- -------------------------------------------------------------------------------
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): March 12, 1999
LEHMAN ABS CORPORATION, (as depositor under the Sale and
Servicing Agreement, dated as of March 1, 1999)
LEHMAN ABS CORPORATION
(Exact name of registrant as specified in its charter)
-------------------------------------------------------
Delaware 333-39649 13-3447441
- -------------------------------- ------------- -------------------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation) File Number) Identification No.)
Three World Financial Center
200 Vesey Street
New York, New York 10022
--------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code (212) 526-7000
- -------------------------------------------------------------------------------
<PAGE>
Item 5. Other Events.
Filing of MBIA Insurance Corporation Insurance Policy
Reference is made to the Champion Home Equity Loan Trust 1999-1, Home
Equity Loan Asset-Backed Notes, Series 1999-1, Class A Notes, issued pursuant
to an indenture, dated as of March 1, 1999 between the Champion Home Equity
Loan Trust 1999-1 (the "Trust") and Harris Trust and Savings Bank, as
Indenture Trustee. Principal payments and accrued and unpaid interest due on
the Class A Notes will be unconditionally and irrevocably guaranteed by a
policy issued by MBIA Insurance Corporation (the "MBIA Policy").
The Registrant is filing a form of the MBIA Policy in connection with
the Class A Notes. The form of MBIA Policy is attached hereto as Exhibit 1.
Item 7. Financial Statements and Exhibits.
Information and Exhibits.
(a) Financial Statements of businesses acquired.
Not applicable.
(b) Pro Forma financial information.
Not applicable.
(c) Exhibit No. Description
1 Form of MBIA Policy
25 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended. (Certain
exhibits to Form T-1 are incorporated by reference
herein).
<PAGE>
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/ Samir A. Tabet
----------------------
Name: Samir A. Tabet
Title: Senior Vice-President
Dated: March 17, 1999
<PAGE>
Exhibit Index
Exhibit Page
1 Form of MBIA Policy......................................... 5
25 Form T-1.................................................... 11
<PAGE>
Exhibit 1: Form of MBIA Policy
[Date]
Policy No. [ ]
Re: CHAMPION HOME EQUITY LOAN TRUST 1999-1 (the
"Trust"), Class A Notes (the "Class A Notes")
and the Senior Interest Participation (the
"Senior Interest Participation")
Insured Obligation: Obligation of the Trust to pay up to $[ ]in
aggregate principal amount of the Class ANotes,
plus accrued and unpaid interest on the Class A
Notes and the Senior Interest Participation
Beneficiary: Harris Trust and Savings Bank and its permitted
successors and assigns, as Indenture Trustee of
the Trust
For consideration received, MBIA INSURANCE CORPORATION ("MBIA"), hereby
unconditionally and irrevocably guarantees to the Beneficiary, payment of the
Insured Obligation, subject to the terms of this policy (the "Policy"). MBIA
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 [Interest Distributions] with respect to the Class A
Notes and the Senior Interest Participation 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 [Section 5.01(a)(2)] of the Sale and Servicing Agreement (as
defined herein), plus
(b) on any Distribution Date other than the Final Scheduled
Distribution Date, the amount by which the Class APrincipal
Balance 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)(3) and 5.01(a)(5)] of the Sale and Servicing Agreement)
exceeds the Pool Principal Balance at the end of the related
Due Period;
(c) on the Final Scheduled Distribution Date, an amount equal
to the Class APrincipal Balance (after taking into account
distributions (excluding Insured Payments) 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 a payment of the Insured Obligation 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 Class A Notes or the Senior Interest
Participation (an "Avoided Payment"), MBIA 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 the Fiscal Agent from the Beneficiary of (w) 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 Policy 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"), (x) an opinion of counsel satisfactory
to MBIA that such order is final and not subject to appeal, (y) an assignment,
in form reasonably satisfactory to Mbia, irrevocably assigning to MBIA 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
(unless a Holder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final Order in
which case such payment shall be disbursed to the Beneficiary for distribution
to such Holder upon proof of such payment reasonably satisfactory to MBIA).
Notwithstanding the foregoing, in no event shall MBIA 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 Notes, prior to the time MBIA
would have been required to make a payment in respect of such principal
pursuant to the first paragraph of this Policy.
MBIA shall make payments due in respect of Avoided Payments prior to 1:00
p.m. New York City time on the Business Day following the Fiscal Agent's
receipt of the documents required under clauses (w) through (z) of the second
preceding paragraph. Any such documents received by the Fiscal Agent after
12:00 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 the Fiscal Agent prior
to 12:00 p.m. on the next succeeding Business Day. All payments made by MBIA
hereunder in respect of Avoided Payments will be made with MBIA's own funds.
In no event shall MBIA be obligated to make any payments in respect of
principal on the Class A Notes pursuant to any Notice for Payment (as defined
below) presented hereunder in an amount in excess of $[ ] less the sum of all
amounts theretofore paid in respect of principal on the Class A Notes 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 Sale and Servicing Agreement, dated as of
March 1, 1999, by and among Lehman ABS Corporation, as Depositor, Champion
Mortgage Co., Inc., as Seller and as Servicer, the Trust and Harris Trust and
Savings Bank, as Indenture Trustee (the "Sale 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 the Seller, the
Servicer, the Depositor or the Trust, or the commencement, after the date
hereof, of any proceedings by or against the Seller, the Servicer, the
Depositor or the Trust, 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 the Seller, the Servicer, the Depositor
or the Trust.
MBIA 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) 12:00 p.m. New York City time on the
Distribution Date and, (b) 12:00 p.m. New York City time on the third Business
Day next succeeding presentation to State Street Bank and Trust Company, N.A.,
as Fiscal Agent for MBIA or any successor fiscal agent appointed by MBIA (the
"Fiscal Agent") (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 Policy must be received by the Fiscal
Agent by 12:00 p.m. New York City time on any Business Day by (a) delivery of
the original Notice for Payment to the Fiscal Agent at its address set forth
below, or (b) facsimile transmission of the original Notice for Payment to the
Fiscal Agent at its facsimile number set forth below. If presentation is made
by facsimile transmission, the Beneficiary shall (i) simultaneously confirm
transmission by telephone to the Fiscal Agent at its telephone number set
forth below, and (ii) as soon as reasonably practicable, deliver the original
Notice for Payment to the Fiscal Agent at its address set forth below. Any
Notice for Payment received by the Fiscal Agent after 12:00 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 the Fiscal Agent at 9:00 a.m., New York City time, on
the next succeeding Business Day.
If any Notice for Payment received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making a claim hereunder,
it shall be deemed not to have been received by the Fiscal Agent, and MBIA or
the Fiscal Agent, as the case may be, shall promptly so advise the Indenture
Trustee, and the Indenture Trustee may submit an amended Notice for Payment.
The Fiscal Agent is the agent of MBIA only, and the Fiscal Agent shall in
no event be liable to the Holders for any acts of the Fiscal Agent or any
failure of MBIA to deposit or cause to be deposited sufficient funds to make
payments due under this Policy.
MBIA shall be subrogated to the rights of each Holder to receive payments
under the Class A Notes and the Senior Interest Participation to the extent of
any payment by MBIA hereunder.
Mbia 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 Policy.
No defenses, set-offs and counterclaims of any kind available to Mbia so
as to deny payment of any amount due in respect of this Policy will be valid
and Mbia 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 MBIA as a result of any payment made under this Policy shall, in
all respects, be subordinate and junior in right of payment to the prior
indefeasible payment in full of all amounts due the Indenture Trustee on
account of payments due under the Class A Notes and the Senior Interest
Participation.
This Policy is neither transferable nor assignable, except in whole, but
not in part, to a successor Indenture Trustee duly appointed and qualified
under the Sale and Servicing Agreement. Such transfer and assignment shall be
effective upon receipt by Mbia 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 Policy 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 Mbia with respect to this Policy shall specifically
refer to the number of this Policy and shall be made to Mbia at:
<PAGE>
MBIA Insurance Corporation
113 King Street
Armonk, N.Y. 10504
Attention: Insured Portfolio Management, Structured Finance
Telephone: (914) 273-4949
Facsimile: (914) 765-3163
or such other address, officer, telephone number or facsimile number as
Mbia 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 Mbia.
Any notice hereunder delivered to the Fiscal Agent of MBIA may be made at
the address listed below for the Fiscal Agent of MBIA or such other address as
MBIA shall specify in writing to the Indenture Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.
The obligations of Mbia under this Policy are irrevocable, primary,
absolute and unconditional (except as expressly provided herein) and neither
the failure of the Beneficiary, the Seller, the Servicer, the Depositor, the
Trust or any other person to perform any covenant or obligation in favor of
Mbia (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, the Trust or any other person shall in any way affect or limit
MBIA's obligations under this Policy. If an action or proceeding to enforce
this Policy is brought, the Beneficiary shall be entitled to recover from MBIA
costs and expenses reasonably incurred, including without limitation
reasonable fees and expenses of counsel.
There shall be no acceleration payment due under this Policy unless such
acceleration is at the sole option of Mbia.
This Policy and the obligations of Mbia 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
Business Day following the date MBIA receives written notice from the Seller
terminating this Policy as a result of (a) a downgrade of its claims paying
ability rating by any Rating Agency which results in a downgrading of the
Class A Notes or the Senior Interest Participation or (b) the occurrence of a
Certificate Insurer Default, provided, however, that no termination under this
clause (ii) shall be effective until (I) all amounts owed to MBIA under the
Insurance Agreement on the date such written notice is received by MBIA are
paid in full in cash and (II) the original of this Policy is received by MBIA
and (iii) the Distribution Date upon which final distribution on the Class A
Notes and the Senior Interest Participation is made; provided that, if an
Insolvency Proceeding is existing by or against the Trust, the Seller, the
Servicer or the Depositor during such one year and one day period, then this
Policy and Mbia'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 Policy shall not terminate prior to the date on which Mbia has made all
payments required to be made under the terms of this Policy in respect of such
Avoided Payments.
This Policy shall be returned to Mbia upon the expiration of its term.
This Policy is not covered by the property/casualty insurance fund
specified in Article Seventy-six of the New York State insurance law.
This Policy sets forth in full the undertaking of Mbia, 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 POLICY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, Mbia has caused this Policy to be executed on the
date first written above.
MBIA INSURANCE CORPORATION
By
---------------------------------------
<PAGE>
Exhibit 25: Form T-1.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) ______
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Keith Richardson, Harris Trust and Savings Bank,
311 West Monroe Street, Chicago, Illinois, 60606
312-461-2647 phone 312-461-3525 facsimile
(Name, address and telephone number for agent for service)
Champion Home Equity Loan Trust 1999-1
(Note Issuer)
Delaware Applied For
(State of Incorporation) (I.R.S. Employer Identification No.)
Champion Mortgage Company, Inc.
20 Waterview Boulevard
Parsippany, NJ 07054
(Address of principal executive offices)
Home Equity Loan Asset-Backed Notes
(Title of indenture securities)
<PAGE>
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Commissioner of Banks and Trust Companies, State of
Illinois, Springfield, Illinois; Chicago Clearing House
Association, 164 West Jackson Boulevard, Chicago, Illinois;
Federal Deposit Insurance Corporation, Washington, D.C.; The
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise
corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. through 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee as now in
effect which includes the authority of the trustee to commence
business and to exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between
Harris Trust and Savings Bank, HTS Bank and Harris Bankcorp,
Inc. which constitutes the articles of association of the
Trustee as now in effect and includes the authority of the
Trustee to commence business and to exercise corporate trust
powers was filed in connection with the Registration Statement
of Louisville Gas and Electric Company, File No. 2-44295, and is
incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in
connection with the Registration Statement of Commercial Federal
Corporation, File No. 333-20711, and is incorporated herein by
reference.
3. The consents of the Trustee required by Section 321(b) of
the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its supervising
or examining authority.
(included as Exhibit B on page 3 of this statement)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago, and State of Illinois, on the 16th day of March, 1999.
HARRIS TRUST AND SAVINGS BANK
By: /s/ Keith Richardson
----------------------------
Keith Richardson
Assistant Vice President
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents
that reports of examinations of said trustee by Federal and State authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /s/ Keith Richardson
-------------------------
Keith Richardson
Assistant Vice President
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of September 30, 1998, as published in accordance
with a call made by the State Banking Authority and by the Federal Reserve
Bank of the Seventh Reserve District.
[LOGO OMITTED] HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on September 30, 1998, a state banking institution organized and
operating under the banking laws of this State and a member of the Federal
Reserve System. Published in accordance with a call made by the Commissioner
of Banks and Trust Companies of the State of Illinois and by the Federal
Reserve Bank of this District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency and $1,097,714
coin..................................
Interest bearing $213,712
balances...................................................................
Securities:................................................................
a. Held-to-maturity securities $0
b. Available-for-sale securities $5,036,734
Federal funds sold and securities purchased under agreements to resell $48,950
Loans and lease financing receivables:
Loans and leases, net of unearned income................................... $9,111,098
LESS: Allowance for loan and lease losses................................. $104,900
----------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b)....................................................... $9,006,198
Assets held in trading
accounts................................................................... $202,008
Premises and fixed assets (including capitalized
leases)............................................... $245,290
Other real estate
owned...................................................................... $365
Investments in unconsolidated subsidiaries and associated
companies.............................. $41
Customer's liability to this bank on acceptances
outstanding........................................ $34,997
Intangible $260,477
assets....................................................................
Other $1,148,163
assets....................................................................
---------------
TOTAL ASSETS $17,294,649
===============
LIABILITIES
Deposits:
In domestic $9,467,895
offices...................................................................
Non-interest $2,787,471
bearing...................................................................
Interest $6,680,424
bearing...................................................................
In foreign offices, Edge and Agreement subsidiaries, and
IBF's..................................................................... $1,268,759
Non-interest $23,329
bearing...................................................................
Interest $1,245,430
bearing...................................................................
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds purchased & securities sold under agreements to
repurchase ...............................................................
$3,118,548
Trading Liabilities 110,858
Other borrowed
money:..................................................................... $1,202,050
a. With remaining maturity of one year or less $0
b. With remaining maturity of more than one year
Bank's liability on acceptances executed and outstanding $34,997
Subordinated notes and
debentures................................................................. $225,000
Other $530,224
liabilities................................................................
=================
TOTAL LIABILITIES $15,958,331
=================
EQUITY CAPITAL
Common stock.............................................................. $100,000
Surplus................................................................... $604,834
a. Undivided profits and capital reserves................................ $580,271
b. Net unrealized holding gains (losses) on available-for-sale securities $51,213
------------------
TOTAL EQUITY CAPITAL $1,336,318
==================
Total liabilities, limited-life preferred stock, and equity
capital................................................................... $17,294,649
===================
</TABLE>
I, Pamela Piarowski, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with
the instructions issued by the Board of Governors of the Federal Reserve
System and is true to the best of my knowledge and belief.
PAMELA PIAROWSKI
10/29/98
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and, to the best of
our knowledge and belief, has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and the Commissioner of Banks and Trust Companies of the State of Illinois and
is true and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
CHARLES SHAW
Directors.
