on the later of (a) 11:00 a.m. New York City time on the Business Day
immediately preceding a Distribution Date and, (b) 11:00 a.m. New York City
time on the second Business Day next succeeding presentation to CapMAC (as
hereinafter provided) of a notice for payment in the form of Exhibit A hereto
("Notice for Payment"), appropriately completed and executed by the
Beneficiary.
A Notice for Payment under this Surety Bond must be received by CapMAC
by 2:00 p.m. New York City time on any Business Day by (a) delivery of the
original Notice for Payment to CapMAC at its address set forth below, or (b)
facsimile transmission of the original Notice for Payment to CapMAC at its
facsimile number set forth below. If presentation is made by facsimile
transmission, the Beneficiary shall (i) simultaneously confirm transmission by
telephone to CapMAC at its telephone number set forth below, and (ii) as soon
as reasonably practicable, deliver the original Notice for Payment to CapMAC at
its address set forth below. Any Notice for Payment received by CapMAC after
2:00 p.m. New York City time, on a Business Day, or on any day that is not a
Business Day, will be deemed to be received by CapMAC at 9:00 a.m., New York
City time, on the next succeeding Business Day.
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CapMAC hereby waives and agrees not to assert any and all rights to
require the Beneficiary to make demand on or to proceed against any person,
party or security prior to demanding payment under this Surety Bond.
No defenses, set-offs and counterclaims of any kind available to
CapMAC so as to deny payment of any amount due in respect of this Surety Bond
will be valid and CapMAC hereby waives and agrees not to assert any and all
such defenses, set-offs and counterclaims, including, without limitation, any
such rights acquired by subrogation, assignment or otherwise.
Any rights of subrogation acquired by CapMAC as a result of any
payment made under this Surety Bond shall, in all respects, be subordinate and
junior in right of payment to the prior indefeasible payment in full of all
amounts due the Trustee on account of payments due under the Certificates.
This Surety Bond is neither transferable nor assignable, except in
whole, but not in part, to a successor Trustee duly appointed and qualified
under the Pooling and Servicing Agreement. Such transfer and assignment shall
be effective upon receipt by CapMAC of a copy of the instrument effecting such
transfer and assignment signed by the transferor and by the transferee, and a
certificate, properly completed and signed by the transferor and the
transferee, in the form of Exhibit B hereto (which shall be conclusive evidence
of such transfer and assignment), and, in such case, the transferee instead of
the transferor shall, without the necessity of further action, be entitled to
all the benefits of and rights under this Surety Bond in the transferor's
place, provided that, in such case, the Notice for Payment presented hereunder
shall be a certificate of the transferee and shall be signed by one who states
therein that he is a duly authorized officer of the transferee.
All notices, presentations, transmissions, deliveries and
communications made by the Beneficiary to CapMAC with respect to this Surety
Bond shall specifically refer to the number of this Surety Bond and shall be
made to CapMAC at:
Capital Markets Assurance Corporation
885 Third Avenue, 14th Floor
New York, N.Y. 10022
Attention: Managing Director,
Credit Enhancement
Telephone: (212) 891-4271
Facsimile: (212) 755-5462
or such other address, officer, telephone number or facsimile number as CapMAC
may designate to the Beneficiary in writing from time to time. Each such
notice, presentation, delivery and communication shall be effective only upon
actual receipt by CapMAC.
The obligations of CapMAC under this Surety Bond are irrevocable,
primary, absolute and unconditional (except as expressly provided herein) and
neither the failure of the
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Beneficiary, the Seller, the Servicer, the Depositor or any other person to
perform any covenant or obligation in favor of CapMAC (or otherwise), nor the
failure or omission to make a demand permitted hereunder, nor the commencement
of any bankruptcy, debtor or other insolvency proceeding by or against the
Beneficiary, the Seller, the Servicer, the Depositor or any other person shall
in any way affect or limit CapMAC's obligations under this Surety Bond. If an
action or proceeding to enforce this Surety Bond is brought, the Beneficiary
shall be entitled to recover from CapMAC costs and expenses reasonably
incurred, including without limitation reasonable fees and expenses of counsel.
There shall be no acceleration payment due under this Surety Bond
unless such acceleration is at the sole option of CapMAC.
This Surety Bond and the obligations of CapMAC hereunder shall
terminate upon the date (the "Termination Date") which is one year and one day
following the earliest to occur of: (i) the Distribution Date occurring in
[ ], (ii) the receipt by CapMAC of written notice, together with the
original of this Surety Bond, from the Beneficiary substantially in the form of
Exhibit C hereto, stating that the Trust has been terminated in accordance with
the terms of the Pooling and Servicing Agreement, signed by the Beneficiary, and
(iii) the Distribution Date upon which final distribution on the Class A
Certificates is made; provided that, if an Insolvency Proceeding is existing by
or against the Seller, the Servicer or the Depositor during such one year and
one day period, then this Surety Bond and CapMAC's obligations hereunder shall
terminate on the date of the conclusion or dismissal of such Insolvency
Proceeding without continuing jurisdiction by the court in such Insolvency
Proceeding; provided further that this Surety Bond shall not terminate prior to
the date on which CapMAC has made all payments required to be made under the
terms of this Surety Bond in respect of such Avoided Payments.
This Surety Bond shall be returned to CapMAC upon the expiration of
its term.
This Surety Bond is not covered by the property/casualty insurance
fund specified in Article Seventy-six of the New York State insurance law.
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This Surety Bond sets forth in full the undertaking of CapMAC, and
shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment to any other agreement or
instrument, or by the merger, consolidation or dissolution of the Trust or any
other Person and may not be canceled or revoked prior to the time it is
terminated in accordance with the express terms hereof.
THIS SURETY BOND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, CapMAC has caused this Surety Bond to be executed
on the date first written above.
CAPITAL MARKETS ASSURANCE CORPORATION
By
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