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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1998
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ContiMortgage Home Equity Loan Trust 1998-2
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(Exact name of registrant as specified in its charter)
New York 333-39505-02 Application Pending
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) ID Number)
3811 West Charleston Boulevard, Suite 104, Las Vegas, Nevada 89102
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (702) 822-5836
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N/A
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
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Description of the Certificates and the Mortgage Loans
ContiSecurities Asset Funding Corp. registered issuance of up
to $6,000,000,000 principal amount of Asset Backed Certificates on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1993, as
amended (the "Act"), by a Registration Statement on Form S-3 (Registration File
No. 333-39505) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, ContiMortgage Home Equity Loan Trust 1998-2 (the
"Registrant" or the "Trust") issued $1,750,000,000 in aggregate principal
amount of its Home Equity Pass-Through Certificates, Series 1998-2 (the
"Certificates"), on June 29, 1998. This Current Report on Form 8-K is being
filed to satisfy an undertaking to file copies of certain agreements executed
in connection with the issuance of the Certificates, the forms of which were
filed as Exhibits to the Registration Statement.
Certain certificates were issued pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") attached hereto as
Exhibit 4.2, dated as of June 1, 1998, among ContiSecurities Asset Funding
Corp., as the Depositor , (the "Depositor"), ContiMortgage Corporation, as the
Company, (the "Company"), as seller and servicer (the "Servicer") and
Manufacturers and Traders Trust Company, in its capacity as trustee (the
"Trustee"). The certificates issued pursuant to the Pooling and Servicing
Agreement consist of the following classes: the Class A-1, Class A-2 Internal,
Class A-2 Fixed, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-8, Class A-9 Certificates and Class A-10 IO Certificates (the "Class A
Certificates"), the Class B Certificates (the "Class B Certificates"), the
Class C Certificates (the "Class C Certificates"), the Class R Certificates
(the "Class R Certificates"), the Class R-I Certificates (the "Class R-I
Certificates"), and the Class R-II Certificates (the "Class R-II Certificates"
and together with the Class A Certificates, the Class B Certificates, the Class
C Certificates, the Class R Certificates and Class R-I Certificates, the
"Certificates"). The Certificates evidence, in the aggregate, 100% of the
undivided beneficial ownership interests in the Trust.
Certain certificates were issued pursuant to a Grantor Trust
Agreement, (the "Grantor Trust Agreement") attached hereto as 4.3, dated as of
June 1, 1998, among the Depositor, the Servicer and Manufacturers and Traders
Trust Company, in its capacity as Grantor Trustee (the "Grantor Trustee"). The
certificates issued pursuant to the Grantor Trust Agreement consists of the
following class: Class A-2 Floating Certificates (the "Grantor Trust
Certificates"). The Grantor Trust Certificates evidence, in the aggregate, 100%
of the undivided beneficial ownership interests in the Trust.
The assets of the Trust initially include a pool of
closed-end home equity loans (the "Home Equity Loans") secured by mortgages or
deeds of trust primarily on one-to-four family residential properties. Interest
distributions on the Class A Certificates are based on the Certificate
Principal Balance (or, in the case of the Class A-10 IO Certificates, the
Notional Principal Amount) thereof and the applicable Pass-Through Rate
thereof. The Pass-Through Rates for the Class A Certificates are as
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follows: Class A-1, 5.64875%; Class A-2 Internal, 5.92%; Class A-2 Fixed,
6.15%; Class A-3, 6.13%; Class A-4, 6.19%; Class A-5, 6.28%, Class A-6, 6.36%;
Class A-7, 6.57%; Class A-8, Class A-9, and Class A-10 IO as defined in the
Pooling and Servicing Agreement. The Pass-Through Rate for the Class A-2
Floating Certificate is at a variable rate as defined in the Grantor Trust
Agreement. The Pass-Through Rate for the Class B Certificate is 7.74%. The
Class A Certificates have initial aggregate principal amounts as follows: Class
A-1, $114,000,000; Class A-2 Internal, $175,000,000; Class A-2 Fixed,
$250,000,000; Class A-3, $275,000,000; Class A-4, $185,000,000; Class A-5,
$90,000,000; Class A-6, $97,000,000; Class A-7, $100,600,000; Class A-8,
$235,000,000; Class A-9, $158,400,000. The Class A-10 IO Certificate is
interest only and has no Certificate Principal Balance. The Class A-2 Floating
Certificates have initial aggregate principal amounts as follows: Class A-2
Floating, $175,000,000. The Class B Certificates have initial aggregate
principal amounts as follows: Class B, $70,000,000.
As of the Cut-Off Date, the Home Equity Loans possessed the
characteristics described in the Prospectus dated December 16, 1997 and the
Prospectus Supplement (the "Prospectus Supplement") dated June 9, 1998 filed
pursuant to Rule 424(b)(5) of the Act on July 1, 1998.
The Offered Certificates (the "Offered Certificates") as
defined in the Prospectus Supplement, are as follows: Class A-1, Class A-2
Floating, Class A-2 Fixed, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, and the Class B Certificates.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
4.1 Underwriting Agreement dated as of June 9, 1998 among
ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as a seller and servicer,
ContiWest Corporation, as a seller and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as representative of the several
underwriters.
4.2 Pooling and Servicing Agreement dated as of June 1, 1998,
among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as a seller and servicer,
ContiWest Corporation, as a seller and Manufacturers and
Traders Trust Company, as the Trustee.
4.3 Grantor Trust Agreement dated as of June 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as servicer and Manufacturers and
Traders Trust Company, as the Grantor Trustee.
8.1 Opinion of Dewey Ballantine LLP regarding certain tax
matters.
23.1 Consent of Dewey Ballantine LLP (included in Exhibit
8.1).
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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 thereunto duly authorized.
CONTISECURITIES ASSET FUNDING CORP.
By: /s/ Mary Bogdan
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Name: Mary Bogdan
Title: Authorized Signatory
Dated: July 21, 1998
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EXHIBIT INDEX
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Exhibit Page
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4.1 Underwriting Agreement dated as of June 9, 1998 among ContiSecurities
Asset Funding Corp., as Depositor, ContiMortgage Corporation, as a
seller and servicer, ContiWest Corporation, as a seller and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as representative of the
several underwriters.
4.2 Pooling and Servicing Agreement dated as of June 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as a seller and servicer, ContiWest Corporation, as a
seller and Manufacturers and Traders Trust Company, as the Trustee.
4.3 Grantor Trust Agreement dated as of June 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as servicer and Manufacturers and Traders Trust Company,
as the Grantor Trustee.
8.1 Opinion of Dewey Ballantine LLP regarding certain tax matters.
23.1 Consent of Dewey Ballantine LLP (included in Exhibit 8.1).
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$1,750,000,000
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
Home Equity Loan Pass-Through Certificates
Series 1998-2
UNDERWRITING AGREEMENT
June 9, 1998
Merrill Lynch, Pierce, Fenner & Smith Incorporated
As Representative of the Several Underwriters
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281
Ladies and Gentlemen:
ContiSecurities Asset Funding Corp. (the "Depositor"), a
Delaware corporation, has authorized the issuance and sale of Home Equity Loan
Pass-Through Certificates, Series 1998-2, Class A-1, Class A-2 Fixed, Class A-2
Internal, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, Class A-10 IO, (the "Class A Trust Certificates"), Class B (the
"Subordinate Certificates") and the Grantor Trust Pass-Through Certificates,
Series 1998-A, Class A-2 Floating (the "Class A-2 Floating Certificates"). The
Class A Trust Certificates (other than the Class A-2 Internal Certificates), the
Class A-2 Floating Certificates and the Subordinate Certificates are
collectively referred to as the "Offered Certificates". Also issued are the
Class R, Class R-I and Class R-II Certificates (the "Retained Certificates").
The Class A-2 Floating Certificates evidence interests in the ContiMortgage
Grantor Trust 1998-A (the "Grantor Trust"). The Class A Trust Certificates, the
Class A-2 Floating Certificates, the Subordinate Certificates and the Retained
Certificates shall be referred to as the "Certificates".
Only the Offered Certificates are being purchased by the
Underwriters named in Schedule A hereto, and the Underwriters are purchasing,
severally, only the Offered Certificates set forth opposite their names in
Schedule A, except that the amounts purchased by the Underwriters may change in
accordance with Section X of this Agreement. Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") is acting as representative of the several
Underwriters and in such capacity is hereinafter referred to as the
"Representative."
The Class A Trust Certificates, Subordinate Certificates and
Retained Certificates (collectively the "Trust Certificates") will be issued
under a pooling and
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servicing agreement (the "Pooling and Servicing Agreement"), to be dated as of
June 1, 1998 among the Depositor, ContiMortgage Corporation ("ContiMortgage"),
as the servicer and a seller (in such capacity, the "Servicer" or a "Seller," as
the case may be), ContiWest Corporation ("ContiWest"), as a seller (a "Seller,"
and collectively with ContiMortgage, the "Sellers") and Manufacturers and
Traders Trust Company, as the Trustee (in such capacity, the "Trustee"). Each of
the Depositor, ContiMortgage and ContiWest is a subsidiary of ContiFinancial
Corporation ("ContiFinancial").
The Trust Certificates will evidence fractional undivided
interests in the Trust (the "Trust") formed pursuant to the Pooling and
Servicing Agreement. The assets of the Trust will initially include, among other
things, two pools of home equity loans, one comprised of fixed rate and
adjustable rate home equity loans and the other comprised only of adjustable
rate home equity loans, having a Cut-Off Date as of the close of business on
June 17, 1998 (the "Home Equity Loans"), and such amounts as may be held by the
Trustee in any accounts held by the Trustee for the Trust. The Home Equity Loans
are secured primarily by first and second deeds of trust or mortgages on one- to
four-family residential properties. A form of the Pooling and Servicing
Agreement has been filed as an exhibit to the Registration Statement.
The Class A-2 Floating Certificates will be issued pursuant to
a Grantor Trust Agreement (the "Grantor Trust Agreement") dated as of June 1,
1998, among the Depositor, the Servicer and Manufacturers and Traders Trust
Company, as the Grantor Trustee (in such capacity, the "Grantor Trustee").
The Class A-2 Floating Certificates evidence interests in the
ContiMortgage Grantor Trust 1998-A, which is comprised of: (i) the Class A-2
Internal Certificates issued by the Trust, (ii) a swap agreement between the
Grantor Trust and National Westminster Bank, Plc. (the "Swap Agreement") and
(iii) the rights of the Grantor Trustee under the related Certificate Insurance
Policy.
The Certificates are more fully described in a Registration
Statement which the Depositor has furnished to the Underwriters. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Pooling and Servicing Agreement and the Grantor Trust Agreement.
The Class A Trust Certificates and the Class A-2 Floating
Certificates will each be entitled to the benefits of a certificate guaranty
insurance policy (together, the "Policies") issued by MBIA Insurance Corporation
("MBIA"). The Depositor, ContiMortgage and ContiWest will also enter into an
Indemnification Agreement (the "Indemnification Agreement") dated as of June 1,
1998 among the Underwriters, the Depositor, ContiMortgage, ContiWest and MBIA,
governing the liability of the several parties with respect to the losses
resulting from material misstatements or omissions contained in the Prospectus
Supplement.
Pursuant to Section 3.05 of the Pooling and Servicing
Agreement and concurrently with the execution thereof, ContiMortgage and
ContiWest will transfer to the
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Depositor all of their right, title and interest in and to the unpaid principal
balances of the Home Equity Loans as of the Cut-Off Date and interest due after
the Cut-Off Date and the collateral securing each Home Equity Loan.
SECTION I. Representations and Warranties of the Depositor.
The Depositor represents and warrants to, and agrees with the Underwriters that
as of the date hereof and as of the
Closing Date:
A. A Registration Statement on Form S-3 (No. 333-39505), has
(i) been prepared by the Depositor in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the rules and
regulations (the "Rules and Regulations") of the United States Securities and
Exchange Commission (the "Commission") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective and is still
effective as of the date hereof under the Securities Act; Copies of such
Registration Statement have been delivered by the Depositor to the Underwriters.
As used in this Agreement, "Effective Time" means the date and the time as of
which such Registration Statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission; "Effective Date"
means the date of the Effective Time; "Registration Statement" means such
registration statement, at the Effective Time, including any documents
incorporated by reference therein at such time; "Basic Prospectus" means such
final prospectus dated December 16, 1997; and "Prospectus Supplement" means the
final prospectus supplement relating to the Offered Certificates, to be filed
with the Commission pursuant to paragraphs (2), (3) or (5) of Rule 424(b) of the
Rules and Regulations. "Prospectus" means the Basic Prospectus together with the
Prospectus Supplement. Reference made herein to the Prospectus shall be deemed
to refer to and include any documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act, as of the date of the
Prospectus and any reference to any amendment or supplement to the Prospectus
shall be deemed to refer to and include any document filed under the Securities
Exchange Act of 1934 (the "Exchange Act") after the date of the Prospectus, and
incorporated by reference in the Prospectus and any reference to any amendment
to the Registration Statement shall be deemed to include any report of the
Depositor filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by reference in the
Registration Statement. The Commission has not issued any order preventing or
suspending the use of the Prospectus or the effectiveness of the Registration
Statement and no proceedings for such purpose are pending or, to the Depositor's
knowledge, threatened by the Commission. There are no contracts or documents of
the Depositor which are required to be filed as exhibits to the Registration
Statement pursuant to the Securities Act or the Rules and Regulations which have
not been so filed or incorporated by reference therein on or prior to the
Effective Date of the Registration Statement other than such documents or
materials, if any, as any Underwriter delivers to the Depositor pursuant to
Section VIII (D) hereof for filing on Form 8-K. The conditions for use of Form
S-3, as set forth in the General Instructions thereto, have been satisfied.
To the extent that any Underwriter has provided to the
Depositor Computational Materials that such Underwriter has provided to a
prospective investor, the
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Depositor will file or cause to be filed with the Commission a report on Form
8-K containing such Computational Materials, as soon as reasonably practicable
after the date of this Agreement, but in any event, not later than 11:00 a.m.
New York time the date on which the Prospectus is made available to the
Underwriter and is filed with the Commission pursuant to Rule 424 of the Rules
and Regulations.
B. The Registration Statement and the Prospectus conform, and
any further amendments or supplements to the Registration Statement or the
Prospectus will conform, when they become effective or are filed with the
Commission, as the case may be, in all respects to the requirements of the
Securities Act and the Rules and Regulations. The Registration Statement, as of
the Effective Date thereof and of any amendment thereto, did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
The Prospectus as of its date, and as amended or supplemented as of the Closing
Date does not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided that no representation or warranty is made as to information contained
in or omitted from the Registration Statement or the Prospectus in reliance upon
and in conformity with written information furnished to the Depositor in writing
by any Underwriters through the Representative expressly for use therein.
C. The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the Prospectus, when
such documents become effective or are filed with the Commission, as the case
may be, will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and regulations
of the Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that no
representation is made as to documents deemed to be incorporated by reference in
the Prospectus as the result of filing a Form 8-K at the request of the
Underwriters except to the extent such documents reflect information furnished
by the Depositor to the Underwriters for the purpose of preparing such
documents.
D. Since the respective dates as of which information is given
in the Prospectus, there has not been any material adverse change in the general
affairs, management, financial condition, or results of operations of the
Depositor, otherwise than as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
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E. The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or the conduct of its
business so requires such standing. The Depositor has all power and authority
necessary to own or hold its properties, to conduct the business in which it is
engaged and to enter into and perform its obligations under this Agreement, the
Grantor Trust Agreement and the Pooling and Servicing Agreement and to cause the
Certificates to be issued.
F. There are no actions, proceedings or investigations pending
with respect to which the Depositor has received service of process before or
threatened by any court, administrative agency or other tribunal to which the
Depositor is a party or of which any of its properties is the subject (a) which
if determined adversely to the Depositor would have a material adverse effect on
the business or financial condition of the Depositor, (b) asserting the
invalidity of this Agreement, the Pooling and Servicing Agreement or the
Certificates (c) seeking to prevent the issuance of the Certificates or the
consummation by the Depositor of any of the transactions contemplated by the
Pooling and Servicing Agreement, the Grantor Trust Agreement or this Agreement,
as the case may be, or (d) which might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement, the Grantor Trust
Agreement, this Agreement or the Certificates.
G. This Agreement has been, and the Grantor Trust Agreement
and the Pooling and Servicing Agreement when executed and delivered as
contemplated hereby and thereby will have been, duly authorized, executed and
delivered by the Depositor, and this Agreement constitutes, and the Pooling and
Servicing Agreement and the Grantor Trust Agreement when executed and delivered
as contemplated herein will constitute, legal, valid and binding instruments
enforceable against the Depositor in accordance with their respective terms,
subject as to enforceability to (x) applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, (y) general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law), and (z) with respect to rights
of indemnity under this Agreement, limitations of public policy under applicable
securities laws.
H. The execution, delivery and performance of this Agreement,
the Grantor Trust Agreement and the Pooling and Servicing Agreement by the
Depositor and the consummation of the transactions contemplated hereby and
thereby, and the issuance and delivery of the Certificates do not and will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Depositor is
a party, by which the Depositor is bound or to which any of the properties or
assets of the Depositor or any of its subsidiaries is subject, which breach or
violation would have a material adverse effect on the business, operations or
financial condition of the Depositor or its ability to perform its obligations
under this Agreement, the Grantor Trust Agreement and the Pooling and Servicing
Agreement, nor will such actions result in any violation of the provisions of
the articles of incorporation or by-laws of the Depositor
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or any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Depositor or any of its properties
or assets, which breach or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor or its ability to
perform its obligations under this Agreement, the Grantor Trust Agreement and
the Pooling and Servicing Agreement.
I. The Depositor has no reason to know that Arthur Andersen &
Co. are not independent public accountants with respect to the Depositor as
required by the Securities Act and the Rules and Regulations.
J. The direction by the Depositor to the Trustee and the
Grantor Trustee to authenticate, issue and deliver the Certificates has been
duly authorized by the Depositor, and, assuming the Trustee and the Grantor
Trustee have been duly authorized to undertake such actions, when executed,
authenticated, issued and delivered by the Trustee and the Grantor Trustee, as
applicable, in accordance with the Pooling and Servicing Agreement and the
Grantor Trust Agreement, the Certificates will be validly issued and outstanding
and the holders of the Certificates will be entitled to the rights and benefits
of the Certificates as provided by the Pooling and Servicing Agreement and the
Grantor Trust Agreement.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issuance of the Certificates and the sale of the
Offered Certificates to the Underwriters, or the consummation by the Depositor
of the other transactions contemplated by this Agreement, the Grantor Trust
Agreement and the Pooling and Servicing Agreement except such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Certificates by the Underwriters or as have been
obtained.
L. The Depositor possesses all material licenses,
certificates, authorities or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business now
conducted by it and as described in the Prospectus, and the Depositor has not
received notice of any proceedings relating to the revocation or modification of
any such license, certificate, authority or permit which if decided adversely to
the Depositor would, singly or in the aggregate, materially and adversely affect
the conduct of its business, operations or financial condition.
M. At the time of execution and delivery of the Pooling and
Servicing Agreement, the Depositor will: (i) have good title to the Home Equity
Loans conveyed by the Sellers, free and clear of any lien, mortgage, pledge,
charge, encumbrance, adverse claim or other security interest (collectively,
"Liens"); (ii) not have assigned to any person any of its right or title in the
Home Equity Loans contemplated in the Pooling and Servicing Agreement or in the
Certificates being issued pursuant thereto; and (iii) have the power and
authority to sell its interest in the Home Equity Loans to the Trustee and to
sell the Offered Certificates to the Underwriters. Upon execution and delivery
of the Pooling
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and Servicing Agreement by the Trustee, the Trustee will have acquired
beneficial ownership of all of the right, title and interest in and to the Home
Equity Loans, free of any Liens. Upon delivery to the Underwriters of the
Offered Certificates, the Underwriters will have good title to the Offered
Certificates, free of any Liens.
N. Reserved.
O. As of the Statistical Calculation Date, each of the Home
Equity Loans will meet the eligibility criteria described in the Prospectus and
will conform to the descriptions thereof contained in the Prospectus.
P. Reserved.
Q. Neither the Depositor nor the Trust created by the Pooling
and Servicing Agreement nor the Grantor Trust created pursuant to the Grantor
Trust Agreement is an "investment company" within the meaning of such term under
the Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations of the Commission thereunder.
R. At the Closing Date, the Offered Certificates, the Grantor
Trust Agreement and the Pooling and Servicing Agreement will conform in all
material respects to the descriptions thereof contained in the Prospectus.
S. At the Closing Date, the Offered Certificates (other than
the Subordinate Certificates) shall have been rated in the highest rating
category by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Rating Services, a division of the McGraw-Hill Companies, Inc. ("Standard &
Poor's") and Fitch IBCA, Inc. ("Fitch") and the Subordinate Certificates shall
have been rated "Baa3" by Moody's, "BBB-" by Standard & Poor's and "BBB" by
Fitch.
T. Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this Agreement, the
Grantor Trust Agreement, the Pooling and Servicing Agreement and the
Certificates have been paid or will be paid at or prior to the Closing Date.
U. At the Closing Date, each of the representations and
warranties of the Depositor, ContiMortgage and ContiWest set forth herein, and
in the Grantor Trust Agreement and in the Pooling and Servicing Agreement will
be true and correct in all material respects.
V. Any certificate signed by an officer of the Depositor and
delivered to the Representative or counsel for the Representative in connection
with an offering of the Offered Certificates shall be deemed, and shall state
that it is, a representation and warranty as to the matters covered thereby to
each person to whom the representations and warranties in this Section I are
made.
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W. The transfer of the Class A-2 Internal Certificates from
the Depositor to the Grantor Trust as set forth in the Grantor Trust Agreement
is not required to be registered under the Securities Act of 1933, as amended.
SECTION II. Purchase and Sale. The commitment of the
Underwriters to purchase the Offered Certificates pursuant to this Agreement
shall be deemed to have been made on the basis of the representations and
warranties herein contained and shall be subject to the terms and conditions
herein set forth. The Depositor agrees to instruct the Trustee to issue the
Offered Certificates and agrees to sell to the Underwriters, and the
Underwriters agree (except as provided in Sections X and XI hereof) severally
and not jointly to purchase from the Depositor, the aggregate initial principal
amounts or percentage interests of the Offered Certificates of each Class, as
set forth opposite their names on Schedule A, at the purchase price or prices
set forth on Schedule A.
SECTION III. Delivery and Payment. Delivery of and payment for
the Offered Certificates shall be made at the offices of Dewey Ballantine LLP,
1301 Avenue of the Americas, New York, New York 10019, or at such other place as
shall be agreed upon by the Representative and the Depositor at 10:00 A.M. New
York City time on June 29, 1998 or at such other time or date as shall be agreed
upon in writing by the Representative and the Depositor (such date being
referred to as the "Closing Date"). Payment shall be made to the Depositor by
wire transfer of same day funds payable to the account of the Depositor.
Delivery of the Offered Certificates shall be made to the Representative for the
accounts of the Underwriters against payment of the purchase price thereof. The
Certificates shall be in such authorized denominations and registered in such
names as the Representative may request in writing at least two business days
prior to the Closing Date. The Offered Certificates will be made available for
examination by the Representative no later than 2:00 p.m. New York City time on
the first business day prior to the Closing Date.
SECTION IV. Offering by the Underwriters. It is understood
that, subject to the terms and conditions hereof, the Underwriters propose to
offer the Offered Certificates for sale to the public as set forth in the
Prospectus.
SECTION V. Covenants of the Depositor. The Depositor and, to
the extent the provisions of subsections H and I below relate to ContiMortgage
and ContiWest, respectively, ContiMortgage and ContiWest agree as follows:
A. To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the availability of the Prospectus to the Underwriters;
to make no further amendment or any supplement to the Registration Statement or
to the Prospectus prior to the Closing Date except as permitted herein; to
advise the Underwriters, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective prior to the Closing Date or any supplement to the Prospectus or any
amended
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Prospectus has been filed prior to the Closing Date and to furnish the
Underwriters with copies thereof without charge; to file promptly all reports
and any definitive proxy or information statements required to be filed by the
Depositor with the Commission pursuant to Section 13(a), 13(c), 14 or l5(d) of
the Exchange Act subsequent to the date of the Prospectus and, for so long as
the delivery of a prospectus is required in connection with the offering or sale
of the Offered Certificates; to promptly advise the Underwriters of its receipt
of notice of the issuance by the Commission of any stop order or the institution
of or, to the knowledge of the Depositor, the threatening of any proceeding for
such purpose, or of: (i) any order preventing or suspending the use of the
Prospectus; (ii) the suspension of the qualification of the Offered Certificates
for offering or sale in any jurisdiction; (iii) the initiation of or threat of
any proceeding for any such purpose; or (iv) any request by the Commission for
the amending or supplementing of the Registration Statement or the Prospectus or
for additional information. In the event of the issuance of any stop order or of
any order preventing or suspending the use of the Prospectus or suspending any
such qualification, the Depositor promptly shall use its best efforts to obtain
the withdrawal of such order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for
the Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and of each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters without charge such
number of the following documents as the Underwriters shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case including exhibits); (ii)
the Prospectus and any amended or supplemented Prospectus; and (iii) any
document incorporated by reference in the Prospectus (including exhibits
thereto). If the delivery of a prospectus is required at any time prior to the
expiration of nine months after the Closing Date in connection with the offering
or sale of the Offered Certificates, and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary during such
same period to amend or supplement the Prospectus or to file under the Exchange
Act any document incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, the Depositor shall notify the
Underwriters and, upon any Underwriters' request, shall file such document and
prepare and furnish without charge to the Underwriters and to any dealer in
securities as many copies as the Underwriters may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which
corrects such statement or omission or effects such compliance, and in case the
Underwriters are required to deliver a Prospectus in connection with sales of
any of the Offered Certificates at any time nine months or more after the
Effective Time, upon the request of the Underwriters but at their expense, the
Depositor shall prepare and deliver to the Underwriters as many copies as the
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Underwriters may reasonably request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Securities Act.
D. To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Depositor or the Underwriters, be required by
the Securities Act or requested by the Commission. Neither the Underwriters'
consent to nor their distribution of any amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section VI.
E. To furnish the Underwriters and counsel for the
Underwriters, prior to filing with the Commission, and to obtain the consent of
the Underwriters for the filing of the following documents relating to the
Certificates: (i) any Post-Effective Amendment to the Registration Statement or
supplement to the Prospectus, or document incorporated by reference in the
Prospectus, or (ii) Prospectus pursuant to Rule 424 of the Rules and
Regulations.
F. To make generally available to holders of the Offered
Certificates as soon as practicable, but in any event not later than 90 days
after the close of the period covered thereby, a statement of earnings of the
Trust (which need not be audited) complying with Section 11(a) of the Securities
Act and the Rules and Regulations (including, at the option of the Depositor,
Rule 158) and covering a period of at least twelve consecutive months beginning
not later than the first day of the first fiscal quarter following the Closing
Date.
G. To use its best efforts, in cooperation with the
Underwriters, to qualify the Offered Certificates for offering and sale under
the applicable securities laws of such states and other jurisdictions of the
United States or elsewhere as the Underwriters may designate, and maintain or
cause to be maintained such qualifications in effect for as long as may be
required for the distribution of the Offered Certificates. The Depositor will
file or cause the filing of such statements and reports as may be required by
the laws of each jurisdiction in which the Offered Certificates have been so
qualified.
H. Unless the Underwriters shall otherwise have given their
written consent, no collateralized mortgage obligations or other similar
securities representing interests in or secured by other mortgage-related assets
originated or owned by ContiMortgage shall be publicly offered or sold, nor
shall ContiMortgage enter into any contractual arrangements that contemplate the
public offering or sale of such securities, until the earlier to occur of the
termination of the syndicate or the Closing Date.
I. Unless the Underwriters shall otherwise have given their
written consent, no collateralized mortgage obligations or other similar
securities representing interests in or secured by other mortgage-related assets
originated or owned by ContiWest shall be publicly offered or sold, nor shall
ContiWest enter into any contractual arrangements that contemplate the public
offering or sale of such securities, until the earlier to occur of the
termination of the syndicate or the Closing Date.
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J. Unless the Underwriters shall otherwise have given their
written consent (such consent not to be unreasonably withheld), no
collateralized mortgage obligations or other similar securities representing
interests in or secured by other mortgage-related assets that are similar to the
Home Equity Loans originated or owned by the Depositor shall be publicly offered
or sold until the earlier to occur of the termination of the syndicate or the
Closing Date.
K. So long as the Offered Certificates shall be outstanding
the Depositor shall cause the Trustee, pursuant to the Pooling and Servicing
Agreement, to deliver to the Underwriters as soon as such statements are
furnished to the Trustee: (i) the annual statement as to compliance delivered to
the Trustee pursuant to Section 8.16 of the Pooling and Servicing Agreement;
(ii) the annual statement of a firm of independent public accountants furnished
to the Trustee pursuant to Section 8.17 of the Pooling and Servicing Agreement;
(iii) the monthly servicing report furnished to the Trustee pursuant to Section
7.08 of the Pooling and Servicing Agreement; and (iv) the monthly reports
furnished to the Certificateholders pursuant to Section 7.09 of the Pooling and
Servicing Agreement.
L. To apply the net proceeds from the sale of the Offered
Certificates in the manner set forth in the Prospectus.
SECTION VI. Conditions to the Underwriters' Obligation. The
obligations of the Underwriters hereunder to purchase the Offered Certificates
pursuant to the Agreement are subject to: (i) the accuracy on and as of the
Closing Date of the representations and warranties on the part of the Depositor
herein contained; (ii) the performance by the Depositor of all of its
obligations hereunder; and (iii) the following conditions as of the Closing
Date:
A. The Underwriters shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission. Any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus shall
have been complied with.
B. The Underwriters shall not have discovered and disclosed to
the Depositor on or prior to the Closing Date that the Registration Statement or
the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact or omits to state a fact which, in the opinion of Stroock &
Stroock & Lavan LLP, counsel for the Underwriters, is material and is required
to be stated therein or is necessary to make the statements therein not
misleading.
C. All corporate proceedings and other legal matters relating
to the authorization, form and validity of this Agreement, the Grantor Trust
Agreement, the Pooling and Servicing Agreement, the Certificates, the
Registration Statement and the Prospectus, and all other legal matters relating
to this Agreement and the transactions
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contemplated hereby shall be satisfactory in all respects to counsel for the
Underwriters, and the Depositor shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.
D. Dewey Ballantine LLP shall have furnished to the
Underwriters and MBIA their written opinion, as counsel to the Depositor,
addressed to the Underwriters and MBIA and dated the Closing Date, in form and
substance satisfactory to the Underwriters and MBIA, to the effect that:
(i) The conditions to the use by the Depositor of a
registration statement on Form S-3 under the Securities Act, as set
forth in the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus.
(ii) The Registration Statement and any amendments
thereto have become effective under the Securities Act; to the best of
such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and not withdrawn and no
proceedings for that purpose have been instituted or threatened and not
terminated; and the Registration Statement, the Prospectus and each
amendment or supplement thereto, as of their respective effective or
issue dates (other than the financial and statistical information
contained therein, as to which such counsel need express no opinion),
complied as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations
thereunder.
(iii) To the best of such counsel's knowledge, there
are no material contracts, indentures or other documents of a character
required to be described or referred to in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto.
(iv) The statements set forth in the Basic Prospectus
under the captions "Summary of Prospectus," "Description of The
Certificates," "The Trusts" and "The Pooling and Servicing Agreement"
and in the Prospectus Supplement under the captions "Description of The
Offered Certificates" and "The Pooling and Servicing Agreement," to the
extent such statements purport to summarize certain provisions of the
Certificates or of the Pooling and Servicing Agreement, are fair and
accurate in all material respects.
(v) The statements set forth in the Basic Prospectus
and the Prospectus Supplement under the captions "ERISA
Considerations," "Certain Legal Aspects of the Mortgage Assets" and
"Certain Federal Income Tax Considerations" to the extent that they
constitute matters of federal law, provide a fair and accurate summary
of such law or conclusions.
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(vi) The Pooling and Servicing Agreement conforms in
all material respects to the description thereof contained in the
Prospectus and is not required to be qualified under the Trust
Indenture Act of 1939, as amended, and the Trust is not required to be
registered under the Investment Company Act of 1940, as amended.
(vii) Neither the Depositor nor the Trust nor the
Grantor Trust is an "investment company" or under the "control" of an
"investment company" as such terms are defined in the 1940 Act.
(viii)Assuming that (a) the Trustee causes certain
assets of the Trust Estate, as the Trustee has covenanted to do in the
Pooling and Servicing Agreement, to be treated as a "real estate
mortgage investment conduit" ("REMIC"), as such term is defined in the
Internal Revenue Code of 1986, as amended (the "Code"), and (b) the
parties to the Pooling and Servicing Agreement comply with the terms
thereof, REMIC I, REMIC II and REMIC III will each be treated as a
REMIC, each Class of the Class A Trust Certificates and the Subordinate
Certificates will be treated as "regular interests" in REMIC III, the
Class R Certificates will be treated as the sole "residual interest" in
REMIC III, the Class R-I Certificates will be treated as the sole
"residual interest" in REMIC I and the Class R-II Certificates will be
treated as the sole "residual interest" in REMIC II. The Trust is not
subject to tax upon its income or assets by any taxing authority of the
State of New York.
(ix) To the best of such counsel's knowledge, there
are no actions, proceedings or investigations pending that would
adversely affect the status of REMIC I, REMIC II or REMIC III as a
REMIC.
(x) As a consequence of the qualifications of REMIC
I, REMIC II and REMIC III as REMICs, the Class A Trust Certificates and
the Subordinate Certificates will be treated as "regular . . .
interest(s) in a REMIC" under Section 7701(a)(19)(C) of the Code and
"real estate assets" under Section 856(c) of the Code in the same
proportion that the assets in the Trust consist of qualifying assets
under such Sections. In addition, as a consequence of the qualification
of REMIC I, the REMIC II and REMIC III as REMICs, interest on the
Offered Certificates will be treated as "interest on obligations
secured by mortgages on real property" under Section 856(c) of the Code
to the extent that such Offered Certificates are treated as "real
estate assets" under Section 856(c) of the Code.
(xi) No election will be made to qualify the Grantor
Trust as a REMIC for federal income tax purposes. For federal income
tax purposes, the Grantor Trust will be classified as a grantor trust
under Subpart E, part I of Subchapter J of the Code, and not as an
association taxable as a corporation. The Grantor Trust Certificates
represent an undivided ownership interest in the Grantor Trust.
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(xii) The transfer of the Class A-2 Internal
Certificates from the Depositor to the Grantor Trust as set forth in
the Grantor Trust Agreement is not required to be registered under the
Securities Act of 1933, as amended.
(xiii)The Certificates have been duly executed and
delivered by the Depositor to the Trustee for authentication.
Such counsel shall also have furnished to the Underwriters and MBIA a written
statement, addressed to the Underwriters and MBIA and dated the Closing Date, in
form and substance satisfactory to the Underwriters and MBIA to the effect that
nothing has come to the attention of such counsel which lead them to believe
that: (a) the Registration Statement, at the time such Registration Statement
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (except as to financial or statistical data
contained in the Registration Statement); (b) the Prospectus, as of its date and
as of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (c) any document
incorporated by reference in the Prospectus or any further amendment or
supplement to any such incorporated document made by the Depositor prior to the
Closing Date (other than any document filed at the request of an Underwriter to
the extent such document relates to Computational Materials) contained, as of
the time it became effective or was filed with the Commission, as the case may
be, an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
E. The Underwriters shall have received the favorable opinion,
dated the Closing Date, of Dewey Ballantine LLP, special counsel to the
Depositor, addressed to the Depositor and satisfactory to Moody's, Standard &
Poor's, Fitch and the Underwriters, with respect to certain matters relating to
the transfer of the Home Equity Loans to the Depositor and from the Depositor to
the Trust, and such counsel shall have consented to reliance on such opinion by
Moody's, Standard & Poor's, Fitch and the Underwriters as though such opinion
had been addressed to each such party.
F. Dewey Ballantine LLP, counsel for ContiMortgage in its
capacity as both a Seller and the Servicer and ContiWest in its capacity as a
Seller, shall have furnished to the Underwriters and MBIA their written opinion,
as counsel to ContiMortgage and ContiWest, addressed to the Underwriters and
MBIA and the Depositor and dated the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
(i) ContiMortgage is duly organized, validly existing
in good standing as a corporation under the laws of the State of
Delaware.
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(ii) ContiMortgage has full corporate power and
authority to serve in the capacity of a seller and the servicer of the
Home Equity Loans as contemplated in the Pooling and Servicing
Agreement and to transfer the Home Equity Loans to the Depositor as
contemplated in the Pooling and Servicing Agreement.
(iii) The Pooling and Servicing Agreement, Grantor
Trust Agreement and this Agreement have been duly authorized, executed
and delivered by ContiMortgage, and, assuming the due authorization,
execution and delivery of such agreements by the other parties thereto,
constitute the legal, valid and binding agreements of ContiMortgage,
enforceable against ContiMortgage in accordance with their respective
terms, subject as to enforceability to (x) bankruptcy, insolvency,
reorganization, moratorium, receivership or other similar laws now or
hereafter in effect relating to creditors' rights generally and (y) the
qualification that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion, with respect to such remedies, of the
court before which any proceedings with respect thereto may be brought
and (z) public policy considerations under the securities laws which
may limit the availability of indemnification as to securities law
liability.
(iv) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body having jurisdiction over ContiMortgage is required for
the consummation by ContiMortgage of the transactions contemplated by
the Pooling and Servicing Agreement except such consents, approvals,
authorizations, registrations and qualifications as have been obtained.
(v) Neither the sale and transfer of the Home Equity
Loans by ContiMortgage to the Depositor, nor the execution, delivery or
performance by ContiMortgage of the Grantor Trust Agreement and the
Pooling and Servicing Agreement and the transactions contemplated
thereby (A) conflict with or result in a breach of, or constitute a
default under, (i) any term or provision of the certificate of
incorporation or by-laws of ContiMortgage; (ii) any term or provision
of any material agreement, deed of trust, mortgage loan agreement,
contract, instrument or indenture, or other agreement to which
ContiMortgage is a party or is bound or to which any of the property or
assets of ContiMortgage or any of its subsidiaries is subject; (iii) to
the best of such firm's knowledge without independent investigation any
order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over ContiMortgage; or (iv)
any law, rule or regulation, applicable to ContiMortgage; or (B) to the
best of such firm's knowledge without independent investigation,
results in the creation or imposition of any lien, charge or
encumbrance upon the Trust Estate or upon the Certificates.
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<PAGE>
(vi) The execution of the Pooling and Servicing
Agreement is sufficient to convey all of ContiMortgage's, ContiWest's
and the Depositor's right, title and interest in the Home Equity Loans
to the Trust (except as otherwise specifically set forth in the Pooling
and Servicing Agreement) and following the consummation of the
transaction contemplated by Section 3.05 of the Pooling and Servicing
Agreement, the transfers of the Home Equity Loans by ContiMortgage and
ContiWest to the Depositor and by the Depositor to the Trust are
sufficient to vest in the Trust all of ContiMortgage's, ContiWest's and
the Depositor's right, title and interest in the Home Equity Loans
(except as otherwise specifically set forth in the Pooling and
Servicing Agreement).
(vii) There are, to the best of such counsel's
knowledge without independent investigation, no actions, proceedings or
investigations pending with respect to which ContiMortgage has received
service of process or threatened against ContiMortgage before any
court, administrative agency or other tribunal (a) asserting the
invalidity of the Grantor Trust Agreement, the Pooling and Servicing
Agreement, the Underwriting Agreement or the Certificates, (b) seeking
to prevent the consummation of any of the transactions contemplated by
the Pooling and Servicing Agreement or (c) which would materially and
adversely affect the performance by ContiMortgage of its obligations
under, or the validity or enforceability of, the Grantor Trust
Agreement, the Pooling and Servicing Agreement or the Underwriting
Agreement.
G. Michael R. Mayberry, Esq., Counsel for ContiWest, in its
capacity as a Seller, shall have furnished to the Underwriters and MBIA his
written opinion, addressed to the Underwriters and dated as of the Closing Date,
in form and substance satisfactory to the Underwriters, to the effect that:
(i) ContiWest is duly organized, validly existing in
good standing as a corporation under the laws of the State of Nevada.
(ii) ContiWest has full corporate power and authority
to serve in the capacity of a seller of the Home Equity Loans as
contemplated in the Pooling and Servicing Agreement and to transfer the
Home Equity Loans to the Depositor as contemplated in the Pooling and
Servicing Agreement.
(iii) The Pooling and Servicing Agreement and this
Agreement have been duly authorized, executed and delivered by
ContiWest, and, assuming the due authorization, execution and delivery
of such agreement by the other parties thereto, constitute the legal,
valid and binding agreements of ContiWest, enforceable against
ContiWest in accordance with its terms, subject as to enforceability to
(x) bankruptcy, insolvency, reorganization, moratorium, receivership or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (y) the qualification that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion, with respect to
such remedies, of the court before
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which any proceedings with respect thereto may be brought and (z)
public policy considerations under the securities laws which may limit
the availability of indemnification as to securities law liability.
(iv) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body having jurisdiction over ContiWest is required for the
consummation by ContiWest of the transactions contemplated by the
Pooling and Servicing Agreement except such consents, approvals,
authorizations, registrations and qualifications as have been obtained.
(v) Neither the sale and transfer of the Home Equity
Loans by ContiWest to the Depositor, nor the execution, delivery or
performance by ContiWest of the Pooling and Servicing Agreement and the
transactions contemplated thereby (A) conflict with or result in a
breach of, or constitute a default under, (i) any term or provision of
the articles of incorporation or by-laws of ContiWest; (ii) any term or
provision of any material agreement, deed of trust, mortgage loan
agreement, contract, instrument or indenture, or other agreement to
which ContiWest is a party or is bound or to which any of the property
or assets of ContiWest or any of its subsidiaries is subject; (iii) to
the best of such counsel's knowledge without independent investigation
any order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over ContiWest; or (iv) any
law, rule or regulation, applicable to ContiWest; or (B) to the best of
such counsel's knowledge without independent investigation, results in
the creation or imposition of any lien, charge or encumbrance upon the
Trust Estate or upon the Certificates.
(vi) There are, to the best of such counsel's
knowledge without independent investigation, no actions, proceedings or
investigations pending with respect to which ContiWest has received
service of process or threatened against ContiWest before any court,
administrative agency or other tribunal (a) asserting the invalidity of
the Pooling and Servicing Agreement, the Underwriting Agreement or the
Certificates, (b) seeking to prevent the consummation of any of the
transactions contemplated by the Pooling and Servicing Agreement or (c)
which would materially and adversely affect the performance by
ContiWest of its obligations under, or the validity or enforceability
of, the Pooling and Servicing Agreement or the Underwriting Agreement.
H. Michael R. Mayberry, Esq., Counsel for the Depositor, shall
have furnished to the Underwriters and MBIA his written opinion, addressed to
the Underwriters and MBIA and dated the Closing Date, in form and substance
satisfactory to the Underwriters and MBIA, to the effect that:
(i) The Depositor has been duly organized and is
validly existing as a corporation in good standing under the laws of
the State of Delaware and is in good standing as a foreign corporation
in each jurisdiction in which its
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ownership or lease of property or the conduct of its business so
requires such standing except where the failure to be in good standing
would not result in a material adverse change in the condition of the
Depositor, whether or not arising in the ordinary course of business.
The Depositor has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged and to
enter into and perform its obligations under this Agreement and the
Pooling and Servicing Agreement and to cause the Certificates to be
issued.
(ii) The Depositor is not in violation of its
articles of incorporation or by-laws or in default in the performance
or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Depositor is a
party or by which it or its properties may be bound, which default
might result in any material adverse changes in the financial
condition, earnings, affairs or business of the Depositor or which
might materially and adversely affect the properties or assets, taken
as a whole, of the Depositor.
(iii) This Agreement, the Grantor Trust Agreement and
the Pooling and Servicing Agreement have been duly authorized, executed
and delivered by the Depositor and, assuming the due authorization,
execution and delivery of such agreements by the other parties thereto,
such agreements constitute valid and binding obligations, enforceable
against the Depositor in accordance with their respective terms,
subject as to enforceability to (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, (y) general principles
of equity (regardless of whether enforcement is sought in a proceeding
in equity or at law) and (z) with respect to rights of indemnity under
this Agreement, limitations of public policy under applicable
securities laws.
(iv) The execution, delivery and performance of this
Agreement, the Grantor Trust Agreement and the Pooling and Servicing
Agreement by the Depositor, the consummation of the transactions
contemplated hereby and thereby, and the issuance and delivery of the
Certificates do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Depositor is a party or by which
the Depositor is bound or to which any of the property or assets of the
Depositor or any of its subsidiaries is subject, which breach or
violation would have a material adverse effect on the business,
operations or financial condition of the Depositor or its ability to
perform its obligations under this Agreement, the Grantor Trust
Agreement and the Pooling and Servicing Agreement nor will such actions
result in a violation of the provisions of the articles of
incorporation or by-laws of the Depositor or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets,
which breach or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor or its
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ability to perform its obligations under this Agreement and the Pooling
and Servicing Agreement.
(v) The direction by the Depositor to the Trustee and
the Grantor Trustee to issue, authenticate and deliver the Certificates
has been duly authorized by the Depositor and, assuming that the
Trustee and the Grantor Trustee have been duly authorized to do so,
when executed, authenticated and delivered by the Trustee in accordance
with the Pooling and Servicing Agreement and the Grantor Trustee in
accordance with the Grantor Trust Agreement, the Certificates will be
validly issued and outstanding and will be entitled to the benefits of
the Pooling and Servicing Agreement and the Grantor Trust Agreement.
(vi) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the issuance of the Certificates, and
the sale of the Offered Certificates to the Underwriters, or the
consummation by the Depositor of the other transactions contemplated by
this Agreement and the Pooling and Servicing Agreement, except such
consents, approvals, authorizations, registrations or qualifications as
may be required under the Securities Act or state securities or Blue
Sky laws in connection with the purchase and distribution of the
Offered Certificates by the Underwriters or as have been previously
obtained.
(vii) There are not, to the best of his knowledge
without independent investigation, any actions, proceedings or
investigations pending with respect to which the Depositor has received
service of process before or threatened by any court, administrative
agency or other tribunal to which the Depositor is a party or of which
any of its properties is the subject: (a) which if determined adversely
to the Depositor would have a material adverse effect on the business,
results of operations or financial condition of the Depositor; (b)
asserting the invalidity of the Grantor Trust Agreement, the Pooling
and Servicing Agreement or the Certificates; (c) seeking to prevent the
issuance of the Certificates or the consummation by the Depositor of
any of the transactions contemplated by the Grantor Trust Agreement,
the Pooling and Servicing Agreement or this Agreement, as the case may
be; or (d) which might materially and adversely affect the performance
by the Depositor of its obligations under, or the validity or
enforceability of, the Grantor Trust Agreement, the Pooling and
Servicing Agreement, this Agreement or the Certificates.
(viii) The Certificates have been duly and validly
authorized and issued and, immediately prior to the sale of the Offered
Certificates to the Underwriters, such Certificates are owned by the
Depositor, free and clear of all Liens.
I. The Underwriters and MBIA shall have received the favorable
opinion of counsel to the Trustee and the Grantor Trustee (together, for
purposes of this section
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only, "MTT"), dated the Closing Date, addressed to the Underwriters and in form
and scope satisfactory to counsel to the Underwriters, to the effect that:
(i) MTT is a banking corporation duly incorporated
and validly existing under the law of the State of New York.
(ii) MTT has the full corporate trust power to
execute, deliver and perform its obligations under the Pooling and
Servicing Agreement and the Grantor Trust Agreement.
(iii) The execution and delivery by MTT of the
Pooling and Servicing Agreement and the Grantor Trust Agreement, and
the performance by MTT of its obligations under the Pooling and
Servicing Agreement and the Grantor Trust Agreement, have been duly
authorized by all necessary corporate action of MTT.
(iv) The Pooling and Servicing Agreement and the
Grantor Trust Agreement are valid and legally binding obligations of
MTT enforceable against MTT.
(v) The execution and delivery by MTT of the Pooling
and Servicing Agreement and the Grantor Trust Agreement does not (a)
violate the Organization Certificate of MTT or the by-laws of the MTT,
(b) to such counsel's knowledge, violate any judgment, decree or order
of any New York or United States federal court or other New York or
United States federal governmental authority by which MTT is bound or
(c) assuming the non-existence of any judgment, decree or order of any
court or other governmental authority that would be violated by such
execution and delivery, violate any New York or United States federal
statute, rule or regulation or require any consent, approval or
authorization of any New York or United States federal court or other
New York or United States federal governmental authority.
(vi) The Trust Certificates have been duly executed,
authenticated and delivered by the Trustee. The Class A-2 Floating
Certificates have been duly executed, authenticated and delivered by
the Grantor Trustee.
(vii) If the Trustee were acting as Servicer under
the Pooling and Servicing Agreement as of the date of such opinion, the
Trustee would have the full corporate trust power to perform the
obligations of the Servicer under the Pooling and Servicing Agreement;
and
(viii) To the best of such counsel's knowledge, there
are no actions, proceedings or investigations pending or threatened
against or affecting MTT before or by any court, arbitrator,
administrative agency or other governmental authority which, if decided
adversely to MTT, would materially and
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adversely affect the ability of MTT to carry out the transactions
contemplated in the Pooling and Servicing Agreement or the Grantor
Trust Agreement.
J. The Underwriters and MBIA shall have received the favorable
opinion or opinions, dated the Closing Date, of counsel for the Underwriters,
with respect to the issue and sale of the Offered Certificates, the Registration
Statement, this Agreement, the Prospectus and such other related matters as the
Underwriters may reasonably require.
K. The Underwriters and MBIA shall have received an executed
copy of the Swap Agreement with respect to the Class A-2 Floating Certificates.
L. The Depositor, ContiMortgage, ContiWest and ContiFinancial
shall each have furnished to the Underwriters and MBIA a certificate, dated the
Closing Date and signed by the Chairman of the Board, the President or a Vice
President of the Depositor, ContiMortgage, ContiWest and ContiFinancial,
respectively, stating as it relates to each, as of the Closing Date:
(i) The representations and warranties of the
Depositor, ContiMortgage and ContiWest in this Agreement are true and
correct as of the Closing Date; and the Depositor, ContiMortgage and
ContiWest have complied with each of their respective agreements
contained herein which are to have been complied with on or prior to
the Closing Date;
(ii) The information contained in the Prospectus
relating to the Depositor, ContiMortgage, ContiWest and the Home Equity
Loans is true and accurate in all material respects and nothing has
come to his or her attention that would lead such officer to believe
that the Registration Statement or the Prospectus includes any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein not misleading;
(iii) There has been no amendment or other document
filed affecting the certificate of incorporation or by-laws of the
Depositor since May 18, 1995 or the certificate of incorporation or
by-laws of ContiMortgage since October 19, 1990 or the Articles of
incorporation or by-laws of ContiWest since January 1, 1997 and no such
amendment has been authorized. No event has occurred since March 31,
1998 which has affected the good standing of the Depositor,
ContiMortgage or ContiWest under the laws of the States of Delaware and
Nevada, as applicable; and
(iv) There has not occurred any material adverse
change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings,
business or operations of the Depositor, ContiMortgage, ContiWest or
ContiFinancial from March 31, 1998. No publicly-held debt of
ContiFinancial shall have been downgraded or put on credit watch for
possible downgrade since March 31, 1998; there has been no suspension
of trading in ContiFinancial's publicly-held common stock since March
31, 1998.
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M. The Trustee shall have furnished to the Underwriters and
MBIA a certificate of the Trustee, signed by one or more duly authorized
officers of the Trustee, dated the Closing Date, as to the due authorization,
execution and delivery of the Pooling and Servicing Agreement by the Trustee and
the acceptance by the Trustee of the Trusts created thereby and the due
execution, authentication and delivery of the Certificates by the Trustee
thereunder and such other matters as the Representative shall reasonably
request.
N. The Certificate Insurance Policies and the Insurance
Agreement shall have been issued by the Certificate Insurer and shall have been
duly authenticated by an authorized agent of the Certificate Insurer, if so
required under applicable state law or regulations.
O. The Offered Certificates (other than the Subordinate
Certificates) shall have been rated in the highest rating category by Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Rating Services, a
division of the McGraw-Hill Companies, Inc. ("Standard & Poor's") and Fitch
IBCA, Inc. ("Fitch") and the Subordinate Certificates shall have been rated
"Baa3" by Moody's, "BBB-" by Standard & Poor's and "BBB" by Fitch; no Class of
Offered Certificates shall have been put on credit watch for possible downgrade.
P. The Depositor shall have furnished to the Underwriters such
further information, certificates and documents as the Underwriters may
reasonably have requested not less than three full business days prior to the
Closing Date.
Q. Prior to the Closing Date, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Certificates as herein contemplated and related proceedings or
in order to evidence the accuracy and completeness of any of the representations
and warranties, or the fulfillment of any of the conditions, herein contained,
and all proceedings taken by the Depositor in connection with the issuance and
sale of the Certificates as herein contemplated shall be satisfactory in form
and substance to the Underwriters and counsel for the Underwriters.
R. Subsequent to the execution and delivery of this Agreement
none of the following shall have occurred: (i) trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or minimum prices shall have
been established on either of such exchanges or such market by the Commission,
by such exchange or by any other regulatory body or governmental authority
having jurisdiction; (ii) a banking moratorium shall have been declared by
Federal or state authorities; (iii) the United States shall have become engaged
in hostilities, there shall have been an escalation of hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by the United States; or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets of the United States
shall be such) as to make it in each of the instances set forth
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<PAGE>
in clauses (i), (ii), (iii) and (iv) herein, in the reasonable judgment of the
Underwriters, impractical or inadvisable to proceed with the public offering or
delivery of the Certificates on the terms and in the manner contemplated in the
Prospectus.
S. The Representative shall have received letters, including
bring-down letters, from Arthur Andersen LLP, dated on or before the Closing
Date, in form and substance satisfactory to the Representative and counsel for
the Underwriters, to the effect that they have performed certain specified
procedures requested by the Representative with respect to the information set
forth in the Prospectus and certain matters relating to ContiMortgage and
ContiWest.
T. The Underwriters shall have received any other opinions
delivered to the Ratings Agencies.
U. The Policies shall have been duly executed and issued at or
prior to the Closing Date and shall conform in all material respects to the
description thereof in the Prospectus. The Insurance Agreement and the
Indemnification Agreement shall each have been duly executed and delivered by
MBIA and the other parties thereto at or prior to the Closing Date.
V. The Underwriters shall have received a favorable opinion of
Kutak Rock, counsel to MBIA, dated the Closing Date and in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) MBIA is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New
York. MBIA is validly licensed to do business in New York and is
authorized to issue the Policies and perform its obligations under the
Policies in accordance with the terms thereof.
(ii) The execution and delivery by MBIA of the
Policies and the Indemnification Agreement are within the corporate
power of MBIA and have been authorized by all necessary corporate
action on the part of MBIA; the Policies have been duly executed and is
the valid and binding obligation of the Insurer enforceable in
accordance with its terms except that the enforcement of the Policies
may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws
affecting creditors' rights generally and by general principles of
equity.
(iii) MBIA is authorized to deliver the
Indemnification Agreement, and such agreement has been duly executed
and delivered and constitutes the legal, valid and binding obligations
of MBIA enforceable in accordance with its terms except that the
enforcement of the Indemnification Agreement may be limited by laws
relating to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors' rights
generally and by general principles of equity and by public policy
considerations relating to indemnification for securities law
violations.
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In rendering this opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of MBIA and public
officials. Such opinion may assume the due authorization, execution and delivery
of the instruments and documents referred to therein by the parties thereto
other than MBIA.
W. The Underwriters shall have received from MBIA a
certificate, signed by the president, a senior vice president or a vice
president of MBIA, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Policies, the Indemnification Agreement
and the related documents and that, to the best of his or her knowledge based on
reasonable investigation:
(i) There are no actions, suits or proceedings
pending or threatened against or affecting MBIA which, if adversely
determined, individually or in the aggregate, would adversely affect
the Insurer's performance under the Policies or the Indemnification
Agreement;
(ii) Each person who as an officer or representative
of MBIA, signed or signs the Policies, the Indemnification Agreement or
any other document delivered pursuant hereto, on the date thereof, or
on the Closing Date, in connection with the transactions described in
this Agreement was, at the respective times of such signing and
delivery, and is now, duly elected or appointed, qualified and acting
as such officer or representative, and the signatures of such persons
appearing on such documents are their genuine signatures;
(iii) The information contained in the Prospectus
Supplement under the captions "Credit Enhancement - The Certificate
Insurance Policies" and "The Certificate Insurer" is true and correct
in all material respects and does not omit to state a material fact
with respect to the description of the Policies or the ability of MBIA
to meet its payment obligations under the Policies;
(iv) The tables regarding MBIA's capitalization set
forth under the caption "The Certificate Insurer" presents fairly the
capitalization of the Insurer as of March 31, 1998;
(v) On or prior to the Closing Date, there has been
no downgrading, nor has any notice been given of (A) any intended or
potential downgrading or (B) any review or possible changes in rating
the direction of which has not been indicated, in the rating accorded
the claims paying ability of MBIA by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of the Securities Act;
(vi) The audited balance sheet of MBIA as of December
31, 1996 and the related statement of income and retained earnings for
the fiscal year then ended, and the accompanying footnotes, together
with the related opinion of an independent certified public accountant,
copies of which are incorporated by reference in the Prospectus
Supplement, fairly present in all material respects the
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financial condition of MBIA as of such date and for the period covered
by such statements in accordance with generally accepted accounting
principles consistently applied; the unaudited balance sheet of MBIA as
of March 31, 1998 and the related statement of income and retained
earnings for the three-month period then ended, copies of which are
included in the Prospectus Supplement, fairly present in all material
respects the financial condition of MBIA as of such date and for the
period covered by such statements in accordance with generally accepted
accounting principles applied consistently with those principles
applied in preparing the December 31, 1997 audited statements.
(vii) to the best knowledge of such officer, since
March 31, 1998, no material adverse change has occurred in the
financial position of MBIA other than as set forth in the Prospectus
Supplement.
The officer of MBIA certifying to items (v) - (vii) shall be
an officer in charge of a principal financial function.
MBIA shall attach to such certificate a true and correct copy
of its certificate or articles of incorporation, as appropriate, and its
by-laws, all of which are in full force and effect on the date of such
certificate.
If any condition specified in this Section VII shall not have
been fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriters by notice to the Depositor at any time at or
prior to the Closing Date, and such termination shall be without liability of
any party to any other party except as provided in Section VII.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
SECTION VII. Payment of Expenses. The Depositor agrees to pay:
A. the costs incident to the authorization, issuance, sale and
delivery of the Certificates and any taxes payable in connection therewith; (b)
the costs incident to the preparation, printing and filing under the Securities
Act of the Registration Statement and any amendments and exhibits thereto; (c)
the costs of distributing the Registration Statement as originally filed and
each amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), the Prospectus and any amendment or supplement to the
Prospectus or any document incorporated by reference therein, all as provided in
this Agreement; (d) the costs of reproducing and distributing this Agreement;
(e) the fees and expenses of Stroock & Stroock & Lavan LLP in qualifying the
Certificates under the securities laws of the several jurisdictions as provided
in Section V (G) hereof and of preparing, printing and distributing a Blue Sky
Memorandum and a Legal Investment Survey (including related fees and expenses of
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counsel to the Representative); (f) any fees charged by securities rating
services for rating the Offered Certificates; (g) the cost of the accountants
comfort letter relating to the Prospectus; and (h) all other costs and expenses
incidental to the performance of the obligations of the Depositor (including
costs and expenses of counsel to the Depositor); provided that, except as
provided in this Section VII, the Underwriters shall pay their own costs and
expenses, including the costs and expenses of their counsel, any transfer taxes
on the Offered Certificates which they may sell and the expenses of advertising
any offering of the Offered Certificates made by the Underwriters, and the
Underwriters shall pay the cost of any accountant's comfort letters relating to
any Computational Materials (as defined herein).
If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section VI or Section XI, the Depositor shall
cause the Underwriters to be reimbursed for all reasonable out-of-pocket
expenses, including fees and disbursements of Stroock & Stroock & Lavan LLP,
counsel for the Underwriters.
SECTION VIII. Indemnification and Contribution.
A. The Depositor agrees to indemnify and hold harmless each
Underwriter, each Underwriter's respective officers and directors and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Securities Act from and against any and all loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of the Offered Certificates), to which such Underwriter or
any such controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment thereof
or supplement thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus, or any amendment thereof or
supplement thereto, or (iv) 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 and shall reimburse such Underwriter and each such controlling person
promptly upon demand for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Depositor
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Prospectus, or any amendment thereof or supplement thereto, or the
Registration Statement, or any amendment thereof or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Depositor by or on behalf of such Underwriter through the Representative,
specifically for inclusion therein. The foregoing indemnity agreement is in
addition to any liability which the Depositor may otherwise
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have to any Underwriter or any such officer or director or any controlling
person of any such Underwriter.
B. Each Underwriter severally agrees to indemnify and hold
harmless the Depositor, each of its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act against any and all loss,
claim, damage or liability, or any action in respect thereof, to which the
Depositor or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) 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, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Depositor by or on behalf of such Underwriter
specifically for inclusion therein, and shall reimburse the Depositor and any
such director, officer or controlling person for any legal or other expenses
reasonably incurred by the Depositor or any director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any Underwriter may otherwise have to the Depositor or any such director,
officer or controlling person.
C. Promptly after receipt by any indemnified party under this
Section VIII of notice of any claim or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section VIII, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section VIII except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify any indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this Section
VIII.
If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, except to
the extent provided in the next following paragraph, the indemnifying party
shall not be liable to the indemnified party under this Section VIII for any
legal or other expenses
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subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by the related
Underwriter, if the indemnified parties under this Section VIII consist of one
or more Underwriters or any of its or their controlling persons, or the
Depositor, if the indemnified parties under this Section VIII consist of the
Depositor or any of the Depositor's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity
agreements contained in Section VIII (A) and (B), shall use its reasonable best
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. No indemnifying party shall be liable for any settlement of any
such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject of such action.
Notwithstanding the foregoing paragraph, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid
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request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement.
D. Each Underwriter agrees to provide the Depositor no later
than two Business Days prior to the day on which the Prospectus Supplement is
required to be filed pursuant to Section I (A) hereof with a copy of any
Computational Materials (defined below) produced by such Underwriter for filing
with the Commission on Form 8-K.
E. Each Underwriter severally agrees, to indemnify and hold
harmless the Depositor, each of the Depositor's officers and directors and each
person who controls the Depositor within the meaning of Section 15 of the
Securities Act against any and all losses, claims, damages or liabilities, to
which they may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement of a material fact contained
in the Computational Materials provided by such Underwriter, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading when read in conjunction with the
Prospectus, and agrees to reimburse each such indemnified party for any legal or
other expenses reasonably incurred by him, her or it in connection with
investigating or defending or preparing to defend any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that in no
event shall an Underwriter be liable to the Depositor under this paragraph E in
an amount in excess of the fees received by such Underwriter in connection with
the offering of the Offered Certificates. The obligations of an Underwriter
under this Section VIII (E) shall be in addition to any liability which such
Underwriter may otherwise have.
The procedures set forth in Section VIII (C) shall be equally
applicable to this Section VIII (E).
F. The Depositor agrees to indemnify and hold harmless each
Underwriter, each Underwriter's respective officers and directors and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of the Offered Certificates), to which they may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement of a material fact contained in the Seller Provided
Information (as defined below) provided by the Company, 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, and
agrees to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by him, her or it in connection with investigating or
defending or preparing to defend any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing indemnity agreement is in
addition to
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any liability which the Depositor may otherwise have to any Underwriter or any
such officer or director or any controlling person of any such Underwriter.
The procedures set forth in Section VIII (C) shall be equally
applicable to this Section VIII (F).
G. If the indemnification provided for in this Section VIII
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section VIII (A), (B), (E) or (F) in respect of any
loss, claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Depositor on the one hand and the Underwriters on the
other from the offering of the relevant class of Offered Certificates or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law
or if the indemnified party failed to give the notice required under Section
VIII (C), in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Depositor on the one hand and the related Underwriter on the other with respect
to the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations.
The relative benefits of an Underwriter and the Depositor
shall be deemed to be in such proportion as the sum of the original principal
amount of the offering, plus the total proceeds to the Depositor from the sale
of the Class A-10 IO Certificates (before deducting expenses) bears to the total
underwriting discounts and commissions received by the related Underwriter from
time to time in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall
be determined by reference to whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact relates
to information supplied by the Depositor or by such Underwriter, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section VIII (G) were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purposes) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
VIII (G) shall be deemed to include, for purposes of this Section VIII (G), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
30
<PAGE>
For purposes of this Section VIII, in no case shall any
Underwriter (except with respect to any document (other than the Computational
Materials) incorporated by reference into the Registration Statement or
Prospectus at the request of such Underwriter through the Representative and
except as may be provided in any agreement among the Underwriters relating to
the offering of the Offered Certificates) be responsible for any amount in
excess of the amount by which (x) the amount received by such Underwriter in
connection with its sale of the Offered Certificates exceeds (y) the amount paid
by such Underwriter to the Depositor for the Offered Certificates hereunder. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of fraudulent misrepresentation.
H. For purposes of this Section VIII, as to each Underwriter
the term "Computational Materials" means collectively, "Computational
Materials," "Collateral Term Sheets" and "Structural Term Sheets" as such terms
are defined in the No-Action Letter of May 20, 1994 issued by the Securities and
Exchange Commission (the "Commission") to Kidder, Peabody Acceptance Corporation
I, Kidder, Peabody & Co. Incorporated and Kidder Structured Asset Corporation,
as made applicable to other issuers and underwriters by the Commission in
response to the request of the Public Securities Association dated May 24, 1994,
and the No-Action Letter of February 17, 1995 issued by the Commission to the
Public Securities Association, provided, that the term Computational Materials
shall not include any Seller Provided Information. "Seller Provided Information"
means any computer tape (or other information) furnished to any Underwriter by
any Seller concerning the assets comprising the Trust.
I. The Underwriters confirm that the information set forth in
the last paragraph on the cover page of and under the caption "Underwriting" in
the Prospectus Supplement and the Computational Materials are correct and
constitute the only information furnished in writing to the Depositor by or on
behalf of any Underwriter specifically for inclusion in the Registration
Statement and the Prospectus.
SECTION IX. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or contained in certificates of officers of the Depositor
submitted pursuant hereto shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Underwriters or
controlling persons thereof, or by or on behalf of the Depositor, and shall
survive delivery of any Offered Certificates to the Underwriters.
SECTION X. Default by One or More of the Underwriters. If one
or more of the Underwriters participating in the public offering of the Offered
Certificates shall fail at the Closing Date to purchase the Offered Certificates
which it is (or they are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon
31
<PAGE>
and upon the terms herein set forth. If, however, the Underwriters have not
completed such arrangements within such 24-hour period, then
(i) if the aggregate principal amount of Defaulted
Certificates does not exceed 10% of the aggregate principal amount of
the Offered Certificates to be purchased pursuant to this Agreement,
the non-defaulting Underwriters named in this Agreement shall be
obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all such non-defaulting Underwriters, or
(ii) if the aggregate principal amount of Defaulted
Certificates exceeds 10% of the aggregate principal amount of the
Offered Certificates to be purchased pursuant to this Agreement, this
Agreement shall terminate, without any liability on the part of any
non-defaulting Underwriters.
No action taken pursuant to this Section X shall relieve any
defaulting Underwriter from the liability with respect to any default of such
Underwriter under this Agreement.
In the event of a default by any Underwriter as set forth in
this Section X, each of the Underwriters and the Depositors shall have the right
to postpone the Closing Date for a period not exceeding five Business Days in
order that any required changes in the Registration Statement or Prospectus or
in any other documents or arrangements may be effected.
SECTION XI. Termination of Agreement. The Underwriters may
terminate this Agreement immediately upon notice to the Depositor, at any time
at or prior to the Closing Date if any of the events or conditions described in
Section VI (R) of this Agreement shall occur and be continuing, or if any other
closing condition set forth in Section VI shall not have been fulfilled when
required to be fulfilled. In the event of any such termination, the covenant set
forth in Section V (H), the provisions of Section VII, the indemnity and
contribution agreements set forth in Section VIII, and the provisions of
Sections IX, XIV and XVI shall remain in effect.
SECTION XII. Notices. All statements, requests, notices and
agreements hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Merrill Lynch & Co., World Financial Center,
North Tower, 250 Vesey Street, New York, New York 10281, Attention: Asset
Finance Group (Fax: 212-449-9015); and
B. if to the Depositor, shall be delivered or sent by mail,
telex or facsimile transmission to care of ContiSecurities Asset Funding Corp.,
3811 West Charleston Boulevard, Suite 104, Las Vegas Nevada 81092 (fax:
702-822-5839), with a copy to
32
<PAGE>
ContiFinancial Corporation, 277 Park Avenue, New York, New York 10172,
Attention: Chief Counsel (Fax: 212-207-2937).
SECTION XIII. Persons Entitled to the Benefit of this
Agreement. This Agreement shall inure to the benefit of and be binding upon the
Underwriters and the Depositor, and their respective successors. This Agreement
and the terms and provisions hereof are for the sole benefit of only those
persons, except that the representations, warranties, indemnities and agreements
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any of the Underwriters within the
meaning of Section 15 of the Securities Act, and for the benefit of each
Underwriter's respective officers and directors and for the benefit of directors
of the Depositor, officers of the Depositor who have signed the Registration
Statement and any person controlling the Depositor within the meaning of Section
15 of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
XIII, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
SECTION XIV. Survival. The respective indemnities,
representations, warranties and agreements of the Depositor and the Underwriters
contained in this Agreement, or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Certificates and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
SECTION XV. Definition of the Term "Business Day". For
purposes of this Agreement, "Business Day" means any day on which the New York
Stock Exchange, Inc. is open for trading.
SECTION XVI. Governing Law: Submission to Jurisdiction; Waiver
of Jury Trial. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York
without giving effect to the principles of conflicts of law thereof.
The parties hereto hereby 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
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 agree that all claims in respect of
any such action or proceeding may be heard or determined in New York State court
or, to the extent permitted by law, in such federal court.
The parties hereto hereby irrevocably waive, to the fullest
extent permitted by law, any and all rights to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
33
<PAGE>
SECTION XVII. Counterparts. This Agreement may be executed in
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION XVIII. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
SECTION XIX.. Miscellaneous. Merrill Lynch will be deemed to
be a Selling Agent with respect to the Class A-2 Internal Certificates.
34
<PAGE>
If the foregoing correctly sets forth the agreement between
the Depositor and the Underwriters, please indicate your acceptance in the space
provided for the purpose below.
Very truly yours,
CONTISECURITIES ASSET FUNDING CORP.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Acting on its own behalf and as
Representative of the Several
Underwriters referred to in the foregoing
Agreement
By:
--------------------------------------
Name:
Title:
CONTIMORTGAGE CORPORATION CONTIWEST CORPORATION
Accepts and hereby agrees solely Accepts and hereby agrees solely
to the provisions of Section V (H) to the provisionsof Section V (I)
By: By:
------------------------------- -------------------------------
Name: Name:
Title: Title:
By: By:
-------------------------------- -------------------------------
Name: Name:
Title: Title:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
Class A-1 Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $19,000,000 0.1000%
Incorporated
Bear, Stearns & Co. Inc. $19,000,000 0.1000%
Credit Suisse First Boston Corporation $19,000,000 0.1000%
Greenwich Capital Markets, Inc. $19,000,000 0.1000%
Morgan Stanley & Co. Incorporated $19,000,000 0.1000%
Nomura Securities International, Inc. $19,000,000 0.1000%
</TABLE>
<TABLE>
<CAPTION>
Class A-2 Fixed
Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $41,666,670 0.1600%
Incorporated
Bear, Stearns & Co. Inc. $41,666,666 0.1600%
Credit Suisse First Boston Corporation $41,666,666 0.1600%
Greenwich Capital Markets, Inc. $41,666,666 0.1600%
Morgan Stanley & Co. Incorporated $41,666,666 0.1600%
Nomura Securities International, Inc. $41,666,666 0.1600%
</TABLE>
<TABLE>
<CAPTION>
Class A-2 Floating Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $29,166,670 0.1600%
Incorporated
Bear, Stearns & Co. Inc. $29,166,666 0.1600%
Credit Suisse First Boston Corporation $29,166,666 0.1600%
Greenwich Capital Markets, Inc. $29,166,666 0.1600%
Morgan Stanley & Co. Incorporated $29,166,666 0.1600%
Nomura Securities International, Inc. $29,166,666 0.1600%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A-3 Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $45,833,335 0.1800%
Incorporated
Bear, Stearns & Co. Inc. $45,833,333 0.1800%
Credit Suisse First Boston Corporation $45,833,333 0.1800%
Greenwich Capital Markets, Inc. $45,833,333 0.1800%
Morgan Stanley & Co. Incorporated $45,833,333 0.1800%
Nomura Securities International, Inc. $45,833,333 0.1800%
</TABLE>
<TABLE>
<CAPTION>
Class A-4 Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $30,833,335 0.2500%
Incorporated
Bear, Stearns & Co. Inc. $30,833,333 0.2500%
Credit Suisse First Boston Corporation $30,833,333 0.2500%
Greenwich Capital Markets, Inc. $30,833,333 0.2500%
Morgan Stanley & Co. Incorporated $30,833,333 0.2500%
Nomura Securities International, Inc. $30,833,333 0.2500%
</TABLE>
<TABLE>
<CAPTION>
Class A-5 Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $15,000,000 0.3000%
Incorporated
Bear, Stearns & Co. Inc. $15,000,000 0.3000%
Credit Suisse First Boston Corporation $15,000,000 0.3000%
Greenwich Capital Markets, Inc. $15,000,000 0.3000%
Morgan Stanley & Co. Incorporated $15,000,000 0.3000%
Nomura Securities International, Inc. $15,000,000 0.3000%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A-6 Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $16,166,670 0.3300%
Incorporated
Bear, Stearns & Co. Inc. $16,166,666 0.3300%
Credit Suisse First Boston Corporation $16,166,666 0.3300%
Greenwich Capital Markets, Inc. $16,166,666 0.3300%
Morgan Stanley & Co. Incorporated $16,166,666 0.3300%
Nomura Securities International, Inc. $16,166,666 0.3300%
</TABLE>
<TABLE>
<CAPTION>
Class A-7 Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $16,766,670 0.3500%
Incorporated
Bear, Stearns & Co. Inc. $16,766,666 0.3500%
Credit Suisse First Boston Corporation $16,766,666 0.3500%
Greenwich Capital Markets, Inc. $16,766,666 0.3500%
Morgan Stanley & Co. Incorporated $16,766,666 0.3500%
Nomura Securities International, Inc. $16,766,666 0.3500%
</TABLE>
<TABLE>
<CAPTION>
Class A-8 Certificates
Underwriters Underwriting
Principal Amount Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $235,000,000 0.2400%
Incorporated
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A-9 Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $23,900,000 0.2000%
Incorporated
Bear, Stearns & Co. Inc. $23,900,000 0.2000%
ContiFinancial Services Corporation $15,000,000 0.2000%
Credit Suisse First Boston Corporation $23,900,000 0.2000%
Greenwich Capital Markets, Inc. $23,900,000 0.2000%
Morgan Stanley & Co. Incorporated $23,900,000 0.2000%
Nomura Securities International, Inc. $23,900,000 0.2000%
</TABLE>
<TABLE>
<CAPTION>
Class A-10 IO Certificates
Underwriters Percentage Interest Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith 100% 0.5000%
Incorporated
</TABLE>
<TABLE>
<CAPTION>
Class B Certificates
Underwriters Principal Amount Underwriting
Discount
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith $11,666,670 0.6000%
Incorporated
Bear, Stearns & Co. Inc. $11,666,666 0.6000%
Credit Suisse First Boston Corporation $11,666,666 0.6000%
Greenwich Capital Markets, Inc. $11,666,666 0.6000%
Morgan Stanley & Co. Incorporated $11,666,666 0.6000%
Nomura Securities International, Inc. $11,666,666 0.6000%
</TABLE>
<PAGE>
EXHIBIT A
[LETTERHEAD OF CONTIFINANCIAL CORPORATION]
June 9, 1998
Merrill Lynch, Pierce, Fenner & Smith Incorporated
As Representative of the Several Underwriters
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281
Ladies and Gentlemen:
This Guaranty is made by ContiFinancial Corporation, a Delaware corporation with
its principal office at 277 Park Avenue, New York, New York 10172 ("CFC"), in
favor of Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Representative
of the Several Underwriters, with its principal office at World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281.
As an inducement to you and in consideration of your entering into the
Underwriting Agreement referred to below, CFC hereby absolutely, unconditionally
and irrevocably guarantees the prompt performance of the obligations, including
any payment obligations, of ContiSecurities Asset Funding Corp., ("Depositor"),
a Delaware corporation with its principal office at 3811 West Charleston
Boulevard, Las Vegas, Nevada 81092, under Section VIII of the Underwriting
Agreement, dated as of June 9, 1998, between Depositor and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as Representative of the Several
Underwriters. This Guaranty is a guaranty of performance and payment and not of
collection. The obligations of CFC hereunder shall not be impaired by failure of
Depositor to provide notice to CFC of any modification or amendment of said
contract agreed to by the parties thereto. This Guaranty may be amended only by
an instrument in writing executed by the undersigned.
This Guaranty shall be governed by the laws of the State of New York
applicable to agreements made and to be performed in the State of New York
without giving effect to the conflict of law rules thereof.
<PAGE>
IN WITNESS WHEREOF, CFC has caused this Guaranty to be executed by duly
authorized corporate officers the day and year first above written.
CONTIFINANCIAL CORPORATION
By:
-----------------------
Name:
Title:
By:
-----------------------
Name:
Title:
ACCEPTED
as of June , 1998
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
as representative of the Several Underwriters
By:
------------------------------------------
Name:
Title:
<PAGE>
===============================================================================
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1998
among
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor,
CONTIMORTGAGE CORPORATION,
as Seller and Servicer,
CONTIWEST CORPORATION,
as Seller
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
Home Equity Loan Pass-Through Certificates
Series 1998-2
===============================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Article I DEFINITIONS; RULES OF CONSTRUCTION.............................................................3
Section 1.01 Definitions.......................................................................3
-----------
Section 1.02 Use of Words and Phrases.........................................................30
------------------------
Section 1.03 Captions; Table of Contents......................................................30
---------------------------
Section 1.04 Opinions.........................................................................30
--------
Article II ESTABLISHMENT AND ORGANIZATION OF THE TRUST..................................................32
Section 2.01 Establishment of the Trust.......................................................32
--------------------------
Section 2.02 Office...........................................................................32
------
Section 2.03 Purposes and Powers..............................................................32
-------------------
Section 2.04 Appointment of the Trustee; Declaration of Trust.................................32
------------------------------------------------
Section 2.05 Expenses of the Trust............................................................32
---------------------
Section 2.06 Ownership of the Trust...........................................................33
----------------------
Section 2.07 Situs of the Trust...............................................................33
------------------
Section 2.08 Miscellaneous REMIC Provisions...................................................33
------------------------------
Article III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR, THE SERVICER AND THE
SELLERS; COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS..............................38
Section 3.01 Representations and Warranties of the Depositor..................................38
-----------------------------------------------
Section 3.02 Representations and Warranties of the Servicer...................................40
----------------------------------------------
Section 3.03 Representations and Warranties of the Sellers....................................42
---------------------------------------------
Section 3.04 Covenants of the Sellers to Take Certain Actions with Respect to the
--------------------------------------------------------------------
Home Equity Loans In Certain Situations..........................................48
---------------------------------------
Section 3.05 Conveyance of the Home Equity Loans and Qualified Replacement Mortgages..........56
-----------------------------------------------------------------------
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
------------------------------------------------------------------
Certification by Trustee.........................................................60
------------------------
Article IV ISSUANCE AND SALE OF CERTIFICATES............................................................63
Section 4.01 Issuance of Certificates.........................................................63
------------------------
Section 4.02 Sale of Certificates.............................................................63
--------------------
Article V CERTIFICATES AND TRANSFER OF INTERESTS........................................................64
Section 5.01 Terms............................................................................64
-----
Section 5.02 Forms............................................................................64
-----
Section 5.03 Execution, Authentication and Delivery...........................................64
--------------------------------------
Section 5.04 Registration and Transfer of Certificates........................................65
-----------------------------------------
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates................................67
-------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 5.06 Persons Deemed Owners............................................................68
---------------------
Section 5.07 Cancellation.....................................................................68
------------
Section 5.08 Limitation on Transfer of Ownership Rights.......................................68
------------------------------------------
Section 5.09 Assignment of Rights.............................................................69
--------------------
Article VI COVENANTS ...................................................................................71
Section 6.01 Distributions....................................................................71
-------------
Section 6.02 Money for Distributions to be Held in Trust; Withholding.........................71
--------------------------------------------------------
Section 6.03 Protection of Trust Estate.......................................................72
--------------------------
Section 6.04 Performance of Obligations.......................................................73
--------------------------
Section 6.05 Negative Covenants...............................................................73
------------------
Section 6.06 No Other Powers..................................................................74
---------------
Section 6.07 Limitation of Suits..............................................................74
-------------------
Section 6.08 Unconditional Rights of Owners to Receive Distributions..........................75
-------------------------------------------------------
Section 6.09 Rights and Remedies Cumulative...................................................75
------------------------------
Section 6.10 Delay or Omission Not Waiver.....................................................75
----------------------------
Section 6.11 Control by Owners................................................................75
-----------------
Section 6.12 Indemnification..................................................................76
---------------
Section 6.13 Access to Names and Addresses of Owners of Certificates..........................76
-------------------------------------------------------
Article VII ACCOUNTS, DISBURSEMENTS AND RELEASES........................................................78
Section 7.01 Collection of Money..............................................................78
-------------------
Section 7.02 Establishment of Accounts........................................................78
-------------------------
Section 7.03 Flow of Funds....................................................................78
-------------
Section 7.04 [Reserved].......................................................................83
----------
Section 7.05 Investment of Accounts...........................................................83
----------------------
Section 7.06 Payment of Trust Expenses........................................................83
-------------------------
Section 7.07 Eligible Investments.............................................................84
--------------------
Section 7.08 Accounting and Directions by Trustee.............................................86
------------------------------------
Section 7.09 Reports by Trustee to Owners and the Certificate Insurer.........................87
--------------------------------------------------------
Section 7.10 Reports by Trustee...............................................................90
------------------
Section 7.11 Preference Payments..............................................................90
-------------------
Article VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS..........................................92
Section 8.01 Servicer and Sub-Servicers.......................................................92
--------------------------
Section 8.02 Collection of Certain Home Equity Loan Payments..................................93
-----------------------------------------------
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers......................93
-----------------------------------------------------------
Section 8.04 Successor Sub-Servicers..........................................................94
-----------------------
Section 8.05 Liability of Servicer; Indemnification...........................................94
--------------------------------------
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or the Owners..........94
-----------------------------------------------------------------------
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee..................95
---------------------------------------------------------------
Section 8.08 Principal and Interest Account...................................................95
------------------------------
Section 8.09 Delinquency Advances and Servicing Advances......................................97
-------------------------------------------
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans...........................98
------------------------------------------------------
Section 8.11 Maintenance of Insurance.........................................................98
------------------------
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements......................99
-----------------------------------------------------------
Section 8.13 Realization Upon Defaulted Home Equity Loans; Modification......................100
----------------------------------------------------------
Section 8.14 Trustee to Cooperate; Release of Files..........................................102
--------------------------------------
Section 8.15 Servicing Compensation..........................................................103
----------------------
Section 8.16 Annual Statement as to Compliance...............................................103
---------------------------------
Section 8.17 Annual Independent Certified Public Accountants' Reports........................103
--------------------------------------------------------
Section 8.18 Access to Certain Documentation and Information Regarding the Home
------------------------------------------------------------------
Equity Loans....................................................................103
------------
Section 8.19 Assignment of Agreement.........................................................104
-----------------------
Section 8.20 Removal of Servicer; Resignation of Servicer....................................104
--------------------------------------------
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions Insurance..............109
------------------------------------------------------------------
Article IX TERMINATION OF TRUST........................................................................110
Section 9.01 Termination of Trust............................................................110
--------------------
Section 9.02 Termination Upon Option of Owners of Class R-I Certificates.....................110
-----------------------------------------------------------
Section 9.03 Termination Upon Loss of REMIC Status...........................................111
-------------------------------------
Section 9.04 Disposition of Proceeds.........................................................113
-----------------------
Article X THE TRUSTEE ................................................................................ 114
Section 10.01 Certain Duties and Responsibilities.............................................114
-----------------------------------
Section 10.02 Removal of Trustee for Cause....................................................115
----------------------------
Section 10.03 Certain Rights of the Trustee...................................................117
-----------------------------
Section 10.04 Not Responsible for Recitals or Issuance of Certificates........................118
--------------------------------------------------------
Section 10.05 May Hold Certificates...........................................................118
---------------------
Section 10.06 Money Held in Trust.............................................................118
-------------------
Section 10.07 Compensation and Reimbursement; No Lien for Fees................................119
------------------------------------------------
Section 10.08 Corporate Trustee Required; Eligibility.........................................119
---------------------------------------
Section 10.09 Resignation and Removal; Appointment of Successor...............................119
-------------------------------------------------
Section 10.10 Acceptance of Appointment by Successor Trustee..................................121
----------------------------------------------
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the
------------------------------------------------------------------
Trustee.........................................................................121
-------
Section 10.12 Reporting; Withholding..........................................................121
----------------------
Section 10.13 Liability of the Trustee........................................................122
------------------------
Section 10.14 Appointment of Co-Trustee or Separate Trustee...................................123
---------------------------------------------
Article XI MISCELLANEOUS...............................................................................125
Section 11.01 Compliance Certificates and Opinions............................................125
------------------------------------
Section 11.02 Form of Documents Delivered to the Trustee......................................125
------------------------------------------
Section 11.03 Acts of Owners..................................................................126
--------------
Section 11.04 Notices, etc. to Trustee.......................................................127
-------------------------
Section 11.05 Notices and Reports to Owners; Waiver of Notices................................127
------------------------------------------------
Section 11.06 Rules by Trustee................................................................127
----------------
Section 11.07 Successors and Assigns..........................................................127
----------------------
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
Section 11.08 Severability....................................................................128
------------
Section 11.09 Benefits of Agreement...........................................................128
---------------------
Section 11.10 Legal Holidays..................................................................128
--------------
Section 11.11 Governing Law; Submission to Jurisdiction.......................................128
-----------------------------------------
Section 11.12 Counterparts....................................................................129
------------
Section 11.13 Usury...........................................................................129
-----
Section 11.14 Amendment.......................................................................129
---------
Section 11.15 Paying Agent; Appointment and Acceptance of Duties..............................130
--------------------------------------------------
Section 11.16 REMIC Status....................................................................131
------------
Section 11.17 Additional Limitation on Action and Imposition of Tax...........................132
-----------------------------------------------------
Section 11.18 Appointment of Tax Matters Person...............................................133
---------------------------------
Section 11.19 The Certificate Insurer.........................................................133
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Section 11.20 Reserved........................................................................133
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Section 11.21 Third Party Rights..............................................................133
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Section 11.22 Notices.........................................................................133
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</TABLE>
SCHEDULE I-A I-A-1
SCHEDULE I-B I-B-1
SCHEDULE I-C I-C-1
SCHEDULE II II-1
SCHEDULE III III-1
SCHEDULE IV IV-1
SCHEDULE V V-1
EXHIBIT A-1 A-1-1
EXHIBIT A-2-F A-2-F-1
EXHIBIT A-2-I A-2-I-1
EXHIBIT A-3 A-3-1
EXHIBIT A-4 A-4-1
EXHIBIT A-5 A-5-1
EXHIBIT A-6 A-6-1
EXHIBIT A-7 A-7-1
EXHIBIT A-8 A-8-1
EXHIBIT A-9 A-9-1
EXHIBIT A-10 IO A-10-IO-1
EXHIBIT B B-1
EXHIBIT C C-1
EXHIBIT R-I R-I-1
EXHIBIT R-II R-II-1
EXHIBIT R-III R-III-1
EXHIBIT D D-1
EXHIBIT E E-1
EXHIBIT F F-1
EXHIBIT G G-1
EXHIBIT H H-1
EXHIBIT I I-1
-iv-
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to CONTIMORTGAGE HOME
EQUITY LOAN TRUST 1998-2, dated as of June 1, 1998 by and among
CONTISECURITIES ASSET FUNDING CORP., a Delaware corporation, in its
capacity as Depositor (the "Depositor"), CONTIMORTGAGE CORPORATION, a
Delaware corporation in its capacities as a Seller (in such capacity, a
"Seller") and as Servicer (in such capacity, the "Servicer"), CONTIWEST
CORPORATION, a Nevada corporation, in its capacity as a Seller (a
"Seller" and together with ContiMortgage Corporation, the "Sellers") and
MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation,
in its capacity as the trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish the Trust and two
subtrusts and provide for the allocation and sale of the beneficial
interests therein and the maintenance and distribution thereof;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the Trust Estate;
WHEREAS, all things necessary to make the Certificates, when
executed and authenticated by the Trustee, valid instruments, and to make
this Agreement a valid agreement, in accordance with their and its terms,
have been done;
WHEREAS, Manufacturers and Traders Trust Company is willing to serve
in the capacity of Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Sellers, the Servicer, and the Trustee
hereby agree as follows:
CONVEYANCE
To provide for the distribution of the interest on and/or principal
of the Certificates in accordance with their terms, all of the sums
distributable under this Agreement with respect to the Certificates and
the performance of the covenants contained in this Agreement, each Seller
hereby bargains, sells, conveys, assigns and transfers to the Depositor
and the Depositor hereby bargains, sells, conveys, assigns and transfers
to the Trust, without recourse and for the exclusive benefit of the
Owners of the Certificates and the Certificate Insurer, all of its
respective right, title and interest in and to any and all benefits
accruing to it from (a) the Home Equity Loans (other than any principal
and interest payments received thereon on or prior to the Cut-Off Date)
listed in Schedules I-A, I-B and I-C to this Agreement which the Sellers
are causing to be delivered to the Depositor and the Depositor is causing
to be delivered to the Trustee herewith (and all substitutions therefor
as provided by Sections 3.03, 3.04 and 3.06), together with the related
Home Equity Loan documents and each Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing;
(b) such amounts as may be held by the Trustee in the Certificate Account
together with investment earnings on such amounts and such amounts as may
be held in the name of the Trustee in the Principal and Interest Account,
if any, exclusive of investment earnings thereon (except as otherwise
provided herein), whether in the form of cash, instruments, securities or
<PAGE>
other properties (including any Eligible Investments held by the
Servicer); (c) the Insurance Agreement; (d) the Certificate Insurance
Policy; and (e) proceeds of all the foregoing (including, but not by way
of limitation, all proceeds of any mortgage insurance, hazard insurance
and title insurance policy relating to the Home Equity Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and
every kind, and other forms of obligations and receivables which at any
time constitute all or part of or are included in the proceeds of any of
the foregoing) to pay the Certificates as specified herein ((a)-(e) above
shall be collectively referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties
herein to the best of its ability to the end that the interests of the
Owners may be adequately and effectively protected.
-2-
<PAGE>
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have
the meanings set forth below, unless the context clearly indicates
otherwise:
"Account": Any account established in accordance with Section 7.02
or 8.08 hereof.
"Accrual Period": With respect to the Fixed Rate Certificates (other
than the Class A-1 Certificates and the Class A-2 Internal Certificates)
and any Payment Date, the calendar month immediately preceding the month
in which the Payment Date occurs (or the period from the Cut-Off Date to
the end of the calendar month in which the Cut-Off Date occurs in the
case of the first Payment Date). A "calendar month" shall be deemed to be
30 days. With respect to the Adjustable Rate Certificates, the Class A-1
Certificates and the Class A-2 Internal Certificates and any Payment
Date, the period commencing on the immediately preceding Payment Date (or
the Closing Date in the case of the first Payment Date) to and including
the day prior to the current Payment Date. All calculations of interest
on the Fixed Rate Certificates will be made on the basis of a 360-day
year assumed to consist of twelve 30-day months and calculations of
interest on the Adjustable Rate Certificates and or the Class A-1
Certificates will be made on the basis of the actual number of days
elapsed in the related Accrual Period and in a year of 360 days.
"Adjustable Rate Certificates": The Class A-8 and Class A-9
Certificates.
"Adjustable Rate Home Equity Loans": The Home Equity Loans
identified in Schedule I-B and Schedule I-C hereto as having adjustable
Coupon Rates, including any Qualified Replacement Mortgages delivered in
replacement thereof.
"Adjustable Rate Pool 1": The Home Equity Loans identified in the
related Schedule of Home Equity Loans as having adjustable Coupon Rates
in Schedule I-B hereto, including any Qualified Replacement Mortgages
delivered in replacement thereof.
"Adjustable Rate Pool 2": The Home Equity Loans identified in the
related Schedule of Home Equity Loans as having adjustable Coupon Rates
in Schedule I-C hereto, including any Qualified Replacement Mortgages
delivered in replacement thereof.
"Aggregate Class A Trust Certificate Principal Balance": As of any
time of determination, the sum of the Class A Certificate Principal
Balances of all Class A Trust Certificates. Unless otherwise specified
herein with respect to any particular provision, with respect to a
Payment Date, the "Aggregate Class A Trust Certificate Principal Balance"
shall be calculated after taking into account the Class A Principal
Distribution Amount for both Loan Groups on such Payment Date.
-3-
<PAGE>
"Aggregate Class A Overcollateralization Deficit": As of any Payment
Date, the excess of (x) the Aggregate Class A Trust Certificate Principal
Balance over (y) the outstanding Total Loan Balance, calculated after
taking into account the reduction on such Payment Date of the Aggregate
Class A Trust Certificate Principal Balance resulting from the
distribution of the Principal Remittance Amounts for both Loan Groups on
such Payment Date.
"Aggregate Extra Principal Distribution Amount": As of any Payment
Date, the excess, if any, of (x) the Class A Principal Distribution
Amount for both Loan Groups plus the Class B Principal Distribution
Amount over (y) the Principal Remittance Amounts for both Loan Groups, in
each case with respect to such Payment Date.
"Aggregate Total Available Funds": As of any Payment Date, the sum
of (a) the sum of the Interest Amount Available for both Loan Groups and
(b) the sum of the Principal Remittance Amounts for both Loan Groups,
less any such amount that cannot be distributed to the Owners of the
Class A Trust Certificates as a result of proceedings under the United
States Bankruptcy Code.
"Aggregate Trust Certificate Principal Balance": As of any time of
determination thereof, the sum of the Aggregate Class A Trust Certificate
Principal Balance and the Class B Certificate Principal Balance, in each
case as of such time.
"Agreement": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
"Applied Realized Loss Amount": As of any Payment Date, the excess
of (x) the Aggregate Trust Certificate Principal Balance on such Payment
Date, after taking into account all distributions of principal of the
Class A Trust Certificates and the Class B Certificates on such Payment
Date, but prior to the reduction of the Class B Certificate Principal
Balance pursuant to Section 7.03(i), if any, on such Payment Date over
(y) the Total Loan Balance.
"Appraised Value": The appraised value of any Property based upon
the appraisal or other valuation made at the time of the origination of
the related Home Equity Loan, or, in the case of a Home Equity Loan which
is a purchase money mortgage, the sales price of the Property at such
time of origination, if such sales price is less than such appraised
value.
"Authorized Officer": With respect to any Person, any officer of
such Person who is authorized to act for such Person in matters relating
to the Agreement, and whose action is binding upon such Person; with
respect to the Depositor, the Sellers and the Servicer, initially
including those individuals whose names appear on the lists of Authorized
Officers delivered at the Closing; with respect to the Trustee, any Vice
President, Assistant Vice President, Trust Officer or any Officer of the
Trustee located at the Corporate Trust Office.
"Available Funds": As defined in Section 7.03(b).
"Business Day": Any day that is not a Saturday, Sunday or other day
on which the Certificate Insurer or commercial banking institutions in
The City of New York, or in the city in which the principal corporate
trust office of the Trustee is located, are authorized or obligated by
law or executive order to be closed.
-4-
<PAGE>
"Certificate": Any one of the Class A Trust Certificates, Class B
Certificates, Class C Certificates, Class R-I Certificates, Class R-II
Certificates or Class R Certificates, each representing the interests and
the rights described in this Agreement.
"Certificate Account": The certificate account established in
accordance with Section 7.02 hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall
not be commingled with other funds held by the Trustee.
"Certificate Insurance Policy": The certificate guaranty insurance
policy (number 26884) dated June 29, 1998 issued by the Certificate
Insurer for the benefit of the Owners of the Class A Trust Certificates
pursuant to which the Certificate Insurer guarantees Insured Payments.
"Certificate Insurance Policy-Grantor Trust": The Certificate
Insurance Policy (number 26885) dated June 29, 1998 issued by the
Certificate Insurer for the benefit of the owners of Class A-2 Floating
Certificate issued by the ContiMortgage Grantor Trust 1998-A pursuant to
which the Certificate Insurer guarantees the Insured Payments (as defined
therein).
"Certificate Insurer": MBIA Insurance Corporation, a New York stock
insurance company, or any successor thereto, as issuer of the Certificate
Insurance Policy.
"Certificate Insurer Default": The existence and continuance of any
of the following:
(a) the Certificate Insurer fails to make a payment required under
the Certificate Insurance Policy in accordance with its terms; or
(b) (i) the entry by a court having jurisdiction in the premises of
(A) a final and nonappealable decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency,
rehabilitation, reorganization or other similar law or (B) a final and
nonappealable decree or order adjudging the Certificate Insurer as
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganizing, rehabilitation, arrangement, adjustment or composition of
or in respect of the Certificate Insurer under any applicable United
States federal or state law, or appointing a custodian, receiver,
liquidator, rehabilitator, assignee, trustee, sequestrator or other
similar official of the Certificate Insurer or of any substantial part of
its property, or ordering the winding-up or liquidation of its affairs,
and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60
consecutive days; or
(ii) the commencement by the Certificate Insurer of a voluntary case
or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated as bankrupt or insolvent, or
the consent of the Certificate Insurer to the entry of a decree or order
for relief in respect of the Certificate Insurer in an involuntary case
or proceeding under any applicable United States federal or state
bankruptcy, insolvency case or proceeding against the Certificate
Insurer, or the acquiescence by the Certificate Insurer to the filing of
such petition or to the appointment of or the taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
similar official of the Certificate Insurer or of any substantial part of
its property, or the failure of the Certificate Insurer to pay debts
generally as they become due, or the admission by the
-5-
<PAGE>
Certificate Insurer in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the
Certificate Insurer in furtherance of any such action.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal Balances
thereof, as follows:
Class A-1 Certificates - $114,000,000
Class A-2 Internal Certificates - $175,000,000
Class A-2 Fixed Certificates - $250,000,000
Class A-3 Certificates - $275,000,000
Class A-4 Certificates - $185,000,000
Class A-5 Certificates - $90,000,000
Class A-6 Certificates - $97,000,000
Class A-7 Certificates - $100,600,000
Class A-8 Certificates - $235,000,000
Class A-9 Certificates - $158,400,000
Class B Certificates - $70,000,000
The Class A-10 IO, Class C, Class R-I, Class R-II and the Class R
Certificates do not have a Certificate Principal Balance.
As of any time of determination, the Certificate Principal Balance
of any Class of Certificates is the Certificate Principal Balance as of
the Startup Day of such Class less any amounts actually distributed on
such Class with respect to principal thereon on all prior Payment Dates
(except, for purposes of effecting the Certificate Insurer's subrogation
rights, that portion of Insured Payments made in respect of principal)
and, additionally in the case of Class B, less the amount of any
reduction in the Class B Certificate Principal Balance on all prior
Payment Dates pursuant to Section 7.03(i).
"Class": Any Class of the Class A Trust Certificates, the Class B
Certificates, the Class C Certificates, the Class R-I Certificates, Class
R-II Certificates or the Class R Certificates.
"Class A Certificate Principal Balance": As of any time of
determination and with respect to any Class of Class A Trust
Certificates, the Certificate Principal Balance as of the Startup Day of
all Class A Certificates of such Class less any amounts actually
distributed to the Owners of such Class of the Class A Trust Certificates
with respect to the related Class A Principal Distribution Amount
pursuant to Section 7.03(d) hereof on all prior Payment Dates (except,
for purposes of effecting the Certificate Insurer's subrogation rights,
that portion of Insured Payments made in respect of principal).
-6-
<PAGE>
"Class A Current Interest": With respect to any Payment Date and
with respect to any individual Class of Class A Trust Certificates, the
amount of interest accrued on the Class A Certificate Principal Balance
(or, with respect to the Class A-10 IO Certificates the Class A-10 IO
Notional Principal Amount) immediately prior to such Payment Date during
the related Accrual Period at the related Class A Pass-Through Rate plus
the Preference Amount owed to the Owners of the Class A Certificates of
such Class as it relates to interest previously paid on the Class A
Certificates of such Class.
"Class A Distribution Amount": With respect to any Payment Date, and
with respect to any individual Class of Class A Trust Certificates, the
sum of (w) the related Class A Current Interest, (x) the related Class A
Interest Carry Forward Amount, (y) except for the Class A-10 IO
Certificates, the portion of Class A Principal Distribution Amount
payable to the Owners of the Class A Certificates of such Class pursuant
to Section 7.03(d) hereof and (z) the related Class A Guaranteed Payment
if any.
"Class A Enhancement Percentage": As of any Payment Date, the
percentage equivalent of a fraction, the numerator of which is the excess
of (x) the Total Loan Balance for such Payment Date over (y) the
Aggregate Class A Trust Certificate Principal Balance after taking into
account the payment of the Class A Principal Distribution Amount for both
Loan Groups on such Payment Date, assuming that no Delinquency Trigger
Event is in effect, and the denominator of which is the Total Loan
Balance for such Payment Date.
"Class A Guaranteed Payment": Only three Class A Trust Certificates
have "Class A Guaranteed Payments":
The Guaranteed Payment with respect to the Class A-1
Certificates is equal to the excess, if any, on the June 15,
1999 Payment Date of (i) the Outstanding Certificate Principal
Balance of the Class A-1 Certificates over (ii) the Principal
Remittance Amount for Group I for such Payment Date.
The Guaranteed Payment with respect to Class A-8
Certificates is equal to the excess, if any, on the June 15,
2028 Payment Date, of (i) the Outstanding Certificate Principal
Balance of the Class A-8 Certificates over (ii) the Principal
Remittance Amount for Group I for such Payment Date.
The Guaranteed Payment with respect to Class A-9
Certificates is equal to the excess, if any, on the June 15,
2028 Payment Date, of (i) the Outstanding Certificate Principal
of the Class A-9 Certificates over (ii) the Principal
Remittance Amount for Group II for such Payment Date.
"Class A Interest Carry Forward Amount": With respect to any Payment
Date and with respect to any Class of Class A Trust Certificates, the sum
of (x) the excess, if any, of (i) the sum of (A) the related Class A
Current Interest as of the immediately preceding Payment Date and (B) any
related unpaid Class A Interest Carry Forward Amount from all previous
Payment Dates over (ii) the amount of the actual distribution with
respect to interest made to the Owners of such Class of Class A Trust
Certificates on such immediately preceding Payment Date and (y) 30 days'
interest on such amount at the related Class A Pass-Through Rate.
-7-
<PAGE>
"Class A Optimal Balance": As of any Payment Date and with respect
to either Loan Group, as follows, but in no event less than zero:
I. Prior to the Stepdown Date:
(a) if a Cumulative Realized Loss Trigger Event is
not then in effect, the excess of (x) the Group
Loan Balance for the related Loan Group over (y)
an amount equal to (i) prior to the 7th Payment
Date, 4.00% of the Original Group Loan Balance
for the related Loan Group, and (ii) on and
after the 7th Payment Date, 5.45% of the
Original Group Loan Balance for the related Loan
Group; or
(b) if a Cumulative Realized Loss Trigger Event is
in effect, the product of (x) 100% minus the
percentage equivalent of a fraction, the
numerator of which is $112,000,000 and the
denominator of which is the Total Loan Balance
and (y) the Group Loan Balance for the related
Loan Group.
II. On and after the Stepdown Date:
(a) if neither a Delinquency Trigger Event nor a
Cumulative Realized Loss Trigger Event is then
in effect, the lesser of:
(i) the product of (x) 88.2825% and (y) the Group
Loan Balance for the related Loan Group; and
(ii) the product of (x) 100% minus the percentage
equivalent of a fraction, the numerator of which
is $8,750,000 and the denominator is the Total
Loan Balance and (y) the Group Loan Balance for
the related Loan Group; or
(b) if a Delinquency Trigger Event is then in
effect, but as to which a Cumulative Realized
Loss Trigger Event is not in effect, the lesser
of:
(i) the product of (x) 100% minus the product of
65.25% and the Three-Month Rolling Average 60+
Delinquency Rate and (y) the Group Loan Balance
for the related Loan Group; and
(ii) the product of (x) 100% minus the percentage
equivalent of a fraction, the numerator of which
is $8,750,000 and the denominator is the Total
Loan Balance and (y) the Group Loan Balance for
the related Loan Group; or
(c) if a Cumulative Realized Loss Trigger Event is
in effect but as to which a Delinquency Trigger
Event is not in effect,
-8-
<PAGE>
the product of (x) 91.40% minus the percentage
equivalent of a fraction, the numerator of which is
$42,000,000 and the denominator of which is the Total
Loan Balance and (y) the Group Loan Balance for the
related Loan Group;
(d) if both a Delinquency Trigger Event and a
Cumulative Realized Loss Trigger Event are then
in effect, the lesser of: (i) the product of (x)
100% minus the product of 65.25% and the
Three-Month Rolling Average 60+ Delinquency Rate
and (y) the Group Loan Balance for the related
Loan Group; and
(ii) the product of (x) 91.40% minus the percentage
equivalent of a fraction, the numerator of which
is $42,000,000 and the denominator of which is
the Total Loan Balance and (y) the Group Loan
Balance for the related Loan Group.
"Class A Principal Distribution Amount": As of any Payment Date and
with respect to each Loan Group the amount distributed to the Owners of
the Class A Trust Certificates related to such Loan Group pursuant to
Sections 7.03(b)(vi) and 7.03(b)(vii) on such Payment Date.
"Class A Trust Certificate": Any one of the Class A-1 Certificates,
Class A-2 Internal Certificates, Class A-2 Fixed Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates, Class A-6
Certificates, Class A-7 Certificates, Class A-8 Certificates, Class A-9
Certificates or Class A-10 IO Certificates. The Class A-9 Certificates
relate to Loan Group II; all other classes of Class A Trust Certificates
relate to Loan Group I.
"Class A Pass-Through Rate": As applicable, the Class A-1
Pass-Through Rate, the Class A-2 Fixed Pass Through Rate, the Class A-2
Internal Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class
A-4 Pass-Through Rate, the Class A-5 Pass-Through Rate, the Class A-6
Pass-Through Rate, the Class A-7 Pass-Through Rate, the Class A-8
Pass-Through Rate, the Class A-9 Pass Through Rate or the Class A-10 IO
Pass-Through Rate.
"Class A-1 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-1 Certificate, substantially in the form
annexed hereto as Exhibit A-1, executed, authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein.
"Class A-1 Pass-Through Rate": With respect to any Payment Date,
5.64875% per annum.
"Class A-2 Fixed Certificate": Any one of the Certificates
designated on the face thereof as a Class A-2 Fixed Certificate,
substantially in the form annexed hereto as Exhibit A-2-F, executed,
authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein.
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<PAGE>
"Class A-2 Fixed Pass-Through Rate": 6.15% per annum.
"Class A-2 Internal Certificate": Any one of the Certificates
designated on the face thereof as a Class A-2 Internal Certificate,
substantially in the form annexed hereto as Exhibit A-2-I, executed,
authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein.
"Class A-2 Internal Pass-Through Rate": With respect to any Payment
Date, 5.92% per annum.
"Class A-3 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-3 Certificate, substantially in the form
annexed hereto as Exhibit A-3, executed, authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein.
"Class A-3 Pass-Through Rate": With respect to any Payment Date,
6.13% per annum.
"Class A-4 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-4 Certificate, substantially in the form
annexed hereto as Exhibit A-4, executed, authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein.
"Class A-4 Pass-Through Rate": With respect to any Payment Date,
6.19% per annum.
"Class A-5 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-5 Certificate, substantially in the form
annexed hereto as Exhibit A-5, executed, authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein.
"Class A-5 Pass-Through Rate": With respect to any Payment Date, the
lesser of (i) 6.28% per annum and (ii) the Group I Available Funds Cap.
"Class A-6 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-6 Certificate, substantially in the form
annexed hereto as Exhibit A-6, executed, authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein.
"Class A-6 Pass-Through Rate": With respect to any Payment Date, the
lesser of (i) 6.36% per annum and (ii) the Group I Available Funds Cap.
"Class A-7 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-7 Certificate, substantially in the form
annexed hereto as Exhibit A-7, executed, authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein.
"Class A-7 Pass-Through Rate": With respect to any Payment Date, the
lesser of (i) 6.57% per annum and (ii) the Group I Available Funds Cap.
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<PAGE>
"Class A-8 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-8 Certificate, substantially in the form
annexed hereto as Exhibit A-8, executed, authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein.
"Class A-8 Pass-Through Rate": For any Payment Date on or prior to
the Clean-Up Call Date, the lesser of (i) LIBOR plus 0.25% per annum and
(ii) the Group I Available Funds Cap for such Payment Date and
thereafter, the lesser of (i) LIBOR plus 0.30% per annum and (ii) the
Group I Available Funds Cap for such Payment Date.
"Class A-9 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-9 Certificate, substantially in the form
annexed hereto as Exhibit A-9, executed, authenticated and delivered by
the Trustee, representing the right to distributions as set forth herein.
"Class A-9 Pass-Through Rate": For any Payment Date on or prior to
the Clean-Up Call Date, the lesser of (i) LIBOR plus 0.14% per annum and
(ii) the Group II Available Funds Cap for such Payment Date and
thereafter, the lesser of (i) LIBOR plus 0.28% per annum and (ii) the
Group II Available Funds Cap for such Payment Date.
"Class A-10 IO Certificate": Any one of the Certificates designated
on the face thereof as a Class A-10 IO Certificate, substantially in the
form annexed hereto as Exhibit A-10 IO, executed, authenticated and
delivered by the Trustee, representing the right to distributions as set
forth herein.
"Class A-10 IO Notional Principal Amount": For each Payment Date
during the Interest Only Period, the aggregate Class A-6 and Class A-7
Certificate Principal Balances immediately prior to such Payment Date and
thereafter, zero.
"Class A-10 IO Pass-Through Rate": For the 1st through the 30th
Payment Date, 6.50% per annum; thereafter, zero.
"Class B Applied Realized Loss Amount": With respect to any Payment
Date, the lesser of (x) the Class B Certificate Principal Balance (after
taking into account the distribution of the Class B Principal
Distribution Amount on such Payment Date, but prior to the reduction of
the Class B Certificate Principal Balance pursuant to Section 7.03(i), if
any, on such Payment Date) and (y) the Applied Realized Loss Amount as of
such Payment Date.
"Class B Certificate": Any one of the Certificates designated on the
face thereof as a Class B Certificate, substantially in the form annexed
hereto as Exhibit B, executed authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class B Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of
all Class B Certificates plus any amount previously distributed with
respect to principal that is recovered as a voidable preference by a
trustee in bankruptcy pursuant to a final, nonappealable order, less the
sum of (x) any amounts of the Class B Principal Distribution Amount
actually distributed to the Owners of the Class B Certificates
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pursuant to Section 7.03(b)(viii) hereof on all prior Payment Dates and
(y) the aggregate, cumulative amount of the Class B Applied Realized Loss
Amounts on all prior Payment Dates.
"Class B Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period
at the Class B Pass-Through Rate plus the Preference Amount owed to the
Owners of the Class B Certificates as it relates to interest previously
paid on the Class B Certificates.
"Class B Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B Current Interest, (x) the Class B Principal
Distribution Amount, if any, payable to the Owners of the Class B
Certificates pursuant to Section 7.03(b)(viii) hereof, (y) the Class B
Interest Carry Forward Amount, if any, and (z) the Class B Realized Loss
Amortization Amount, if any.
"Class B Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class B Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class B Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with
respect to interest made to the Owners of the Class B Certificates on
such immediately preceding Payment Date and (y) 30 days' interest on such
amount at the Class B Pass-Through Rate.
"Class B Optimal Balance": As of any Payment Date:
I. Prior to the Stepdown Date and if the Aggregate Class A Trust
Certificate Principal Balance is then greater than zero, the Class B
Initial Certificate Principal Balance; and
II. On and after the Stepdown Date, or if the Aggregate Class A
Trust Certificate Principal Balance then equals zero, the excess of (a)
the Total Loan Balance over (b) the Aggregate Class A Trust Certificate
Principal Balance plus the Targeted Overcollateralization Amount.
"Class B Pass-Through Rate": With respect to any Payment Date, the
lesser of (i) 7.74% per annum and (ii) the lesser of (A) the Group I
Available Funds Cap and (B) the Group II Available Funds Cap.
"Class B Principal Distribution Amount": As of any Payment Date, the
amount distributed to the Owners of the Class B Certificates pursuant to
Section 7.03(b)(viii) hereof on such Payment Date.
"Class B Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount as of such Payment Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii)
the sum of the Class A Interest Carry Forward Amount for all Classes of
Class A Trust Certificates on such Payment Date, the Reimbursement Amount
for both Loan Groups on such Payment Date, and the Class B Interest Carry
Forward Amount, in each case for such Payment Date.
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"Class C Carryforward Amount": With respect to any Payment Date, the
excess, if any, of the Class C Distribution Amount over the Monthly
Excess Cashflow Amount remaining immediately prior to distribution in
accordance with Section 7.03(e)(iv).
"Class C Certificate": Any one of the Certificates designated on the
face thereof as a Class C Certificate, substantially in the form annexed
hereto as Exhibit C, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein. The Class C
Certificates represent a class of "regular interests" in REMIC III.
"Class C Distribution Amount": With respect to any Payment Date, the
amount payable to Class C pursuant to footnotes (4), (5), and (6) of
Section 2.08(c).
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed
hereto as Exhibit R-III, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein, and
evidencing an interest designated as a "residual interest" in REMIC III
for the purposes of the REMIC Provisions.
"Class R-I Certificate": Any one of the Certificates designated
herein as a Class R-I Certificate, substantially in the form annexed
hereto as Exhibit R-I, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein, and
evidencing an interest designated as a "residual interest" in REMIC I for
the purposes of the REMIC Provisions.
"Class R-II Certificate": Any one of the Certificates designated
herein as a Class R-II Certificate, substantially in the form annexed
hereto as Exhibit R-II, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein, and
evidencing an interest designated as a "residual interest" in REMIC II
for the purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date immediately
following the date on which the aggregate Loan Balances of the Home
Equity Loans has declined to $175,000,000 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"ContiMortgage": ContiMortgage Corporation, a Delaware corporation,
and the originator of each Home Equity Loan, one of the Sellers and the
Servicer.
"ContiWest": ContiWest Corporation, a Nevada corporation, and one of
the Sellers.
"Corporate Trust Office": The principal office of the Trustee at One
M&T Plaza, Buffalo, New York 14203.
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"Coupon Rate": The rate of interest borne by each Note.
"Crossover Overcollateralization Increase Amount" With respect to
any Payment Date and a Loan Group, an amount equal to the lesser of (i)
the excess of (a) the aggregate Class A Certificate Principal Balance,
with respect to all Class A Trust Certificates relating to the other Loan
Group (after taking into account the distribution described in clause
"Sixth" of Section 7.03(b)) over (b) the Class A Optimal Balance for such
other Loan Group and Payment Date and (ii) the amount of Available Funds
remaining in the Certificate Account with respect to such Loan Group
after taking into account the distribution described in clause "Sixth" of
Section 7.03(b) with respect to such Loan Group.
"Cumulative Class C Carryforward Amount": With respect to any
Payment Date, the sum of the Class C Carryforward Amounts for all prior
Payment Dates, less distributions for each prior Payment Date under
Section 7.03(e)(iv) in excess of the Class C Distribution Amount for each
such prior Payment Date.
"Cumulative Realized Loss Termination Trigger Event": A Cumulative
Realized Loss Termination Trigger Event occurs on any date of
determination if the amount of Cumulative Realized Losses expressed as a
percentage of the Original Total Loan Balance on any date of
determination equals or exceeds the percentage for such date set out
below:
Date Percentage
---- ----------
July 1998-June 2000 1.575%
July 2000-June 2001 2.700%
July 2001-June 2002 3.600%
July 2002-June 2003 4.275%
July 2003 and thereafter 4.500%
"Cumulative Realized Loss Trigger Event": A Cumulative Realized Loss
Trigger Event occurs on any date of determination if the amount of
Cumulative Realized Losses expressed as a percentage of the Original
Total Loan Balance on any date of determination equals or exceeds the
percentage for such date set out below:
Date Percentage
---- ----------
July 1998- June 2000 1.05%
July 2000- June 2001 1.80%
July 2001- June 2002 2.40%
July 2002- June 2003 2.85%
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July 2003 and thereafter 3.00%
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Home Equity Loans
since the Startup Day.
"Cut-Off Date": As of the close of business on June 17, 1998.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Date-of-Payment Loans": Any Home Equity Loan as to which, pursuant
to the Note relating thereto, interest is computed and charged to the
Mortgagor at the Coupon Rate on the outstanding principal balance of such
Note based on the number of days elapsed between receipt of the
Mortgagor's last payment through receipt of the Mortgagor's most current
payment.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the day such payment is
scheduled to be due. A Home Equity Loan is "30 days Delinquent" if such
payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as
when a 30-day month follows a 31-day month in which a payment was due on
the 31st day of such month) then on the last day of such immediately
succeeding month. Similarly for "60 days Delinquent," "90 days
Delinquent" and so on.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquency Trigger Event": A Delinquency Trigger Event has
occurred with respect to a Payment Date on or after the Stepdown Date if
the Three-Month Rolling Average of 60+ Day Delinquency Rate equals or
exceeds the greater of (x) 17.95% or (y) the Class A Enhancement
Percentage.
"Delivery Order": Each delivery order in the form set forth as
Exhibit G hereto and delivered by the Depositor to the Trustee on the
Startup Day pursuant to Section 4.01 hereof.
"Depositor": ContiSecurities Asset Funding Corp., a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 7 Hanover Square, New
York, New York 10004, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the Principal
and Interest Account, a trust account maintained by the trust department
of a federal or state chartered depository institution acceptable to the
Certificate Insurer acting in its fiduciary capacity, having combined
capital and surplus of at least $50,000,000; provided, however, that if
the Principal and Interest Account is not maintained with the Trustee,
(i) such institution shall have a long-term debt rating of at least "A2"
by Moody's, and, if rated by Fitch, at least "A" by Fitch (ii) a
short-term debt rating of at least "A-1" by Standard & Poor's and (iii)
if such Principal and Interest Account is
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moved to a new institution, the Servicer shall provide the Trustee, the
Certificate Insurer and the Owners with a statement identifying the
location of the Principal and Interest Account.
"Determination Date": As to each Payment Date, the third Business
Day next preceding such Payment Date.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank
or other financial institution for which the Depository holds Offered
Certificates from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time
in the definition thereof at Section 860E(e)(5) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"FannieMae": FannieMae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association
Charter Act, as amended, or any successor thereof.
"FannieMae Guide": FannieMae's Servicing Guide, as the same may be
amended by FannieMae from time to time, and the Servicer shall elect to
apply such amendments in accordance with Section 8.01 hereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"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 hereof pertaining to a particular Home Equity Loan and any
additional documents required to be added to the File pursuant to this
Agreement.
"Final Determination": As defined in Section 9.03 hereof.
"Final Scheduled Payment Date": For each Class of Certificates, as
set out in Section 2.08(f).
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to the related Property.
"Fiscal Agent": State Street Bank and Trust Company, N.A., as Fiscal
Agent for the Certificate Insurer under the Certificate Insurer Policy or
any successor thereto appointed by the Certificate Insurer.
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"Fitch": Fitch IBCA, Inc.
"Fixed Rate Certificates": The Class A-1, Class A-2 Fixed, Class A-2
Internal, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-10 IO and Class B Certificates.
"Fixed Rate Pool": The Home Equity Loans identified in the related
Schedule of Home Equity Loans as having fixed Coupon Rates in Schedule
I-A hereto, including any Qualified Replacement Mortgages delivered in
replacement thereof.
"Grantor Trust": The ContiMortgage Grantor Trust 1998-A formed
pursuant to the Grantor Trust Agreement.
"Grantor Trust Agreement": That certain Grantor Trust Agreement
dated as of June 1, 1998 between the Depositor, ContiMortgage
Corporation, as Servicer and the Grantor Trustee pursuant to which the
Class A-2 Floating Certificates are issued.
"Grantor Trustee": Manufacturers and Traders Trust Company, as
trustee under the Grantor Trust Agreement.
"Group Loan Balance": As of any Payment Date, the aggregate
outstanding Loan Balance of the Home Equity Loans in the related Loan
Group as of the last day of the related Remittance Period.
"Group I Available Funds Cap": As of any Payment Date, the weighted
average Coupon Rate of the Home Equity Loans in Loan Group I as of the
opening of business on the first day of the related Remittance Period,
less the sum of (i) (a) the sum of the Premium Amount with respect to
Loan Group I plus the Trustee Fee with respect to Loan Group I plus the
Servicing Fee with respect to Loan Group I divided by (b) the aggregate
outstanding Loan Balance of the Home Equity Loans in Loan Group I as of
the opening of business on the first day of the related Remittance
Period, (ii) after the 6th Payment Date, 0.50% per annum, and (iii) for
the 1st through 30th Payment Dates, the product of (a) 6.50% per annum
and (b) the Class A-10 IO Notional Principal Amount divided by the
outstanding aggregate Loan Balance of the Home Equity Loans in Loan Group
I as of the opening of business on the first day of the related
Remittance Period.
"Group II Available Funds Cap": As of any Payment Date, the weighted
average Coupon Rate of the Home Equity Loans in Loan Group II as of the
opening of business on the first day of the related Remittance Period,
less the sum of (i) (a) the sum of the Premium Amount with respect to
Loan Group II plus the Trustee Fee with respect to Loan Group II plus the
Servicing Fee with respect to Loan Group II divided by (b) the aggregate
outstanding Loan Balance of the Home Equity Loans in Loan Group II as of
the opening of business on the first day of the related Remittance Period
and (ii) after the 6th Payment Date, 0.50% per annum.
"Highest Lawful Rate": As defined in Section 11.13.
"Home Equity Loans": Such of the home equity loans transferred and
assigned to the Trust pursuant to Section 3.05(a) hereof, together with
any Qualified Replacement Mortgages substituted therefor in accordance
with this Agreement, as from time to time are held as a part of the Trust
Estate, the Home Equity Loans originally so held being identified in the
Schedules of
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Home Equity Loans. The term "Home Equity Loan" includes the terms "First
Mortgage Loan" and "Second Mortgage Loan". The term "Home Equity Loan"
includes any Home Equity Loan which is Delinquent, which relates to a
foreclosure or which relates to a Property which is REO Property prior to
such Property's disposition by the Trust. Any home equity loan which,
although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust by the Depositor,
in fact was not transferred and assigned to the Trust for any reason
whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.04(b)(x) hereof with respect to such
home equity loan, shall nevertheless be considered a "Home Equity Loan"
for all purposes of this Agreement.
"Indemnification Agreement": The Indemnification Agreement dated
June 9, 1998 among the Certificate Insurer, the Depositor, the Sellers,
the Servicer, and the Underwriters.
"Indirect Participant": Any financial institution for whom any
Direct Participant holds an interest in a Offered Certificate.
"Insurance Agreement": The Insurance Agreement dated as of June 1,
1998, among the Depositor, the Sellers, the Servicer, the Certificate
Insurer, the Grantor Trustee and the Trustee as it may be amended from
time to time.
"Insurance Commitment Letter": The letter dated June 29, 1998 from
MBIA to ContiMortgage Corporation evidencing the commitment by MBIA to
issue the insurance policy with respect to the Class A Trust
Certificates.
"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.
"Insurance Proceeds": Payments received with respect to any
Insurance Policy, except the Certificate Insurance Policy.
"Insured Payment": As of any Payment Date, without duplication, (A)
the excess, if any, of (I) the sum of the aggregate Current Interest of
the Class A Trust Certificates related to both Loan Groups and the then
existing Aggregate Class A Overcollateralization Deficit, if any, over
(II) the Aggregate Total Available Funds after taking into account the
portion of any Class A Principal Distribution Amount with respect to both
Loan Groups to be actually distributed on such Payment Date without
regard to any Insured Payment to be made with respect to such Payment
Date plus (B) an amount equal to the aggregate Preference Amount with
respect to the Class A Trust Certificates related to both Loan Groups
plus (C) the excess, if any, on the June 15, 1999 Payment Date only, of
(I) the Certificate Principal Balance of the Class A-1 Certificates, over
(II) the Principal Remittance Amount for Loan Group I for such Payment
Date, plus (D) on the June 15, 2028 Payment Date only, the excess, if
any, of (i) the Certificate Principal Balance of the Class A-8
Certificates over (ii) the Principal Remittance Amount for Loan Group I
with respect to such Payment Date, plus (E) on the June 15, 2028 Payment
Date only, the excess, if any, of (i) the Certificate Principal Balance
of the Class A-9 Certificates over (ii) the Principal Remittance Amount
for Loan Group II with respect to such Payment Date.
"Interest Amount Available": As defined in Section 7.03(b)(vi)
hereof.
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"Interest Only Period": The period from the Startup Day through and
including the 30th Payment Date.
"Interest Remittance Amount": As of any Monthly Remittance Date and
with respect to a Loan Group, the sum, without duplication, of (i) all
interest due during the related Remittance Period with respect to the
Home Equity Loans in such Loan Group (less the Servicing Fee with respect
to such Home Equity Loans), (ii) all Compensating Interest paid by the
Servicer on such Monthly Remittance Date with respect to such Home Equity
Loans, (iii) the portion of the Substitution Amount relating to interest
on such Home Equity Loans substituted during the related Remittance
Period, (iv) the portion of any Loan Purchase Price relating to interest
on any such Home Equity Loan repurchased during the related Remittance
Period and (v) the portion of Net Liquidation Proceeds relating to
interest in such in Home Equity Loans liquidated during the related
Remittance Period.
"Late Payment Rate": For any Payment Date, the fluctuating rate of
interest, as it is published from time to time in the New York, New York
edition of The Wall Street Journal under the caption "Money Rates" as the
"prime rate," to change when and as such published prime rate changes
plus 2%. The Late Payment Rate shall be computed on the basis of a year
of 360 days calculating the actual number of days elapsed. In no event
shall the Late Payment Rate exceed the maximum rate permissible under any
applicable law limiting interest rates.
"LIBOR": With respect to any Accrual Period for the Adjustable Rate
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S.
dollar deposits as such rate appears on Telerate Page 3750 as of 11:00
a.m. (London time) on such date; provided that if such rate does not
appear on Telerate Page 3750, the rate for such date will be determined
on the basis of the rates at which one-month U.S. dollar deposits are
offered by the Reference Banks at approximately 11:00 a.m. (London time)
on such date to prime banks in the London interbank market. In such
event, the Trustee will request the principal London office of each of
the Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16%). If fewer than two quotations are
provided as requested, the rate for that date will be the arithmetic mean
of the rates quoted by major banks in New York City, selected by the
Servicer, at approximately 11:00 a.m. (New York City time) on such date
for one-month U.S. dollar loan to leading European banks.
"LIBOR Determination Date": With respect to any Accrual Period for
the Adjustable Rate Certificates, the second London Business Day
preceding the commencement of such Accrual Period.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by the Servicer in connection with the liquidation of
any defaulted Home Equity Loan, such expenses including, without
limitation, legal fees and expenses, and any unreimbursed Servicing
Advances expended by the Servicer pursuant to Section 8.09(b) with
respect to the related Home Equity Loan.
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"Liquidation Proceeds": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through
trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the outstanding principal balance thereof on the
Cut-Off Date, less any principal payments relating to such Home Equity
Loan included in previous Monthly Remittance Amounts, provided, however,
that the Loan Balance for any Home Equity Loan that has become a
Liquidated Loan shall be zero as of the first day of the Remittance
Period following the Remittance Period in which such Home Equity Loan
becomes a Liquidated Loan, and at all times thereafter.
"Loan Group" or "Group": Loan Group I or Loan Group II, as
applicable.
"Loan Group I" or "Group I": The Home Equity Loans in the Fixed Rate
Pool and Adjustable Rate Pool 1. Loan Group I will constitute a separate
sub-trust.
"Loan Group II" or "Group III": The Home Equity Loans in Adjustable
Rate Pool 2. Loan Group II will constitute a separate sub-trust.
"Loan Purchase Price": With respect to any Home Equity Loan
purchased from the Trust on a Monthly Remittance Date pursuant to Section
3.03, 3.04, 3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the
Loan Balance of such Home Equity Loan as of the date of purchase
(assuming that the Monthly Remittance Amount remitted by the Servicer on
such Monthly Remittance Date has already been remitted), plus one month's
interest on the outstanding Loan Balance thereof as of the beginning of
the related Remittance Period computed at the then applicable Coupon
Rate, together with (without duplication) the aggregate amounts of (i)
all unreimbursed Delinquency Advances and Servicing Advances theretofore
made with respect to such Home Equity Loan, (ii) all Delinquency Advances
and Servicing Advances which the Servicer has theretofore failed to remit
with respect to such Home Equity Loan and (iii) all reimbursed
Delinquency Advances to the extent that reimbursement is not made from
the Mortgagor or from Liquidation Proceeds from the respective Home
Equity Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the
Appraised Value into the original principal balance of the Note relating
to such First Mortgage Loan and (ii) with respect to any Second Mortgage
Loan, the percentage obtained by dividing the Appraised Value as of the
date of origination of such Second Mortgage Loan into an amount equal to
the sum of (a) the remaining principal balance of the Senior Lien note
relating to such First Mortgage Loan as of the date of origination of the
related Second Mortgage Loan and (b) the original principal balance of
the Note relating to such Second Mortgage Loan.
"London Business Day": Any day on which dealings in deposits of
United States dollars are transacted in the London interbank market.
"Maximum Insurer Current Reimbursement Amount": With respect to any
Payment Date, the lesser of (x) the Available Funds remaining in the
Certificate Account with respect to both Loan Groups after taking into
account all distributions described in clauses "First" through
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"Fourth" of Section 7.03(b) and (y) the excess (1) the sum of (a) the
Total Loan Balance plus (b) the amount described in the immediately
preceding clause (x) over (2) the Aggregate Class A Trust Certificate
Principal Balance prior to taking into account any payment of principal
on such Payment Date.
"Monthly Excess Cashflow Amount": As defined in Section 7.03(b)(ix)
hereof.
"Monthly Remittance Amount": As of any Monthly Remittance Date and
with respect to a Loan Group, the sum of (i) the Interest Remittance
Amount and (ii) the Principal Remittance Amount, in each case with
respect to such Loan Group, for such Monthly Remittance Date.
"Monthly Remittance Date": The 10th day of each month or, if such
day is not a Business Day, the Business Day succeeding such day,
commencing in the month following the Startup Day.
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first or second lien on an estate in fee simple interest in real
property securing a Note.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses and unreimbursed Delinquency
Advances relating to such Home Equity Loan. In no event shall Net
Liquidation Proceeds with respect to any Liquidated Loan be less than
zero.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Offered Certificates": Collectively, the Class A Trust Certificates
(other than the Class A-2 Internal Certificates) and the Subordinate
Certificates.
"Officer's Certificate": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the
Trustee.
"Operative Documents": Collectively, this Agreement, the
Underwriting Agreement, the Certificates, the Certificate Insurance
Policy, the Grantor Trust Agreement, the Certificate Insurance
Policy-Grantor Trust, the Insurance Agreement and the Indemnification
Agreement.
"Original Group I Loan Balance": The original aggregate Loan Balance
of the Home Equity Loans in Loan Group I as of the Cut-Off Date.
"Original Group II Loan Balance": The original aggregate Loan
Balance of the Home Equity Loans in Loan Group II as of the Cut-Off Date.
"Original Group Loan Balance": The applicable Original Group I Loan
Balance or Original Group II Loan Balance.
"Original Total Loan Balance": The sum of the Original Group I Loan
Balance and the Original Group II Loan Balance.
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"Outstanding": With respect to all Certificates of a Class, as of
any date of determination, all such Certificates theretofore executed and
delivered hereunder except:
(i) Certificates theretofore canceled by the Registrar or delivered
to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or stolen for
which replacement Certificates have been issued as provided for in
Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final distribution
thereon, whether or not such Certificate is ever returned to the Trustee.
"Overcollateralization Floor": As of any Payment Date, $8,750,000.
"Overcollateralization Stepdown Amount": With respect to a Loan
Group and any Payment Date, the excess, if any, by which (x) the Class A
Optimal Balance for the other Loan Group exceeds the aggregate Class A
Trust Certificate Principal Balance with respect to such other Loan
Group, after taking into account the payment of the Class A Principal
Distribution Amount with respect to such other Loan Group on such Payment
Date.
"Owner": The Person in whose name a Certificate is registered in the
Register and the Certificate Insurer to the extent described in Section
5.06 and Section 7.03 (n) hereof, respectively hereof; provided that
solely for the purposes of determining the exercise of any voting rights
hereunder, if any Offered Certificates are beneficially owned by a Seller
or any affiliate thereof, such Seller or such affiliate shall not be
considered an Owner hereunder.
"PAC Certificates": Any of the Class A-2 Fixed, Class A-2 Internal,
Class A-3, Class A-4, Class A-5, Class A-6 and Class A-7 Certificates.
"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.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 15th day of each month or
if such day is not a Business Day, the next Business Day thereafter,
commencing in the month following the Startup Day.
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"Percentage Interest": With respect to a Class of the Offered
Certificates, a fraction, expressed as a percentage, the numerator of
which is the initial Certificate Principal Balance represented by such
Certificate and the denominator of which is the aggregate initial
Certificate Principal Balance represented by all the Certificates in such
Class. With respect to the Class A-10 IO Certificates a fraction,
expressed as a percentage, the numerator of which is the initial Class
A-10 IO Notional Principal Amount represented by such Class A-10 IO
Certificate and the denominator of which is the aggregate initial Class
A-10 IO Notional Principal Amount represented by all of the Class A-10 IO
Certificates. With respect to a Class C, Class R-I, Class R-II or Class R
Certificate, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate, all of which shall
total 100% with respect to the related Class.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Planned Principal Balance": With respect to any Class of PAC
Certificates and any Payment Date, the respective balance for such Class
set forth opposite such Payment Date in the Planned Principal Balance
Schedule set forth as Schedule VI hereto.
"Preference Amount": With respect to the Class A Trust Certificates
and Class B Certificates, any amounts of Current Interest and principal
included in previous distributions to the Owners of such Certificates
which are recoverable and sought to be recovered from such Owners as a
voidable preference by a trustee in bankruptcy pursuant to the United
States Bankruptcy Code in accordance with a final, nonappealable order of
a court having competent jurisdiction and which have not theretofore been
repaid to such Owners.
"Premium Amount": As of any Payment Date and with respect to a Loan
Group the product of (x) one-twelfth of the Premium Percentage and (y)
the Aggregate Class A Trust Certificate Principal Balance of the related
Class A Trust Certificates.
"Premium Percentage": As defined in the Insurance Commitment Letter.
"Prepaid Installment": With respect to any Home Equity Loan, any
installment of principal thereof and interest thereon received by the
Servicer prior to the scheduled due date for such installment, intended
by the Mortgagor as an early payment thereof and not as a Prepayment with
respect to such Home Equity Loan.
"Prepayment": Any payment of principal of a Home Equity Loan which
is received by the Servicer in advance of the scheduled due date for the
payment of such principal (other than the principal portion of any
Prepaid Installment), Substitution Amounts, the portion of the purchase
price of any Home Equity Loan purchased from the Trust pursuant to
Section 3.03, 3.04, 3.06(b), 8.10(b) or 8.13(a) hereof representing
principal and the proceeds of any Insurance Policy which are to be
applied as a payment of principal on the related Home Equity Loan shall
be deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation
thereof, including, without limitation,
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expenditures for real estate property taxes, hazard insurance premiums,
property restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date and
with respect to a Loan Group, the sum, without duplication, of (i) the
principal actually collected by the Servicer on the Home Equity Loans in
the related Loan Group during the related Remittance Period, (ii) the
Loan Balance of each Home Equity Loan in the related Loan Group that was
repurchased from the Trust during the related Remittance Period, (iii)
any Substitution Amount relating to principal delivered by the Seller in
connection with a substitution of a Home Equity Loan in the related Loan
Group during the related Remittance Period, (iv) any Insurance Proceeds
actually collected by the Servicer during the related Remittance Period
with respect to a Home Equity Loan in the related Loan Group (to the
extent such Insurance Proceeds relate to principal) and (v) all Net
Liquidation Proceeds actually collected by the Servicer during the
related Remittance Period with respect to in the related Loan Group (to
the extent such Net Liquidation Proceeds relate to principal).
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Property": The underlying property (including all building thereon)
securing a Home Equity Loan.
"Prospectus": The Prospectus dated December 16, 1997 constituting
part of the Registration Statement.
"Prospectus Supplement": The ContiMortgage Home Equity Loan Trust
1998-2 Prospectus Supplement dated June 9, 1998 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03 hereof.
"Qualified Liquidation": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(4) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 or 3.06(b) hereof, which (i) has a
Coupon Rate at least equal to the Coupon Rate of the Home Equity Loan
being replaced, (ii) is of the same property type or is a single family
dwelling and the same occupancy status or is a primary residence as the
replaced Home Equity Loan, (iii) shall mature no later than December 15,
2028, (iv) has a Loan-to-Value Ratio as of the Replacement Cut-Off Date
no higher than the Loan-to-Value Ratio of the replaced Home Equity Loan
at such time, (v) shall be of the same or higher credit quality
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classification (determined in accordance with ContiMortgage's credit
underwriting guidelines set forth in ContiMortgage's underwriting manual)
as the Home Equity Loan which such Qualified Replacement Mortgage
replaces, (vi) has a Loan Balance as of the related Replacement Cut-Off
Date equal to or less than the Loan Balance of the replaced Home Equity
Loan as of such Replacement Cut-Off Date, (vii) shall not provide for a
"balloon" payment if the related Home Equity Loan did not provide for a
"balloon" payment (and if such related Home Equity Loan provided for a
"balloon" payment, such Qualified Replacement Mortgage shall have an
original maturity of not less than the original maturity of such related
Home Equity Loan), (viii) shall be a fixed rate Home Equity Loan if the
Home Equity Loan being replaced is a Fixed Rate Home Equity Loan and
shall be a first lien adjustable rate Home Equity Loan if the Home Equity
Loan being replaced is an Adjustable Rate Home Equity Loan and (ix)
satisfies the criteria set forth from time to time in the definition
thereof at Section 860G(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Rating Agencies": Collectively, Moody's, Standard & Poor's and
Fitch or any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which the Loan Balance thereof as of the date of liquidation is in excess
of Net Liquidation Proceeds realized thereon applied in reduction of such
Loan Balance.
"Record Date": With respect to the Fixed Rate Certificates (other
than the Class A-1 Certificates) and any Payment Date, the last day of
the calendar month immediately preceding the calendar month in which such
Payment Date occurs and with respect to the Floating Rate Certificates,
the Class A-1 Certificates.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The
Bank of Tokyo and National Westminster Bank PLC, provided that if any of
the foregoing banks are not suitable to serve as a Reference Bank, then
any leading banks selected by the Trustee which are engaged in
transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) not
controlling, under the control of or under common control with either
Seller or any affiliate thereof, (iii) whose quotations appear on
Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in accordance
with Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar
appointed pursuant to Section 5.04 hereof, or any duly appointed and
eligible successor thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration
Number 333-39505), including all amendments thereto and including the
Prospectus relating to the Offered Certificates constituting a part
thereof.
"Reimbursement Amount": As of any Payment Date and as to each of the
Certificate Insurance Policy and the Certificate Insurance Policy-Grantor
Trust, the sum of (x)(i) all Insured
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Payments under each such policy previously paid to the Trustee or the
Grantor Trustee by the Certificate Insurer and not previously repaid to
the Certificate Insurer pursuant to Section 7.03(b)(v) hereof plus (ii)
interest accrued on each such Insured Payment not previously repaid
calculated at the Reimbursement Late Payment Rate and (y)(i) any amounts
then due and owing to the Certificate Insurer under the Insurance
Agreement plus (ii) interest on such amounts at the Late Payment Rate.
The Certificate Insurer shall notify the Trustee, the Depositor and the
Sellers of the amount of any Reimbursement Amount.
"Reimbursement Late Payment Rate": For any Payment Date, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal
office in New York, New York as its prime rate (any change in such prime
rate of interest to be effective on the date such change is announced by
Citibank, N.A.) plus 3%. The Reimbursement Late Payment Rate shall be
computed on the basis of a year of 365 days elapsed. In no event shall
the Reimbursement Late Payment Rate exceed the maximum rate permissible
under any applicable law limiting interest rates.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC I": A REMIC established pursuant to Section 2.08 hereof.
"REMIC II": A REMIC established pursuant to Section 2.08 hereof.
"REMIC III": A REMIC established pursuant to Section 2.08 hereof.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at
Section 860A through 860G of Subchapter M of Chapter 1 of the Code, and
related provisions, and regulations and revenue rulings promulgated
thereunder, as the foregoing may be in effect from time to time.
"Remittance Period": The calendar month immediately preceding the
month in which a Monthly Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection
with a defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified
Replacement Mortgage, the first day of the calendar month in which such
Qualified Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Offered
Certificates registered in the Register under the nominee name of the
Depository.
"Residual Certificates": Collectively, the Class R-I, Class R-II and
Class R Certificates.
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"Retained Certificates": Collectively, the Class C, Class R-I, Class
R-II and Class R Certificates.
"Schedule of Home Equity Loans": Each of the schedules of Home
Equity Loans, segregated by the Fixed Rate Pool, Adjustable Rate Pool 1
and Adjustable Rate Pool 2, listing each Home Equity Loan in such
category to be conveyed on the Startup Day. Such Schedules of Home Equity
Loans shall identify each Home Equity Loan by the Servicer's loan number
and the borrower's name and address (including the state) of the Property
and shall set forth as to each Home Equity Loan the lien status thereof
(and with respect to Adjustable Rate Home Equity Loans, the margin), the
Loan-to-Value Ratio and the Loan Balance as of the Cut-Off Date, the
Coupon Rate thereof, the current scheduled monthly payment of principal
and interest and the maturity of the related Note, the property type,
occupancy status, Appraised Value and original term-to-maturity thereof,
whether or not such Home Equity Loan (including the related Note) has
been modified and the aggregate Loan Balances of all Home Equity Loans.
Such Schedules shall also identify the Seller of each Home Equity Loan.
"Scheduled Payment": As of any date of calculation, with respect to
a Home Equity Loan, the then stated scheduled monthly installment of
principal and interest payable thereunder which, if timely paid, would
result in the full amortization of principal over the term thereof (or,
in the case of a "balloon" Note, the term to the nominal maturity date
for amortization purposes, without regard to the actual maturity date).
"Second Mortgage Loan": A Home Equity Loan which constitutes a
second priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Sellers": ContiMortgage and ContiWest.
"Senior Lien": With respect to any Second Mortgage Loan, the
mortgage loan relating to the corresponding Property having a first
priority lien.
"Servicer": ContiMortgage Corporation, a Delaware corporation, and
its permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Servicer and (ii) which is qualified to
service residential mortgage loans.
"Servicing Advance": As defined in Section 8.09(b) and Section
8.13(a) hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration
duties relating to such Home Equity Loan pursuant to Section 8.15 and
equal to the Servicing Fee Rate times the then outstanding principal
amount of such Home Equity Loan as of the first day of each calendar
month payable on a monthly basis.
"Servicing Fee Rate": 0.50% per annum.
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"60+ Day Delinquent Loan": With respect to any Determination Date,
all REO Properties, each Home Equity Loan with respect to which any
portion of a Monthly Payment is, as of the last day of the prior
Remittance Period, two months or more past due (without giving effect to
any grace period), each Home Equity Loan in Foreclosure and each Home
Equity Loan for which the mortgagor has filed for bankruptcy.
"Standard & Poor's": Standard & Poor's Ratings Services, a division
of the McGraw-Hill Companies, Inc.
"Startup Day": June 29, 1998.
"Stepdown Date": The later to occur of (x) the Payment Date in July
2001 and (y) the first Payment Date on which the Aggregate Class A Trust
Certificate Principal Balance is less than or equal to the sum of the
Class A Optimal Balances for both Loan Groups for such Payment Date.
"Subordinate Certificates": The Class B Certificates.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in
Section 8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of
certain Home Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Targeted Overcollateralization Amount": As of any Payment Date
means:
(i) on or prior to the sixth Payment Date, zero;
(ii) after the sixth Payment Date, but prior to the
Stepdown Date:
(A) if no Cumulative Realized Loss Trigger Event is
in effect, 1.45% of the Original Total Loan
Balance; or
(B) if a Cumulative Realized Loss Trigger Event is
in effect, $42,000,000; or
(iii) on and after the Stepdown Date:
(A) if neither a Delinquency Trigger Event nor a
Cumulative Realized Loss Trigger Event is in effect,
the greater of (I) 3.1175% of the
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Total Loan Balance and (II) the Overcollateralization
Floor; or
(B) if a Delinquency Trigger Event is in effect but a
Cumulative Realized Loss Trigger Event is not in
effect, the Targeted Overcollateralization Amount
shall be equal to the Targeted Overcollateralization
Amount for the immediately preceding Payment; or
(C) if a Cumulative Realized Loss Trigger Event is in
effect (whether or not a Delinquency Trigger Event is
in effect), $42,000,000.
"Tax Matters Certificate": Each of the Class R-I, Class R-II and
Class R Certificates initially issued to ContiFunding Corporation as the
initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R, Class R-I and Class R-II Certificates, each of which shall be
issued to and held by ContiFunding Corporation throughout the term hereof
unless another Person shall accept an assignment of such interest and the
designation of Tax Matters Person pursuant to Section 11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the
Dow Jones Telerate Capital Markets Report (or such other page as may
replace page 3750 on that report for the purpose of displaying London
interbank offered rates of major banks).
"Termination Date Pass-Through Rate": A rate equal to the sum of (a)
Weighted Average Pass-Through Rate, (b) any portion of the Trustee Fee
(calculated as a percentage of the outstanding principal amount of the
Offered Certificates) then accrued and outstanding and (c) the Premium
Amount (calculated as a percentage of the outstanding principal amount of
the Class A Trust Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03 hereof.
"Three-Month Rolling Average 60+ Day Delinquency Rate": With respect
to a Payment Date, the fraction, expressed as a percentage (A) the
numerator of which is the sum of the following three percentages for each
of the past three Remittance Periods (x) the aggregate principal amount
of 60+ Day Delinquent Loans in Loan Group I and Loan Group II as of the
last day of the related Remittance Period divided by (y) the aggregate
outstanding Total Loan Balance as of the last day of the related
Remittance Period for each of the past three Remittance Periods and (B)
the denominator of which is 3.
"Total Loan Balance": As of any Payment Date, the aggregate
outstanding Loan Balance of the Home Equity Loans in Loan Group I and
Loan Group II as of the last day of the related Remittance Period.
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"Trust": ContiMortgage Home Equity Loan Trust 1998-2, the trust
created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": Manufacturers and Traders Trust Company, a New York
banking corporation, the Corporate Trust Department of which is located
on the date of execution of this Agreement at One M&T Plaza, Buffalo, New
York 14203, not in its individual capacity but solely as Trustee under
this Agreement, and any successor hereunder.
"Trustee Fee": The fee payable monthly on each Payment Date in an
amount equal to one-twelfth of the sum of (i) 0.0011% multiplied by the
then-outstanding Aggregate Trust Certificate Principal Balance and (ii)
$5500.
"Underwriters": Bear, Stearns & Co. Inc., ContiFinancial Services
Corporation, Credit Suisse First Boston, Greenwich Capital Markets, Inc.,
Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Morgan Stanley & Co.
Incorporated and Nomura Securities International, Inc.
"Unpaid Realized Loss Amount": With respect to any Payment Date, the
excess of (x) the aggregate cumulative amount of Class B Applied Realized
Loss Amounts for all prior Payment Dates over (y) the aggregate,
cumulative amount of Class B Realized Loss Amortization Amounts for all
prior Payment Dates.
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.O4 opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
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,
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and such opinion may state that it is given in reasonable reliance upon
an opinion of another, a copy of which must be attached, concerning the
laws of a foreign jurisdiction.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws of
the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "ContiMortgage Home Equity Loan Trust 1998-2."
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to One
M&T Plaza, Buffalo, New York 14203, Attention Corporate Trust Administration, or
at such other address as the Trustee may designate by notice to the Depositor,
the Seller, the Certificate Insurer and the Servicer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and only
such activities: (i) the issuance of the Certificates and the acquiring, owning
and holding of Home Equity Loans and the Trust Estate in connection therewith;
(ii) activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith, including the
investment of moneys in accordance with this Agreement; and (iii) such other
activities as may be required in connection with conservation of the Trust
Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect any of the REMIC I's, REMIC II's or REMIC III's status as a
REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust effective
as of the Startup Day, to have all the rights, powers and duties set forth
herein. The Trustee hereby acknowledges and accepts such appointment, represents
and warrants its eligibility as of the Startup Day to serve as Trustee pursuant
to Section 10.08 hereof and declares that it will hold the Trust Estate in trust
upon and subject to the conditions set forth herein for the benefit of the
Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Trustee (including
any portion of the Trustee Fee not paid pursuant to Section 7.03(b) hereof),
(ii) any reasonable expenses of the Trustee, and (iii) any other expenses of the
Trust that have been reviewed by ContiMortgage, which review shall not be
required in connection with the enforcement of a remedy by the Trustee resulting
from a default under this Agreement, shall be paid directly by ContiMortgage.
ContiMortgage shall pay directly the reasonable fees and expenses of counsel to
the Trustee. The reasonable fees and expenses of the Trustee's counsel
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in connection with the review and delivery of this Agreement and related
documentation shall be paid by ContiMortgage on the Startup Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a trust
under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof) located in any state other than in the
State of New York and payments will be received by the Trustee only in the State
of New York and payments from the Trustee will be made only from the State of
New York. The Trust's only office will be at the office of the Trustee as set
forth in Section 2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The Trustee shall elect that each of REMIC I, REMIC II and
REMIC III shall be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration
of this Agreement shall be resolved in a manner that preserves the
validity of such REMIC elections. The assets of REMIC I shall include the
Home Equity Loans, the Accounts, any REO Property, and any proceeds of
the foregoing. The REMIC I Regular Interests (as defined below) shall
constitute the assets of REMIC II. The REMIC II Regular Interests shall
constitute the assets of REMIC III.
(b) The REMIC I will be evidenced by (x) the Class IA, Class
IB, and Class IC Certificates (the "REMIC I Regular Interests"), which
will be uncertificated and non-transferable and are hereby designated as
the "regular interests" in the REMIC I and (y) the Class R-I
Certificates, which are hereby designated as the single "residual
interest" in the REMIC I (the REMIC I Regular Interests, together with
the Class R-I Certificates, the "REMIC I Certificates"). The REMIC I
Regular Interests shall be recorded on the records of the REMIC I as
being issued to and held by the Trustee on behalf of REMIC II.
The Class IA Certificates shall have an initial principal balance
equal to the sum of the initial principal balances of the Class A-6 and
A-7 Certificates (that is, $197,600,000.00). The Class IB Certificates
shall have an initial principal balance equal to the excess of the
Original Group I Loan Balance over the initial principal balance of the
Class IA Certificate (that is, $1,387,400,000.00). The Class IC
Certificates shall have an initial principal balance equal to the
Original Group II Loan Balance (that is, $165,000,000.00). On each
Payment Date, principal collections on the Group I Home Equity Loans
shall be allocated as follows: an amount equal to the principal payable
on the Class A-6 and A-7 Certificates shall be payable on the Class IA
Certificates and the remaining principal collections shall be payable to
the Class IB Certificates.
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On each Payment Date, to the extent that any of the Aggregate Extra
Principal Distribution Amount is paid to the Class A-6 and A-7
Certificates pursuant to Section 7.03(d)(i), an amount of interest
otherwise payable on the Class IB Certificates shall instead be paid as
principal on the Class IA Certificates (and will be accrued and added to
principal on the Class IB Certificates). Realized Losses on the Group I
Home Equity Loans shall be allocated as follows: an amount equal to the
Realized Losses allocable to the Class A-6 or A-7 Certificates shall be
allocable to the Class IA Certificates and the remaining Realized Losses
shall be allocable to the Class IB Certificates. All principal
collections and Realized Losses on Group II Home Equity Loans shall be
allocated to the Class IC Certificates. The Class IA and Class IB
Certificates shall each have Pass-Through Rates equal to the weighted
average Coupon Rate of the Group I Home Equity Loans net of the sum of
the Servicing Fee for Loan Group I, and the Trustee Fee for Loan Group I
and the Premium Amount for Loan Group I (the sum expressed as a per annum
rate on the Group Loan Balance for Loan Group I). The Class IC
Certificates shall have a Pass-Through Rate equal to the weighted average
Coupon Rate of the Group II Home Equity Loans as of the opening of
business on the first day of the related Remittance Period net of the sum
of the Servicing Fee for Loan Group II, the Trustee Fee for Loan Group
II, and the Premium Amount for Loan Group II (expressed as a per annum
rate on the Group Loan Balance for Loan Group II). The Class R-I
Certificates shall have no principal balance and no Pass-Through Rate and
shall be entitled to only those distributable assets, if any, remaining
in the REMIC I on each Payment Date after all amounts required to be
distributed to the Class IA, Class IB, and Class IC Certificates and
applicable Trust expenses have been paid.
(c) The REMIC II will be evidenced by (x) the Class II-A-1, Class
II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class
II-A-7, Class II-A-8, Class II-A-9, Class II-B, Class II-A-IO, Class
II-M-1, Class II-M-2 and Class II-M-3 Certificates (the "REMIC II Regular
Interests"), which will be uncertificated and non-transferable and are
hereby designated as the "regular interests" in the REMIC II and (y) the
Class R-II Certificates, which are hereby designated as the single
"residual interest" in the REMIC II (the REMIC II Regular Interests,
together with the Class R-II Certificates, the "REMIC II Certificates").
The REMIC II Regular Interests shall be recorded on the records of the
REMIC II as being issued to and held by the Trustee on behalf of REMIC
III.
Any Aggregate Extra Principal Distribution Amount will not be paid
as interest to the REMIC II Regular Interests, but instead to the extent
available, a portion of the interest payable with respect to the Class
II-M-3 Certificates which equals 1% of the Extra Principal Distribution
Amount (and, to the extent 1% of the Extra Principal Distribution Amount
exceeds the interest payable on the Class II-M-3 Certificates, a pro rata
portion of the interest payable on the Class II-M-1 and Class II-M-2
Certificates equal to such excess) will be payable as a reduction of the
principal balances of the Class II-A-1, Class II-A-2, Class II-A-3, Class
II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class II-A-8, Class
II-A-9, and Class II-B Certificates in the same manner in which the Extra
Principal Distribution Amount is allocated among the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, and Class B Certificates, respectively (and will be accrued
and added to principal on the Class II-M-1, Class II-M-2 and Class II
- -M-3 Certificates in the same proportion as interest payable on such
Certificates is used to reduce principal on other Certificates as just
described). Principal payments on the Home Equity Loans shall be
allocated 99% to the Class II-M-1, Class II-M-2 and Class II-M-3
Certificates, and 1% to the Class II-A-1, Class II-A-2, Class II
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<PAGE>
- -A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7, Class
II-A-8, Class II-A-9, and Class II-B Certificates until paid in full. The
aggregate amount of principal allocated to the Class II-A-1, Class
II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class
II-A-7, Class II-A-8, Class II-A-9, and Class II-B Certificates shall be
apportioned among such Classes in the same manner in which principal on
the Home Equity Loans is payable with respect to the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, and Class B Certificates, respectively. The aggregate amount
of principal allocated to the Class II-M-1, Class II-M-2 and Class II-M-3
Certificates shall be allocated and apportioned among such Certificates
first, to the Class II-M-1 and Class II-M-2 Certificates the least amount
of principal necessary which when applied to such classes can be applied
so that the ratio of the principal balance of the Class II-M-1
Certificates to the principal balance of the Class II-M-2 Certificates
equals the ratio of the Group I Loan Balance to the Group II Loan Balance
(the "Balance Ratio") and second, to the Class II-M-3 Certificates.
Notwithstanding the above, principal payments on the Home Equity Loans
that are attributable to the Aggregate Overcollateralization Release
Amount shall be allocated to the Class II-M-1, Class II-M-2 and Class
II-M-3 Certificates (allocated first to the Class II-M-3 Certificates
until such certificates are paid in full, and second to the Class II-M-1
and Class II-M-2 Certificates and apportioned among the Class II-M-1 and
Class II-M-2 Certificates in such a manner that the Balance Ratio is
maintained until paid in full). Realized Losses shall be applied such
that after all distribution have been made on such Payment Date the
principal balance of the principal balances of the Class II-A-1, Class
II-A-2, Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class
II-A-7, Class II-A-8, Class II-A-9, and Class II-B Certificates are each
1% of the principal balances of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, and
Class B Certificates, respectively, and the aggregate principal balance
of the Class II-M-1, Class II-M-2 and Class II-M-3 Certificates is equal
to the Total Loan Balances of the Home Equity Loans less an amount equal
to the sum of the principal balances of the Class II-A-1, Class II-A-2,
Class II-A-3, Class II-A-4, Class II-A-5, Class II-A-6, Class II-A-7,
Class II-A-8, Class II-A-9, and Class II-B Certificates and is allocated
and apportioned first, to the Class II-M-1 and Class II-M-2 Certificates
the least amount of Realized Losses necessary which when applied to such
Classes can be applied in such a manner that the Balance Ratio is
maintained, and second, to the Class II-M-3 Certificates. The REMIC II
Certificates will have the following designations and Pass-Through Rates,
and distributions of principal and interest thereon shall be allocated to
the Certificates in the following manner:
<TABLE>
<CAPTION>
REMIC II Initial Pass- Allocation Allocation
Certificates Balance Through of of
Rate Principal Interest
<S> <C> <C> <C> <C>
II-A-1 1,140,000.00 (1) (4) (5),(6)
II-A-2I 1,750,000.00 (1) (4) (5),(6)
II-A-2F 2,500,000.00 (1) (4) (5),(6)
II-A-3 2,750,000.00 (1) (4) (5),(6)
II-A-4 1,850,000.00 (1) (4) (5),(6)
II-A-5 900,000.00 (1) (4) (5),(6)
II-A-6 970,000.00 (1) (4) (5),(6)
II-A-7 1,006,000.00 (1) (4) (5),(6)
II-A-8 2,350,000.00 (1) (4) (5),(6)
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
II-A-9 1,584,000.00 (1) (4) (5),(6)
II-B 700,000.00 (1) (4) (5),(6)
II-M-1 15,850,000.00 (2) (4) (5),(6)
II-M-2 1,650,000.00 (3) (4) (5),(6)
II-M-3 1,715,000,000.00 (1) (4) (5),(6)
II-A-IO 0 (1) N/A Class A-10 IO
R-II 0 0% N/A N/A (7)
</TABLE>
- -------------------------
(1) The Pass-Through Rate on these REMIC II Regular Interests shall at
any time of determination equal the weighted average of the Class IB
Pass-Through Rate, the Class IC Pass-Through Rate and the excess of
the Class IA Pass-Through Rate over (a) 6.5% for the first 30
Payment Dates and (b) 0.0% thereafter. Interest on the Class II-A-IO
will equal 6.5% per annum of the principal balance of the Class IA
Certificate for the first 30 Payment Dates and 0.0% thereafter.
(2) The Pass-Through Rate on this REMIC II Regular Interest shall at any
time of determination equal the weighted average of the Class IB
Pass-Through Rate and the excess of the Class IA Pass-Through Rate
over (a) 6.5% for the first 30 Payment Dates and (b) 0.0%
thereafter.
(3) The Pass-Through Rate on this REMIC II Regular Interest shall at any
time of determination equal the Pass-Through Rate on the Class IC
Certificates issued by REMIC I.
(4) Principal will be allocated to and apportioned among the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, and Class B Certificates in the same
proportion as principal from the Home Equity Loans is payable with
respect to such Certificates, except that a portion of such
principal in an amount equal to the Overcollateralization Stepdown
Amount shall first be allocated as a payment of interest to the
Class C Certificates, and all principal will be allocated as a
payment of interest to the Class C Certificates after the principal
balance of the Class A and Class B Certificates have been reduced to
zero.
(5) Except as provided in footnote (6), interest will be allocated among
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, and Class B Certificates in
the same proportion as interest is payable on such Certificates.
(6) Any interest with respect to this REMIC II Certificate in excess of
the product of (i) 100 times the weighted average coupon of the
Class II-A-1, Class II-A-2, Class II-A-3, Class II-A-4, Class
II-A-5, Class II-A-6, Class II-A-7, Class II-A-8, Class II-A-9,
Class II-B, Class II-M-1, Class II-M-2, and Class II-M-3
Certificates, where each of such Classes, other than the Class
II-M-1, Class II-M-2 and Class II-M-3 Certificates, is first subject
to a cap and floor equal to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 and
Class B Pass-Through Rate, respectively, and the Class II-M-1, Class
II-M-2 and Class II-M-3 Certificates are each subject to a cap equal
to 0%, and (ii) the principal balance of this REMIC II Certificate,
shall not be allocated to the Class A and Class B Certificates but
will be allocated to the Class C Certificates. However, the Class C
Certificates shall be subordinated to the extent provided in Section
7.03.
(7) On each Distribution Date, available funds, if any, remaining in the
REMIC II after payments of interest and principal, as designated
above, will be distributed to the Class R-II Certificate. It is
expected that there shall not be any distributions on the Class R-II
Certificates.
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<PAGE>
(d) The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 IO, Class B and Class C
Certificates are hereby designated as "regular interests" with respect to
the REMIC III (the "REMIC III Regular Interests") and the Class R
Certificate is hereby designated as the single "residual interest" with
respect to the REMIC III. On each Payment Date, available funds, if any,
remaining in the REMIC III after payments of interest and principal as
designated herein shall be distributed to the Class R Certificates.
(e) For federal income tax purposes, the "latest possible maturity
date" for each of the REMIC I Regular Interests, REMIC II Regular
Interests and REMIC III Regular Interests (other than the Class A-10 IO
Certificates) is hereby set to be the Payment Date of April 15, 2029, and
for the Class A-10 IO Certificates is hereby set to be the Payment Date
of September 15, 2000.
(f) The Final Scheduled Payment Date for each Class of Certificates is
hereby set to be the Payment Date indicated below: Class Final Scheduled Payment
Date
Class Final Scheduled Payment Date
- --------------------------------------- --------------------------------------
Class A-1 Certificates June 15, 1999
Class A-2 Fixed Certificates March 15, 2013
Class A-2 Internal Certificates March 15, 2013
Class A-3 Certificates March 15, 2013
Class A-4 Certificates January 15, 2014
Class A-5 Certificates September 15, 2016
Class A-6 Certificates November 15, 2019
Class A-7 Certificates March 15, 2023
Class A-8 Certificates June 15, 2028
Class A-9 Certificates June 15, 2028
Class A-10 I0 Certificates December 15, 2000
Class B Certificates July 15, 2029
(g) The Startup Day is hereby designated for each of REMIC I,
REMIC II and REMIC III as the "startup day" within the meaning of Section
860G(a)(9) of the Code.
(h) The Trustee shall provide to the Internal Revenue Service
and to the persons described in Section 860E(e)(3) and (6) of the Code,
the information described in Treasury regulations Section
1.860D-1(b)(5)(ii), or any successor regulation thereto, with respect to
each of REMIC I, REMIC II and REMIC III. Such information will be
provided in the manner described in Treasury regulations Section
1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
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<PAGE>
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee, the
Certificate Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned
or leased by it make such qualification necessary. The Depositor has all
requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a
party.
(b) The execution and delivery of this Agreement by the Depositor
and its performance and compliance with the terms of this Agreement and
the other Operative Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of the Depositor
and will not violate the Depositor's Certificate of Incorporation or
Bylaws or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or result in a
breach of, any material contract, agreement or other instrument to which
the Depositor is a party or by which the Depositor is bound or violate
any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Depositor
or any of its properties.
(c) This Agreement and the other Operative Documents to which
the Depositor is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of the Depositor, enforceable against
it in accordance with the terms hereof and thereof, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general principles of equity (whether considered
in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default would materially
and adversely affect the condition (financial or other) or operations of
the Depositor or its properties or the consequences of which would
materially and adversely affect its performance hereunder or under the
other Operative Documents to which the Depositor is a party.
(e) No litigation is pending with respect to which the
Depositor has received service of process or, to the best of the
Depositor's knowledge, threatened against the Depositor which litigation
might have consequences that would prohibit its entering into this
Agreement or
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<PAGE>
any other Operative Documents to which it is a party or that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Depositor or its properties or might have consequences
that would materially and adversely affect its performance hereunder and
under the other Operative Documents to which the Depositor is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Depositor
contains any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report not
misleading.
(g) The statements contained in the Registration Statement
which describe the Depositor or matters or activities for which the
Depositor is responsible in accordance with the Operative Documents or
which are attributable to the Depositor therein are true and correct in
all material respects, and the Registration Statement does not contain
any untrue statement of a material fact with respect to the Depositor
required to be stated therein or necessary to make the statements
contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The
Registration Statement does not contain any untrue statement of a
material fact required to be stated therein or omit to state any material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no
fact known to the Depositor that materially adversely affects or in the
future may (so far as the Depositor can now reasonably foresee)
materially adversely affect the Depositor or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has not
been set forth in the Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by
or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to which the
Depositor makes no such representation or warranty), that are necessary
or advisable in connection with the purchase and sale of the Certificates
and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date
hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal therefrom taken,
and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the
part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative
Documents to which it is a party.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made
insolvent by the transfer of the Home Equity Loans, nor is the Depositor
aware of any pending insolvency.
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<PAGE>
(k) The transfer, assignment and conveyance of the Notes and
the Mortgages by the Depositor hereunder are not subject to the bulk
transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
(l) The Depositor is not transferring the Home Equity Loans to the
Trustee with any intent to hinder, delay or defraud its creditors. It is
understood and agreed that the representations and warranties set forth in this
Section 3.01 shall survive delivery of the respective Home Equity Loans to the
Trustee.
Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Trustee, the
Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
is, and each Sub-Servicer is, in compliance with the laws of each state
in which any Property is located to the extent necessary to enable it to
perform its obligations hereunder and is in good standing as a foreign
corporation in each jurisdiction in which the nature of its business, or
the properties owned or leased by it make such qualification necessary.
The Servicer and each Sub-Servicer has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative
Documents to which it is a party. The Servicer is designated as an
approved seller-servicer by FannieMae for first and second mortgage loans
and has combined equity and subordinated debt of at least $1,500,000, as
determined in accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the
Servicer and its performance and compliance with the terms of this
Agreement have been duly authorized by all necessary corporate action on
the part of the Servicer and will not violate the Servicer's Certificate
of Incorporation or Bylaws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under,
or result in the breach of, any material contract, agreement or other
instrument to which the Servicer is a party or by which the Servicer is
bound or violate any statute or any order, rule or regulation of any
court, governmental agency or body or other tribunal having jurisdiction
over the Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the
Servicer is a party, assuming due authorization, execution and delivery
by the other parties hereto and thereto, each constitutes a valid, legal
and binding obligation of the Servicer, enforceable against it in
accordance with the terms hereof and thereof, except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general principles of equity (whether considered
in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the
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<PAGE>
condition (financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and adversely
affect its performance hereunder or under the other Operative Documents
to which the Servicer is a party.
(e) No litigation is pending with respect to which the
Servicer has received service of process or, to the best of the
Servicer's knowledge, threatened against the Servicer which litigation
might have consequences that would prohibit its entering into this
Agreement or any other Operative Documents to which the Servicer is a
party or that would materially and adversely affect the condition
(financial or otherwise) or operations of the Servicer or its properties
or might have consequences that would materially and adversely affect its
performance hereunder and the other Operative Documents to which the
Servicer is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Servicer
contains any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report not
misleading.
(g) The statements contained in the Registration Statement
which describe the Servicer or matters or activities for which the
Servicer is responsible in accordance with the Operative Document or
which are attributed to the Servicer therein are true and correct in all
material respects, and the Registration Statement does not contain any
untrue statement of a material fact with respect to the Servicer or omit
to state a material fact required to be stated therein or necessary to
make the statements contained therein with respect to the Servicer, in
light of the circumstances under which they were made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee
rate" as that term is used in Statement of Financial Accounting Standards
No. 65 issued by the Financial Accounting Standards Board. Neither the
Servicer nor any affiliate thereof will report on any financial
statements any part of the Servicing Fee as an adjustment to the sales
price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by
or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to which the
Servicer makes no such representation or warranty), that are necessary or
advisable in connection with the execution and delivery by the Servicer
of the Operative Documents to which it is a party, have been duly taken,
given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal therefrom taken,
and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the
part of the Servicer and the performance by the Servicer of its
obligations under this Agreement and such of the other Operative
Documents to which it is a party.
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<PAGE>
(j) The collection practices used by the Servicer with respect
to the Home Equity Loans have been, in all material respects, legal,
proper, prudent and customary in the mortgage servicing business and in
conformity with relevant FannieMae guidelines.
(k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
(i) It is understood and agreed that the representations and
warranties set forth in this Section 3.02 shall survive delivery of the Home
Equity Loans to the Trustee.
Upon discovery by any of either Seller, the Servicer, any
Sub-Servicer, any Owner, the Certificate Insurer or the Trustee (each,
for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which
materially and adversely affects the interests of the Owners or of the
Certificate Insurer, the party discovering such breach shall give prompt
written notice to the other parties. Within 60 days of its discovery or
its receipt of notice of breach, the Servicer shall cure such breach in
all material respects and, upon the Servicer's continued failure to cure
such breach, may thereafter be removed by the Trustee pursuant to Section
8.20 hereof; provided, however, that if any party can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the
written approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of the Sellers.
(1) ContiMortgage hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) ContiMortgage is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned
or leased by it, make such qualification necessary. ContiMortgage has all
requisite corporate power and authority to own and operate its
properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a
party.
(b) The execution and delivery of this Agreement by
ContiMortgage and its performance and compliance with the terms of this
Agreement and the other Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of
ContiMortgage and will not violate ContiMortgage's Certificate of
Incorporation or Bylaws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in a breach of, any material contract, agreement or other
instrument to which ContiMortgage is a party or by which ContiMortgage is
bound or violate any statute or any order, rule or regulation of any
court, governmental agency or body or other tribunal having jurisdiction
over ContiMortgage or any of its properties.
(c) This Agreement and the other Operative Documents to which
ContiMortgage is a party, assuming due authorization, execution and
delivery by the other parties hereto and thereto, each constitutes a
valid, legal and binding obligation of
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<PAGE>
ContiMortgage, enforceable against it in accordance with the terms hereof
and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in
equity or at law).
(d) ContiMortgage is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default would materially
and adversely affect the condition (financial or other) or operations of
ContiMortgage or its properties or the consequences of which would
materially and adversely affect its performance hereunder and under the
other Operative Documents to which ContiMortgage is a party.
(e) No litigation is pending with respect to which ContiMortgage
has received service of process or, to the best of ContiMortgage's
knowledge, threatened against ContiMortgage which litigation might have
consequences that would prohibit its entering into this Agreement or any
other Operative Documents to which it is a party or that would materially
and adversely affect the condition (financial or otherwise) or operations
of ContiMortgage or its properties or might have consequences that would
materially and adversely affect its performance hereunder and under the
other Operative Documents to which ContiMortgage is a party.
(f) No certificate of an officer, statement furnished in writing
or report delivered pursuant to the terms hereof by ContiMortgage
contains any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report not
misleading.
(g) The statements contained in the Registration Statement which
describe ContiMortgage or matters or activities for which ContiMortgage
is responsible in accordance with the Operative Documents or which are
attributable to ContiMortgage therein are true and correct in all
material respects, and the Registration Statement does not contain any
untrue statement of a material fact with respect to ContiMortgage
required to be stated therein or necessary to make the statements
contained therein with respect to ContiMortgage, in light of the
circumstances under which they were made, not misleading. The
Registration Statement does not contain any untrue statement of a
material fact required to be stated therein or omit to state any material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no
fact known to ContiMortgage that materially adversely affects or in the
future may (so far as ContiMortgage can now reasonably foresee)
materially adversely affect ContiMortgage or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has not
been set forth in the Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the
related Note) and other items of the Trust Estate delivered by
ContiMortgage to the Depositor and by the Depositor to the Trustee under
this Agreement, the Trust will have good title to such Home Equity Loan
(including the related Note) and such other items of the Trust Estate
free and clear of any lien, charge, mortgage, encumbrance or rights of
others, except as set forth in Section 3.04 (b) (ix) (other than liens
which will be simultaneously released).
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(i) Neither ContiMortgage nor any affiliate thereof will report
on any financial statement any part of the Servicing Fee as an adjustment
to the sales price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by
or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to which
ContiMortgage makes no such representation or warranty), that are
necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by ContiMortgage of the
Operative Documents to which it is a party, have been duly taken, given
or obtained, as the case may be, are in full force and effect on the date
hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal therefrom taken,
and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the
part of ContiMortgage and the performance by ContiMortgage of its
obligations under this Agreement and such of the other Operative
Documents to which it is a party.
(k) The origination practices used by ContiMortgage with respect
to the Home Equity Loans have been, in all material respects, legal,
proper, prudent and customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiMortgage.
(m) ContiMortgage is not insolvent, nor will it be made
insolvent by the transfer of the Home Equity Loans, nor is ContiMortgage
aware of any pending insolvency.
(n) The transfer, assignment and conveyance of the Notes and the
Mortgages by ContiMortgage hereunder are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(o) ContiMortgage is not transferring the Home Equity Loans to
the Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and
warranties set forth in this Section 3.03(1) shall survive delivery of
the respective Home Equity Loans to the Trustee.
Upon discovery by any of the Servicer, any Sub-Servicer, either
Seller, the Certificate Insurer or the Trustee (each, for purposes of
this paragraph, a "party") of a breach of any of the representations and
warranties set forth in this Section 3.03 which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the
party discovering such breach shall give prompt written notice to the
other parties. ContiMortgage hereby covenants and agrees that within 60
days of its discovery or its receipt of notice of breach, it shall cure
such breach in all material respects or, with respect to a breach of
clause (h) above, ContiMortgage may (or may cause an affiliate of
ContiMortgage to) on the Monthly Remittance Date
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next succeeding such discovery or receipt of notice (i) if such monthly
Remittance Date is within two years following the Startup Day substitute
in lieu of any Home Equity Loan not in compliance with clause (h) a
Qualified Replacement Mortgage and, if the outstanding principal amount
of such Qualified Replacement Mortgage as of the applicable Replacement
Cut-Off Date is less than the Loan Balance of such Home Equity Loan as of
such Replacement Cut-Off Date, deliver an amount equal to such difference
together with the aggregate amount of (A) all Delinquency Advances and
Servicing Advances theretofore made with respect to such Home Equity Loan
and (B) all Delinquency Advances and Servicing Advances which the
Servicer has theretofore failed to remit with respect to such Home Equity
Loan (a "Substitution Amount") to the Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Home Equity Loan
from the Trust at the Loan Purchase Price, which purchase price shall be
delivered to the Servicer for deposit in the Principal and Interest
Account. Notwithstanding any provision of this Agreement to the contrary,
with respect to any Home Equity Loan which is not in default or as to
which no default is imminent, no repurchase or substitution pursuant to
Section 3.03, 3.04 or 3.06 shall be made unless ContiMortgage obtains for
the Trustee and the Certificate Insurer an opinion of counsel experienced
in federal income tax matters to the effect that such a repurchase or
substitution would not constitute a Prohibited Transaction for the Trust
or any REMIC therein or otherwise subject the Trust or any REMIC therein
to tax and would not jeopardize the status of any REMIC therein as a
REMIC (a "REMIC Opinion") addressed to the Trustee and the Certificate
Insurer and acceptable to the Trustee and the Certificate Insurer. Any
Home Equity Loan as to which repurchase or substitution was delayed
pursuant to this Section shall be repurchased or substituted for (subject
to compliance with Sections 3.03, 3.04 or 3.06, as the case may be) upon
the earlier of (a) the occurrence of a default or imminent default with
respect to such Home Equity Loan and (b) receipt by the Trustee and the
Certificate Insurer of a REMIC Opinion.
(2) ContiWest hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Owners that as of the Startup
Day:
(a) ContiWest is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and is in good standing as a foreign corporation in each jurisdiction in
which the nature of its business, or the properties owned or leased by
it, make such qualification necessary. ContiWest has all requisite
corporate power and authority to own and operate its properties, to carry
out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under this Agreement and
the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by ContiWest
and its performance and compliance with the terms of this Agreement and
the other Operative Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of ContiWest and
will not violate ContiWest's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which ContiWest is a
party or by which ContiWest is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over ContiWest or any of its properties.
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(c) Agreement and the other Operative Documents to which
ContiWest is a party, assuming due authorization, execution and delivery
by the other parties hereto and thereto, each constitutes a valid, legal
and binding obligation of ContiWest, enforceable against it in accordance
with the terms hereof and thereof, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally
and by general principles of equity (whether considered in a proceeding
or action in equity or at law).
(d) ContiWest is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default would materially
and adversely affect the condition (financial or other) or operations of
ContiWest or its properties or the consequences of which would materially
and adversely affect its performance hereunder and under the other
Operative Documents to which ContiWest is a party.
(e) No litigation is pending with respect to which ContiWest has
received service of process or, to the best of ContiWest's knowledge,
threatened against ContiWest which litigation might have consequences
that would prohibit its entering into this Agreement or any other
Operative Documents to which it is a party or that would materially and
adversely affect the condition (financial or otherwise) or operations of
ContiWest or its properties or might have consequences that would
materially and adversely affect its performance hereunder and under the
other Operative Documents to which ContiWest is a party.
(f) No certificate of an officer, statement furnished in writing
or report delivered pursuant to the terms hereof by ContiWest contains
any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not
misleading.
(g) The statements contained in the Registration Statement which
describe ContiWest or matters or activities for which ContiWest is
responsible in accordance with the Operative Documents or which are
attributable to ContiWest therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to ContiWest required to be
stated therein or necessary to make the statements contained therein with
respect to ContiWest, in light of the circumstances under which they were
made, not misleading. The Registration Statement does not contain any
untrue statement of a material fact required to be stated therein or omit
to state any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to ContiWest that materially adversely
affects or in the future may (so far as ContiWest can now reasonably
foresee) materially adversely affect ContiWest or the Home Equity Loans
or the ownership interests therein represented by the Certificates that
has not been set forth in the Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the
related Note) and other items of the Trust Estate delivered by ContiWest
to the Depositor and by the Depositor to the Trustee under this
Agreement, the Trust will have good title to such Home Equity Loan
(including the related Note) and such other items of the Trust Estate
free and clear of any lien,
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charge, mortgage, encumbrance or rights of others, except as set forth in
Section 3.04 (b) (ix) (other than liens which will be simultaneously
released).
(i) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by
or from any federal, state or other governmental authority or agency
(other than any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to which
ContiWest makes no such representation or warranty), that are necessary
or advisable in connection with the purchase and sale of the Certificates
and the execution and delivery by ContiWest of the Operative Documents to
which it is a party, have been duly taken, given or obtained, as the case
may be, are in full force and effect on the date hereof, are not subject
to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be
taken or review thereof may be obtained has expired or no review thereof
may be obtained or appeal therefrom taken, and are adequate to authorize
the consummation of the transactions contemplated by this Agreement and
the other Operative Documents on the part of ContiWest and the
performance by ContiWest of its obligations under this Agreement and such
of the other Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of ContiWest.
(k) ContiWest is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is ContiWest aware of any
pending insolvency.
(l) The transfer, assignment and conveyance of the Notes and the
Mortgages by ContiWest hereunder are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(m) ContiWest is not transferring the Home Equity Loans to the
Depositor with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and
warranties set forth in this Section 3.03(2) shall survive delivery of
the respective Home Equity Loans to the Trustee.
Upon discovery by any of the Servicer, any Sub-Servicer, either
Seller, the Certificate Insurer or the Trustee (each, for purposes of
this paragraph, a "party") of a breach of any of the representations and
warranties set forth in this Section 3.03 which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the
party discovering such breach shall give prompt written notice to the
other parties. ContiWest hereby covenants and agrees that within 60 days
of its discovery or its receipt of notice of breach, it shall cure such
breach in all material respects or, with respect to a breach of clause
(h) above, ContiWest may (or may cause an affiliate of ContiWest to) on
the Monthly Remittance Date next succeeding such discovery or receipt of
notice (i) if such monthly Remittance Date is within two years of the
startup day substitute in lieu of any Home Equity Loan not in compliance
with clause (h) a Qualified Replacement Mortgage and, if the outstanding
principal amount of such Qualified Replacement Mortgage as of the
applicable Replacement Cut-Off Date is less than the Loan
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Balance of such Home Equity Loan as of such Replacement Cut-Off Date,
deliver an amount equal to such difference together with the aggregate
amount of (A) all Delinquency Advances and Servicing Advances theretofore
made with respect to such Home Equity Loan and (B) all Delinquency
Advances and Servicing Advances which the Servicer has theretofore failed
to remit with respect to such Home Equity Loan (a "Substitution Amount")
to the Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Home Equity Loan from the Trust at the Loan Purchase Price,
which purchase price shall be delivered to the Servicer for deposit in
the Principal and Interest Account. Notwithstanding any provision of this
Agreement to the contrary, with respect to any Home Equity Loan which is
not in default or as to which no default is imminent, no repurchase or
substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made unless
ContiWest obtains for the Trustee and the Certificate Insurer an opinion
of counsel experienced in federal income tax matters to the effect that
such a repurchase or substitution would not constitute a Prohibited
Transaction for the Trust or any REMIC therein or otherwise subject the
Trust or any REMIC therein to tax and would not jeopardize the status of
any REMIC therein as a REMIC (a "REMIC Opinion") addressed to the Trustee
and the Certificate Insurer and acceptable to the Trustee and the
Certificate Insurer. Any Home Equity Loan as to which repurchase or
substitution was delayed pursuant to this Section shall be repurchased or
substituted for (subject to compliance with Sections 3.03, 3.04 or 3.06,
as the case may be) upon the earlier of (a) the occurrence of a default
or imminent default with respect to such Home Equity Loan and (b) receipt
by the Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of the Sellers to Take Certain Actions with Respect
to the Home Equity Loans In Certain Situations.
(a) Upon the discovery by either Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer or the Trustee (i) that any of the
statements set forth in subsection (b) below were untrue as of the
Startup Day with the result that the interests of the Owners or the
Certificate Insurer are materially and adversely affected or (ii) that
statements set forth in Clauses (ix), (x), (xiii), (xxxvi), (xl), or
(xli) of subsection (b) below were untrue in any material respect as of
the Startup Day, the party discovering such breach shall give prompt
written notice to the other parties. Upon the earliest to occur of such
Seller's discovery, its receipt of notice of breach from any one of the
other parties or such time as a situation resulting from an existing
statement which is untrue materially and adversely affects the interests
of the Owners or of the Certificate Insurer, such Seller hereby covenants
and warrants that it shall promptly cure such breach in all material
respects or subject to the last two sentences of Section 3.03 it shall on
the second Monthly Remittance Date next succeeding such discovery,
receipt of notice or such time (i) if such Monthly Remittance Date is
within two years of the Startup Day substitute in lieu of each Home
Equity Loan which has given rise to the requirement for action by such
Seller a Qualified Replacement Mortgage and deliver the Substitution
Amount to the Servicer for deposit in the Principal and Interest Account
or (ii) purchase such Home Equity Loan from the Trust at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
delivered to the Servicer for deposit in the Principal and Interest
Account. Other than as specified in Section 6.12 hereof, it is understood
and agreed that the obligation of a Seller so to substitute or purchase
any Home Equity Loan as to which such a statement set forth below is
untrue in any material respect and has not been remedied shall constitute
the sole remedy under this Agreement respecting a discovery of any such
statement which is untrue in any material respect
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in this Section 3.04 available to the Owners, the Certificate Insurer and
the Trustee, the Certificate Insurer.
(b) Unless otherwise specified, the information set out below
specifies as of the Startup Day:
(i) The information with respect to each Home Equity Loan and
the aggregate Loan Balance of all Home Equity Loans set forth in the
related Schedule of Home Equity Loans is true and correct as of the
Cut-Off Date;
(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related thereto) with
respect to each Home Equity Loan has been or will be delivered to the
Trustee on the Startup Day or as otherwise provided in Section 3.05;
(iii) Each Home Equity Loan being transferred to the Trust is a
Qualified Mortgage;
(iv) Each Property is improved by a single (one-to-four) family
residential dwelling, which may include condominiums and townhouses,
manufactured housing or small multifamily or mixed-use property but shall
not include co-operatives or mobile homes; provided, however, that not
more than 0.04%, 0.21% and 0.17% of the aggregate Loan Balance of the
Home Equity Loans in the Fixed Rate Pool, Adjustable Rate Pool 1 and
Adjustable Rate Pool 2, respectively, are secured by condominiums with
more than four stories and no more than 0.68%, 1.36% and 1.30% of the
Loan Balance of the Home Equity Loans in the Fixed Rate Pool, Adjustable
Rate Pool 1 and Adjustable Rate Pool 2, respectively, are secured by
condominiums of less than four stories;
(v) No Home Equity Loan in the Fixed Rate Pool has a
Loan-to-Value Ratio in excess of 85%, except 16.67% of such Home Equity
Loans which have a Loan-to-Value Ratio not greater than 100%; no Home
Equity Loan in Adjustable Rate Pool 1 has a Loan-to-Value Ratio in excess
of 85%, except 27.39% of such Home Equity Loans which have a
Loan-to-Value Ratio not greater than 100%; and no Home Equity Loan in
Adjustable Rate Pool 2 has a Loan-to-Value Ratio in excess of 85% except
23.27% of such Home Equity Loans which have a Loan-to-Value Ratio of not
greater than 100%;
(vi) Each Home Equity Loan is being serviced by the Servicer;
(vii) The Note related to each Home Equity Loan in the Fixed
Rate Pool bears a fixed Coupon Rate of at least 6.75% per annum; the Note
related to each Home Equity Loan in the Adjustable Rate Pool 1 bears a
current Coupon Rate of at least 7.80% per annum; and the Note related to
each Home Equity Loan in Adjustable Rate Pool 2 bears a current Coupon
Rate of at least 5.88% per annum. The weighted average Coupon Rate of the
Home Equity Loans in the Fixed Rate Pool is at least 10.49%; the weighted
average Coupon Rate of the Home Equity Loans in Adjustable Rate Pool 1 is
at least 10.27%; and the weighted average Coupon Rate of the Home Equity
Loans in Adjustable Rate Pool 2 is at least 9.73%;
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(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal monthly Scheduled
Payments which are sufficient to amortize fully the principal balance of
such Note on or before its maturity date (other than Notes representing
not more than 41.52% of the aggregate Loan Balance of the fixed rate Home
Equity Loans or 0.03% of the adjustable rate Home Equity Loans, which may
provide for a "balloon" payment due at the end of the 15th year, which
maturity date is not more than 15 years from the date of origination);
(ix) As of the Startup Day, each Mortgage is a valid and
subsisting first or second lien of record on the Property subject in the
case of any Second Mortgage Loan only to a Senior Lien on such Property
and subject in all cases to the exceptions to title set forth in the
title insurance policy or attorney's opinion of title with respect to the
related Home Equity Loan, which exceptions are generally acceptable to
banking institutions in connection with their regular mortgage lending
activities, and such other exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate,
materially and adversely affect the benefits of the security intended to
be provided by such Mortgage;
(x) Immediately prior to the transfer and assignment of the Home
Equity Loans by the related Seller to the Depositor and by the Depositor
to the Trust herein contemplated, such Seller and the Depositor, as the
case may be, held good and indefeasible title to, and was the sole owner
of, each Home Equity Loan (including the related Note) conveyed by such
Seller subject to no liens, charges, mortgages, encumbrances or rights of
others except as set forth in clause (ix) or other liens which will be
released simultaneously with such transfer and assignment; and
immediately upon the transfer and assignment herein contemplated, the
Trustee will hold good and indefeasible title to, and be the sole owner
of, each Home Equity Loan subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in paragraph (ix) or
other liens which will be released simultaneously with such transfer and
assignment;
(xi) As of the Startup Day, (a) no more than 1.77%, 1.39% and
3.08% of the Home Equity Loans in the Fixed Rate Pool, Adjustable Rate
Pool 1 and Adjustable Rate Pool 2, respectively, as a percentage of the
outstanding aggregate Loan Balance of such Home Equity Loans are 30-59
days Delinquent, (b) no more than 0.12%, 0.00% and 0.26% of the Home
Equity Loans in the Fixed Rate Pool, Adjustable Rate Pool 1 and
Adjustable Rate Pool 2, respectively, as a percentage of the outstanding
aggregate Loan Balance of such Home Equity Loans, are 60-89 days
Delinquent, (c) none of the Home Equity Loans, is 90 or more days
Delinquent, (d) no Mortgagor of any Home Equity Loan has been 30 days or
more Delinquent more than once during the 12 months immediately preceding
the Startup Day except as indicated on Schedule III attached hereto and
(e) no Mortgagor of any Home Equity Loan has been 90 or more days
Delinquent during the 12 months immediately preceding the Startup Day
except as indicated on Schedule III attached hereto;
(xii) There is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in good
repair;
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(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation of the
related Mortgagor to pay the unpaid principal of or interest on such
Note;
(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph
(xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal Truth-in-Lending
Act and other consumer protection laws, usury, equal credit opportunity,
disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) an
attorney's opinion of title has been obtained but no title policy has
been obtained (provided that no title policy has been obtained with
respect to not more than 1.0% of the Original Aggregate Loan Balance of
the Home Equity Loans), or (b) a lender's title insurance policy, issued
in standard American Land Title Association form by a title insurance
company authorized to transact business in the state in which the related
Property is situated, in an amount at least equal to the original balance
of such Home Equity Loan together, in the case of a Second Mortgage Loan,
with the then-current principal balance of the mortgage note relating to
the Senior Lien, insuring the mortgagee's interest under the related Home
Equity Loan as the holder of a valid first or second mortgage lien of
record on the real property described in the related Mortgage, as the
case may be, subject only to exceptions of the character referred to in
paragraph (ix) above, was effective on the date of the origination of
such Home Equity Loan, and, as of the Startup Day, such policy is valid
and thereafter such policy shall continue in full force and effect;
(xvii) Each Sub-Servicer, if any, is a qualified servicer as
defined in Section 8.03 with respect to the Home Equity Loans serviced by
it;
(xviii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a generally acceptable
carrier that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal balance
of the related Home Equity Loan (together, in the case of a Second
Mortgage Loan, with the outstanding principal balance of the Senior
Lien), (B) the minimum amount required to compensate for damage or loss
on a replacement cost basis or (C) the full insurable value of the
Property;
(xix) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a
generally acceptable carrier in an amount representing coverage not less
than the least of (A) the outstanding principal balance of the related
Home Equity Loan (together, in the case of a Second Mortgage Loan, with
the outstanding principal balance of the Senior Lien), (B)
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the minimum amount required to compensate for damage or loss on a
replacement cost basis or (C) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973;
(xx) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and by general principles
of equity (whether considered in a proceeding or action in equity or at
law), and all parties to each Home Equity Loan had full legal capacity to
execute all documents relating to such Home Equity Loan and convey the
estate therein purported to be conveyed;
(xxi) Each Seller has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and remedies
of the Trustee in any Insurance Policies applicable to any Home Equity
Loans delivered by such Seller including, without limitation, any
necessary notifications of insurers, assignments of policies or interests
therein, and establishments of co-insured, joint loss payee and mortgagee
rights in favor of the Trustee;
(xxii) As of the Startup Day, no more than 0.26% of the
aggregate Loan Balance of the Home Equity Loans Fixed Rate Pool, 0.53% in
Adjustable Rate Pool 1 and 0.78% in Adjustable Rate Pool 2, respectively,
will be secured by Properties located within any single zip code area;
(xxiii) Each original Mortgage was recorded or is in the process
of being recorded, and all subsequent assignments of the original
Mortgage have been delivered for recordation or have been recorded in the
appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of or purchasers from the
Seller delivering the related Home Equity Loan (or, subject to Section
3.05 hereof, are in the process of being recorded);
(xxiv) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest
of the Owners and the Certificate Insurer and which has been delivered to
the Trustee. The substance of any such alteration or modification is
reflected on the related Schedule of Home Equity Loans;
(xxv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing or recording such
Home Equity Loans were paid;
(xxvi) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
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(xxvii) No Home Equity Loan was originated under a buydown plan;
(xxviii) No Home Equity Loan has a shared appreciation feature,
or other contingent interest feature;
(xxix) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
(xxx) Each Mortgage contains a provision for the acceleration of
the payment of the unpaid principal balance of the related Home Equity
Loan in the event the related Property is sold without the prior consent
of the mortgagee thereunder;
(xxxi) Any advances made after the date of origination of a Home
Equity Loan but prior to the Cut-Off Date have been consolidated with the
outstanding principal amount secured by the related Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the respective Schedule of Home
Equity Loans. The consolidated principal amount does not exceed the
original principal amount of the related Home Equity Loan. No Note
permits or obligates the Servicer to make future advances to the related
Mortgagor at the option of the Mortgagor;
(xxxii) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a proceeding
currently occurring, and each Property is undamaged by waste, fire,
water, flood, earthquake or earth movement;
(xxxiii) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such Property,
and are stated in the title insurance policy and affirmatively insured;
(xxxiv) No improvement located on or being part of any Property
is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of each Property and, with respect to
the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities and such Property is
lawfully occupied under the applicable law;
(xxxv) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the
Owners or the Trust to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the related Mortgagor;
(xxxvi) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against
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the related Property of the benefits of the security, including (A) in
the case of a Mortgage designated as a deed of trust, by trustee's sale
and (B) otherwise by judicial foreclosure. There is no homestead or other
exemption available to the related Mortgagor which would materially
interfere with the right to sell the related Property at a trustee's sale
or the right to foreclose the related Mortgage;
(xxxvii) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no event
which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or
event of acceleration; and neither the Servicer nor the related Seller
has waived any default, breach, violation or event of acceleration;
(xxxviii) No instrument of release or waiver has been executed
in connection with any Home Equity Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement which has been approved by the primary mortgage guaranty
insurer, if any, and which has been delivered to the Trustee;
(xxxix) The maturity date of each Home Equity Loan is at least
twelve months prior to the maturity date of the related first mortgage
loan if such first mortgage loan provides for a balloon payment;
(xl) Each Home Equity Loan conforms, and all such Home Equity
Loans in the aggregate conform, in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xli) The credit underwriting guidelines applicable to each Home
Equity Loan conform in all material respects to the description thereof
set forth in the Prospectus Supplement;
(xlii) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject property;
(xliii) The Home Equity Loans were not selected for inclusion in the
Trust by the Sellers on any basis intended to adversely affect the Trust;
(xliv) No more than 4.44%, 4.08% and 5.39% of the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Pool, Adjustable Rate
Pool 1 and Adjustable Rate Pool 2, respectively, are secured by
Properties that are non-owner occupied Properties (i.e., investor-owned
and vacation);
(xlv) No more than 3.56%, 7.42% and 7.74% of the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Pool, Adjustable Rate
Pool 1 and Adjustable Rate Pool 2, respectively, are secured by Home
Equity Loans which were originated under ContiMortgage's non-income
verification program;
(xlvi) Neither Seller has any actual knowledge that there exist
any hazardous substances, hazardous wastes or solid wastes, as such terms
are defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource
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Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation on any Property;
(xlvii) Both Sellers were properly licensed or otherwise
authorized, to the extent required by applicable law, to originate or
purchase each Home Equity Loan; and the consummation of the transactions
herein contemplated, including, without limitation, the receipt of
interest by the Owners and the ownership of the Home Equity Loans by the
Trustee as trustee of the Trust will not involve the violation of such
laws;
(xlviii) With respect to each Property subject to a ground lease
(i) the current ground lessor has been identified and all ground rents
which have previously become due and owing have been paid; (ii) the
ground lease term extends, or is automatically renewable, for at least
five years beyond the maturity date of the related Home Equity Loan;
(iii) the ground lease has been duly executed and recorded; (iv) the
amount of the ground rent and any increases therein are clearly
identified in the lease and are for predetermined amounts at
predetermined times; (v) the ground rent payment is included in the
borrower's monthly payment as an expense item; (vi) the Trust has the
right to cure defaults on the ground lease; and (vii) the terms and
conditions of the leasehold do not prevent the free and absolute
marketability of the Property. As of the Cut-Off Date, the Loan Balance
of the Home Equity Loans with related Properties subject to ground leases
does not exceed 1% of the Original Aggregate Loan Balance;
(xlix) All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every such
item which remains unpaid and which has been assessed but is not yet due
and payable;
(l) As of the Startup Day, neither Seller has received a notice
of default of any first mortgage loan secured by any Property which has
not been cured by a party other than such Seller;
(li) All of the Adjustable Rate Home Equity Loans are in a first
lien position;
(lii) As of the Cut-off Date, each Home Equity Loan has an
outstanding balance of less than $450,000;
(liii) Each Home Equity Loan is secured by a mortgage on
property which, at the time of origination of each Home Equity Loan, has
an appraised value of not more than $875,000;
(liv) No more than [4.65%] of the Fixed Rate Home Equity Loans
and none of the Adjustable Rate Home Equity Loans are in a second
priority position; and
(lv) The weighted average margin of the Home Equity Loans in
Adjustable Rate Pool 1 is 6.28% and the weighted average margin of the
Home Equity Loans in Adjustable Rate Pool 2 is 6.08%.
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(c) In the event that any such repurchase results in a
prohibited transaction tax, the Trustee shall immediately notify the
related Seller in writing thereof and such Seller will, within 10 days of
receiving notice thereof from the Trustee, deposit the amount due from
the Trust with the Trustee for the payment thereof, including any
interest and penalties, in immediately available funds. In the event that
any Qualified Replacement Mortgage is delivered by either Seller to the
Trust pursuant to Section 3.03, Section 3.04 or Section 3.06 hereof, such
Seller shall be obligated to take the actions described in Section
3.04(a) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Owners, the other Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer or the Trustee that the statements
set forth in clause (ix), (x), (xiii), (xxxvi), (xl) or (xli) of
subsection (b) above are untrue in any material respect on the date such
Qualified Replacement Mortgage is conveyed to the Trust or that any of
the other statements set forth in subsection (b) above are untrue on the
date such Qualified Replacement Mortgage is conveyed to the Trust such
that the interests of the Owners or the Certificate Insurer in the
related Qualified Replacement Mortgage are materially and adversely
affected; provided, however, that for the purposes of this subsection (c)
the statements in subsection (b) above referring to items "as of the
Cut-Off Date" or "as of the Startup Day" shall be deemed to refer to such
items as of the date such Qualified Replacement Mortgage is conveyed to
the Trust. Notwithstanding the fact that a representation contained in
subsection (b) above may be limited to a Seller's knowledge, such
limitation shall not relieve a Seller of its repurchase obligation under
this Section and Section 3.05 hereof.
(d) It is understood and agreed that the covenants set forth in
this Section 3.04 shall survive delivery of the respective Home Equity
Loans (including Qualified Replacement Mortgages) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as
to the occurrence of any condition requiring the repurchase or
substitution of any Home Equity Loan pursuant to this Article III or the
eligibility of any Home Equity Loan for the purpose of this Agreement.
Section 3.05 Conveyance of the Home Equity Loans and Qualified Replacement
Mortgages.
(a) On the Startup Day each Seller, concurrently with the
execution and delivery hereof, hereby transfers, assigns, sets over and
otherwise conveys to the Depositor and the Depositor, concurrently with
the execution and delivery hereof, transfers, assigns, sets over and
otherwise conveys, without recourse, to the Trust all of their respective
right, title and interest in and to the Trust Estate; provided, however,
that each Seller reserves and retains all of its right, title and
interest in and to principal (including Prepayments) collected and
interest accrued on each Home Equity Loan on or prior to the Cut-Off
Date. The transfer by the Depositor of the Home Equity Loans set forth on
the Schedule of Home Equity Loans to the Trustee is absolute and is
intended by the Owners and all parties hereto to be treated as a sale by
the Depositor.
It is intended that the sale, transfer, assignment and
conveyance herein contemplated constitute a sale of the Home Equity Loans
conveying good title thereto free and clear of any liens and encumbrances
from each Seller to the Depositor and from the Depositor to
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the Trust and that the Home Equity Loans not be part of the Depositor's
or either Seller's estate in the event of insolvency. In the event that
such conveyance is deemed to be a loan, the parties intend that each
Seller shall be deemed to have granted to the Depositor and the Depositor
shall be deemed to have granted to the Trustee a first priority perfected
security interest in the Trust Estate, and that this Agreement shall
constitute a security agreement under applicable law.
In connection with such sale, transfer, assignment, and
conveyance from the Sellers to the Depositor, each Seller has filed, in
the appropriate office or offices in the States of Delaware, Pennsylvania
and Nevada, as the case may be, a UCC-1 financing statement executed by
such Seller as debtor, naming the Depositor as secured party and listing
the Home Equity Loans and the other property described above as
collateral. The characterization of a Seller as debtor and the Depositor
as secured party on such financing statements is solely for protective
purposes and shall in no way be construed as being contrary to the intent
of the parties that this transaction be treated as a sale of such
Seller's entire right, title and interest in and to the Trust Estate. In
connection with such filing, each Seller agrees that it shall cause to be
filed all necessary continuation statements thereof and to take or cause
to be taken such actions and execute such documents as are necessary to
perfect and protect the Trustee's, the Certificate Insurer's and the
Owners' interest in the Trust Estate.
In connection with such sale, transfer, assignment, and
conveyance from the Depositor to the Trustee, the Depositor has filed, in
the appropriate office or offices in the States of New York, Nevada and
Delaware, a UCC-1 financing statement executed by the Depositor as
debtor, naming the Trustee as secured party and listing the Home Equity
Loans and the other property described above as collateral. The
characterization of the Depositor as debtor and the Trustee as secured
party in such financing statements is solely for protective purposes and
shall in no way be construed as being contrary to the intent of the
parties that this transaction be treated as a sale of the Depositor's
entire right, title and interest in and to the Trust Estate. In
connection with such filing, the Depositor agrees that it shall cause to
be filed all necessary continuation statements thereof and to take or
cause to be taken such actions and execute such documents as are
necessary to perfect and protect the Trustee's, the Certificate Insurer's
and the Owners' interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Home
Equity Loans, the Depositor agrees to:
(i) deliver without recourse to the Trustee on the
Startup Day with respect to each Home Equity Loan (A) the
original Notes endorsed in blank or to the order of the Trustee,
(B) the original title insurance policy or a copy certified by
the issuer of the title insurance policy, or the attorney's
opinion of title, (C) originals or certified copies of all
intervening assignments, showing a complete chain of title from
origination to the Trustee, if any, including warehousing
assignments, with evidence of recording thereon, (D) originals
of all assumption and modification agreements, if any and (E)
either: (1) the original Mortgage, with evidence of recording
thereon (if such original Mortgage has been returned to the
related Seller from the applicable recording office or a
certified copy thereof if such original Mortgage has not been
returned to the related Seller from the applicable recording
office), or (2) a copy of the Mortgage certified by the public
recording office in those instances where the original recorded
Mortgage has been lost;
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(ii) cause, within 60 days following the Startup Day or
15 days following the receipt from the relevant state
authorities, assignments of the Mortgages to "Manufacturers and
Traders Trust Company, as Trustee of ContiMortgage Home Equity
Loan Trust 1998-2 under the Pooling and Servicing Agreement
dated as of June 1, 1998" to be submitted for recording in the
appropriate jurisdictions; provided, however, that the Depositor
shall not be required to record an assignment of a Mortgage if
the Depositor furnishes to the Trustee and the Certificate
Insurer, on or before the Startup Day, at the Depositor's
expense an opinion of counsel with respect to the relevant
jurisdiction that such recording is not necessary to perfect the
Trustee's interest in the related Home Equity Loans (in form and
substance and from counsel satisfactory to the Rating Agencies
and the Certificate Insurer); notwithstanding the furnishing of
such opinion of counsel, however, the Certificate Insurer may,
in its reasonable discretion after consultation with the
Depositor prior to the date on which all assignments of
Mortgages are required to be filed hereunder, require the filing
of assignments of Mortgages in any state that is the subject of
such opinions; and
(iii) deliver the title insurance policy or title
searches, the original Mortgages and such recorded assignments,
together with originals or duly certified copies of any and all
prior assignments, to the Trustee within 15 days of receipt
thereof by the Depositor (but in any event, with respect to any
Mortgage as to which original recording information has been
made available to the Depositor, within one year after the
Startup Day).
Notwithstanding the delivery of opinions specified in clause (i)
above the Trustee shall cause to be recorded each assignment of a Mortgage upon
the earliest to occur of (a) the reasonable direction of the Certificate
Insurer, (b) the removal of the Servicer pursuant to Section 8.20 hereof or (c)
notification to the Trustee of the occurrence of a bankruptcy or insolvency
relating to the Mortgagor.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period
referred in clause (ii) of the second preceding paragraph, each Seller shall
deliver to the Trustee a list of all Mortgages with respect to Home Equity Loans
delivered by such Seller for which no Mortgage assignment has yet been submitted
for recording by such Seller, which list shall state the reason why such Seller
has not yet submitted such Mortgage assignments for recording. With respect to
any Mortgage assignment disclosed on such list as not yet submitted for
recording for a reason other than a lack of original recording information, the
Trustee shall make an immediate demand on such Seller to prepare such Mortgage
assignments, and shall inform the Certificate Insurer of such Seller's failure
to prepare such Mortgage assignments. Thereafter, the Trustee shall cooperate in
executing any documents prepared by the Certificate Insurer and submitted to the
Trustee in connection with this provision. Following the expiration of the
60-day period referred
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to in clause (ii) of the second preceding paragraph, each Seller shall
promptly prepare a Mortgage assignment for any Mortgage with respect to
Home Equity Loans delivered by such Seller for which original recording
information is subsequently received by such Seller, and shall promptly
deliver a copy of such Mortgage assignment to the Trustee. Each Seller
agrees that it will follow its normal servicing procedures and attempt to
obtain the original recording information necessary to complete a
Mortgage assignment with respect to Home Equity Loans delivered by such
Seller. In the event that a Seller is unable to obtain such recording
information with respect to any Mortgage prior to the end of the 18th
calendar month following the Startup Day and has not provided to the
Trustee a Mortgage assignment with evidence of recording thereon relating
to the assignment of such Mortgage to the Trustee, the Trustee shall
notify such Seller of such Seller's obligation to provide a completed
assignment (with evidence of recording thereon) on or before the end of
the 20th calendar month following the Startup Day with respect to the
Home Equity Loans. A copy of such notice shall be sent by the Trustee to
the Certificate Insurer. If no such completed assignment (with evidence
of recording thereon) is provided before the end of such 20th calendar
month, the related Home Equity Loan shall be deemed to have breached the
representation contained in clause (xxiii) of Section 3.04(b) hereof;
provided, however, that if as of the end of such 20th calendar month
either Seller then required to deliver such a completed assignment
demonstrates to the satisfaction of the Certificate Insurer that it is
exercising its best efforts to obtain such completed assignment and,
during each month thereafter until such completed assignment is delivered
to the Trustee, such Seller continues to demonstrate to the satisfaction
of the Certificate Insurer that it is exercising its best efforts to
obtain such completed assignment, the related Home Equity Loan will not
be deemed to have breached such representation. The requirement to
deliver a completed assignment with evidence of recording thereon will be
deemed satisfied upon delivery of a copy of the completed assignment
certified by the applicable public recording office.
Copies of all Mortgage assignments received by the Trustee shall be
retained in the related File.
All recording required pursuant to this Section 3.05 with respect to
one or more Home Equity Loans shall be accomplished at the expense of the Seller
delivering such Home Equity Loan.
(c) In the case of Home Equity Loans which have been prepaid in full
after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of
the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) Each Seller shall transfer, assign, set over and otherwise convey,
without recourse, to the Trustee all right, title and interest of such Seller in
and to any Qualified Replacement Mortgage delivered to the Trustee on behalf of
the Trust by such Seller pursuant to Section 3.03, 3.04 or 3.06 hereof and all
its right, title and interest to principal and interest due on such Qualified
Replacement Mortgage after the applicable Replacement Cut-Off Date; provided,
however, that such Seller shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such Qualified Replacement
Mortgage on or prior to the applicable Replacement Cut-Off Date.
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(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the order of the Seller delivering such Home Equity Loan, all
of its right, title and interest in and to such released Home Equity Loan and
all the Trust's right, title and interest to principal and interest due on such
released Home Equity Loan after the applicable Replacement Cut-Off Date;
provided, however, that the Trust shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such released Home
Equity Loan on or prior to the applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, each Seller agrees
to (i) deliver without recourse to the Trustee on the date of delivery of such
Qualified Replacement Mortgage the original Note relating thereto, endorsed in
blank or to the order of the Trustee, (ii) cause promptly to be recorded an
assignment in the appropriate jurisdictions, (iii) deliver the original
Qualified Replacement Mortgage and such recorded assignment, together with
original or duly certified copies of any and all prior assignments, to the
Trustee within 15 days of receipt thereof by such Seller (but in any event
within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 3.05(b)(i)(B), the other evidence of
title in the same manner required in Section 3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Trustee shall
deliver on the date of conveyance of such Qualified Replacement Mortgage and on
the order of the Seller delivering such Qualified Replacement Mortgage (i) the
original Note relating thereto, endorsed without recourse or representation, to
such Seller, (ii) the original Mortgage so released and all assignments relating
thereto and (iii) such other documents as constituted the File with respect
thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller that delivered the corresponding Home Equity Loan shall prepare a
substitute assignment or cure such defect, as the case may be, and thereafter
cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by each of the Sellers and the
Depositor in the form attached as Exhibit E hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definitions of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners. The Trustee agrees, for the
benefit of the Owners, to review such items within 45 days after the Startup Day
(or, with respect to any document delivered after the Startup Day, within 45
days of receipt and with respect to any Qualified Replacement Mortgage, within
45 days after the assignment thereof) and to deliver to
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the Depositor, each of the Sellers, the Certificate Insurer and the
Servicer a certification in the form attached hereto as Exhibit F (a
"Pool Certification") to the effect that, as to each Home Equity Loan
listed in the Schedule of Home Equity Loans (other than any Home Equity
Loan paid in full or any Home Equity Loan specifically identified in such
Pool Certification as not covered by such Pool Certification), (i) all
documents required to be delivered to it pursuant to Section 3.05(b)(i)
of this Agreement are in its possession, (ii) such documents have been
reviewed by it and have not been mutilated, damaged or torn and relate to
such Home Equity Loan and (iii) based on its examination and only as to
the foregoing documents, the information set forth on the Schedule of
Home Equity Loans accurately reflects the information set forth in the
File. The Trustee shall have no responsibility for reviewing any File
except as expressly provided in this subsection 3.06(a). Without limiting
the effect of the preceding sentence, in reviewing any File, the Trustee
shall have no responsibility for determining whether any document is
valid and binding, whether the text of any assignment is in proper form
(except to determine if the Trustee is the assignee), whether any
document has been recorded in accordance with the requirements of any
applicable jurisdiction or whether a blanket assignment is permitted in
any applicable jurisdiction, but shall only be required to determine
whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
The Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be
on their face, nor shall the Trustee be under any duty to determine
independently whether there are any intervening assignments or assumption
or modification agreements with respect to any Home Equity Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Home Equity Loans identified in the Schedule of Home Equity
Loans, or that any Home Equity Loan does not conform to the description thereof
as set forth in the Schedule of Home Equity Loans, the Trustee shall promptly so
notify the Depositor, each of the Sellers, the Certificate Insurer and the
Owners. In performing any such review, the Trustee may conclusively rely as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's review of the items delivered by each
of the Sellers pursuant to Section 3.05(b)(i) is limited solely to confirming
that the documents listed in Section 3.05(b)(i) have been executed and received,
relate to the Files identified in the Schedule of Home Equity Loans and conform
to the description thereof in the Schedule of Home Equity Loans. Each Seller
agrees to use reasonable efforts to remedy a material defect in a document
constituting part of a File delivered by such Seller of which it is so notified
by the Trustee. If, however, within 60 days after the Trustee's notice to it
respecting such defect the related Seller has not remedied the defect and the
defect materially and adversely affects the interest of the Owners or the
Certificate Insurer in the related Home Equity Loan such Seller will (or will
cause an affiliate of such Seller to) on the next succeeding Monthly Remittance
Date (i) if such Monthly Remittance Date is within two years following the
Startup Day, substitute in lieu of such Home Equity Loan a Qualified Replacement
Mortgage and deliver the Substitution Amount to the Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Home Equity Loan at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account. However, such substitution or purchase must occur within 90 days of the
Trustee's notice of the defect if the defect would prevent the Home
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Equity Loan from being a Qualified Mortgage, and no substitution or
purchase of a Home Equity Loan that is not in default or for which no
default is imminent shall be made unless such Seller obtains for the
Trustee and Certificate Insurer a REMIC Opinion, addressed to and
acceptable to the Trustee and Certificate Insurer.
(c) In addition to the foregoing, the Trustee also agrees to make a
review during the 18th month after the Startup Day indicating the current status
of the exceptions previously indicated on the Pool Certification (the "Final
Certification"). After delivery of the Final Certification, the Trustee and the
Servicer shall monitor and upon request from the Certificate Insurer provide no
less frequently than monthly, updated certifications indicating the then current
status of exceptions, until all such exceptions have been eliminated.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall execute, authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 11:00 a.m. New York City time on the Startup Day (the "Closing"),
at the offices of Dewey Ballantine LLP, 1301 Sixth Avenue, New York, New
York (or at such other location acceptable to the Seller), the Sellers
will sell and convey the Home Equity Loans and the money, instruments and
other property related thereto to the Depositor and the Depositor will
sell and convey the Home Equity Loans and the money, instruments and
other property related thereto to the Trustee, and the Trustee will
deliver (i) to the Underwriters the Class A Trust Certificates (other
than the Class A-2 Internal Certificates) and the Class B Certificates
with an aggregate Percentage Interest in each Class equal to 100%,
registered in the name of Cede & Co., or in such other names as the
Underwriters shall direct, against payment of the purchase price thereof
by wire transfer of immediately available funds to the Trust; (ii) to the
Grantor Trustee, the Class A-2 Internal Certificates, registered in the
name of the Grantor Trust, (iii) to the Depositor, the Class C
Certificates with an aggregate Percentage Interest in such Class equal to
100%, registered in the name of the ContiSecurities Holding Corporation
or in such other name as the Depositor shall direct; and (iv) to the
respective registered Owners thereof, a Class R-I, Class R-II and a Class
R Certificate each with a Percentage Interest equal to 99.999%,
registered in the name of ContiSecurities Holding Corporation and a Class
R-I, Class R-II and a Class R Certificate each with a Percentage Interest
equal to 0.001%, registered in the name of ContiFunding Corporation.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Certificates, the Trustee shall remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by
the Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the
rights described therein and herein. Notwithstanding references herein or
therein with respect to the Certificates to "principal" and "interest" no
debt of any Person is represented thereby, nor are the Certificates or
the underlying Notes guaranteed by any Person (except that the Notes may
be recourse to the Mortgagors thereof to the extent permitted by law) and
except for the rights of the Trustee on behalf of the Owners of the Class
A Trust Certificates with respect to the Certificate Insurance Policy.
The Certificates are payable solely from payments received on or with
respect to the Home Equity Loans (other than the Servicing Fees), moneys
in the Principal and Interest Account, earnings on moneys and the
proceeds of property held as a part of the Trust Estate. Each Certificate
entitles the Owner thereof to receive monthly on each Payment Date, in
order of priority of distributions with respect to such Class of
Certificates as set forth in Section 7.03, a specified portion of such
payments with respect to the Home Equity Loans, pro rata in accordance
with such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee any Certificate with respect to which the Trustee has made the
final distribution due thereon. Any such Certificate as to which the
Trustee has made the final distribution thereon shall be deemed canceled
and shall no longer be Outstanding for any purpose of this Agreement,
whether or not such Certificate is ever returned to the Trustee.
Section 5.02 Forms
The Class A-1 Certificates, the Class A-2 Fixed Certificates,
the Class A-2 Internal Certificates, the Class A-3 Certificates, the
Class A-4 Certificates, the Class A-5 Certificates, the Class A-6
Certificates, the Class A-7 Certificates, the Class A-8 Certificates, the
Class A-9 Certificates and the Class A-10 IO Certificates, the Class B
Certificates, the Class C Certificates and the Class R-I, Class R-II and
Class R Certificates shall be in substantially the forms set forth in
Exhibits A-1, A-2-F, A-2-I, A-3, A-4, A-5, A-6, A-7, A-8, A-9, A-10 IO,
B, C, R-I, R-II and R-III hereof, respectively, with such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by this Agreement or as may in the Depositor's judgment be
necessary, appropriate or convenient to comply, or facilitate compliance,
with applicable laws, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may
be required to comply with the rules of any applicable securities laws or
as may, consistently herewith, be determined by the Authorized Officer of
the Depositor executing such Certificates, as evidenced by his execution
thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated by the
manual or facsimile signature of one of the Trustee's Authorized
Officers. Upon proper authentication by the Trustee, the Certificates
shall bind the Trust.
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The initial Certificates shall be dated as of the Startup Day
and delivered at the Closing to the parties specified in Section 4.02
hereof. Subsequently issued Certificates will be dated as of the issuance
of the Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the
"Register") in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates
and the registration of transfer of Certificates. The Trustee is hereby
initially appointed Registrar for the purpose of registering Certificates
and transfers of Certificates as herein provided. The Owners, the
Certificate Insurer and the Trustee shall have the right to inspect the
Register during the Trustee's normal hours and to obtain copies thereof,
and the Trustee shall have the right to rely upon a certificate executed
on behalf of the Registrar by an Authorized Officer thereof as to the
names and addresses of the Owners of the Certificates and the principal
amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by
the Owners of a majority of the aggregate Percentage Interests
represented by the Class A Trust Certificates and the Class B
Certificates then Outstanding with the consent of the Certificate
Insurer, or if there are no longer any Class A Trust Certificates or
Class B Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class R-I Certificates, the Trustee will
give the Owners and the Certificate Insurer prompt written notice of the
appointment of such Registrar and of the location, and any change in the
location, of the Register. In connection with any such appointment the
annual fees of the bank then serving as Trustee and Registrar shall
thenceforth be reduced by the amount to be agreed upon by the Trustee and
the Depositor at such time and the reasonable fees of the Registrar shall
be paid, as expenses of the Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon
surrender for registration of transfer of any Certificate at the office
designated as the location of the Register, upon the direction of the
Registrar the Trustee shall execute, authenticate and deliver, in the
name of the designated transferee or transferees, one or more new
Certificates of a like Class and in the aggregate principal amount or
percentage interest of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned
by such Owner may be exchanged for other Certificates authorized of like
Class and tenor and a like aggregate original principal amount or
percentage interest and bearing numbers not contemporaneously
outstanding, upon surrender of the Certificates to be exchanged at the
office designated as the location of the Register. Whenever any
Certificate is so surrendered for exchange, upon the direction of the
Registrar, the Trustee shall execute, authenticate and deliver the
Certificate or Certificates which the Owner making the exchange is
entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to
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the same benefits under this Agreement as the Certificates surrendered
upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration
of transfer or exchange shall be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Registrar duly
executed by the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the Registrar
or Trustee may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Certificates; any other expenses
in connection with such transfer or exchange shall be an expense of the
Trust.
(g) It is intended that the Offered Certificates be registered
so as to participate in a global book-entry system with the Depository,
as set forth herein. Each Class of Offered Certificates shall, except as
otherwise provided in Subsection (h), be initially issued in the form of
a single fully registered Certificate of such Class. Upon initial
issuance, the ownership of each such Certificate shall be registered in
the Register in the name of Cede & Co., or any successor thereto, as
nominee for the Depository.
On the Startup Day, the Offered Certificates (other than the Class
A-10 IO Certificates) shall be issued in denominations of no less than $1,000
and integral multiples thereof. On the Startup Day, the Class A-10 IO
Certificates shall be issued in denominations of no less than $1,000 (based on
the Class A-10 IO Notional Principal Amount thereof) and integral multiples
thereof.
The Depositor and the Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
With respect to the Offered Certificates registered in the
Register in the name of Cede & Co., as nominee of the Depository, the
Depositor, the Servicer, the Sellers, the Certificate Insurer and the
Trustee shall have no responsibility or obligation to Direct or Indirect
Participants or beneficial owners for which the Depository holds Offered
Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Depositor, the Servicer, the Sellers,
the Certificate Insurer and the Trustee shall have no responsibility or
obligation with respect to (i) the accuracy of the records of the
Depository, Cede & Co., or any Direct or Indirect Participant with
respect to the ownership interest in the Offered Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other
than a registered Owner of an Offered Certificate as shown in the
Register, of any notice with respect to the Offered Certificates or (iii)
the payment to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Offered Certificate as shown in the
Register, of any amount with respect to any distribution of principal or
interest on the Offered Certificates. No Person other than a registered
Owner of a Offered Certificate as shown in the Register shall receive a
certificate evidencing such Offered Certificate.
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Upon delivery by the Depository to the Trustee of written notice
to the effect that the Depository has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of interest by the mailing of checks or drafts to
the registered Owners of Offered Certificates appearing as registered
Owners in the registration books maintained by the Trustee at the close
of business on a Record Date, the name "Cede & Co." in this Agreement
shall refer to such new nominee of the Depository.
(h) In the event that (i) the Depository or the Depositor
advises the Trustee in writing that the Depository is no longer willing
or able to discharge properly its responsibilities as nominee and
depository with respect to the Offered Certificates and the Depositor or
the Trustee is unable to locate a qualified successor or (ii) the
Depositor at its sole option elects to terminate the book-entry system
through the Depository, the Offered Certificates shall no longer be
restricted to being registered in the Register in the name of Cede & Co.
(or a successor nominee) as nominee of the Depository. At that time, the
Depositor may determine that the Offered Certificates shall be registered
in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Depositor and at
the Depositor's expense, or such depository's agent or designee but, if
the Depositor does not select such alternative global book-entry system,
then the Offered Certificates may be registered in whatever name or names
registered Owners of Offered Certificates transferring the Offered
Certificates shall designate, in accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any of the Offered Certificates is registered in the
name of Cede & Co., as nominee of the Depository, all distributions of
principal or interest on such Offered Certificates and all notices with
respect to such Offered Certificates shall be made and given,
respectively, in the manner provided in the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee,
or the Trustee receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (ii) in the case of any mutilated
Certificate, such mutilated Certificate shall first be surrendered to the
Trustee, and in the case of any destroyed, lost or stolen Certificate,
there shall be first delivered to the Trustee such security or indemnity
as may be reasonably required by it to hold the Trustee and the
Certificate Insurer harmless, then, in the absence of notice to the
Trustee or the Registrar that such Certificate has been acquired by a
bona fide purchaser, and the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed,
lost or stolen Certificate, a new Certificate of like Class, tenor and
aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation
thereto; any other expenses in connection with such issuance shall be an
expense of the Trust.
Every new Certificate issued pursuant to this Section in
exchange for or in lieu of any mutilated, destroyed, lost or stolen
Certificate shall constitute evidence of a substitute interest in
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the Trust, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Certificates of the same Class duly
issued hereunder and such mutilated, destroyed, lost or stolen Certificate shall
not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen
Certificates.
Section 5.06 Persons Deemed Owners.
The Trustee and the Certificate Insurer and any agent of the Trustee may
treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever and the Trustee and the
Certificate Insurer or any agent of the Trustee shall not be affected by notice
to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership
of a Residual Certificate (whether pursuant to a purchase, a transfer
resulting from a default under a secured lending agreement or otherwise)
shall be made to a Disqualified Organization or an agent of a
Disqualified Organization. The transfer, sale or other disposition of a
Residual Certificate (whether pursuant to a purchase, a transfer
resulting from a default under a secured lending agreement or otherwise)
to a Disqualified Organization shall be deemed to be of no legal force or
effect whatsoever and such transferee shall not be deemed to be an Owner
for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Residual Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of
transfer, or register the transfer, of any Residual Certificate nor
authenticate and make available any new Residual Certificate unless the
Trustee has received an affidavit from the proposed transferee in the
form attached hereto as Exhibit I. Each holder of a Residual Certificate
by his acceptance thereof, shall be deemed for all purposes to have
consented to the provisions of this Section 5.08(a). The Class R-I, Class
R-II and Class R Certificates are not transferable except that the Owner
of the Tax Matters Person Residual Interest in the REMIC I, REMIC II or
REMIC III may assign its interest to another Person who accepts such
assignment and the designation as Tax Matters Person pursuant to Section
11.18 hereof.
(b) No other sale or other transfer of record or beneficial
ownership of a Class A-2 Internal Certificate, a Class C, a Class R-I,
Class R-II or Class R Certificate shall be made unless such transfer is
exempt from the registration requirements of the Securities Act and any
applicable state securities laws or is made in accordance with said Act
and laws. In the event
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such a transfer is to be made within three years from the Startup day,
(i) the Trustee or the Depositor shall require a written opinion of
counsel acceptable to and in form and substance satisfactory to the
Depositor and the Certificate Insurer in the event that such transfer may
be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from said Act and laws or is being made pursuant to
said Act and laws, which opinion of counsel shall not be an expense of
the Trustee, the Certificate Insurer or the Trust Estate, and (ii) the
Trustee shall require the Transferee to execute an investment letter
acceptable to and in form and substance satisfactory to each of the
Sellers certifying to the Trustee, the Certificate Insurer and each of
the Sellers and the Certificate Insurer the facts surrounding such
transfer, which investment letter shall not be an expense of the Trustee,
the Trust Estate, the Certificate Insurer or either of the Sellers. The
Owner of a Class C, Class R-I, Class R-II or Class R Certificate desiring
to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor, the Certificate Insurer and each of the Sellers
against any liability that may result if the transfer is not so exempt or
is not made in accordance with such federal and state laws.
(c) [RESERVED]
(d) [RESERVED]
(e) No transfer of a Residual Certificate shall be made unless
the Trustee shall have received a representation letter from the
transferee of such Residual Certificate, acceptable to and in form and
substance satisfactory to the Trustee to the effect that such transferee
is not an employee benefit plan subject to Section 406 of ERISA nor a
plan or other arrangement subject to Section 406 of ERISA nor a plan or
other arrangement subject to Section 4975 of the Code (collectively, a
"Plan"), nor is acting on behalf of any Plan nor using the assets of any
Plan to effect such transfer. By its acceptance or acquisition of a Class
B or Class C Certificate, the transferee shall be deemed to have
represented that it either (i) is not a Plan and is not acquiring its
interest in such Class B or Class C Certificates with assets of a Plan or
(ii) is an insurance company acquiring its interest as permitted in
accordance with Prohibited Transaction Exemption 95-60. Notwithstanding
anything else to the contrary herein, any purported transfer of a
Certificate to or on behalf of any Plan without the delivery to the
Trustee a representation letter as described above shall be null and void
and of no effect.
(f) No sale or other transfer of any Offered Certificate may be
made to the Depositor, the Sellers or the Servicer. No sale or other
transfer of any Offered Certificate may be made to an affiliate of either
Seller unless the Trustee and the Certificate Insurer shall have been
furnished with an opinion of counsel acceptable to the Trustee and the
Certificate Insurer experienced in federal bankruptcy matters to the
effect that such sale or transfer would not adversely affect the
character of the conveyance of the Home Equity Loans to the Trust as a
sale. No sale or other transfer of the Residual Certificate issued to
ContiFunding Corporation on the Startup Day may be transferred or sold to
any Person, except to a person who accepts the appointment of Tax Matters
Person pursuant to Section 11.18 hereof.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any
part of its right to receive distributions hereunder, but such pledge,
encumbrance, hypothecation or assignment
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shall not constitute a transfer of an ownership interest sufficient to
render the transferee an Owner of the Trust without compliance with the
provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
related Account(s) and make the distributions with respect to the
Certificates in accordance with the terms of the Certificates and this
Agreement. Such distributions shall be made (i) by check or draft mailed
on each Payment Date or (ii) if requested by any Owner of (A) an Offered
Certificate (other than the Class A-10 IO Certificates) having an
original principal balance of not less than $1,000,000, (B) a Class A-10
IO Certificate having an original Notional Principal Amount of not less
than $1,000,000 or (C) 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 Payment Date, in each
case to each Owner of record on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust;
Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the
Certificate Account, shall be made by and on behalf of the Trustee, and
no amounts so withdrawn from the Certificate Account, for payments of
Certificates except as provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying
Agents pursuant to Section 11.15 hereof, the Trustee will, on the
Business Day immediately preceding each Payment Date, deposit with such
Paying Agents in immediately available funds an aggregate sum sufficient
to pay the amounts then becoming due (to the extent funds are then
available for such purpose in the Certificate Account for the Class to
which such amounts are due) such sum to be held in trust for the benefit
of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay
to the Trustee all sums held in trust by such Paying Agent, such sums to
be held by the Trustee upon the same trusts as those upon which the sums
were held by such Paying Agent; and upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust to comply with all requirements of the
Code and applicable state and local law with respect to the withholding
from any distributions made by it to any Owner of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Offered Certificate
and remaining unclaimed by
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the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due
and payable shall be discharged from such trust and be paid to the Owners
of the Class R-I Certificates; and the Owner of such Offered Certificate
shall thereafter, as an unsecured general creditor, look only to the
Owners of the Class R-I Certificates for payment thereof (but only to the
extent of the amounts so paid to the Owners of the Class R-I
Certificates) and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however,
that the Trustee or such Paying Agent before being required to make any
such payment, may, at the expense of the Trust, cause to be published
once, in the eastern edition of The Wall Street Journal, notice that such
money remains unclaimed and that, after a date specified therein, which
shall be not fewer than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be paid to the Owners
of the Class R-I Certificates. The Trustee shall, at the direction of the
Depositor, also adopt and employ, at the expense of the Trust, any other
reasonable means of notification of such payment (including but not
limited to mailing notice of such payment to Owners whose right to or
interest in moneys due and payable but not claimed is determinable from
the records of the Registrar, the Trustee or any Paying Agent, at the
last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the
benefit of the Owners and the Certificate Insurer and, upon request of
the Certificate Insurer or, with the consent of the Certificate Insurer
at the request of the Depositor, will from time to time execute and
deliver all such supplements and amendments hereto pursuant to Section
11.14 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request from the
Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of any
grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the rights
of the Trustee, and the ownership interests of the Owners
represented thereby, in such Trust Estate against the claims of
all Persons and parties.
The Trustee shall send copies of any request received from the
Depositor or the Certificate Insurer to take any action pursuant to this Section
6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall
enforce the obligations and rights of the other parties to this Agreement
and the obligations of the Certificate Insurer under the Certificate
Insurance Policy; in addition, the Certificate Insurer or the Owners, by
action, suit or proceeding at law or equity and shall also have the power
to enjoin, by action or suit in equity, and acts or occurrences which may
be unlawful or in violation of the rights of the Certificate Insurer
and/or the Owners as such rights are set forth in this Agreement,
provided, however, that nothing in this Section shall require any action
by the Trustee unless the Trustee
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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 Owners of a majority of the Percentage Interests represented
by the Offered Certificates then Outstanding with the consent of the
Certificate Insurer or, if there are no longer any Offered Certificates
then outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates; provided, further, however, that
if there is a dispute with respect to payments under a Certificate
Insurance Policy the Trustee's sole responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant
to this Section so long as such instrument does not conflict with this
Agreement or with the Trustee's fiduciary duties, or adversely affect its
rights and immunities hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from any
of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing its
duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of the
Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Owner by reason of the payment of any taxes
levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person except
pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part except pursuant to
Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement to be
impaired, or permit any Person to be released from any covenants or
obligations with respect to the Trust or to the Certificates under this
Agreement, except as may be expressly permitted hereby or (B) permit any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or burden
the Trust Estate or any part thereof or any interest therein or the
proceeds thereof.
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Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section
2.03 hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Agreement, the Insurance
Agreement, the Indemnification 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 25% of the Percentage Interests
represented by the Class A Trust Certificates and Class B
Certificates then Outstanding or, if there are no Class A or
Class B Certificates then Outstanding, by such percentage of the
Percentage Interests represented by the Class 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 Trust Certificates are Outstanding or any
Reimbursement Amount remains unpaid, the Certificate Insurer
consented in writing thereto (unless the Certificate Insurer is
the party against whom the proceeding is directed); and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners of a
majority of the Percentage Interests represented by the Class A
Trust and Class B Certificates or, if there are no Class A Trust
or Class B Certificates then Outstanding, by such majority of the
Percentage Interests represented by 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
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Class of Certificates and each conforming to paragraphs (1)-(5) of this
Section 6.07, the Certificate Insurer in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provision of this Agreement (unless the Certificate Insurer is the party
against whom the proceeding is directed).
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee, the Certificate Insurer or the Owners is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement with respect to
any event described in Section 8.20(a) or (b) shall impair any such right or
remedy or constitute a waiver of any such event or an acquiescence therein.
Every right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer or the
Owners, as the case may be.
Section 6.11 Control by Owners.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Offered Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A Trust
or Class B Certificates then Outstanding, by such majority of the Percentage
Interests represented by 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
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(3) the Trustee may take any other action deemed proper by the Trustee,
as the case may be, which is not inconsistent with such direction;
provided, however, that neither of the Sellers nor the Trustee, as
the case may be, need take any action which it determines might
involve it in liability or may be unjustly prejudicial to the Owners
not so directing.
Section 6.12 Indemnification.
The Depositor agrees to indemnify and hold the Trustee, the Certificate
Insurer and each Owner harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee, the Certificate Insurer and any Owner
may sustain in any way related to the failure of the Depositor to perform its
duties in compliance with the terms of this Agreement. The Depositor shall
immediately notify the Trustee, the Certificate Insurer and each Owner if such a
claim is made by a third party with respect to this Agreement, and the Depositor
shall assume (with the consent of the Trustee) the defense of any such claim and
pay all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, either of the Sellers, the Trustee, the Certificate
Insurer and/or any Owner in respect of such claim. The Trustee may, if
necessary, reimburse the Depositor from amounts otherwise distributable on the
Class R Certificates for all amounts advanced by it pursuant to the preceding
sentence, except when the claim relates directly to the failure of the Depositor
to perform its duties in compliance with the terms of this Agreement. In
addition to the foregoing, ContiMortgage agrees to indemnify and hold the
Trustee, the Certificate Insurer and each Owner harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and other costs, fees and expenses that the Trustee, the Certificate
Insurer and any Owner may sustain in any way related to the breach by
ContiMortgage of its representations and warranties set forth in Section
3.04(b)(xiii) or (xv) hereof with respect to a Home Equity Loan if such Home
Equity Loan qualifies as a "high cost mortgage" pursuant to Section 226.32 of
the Truth-in-Lending Act, as amended. The provisions of this Section 6.12 shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.
Section 6.13 Access to Names and Addresses of Owners of Certificates.
(a) If any Owner (for purposes of this Section 6.13, an
"Applicant") applies in writing to the Trustee, and such application
states that the Applicant desires to communicate with other Owners with
respect to their rights under this Agreement or under the Certificates
and is accompanied by a copy of the communication which such Applicant
proposes to transmit, then the Trustee shall, at the expense of such
Applicant, within ten (10) Business Days after the receipt of such
application, furnish or cause to be furnished to such Applicant a list of
the names and addresses of the Owners of record as of the most recent
Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with
the Trustee that the Trustee shall not be held accountable in any way by
reason of the disclosure of any information as to the names and addresses
of the Owners hereunder, regardless of the source from which such
information was derived.
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END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policy,
including all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer. The Trustee
shall hold all such money and property received by it, other than pursuant to or
as contemplated by Section 6.02(e) hereof, as part of the Trust Estate and shall
apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts.
The Depositor shall cause to be established on the Startup Day, and the
Trustee shall maintain, at the Corporate Trust Office the Certificate Account,
which is to be held by the Trustee on behalf of the Owners of the Certificates,
the Certificate Insurer and the Trustee.
Section 7.03 Flow of Funds.
(a) The Trustee shall deposit to the Certificate Account,
without duplication, upon receipt, any Insured Payments, the proceeds of
any liquidation of the assets of the Trust, all remittances made to the
Trustee pursuant to Section 8.08(d)(ii) and the Monthly Remittance Amount
remitted by the Servicer with respect to each Loan Group.
(b) On each Payment Date, the Monthly Remittance Amount for a
Loan Group which is then on deposit in the Certificate Account (such
amount, the "Available Funds" with respect to a Loan Group) will be
applied in the following order of priority:
(i) First, concurrently, to the Trustee, the Trustee Fee and to
the Certificate Insurer, the Premium Amount, in each case with respect to
such Loan Group;
(ii) Second, to the extent of the Available Funds then remaining
in the Certificate Account with respect to such Loan Group, plus the
interest component of any related Insured Payment (such amount, the
"Interest Amount Available" for such Loan Group), to the Owners of the
Class A Trust Certificates related to such Loan Group, the related
Current Interest plus the Interest Carry Forward Amount with respect to
each such Class of related Class A Trust Certificates without any
priority among such Class A Trust Certificates; provided, that if the
Interest Amount Available (together with the amounts described in clause
Third, below) is not sufficient to make a full distribution of interest
with respect to all Classes of the related Class A Trust Certificates,
then such amount will be distributed among the outstanding Classes of
related Class A Trust Certificates pro rata based on the aggregate amount
of interest due on each such Class, and any shortfall will be carried
forward with accrued interest;
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(iii) Third, to the extent of the Available Funds then remaining
in the Certificate Account with respect to such Loan Group, to the Owners
of the Class A Trust Certificates related to the other Loan Group; the
amount of any shortfall on such Payment Date under priority Second above;
(iv) Fourth, to the extent of the Available Funds then remaining
in the Certificate Account with respect to such Loan Group, to the Owners
of the Class B Certificates an amount equal to the product of (a) the
Current Interest for the Class B Certificates and (b) a fraction, the
numerator of which is the outstanding aggregate Class A Certificate
Principal Balance with respect to the Class A Trust Certificates related
to such Loan Group and the denominator of which is the sum of the
outstanding aggregate Class A Certificate Principal Balance with respect
to the Class A Trust Certificates related to both Loan Groups;
(v) Fifth, to the Certificate Insurer, the lesser of (x) the
Reimbursement Amount then owed to the Certificate Insurer and (y) the
Maximum Insurer Current Reimbursement Amount for such Payment Date; the
amount paid to the Certificate Insurer on account of any Reimbursement
Amount shall be funded from the Available Funds then remaining on deposit
in the Certificate Account with respect to each Loan Group in an amount
equal to the product of (a) the total amount so to be funded and (b) a
fraction, the numerator of which is the outstanding Class A Certificate
Principal Balance with respect to the Class A Trust Certificates related
to such Loan Group and the denominator of which is the sum of the
outstanding Class A Certificate Principal Balance with respect to the
Class A Trust Certificate related to both Loan Groups (provided that any
amount paid in respect of the Insurance Agreement-Grantor Trust shall be
deemed for federal income tax purposes to have been distributed to the
Owners of the Class R Certificates);
(vi) Sixth, to the extent of the Available Funds then remaining
in the Certificate Account with respect to such Loan Group, plus the
principal component of any related Insured Payment, to the Owners of the
Class A Trust Certificates with respect to such Loan Group, an amount
necessary to reduce the aggregate Class A Principal Balance of such
related Class A Trust Certificates to the Class A Optimal Balance for
such Payment Date; provided, that such amount of principal so distributed
with respect to such Loan Group shall be reduced, but not below zero, by
an amount equal to the Overcollateralization Stepdown Amount, if any, for
such Payment Date; such amount to be distributed with respect to specific
Classes of the Class A Trust Certificates in the further priorities
described in paragraph (d) below);
(vii) Seventh, to the extent of the Available Funds then remaining
in the Certificate Account with respect to such Loan Group, to the Owners
of the Class A Trust Certificates related to the other Loan Group, the
amount of any Crossover Overcollateralization Increase Amount; such amount
to be distributed with respect to specific Classes of the Class A Trust
Certificates in the further provisions described in paragraph (d) below;
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(viii) Eighth, to the extent of the amount then remaining in the
Certificate Account with respect to both Loan Groups together, an amount
necessary to reduce the Class B Principal Balance to the Class B Optimal
Balance for such Payment Date;
(ix) Ninth, the remaining amount, if any, on deposit in the
Certificate Account with respect to both Loan Groups is the "Monthly
Excess Cashflow Amount" which shall be applied as set forth in paragraph
(e) below;
(c) [Reserved];
(d) (i) On each Payment Date, the Class A Principal Distribution
Amount with respect to Loan Group I is required to be distributed on each
Payment Date in the following order of priority:
(a) first, to the Class A-1 Certificates until the
Certificate Principal Balance thereof has been
reduced to zero;
(b) second, to each Class of PAC Certificates,
sequentially in the order of their numerical
Class designations (beginning with the Class
A-2 Internal Certificates and the Class A-2
Fixed Certificates, which will receive
principal pro rata) in an amount up to the
amount necessary to reduce the respective
Certificate Principal Balances thereof to
their Planned Principal Balances for such
Payment Date;
(c) third, to the Class A-8 Certificates, until
the Certificate Principal Balances thereof
have been reduced to zero; and
(d) fourth, to the PAC Certificates as provided in
clause (b), but without regard to the Planned
Principal Balances and until the respective
Certificate Principal Balances thereof have
been reduced to zero.
(ii) On each Payment Date, the Class A Principal Distribution
Amount with respect to Loan Group II is required to be
distributed on each Payment Date to the Owners of the Class A-9
Certificates, until the Class A-9 Certificate Principal Balance
has been reduced to zero.
(iii) If the Class A Certificate Principal Balance of all of the
Class A Trust Certificates relating to Loan Group I is reduced
to zero, the Class A Trust Certificates relating to Loan Group
II (if any remain Outstanding) will thereafter be entitled to
receive 100% of the aggregate Class A Principal Distribution
Amount relating to both Loan Groups. If the Class A Certificate
Principal Balance of all of the Class A Trust Certificates
relating to Loan Group II is reduced to zero, the Class A Trust
Certificates relating to Loan Group I (if any remain
Outstanding) will thereafter be entitled to receive 100% of the
aggregate Class A Principal Distribution Amount. Notwithstanding
the foregoing, on any Payment Date on which the Class B
Certificate Principal Balance and the
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Overcollateralization Amount is zero and a Certificate Insurer
Default has occurred and is continuing, any amounts of principal
payable to the Owners of the Class A Trust Certificates on such
Payment Date shall be distributed pro rata without regard to
Planned Principal Balances, any Group designation or other order
of priority.
(e) On each Payment Date, the Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment
Date:
(i) to pay the Class B Interest Carry Forward Amount, if any;
(ii) to pay the Class B Realized Loss Amortization Amount for
such Payment Date;
(iii) to the Servicer to the extent of any unreimbursed
Delinquency Advances or Servicing Advances;
(iv) to fund a distribution to Owners of the Class C
Certificates, the lesser of (x) the amount of the Monthly Excess Cashflow
Amount then remaining and (y) the Class C Distribution Amount plus the
Cumulative Class C Carryforward Amount; and (v) to fund a distribution to
the Owners of the Residual Certificates, the remainder.
(f) [Reserved]
(g) [Reserved]
(h) [Reserved]
(i) On each Payment Date, if the Class B Certificate Principal
Balance has not been reduced to zero, the Trustee shall allocate the
excess of the Aggregate Trust Certificate Principal Balance over the
Total Loan Balance to reduce the Class B Certificate Principal Balance,
but not below zero.
(j) [Reserved];
(k) Notwithstanding anything above, the aggregate amounts
distributed on all Payment Dates to the Owners of the Certificates on
account of principal shall not exceed the original Certificate Principal
Balance of the related Certificates.
(l) On any Payment Date during the continuance of any
Certificate Insurer Default any amounts otherwise payable to the
Certificate Insurer as Premium Amounts shall be retained in the
Certificate Account.
(m) Upon receipt of Insured Payments from the Certificate
Insurer on behalf of the Owners of the Class A Trust Certificates, the
Trustee shall deposit such Insured Payments in
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the Certificate Account and shall distribute such Insured Payments, or
the proceeds thereof as provided in paragraph (b) above.
(n) Anything herein to the contrary notwithstanding, any payment
with respect to principal of or interest on any of the Class A Trust
Certificates which is made with monies received pursuant to the terms of
the Certificate Insurance Policy shall not be considered payment of such
Certificates from the Trust and shall not result in the payment of or the
provision for the payment of the principal of or interest on such
Certificates within the meaning of Section 7.03. The Depositor, the
Servicer and the Trustee acknowledge, and each Owner by its acceptance of
a Certificate agrees, that without the need for any further action on the
part of the Certificate Insurer, the Depositor, the Servicer, the Trustee
or the Registrar (a) to the extent the Certificate Insurer makes
payments, directly or indirectly, on account of principal of or interest
on any Class A Trust Certificates to the Owners of such Certificates, the
Certificate Insurer will be fully subrogated to the rights of such Owners
to receive such principal and interest together with any interest thereon
of the applicable Pass-Through Rate for such Class from the Trust and (b)
the Certificate Insurer shall be paid such principal and interest only
from the sources and in the manner provided herein for the payment of
such principal and interest.
It is understood and agreed that the intention of the parties is
that the Certificate Insurer shall not be entitled to reimbursement on
any Payment Date for amounts previously paid by it unless on such Payment
Date the Owners of the Class A Trust Certificates shall also have
received the full amount of the related Class A Distribution Amounts for
such Payment Date.
The Trustee or Paying Agent shall (i) receive as
attorney-in-fact of each Owner of Class A Trust Certificates any Insured
Payment from the Certificate Insurer and (ii) disburse the same to the
Owners of the related Class A Trust Certificates as set forth in this
Section 7.03. Insured Payments disbursed by the Trustee or Paying Agent
from proceeds of a Certificate Insurance Policy shall not be considered
payment by the Trust, nor shall such payments discharge the obligation of
the Trust with respect to such Class A Trust Certificates and the
Certificate Insurer shall be entitled to receive the related
Reimbursement Amount pursuant to Section 7.03(b)(v) hereof.
The rights of the Owners to receive distributions from the
proceeds of the Trust Estate and all ownership interests of the Owners in
such distributions, shall be as set forth in this Agreement. In this
regard, all rights of the Owners of the Residual Certificates to receive
distributions in respect of Residual Certificates, and all ownership
interests of the Owners of the Residual Certificates in and to such
distributions, shall be subject and subordinate to the preferential
rights of the holders of the Offered Certificates to receive
distributions thereon and the ownership interests of such Owners in such
distributions, as described herein. In accordance with the foregoing, the
ownership interests of the Owners of the Residual Certificates in amounts
deposited in the Accounts from time to time shall not vest unless and
until such amounts are distributed in respect of the Residual
Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the
Owners of the Residual Certificates shall not be required to refund any
amount properly distributed on the Residual Certificates pursuant to this
Section 7.03.
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Section 7.04 [Reserved]
Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a
portion of any Account held by the Trustee for the benefit of the Owners
and the Certificate Insurer shall be invested and reinvested by the
Trustee in the name of the Trustee for the benefit of the Owners and the
Certificate Insurer, as directed in writing by the Depositor, in one or
more Eligible Investments bearing interest or sold at a discount
(provided, that the proceeds of the Certificate Insurance Policy shall
not be so invested). The bank serving as Trustee or any affiliate thereof
may be the obligor on any investment which otherwise qualifies as an
Eligible Investment. No investment in any Account shall mature later than
the Business Day immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any Account
held by the Trustee and sufficient uninvested funds are not available to
make such disbursement, the Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account.
No investments will be liquidated prior to maturity unless the proceeds
thereof are needed for disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held
by the Trustee resulting from any loss on any Eligible Investment
included therein (except to the extent that the bank serving as Trustee
is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts
held by the Trustee, in accordance with the written instructions
delivered to the Trustee on the Startup Day, but only in one or more
Eligible Investments bearing interest or sold at a discount.
If the Depositor shall have failed to give investment directions
to the Trustee then the Trustee shall invest in money market funds
described in Section 7.07(h); to be redeemable without penalty no later
than the Business Day immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account
held by the Trustee shall be for the account of the Owners of the Class
R-I Certificates and distributed to the Owners of the Class R-I
Certificates immediately prior to any distribution under Section 7.03
hereof on any Payment Date, and any loss resulting from such investments
shall be for the account of the Servicer and promptly upon the
realization of such loss the Servicer shall contribute funds in an amount
equal to such loss to such Account.
Section 7.06 Payment of Trust Expenses.
(a) The Trustee shall make demand on ContiMortgage to pay the
amount of the expenses of the Trust (other than payments of premiums to
the Certificate Insurer) (including Trustee's fees and expenses not
covered by Section 7.03(b)(i)) and ContiMortgage shall promptly pay such
expenses directly to the Persons to whom such amounts are due.
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(b) The Depositor shall pay directly the reasonable fees and
expenses of counsel to the Trustee.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FannieMae senior debt obligations, but excluding any of
such securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption; and consolidated senior debt
obligations of any Federal Home Loan Banks; provided, that any such
investment shall be rated (or have an implied rating) in one of the two
highest ratings categories by each Rating Agency;
(c) Federal funds, certificates of deposit, time deposits, and
bankers' acceptances (having original maturities of not more than 365
days) of any domestic bank, the short-term debt obligations of which have
been rated as follows by at least Moody's and Standard & Poor's: A-1 or
better by Standard & Poor's and P-1 by Moody's and F-1 or better, if
rated by Fitch;
(d) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is rated as follows by at least Moody's
and Standard & Poor's: Baa3 or better by Moody's and BBB by each of
Standard & Poor's and by Fitch, if rated by Fitch), which has combined
capital, surplus and undivided profits of at least $50,000,000 which
deposits are insured by the FDIC and held up to the limits insured by the
FDIC;
(e) Investment agreements approved by the Certificate Insurer,
provided:
(i) The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations
rated as follows by at least Moody's and Standard & Poor's: Aa2
or better by Moody's and AA or better by Standard & Poor's and
by Fitch, if rated by Fitch, and
(ii) Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time
prior to the withdrawal date), and
(iii) The agreement is not subordinated to any other obligations
of such insurance company or bank, and
(iv) The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
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(v) The Trustee receives an opinion of counsel that such
agreement is an enforceable obligation of such insurance company or
bank;
(f) Repurchase agreements collateralized by securities described
in (a) above with any registered broker/dealer subject to the Securities
Investors Protection Corporation's jurisdiction and subject to applicable
limits therein promulgated by Securities Investors Protection Corporation
or any commercial bank, if such broker/dealer or bank has an uninsured,
unsecured and unguaranteed short-term or long-term obligation rated, as
follows by at least Moody's and Standard & Poor's: P-1 or Aa2,
respectively, or better by Moody's, A-1 or AA, respectively or better by
Standard & Poor's and F-1 or AA, respectively, or better by Fitch, if
rated by Fitch, provided:
(i) A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
(ii) The securities are held free and clear of any lien by
the Trustee or an independent third party acting solely
as agent for the Trustee, and such third party is (a) a
Federal Reserve Bank or (b) a bank which is a member of
the FDIC and which has combined capital, surplus and
undivided profits of not less than $125 million, or (c)
a bank approved in writing for such purpose by the
Certificate Insurer and the Trustee shall have received
written confirmation from such third party that it
holds such securities, free and clear of any lien, as
agent for the Trustee, and
(iii) A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at
31 CFR 306.1 et seq. or 31 CFR 350.0 et seq., in such
securities is created for the benefit of the Trustee,
and
(iv) The repurchase agreement has a term of thirty days or
less and the Trustee will value the collateral
securities no less frequently than weekly and will
liquidate the collateral securities if any deficiency
in the required collateral percentage is not restored
within two business days of such valuation, and
(v) The fair market value of the collateral securities in
relation to the amount of the repurchase obligation,
including principal and interest, is equal to at least
104% and such collateral securities must be valued
weekly and market-to-market at current market price
plus accrued interest.
(g) Commercial paper (having original maturities of not more
than 270 days) rated in the highest short-term rating categories of each
of Moody's and Standard & Poor's and Fitch, if rated by Fitch; and
(h) Investments in no load money market funds registered under
the Investment Company Act of 1940 whose shares are registered under the
Securities Act and rated as follows by at least Moody's and Standard &
Poor's: AAAm or AAAm-G by Standard & Poor's, Aaa by Moody's, and AAA, if
rated by Fitch;
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provided that no instrument described above shall evidence either the
right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments
derived from obligations underlying such instrument and the interest and
principal payments with respect to such instrument provided a yield to
maturity at par greater than 120% of the yield to maturity at par of the
underlying obligations; and provided, further, that all instruments
described hereunder shall mature at par on or prior to the next
succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price
greater than par if such instrument may be prepaid or called at a price
less than its purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) Trustee shall determine whether an Insured Payment will be
required to be made by the Certificate Insurer on the following Payment
Date and if so then no later than 12:00 noon on the second Business Day
immediately preceding the related Payment Date the Trustee shall furnish
the Certificate Insurer and the Depositor with a completed Notice in the
form set forth as Exhibit A to the Certificate Insurance Policy
Agreement. The Notice shall specify the amount of the Insured Payment and
shall constitute a claim for an Insured Payment pursuant to the
Certificate Insurance Policy.
(b) By 12:00 noon New York time, on the Business Day preceding
each Payment Date (or such earlier period as shall be agreed by the
Depositor and the Trustee), the Trustee shall notify (subject to the
terms of Section 10.03(j) hereof, based solely on information provided to
the Trustee by the Servicer) the Depositor, each of the Sellers, the
Certificate Insurer and each Owner of the following information with
respect to the next Payment Date (which notification may be given by
facsimile or by telephone promptly confirmed in writing):
(i) The aggregate amount then on deposit in the Certificate
Account;
(ii) The Class A Distribution Amount, with respect to each
Class individually and all Classes of the Class A Trust
Certificates in the aggregate, on the next Payment Date
and the related Class B Distribution Amount;
(iii) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(iv) The application of the amounts described in clause (i)
preceding to the allocation and distribution of the
related Class A Distribution Amounts, and the related
Class B Distribution Amount, on such Payment Date in
accordance with Section 7.03 hereof;
(v) The Certificate Principal Balance of each Class of the
Class A Trust and Class B Certificates, the Class A-10
IO Notional Principal Amount, the aggregate amount of
the principal of each Class of Certificates to be paid
on such Payment Date and the remaining Certificate
Principal Balance (or Class A-10 IO Notional Principal
Amount) of each Class of Certificates following any
such payment;
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(vi) The amount, if any, of any Realized Losses for the
related Remittance Period in the aggregate and for each
of the Fixed Rate Pool, Adjustable Rate Pool 1 and
Adjustable Pool 2 and the amount of Cumulative Realized
Losses as of the last day of the related Remittance
Period; and
(vii) The amount of 60+ Day Delinquent Loans and the
Three-Month Rolling Average 60+ Day Delinquency Rate.
Section 7.09 Reports by Trustee to Owners and the Certificate Insurer.
(a) On each Payment Date the Trustee shall report in writing to
the Depositor, each Owner, the Certificate Insurer, the Underwriters and
the Rating Agencies:
(i) the amount of the distribution with respect to such
Owners' Certificates (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, the principal portion of the Loan Purchase Price
for each repurchased Home Equity Loan, or other recoveries of
principal included therein;
(iii) the amount of such Owner's distributions
allocable to interest (based on a Certificate in the original
principal amount of $1,000);
(iv) the Interest Carry Forward Amount for each Class;
(v) the principal amount (or notional principal amount)
and the Planned Principal Balance, if any, of each Class of
Class A Trust and Class B Certificates (based on a Certificate
in the original principal amount of $1,000) which will be
Outstanding after giving effect to any payment of principal on
such Payment Date;
(vi) the aggregate Loan Balance of all Home Equity
Loans, and of the Home Equity Loans in the Fixed-Rate Pool,
Adjustable Rate Pool 1 and Adjustable Rate Pool 2 after giving
effect to any payment and any prepayments of principal on such
Payment Date;
(vii) the principal actually collected by the Servicer
during the related Remittance Period in the aggregate and for
the Fixed Rate Pool, Adjustable Rate Pool 1 and Adjustable Rate
Pool 2, separately identifying amounts received in respect of
Scheduled Payments, Prepayments, the principal portion of the
Loan Purchase Price for each repurchased Home Equity Loan, and
Net Liquidation Proceeds;
(viii) based upon information furnished by the
Depositor, 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 Loan Group;
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(x) the weighted average Coupon Rate of the Home Equity
Loans, and of the Home Equity Loans in the Fixed-Rate Pool,
Adjustable-Rate Pool 1 and Adjustable Rate Pool 2;
(xi) the weighted-average remaining term to maturity of
the Home Equity Loans in the aggregate, in the Fixed Rate Pool,
in Adjustable Rate Pool 1 and in Adjustable Rate Pool 2;
(xii) whether a Delinquency Trigger Event has occurred and/or
a Cumulative Realized Loss Trigger Event and/or a Cumulative
Realized Loss Termination Event has occurred;
(xiii) the Targeted Overcollateralization Amount, Class
A Enhancement Percentage and the Overcollateralization Stepdown
Amount;
(xiv) the Overcollateralization Amount and the
Certificate Principal Balance of each Class of the Class A Trust
Certificates then outstanding after giving effect to any payment
of principal on such Payment Date, together with the Class A-10
IO Notional Principal Amount;
(xv) the amount of any Applied Realized Loss Amount,
Class B Realized Loss Amortization Amount and Class B Unpaid
Realized Loss Amount as of the close of such Payment Date;
(xvi) the Pass-Through Rate for the Adjustable Rate
Certificates applicable to the related Accrual Period and if any
such Pass-Through Rate was based on the Group I or Group II
Available Funds Cap, then what such Pass-Through Rate would have
been in the absence thereof;
(xvii) each of the Group I and Group II Available Funds
Cap for such Payment Date;
(xviii) the amount of any Insured Payment included in the
distribution to Owners of Class A Trust Certificates;
(xix) any Reimbursement Amount paid on such Payment
Date and any Reimbursement Amount remaining unpaid;
(xx) such other information as the Certificate Insurer
may reasonably request with respect to Home Equity Loans that
are Delinquent by the Fixed Rate Pool, Adjustable Rate Pool 1
and Adjustable Rate Pool 2; and
(xxi) the largest Home Equity Loan Balance outstanding.
The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(iii) and in clause (b) below to enable the
Trustee to perform its reporting obligations under this Section, and such
obligations of the Trustee under this Section are conditioned upon such
information being received and the information provided in clauses (ii),
(vii), (viii), (ix),
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(xi), (xii), (xiii) and (xiv) shall be based solely upon information
contained in the monthly servicing report provided by the Servicer to the
Trustee pursuant to Section 8.01 hereof.
(b) In addition, on each Payment Date the Trustee will
distribute to the Depositor, the Certificate Insurer, each Owner, the
Underwriters and the Rating Agencies, together with the information
described in Subsection (a) preceding, the following information with
respect to the Home Equity Loans which is hereby required to be prepared
by the Servicer and furnished to the Trustee for such purpose on or prior
to the related Monthly Remittance Date:
(i) the related Class A Trust Certificate Principal
Balance, as of such Payment Date;
(ii) the number and aggregate Loan Balances of all Home
Equity Loans and the Home Equity Loans in the Fixed Rate Pool,
Adjustable Rate Pool 1 and Adjustable Rate Pool 2: (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 next preceding such Payment
Date;
(iii) the status and the number and dollar amounts of
all Home Equity Loans and the Home Equity Loans in the Fixed
Rate Pool, Adjustable Rate Pool 1 and Adjustable Rate Pool 2 in
foreclosure proceedings as of the close of business on the last
Business Day of the calendar month next preceding such Payment
Date, separately stating, for this purpose, all Home Equity
Loans with respect to which foreclosure proceedings were
commenced in the immediately preceding calendar month;
(iv) the number of Mortgagors and the Loan Balances of
Home Equity Loans and the Home Equity Loans in the Fixed Rate
Pool, Adjustable Rate Pool 1 and Adjustable Rate Pool 2 (a) the
related Mortgages involved in bankruptcy proceedings as of the
close of business on the last Business Day of the calendar month
next preceding such Payment Date and (b) Home Equity Loans in
each Pool that are "balloon" loans;
(v) the existence and status of any REO Properties for
all Home Equity Loans and the Home Equity Loans in the Fixed
Rate Pool, Adjustable Rate Pool 1 and Adjustable Rate Pool 2 as
of the close of business of the last Business Day of the month
next preceding the Payment Date;
(vi) the book value of any REO Property for the Home
Equity Loans in the Fixed Rate Pool, Adjustable Rate Pool 1 and
Adjustable Rate Pool 2 as of the close of business on the last
Business Day of the calendar month next preceding the Payment
Date;
(vii) the amount of Cumulative Realized Losses for all
Home Equity Loans and the Home Equity Loans in the Fixed Rate
Pool, Adjustable Rate Pool 1 and Adjustable Rate Pool 2;
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(viii) the aggregate Loan Balance of 60+ Day Delinquent
Loans for all Home Equity Loans and the Home Equity Loans in the
Fixed Rate Pool, Adjustable Rate Pool 1 and Adjustable Rate Pool
2;
(ix) the Three-Month Rolling Average 60+ Day
Delinquency Rate for all Home Equity Loans and the Home Equity
Loans in the Fixed Rate Pool, Adjustable Rate Pool 1 and
Adjustable Rate Pool 2 and whether a Delinquency Trigger Event
or a Cumulative Realized Loss Trigger Event is in effect; and
(x) the aggregate Loan Balance of Home Equity Loans
repurchased for loss mitigation purposes in the Home Equity
Loans in the Fixed Rate Pool, Adjustable Rate Pool, and
Adjustable Rate Pool 2.
(c) The Servicer shall furnish to the Trustee and to the
Certificate Insurer during the term of this Agreement, such periodic,
special, or other reports or information not specifically provided for
herein, as may be necessary, reasonable, or appropriate with respect to
the Trustee or the Certificate Insurer, as the case may be, or otherwise
with respect to the purposes of this Agreement, all such reports or
information to be provided by and in accordance with such applicable
instructions and directions as the Trustee or the Certificate Insurer may
reasonably require; provided, that the Servicer shall be entitled to be
reimbursed by the requesting party for the fees and actual expenses
associated with providing such reports, if such reports are not generally
produced in the ordinary course of business.
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, each of the
Sellers, the Underwriters, the Certificate Insurer and each Owner, with
respect to the amount on deposit in the Certificate Account and the
identity of the investments included therein, as the Depositor, the
Certificate Insurer or the Seller may from time to time request. Without
limiting the generality of the foregoing, the Trustee shall, at the
request of the Depositor, the Certificate Insurer or either of the
Sellers transmit promptly to the Depositor, the Certificate Insurer and
each of the Sellers copies of all accounting of receipts in respect of
the Home Equity Loans furnished to it by the Servicer and shall notify
the Certificate Insurer and each of the Sellers if any Monthly Remittance
Amount has not been received by the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each
Owner with respect to any written notices it may from time to time
receive which provide an Authorized Officer with actual knowledge that
any of the statements set forth in Section 3.04(b) hereof are inaccurate.
Section 7.11 Preference Payments.
The Certificate Insurer will pay any Insured Payment that is a
Preference Amount on the Business Day following receipt on a Business Day
by the Fiscal Agent of (i) a certified copy of the order requiring the
return of such Preference Amount, (ii) an opinion of counsel satisfactory
to the Certificate Insurer that such order is final and not subject to
appeal, (iii) an assignment in such form as is reasonably required by the
Certificate Insurer, irrevocably assigning to the Certificate Insurer all
rights and claims of the Owners relating to or arising under the Class A
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Trust Certificates against the debtor which made such preference payment
or otherwise with respect to such preference payment and (iv) appropriate
instruments to effect the appointment of the Certificate Insurer as agent
for such Owner in any legal proceeding related to such preference
payment, such instruments being in a form satisfactory to the Certificate
Insurer, provided that if such documents are received after 12:00 noon
New York City time on such Business Day, they will be deemed to be
received on the following Business Day. Such payment shall be disbursed
to the receiver or trustee in bankruptcy named in the final court order
of the court exercising jurisdiction on behalf of the Owner and not to
any Owner directly unless such Owner has returned principal or interest
paid on the Class A Trust Certificates to such receiver or trustee in
bankruptcy in which case payment will be disbursed to the Owner.
Each Owner of a Class A Trust Certificate, by its purchase of
Class A Trust Certificates, the Servicer and the Trustee hereby agree
that the Certificate Insurer may at any time during the continuation of
any proceeding relating to a preference claim direct all matters relating
to such preference claim, including, without limitation, the direction of
any appeal of any order relating to such preference claim and the posting
of any surety or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Certificate Insurer shall be
subrogated to the rights of the Servicer, the Trustee and the Owner of
each Class A Trust Certificate in the conduct of any such preference
claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in
connection with any such preference claim.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity
Loans in accordance with this Agreement and the servicing standards set
forth in the FannieMae Guide 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. It is the intent of the parties hereto that the Servicer shall
have all of the servicing obligations hereunder which a lender would have
under the FannieMae Guide (as such provisions relate to second lien
mortgages); provided, however, that to the extent that such standards,
such obligations or the FannieMae Guide are amended by FannieMae after
the date hereof and the effect of such amendment would be to impose upon
the Servicer any material additional costs or other burdens relating to
such servicing obligations, the Servicer may, at its option, determine
not to comply with such amendment.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect
to all or certain of the Home Equity Loans through a Sub-Servicer as it
may from time to time designate, but no such designation of a
Sub-Servicer shall serve to release the Servicer from any of its
obligations under this Agreement. Such Sub-Servicer shall have all the
rights and powers of the Servicer with respect to such Home Equity Loans
under this Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of
attorney executed and delivered by the Trustee to execute and deliver,
and may be authorized and empowered by the Trustee, to execute and
deliver, on behalf of itself, the Owners and the Trustee or any of them,
(i) any and all instruments of satisfaction or cancellation or of partial
or full release or discharge and all other comparable instruments with
respect to the Home Equity Loans and with respect to the Properties, (ii)
to institute foreclosure proceedings or obtain a deed in lieu of
foreclosure so as to effect ownership of any Property in the name of the
Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf
of the Trustee; provided, however, that to the extent any instrument
described in clause (i) preceding would be delivered by the Servicer
outside of its usual procedures for mortgage loans held in its own
portfolio the Servicer shall, prior to executing and delivering such
instrument, obtain the prior written consent of the Certificate Insurer,
and provided further, however, that Section 8.14(a) shall constitute an
authorization from the Trustee to the Servicer to execute an instrument
of satisfaction (or assignment of mortgage without recourse) with respect
to any Home Equity Loan paid in full (or with respect to which payment in
full has been escrowed). The Trustee shall execute any documentation
furnished to it by the Servicer for recordation by the Servicer in the
appropriate jurisdictions as shall be necessary to effectuate the
foregoing. Subject to Sections 8.13 and 8.14, the Trustee
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shall execute any authorizations and other documents as the Servicer or
such Sub-Servicer shall reasonably request that are furnished to the
Trustee to enable the Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
The Servicer shall give prompt notice to the Trustee and the
Certificate Insurer of any action, of which the Servicer has actual
knowledge, to (i) assert a claim against the Trust or (ii) assert
jurisdiction over the Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any
penalties in connection with the payment of any taxes and assessments or
other charges) on any Property shall be recoverable by the Servicer or
such Sub-Servicer to the extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and
shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any applicable Insurance
Policy, follow collection procedures for all Home Equity Loans at least
as rigorous as those described in the FannieMae Guide. Consistent with
the foregoing, the Servicer may in its discretion waive or permit to be
waived any late payment charge, prepayment charge, assumption fee or any
penalty interest in connection with the prepayment of a Home Equity Loan
or any other fee or charge which the Servicer would be entitled to retain
hereunder as servicing compensation. In the event the Servicer shall
consent to the deferment of the due dates for payments due on a Note, the
Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if
such installment were due, owing and Delinquent and had not been
deferred, and shall be entitled to reimbursement therefor in accordance
with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
The Servicer may enter into Sub-Servicing Agreements for any
servicing and administration of Home Equity Loans with any institution
that is acceptable to the Certificate Insurer and that is in compliance
with the laws of each state necessary to enable it to perform its
obligations under such Sub-Servicing Agreement and (x) has (i) been
designated an approved seller-servicer by FHLMC or FannieMae for second
mortgage loans and (ii) has equity of at least $5,000,000, as determined
in accordance with generally accepted accounting principles or (y) is a
Servicer Affiliate. The Servicer shall give notice to the Trustee, the
Certificate Insurer and the Rating Agencies of the appointment of any
Sub-Servicer. For purposes of this Agreement, the Servicer shall be
deemed to have received payments on Home Equity Loans when any
Sub-Servicer has received such payments. Each Sub-Servicer shall be
required to service the Home Equity Loans in accordance with this
Agreement and any such Sub-Servicing Agreement shall be consistent with
and not violate the provisions of this Agreement. Each Sub-Servicing
Agreement shall provide that a successor Servicer shall have the option
to terminate such agreement without payment of any fees if the original
Servicer is terminated or resigns.
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Section 8.04 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing
Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement and to either itself directly service the related
Home Equity Loans or enter into a Sub-Servicing Agreement with a
successor Sub-Servicer which qualifies under Section 8.03.
Section 8.05 Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under
this Agreement notwithstanding any Sub-Servicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements
between the Servicer and a Sub-Servicer and the Servicer shall be
obligated to the same extent and under the same terms and conditions as
if it alone were servicing and administering the Home Equity Loans. The
Servicer shall be entitled to enter into any agreement with a
Sub-Servicer for indemnification of the Servicer by such Sub-Servicer and
nothing contained in such Sub-Servicing Agreement shall be deemed to
limit or modify this Agreement.
(b) The Servicer (except Manufacturers and Traders Trust Company
if it is required to succeed the Servicer hereunder) agrees to indemnify
and hold the Trustee, the Certificate Insurer and each Owner harmless
against any and all claims, losses, penalties, fines, forfeitures, legal
fees and related costs, judgments, and any other costs, fees and expenses
that the Trustee, the Certificate Insurer and any Owner may sustain in
any way related to the failure of the Servicer to perform its duties and
service the Home Equity Loans in compliance with the terms of this
Agreement. The Servicer shall immediately notify the Trustee, the
Certificate Insurer and each Owner if a claim is made by a third party
with respect to this Agreement, and the Servicer shall assume (with the
consent of the Trustee and the Certificate Insurer) the defense of any
such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Servicer, the
Trustee, the Certificate Insurer and/or Owner in respect of such claim.
The Trustee may, if necessary, reimburse the Servicer from amounts
otherwise distributable on the Class R Certificates for all amounts
advanced by it pursuant to the preceding sentence except when the claim
relates directly to the failure of the Servicer to service and administer
the Home Equity Loans in compliance with the terms of this Agreement. The
provisions of this Section 8.05 shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or
the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be
deemed to be between the Sub-Servicer and the Servicer alone and the
Trustee, the Certificate Insurer and the Owners shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to any Sub-Servicer except as set forth in
Section 8.07.
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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, 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 without act or deed on the part of
the Trustee; provided, however, that the successor Servicer may terminate
the Sub-Servicer as provided in Section 8.03.
The Servicer shall, upon the reasonable request of the 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. Each Principal and Interest Account shall be
identified on the records of the Designated Depository Institution as
follows: "Manufacturers and Traders Trust Company, as Trustee under the
Pooling and Servicing Agreement dated as of June 1, 1998." If the
institution at any time holding the Principal and Interest Account ceases
to be eligible as a Designated Depository Institution hereunder, then the
Servicer shall, within 30 days, be required to name a successor
institution meeting the requirements for a Designated Depository
Institution hereunder. If the Servicer fails to name such a successor
institution, then the Principal and Interest Account shall thenceforth be
held as a trust account with a qualifying Designated Depository
Institution. The Servicer shall notify the Trustee, the Certificate
Insurer and the Owners if there is a change in the name, account number
or institution holding the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all
receipts required pursuant to Subsection (c) below and related to the
Home Equity Loans to the Principal and Interest Account on a daily basis
(but no later than the first Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be
held (i) uninvested (up to the limits insured by the FDIC) or (ii)
invested in Eligible Investments. Any investments of funds in the
Principal and Interest Account shall mature or be withdrawable at par on
or prior to the immediately succeeding Monthly Remittance Date. The
Principal and Interest Account shall be held in trust in the name of the
Trustee for the benefit of the Owners and the Certificate Insurer. Any
investment earnings on funds held in the Principal and Interest Account
shall be for the account of the Servicer and may only be withdrawn from
the Principal and Interest Account by the Servicer immediately following
the remittance of the Monthly Remittance Amount (and the Monthly Excess
Interest Amount included therein) by the Servicer. Any investment losses
on funds held in the Principal and Interest Account shall be for the
account of the Servicer and promptly upon the realization of such loss
shall be contributed by the Servicer to the Principal and Interest
Account. Any references herein to amounts on deposit in the Principal and
Interest Account shall refer to amounts net of such investment earnings.
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(c) The Servicer shall deposit to the Principal and Interest
Account on the Business Day after receipt all principal collections on
the Home Equity Loans received, and interest collections on the Home
Equity Loans accrued after the Cut-Off Date including any Prepayments and
Net Liquidation Proceeds, other recoveries or amounts related to the Home
Equity Loans received by the Servicer and any income from REO Properties,
but net of (i) the Servicing Fee with respect to each Home Equity Loan
and other servicing compensation to the Servicer as permitted by Section
8.15 hereof, (ii) principal collected and interest accrued on any Home
Equity Loan on or prior to the Cut-Off Date, (iii) Net Liquidation
Proceeds to the extent such Net Liquidation Proceeds exceed the sum of
(I) the Loan Balance of the related Home Equity Loan immediately prior to
liquidation, (II) accrued and unpaid interest on such Home Equity Loan
(net of the Servicing Fee) to the date of such liquidation, and (III) any
Realized Losses incurred during the related Remittance Period, (iv)
reimbursements for Delinquency Advances and (v) reimbursements for
amounts deposited in the Principal and Interest Account representing
payments of principal and/or interest on a Note by a Mortgagor which are
subsequently returned by a depository institution as unpaid (all such net
amount herein referred to as "Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account
from the amounts on deposit in the Principal and Interest Account, with
respect to the Home Equity Loans, only in the following priority and for
the following purposes:
(A) to withdraw interest paid with respect to any Home Equity Loans that
had accrued for periods prior to the Cut-Off Date;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to reimburse itself pursuant to Section 8.09(a) for unrecovered
Delinquency Advances and Servicing Advances;
(D) to withdraw amounts that have been deposited to the Principal
and Interest Account in error; and
(E) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds
available in immediately available funds, without duplication,
the Daily Collections allocable to a Remittance Period not
later than the related Monthly Remittance Date and Loan
Purchase Prices and Substitution Amounts two Business Days
following the related purchase or substitution, and (b) on each
Monthly Remittance Date, deliver to the Trustee and the
Certificate Insurer a monthly servicing report, with respect to
the Home Equity Loans, containing the following information:
principal and interest collected, scheduled interest,
Liquidated Loans, summary and detailed delinquency reports,
Liquidation Proceeds and other similar information concerning
the servicing of the Home Equity Loans. In addition, the
Servicer
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shall inform the Trustee and the Certificate Insurer on each
Monthly Remittance Date with respect to the Home Equity Loans
of the amounts of any Loan Purchase Prices or Substitution
Amounts so remitted during the related Remittance Period.
(iii) The Servicer shall provide to the Trustee the information
described in Section 8.08(d)(ii)(b) and in Section 7.09(c) to
enable the Trustee to perform its reporting requirements under
Section 7.09 and the Trustee shall forward such information to
the Underwriters within five Business Days of receipt thereof.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) If the amount on deposit in the Certificate Account as of
any Monthly Remittance Date is less than the sum of (I) the Group I and
Group II Interest Remittance Amount on such Monthly Remittance Date and
(II) the Group I and Group II Principal Remittance Amount on such Monthly
Remittance Date, the Servicer shall remit to the Trustee for deposit into
the Certificate Account a sufficient amount of its own funds to make the
total amount remitted to the Trustee equal to such sum. Such amounts of
the Servicer's own funds so deposited are "Delinquency Advances,"
including but not limited to any amount advanced due to the invocation by
a Mortgagor of the relief provisions provided by the Soldiers' and
Sailors' Civil Relief Act of 1940.
The Servicer shall be permitted to fund its payment of
Delinquency Advances on any Business Day and to reimburse itself for any
Delinquency Advances paid from the Servicer's own funds from collections
on any Home Equity Loan deposited to the Principal and Interest Account
subsequent to the related Remittance Period and shall deposit into the
Principal and Interest Account with respect thereto (i) collections from
the Mortgagor whose Delinquency gave rise to the shortfall which resulted
in such Delinquency Advance and (ii) Net Liquidation Proceeds recovered
on account of the related Mortgage Loan to the extent of the amount of
aggregate Delinquency Advances related thereto. If not recovered from the
related Mortgagor or the related Net Liquidation Proceeds, the Servicer
shall recover Delinquency Advances pursuant to Section 7.03(e)(iii).
Notwithstanding the foregoing, in the event that the Servicer
determines that the aggregate unreimbursed Delinquency Advances exceed
the aggregate remaining Scheduled Payments due on the Home Equity Loans,
the Servicer shall not be required to make any future Delinquency
Advances, and shall be entitled to reimbursement for such aggregate
unreimbursed Delinquency Advances as provided above. The Servicer shall
give written notice of such determination to the Trustee and the
Certificate Insurer; and the Trustee shall promptly furnish a copy of
such notice to the Owners of the Class R Certificates; provided, that the
Servicer shall be entitled to recover any unreimbursed Delinquency
Advances from the aforesaid Liquidation Proceeds prior to the payment of
the Liquidation Proceeds to any other party to this Agreement.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but
not limited to, the cost of (i) Preservation Expenses, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of REO Property and (iv) advances required by
Section 8.13(a), but the Servicer is only required to pay such costs and
expenses to the extent the Servicer
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reasonably believes such costs and expenses will be recoverable from the
related Home Equity Loan. Each such expenditure will constitute a
"Servicing Advance". The Servicer may recover Servicing Advances (x) from
the Mortgagors to the extent permitted by the Home Equity Loans or, if
not recovered from the Mortgagor on whose behalf such Servicing Advance
was made, from Liquidation Proceeds realized upon the liquidation of the
related Home Equity Loan and (y) as provided in Section 7.03(e)(iii). The
Servicer shall be entitled to recover the Servicing Advances from the
aforesaid Liquidation Proceeds prior to the payment of the Liquidation
Proceeds to any other party to this Agreement. Except as provided in the
previous sentence, in no case may the Servicer recover Servicing Advances
from the principal and interest payments on any Home Equity Loan or from
any amounts relating to any other Home Equity Loan except as provided in
Section 7.03(e)(iii).
Section 8.10 Compensating Interest; Repurchase of Home Equity
Loans.
(a) Prepayment of a Home Equity Loan occurs during any calendar
month or if the amount received with respect to a date-of-payment or
simple interest Home Equity Loan represents less than a full month's
interest, any difference between the interest collected from the
Mortgagor and the full month's interest at the Coupon Rate less the
Servicing Fee ("Compensating Interest") that is due shall be deposited by
the Servicer (but not in excess of the aggregate Servicing Fee for the
related Remittance Period) to the Principal and Interest Account on the
next succeeding Monthly Remittance Date and shall be included in the
Monthly Remittance to be made available to the Trustee on such Monthly
Remittance Date. The Servicer shall not be entitled to reimbursement for
amounts paid as Compensating Interest.
(b) The Servicer, and in the absence of exercise thereof by the
Servicer, the Certificate Insurer, has the right and the option, but not
the obligation, for administrative convenience, to purchase for its own
account any Home Equity Loan which becomes Delinquent, in whole or in
part, as to four consecutive monthly installments or any Home Equity Loan
as to which enforcement proceedings have been brought by the Servicer
pursuant to Section 8.13; provided, however, that the Servicer or the
Certificate Insurer, as the case may be, may not purchase any such Home
Equity Loan unless the Servicer or the Certificate Insurer, as the case
may be, has delivered to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Trustee and the Certificate
Insurer to the effect that such a purchase would not constitute a
Prohibited Transaction for the Trust or otherwise subject the Trust to
tax and would not jeopardize the status any REMIC therein as a REMIC. Any
such Loan so purchased shall be purchased by the Servicer or the
Certificate Insurer, as the case may be, on a Monthly Remittance Date at
a purchase price equal to the Loan Purchase Price thereof, which purchase
price shall be deposited in the Principal and Interest Account.
(c) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Daily Collections remitted by the Servicer to the
Trustee.
Section 8.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to
each Home Equity Loan a hazard insurance policy with a generally
acceptable carrier that provides for fire
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and extended coverage, and which provides for a recovery by the Trust of
insurance proceeds relating to such Home Equity Loan in an amount not
less than the least of (i) the outstanding principal balance of the Home
Equity Loan (plus the related senior lien loan, if any), (ii) the minimum
amount required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises. The Servicer
shall maintain the insurance policies required hereunder in the name of
the mortgagee, its successors and assigns, as loss payee. The policies
shall require the insurer to provide the mortgagee with 30 days' notice
prior to any cancellation or as otherwise required by law. The Servicer
may also maintain a blanket hazard insurance policy or policies if the
insurer or insurers of such policies are rated investment grade by each
Rating Agency. Upon the request of the Trustee or the Certificate
Insurer, the Servicer will cause to be delivered to such requesting
Person a certified true copy of such blanket policy.
(b) If the Home Equity Loan at the time of origination relates
to a Property in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards, the
Servicer will cause to be maintained with respect thereto a flood
insurance policy in a form meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally
acceptable carrier in an amount representing coverage, and which provides
for a recovery by the Trust of insurance proceeds relating to such Home
Equity Loan of not less than the least of (i) the outstanding principal
balance of the Home Equity Loan (plus the related senior lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss
on a replacement cost basis and (iii) the maximum amount of insurance
that is available under the Flood Disaster Protection Act of 1973. The
Servicer shall indemnify the Trust out of the Servicer's own funds for
any loss to the Trust resulting from the Servicer's failure to maintain
premiums for such insurance required by this Section when so permitted by
the terms of the Mortgage as to which such loss relates.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such
conveyance or prospective conveyance, exercise its rights to accelerate
the maturity of the related Home Equity Loan under any "due-on-sale"
clause contained in the related Mortgage or Note; provided, however, that
the Servicer shall not exercise any such right if the "due-on-sale"
clause, in the reasonable belief of the Servicer, is not enforceable
under applicable law. An opinion of counsel to the foregoing effect shall
conclusively establish the reasonableness of such belief. In such event,
the Servicer shall enter into an assumption and modification agreement
with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Note
and, unless prohibited by applicable law or the Mortgage Documents, the
Mortgagor remains liable thereon. If the foregoing is not permitted under
applicable law, the Servicer is authorized to enter into a substitution
of liability agreement with such person, pursuant to which the original
Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; provided, however, that to
the extent any such substitution of liability agreement would be
delivered by the Servicer outside of its usual procedures for mortgage
loans held in its own portfolio the Servicer shall, prior to executing
and delivering such agreement, obtain the prior written consent of the
Certificate Insurer. The Home Equity Loan, as assumed, shall conform in
all respects to the requirements, representations and warranties of this
Agreement. The Servicer shall notify the Trustee that any such assumption
or substitution
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agreement has been completed by forwarding to the Trustee the original
copy of such assumption or substitution agreement (indicating the File to
which it relates) which copy shall be added by the Trustee to the related
File and which shall, for all purposes, be considered a part of such File
to the same extent as all other documents and instruments constituting a
part thereof. The Servicer shall be responsible for recording any such
assumption or substitution agreements. In connection with any such
assumption or substitution agreement, the required monthly payment on the
related Home Equity Loan shall not be changed but shall remain as in
effect immediately prior to the assumption or substitution, the stated
maturity or outstanding principal amount of such Home Equity Loan shall
not be changed nor shall any required monthly payments of principal or
interest be deferred or forgiven. Any fee collected by the Servicer or
the Sub-Servicer for consenting to any such conveyance or entering into
an assumption or substitution agreement shall be retained by or paid to
the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of
this Agreement, the Servicer shall not be deemed to be in default, breach
or any other violation of its obligations hereunder by reason of any
assumption of a Home Equity Loan by operation of law or any assumption
which the Servicer may be restricted by law from preventing, for any
reason whatsoever.
Section 8.13 Realization Upon Defaulted Home Equity Loans; Modification.
(a) The Servicer shall foreclose upon or otherwise comparably
effect the ownership in the name of the Servicer on behalf of the Trust
of Properties relating to defaulted Home Equity Loans as to which no
satisfactory arrangements can be made for collection of Delinquent
payments and which the Servicer has not purchased pursuant to Section
8.10(b). In connection with such foreclosure or other conversion, the
Servicer shall exercise such of the rights and powers vested in it
hereunder, and use the same degree of care and skill in their exercise or
use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FannieMae Guide, including, but not
limited to, advancing funds for the payment of taxes, amounts due with
respect to Senior Liens, and insurance premiums. Any amounts so advanced
shall constitute "Servicing Advances" within the meaning of Section
8.09(b) hereof. The Servicer shall sell any REO Property before the start
of the 12th month of the 3rd taxable year following the taxable year in
which the Trust acquired such property, at such price as the Servicer
deems necessary to comply with this covenant unless the Seller which
delivered the related Home Equity Loan obtains for the Trustee, the
Certificate Insurer and the Servicer an opinion of counsel experienced in
federal income tax matters acceptable to the Trustee and the Certificate
Insurer, addressed to the Trustee, the Certificate Insurer, and the
Servicer, to the effect that the holding by the Trust of such REO
Property for any greater period will not result in the imposition of
taxes on "Prohibited Transactions" of the Trust or any REMIC therein as
defined in Section 860F of the Code or cause any REMIC therein to fail to
qualify as a REMIC under the REMIC Provisions at any time that any
Certificates are outstanding. Notwithstanding the generality of the
foregoing provisions, the Servicer shall manage, conserve, protect and
operate each REO Property for the Owners solely for the purpose of its
prompt disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning
of Section 860G(a)(8) of the Code or result in the receipt by any REMIC
of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B)
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of the Code or any "net income from foreclosure property" which is subject to
taxation under the REMIC Provisions. Pursuant to its efforts to sell such
REO Property, the Servicer shall either itself or through an agent
selected by the Servicer protect and conserve such REO Property in the
same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and
protection of the interests of the Owners, rent the same, or any part
thereof, as the Servicer deems to be in the best interest of the Owners
for the period prior to the sale of such REO Property. The Servicer shall
take into account the existence of any hazardous substances, hazardous
wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource
Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on a Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such
Property. The Servicer shall not take any such action with respect to any
Property known by the Servicer to contain such wastes or substances,
without the prior written consent of the Certificate Insurer. With
respect to any Home Equity Loan secured by a mixed use Property, the
Servicer shall, prior to foreclosing upon or otherwise comparably
effecting the ownership in the name of the Servicer on behalf of the
Trust, either (x) perform a "phase one environmental study" of such
Property or (y) repurchase such Property at the Loan Purchase Price.
(b) The Servicer shall determine, with respect to each defaulted
Home Equity Loan and in accordance with the procedures set forth in the
FannieMae Guide, when it has recovered, whether through trustee's sale,
foreclosure sale or otherwise, all amounts it expects to recover from or
on account of such defaulted Home Equity Loan, whereupon such Home Equity
Loan shall become a "Liquidated Loan." After a Home Equity Loan has
become a Liquidated Loan, the Servicer shall promptly prepare and forward
to the Depositor, the Certificate Insurer and the Trustee a report
detailing the Liquidation Proceeds received from the Liquidated Loan,
expenses incurred with respect thereto, and any loss incurred in
connection therewith.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the
Servicer's good faith judgment, such modification, waiver or amendment
would minimize the loss that might otherwise be experienced with respect
to such Home Equity Loan and only in the event of a payment default with
respect to such Home Equity Loan or in the event that a payment default
with respect to such Home Equity Loan is reasonably foreseeable by the
Servicer; provided, however, that no such modification, waiver or
amendment shall extend the maturity date of such Home Equity Loan beyond
the Remittance Period related to the Final Scheduled Payment Date of the
latest Class of Certificates remaining in the Trust. Notwithstanding
anything set out in this Section 8.13(c) or elsewhere in this Agreement
to the contrary, the Servicer shall be permitted to modify, waive or
amend any provision of a Home Equity Loan if required by statute or a
court of competent jurisdiction to do so.
(d) The Servicer shall deliver to the Trustee for deposit in the
related File, an original counterpart of any agreement relating to such
modification, waiver or amendment, promptly following the execution
thereof.
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Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including
any liquidation of such Home Equity Loan through foreclosure or
otherwise), or the receipt by the Servicer of a notification that payment
in full will be escrowed in a manner customary for such purposes, the
Servicer shall deliver to the Trustee the FannieMae "Request for Release
of Documents" (FannieMae Form 2009). Upon receipt of such Request for
Release of Documents, the Trustee shall promptly release the related
File, in trust, in its reasonable discretion to (i) the Servicer, (ii) an
escrow agent or (iii) any employee, agent or attorney of the Trustee.
Upon any such payment in full, or the receipt of such notification that
such funds have been placed in escrow, the Servicer is authorized to
give, as attorney-in-fact for the Trustee and the mortgagee under the
Mortgage which secured the Note, an instrument of satisfaction (or
assignment of Mortgage without recourse) regarding the Property relating
to such Mortgage, which instrument of satisfaction or assignment, as the
case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of payment in full, it being understood and
agreed that no expense incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to
the Principal and Interest Account. In lieu of executing any such
satisfaction or assignment, as the case may be, the Servicer may prepare
and submit to the Trustee a satisfaction (or assignment without recourse,
if requested by the Person or Persons entitled thereto) in form for
execution by the Trustee with all requisite information completed by the
Servicer; in such event, the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with
the related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any
Home Equity Loan, including, without limitation, foreclosure or other
comparable conversion of a Home Equity Loan or collection under any
applicable Insurance Policy, the Trustee shall (except in the case of the
payment or liquidation pursuant to which the related File is released to
an escrow agent or an employee, agent or attorney of the Trustee), upon
request of the Servicer and delivery to the Trustee of a receipt signed
by an Authorized Officer of the Servicer, release the related File to the
Servicer and shall execute such documents as shall be necessary to the
prosecution of any such proceedings, including, without limitation, an
assignment without recourse of the related Mortgage to the Servicer;
provided that there shall not be released and unreturned at any one time
more than 10% of the entire number of Files. Such receipt shall obligate
the Servicer to return the File to the Trustee when the need therefor by
the Servicer no longer exists unless the Home Equity Loan shall be
liquidated, in which case, upon receipt of the FannieMae "Liquidation
Schedule" relating to such liquidation, the receipt shall be released by
the Trustee to the Servicer.
(c) The Servicer shall have the right to accept applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii)
alterations and (iii) removal, demolition or division of properties
subject to Mortgages. No application for approval shall be considered by
the Servicer unless: (x) the provisions of the related Note and Mortgage
have been complied with; (y) the Loan-to-Value Ratio after any release
does not exceed the Loan-to-Value Ratio of such Home Equity Loan as of
the date of origination thereof and any increase in the Loan-to-Value
Ratio shall not exceed 15% unless approved in writing by the Certificate
Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate
executed on behalf of the Servicer setting forth the action proposed to
be
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taken in respect of a particular Home Equity Loan and certifying that the
criteria set forth in the immediately preceding sentence have been
satisfied, the Trustee shall execute and deliver to the Servicer the
consent or partial release so requested by the Servicer. A proposed form
of consent or partial release, as the case may be, shall accompany any
Officer's Certificate delivered by the Servicer pursuant to this
paragraph. The Servicer shall notify the Certificate Insurer and the
Rating Agencies if an application is approved under clause (y) above
without approval in writing by the Certificate Insurer.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall
be entitled to retain the amount of the Servicing Fee with respect to
each Home Equity Loan. Additional servicing compensation in the form of
prepayment charges, release fees, bad check charges, assumption fees,
late payment charges, prepayment penalties, or any other servicing-related
fees, Net Liquidation Proceeds not required to be deposited in the Principal
and Interest Account pursuant to Section 8.08(c)(ii) and similar items may,
to the extent collected from Mortgagors, be retained by the Servicer.
Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor, the Certificate Insurer and the Rating Agencies, on or before
March 31 of each year, commencing in 1999, an Officer's Certificate
stating, as to each signer thereof, that (i) a review of the activities
of the Servicer during such preceding calendar year and of performance
under this Agreement has been made under such officers' supervision, and
(ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement for such
year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the
nature and status thereof including the steps being taken by the Servicer
to remedy such default.
Section 8.17 Annual Independent Certified Public Accountants'
Reports.
On or before June 30 of any year, commencing in 1999, the Servicer,
at its own expense (or if the Trustee is then acting as Servicer, at the
expense of the Depositor, which in no event shall exceed $1,000 per
annum), shall cause to be delivered to the Trustee, the Certificate
Insurer and the Rating Agencies a letter or letters of a firm of
independent, nationally recognized certified public accountants
reasonably acceptable to the Certificate Insurer, dated as of the date of
the Servicer's fiscal audit for subsequent letters, stating that such
firm has examined the Servicer's overall servicing operations in
accordance with the requirements of the Uniform Single Attestation
Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.
Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans.
The Servicer shall provide to the Trustee, the Certificate Insurer,
the FDIC and the supervisory agents and examiners of each of the
foregoing (which, in the case of supervisory agents and examiners, may be
required by applicable state and federal regulations) access to the
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documentation regarding the Home Equity Loans, such access being afforded
without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer designated by it.
Section 8.19 Assignment of Agreement.
The Servicer may not assign its obligations under this Agreement,
in whole or in part, unless it shall have first obtained the written
consent of the Trustee and the Certificate Insurer, which consent shall
not be unreasonably withheld; provided, however, that any assignee must
meet the eligibility requirements set forth in Section 8.20(i) hereof for
a successor servicer.
Section 8.20 Removal of Servicer; Resignation of Servicer.
(a) The Certificate Insurer (or Trustee with the consent of the
Certificate Insurer and acting upon the request of a majority of the
Percentage Interests of the Offered Certificates then Outstanding), may
remove the Servicer upon the occurrence of any of the following events:
(i) The Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II)
admit in writing its inability to pay its debts generally as
they become due, (III) make a general assignment for the benefit
of creditors, (IV) be adjudicated a bankrupt or insolvent, (V)
commence a voluntary case under the federal bankruptcy laws of
the United States of America or file a voluntary petition or
answer seeking reorganization, an arrangement with creditors or
an order for relief or seeking to take advantage of any
insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate
action for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of
the Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in
respect of the Servicer an order for relief or an adjudication
in bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or similar entity with respect to the
Servicer or of all or any substantial part of its assets, or
other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by
the Servicer in good faith, the same shall (A) result in the
entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and unstayed
for any period of seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or
more of its obligations hereunder and shall continue in default
thereof for a period of thirty (30) days (one (1) Business Day
in the case of a delay in making a required payment to the
Trustee under Section 8.08(d)(ii)(a)) after the earlier of (a)
actual knowledge of an officer of the Servicer or (b) receipt of
notice from the Trustee or the Certificate Insurer of said
failure;
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provided, however, that if the Servicer can demonstrate to the
reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Certificate Insurer;
or
(iv) The Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 3.02
which materially and adversely affects the interests of the
Owners or the Certificate Insurer for a period of sixty (60)
days after the earlier of the Servicer's discovery or receipt of
notice thereof; provided however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, then the
cure period may be extended with the written approval of the
Certificate Insurer; or
(v) The merger, consolidation or other combination of
the Servicer with or into any other entity, unless (1) the
Servicer is the surviving entity of such combination or (2) the
surviving entity is a corporation or a state-chartered or
national bank acceptable to the Certificate Insurer (acceptable
to the Owners of the Class R Certificates as provided below but
if such Owners and the Certificate Insurer cannot agree, the
Certificate Insurer shall control) organized and doing business
under the laws of any state or the United States; or
(vi) The occurrence of a Cumulative Realized Loss
Termination Trigger.
(b) The Certificate Insurer may remove the Servicer
upon the occurrence of any of the following events:
(i) an Insured Payment is made by the Certificate
Insurer, provided, however, that in the event that the Trustee
shall become the Servicer hereunder, if the Servicer can
demonstrate to the reasonable satisfaction of the Certificate
Insurer that such event was due to circumstances beyond the
control of the Servicer, the right of removal hereunder shall
not be considered a default by the Servicer;
(ii) the failure by the Servicer to make any required
Servicing Advance when due;
(iii) Cumulative Realized Losses has exceeded 7% of the
Original Aggregate Loan Balance; provided, however, that in the
event that the Trustee shall become the Servicer hereunder, if
the Servicer can demonstrate to the reasonable satisfaction of
the Certificate Insurer that such event was due to circumstances
beyond the control of the Servicer, the right of removal
hereunder shall not be considered a default by the Servicer; or
(iv) the failure by the Servicer to make any required
Delinquency Advance or to pay any Compensating Interest when
due;
provided, however, that (x) prior to any removal of the Servicer by the
Certificate Insurer pursuant to clause (iii) of this Section 8.20(b), the
Servicer and the Trustee shall first have been given by the Certificate
Insurer and by registered or certified mail, notice of the occurrence of
one or more of the events set forth in clause (iii) above and the
Servicer shall not have remedied,
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or shall not have taken actions satisfactory to the Certificate Insurer
to remedy, such event or events within 60 days after the Servicer's
receipt of such notice and (y) upon the Trustee's determination that a
required Delinquency Advance or payment of Compensating Interest has not
been made by the Servicer, the Trustee shall so notify an Authorized
Officer of the Servicer, the Owners, if any, and the Certificate Insurer
as soon as is reasonably practical.
(c) If any event described in subsection (b)(iii) above occurs
and is continuing, during the thirty (30) day period following receipt of
notice, the Trustee, the Owners of the Class R Certificates and the
Certificate Insurer shall cooperate with each other to determine if the
occurrence of such event is more likely than not the result of the acts
or omissions of the Servicer or more likely than not the result of events
beyond the control of the Servicer. If the Trustee, the Owners of the
Class R Certificates and the Certificate Insurer conclude that the event
is the result of the latter, the Servicer may not be terminated, unless
and until some other event set forth in subsection (b) (i), (ii) or (iv)
has occurred and is continuing. If the Trustee, the Owners of the Class R
Certificates and the Certificate Insurer conclude that the event is the
result of the former, the Certificate Insurer may terminate the Servicer
in accordance with this Section and the Trustee shall act as successor
Servicer, provided that the Trustee shall have until the 30th day
following the date of receipt of notice of the event to become the
successor Servicer or to appoint a successor Servicer pursuant to this
Section.
If the Trustee, the Owners of the Class R Certificates and the
Certificate Insurer cannot agree, and the basis for such disagreement is
not arbitrary or unreasonable, as to the cause of the event, the decision
of the Certificate Insurer shall control; provided, however, that if the
Certificate Insurer decides to terminate the Servicer, the Trustee shall
be relieved of its obligation to assume the servicing or to appoint a
successor, which shall be the exclusive obligation of the Certificate
Insurer.
The Certificate Insurer agrees to use its best efforts to inform
the Trustee of any materially adverse information regarding the
Servicer's servicing activities that comes to the attention of the
Certificate Insurer from time to time.
(d) If any event described in sections (a) and (b) above (other
than (b)(iii) for which Section 8.20(c) controls) occurs and is
continuing, the Certificate Insurer shall notify the Owners of the Class
R Certificates in writing if the Certificate Insurer intends to terminate
the Servicer in its capacity as Servicer under this Agreement. During the
30 day period following receipt of such notice by the Owners of the Class
R Certificates, such Owners and the Certificate Insurer shall cooperate
with each other to determine if the occurrence of such event is more
likely than not the result of the acts or omissions of the Servicer or
more likely than not the result of events beyond the control of the
Servicer. If the Owners of the Class R Certificates and the Certificate
Insurer conclude that the event is the result of the latter, the Servicer
may not be terminated. If the Owners of the Class R Certificates and the
Certificate Insurer conclude that the event is the result of the former,
the Certificate Insurer may terminate the Servicer in accordance with
this Section and the Trustee shall act as successor Servicer, provided
that the Trustee shall have until the 30th day following the date of
receipt of notice of the event to become the successor Servicer or to
appoint a successor Servicer pursuant to this Section. If the Owners of
the Class R Certificates and the Certificate Insurer cannot agree as to
the cause of the event, the decision of the Certificate Insurer shall
control.
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(e) The Servicer shall not resign from the obligations and
duties hereby imposed on it, except upon determination that its duties
hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities
carried on by it, the other activities of the Servicer so causing such a
conflict being of a type and nature carried on by the Servicer at the
date of this Agreement. Any such determination permitting the resignation
of the Servicer shall be evidenced by an opinion of counsel to such
effect which shall be delivered to the Trustee and the Certificate
Insurer, which opinion shall be at the Servicer's expense.
(f) No removal or resignation of the Servicer shall become
effective until the Trustee or a successor Servicer shall have assumed
the Servicer's responsibilities and obligations in accordance with this
Section.
(g) Upon removal or resignation of the Servicer, the Servicer at
its own expense also shall promptly deliver or cause to be delivered to a
successor servicer or the Trustee all the books and records (including,
without limitation, records kept in electronic form) that the Servicer
has maintained for the 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.
(h) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly
and immediately to the Trustee or the successor Servicer.
(i) Upon removal or resignation of the Servicer, the Trustee (x)
may solicit bids for a successor servicer as described below, and (y)
pending the appointment of a successor servicer as a result of soliciting
such bids, shall serve as 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
FannieMae or FHLMC for first and second mortgage loans and having equity
of not less than $10,000,000 (or such lower level as may be acceptable to
the Certificate Insurer), as determined in accordance with generally
accepted accounting principles and acceptable to the Certificate Insurer
and the Owners of the Class R Certificates (provided that if the
Certificate Insurer and such Owners cannot agree as to the acceptability
of such successor Servicer, the decision of the Certificate Insurer shall
control) as the successor to the Servicer hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. The compensation of any successor Servicer
(including, without limitation, the Trustee) so appointed shall be the
aggregate Servicing Fee, together with the other servicing compensation
in the form of assumption fees, late payment charges or otherwise as
provided in Sections 8.08 and 8.15; provided, however, that if the
Trustee acts as successor Servicer then ContiMortgage agrees to pay to
the Trustee at such time that the Trustee becomes such successor Servicer
a set-up fee of twenty-five dollars ($25.00) for each Home Equity Loan
then included in the Trust Estate. The Trustee shall be obligated to
serve as successor Servicer whether or not the fee described in the
preceding sentence is paid by ContiMortgage, but shall in any event be
entitled to receive, and to enforce payment of, such fee from
ContiMortgage.
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(j) In the event the Trustee solicits bids as provided above,
the Trustee shall solicit, by public announcement, bids from housing and
home finance institutions, banks and mortgage servicing institutions
meeting the qualifications set forth above. Such public announcement
shall specify that the successor Servicer shall be entitled to the full
amount of the aggregate Servicing Fees as servicing compensation,
together with the other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided in Sections 8.08 and
8.15. Within thirty days after any such public announcement, the Trustee
shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price they will pay to
obtain servicing. The Trustee shall deduct from any sum received by the
Trustee from the successor Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any
sale, transfer and assignment of the servicing rights and
responsibilities hereunder. After such deductions, the remainder of such
sum less any amounts due the Trustee or the Trust from the Servicer shall
be paid by the Trustee to the Servicer at the time of such sale, transfer
and assignment to the successor Servicer.
(k) The Trustee and such successor 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 Servicer agrees to cooperate with the Trustee
and any successor Servicer in effecting the termination of the Servicer's
servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Servicer, as applicable, all
documents and records reasonably requested by it to enable it to assume
the Servicer's functions hereunder and shall promptly also transfer to
the Trustee or such successor Servicer, as applicable, all amounts which
then have been or should have been deposited in the Principal and
Interest Account by the Servicer or which are thereafter received with
respect to the Home Equity Loans. Neither the Trustee nor any other
successor 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 Seller
agrees to reimburse the Trust, the Certificate Insurer and the Owners for
the costs and expenses associated with the transfer of servicing to the
replacement Servicer, but subject to a maximum reimbursement to all such
parties in the amount of twenty-five dollars ($25.00) for each Home
Equity Loan then included in the Trust Estate.
(l) The Trustee or any other successor Servicer, upon assuming
the duties of Servicer hereunder, shall immediately make all Delinquency
Advances and deposit them to the Principal and Interest Account which the
Servicer has theretofore failed to remit with respect to the Home Equity
Loans; provided, however, that if the Trustee is acting as successor
Servicer, the Trustee shall only be required to make Delinquency Advances
(including the Delinquency Advances described in this clause (l)) if, in
the Trustee's reasonable good faith judgment, such Delinquency Advances
will ultimately be recoverable from the Home Equity Loans.
(m) The Servicer which is being removed or is resigning shall
give notice to the Mortgagors, the Certificate Insurer and the Rating
Agencies of the transfer of the servicing to the successor Servicer.
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The Trustee shall give notice to the Owners, the Trustee, the
Seller, the Certificate Insurer and the Rating Agencies of the occurrence
of any event described in paragraphs (a) or (b) above of which the
Trustee is aware.
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
Insurance.
At any reasonable time and from time to time upon reasonable
notice, the Trustee, the Certificate Insurer 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;
The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of
Part I of the FannieMae Guide or any successor provision thereof;
provided, however, that if the Trustee shall become the Servicer, any
customary insurance coverage that the Trustee maintains shall be deemed
sufficient hereunder; provided, further, that in the event that the
fidelity bond or the errors and omissions coverage is no longer in
effect, the Trustee shall promptly give such notice to the Certificate
Insurer and the Owners. Upon the request of the Trustee or the
Certificate Insurer, the Servicer shall cause to be delivered to such
requesting Person a certified true copy of such fidelity bond or errors
and omission policy.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all
Certificates, from amounts other than those available under the
Certificate Insurance Policy, of all amounts held by the Trustee and
required to be paid to such Owners pursuant to this Agreement upon the
latest to occur of (a) the final payment or other liquidation (or any
advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate, (b) the disposition of all property acquired in respect of
any Home Equity Loan remaining in the Trust Estate, (c) at any time when
a Qualified Liquidation of the Home Equity Loans included within the
Trust is effected as described below and (d) the final payment to the
Certificate Insurer of all amounts then owing to it. To effect a
termination of this Agreement pursuant to clause (c) above, the Owners of
all Certificates then Outstanding shall (i) unanimously direct the
Trustee on behalf of the each REMIC to adopt a plan of complete
liquidation as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified
Liquidation, and the Trustee either shall sell the Home Equity Loans and
distribute the proceeds of the liquidation of the Trust Estate, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
this Agreement occur no later than the close of the 90th day after the
date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation. In no event, however, will the
Trust created by this Agreement continue beyond the expiration of
twenty-one (21) years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United
States to the Court of Saint James, living on the date hereof. The
Trustee shall give written notice of termination of the Agreement to each
Owner in the manner set forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R-I
Certificates.
On any Monthly Remittance Date on or after the Clean-Up Call Date,
the Owners of a majority of the Percentage Interests represented by the
Class R-I Certificates then outstanding or, in the absence of a
determination by such Owners, the Certificate Insurer may determine to
purchase and may cause the purchase from the Trust of all (but not fewer
than all) Home Equity Loans and all property theretofore acquired in
respect of any Home Equity Loan by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate (i) on terms
agreed upon between the Certificate Insurer and the Owners of such Class
R-I Certificates, or (ii) in the absence of such an agreement, at a price
equal to 100% of the aggregate Loan Balances of the related Home Equity
Loans as of the day of purchase minus amounts remitted from the Principal
and Interest Account to the Certificate Account representing collections
of principal on the Home Equity Loans during the current Remittance
Period, plus one month's interest on such amount computed at the
Termination Date Pass-Through Rate, plus all accrued and unpaid
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Servicing Fees plus the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and any Delinquency Advances which the
Servicer has theretofore failed to remit plus any amounts due and owing
to the Certificate Insurer under the Insurance Agreement, provided that
any such purchase price pursuant to clause (i) or (ii) shall be
sufficient to pay the Outstanding Certificate Principal Balance of and
accrued and unpaid interest on all Classes of outstanding Class A Trust
and Class B Certificates plus any amounts due and owing the Certificate
Insurer under the Insurance Agreement. In connection with such purchase,
the Servicer shall remit to the Trustee all amounts then on deposit in
the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
In connection with any such purchase, such Owners of the Class R-I
Certificates shall unanimously direct the Trustee to adopt and the
Trustee shall adopt, as to each REMIC, a plan of complete liquidation of
all Home Equity as contemplated by Section 860F(a)(4) of the Code and
shall provide to the Trustee and the Certificate Insurer an opinion of
counsel experienced in federal income tax matters acceptable to the
Trustee and the Certificate Insurer to the effect that such purchase and
liquidations constitutes, as to the REMIC, a Qualified Liquidation. In
addition, such Owners of the Class R-I Certificates shall provide to the
Trustee and the Certificate Insurer an opinion of counsel acceptable to
the Trustee and the Certificate Insurer to the effect that such purchase
and liquidation does not constitute a preference payment pursuant to the
United States Bankruptcy Code.
The purchase option reserved to the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates may be
exercised by the Certificate Insurer if (i) not exercised by such owners
and (ii) the Servicer as of the Closing Date is no longer the Servicer
hereunder.
Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R-I
Certificates or the Certificate Insurers, as the case may be, or
otherwise upon their order, in a manner similar to that described in
Section 8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal
is taken within the permitted time for such appeal or, if any appeal is
taken, following a final determination of such appeal from which no
further appeal can be taken, to the effect that any REMIC in the Trust
does not and will no longer qualify as a REMIC pursuant to Section 860D
of the Code (the "Final Determination"), at any time on or after the date
which is 30 calendar days following such Final Determination (i) the
Certificate Insurer or the Owners of a majority in Percentage Interests
represented by the Class A Trust and Class B Certificates then
Outstanding may direct the Trustee on behalf of the Trust to adopt a plan
of complete liquidation, as contemplated by Section 860F(a)(4) of the
Code and (ii) the Certificate Insurer may notify the Trustee of the
Certificate Insurer's determination to purchase from the Trust all (but
not fewer than all) Home Equity Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise then
remaining in the Trust Estate at a price equal to the sum of (x) the
greater of (i) 100% of the aggregate Loan Balances of the Home Equity
Loans as of the day of purchase minus amounts remitted from the
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Principal and Interest Account representing collections of principal on
the Home Equity Loans during the current Remittance Period, and (ii) the
fair market value of such Home Equity Loans (disregarding accrued
interest), (y) one month's interest on such amount computed at the
Adjusted Pass-Through Rate and (z) the aggregate amount of any
unreimbursed Delinquency Advances and Servicing Advances and any
Delinquency Advances which the Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Residual Certificates of such
election to liquidate or such determination to purchase, as the case may
be (the "Termination Notice"). The Owners of a majority of the Percentage
Interests of the Class R-I Certificates then Outstanding may, within 60
days from the date of receipt of the Termination Notice (the "Purchase
Option Period"), at their option, purchase from the Trust all (but not
fewer than all) Home Equity Loans and all property theretofore acquired
by foreclosure, deed in lieu of foreclosure, or otherwise then remaining
in the Trust Estate at a purchase price equal to the aggregate Loan
Balances of all Home Equity Loans as of the date of such purchase, plus
(a) one month's interest on such amount at the Termination Date
Pass-Through Rate, (b) the aggregate amount of any unreimbursed
Delinquency Advances and Servicing Advances and (c) any Delinquency
Advances which the Servicer has theretofore failed to remit. If, during
the Purchase Option Period, the Owners of the Class R-I Certificates have
not exercised the option described in the immediately preceding sentence,
then upon the expiration of the Purchase Option Period in the event that
the Certificate Insurer or the Owners of the Class A Trust Certificates
with the consent of the Certificate Insurer have given the Trustee the
direction described in clause (a)(i) above, the Trustee shall sell the
Home Equity Loans and distribute the proceeds of the liquidation of the
Trust Estate, each in accordance with the plan of complete liquidation,
such that, if so directed, the liquidation of the Trust Estate, the
distribution of the proceeds of the liquidation and the termination of
this Agreement occur no later than the close of the 60th day, or such
later day as the Certificate Insurer or the Owners of the Class A Trust
Certificates with the consent of the Certificate Insurer shall permit or
direct in writing, after the expiration of the Purchase Option Period and
(ii) in the event that the Certificate Insurer has given the Trustee
notice of the Certificate Insurer's determination to purchase the Trust
Estate described in clause (a)(ii) above the Certificate Insurer shall,
within 60 days, purchase all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure or otherwise then remaining in the Trust Estate. In
connection with such purchase, the Servicer shall remit to the Trustee
all amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
Following a Final Determination, the Owners of a majority of the
Percentage Interests of the Class R-I Certificates then Outstanding may,
at their option and upon delivery to the Certificate Insurer of an
opinion of counsel experienced in federal income tax matters acceptable
to the Certificate Insurer selected by the Owners of the Class R-I
Certificates, which opinion shall be reasonably satisfactory in form and
substance to the Certificate Insurer, to the effect that the effect of
the Final Determination is to increase substantially the probability that
the gross income of the Trust will be subject to federal taxation,
purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust Estate at a
purchase price equal to the
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aggregate Loan Balances of all Home Equity Loans as of the date of
such purchase, plus (a) one month's interest on such amount computed at
the Termination Date Pass-Through Rate, (b) the aggregate amount of
unreimbursed Delinquency Advances and (c) any Delinquency Advances which
the Servicer has theretofore failed to remit. In connection with such
purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred
immediately preceding such purchase. The foregoing opinion shall be
deemed satisfactory unless the Certificate Insurer gives the Owners of a
majority of the Percentage Interests of the Class R-I Certificates notice
that such opinion is not satisfactory within thirty days after receipt of
such opinion. In connection with any such purchase, such Owners shall
direct the Trustee to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code and shall provide to the
Trustee an opinion of counsel experienced in federal income tax matters
to the effect that such purchase constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of
any liquidation of the Trust Estate pursuant to this Article IX to the
Certificate Account; provided, however, that 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.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement
against the Trustee and (B) the banking institution that is the Trustee
shall serve as the Trustee at all times under this Agreement, and (ii) in
the absence of bad faith on its part, may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished pursuant to and
conforming to the requirements of this Agreement; but in the case of any
such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicer hereunder,
the Trustee is hereby empowered to perform the duties of the Servicer it
being expressly understood, however, that the foregoing describes a power
and not an obligation of the Trustee, and that all parties hereto agree
that, prior to any termination of the Servicer, the Servicer and,
thereafter, the 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;
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(ii) the Trustee shall not be personally liable for any
error of judgment made in good faith by an Authorized Officer,
unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or the
Owners of a majority in Percentage Interest of the Certificates
of the affected Class or Classes and the Certificate Insurer
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under
this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section.
(e) No provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. None of the provisions
contained in this Agreement shall in any event require the Trustee to
perform, or be responsible for the manner of performance of, any of the
obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and the
Trustee shall not be answerable for other than its own negligence or
willful misconduct.
(g) The Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Agreement, or to take
any steps in the execution of the trusts hereby created or in the
enforcement of any rights and powers hereunder until it shall be
indemnified to its satisfaction against any and all costs and expenses,
outlays and counsel fees and other reasonable disbursements and against
all liability, except liability which is adjudicated to have resulted
from its negligence or willful misconduct, in connection with any action
so taken.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof
upon the occurrence of any of the following events (whatever the reason
for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(i) the Trustee shall fail to distribute to the Owners entitled
hereto on any Payment Date amounts available for distribution in
accordance with the terms hereof;
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(provided, however, that any such failure which is due to circumstances
beyond the control of the Trustee shall not be a cause for r emoval
hereunder); or
(ii) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after there
shall have been given, by registered or certified mail, to the Trustee by
the Sellers, the Certificate Insurer or by the Owners of at least 25% of
the aggregate Percentage Interests in the Trust Estate represented by the
Offered Certificates then Outstanding, or, if there are no Offered
Certificates then Outstanding, by such Percentage Interests represented
by the Class R Certificates, a written notice specifying such failure or
breach and requiring it to be remedied; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Trustee, and such decree or order shall have remained in force
undischarged or unstayed for a period of 75 days; or
(iv) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property; or
(v) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit
of its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing.
The Depositor shall give notice to the Certificate Insurer and
the Rating Agencies of the occurrence of any such event of which the
Depositor is aware.
(b) If any event described in paragraph (a) occurs and is
continuing, then and in every such case (i) the Certificate Insurer or
(ii) with the prior written consent (which shall not be unreasonably
withheld) of the Certificate Insurer, the Depositor and the Owners of a
majority of the Percentage Interests represented by the Offered
Certificates or if there are no Offered Certificates then outstanding by
such majority of the Percentage Interests represented by the Retained
Certificates, may, whether or not the Trustee resigns pursuant to Section
10.09(b) hereof, immediately, concurrently with the giving of notice to
the Trustee, and without delaying the 30 days required for notice
therein, appoint a successor Trustee pursuant to the terms of Section
10.09 hereof.
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(c) The Servicer shall not be liable for any costs relating to
the removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request or direction of the Depositor, either of the
Sellers, the Certificate Insurer or the Owners of any Class of
Certificates mentioned herein shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice
of such counsel (selected in good faith by the Trustee) shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reasonable
reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement at the request or
direction of any of the Owners pursuant to this Agreement, unless such
Owners shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note or other paper or document, but the Trustee in
its discretion may make such further inquiry or investigation into such
facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, attorneys or custodians;
(h) the Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized
by the Authorized Officer of any Person or within its rights or powers
under this Agreement other than as to validity and sufficiency of its
authentication of the Certificates;
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(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is
required to furnish to the Trustee from time to time certain information
and to make various calculations which are relevant to the performance of
the Trustee's duties under this Agreement. The Trustee shall be entitled
to rely in good faith on any such information and calculations in the
performance of its duties hereunder, (i) unless and until an Authorized
Officer of the Trustee has actual knowledge, or is advised by any Owner
of a Certificate (either in writing or orally with prompt written or
telecopies confirmation), that such information or calculations is or are
incorrect, or (ii) unless there is a manifest error in any such
information; and
(k) the Trustee shall not be required to give any bond or surety
in respect of the execution of the Trust Estate created hereby or the
powers granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to
the Trustee, shall be taken as the statements of the Depositor and the
Trustee assumes no responsibility for their correctness. The Trustee
makes no representation as to the validity or sufficiency of this
Agreement, of the Certificates, or any Home Equity Loan or document
related thereto other than as to validity and sufficiency of its
authentication of the Certificates. The Trustee shall not be accountable
for the use or application by the Depositor of any of the Certificates or
of the proceeds of such Certificates, or for the use or application of
any funds paid to the Depositor, either of the Sellers or the Servicer in
respect of the Home Equity Loans or deposited into or withdrawn from the
Principal and Interest Account or the Certificate Account by the
Depositor, the Servicer or either of the Sellers, and shall have no
responsibility for filing any financing or continuation statement in any
public office at any time or otherwise to perfect or maintain the
perfection of any security interest or lien or to prepare or file any tax
returns or Securities and Exchange Commission filings for the Trust or to
record this Agreement. The Trustee shall not be required to take notice
or be deemed to have notice or knowledge of any default unless an
Authorized Officer of the Trustee shall have received written notice
thereof or an Authorized Officer has actual knowledge thereof. In the
absence of receipt of such notice, the Trustee may conclusively assume
that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of
the Trust, in its individual or any other capacity, may become an Owner
or pledgee of Certificates and may otherwise deal with the Trust with the
same rights it would have if it were not Trustee, any Paying Agent,
Registrar or such other agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other trust funds except to the extent required herein or
required by law. The Trustee shall be under no
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liability for interest on any money received by it hereunder except as
otherwise agreed with the Seller and except to the extent of income or
other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and
reimbursement for expenses pursuant to Section 2.05, Section 7.03(b)(i)
and Section 7.06 hereof. The Trustee shall have no lien on the Trust
Estate for the payment of such fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of
the United States of America or of any State authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 subject to supervision or examination by the
United States of America, acceptable to the Certificate Insurer and
having a deposit rating of at least A2 by Moody's (or such lower rating
as may be acceptable to Moody's), and deposit rating of A- by Standard &
Poor's (or such lower rating as may be acceptable to Standard & Poor's)
and, if rated by Fitch, having a rating of at least A- from Fitch (or
such lower rating as may be acceptable to Fitch). If such Trustee
publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus
of such corporation or association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall, upon the
request of ContiMortgage with the consent of the Certificate Insurer
(which consent shall not be unreasonably withheld) or of the Certificate
Insurer, resign immediately in the manner and with the effect hereinafter
specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor trustee pursuant to this Article X shall become effective
until the acceptance of appointment by the successor trustee under
Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed,
may resign at any time by giving written notice of resignation to the
Depositor and by mailing notice of resignation by first-class mail,
postage prepaid, to the Certificate Insurer and the Owners at their
addresses appearing on the Register; provided, that the Trustee cannot
resign solely for the failure to receive the Trustee Fee. A copy of such
notice shall be sent by the resigning Trustee to 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 ContiMortgage, one copy of which
instrument shall be delivered to the Trustee so resigning and one copy to
the successor trustee or trustees. If no successor trustee shall have
been appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning trustee may petition
any court of competent jurisdiction for the appointment of a successor
trustee, or
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any Owner may, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
appropriate, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written request
therefor by the Depositor or the Certificate Insurer, the Certificate
Insurer or the Depositor with the consent of the Certificate Insurer may
remove the Trustee and appoint a successor trustee acceptable to the
Certificate Insurer by written instrument, in duplicate, executed on
behalf of the Trust by an Authorized Officer of the Depositor, one copy
of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests
represented by the Class A Trust Certificates with the consent of the
Certificate Insurer or, if there are no Class A Trust 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 Certificate Insurer and to the Servicer copies of
the record of the act taken by the Owners, as provided for in Section
11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance
with the terms of this Agreement, or becomes ineligible pursuant to
Section 10.08 to serve as Trustee, the Certificate Insurer may remove the
Trustee and appoint a successor trustee by written instrument, in
triplicate, signed by the Certificate Insurer duly authorized, one
complete set of which instruments shall be delivered to the Depositor,
one complete set to the Trustee so removed and one complete set to the
successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of the Trustee for
any cause, ContiMortgage shall promptly appoint a successor trustee
acceptable to the Certificate Insurer. If within one year after such
resignation, removal or incapability or the occurrence of such vacancy, a
successor trustee shall be appointed by act of the Certificate Insurer or
the Owners of a majority of the Percentage Interests represented by the
Class A Trust 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 Depositor shall give notice of any removal of the
Trustee by mailing notice of such event by first-class mail, postage
prepaid, to the Certificate Insurer, the Rating Agencies and to the
Owners as their names and addresses appear in the Register. Each notice
shall include the name of the successor Trustee and the address of its
corporate trust office.
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Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor on behalf of the Trust and to
its predecessor Trustee an instrument accepting such appointment
hereunder and stating its eligibility to serve as Trustee hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall
become effective and such successor trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers,
trusts, duties and obligations of its predecessor hereunder; but, on
request of the Depositor or the successor Trustee, such predecessor
Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor trustee all of the
rights, powers and trusts of the Trustee so ceasing to act, and shall
duly assign, transfer and deliver to such successor trustee all property
and money held by such Trustee so ceasing to act hereunder. Upon request
of any such successor trustee, the Depositor on behalf of the Trust shall
execute any and all instruments for more fully and certainly vesting in
and confirming to such successor trustee all such rights, powers and
trusts.
Upon acceptance of appointment by a successor Trustee as provided
in this Section, the Depositor shall mail notice thereof by first-class
mail, postage prepaid, to the Owners at their last addresses appearing
upon the Register. The Depositor shall send a copy of such notice to the
Rating Agencies. If the Depositor fails to mail such notice within ten
days after acceptance of appointment by the successor Trustee, the
successor trustee shall cause such notice to be mailed at the expense of
the Trust.
No successor trustee shall accept its appointment unless at the
time of such acceptance such successor shall be qualified and eligible
under this Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation or association
succeeding to all or substantially all of the corporate trust business of
the Trustee, shall be the successor of the Trustee hereunder, without the
execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, however, that such corporation or
association shall be otherwise qualified and eligible under this Article
X. In case any Certificates have been executed, but not delivered, by the
Trustee then in office, any successor 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
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backup withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the
Code.
(b) As required by law or upon request of the Tax Matters Person
and except as otherwise specifically set forth in subsection (a) above,
the Trustee shall timely file all reports prepared by the Depositor and
required to be filed by the Trust with any federal, state or local
governmental authority having jurisdiction over the Trust, including
other reports that must be filed with the Owners, such as the Internal
Revenue Service's Form 1066 and Schedule Q and the form required under
Section 6050K of the Code, if applicable to REMICs. Furthermore, the
Trustee shall report to Owners, if required, with respect to the
allocation of expenses pursuant to Section 212 of the Code in accordance
with the specific instructions to the Trustee by the Depositor with
respect to such allocation of expenses. The Trustee shall, upon request
of the Depositor, collect any forms or reports from the Owners determined
by the Depositor to be required under applicable federal, state and local
tax laws.
(c) The Depositor covenants and agrees that it shall provide to
the Trustee any information necessary to enable the Trustee to meet its
obligations under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility
shall be to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Trustee herein. Neither the Trustee nor any of the directors, officers,
employees or agents of the Trustee shall be under any liability on any
Certificate or otherwise to the Depositor, either of the Sellers, the
Servicer, the Certificate Insurer or any Owner for any action taken or
for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Trustee, its directors, officers,
employees or agents or any such Person against any liability which would
otherwise be imposed by reason of negligent action, negligent failure to
act or willful misconduct in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. Subject to the
foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses
on obligations on which the bank serving as Trustee is the obligor). In
addition, the Depositor, each of the Sellers and Servicer covenant and
agree to indemnify the Trustee, and when the Trustee is acting as
Servicer, the Servicer, from, and hold it harmless against, any and all
losses, liabilities, damages, claims or expenses (including legal fees
and expenses) of whatsoever kind arising out of or in connection with the
performance of its duties hereunder other than those resulting from the
negligence or bad faith of the Trustee, and the Depositor shall pay all
amounts not otherwise paid pursuant to Sections 2.05 and 7.06 hereof. The
Trustee and any director, officer, employee or agent of the Trustee may
rely and shall be protected in acting or refraining from acting in good
faith on any certificate, notice or other document of any kind prima
facie properly executed and submitted by the Authorized Officer of
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any Person respecting any matters arising hereunder. The provisions of
this Section 10.13 shall survive the termination of this Agreement and
the payment of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Estate or Property may at the
time be located, the Servicer and the Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Trustee and reasonably acceptable to the
Certificate Insurer to act as co-Trustee or co-Trustees, jointly with the
Trustee, of all or any part of the Trust Estate or separate Trustee or
separate Trustees of any part of the Trust Estate, and to vest in such
Person or Persons, in such capacity and for the benefit of the Owners,
such title to the Trust Estate, or any part thereof, and, subject to the
other provisions of this Section 10.14, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary
or desirable. If the Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, or in the
case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee subject to reasonable approval of the Certificate
Insurer alone shall have the power to make such appointment. No
co-Trustee or separate Trustee hereunder shall be required to meet the
terms of eligibility as a successor trustee under Section 10.08 and no
notice to Owners of the appointment of any co-Trustee or separate Trustee
shall be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent
permitted, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate Trustee or co-Trustee jointly
(it being understood that such separate Trustee or co-Trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder
or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
Trustee or co-Trustee, but solely at the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable by
reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer, the Certificate Insurer and the Trustee acting
jointly may at any time accept the resignation of or remove any separate
Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate Trustees and
co-Trustees, as effectively as if given to each of them. Every instrument
appointing any separate Trustee or co-Trustee shall refer to this
Agreement and the conditions of this Section 10.14. Each separate Trustee
and co-Trustee, upon
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its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly
with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such
instrument shall be filed with the Trustee and a copy thereof given to
the Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate
Trustee or co-Trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts
shall vest in and be exercised by the Trustee, to the extent permitted by
law, without the appointment of a new or successor Trustee.
The Servicer and the Trustee hereby appoint First Union National
Bank (the "Initial Co-Trustee") as co-trustee with respect to the
Mortgage Loans secured by Mortgaged Properties situated in New Jersey and
any other part of the Trust Estate or property securing the same that at
any time may be situated in New Jersey.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under
any provision of this Agreement, the Depositor, either of the Sellers,
the Certificate Insurer or the Owners, as the case may be, shall furnish
to the Trustee a certificate stating that all conditions precedent, if
any, provided for in this Agreement relating to the proposed action have
been complied with, except that in the case of any such application or
request as to which the furnishing of such documents is specifically
required by any provision of this Agreement relating to such particular
application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate
or opinion with respect to compliance with a condition or covenant
provided for in this Agreement (including one furnished pursuant to
specific requirements of this Agreement relating to a particular
application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of, only
one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect
to some matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in
one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee
may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such Authorized
Officer knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such
certificate or opinion of an Authorized Officer of the Trustee or any
opinion of counsel may be based, insofar as it relates to factual matters
upon a certificate or opinion of, or representations by, one or more
Authorized Officers of the Depositor, either of the Sellers or the
Servicer, stating that the information with respect to such factual
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matters is in the possession of the Depositor, such Seller or the
Servicer, unless such Authorized Officer or counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous. Any
opinion of counsel may also be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Trustee, stating that the information with
respect to such matters is in the possession of the Trustee, unless such
counsel knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to such
matters are erroneous. Any opinion of counsel may be based on the written
opinion of other counsel, in which event such opinion of counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and
the Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be
consolidated and form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or
taken by the Owners may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Owners in
person or by agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee, and, where
it is hereby expressly required, to one or both of the Sellers. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Agreement and conclusive in favor of the Trustee
and the Trust, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Whenever such execution is by an officer of a
corporation or a member of a partnership on behalf of such corporation or
partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Owner of any Certificate shall
bind the Owner of every Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect
of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made
upon such Certificates.
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Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent,
waiver or act of the Owners or other documents provided or permitted by
this Agreement to be made upon, given or furnished to, or filed with the
Trustee by any Owner, the Depositor, the Certificate Insurer or either of
the Sellers shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with and received by the
Trustee at the Corporate Trust Office.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or
the mailing of any report to Owners, such notice or report shall be
sufficiently given (unless otherwise herein expressly provided) if
mailed, first-class postage prepaid, to each Owner affected by such event
or to whom such report is required to be mailed, at the address of such
Owner as it appears on the Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
notice or the mailing of such report. In any case where a notice or
report to Owners is mailed in the manner provided above, neither the
failure to mail such notice or report nor any defect in any notice or
report so mailed to any particular Owner shall affect the sufficiency of
such notice or report with respect to other Owners, and any notice or
report which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given or provided.
Notwithstanding the foregoing, if the Servicer is removed or resigns or
the Trust is terminated, notice of any such events shall be made by
overnight courier, registered mail or telecopy followed by a telephone
call.
Where this Agreement provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent
of such notice. Waivers of notice by Owners shall be filed with the
Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Owners when such notice is
required to be given pursuant to any provision of this Agreement, then
any manner of giving such notice as shall be satisfactory to the Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any
other rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
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Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Owners, the Certificate
Insurer and the parties hereto and their successors hereunder, any
benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any
Payment Date, any other date on which any distribution to any Owner is
proposed to be paid, or any date on which a notice is required to be sent
to any Person pursuant to the terms of this Agreement shall not be a
Business Day, then (notwithstanding any other provision of the
Certificates or this Agreement) payment or mailing need not be made on
such date, but may be made on the next succeeding Business Day with the
same force and effect as if made or mailed on the nominal date of any
such Monthly Remittance Date, such Payment Date, or such other date for
the payment of any distribution to any Owner or the mailing of such
notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in
many states and outside the United States and the desire to establish
with certainty that this Agreement will be governed by and construed and
interpreted in accordance with the law of a state having a well-developed
body of commercial and financial law relevant to transactions of the type
contemplated herein, this Agreement and each Certificate shall be
construed in accordance with and governed by the laws of the State of New
York applicable to agreements made and to be performed therein, without
giving effect to the conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern
District of New York and any court in the State of New York located in
the City and County of New York, and any appellate court from any
thereof, in any action, suit or proceeding brought against it or in
connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and
unconditionally agree that all claims in respect of any such action or
proceeding may be heard or determined in such New York State court or, to
the extent permitted by law, in such federal court. The parties hereto
agree that a final judgment in any such action, suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. To the extent permitted
by applicable law, the parties hereto hereby waive and agree not to
assert by way of motion, as a defense or otherwise in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or
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proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that the related documents or
the subject matter thereof may not be litigated in or by such courts.
(c) Each of the Depositor, the Sellers and the Servicer hereby
irrevocably appoints and designates the Trustee as its true and lawful
attorney and duly authorized agent for acceptance of service of legal
process with respect to any action, suit or proceeding set forth in
paragraph (b) hereof. Each of the Sellers and the Servicer agrees that
service of such process upon the Trustee shall constitute personal
service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect
the right of the Depositor, the Seller, the Certificate Insurer or the
Servicer or any third-party beneficiary hereunder, as the case may be, to
serve process in any other manner permitted by law or to start legal
proceedings relating to any of the Home Equity Loans against any
Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not
exceed the maximum nonusurious rate of interest allowed by the applicable
laws of the State of New York or any applicable law of the United States
permitting a higher maximum nonusurious rate that preempts such
applicable New York laws, which could lawfully be contracted for, charged
or received (the "Highest Lawful Rate"). In the event any payment of
interest on any Certificate exceeds the Highest Lawful Rate, the Trust
stipulates that such excess amount will be deemed to have been paid to
the Owner of such Certificate as a result of an error on the part of the
Trustee acting on behalf of the Trust and the Owner receiving such excess
payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of
such excess or, at the option of such Owner, apply the excess to the
payment of principal of such Certificate, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Trustee for the
benefit of Owners of Certificates for the use, forbearance or detention
of money shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such
Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, either of the Sellers and the Servicer
may, at any time and from time to time, and without notice to or the consent of
the Owners but with the consent of the Certificate Insurer amend this Agreement,
subject to the provisions of Section 11.16 and 11.17 and the Trustee shall
consent to such amendment, for the purpose of (i) curing any ambiguity,
correcting or supplementing any provision hereof which may be inconsistent with
any other provision hereof, or adding provisions hereto which are not
inconsistent with the
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provisions hereof; (ii) upon receipt of an opinion of counsel experienced in
federal income tax matters to the effect that no entity-level tax will be
imposed on the Trust or upon the transferor of a Residual Certificate as a
result of the ownership of any Residual Certificate by a Disqualified
Organization, removing the restriction on transfer set forth in Section 5.08(b)
hereof or (iii) complying with the requirements of the Code and the regulations
proposed or promulgated thereunder including any amendments necessary to
maintain REMIC status or (iv) for any other purpose, provided that in the case
of this clause (iv) such amendment shall not adversely affect in any material
respect any Owner. Any such amendment shall be deemed not to adversely affect in
any material respect any Owner if there is delivered to the Trustee written
notification from each Rating Agency that such amendment will not cause such
Rating Agency to reduce its then current rating assigned to the Class A Trust
Certificates without regard to the Certificate Insurance Policy. Notwithstanding
anything to the contrary herein, no such amendment shall (a) change in any
manner the amount of, or change the timing of, payments which are required to be
distributed to any Owner without the consent of the Owner of such Certificate,
or (b) which affects in any manner the terms or provisions of the Certificate
Insurance Policy.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to the
Certificate Insurer and each Owner in the manner set forth in Section 11.05, and
to the Rating Agencies.
(c) The Rating Agencies shall be provided with copies of any amendments
to this Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may, subject to
the eligibility requirements for the Trustee set forth in Section 10.08 hereof,
appoint one or more other Paying Agents or successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts due
with respect to the Certificates in trust for the benefit of the Owners
entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
-130-
<PAGE>
Any Paying Agent other than the Trustee may at any time resign
and be discharged of the duties and obligations created by this Agreement
by giving at least sixty (60) days written notice to the Trustee. Any
such Paying Agent may be removed at any time by an instrument filed with
such Paying Agent and signed by the Trustee.
In the event of the resignation or removal of any Paying Agent
other than the Trustee such Paying Agent shall pay over, assign and
deliver any moneys held by it as Paying Agent to its successor, or if
there be no successor, to the Trustee.
Upon the appointment, removal or notice of resignation of any
Paying Agent, the Trustee shall notify the Certificate Insurer and the
Owners by mailing notice thereof at their addresses appearing on the
Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that each REMIC shall constitute,
and that the affairs of each REMIC shall be conducted so as to qualify it
as a REMIC in accordance with the REMIC Provisions. In furtherance of
such intention, ContiFunding Corporation or such other person designated
pursuant to Section 11.18 hereof shall act as agent for the Trust and as
"tax matters person" (as defined in the REMIC Provisions) for the Trust
and in such capacity it shall: (i) prepare or cause to be prepared and
filed, in a timely manner, annual tax returns and any other tax return
required to be filed by each REMIC established hereunder using a calendar
year as the taxable year for each REMIC established hereunder; (ii) in
the related first such tax return, make (or cause to be made) an election
satisfying the requirements of the REMIC Provisions, on behalf of each
REMIC, for it to be treated as a REMIC; (iii) prepare and forward, or
cause to be prepared and forwarded, to the Owners all information,
reports or tax returns required with respect to each REMIC as, when and
in the form required to be provided to the Owners, and to the Internal
Revenue Service and any other relevant governmental taxing authority in
accordance with the REMIC Provisions and any other applicable federal,
state or local laws, including without limitation information reports
relating to "original issue discount" as defined in the Code based upon
the prepayment assumption and calculated by using the "Issue Price"
(within the meaning of Section 1273 of the Code) of the Certificates of
the related Class; (iv) not take any action or omit to take any action
that would cause the termination of the REMIC status of a REMIC, except
as provided under this Agreement; (v) represent the Trust or a REMIC in
any administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative
adjustment as to a taxable year of the Trust or a REMIC, enter into
settlement agreements with any governmental taxing agency, extend any
statute of limitations relating to any tax item of the Trust or a REMIC,
and otherwise act on behalf of the Trust or a REMIC therein in relation
to any tax matter involving the Trust or the REMIC therein; (vi) comply
with all statutory or regulatory requirements with regard to its conduct
of activities pursuant to the foregoing clauses of this Section 11.16,
including, without limitation, providing all notices and other
information to the Internal Revenue Service and Owners of Residual
Certificates required of a "tax matters person" pursuant to subtitle F of
the Code and the Treasury Regulations thereunder; (vii) make available
information necessary for the computation of any tax imposed (A) on
transferors of residual interests to certain Disqualified Organizations
or (B) on pass-through entities, any interest in which is held by or
treated as held by a Disqualified Organization; and (viii) acquire and
hold the Tax Matters
-131-
<PAGE>
Person Residual Interest. The obligations of ContiFunding Corporation or
such other designated Tax Matters Person pursuant to this Section 11.16
shall survive the termination or discharge of this Agreement.
(b) Each of the Sellers, the Depositor, the Trustee and the
Servicer covenant and agree for the benefit of the Owners and the
Certificate Insurer (i) to take no action which would result in the
termination of "REMIC" status for a REMIC, (ii) not to engage in any
"prohibited transaction," as such term is defined in Section 860F(a)(2)
of the Code, (iii) not to engage in any other action which may result in
the imposition on the Trust of any other taxes under the Code and (iv) to
cause the Servicer not to take or engage in any such action, to the
extent the Sellers are aware of any such proposed action by the Servicer.
(c) Each REMIC shall, for federal income tax purposes, maintain
books on a calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no
Eligible Investment shall be sold prior to its stated maturity (unless
sold pursuant to a plan of liquidation in accordance with Article IX
hereof).
(e) Neither the Depositor, either of the Sellers nor the Trustee
shall enter into any arrangement by which the Trustee will receive a fee
or other compensation for services rendered pursuant to this Agreement,
other than as expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), neither
the Trustee nor either of the Sellers may engage in any of the
transactions prohibited by such clauses, unless the Trustee shall have
received an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that
such transaction does not result in a tax imposed on the Trustee or cause
a termination of REMIC status for a REMIC; provided, however, that such
transaction is otherwise permitted under this Agreement.
(g) The Servicer and Tax Matters Person agree to indemnify the
Trust for any tax imposed on the Trust or a REMIC as a result of their
negligence.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer to the effect
that such transaction does not result in a tax imposed on the Trust or a REMIC
or cause a termination of REMIC status for a REMIC, (i) sell any assets in the
Trust Estate, (ii) accept any contribution of assets after the Startup Day or
(iii) agree to any modification of this Agreement. To the extent that sufficient
amounts cannot be so retained to pay or provide for the payment of such tax, the
Trustee is hereby authorized to and shall segregate, into a separate
non-interest bearing account, the net income from any such Prohibited
Transactions of a REMIC and use such income, to the extent necessary, to pay
such tax; provided that, to the extent that any such income is paid to the
Internal Revenue Service, the Trustee shall retain an equal amount from future
amounts otherwise distributable to the Owners of Class R Certificates and shall
distribute such retained amounts to the Owners of Offered Certificates to the
extent they are fully reimbursed and then to the Owners of the Class R
-132-
<PAGE>
Certificates. If any tax, including interest penalties or assessments,
additional amounts or additions to tax, is imposed on the Trust, such tax
shall be charged against amounts otherwise distributable to the owners of
the Class R Certificates on a pro rata basis. The Trustee is hereby
authorized to and shall retain from amounts otherwise distributable to
the Owners of the Class R Certificates sufficient funds to pay or provide
for the payment of, and to actually pay, such tax as is legally owed by
the Trust (but such authorization shall not prevent the Trustee from
contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for each REMIC for all purposes of
the Code and such Tax Matters Person will perform, or cause to be performed,
such duties and take, or cause to be taken, such actions as are required to be
performed or taken by the Tax Matters Person under the Code. The Tax Matters
Person for each REMIC shall be ContiFunding Corporation as long as it owns a
Class R-I, Class R-II or Class R Certificate. If ContiFunding Corporation does
not own a Class R-I, Class R-II or Class R Certificate, as the case may be, the
Tax Matters Person may be any other entity that owns such a Class R-I, Class
R-II or Class R Certificate and accepts a designation hereunder as Tax Matters
person by delivering an affidavit in the form of Exhibit I. ContiFunding
Corporation shall notify the Trustee in writing of the name and address of
another person who accepts a designation as Tax Matters Person hereunder.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be suspended
and shall run to the benefit of the Owners during any period in which the
Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policy. At such time as the Class A Trust Certificates and
any Reimbursement Amounts are no longer Outstanding hereunder, the Certificate
Insurer's rights hereunder shall terminate.
Section 11.20 Reserved.
Section 11.21 Third Party Rights.
The Trustee, each of the Sellers, the Depositor and the Owners agree that
the Certificate Insurer shall be deemed a third-party beneficiary of this
Agreement as if it were a party hereto.
Section 11.22 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
Tel: (716) 842-5589
Fax: (716) 842-5905
Attention: Corporate Trust Administration
-133-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
The Depositor: ContiSecurities Asset Funding Corp.
3811 West Charleston Boulevard
Suite 104
Las Vegas, Nevada 89102
Tel: (702) 822-5836
Fax: (702) 822-5839
The Sellers: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: President and Chief Counsel
Tel: (215) 347-3000
Fax: (215) 347-3400
ContiWest Corporation
3811 West Charleston Boulevard
Suite 104
Las Vegas, Nevada 89102
Tel: (702) 822-5836
Fax: (702) 822-5839
The Servicer: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: Senior Vice President and Chief Counsel
Tel: (215) 347-3000
Fax: (215) 347-3400
The Certificate Insurer: MBIA Insurance Corporation
113 King St.
Armonk, NY 10504
Attention: Insured Portfolio Management
- SF (ContiMortgage Home Equity Loan Trust 1998-2)
Tel: (914) 273-4545
Fax: (914) 765-3810
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-4773
</TABLE>
-134-
<PAGE>
<TABLE>
<S> <C>
Fitch: Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Tel: (800) 753-4824
Fax: (212) 376-6964
Standard & Poor's: Standard & Poor's
26 Broadway, 15th Floor
New York, New York 10004
Tel: (212) 208-8000
Fax: (212) 412-0224
Attention: Manager of Structured Finance
Operations Group
Underwriters: Merrill Lynch, Pierce, Fenner & Smith, Inc.
26th Floor
World Financial Center, North Tower
New York, New York 10281-1326
Tel: (212) 449-1000
Fax: (212) 449-9015
Bear, Stearns & Co. Inc.
245 Park Avenue, 4th Floor
New York, New York 10167
Attention: Asset Backed Securities Group
Tel: (212) 272-3311
Fax: (212) 272-7294
ContiFinancial Services Corporation
277 Park Avenue, 38th Floor
New York, New York 10172
Attention: Chief Counsel, Chief Financial Officer
and Chief Operating Officer
Tel: (212) 207-2822
Fax: (212) 207-5251
Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Attention: Asset Finance
Tel: (212) 325-2000
Fax: (212) 325-8261
</TABLE>
-135-
<PAGE>
<TABLE>
<S> <C>
Greenwich Capital Markets, Inc.
600 Steamboat Rd.
Greenwich, CT 06830
Tel: (203) 622-5693
Fax: (203) 622-3650
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Tel: (212) 761-4000
Fax: (212) 761-0782
Nomura Securities International, Inc.
2 World Financial Center Building B, 21st Floor
New York, New York 10281-1198
Tel: (212) 667-9087
Fax: (212) 667-1391
Attention: Helaine Hebble
</TABLE>
Owners: As set forth in the Register.
Others: Any notice to the Depositor, either Seller or the Servicer shall
also be furnished to:
ContiTrade Services L.L.C.
Chief Counsel
277 Park Avenue, 38th Floor
New York, New York 10172
Tel: (212) 207-2822
Fax: (212) 207-5251
END OF ARTICLE XI
-136-
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and
the Trustee have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized, all as of the day and year
first above written.
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By:
-----------------------------------
Title: Authorized Signatory
By:
-----------------------------------
Title: Authorized Signatory
CONTIMORTGAGE CORPORATION, as Seller
By:
-----------------------------------
Title:
By:
-----------------------------------
Title:
CONTIWEST CORPORATION, as Seller
By:
-----------------------------------
Title:
By:
-----------------------------------
Title:
CONTIMORTGAGE CORPORATION, as Servicer
By:
-----------------------------------
Title:
By:
-----------------------------------
Title:
[Signature Page to the Pooling and Servicing Agreement]
-137-
<PAGE>
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-----------------------------------
Title: Assistant Vice President
[Signature Page to the Pooling and Servicing Agreement]
-138-
<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the __th day of June 1998, before me personally came
________________________ and __________________ , to me known, who, being by me
duly sworn, did depose and say that he/she resides at _________________________
and __________________, respectively; that he/she is a ________________________
and a _________________, respectively, of ContiSecurities Asset Funding
Corp., a Delaware Corporation; and that he/she signed his/her name
thereto by order of the respective Boards of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
-139-
<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the ___ day of June 1998, before me personally came
_________________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at _________________ County; that he/she is a
_________________ of ContiMortgage 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
-140-
<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the __ day of June 1998, before me personally came ________________
____________________, to me known, who, being by me duly sworn, did depose
and say that he/she resides at ___________________ County; that he/she is a
______________________ of ContiMortgage 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
-141-
<PAGE>
STATE OF CALIFORNIA )
): ss.:
COUNTY OF LOS ANGELES )
On the __th day of June 1998, before me personally came Peter
Abeles and Robert E. Riedl, to me known, who, being by me duly sworn, did
depose and say that he resides at 10244 Ojai-Santa Paula Road, Ojai, CA
93023 and 10417 Eastborne Avenue #5, Los Angeles, CA 90024 respectively;
that he is a President and Secretary, respectively, of ContiWest
Corporation, a Nevada corporation; and that he signed his name thereto by
order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
-142-
<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 26th day of June 1998, before me personally came Neil B.
Witoff, to me known, who, being by me duly sworn did depose and say that
he resides at Clarence, New York; that he is an Assistant Vice President
of Manufacturers and Traders Trust Company, the New York banking
corporation described in and that executed the above instrument as
Trustee; and that he signed his name thereto by order of the Board of
Directors of said New York banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
NOTARIAL SEAL
-143-
<PAGE>
SCHEDULE I-A
SCHEDULE OF FIXED RATE HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
I-A-1
<PAGE>
SCHEDULE I-B
SCHEDULE OF ADJUSTABLE RATE POOL 1 HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
I-B-1
<PAGE>
SCHEDULE I-C
SCHEDULE OF ADJUSTABLE RATE POOL 2 HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
II-1
<PAGE>
SCHEDULE II
HOME EQUITY LOANS WITH DELINQUENCY CHARACTERISTICS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
III-1
<PAGE>
SCHEDULE III
HOME EQUITY LOANS WITH 15-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
IV-1
<PAGE>
SCHEDULE IV
HOME EQUITY LOANS WITH 5-YEAR "BALLOON" PAYMENTS
A copy of this Schedule is maintained by the Trustee at the
Corporate Trust Office and by the Seller at its principal office.
V-1
<PAGE>
SCHEDULE V
PLANNED PRINCIPAL BALANCE SCHEDULE
PAC
Schedule
- --------
<TABLE>
<CAPTION>
Class A-2 Class A-2
Period Fixed Internal Class A-3 Class A-4 Class A-5 Class A-6 Class A-7
- ------ -------------- -------------- -------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
0 250,000,000.00 175,000,000.00 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
1 250,000,000.00 175,000,000.00 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
2 250,000,000.00 175,000,000.00 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
3 250,000,000.00 175,000,000.00 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
4 250,000,000.00 175,000,000.00 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
5 250,000,000.00 175,000,000.00 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
6 250,000,000.00 175,000,000.00 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
7 230,546,083.12 161,382,258.19 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
8 209,892,956.06 146,925,069.25 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
9 188,041,285.65 131,628,899.96 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
10 166,557,644.95 116,590,351.46 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
11 145,353,542.86 101,747,480.01 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
12 124,218,051.56 86,952,636.09 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
13 103,349,056.05 72,344,339.23 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
14 84,339,772.49 59,037,840.75 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
15 65,925,071.60 46,147,550.12 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
16 47,990,053.15 33,593,037.20 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
17 30,522,068.50 21,365,447.95 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
18 13,508,808.92 9,456,166.24 275,000,000.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
19 0.00 0.00 269,795,103.52 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
20 0.00 0.00 244,358,085.04 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
21 0.00 0.00 215,634,634.67 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
22 0.00 0.00 189,605,984.24 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
23 0.00 0.00 164,270,002.00 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
24 0.00 0.00 139,591,783.66 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
25 0.00 0.00 115,554,073.93 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
26 0.00 0.00 92,140,078.15 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
27 0.00 0.00 69,333,449.73 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
28 0.00 0.00 47,118,277.92 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
29 0.00 0.00 25,479,075.93 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
30 0.00 0.00 4,400,769.38 185,000,000.00 90,000,000.00 97,000,000.00 100,600,000.00
31 0.00 0.00 0.00 168,868,685.06 90,000,000.00 97,000,000.00 100,600,000.00
32 0.00 0.00 0.00 148,868,540.04 90,000,000.00 97,000,000.00 100,600,000.00
33 0.00 0.00 0.00 129,386,431.03 90,000,000.00 97,000,000.00 100,600,000.00
34 0.00 0.00 0.00 110,413,466.24 90,000,000.00 97,000,000.00 100,600,000.00
35 0.00 0.00 0.00 91,931,543.75 90,000,000.00 97,000,000.00 100,600,000.00
36 0.00 0.00 0.00 74,078,082.26 90,000,000.00 97,000,000.00 100,600,000.00
37 0.00 0.00 0.00 74,078,082.26 90,000,000.00 97,000,000.00 100,600,000.00
38 0.00 0.00 0.00 74,078,082.26 90,000,000.00 97,000,000.00 100,600,000.00
</TABLE>
VI-1
<PAGE>
PAC
Schedule
- --------
<TABLE>
<CAPTION>
Class A-2 Class A-2
Period Fixed Internal Class A-3 Class A-4 Class A-5 Class A-6 Class A-7
- ------ -------------- -------------- -------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
39 0.00 0.00 0.00 64,092,163.67 90,000,000.00 97,000,000.00 100,600,000.00
40 0.00 0.00 0.00 50,174,945.22 90,000,000.00 97,000,000.00 100,600,000.00
41 0.00 0.00 0.00 37,197,955.18 90,000,000.00 97,000,000.00 100,600,000.00
42 0.00 0.00 0.00 24,715,174.33 90,000,000.00 97,000,000.00 100,600,000.00
43 0.00 0.00 0.00 12,707,588.81 90,000,000.00 97,000,000.00 100,600,000.00
44 0.00 0.00 0.00 1,156,927.64 90,000,000.00 97,000,000.00 100,600,000.00
45 0.00 0.00 0.00 0.00 80,045,633.13 97,000,000.00 100,600,000.00
46 0.00 0.00 0.00 0.00 69,356,832.47 97,000,000.00 100,600,000.00
47 0.00 0.00 0.00 0.00 59,074,310.49 97,000,000.00 100,600,000.00
48 0.00 0.00 0.00 0.00 49,182,483.50 97,000,000.00 100,600,000.00
49 0.00 0.00 0.00 0.00 39,666,374.26 97,000,000.00 100,600,000.00
50 0.00 0.00 0.00 0.00 30,511,587.88 97,000,000.00 100,600,000.00
51 0.00 0.00 0.00 0.00 21,704,288.78 97,000,000.00 100,600,000.00
52 0.00 0.00 0.00 0.00 13,231,178.51 97,000,000.00 100,600,000.00
53 0.00 0.00 0.00 0.00 5,079,474.53 97,000,000.00 100,600,000.00
54 0.00 0.00 0.00 0.00 0.00 94,236,889.82 100,600,000.00
55 0.00 0.00 0.00 0.00 0.00 86,691,613.31 100,600,000.00
56 0.00 0.00 0.00 0.00 0.00 79,432,291.11 100,600,000.00
57 0.00 0.00 0.00 0.00 0.00 72,448,008.51 100,600,000.00
58 0.00 0.00 0.00 0.00 0.00 65,732,849.15 100,600,000.00
59 0.00 0.00 0.00 0.00 0.00 59,271,866.10 100,600,000.00
60 0.00 0.00 0.00 0.00 0.00 53,055,374.34 100,600,000.00
61 0.00 0.00 0.00 0.00 0.00 47,074,062.38 100,600,000.00
62 0.00 0.00 0.00 0.00 0.00 41,318,977.59 100,600,000.00
63 0.00 0.00 0.00 0.00 0.00 35,781,512.13 100,600,000.00
64 0.00 0.00 0.00 0.00 0.00 30,453,389.47 100,600,000.00
65 0.00 0.00 0.00 0.00 0.00 25,326,651.39 100,600,000.00
66 0.00 0.00 0.00 0.00 0.00 20,393,645.58 100,600,000.00
67 0.00 0.00 0.00 0.00 0.00 15,647,013.66 100,600,000.00
68 0.00 0.00 0.00 0.00 0.00 11,079,679.71 100,600,000.00
69 0.00 0.00 0.00 0.00 0.00 6,684,839.28 100,600,000.00
70 0.00 0.00 0.00 0.00 0.00 2,455,948.79 100,600,000.00
71 0.00 0.00 0.00 0.00 0.00 0.00 98,986,715.37
72 0.00 0.00 0.00 0.00 0.00 0.00 95,071,087.14
73 0.00 0.00 0.00 0.00 0.00 0.00 91,303,243.80
74 0.00 0.00 0.00 0.00 0.00 0.00 87,677,587.68
75 0.00 0.00 0.00 0.00 0.00 0.00 84,188,735.06
76 0.00 0.00 0.00 0.00 0.00 0.00 80,831,507.91
77 0.00 0.00 0.00 0.00 0.00 0.00 77,600,925.89
78 0.00 0.00 0.00 0.00 0.00 0.00 74,492,198.72
79 0.00 0.00 0.00 0.00 0.00 0.00 71,500,718.81
80 0.00 0.00 0.00 0.00 0.00 0.00 68,622,054.21
</TABLE>
VI-2
<PAGE>
PAC
Schedule
- --------
<TABLE>
<CAPTION>
Class A-2 Class A-2
Period Fixed Internal Class A-3 Class A-4 Class A-5 Class A-6 Class A-7
- ------ -------------- -------------- -------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
81 0.00 0.00 0.00 0.00 0.00 0.00 65,851,941.82
82 0.00 0.00 0.00 0.00 0.00 0.00 63,186,280.88
83 0.00 0.00 0.00 0.00 0.00 0.00 60,621,126.68
84 0.00 0.00 0.00 0.00 0.00 0.00 58,075,880.32
85 0.00 0.00 0.00 0.00 0.00 0.00 55,380,897.81
86 0.00 0.00 0.00 0.00 0.00 0.00 52,787,401.52
87 0.00 0.00 0.00 0.00 0.00 0.00 50,291,564.37
88 0.00 0.00 0.00 0.00 0.00 0.00 47,889,704.57
89 0.00 0.00 0.00 0.00 0.00 0.00 45,578,280.01
90 0.00 0.00 0.00 0.00 0.00 0.00 43,353,882.94
91 0.00 0.00 0.00 0.00 0.00 0.00 41,213,234.80
92 0.00 0.00 0.00 0.00 0.00 0.00 39,153,181.25
93 0.00 0.00 0.00 0.00 0.00 0.00 37,170,687.43
94 0.00 0.00 0.00 0.00 0.00 0.00 35,262,833.38
95 0.00 0.00 0.00 0.00 0.00 0.00 33,426,809.66
96 0.00 0.00 0.00 0.00 0.00 0.00 31,659,913.09
97 0.00 0.00 0.00 0.00 0.00 0.00 29,959,542.71
98 0.00 0.00 0.00 0.00 0.00 0.00 28,323,195.89
99 0.00 0.00 0.00 0.00 0.00 0.00 26,748,464.55
100 0.00 0.00 0.00 0.00 0.00 0.00 25,233,031.56
101 0.00 0.00 0.00 0.00 0.00 0.00 23,774,667.29
102 0.00 0.00 0.00 0.00 0.00 0.00 22,371,226.25
103 0.00 0.00 0.00 0.00 0.00 0.00 21,020,643.91
104 0.00 0.00 0.00 0.00 0.00 0.00 19,720,933.60
105 0.00 0.00 0.00 0.00 0.00 0.00 18,470,183.57
106 0.00 0.00 0.00 0.00 0.00 0.00 17,266,554.10
107 0.00 0.00 0.00 0.00 0.00 0.00 16,108,274.82
108 0.00 0.00 0.00 0.00 0.00 0.00 14,993,642.03
109 0.00 0.00 0.00 0.00 0.00 0.00 13,921,016.19
110 0.00 0.00 0.00 0.00 0.00 0.00 12,888,819.49
111 0.00 0.00 0.00 0.00 0.00 0.00 11,895,533.49
112 0.00 0.00 0.00 0.00 0.00 0.00 10,939,696.88
113 0.00 0.00 0.00 0.00 0.00 0.00 10,019,903.32
114 0.00 0.00 0.00 0.00 0.00 0.00 9,134,799.36
115 0.00 0.00 0.00 0.00 0.00 0.00 8,288,748.78
116 0.00 0.00 0.00 0.00 0.00 0.00 7,474,477.27
117 0.00 0.00 0.00 0.00 0.00 0.00 6,690,794.91
118 0.00 0.00 0.00 0.00 0.00 0.00 5,936,556.40
119 0.00 0.00 0.00 0.00 0.00 0.00 5,210,659.40
120 0.00 0.00 0.00 0.00 0.00 0.00 4,512,042.89
121 0.00 0.00 0.00 0.00 0.00 0.00 3,839,685.62
122 0.00 0.00 0.00 0.00 0.00 0.00 3,192,604.60
</TABLE>
VI-3
<PAGE>
PAC
Schedule
- --------
<TABLE>
<CAPTION>
Class A-2 Class A-2
Period Fixed Internal Class A-3 Class A-4 Class A-5 Class A-6 Class A-7
- ------ -------------- -------------- -------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
123 0.00 0.00 0.00 0.00 0.00 0.00 2,569,853.68
124 0.00 0.00 0.00 0.00 0.00 0.00 1,970,522.13
125 0.00 0.00 0.00 0.00 0.00 0.00 1,393,733.35
126 0.00 0.00 0.00 0.00 0.00 0.00 838,643.53
127 0.00 0.00 0.00 0.00 0.00 0.00 304,440.47
128 0.00 0.00 0.00 0.00 0.00 0.00 0.00
</TABLE>
VI-4
<PAGE>
EXHIBIT A-1
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(5.64875% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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-1 21075WHD0
CUSIP
$114,000,000 June 18, 1998 June 15, 1999
- --------------------- --------------- --------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any Property which secured
<PAGE>
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 together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-1 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-1 (the "Class A-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, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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
2
<PAGE>
bound. Also issued under the Pooling and Servicing Agreement are
Certificates designated as ContiMortgage Home Equity Loan Trust 1998-2
Home Equity Loan Pass-Through Certificates, Class A-2 Fixed, Class A-2
Internal, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-8, Class A-9, Class A-10 IO (collectively, including the Class A-1
Certificates, the "Class A Certificates"), Class B (the "Class B
Certificates" and collectively with the Class A Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates"), Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and collectively, with the
Class R and Class R-I Certificates, the "Residual Certificates"). The
Offered Certificates, Class C Certificates and the Residual Certificates
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 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-1
Certificates as of the close of business on the last day of the calendar
month immediately preceding the calendar month in which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class A-1
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-1 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-1 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-1 Certificates. The
Percentage Interest of each Class A-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 A-1 Certificate on
the Startup Day by the aggregate Class A-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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing
Agreement).
3
<PAGE>
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 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 or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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.
4
<PAGE>
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-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 A-1
Certificates are exchangeable for new Class A-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, except as may otherwise be
specifically provided in the Pooling and Servicing Agreement.
5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date of Authentication: June 29, 1998
6
<PAGE>
EXHIBIT A-2-F
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2 FIXED
(6.15% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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-2 Fixed 21075WHE8
CUSIP
$250,000,000 June 18, 1998 March 15, 2013
- --------------------- --------------- ---------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any Property which secured
<PAGE>
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 together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-2 Fixed Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-2 Fixed (the "Class
A-2 Fixed Certificates") and issued under and subject to the terms,
provisions and conditions of that certain Pooling and Servicing Agreement
dated as of June 1, 1998 (the "Pooling and Servicing Agreement") by and
among ContiMortgage Corporation, in its capacity as a Seller (a "Seller")
and as the Servicer (the "Servicer"), ContiWest Corporation, in its
capacity as a Seller (a "Seller"), ContiSecurities Asset Funding Corp.,
in its capacity as Depositor, (the "Depositor") and Manufacturers and
Traders Trust Company, a New York banking corporation, 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
A-2-F-2
<PAGE>
such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Internal, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class A-10 IO (collectively, including the Class
A-2 Fixed Certificates, the "Class A Certificates"), Class B (the "Class
B Certificates" and collectively with the Class A Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates"), Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and collectively, with the
Class R and Class R-I Certificates, the "Residual Certificates"). The
Offered Certificates, Class C Certificates and the Residual Certificates
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 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-2
Fixed Certificates as of the close of business on the last day of the
calendar month immediately preceding the calendar month in which a
Payment Date occurs (the "Record Date") will be entitled to receive the
Class A-2 Fixed Distribution Amount relating to such Certificate on such
Payment Date. Distributions will be made in immediately available funds
to Owners of Certificates having an aggregate original Class A-2 Fixed
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-2 Fixed Certificate
will be entitled to receive such Owner's Percentage Interest in the
amounts due on such Payment Date to the Owners of the Class A-2 Fixed
Certificates. The Percentage Interest of each Class A-2 Fixed 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-2
Fixed Certificate on the Startup Day by the aggregate Class A-2 Fixed
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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing
Agreement).
A-2-F-3
<PAGE>
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 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 or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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.
A-2-F-4
<PAGE>
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-2 Fixed 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-2
Fixed Certificates are exchangeable for new Class A-2 Fixed 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.
A-2-F-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
Date of Authentication: June 29, 1998
A-2-F-6
<PAGE>
EXHIBIT A-2-I
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 REFEREED TO HEREIN.
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2 Internal
(5.92% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by, ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the Home Equity Loans and certain other property
held by the Trust.)
Unless this certificate is presented by an authorized
representative of the ContiMortgage Grantor Trust 1998-A, to the Issuer
("ContiMortgage Home Equity Loan Trust 1998-2") or its agent for
registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of the ContiMortgage Grantor Trust
1998-A or in such other name as is requested by an authorized
representative of the ContiMortgage Grantor Trust 1998-A (and any payment
is made to the ContiMortgage Grantor Trust 1998-A or to such other entity
as is requested by an authorized representative of the ContiMortgage
Grantor Trust 1998-A), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, the ContiMortgage Grantor Trust 1998-A, has an
interest herein.
No: A-2 Internal
$175,000,000 June 29, 1998 March 15, 2013
- ---------------------- ------------------- -----------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CONTIMORTGAGE GRANTOR TRUST 1998-A
Registered Owner
A-2-I-1
<PAGE>
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedule I-A and Schedule I-B to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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 together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-2 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (THE FIRST
PAYMENT DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-2-I-2
<PAGE>
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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-2 Internal (the
"Class A-2 Internal Certificates") and issued under and subject to the
terms, provisions and conditions of that certain Pooling and Servicing
Agreement dated as of June 1, 1998 (the "Pooling and Servicing
Agreement") by and among ContiMortgage Corporation, in its capacity as a
Seller (a "Seller") and as the Servicer (the "Servicer"), ContiWest
Corporation, in its capacity as a Seller (a "Seller"), ContiSecurities
Asset Funding Corp., in its capacity as Depositor, (the "Depositor") and
Manufacturers and Traders Trust Company, a New York banking corporation,
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
ContiMortgage Home Equity Loan Trust 1998-2 Home Equity Loan Pass-Through
Certificates, Class A-1, Class A-2 Fixed, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11
IO (collectively, including the Class A-2 Internal Certificates, the
"Class A Certificates"), Class B (the "Class B Certificates" and together
with the Class A Certificates, except the Class A-2 Internal
Certificates, the "Offered Certificates"), Class R (the "Class R
Certificates") and Class R-I (the "Class R-I Certificates" and together
with the Class R Certificates, the "Residual Certificates"). The Class A
Certificates, Class B Certificates and the Residual Certificates 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 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-2
Internal Certificates as of the close of business on the last day of the
calendar month immediately preceding the calendar month in which a
Payment Date occurs (the "Record Date") will be entitled to receive the
Class A-2 Internal Distribution Amount relating to such Certificate on
such Payment Date. Distributions will be made in immediately available
funds to Owners of Certificates having an aggregate original Class A-2
Internal 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-2 Internal
Certificate will be entitled to receive such Owner's Percentage Interest
in the amounts due on such Payment Date to the Owners of the Class A-2
Internal Certificates. The Percentage Interest of each Class A-2 Internal
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-2 Internal Certificate on the Startup Day by the
aggregate Class A-2 Internal 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.
A-2-I-3
<PAGE>
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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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 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 or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
A-2-I-4
<PAGE>
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-2 Internal 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-2
Internal Certificates are exchangeable for new Class A-2 Internal
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.
A-2-I-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
------------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
Date of Authentication: June 29, 1998
A-2-I-6
<PAGE>
EXHIBIT A-3
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(6.13% Pass-Through Rate)*
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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.
- ---------------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-3 21075WHG3
CUSIP
$275,000,000 June 18, 1998 March 15, 2013
- --------------------- --------------- ---------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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,
A-3-1
<PAGE>
voluntary or involuntary, of the foregoing; (b) such amounts as may be
held by the Trustee in the Certificate Account together with investment
earnings on such amounts and such amounts as may be held in the name of
the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided herein),
whether in the form of cash, instruments, securities or other properties
(including any Eligible Investments held by the Servicer); and (c)
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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-3 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-3 (the "Class A-3
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class A-10 IO (collectively, including the
Class A-3 Certificates, the "Class A Certificates"), Class B (the "Class
B Certificates" and collectively with the Class A Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates"), Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and
A-3-2
<PAGE>
collectively with the Class R and Class R-I Certificates, the "Residual
Certificates"). The Offered Certificates, the Class C Certificates and
the Residual Certificates 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 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-3
Certificates as of the close of business on the last day of the calendar
month immediately preceding the calendar month in which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class A-3
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-3 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-3 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-3 Certificates. The
Percentage Interest of each Class A-3 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-3 Certificate on
the Startup Day by the aggregate Class A-3 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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
A-3-3
<PAGE>
respect thereto) of the last Home Equity Loan in the Trust Estate or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-3 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-3
Certificates are exchangeable for new Class A-3 Certificates of
authorized denominations evidencing the same aggregate principal amount.
A-3-4
<PAGE>
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.
A-3-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-----------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
Date of Authentication: June 29, 1998
A-3-6
<PAGE>
EXHIBIT A-4
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(6.19% Pass-Through Rate)*
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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.
- ---------------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-4 21075WHH1
CUSIP
$185,000,000 June 18, 1998 January 15, 2014
- --------------------- ------------------- ------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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,
A-4-1
<PAGE>
voluntary or involuntary, of the foregoing; (b) such amounts as may be
held by the Trustee in the Certificate Account together with investment
earnings on such amounts and such amounts as may be held in the name of
the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided herein),
whether in the form of cash, instruments, securities or other properties
(including any Eligible Investments held by the Servicer); and (c)
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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-4 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-4 (the "Class A-4
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-3, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class A-10 IO (collectively, including the
Class A-4 Certificates, the "Class A Certificates"), Class B (the "Class
B Certificates" and collectively with the Class A Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates") Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and
A-4-2
<PAGE>
collectively with the Class R and Class R-I Certificates, the "Residual
Certificates"). The Offered Certificates, the Class C Certificates and
the Residual Certificates 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 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-4
Certificates as of the close of business on the last day of the calendar
month immediately preceding the calendar month in which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class A-4
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-4 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-4 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-4 Certificates. The
Percentage Interest of each Class A-4 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-4 Certificate on
the Startup Day by the aggregate Class A-4 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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
A-4-3
<PAGE>
respect thereto) of the last Home Equity Loan in the Trust Estate or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-4 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-4
Certificates are exchangeable for new Class A-4 Certificates of
authorized denominations evidencing the same aggregate principal amount.
A-4-4
<PAGE>
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.
A-4-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-------------------------------
Name:
----------------------------
Title:
----------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date of Authentication: June 29, 1998
A-4-6
<PAGE>
EXHIBIT A-5
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(6.28% Pass-Through Rate)*
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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.
- ---------------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-5 21075WHJ7
CUSIP
$90,000,000 June 18, 1998 September 15, 2016
- ---------------------- ------------------- ------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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,
A-5-1
<PAGE>
voluntary or involuntary, of the foregoing; (b) such amounts as may be
held by the Trustee in the Certificate Account together with investment
earnings on such amounts and such amounts as may be held in the name of
the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided herein),
whether in the form of cash, instruments, securities or other properties
(including any Eligible Investments held by the Servicer); and (c)
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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-5 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-5 (the "Class A-5
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-3, Class A-4, Class A-6, Class
A-7, Class A-8, Class A-9, Class A-10 IO (collectively, including the
Class A-5 Certificates, the "Class A Certificates"), Class B (the "Class
B Certificates" and collectively with the Class A Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates"), Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and
A-5-2
<PAGE>
collectively with the Class R and Class R-I Certificates, the "Residual
Certificates"). The Offered Certificates, the Class C Certificates and
the Residual Certificates 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 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-5
Certificates as of the close of business on the last day of the calendar
month immediately preceding the calendar month in which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class A-5
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-5 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-5 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-5 Certificates. The
Percentage Interest of each Class A-5 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-5 Certificate on
the Startup Day by the aggregate Class A-5 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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
A-5-3
<PAGE>
respect thereto) of the last Home Equity Loan in the Trust Estate or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-5 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-5
Certificates are exchangeable for new Class A-5 Certificates of
authorized denominations evidencing the same aggregate principal amount.
A-5-4
<PAGE>
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.
A-5-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date of Authentication: June 29, 1998
A-5-6
<PAGE>
EXHIBIT A-6
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(6.36% Pass-Through Rate)*
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by, ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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.
- ---------------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-6 21075WHK4
CUSIP
$97,000,000 June 18, 1998 November 15, 2019
- ---------------------- ------------------- -----------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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,
A-6-1
<PAGE>
voluntary or involuntary, of the foregoing; (b) such amounts as may be
held by the Trustee in the Certificate Account together with investment
earnings on such amounts and such amounts as may be held in the name of
the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided herein),
whether in the form of cash, instruments, securities or other properties
(including any Eligible Investments held by the Servicer); and (c)
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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-6 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-6 (the "Class A-6
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-3, Class A-4, Class A-5, Class
A-7, Class A-8, Class A-9, Class A-10 IO (collectively, including the
Class A-6 Certificates, the "Class A Certificates"), Class B (the "Class
B Certificates" and collectively with the Class A Certificates the
"Offered Certificates"), Class C (the "Class C Certificates"), Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and
A-6-2
<PAGE>
collectively with the Class R and Class R-I Certificates, the "Residual
Certificates"). The Offered Certificates, the Class C Certificates and
the Residual Certificates 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 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-6
Certificates as of the close of business on the last day of the calendar
month immediately preceding the calendar month in which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class A-6
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-6 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-6 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-6 Certificates. The
Percentage Interest of each Class A-6 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-6 Certificate on
the Startup Day by the aggregate Class A-6 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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
A-6-3
<PAGE>
respect thereto) of the last Home Equity Loan in the Trust Estate or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-6 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-6
Certificates are exchangeable for new Class A-6 Certificates of
authorized denominations evidencing the same aggregate principal amount.
A-6-4
<PAGE>
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.
A-6-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date of Authentication: June 29, 1998
A-6-6
<PAGE>
EXHIBIT A-7
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-7
(6.57% Pass-Through Rate)*
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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.
- ---------------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: A-7 21075WHL2
CUSIP
$100,600,000 June 18, 1998 March 15, 2023
- ---------------------- ------------------- ---------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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 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
A-7-1
<PAGE>
thereon (except as otherwise provided herein), whether in the form of
cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer); and (c) 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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-7 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-7 (the "Class A-7
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-8, Class A-9, Class A-10 IO (collectively, including the
Class A-7 Certificates, the "Class A Certificates"), Class B (the "Class
B Certificates" and collectively with the Class A Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates"), Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and collectively with the
Class R and Class R-I Certificates, the "Residual Certificates"). The
Offered Certificates, the Class C Certificates and the Residual
Certificates are together referred to herein as the
A-7-2
<PAGE>
"Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-7
Certificates as of the close of business on the last day of the calendar
month immediately preceding the calendar month in which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class A-7
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-7 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-7 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-7 Certificates. The
Percentage Interest of each Class A-7 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-7 Certificate on
the Startup Day by the aggregate Class A-7 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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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 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 or (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
A-7-3
<PAGE>
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 unanimously direct the Trustee on behalf of the Trust to adopt a
plan of complete liquidation as contemplated by Section 860F(a)(4) of the
Code, and the Trustee shall either sell the Home Equity Loans and
distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-7 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-7
Certificates are exchangeable for new Class A-7 Certificates of
authorized denominations evidencing the same aggregate principal amount.
A-7-4
<PAGE>
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.
A-7-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Date of Authentication: June 29, 1998
A-7-6
<PAGE>
EXHIBIT A-8
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
Class A-8
(Floating Rate Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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-8 21075WHM0
CUSIP
$235,000,000 June 29, 1998 June 15, 2028
- ---------------------- --------------- ---------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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 together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or
A-8-1
<PAGE>
other properties (including any Eligible Investments held by the
Servicer); and (c) 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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-8 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-8 (the "Class A-8
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-9, Class A-10 IO (collectively, including the
Class A-8 Certificates, the "Class A Certificates"), Class B (the "Class
B Certificates" and collectively with the Class A Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates") Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and collectively with the
Class R and Class R-I Certificates, the "Residual Certificates"). The
Offered Certificates, the Class C Certificates and the Residual
Certificates 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.
A-8-2
<PAGE>
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-8
Certificates as of the close of business on the last day of the calendar
month immediately preceding the calendar month in which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class A-8
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-8 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-8 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-8 Certificates. The
Percentage Interest of each Class A-8 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-8 Certificate on
the Startup Day by the aggregate Class A-8 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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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 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 or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete
A-8-3
<PAGE>
liquidation as contemplated by Section 860F(a)(4) of the Code, and the
Trustee shall either sell the Home Equity Loans and distribute the
proceeds of the liquidation of the Trust, or shall distribute equitably
in kind all of the assets of the Trust Estate to the remaining Owners of
the Certificates, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-8 Certificates are issuable only as
registered Certificates in minimum denominations of $25,000 original
Certificate Principal Balance. As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth, Class A-8
Certificates are exchangeable for new Class A-8 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.
A-8-4
<PAGE>
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.
A-8-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Date of Authentication: June 29, 1998
A-8-6
<PAGE>
EXHIBIT A-9
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
Class A-9
(Floating Rate Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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-9 21075WHN8
CUSIP
$158,400,000 June 29, 1998 June 15, 2028
- --------------------- ------------------- -------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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 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
A-9-1
<PAGE>
thereon (except as otherwise provided herein), whether in the form of
cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer); and (c) 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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class A-9 Certificates. Therefore, the actual Outstanding principal
amount of this Certificate may, on any date subsequent to July 15, 1998
(the first Payment 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 cancelled 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 JULY 15, 1998 (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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-9 (the "Class A-9
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-10 IO (collectively, including the
Class A-9 Certificates, the "Class A Certificates"), Class B (the "Class
B Certificates" and collectively with the Class A Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates"), Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and collectively with the
Class R and Class R-I Certificates, the "Residual Certificates"). The
Offered Certificates, the Class C Certificates and the Residual
Certificates are together referred to herein as the
A-9-2
<PAGE>
"Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-9
Certificates as of the close of business on the last day of the calendar
month immediately preceding the calendar month in which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class A-9
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-9 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-9 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class A-9 Certificates. The
Percentage Interest of each Class A-9 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-9 Certificate on
the Startup Day by the aggregate Class A-9 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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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 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 or (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
A-9-3
<PAGE>
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 unanimously direct the Trustee on behalf of the Trust to adopt a
plan of complete liquidation as contemplated by Section 860F(a)(4) of the
Code, and the Trustee shall either sell the Home Equity Loans and
distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-9 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-9
Certificates are exchangeable for new Class A-9 Certificates of
authorized denominations evidencing the same aggregate principal amount.
A-9-4
<PAGE>
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.
A-9-5
<PAGE>
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.
A-9-6
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
---------------------------------------
Date of Authentication: June 29, 1998
A-9-7
<PAGE>
EXHIBIT A-10-IO
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-10 IO
(6.50% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the Home Equity Loans and certain other property
held by the Trust.
No: A-10 IO 21075WHP3
CUSIP
$197,600,000 June 18, 1998 December 15, 2000
- ------------------- ------------------- --------------------
Original Notional Date Final Scheduled
Principal Amount Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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 together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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-10-IO-1
<PAGE>
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 cancelled 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 INITIAL PER ANNUM RATE OF INTEREST ON THIS CLASS
A-10 IO CERTIFICATE IS 6.50%. ASSUMING THAT THE HOME EQUITY LOANS PREPAY
AT A RATE BASED ON 100% OF THE PREPAYMENT ASSUMPTION DESCRIBED IN THE
PROSPECTUS SUPPLEMENT, THIS CERTIFICATE HAS BEEN ISSUED WITH
APPROXIMATELY $8,546.34 OF OID PER $1,000,000 OF CLASS A-10 IO NOTIONAL
PRINCIPAL AMOUNT AND THE ANNUAL YIELD TO MATURITY WILL BE 6.35%
(COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO THE LONG FIRST
ACCRUAL PERIOD IS $427.28 PER $1,000,000 OF CLASS A-10 IO NOTIONAL
PRINCIPAL AMOUNT COMPUTED USING DAILY COMPOUNDING.
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE
HOLDER OF THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF
PRINCIPAL WITH RESPECT TO THE HOME EQUITY LOANS.
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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class A-10 IO (the "Class
A-10 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, 1998 (the "Pooling and Servicing Agreement") by and
among ContiMortgage Corporation, in its capacity as a Seller (a "Seller")
and as the Servicer (the "Servicer"), ContiWest Corporation, in its
capacity as a Seller (a "Seller"), ContiSecurities Asset Funding Corp.,
in its capacity as Depositor, (the "Depositor") and Manufacturers and
Traders Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9 (collectively, including the Class
A-10 IO Certificates, the "Class A Certificates"), Class B (the "Class B
Certificates" and collectively with the Class A Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates"), Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and collectively with the
Class R and Class R-I Certificates, the "Residual Certificates"). The
Offered Certificates, the Class C Certificates and the Residual
Certificates 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 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class A-10
IO Certificates as of the close of business on the last day of the
calendar month immediately preceding the calendar month in which a
Payment Date occurs (the "Record Date") will be entitled to receive the
Class A-10 IO Distribution Amount relating to such Certificate on such
Payment
A-10-IO-2
<PAGE>
Date. Distributions will be made in immediately available funds to Owners
of Certificates having an aggregate original Class A-10 IO Notional
Principal Amount 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-10 IO Certificate
will be entitled to receive such Owner's Percentage Interest in the
amounts due on such Payment Date to the Owners of the Class A-10 IO
Certificates. The Percentage Interest of each Class A-10 IO Certificate
as of any date of determination will be equal to the portion of the Class
stated or the Percentage Interest on the face thereof.
"Class A-10 IO Notional Principal Amount": The Class
A-10 IO "Notional Amount will equal (a) on any Payment Date prior to the
31st Payment Date the aggregate outstanding Certificate Principal Balance
of the Class A-6 and Class A-7 Certificates and (b) on or after the 31st
Payment Date, zero.
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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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 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 or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in
A-10-IO-3
<PAGE>
kind all of the assets of the Trust Estate to the remaining Owners of the
Certificates, each in accordance with such plan, so that the liquidation
or distribution of the Trust Estate, the distribution of any proceeds of
the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class A-10 IO Certificates are issuable only as
registered Certificates in minimum denominations of $1,000 based on the
Class A-10 IO Notional Principal Amount. As provided in the Pooling and
Servicing Agreement and subject to certain limitations therein set forth,
Class A-10 IO Certificates are exchangeable for new Class A-10 IO
Certificates of authorized denominations evidencing the same aggregate
notional 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
A-10-IO-4
<PAGE>
shall be affected by notice to the contrary, except as may otherwise be
specifically provided in the Pooling and Servicing Agreement.
A-10-IO-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Date of Authentication: June 29, 1998
A-10-IO-6
<PAGE>
EXHIBIT B
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS
A-2 FIXED, CLASS A-2 INTERNAL, CLASS A-3, CLASS A-4, CLASS A-5, CLASS
A-6, CLASS A-7, CLASS A-8, CLASS A-9 AND CLASS A-10 IO CERTIFICATES OF
THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS B
(7.74% Pass-Through Rate)*
Representing Certain Interests in a Pool of Home Equity
Loans Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
ownership interest in the 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 ("ContiMortgage Home Equity Loan Trust 1998-2") 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.
- ---------------
* Subject to certain limitations described in the Pooling and Servicing
Agreement.
No: B 21075WHQ1
CUSIP
$70,000,000 June 18, 1998 July 15, 2029
- --------------- ------------------- --------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO
----------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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,
B-1
<PAGE>
voluntary or involuntary, of the foregoing; (b) such amounts as may be
held by the Trustee in the Certificate Account together with investment
earnings on such amounts and such amounts as may be held in the name of
the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided herein),
whether in the form of cash, instruments, securities or other properties
(including any Eligible Investments held by the Servicer); and (c)
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.
The Owner hereof is entitled to principal payments on
each Payment Date, as hereinafter described, which will fully amortize
such original Certificate Principal Balance over the period from the date
of initial issuance of the Certificates to the final Payment Date for the
Class B Certificates. Therefore, the actual Outstanding principal amount
of this Certificate may, on any date subsequent to July 15, 1998 (the
first Payment 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 cancelled 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 JULY 15, 1998 (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.
BY ITS ACCEPTANCE OR ACQUISITION OF A CLASS B
CERTIFICATE, THE OWNER SHALL BE DEEMED TO HAVE REPRESENTED THAT IT EITHER
(I) 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) IS AN INSURANCE COMPANY ACQUIRING
ITS INTEREST AS PERMITTED IN ACCORDANCE WITH PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class B (the "Class B
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust
B-2
<PAGE>
Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan Trust 1998-2
Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2 Fixed,
Class A-2 Internal, Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9, Class A-10 IO (collectively, the "Class A
Certificates" and collectively with the Class B Certificates, the
"Offered Certificates"), Class C (the "Class C Certificates"), Class R
("Class R Certificates"), Class R-I (the "Class R-I Certificates") and
Class R-II (the "Class R-II Certificates and collectively with the Class
R and Class R-I Certificates, the "Residual Certificates"). The Offered
Certificates, the Class C Certificates and the Residual Certificates 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 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a "Payment Date") commencing July 15, 1998, the Owners of the Class B
Certificates as of the close of business on the last day of the calendar
month immediately preceding the calendar month in which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class B
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class B 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 Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class B Certificates. The
Percentage Interest of each Class B 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 Certificate on the
Startup Day by the aggregate Class B 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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 and the Principal and Interest
Account (except as otherwise provided 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.
B-3
<PAGE>
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 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 or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of the majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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, the Sellers and the Servicer at any time
and from time to time, and without the consent of the Owners; provided,
that in certain 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.
B-4
<PAGE>
The Trustee is required to furnish certain information
on each Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class B 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
Certificates are exchangeable for new Class B 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.
B-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Date of Authentication June 29, 1998
B-6
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS
A-2 FIXED, CLASS A-2 INTERNAL, CLASS A-3, CLASS A-4, CLASS A-5, CLASS
A-6, CLASS A-7, CLASS A-8, CLASS A-9, CLASS A-10 IO AND CLASS B
CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
INTEREST-ONLY CLASS C CERTIFICATE
Representing Certain Interests Relating to
a Pool of Home Equity Loans formed by
ContiSecurities Asset Funding Corp.
and Serviced by
CONTIMORTGAGE CORPORATION
as Servicer
This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This certificate represents a fractional
ownership interest in the Home Equity Loans as described herein, moneys
in certain Accounts created pursuant to the Pooling and Servicing
Agreement and certain other rights relating thereto and is payable only
from amounts received by the Trustee relating to the Home Equity Loans
held by the Trust.
No: C
Percentage Interest: June 29, 1998 July 15, 2029
100% ------------- -------------
---- Date Final Scheduled
Payment Date
CONTISECURITIES HOLDING CORPORATION
-----------------------------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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 together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
C-1
<PAGE>
Upon receiving the final distribution hereon, the Owner
hereof is required to send this Certificate to the Trustee. The Pooling
and Servicing Agreement provides that, in any event, upon the making of
the final distribution due on this Certificate, this Certificate shall be
deemed cancelled for all purposes under the Pooling and Servicing
Agreement.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE SECURITIES
LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY
IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR
QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE REPRESENTS A ?REGULAR INTEREST? 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.
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 PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
BY ITS ACCEPTANCE OR ACQUISITION OF A CLASS C
CERTIFICATE, THE OWNER SHALL BE DEEMED TO HAVE REPRESENTED THAT IT EITHER
(I) 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) IS AN INSURANCE COMPANY ACQUIRING
ITS INTEREST AS PERMITTED IN ACCORDANCE WITH PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class C (the "Class C
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 IO, (collectively, the
"Class A Certificates"), Class B (the "Class B Certificates" and together
with the Class A Certificates, the "Offered Certificates") and Class R
(the "Class R Certificates"), Class R-I (the "Class R-I Certificates")
and Class R-II (the "Class R-II Certificates and collectively with the
Class R and Class R-I Certificates, the "Residual Certificates"). The
C-2
<PAGE>
Offered Certificates, the Class C Certificates and the Residual
Certificates 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.
Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 15th day of each month, or, if such day is not a
Business Day, then the next succeeding Business Day (each such day being
a Payment Date) commencing July 15, 1998 (the first Payment Date), the
Holders of the Class C Certificates as of the close of business on the
last business day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs (the "Record Date") may
be entitled to receive the Class C Distribution Amount (as defined in the
Pooling and Servicing Agreement) relating to such Payment Date.
Distributions will be made in immediately available funds to such Owners,
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 at least 5 business days prior to the
related record date, 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 C Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due
on such Payment Date to the Owners of the Class C Certificates. The
Percentage Interest of each Class C Certificate as of any date of
determination will be equal to the percentage interest set forth on such
Class C Certificate.
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 or applicable 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, the Depositor or ContiMortgage or any of
their subsidiaries and affiliates and are not insured or guaranteed by
the Federal Deposit Insurance Corporation, the Government National
Mortgage Association, or any other governmental agency. 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 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 hereof.
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.
C-3
<PAGE>
The Pooling and Servicing Agreement provides that the
obligations created thereby will terminate 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 or (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
unanimously direct the Trustee on behalf of the Trust to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code,
and the Trustee shall either sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining
Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of
any proceeds of the liquidation and the termination of 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 (i) the Owners of the Class R-I Certificates may, at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing
Agreement.
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 Trustee, the Sellers and the Servicer at any time and from time to
time, without the consent of the Owners; provided that in certain
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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class C Certificates are issuable only as
registered Certificates in minimum percentage interests of all interests
in the Class C Certificates. As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth, Class C
Certificates are exchangeable for new Class C Certificates of the same
percentage interest as the Class C Certificates exchanged.
C-4
<PAGE>
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.
C-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
--------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Date of Authentication: June 29, 1998
C-6
xxx
<PAGE>
EXHIBIT R-1
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 CLASS R 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 CLASS R CERTIFICATE WILL BE REGISTERED BY THE
CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN
AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT 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.
R-1-1
<PAGE>
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans
Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
residual ownership interest in the Trust Estate.)
No: R-1
Percentage Interest: June 29, 1998__ July 15, 2029_
- -------------------- --------------- --------------
99.999% Date Final Scheduled
------ Distribution Date
CONTISECURITIES HOLDING CORPORATION
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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, together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
R-1-2
<PAGE>
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 ContiMortgage Home Equity Loan Trust 1998-2,
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, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 IO (collectively, the
"Class A Certificates"), Class B (the "Class B Certificates" and
collectively with the Class A Certificates, the "Offered Certificates"),
Class C (the "Class C Certificates"), Class R-I (the "Class R-I
Certificates") and Class R-II (the "Class R-II Certificates" and together
with Class R-I and Class R Certificates, the "Residual Certificates").
The Offered Certificates, the Class C Certificates and the Residual
Certificates 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.
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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan or (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 unanimously direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code, and the Trustee shall
either sell the Home Equity Loans
R-1-3
<PAGE>
and distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
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 (i) the Owners of the Class R-I Certificates may at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, or if there are no longer any
Offered Certificates then outstanding, the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates then
outstanding, have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
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 REMIC 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, the Sellers and the Servicer at any time
and from time to time, 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 Payment 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, these
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.
R-1-4
<PAGE>
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.
R-1-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-----------------------------------------
Name:
----------------------------------------
Title:
--------------------------------------
Date of Authentication: June 29, 1998
R-1-6
<PAGE>
EXHIBIT R-2
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 CLASS R 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 CLASS R CERTIFICATE WILL BE REGISTERED BY THE
CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN
AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT 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 T OF THE CODE APPLIES
AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
R-2-1
<PAGE>
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans
Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
residual ownership interest in the Trust Estate.)
No: R-2
Percentage Interest: June 29, 1998 July 15, 2029
------------- -------------
.001% Date Final Scheduled
----- Distribution Date
CONTIFUNDING CORPORATION
------------------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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, together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
R-2-2
<PAGE>
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 ContiMortgage Home Equity Loan Trust 1998-2,
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, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal,, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 IO (collectively, the
"Class A Certificates"), Class B, (the "Class B Certificates" and
collectively with the Class A Certificates, the "Offered Certificates"),
Class C (the "Class C Certificates"), Class R-I (the "Class R-I
Certificates"), and Class R-II (the "Class R-II Certificates" and
together with the Class R-I and Class R, the "Residual Certificates").
The Offered Certificates, the Class C Certificates and the Residual
Certificates 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.
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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan or (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 unanimously direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code, and the Trustee shall
either sell the Home Equity Loans
R-2-3
<PAGE>
and distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
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 (i) the Owners of the Class R-I Certificates may at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, or if there are no longer any
Offered Certificates then outstanding, the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates then
outstanding, have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
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 REMIC 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, the Sellers and the Servicer at any time
and from time to time, 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 Payment 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, these
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.
R-2-4
<PAGE>
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.
R-2-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
----------------------------------------
Name:
--------------------------------------
Title:
------------------------------------
Date of Authentication: June 29, 1998
R-2-6
<PAGE>
EXHIBIT R-I-1
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 CLASS R-I CERTIFICATE IS RESTRICTED AS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS
CLASS R-I 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 CLASS R-I CERTIFICATE WILL BE REGISTERED BY THE
CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN
AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS
NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R-I
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-I 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 T OF THE CODE APPLIES
AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
R-I-1-1
<PAGE>
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R-I
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans
Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
residual ownership interest in the Trust Estate.)
No: R-I-1
Percentage Interest: June 29, 1998 July 15, 2029
------------- -------------
99.999% Date Final Scheduled
------ Distribution Date
CONTISECURITIES HOLDING CORPORATION
-----------------------------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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, together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
R-I-1-2
<PAGE>
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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class R-I (the "Class R-I
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal,, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 IO (collectively, the
"Class A Certificates"), Class B, (the "Class B Certificates" and
collectively with the Class A Certificates, the "Offered Certificates"),
Class C (the "Class C Certificates"), Class R (the "Class R
Certificates") and Class R-II (the "Class R-II Certificates" and
collectively with the Class R and Class R-I Certificates, the "Residual
Certificates"). The Offered Certificates, the Class C Certificates and
the Certificates 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.
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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan or (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 unanimously direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code, and the Trustee shall
either sell the Home Equity Loans
R-I-1-3
<PAGE>
and distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
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 (i) the Owners of the Class R-I Certificates may at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, or if there are no longer any
Offered Certificates then outstanding, the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates then
outstanding, have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
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 REMIC-I 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, the Sellers and the Servicer at any time
and from time to time, 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class R-I Certificates are issuable only as
registered Certificates. As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth, these
Class R-I Certificates are exchangeable for new Class R-I Certificates
evidencing the same Percentage Interest as the Class R-I 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.
R-I-1-4
<PAGE>
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.
R-I-1-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Date of Authentication: June 29, 1998
R-I-1-6
<PAGE>
EXHIBIT R-I-2
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 CLASS R-I CERTIFICATE IS RESTRICTED AS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS
CLASS R-I 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 CLASS R-I CERTIFICATE WILL BE REGISTERED BY THE
CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN
AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS
NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R-I
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-I 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 T OF THE CODE APPLIES
AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
R-I-2-1
<PAGE>
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R-I
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans
Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
residual ownership interest in the Trust Estate.)
No: R-I-2
Percentage Interest: June 29, 1998 July 15, 2029
------------- -------------
.001% Date Final Scheduled
---- Distribution Date
CONTIFUNDING CORPORATION
------------------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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, together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
R-I-2-2
<PAGE>
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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class R-I (the "Class R-I
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal,, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 IO (collectively, the
"Class A Certificates"), Class B, (the "Class B Certificates" and
collectively with the Class A Certificates, the "Offered Certificates"),
Class C (the "Class C Certificates"), Class R (the "Class R
Certificates") and Class R-II (the "Class R-II Certificates" and
collectively with the Class R and Class R-I Certificates, the "Residual
Certificates"). The Offered Certificates, the Class C Certificates and
the Certificates 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.
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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan or (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 unanimously direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code, and the Trustee shall
either sell the Home Equity Loans
R-I-2-3
<PAGE>
and distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
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 (i) the Owners of the Class R-I Certificates may at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, or if there are no longer any
Offered Certificates then outstanding, the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates then
outstanding, have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
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 REMIC-I 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, the Sellers and the Servicer at any time
and from time to time, 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class R-I Certificates are issuable only as
registered Certificates. As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth, these
Class R-I Certificates are exchangeable for new Class R-I Certificates
evidencing the same Percentage Interest as the Class R-I 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.
R-I-2-4
<PAGE>
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.
R-I-2-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date of Authentication: June 29, 1998
R-I-2-6
<PAGE>
EXHIBIT R-II-1
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 CLASS R-II CERTIFICATE IS RESTRICTED
AS SET FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS
CLASS R-II 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 CLASS R-II CERTIFICATE WILL BE REGISTERED BY THE
CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN
AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS
NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R-II
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-II 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 T OF THE CODE APPLIES
AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
R-II-1-1
<PAGE>
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R-II
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans
Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
residual ownership interest in the Trust Estate.)
No: R-II-1
Percentage Interest: June 29, 1998 July 15, 2029
------------- -------------
99.999% Date Final Scheduled
------ Distribution Date
CONTISECURITIES HOLDING CORPORATION
-----------------------------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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, together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
R-II-1-2
<PAGE>
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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class R-II (the "Class R-II
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal,, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 IO (collectively, the
"Class A Certificates"), Class B, (the "Class B Certificates" and
collectively with the Class A Certificates, the "Offered Certificates"),
Class C (the "Class C Certificates"), Class R (the "Class R
Certificates"), and Class R-I (the "Class R-I Certificates" and together
with the Class R and Class R-II, the "Residual Certificates"). The
Offered Certificates, the Class C Certificates and the Residual
Certificates 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.
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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan or (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 unanimously direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code, and the Trustee shall
either sell the Home Equity Loans
R-II-1-3
<PAGE>
and distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
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 (i) the Owners of the Class R-I Certificates may at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, or if there are no longer any
Offered Certificates then outstanding, the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates then
outstanding, have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
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 REMIC 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, the Sellers and the Servicer at any time
and from time to time, 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class R-II Certificates are issuable only as
registered Certificates. As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth, these
Class R-II Certificates are exchangeable for new Class R-II Certificates
evidencing the same Percentage Interest as the Class R-II 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.
R-II-1-4
<PAGE>
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.
R-II-1-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
-------------------------------------
Name:
------------------------------------
Title:
----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Date of Authentication: June 29, 1998
R-II-1-6
<PAGE>
EXHIBIT R-II-2
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 CLASS R-II CERTIFICATE IS RESTRICTED
AS SET FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS
CLASS R-II 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 CLASS R-II CERTIFICATE WILL BE REGISTERED BY THE
CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN
AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS
NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R-II
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-II 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 T OF THE CODE APPLIES
AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
R-II-2-1
<PAGE>
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.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1998-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R-II
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Home Equity Loans
Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or
an obligation of, nor are the underlying Home Equity Loans insured or
guaranteed by ContiSecurities Asset Funding Corp., ContiWest Corporation
or ContiMortgage Corporation. This Certificate represents a fractional
residual ownership interest in the Trust Estate.)
No: R-II-2
Percentage Interest: June 29, 1998 July 15, 2029
------------- -------------
.001% Date Final Scheduled
- ---- Distribution Date
CONTIFUNDING CORPORATION
------------------------
Registered Owner
The registered Owner named above is the registered
beneficial Owner of a fractional interest in (a) the Home Equity Loans
listed in Schedules I-A, I-B and I-C to the Pooling and Servicing
Agreement which each Seller has caused to be delivered to the Depositor
and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06 of the
Pooling and Servicing Agreement), together with the related Home Equity
Loan documents and each Sellers' interest in any 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, together with
investment earnings on such amounts and such amounts as may be held in
the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and
(c) 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.
R-II-2-2
<PAGE>
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 ContiMortgage Home Equity Loan Trust 1998-2,
Home Equity Loan Pass-Through Certificates, Class R-II (the "Class R-II
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of
June 1, 1998 (the "Pooling and Servicing Agreement") by and among
ContiMortgage Corporation, in its capacity as a Seller (a "Seller") and
as the Servicer (the "Servicer"), ContiWest Corporation, in its capacity
as a Seller (a "Seller"), ContiSecurities Asset Funding Corp., in its
capacity as Depositor, (the "Depositor") and Manufacturers and Traders
Trust Company, a New York banking corporation, 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 ContiMortgage Home Equity Loan
Trust 1998-2 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2 Fixed, Class A-2 Internal,, Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10 IO (collectively, the
"Class A Certificates"), Class B, (the "Class B Certificates" and
collectively with the Class A Certificates, the "Offered Certificates"),
Class C (the "Class C Certificates"), Class R (the "Class R
Certificates"), and Class R-I (the "Class R-I Certificates" and together
with the Class R and Class R-II, the "Residual Certificates"). The
Offered Certificates, the Class C Certificates and the Residual
Certificates 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.
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, ContiSecurities Asset Funding Corp.,
ContiWest Corporation or ContiMortgage Corporation 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 latest to occur of
(a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan or (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 unanimously direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation as
contemplated by Section 860F(a)(4) of the Code, and the Trustee shall
either sell the Home Equity Loans
R-II-2-3
<PAGE>
and distribute the proceeds of the liquidation of the Trust, or shall
distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan,
so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of
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 (i) the Owners of the Class R-I Certificates may at their
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 and (ii) under certain circumstances relating to the
qualification of any REMIC established by the Trust 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.
The Owners of a majority of the Percentage Interests
represented by the Offered Certificates, or if there are no longer any
Offered Certificates then outstanding, the Owners of a majority of the
Percentage Interests represented by the Class R-I Certificates then
outstanding, have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
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 REMIC 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, the Sellers and the Servicer at any time
and from time to time, 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 Payment Date to the Owner of this Certificate, as more fully
described in the Pooling and Servicing Agreement.
The Class R-II Certificates are issuable only as
registered Certificates. As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth, these
Class R-II Certificates are exchangeable for new Class R-II Certificates
evidencing the same Percentage Interest as the Class R-II 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.
R-II-2-4
<PAGE>
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.
R-II-2-5
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed on behalf of the Trust.
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
By:
------------------------------------
Name:
---------------------------------
Title:
----------------------------------
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Date of Authentication: June 29, 1998
R-II-2-6
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
-----------------------------
I, __________________________, _______________ of ContiMortgage
Corporation ("ContiMortgage"), hereby certify that between the "Cut-Off
Date" (as defined in the Pooling and Servicing Agreement dated as of June
1, 1998 among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage, as a Seller and the Servicer, ContiWest Corporation, as a
Seller, and Manufacturers and Traders Trust Company, as Trustee) and the
"Startup Day," each of the Home Equity Loans listed on the attached
schedule of Home Equity Loans have been prepaid in full.
Account Name Original Current Date Paid Off Pool
- ------- ---- -------- ------- ------------- ----
Number Amount Balance
- ------ ------ -------
Dated: June __, 1998
CONTIMORTGAGE CORPORATION
By:
---------------------------
Title:
------------------------
D-1
<PAGE>
EXHIBIT E
FORM OF TRUSTEE'S RECEIPT
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
-----------------------------------
Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as trustee (the "Trustee") under that
certain Pooling and Servicing Agreement dated as of June 1, 1998 (the
"Pooling and Servicing Agreement") among ContiSecurities Asset Funding
Corp., as Depositor, ContiMortgage Corporation, a Delaware corporation,
as a seller and the servicer ("ContiMortgage"), ContiWest Corporation
("ContiWest"), as a seller, and Manufacturers and Traders Trust Company,
as trustee (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 ContiMortgage and ContiWest
with respect to the Home Equity Loans pursuant to Section 3.05(b)(i) of
the Pooling and Servicing Agreement.
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) of
the Pooling and Servicing Agreement as required thereby.
MANUFACTURERS AND TRADERS TRUST
COMPANY, AS TRUSTEE
By:
---------------------------------
Title:
------------------------------
Dated: June __, 1998
E-1
<PAGE>
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
------------------
WHEREAS, the undersigned is an Authorized Officer of
Manufacturers and Traders Trust Company, a New York banking corporation,
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, 1998 (the "Pooling and Servicing Agreement") among ContiSecurities
Asset Funding Corp., as Depositor, ContiMortgage Corporation, as a Seller
and the Servicer, ContiWest Corporation, as a Seller, and Manufacturers
and Traders Trust Company, as Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 3.06(a) of
the Pooling and Servicing Agreement, to review the Mortgage Files
relating to the Pool within a specified period following the Startup Day
and to notify the related Seller promptly of any defects with respect to
the Pool, and such Seller 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 it has
determined that all required documents (or certified copies of documents
listed in Section 3.05 of the Pooling and Servicing Agreement) have been
executed or received, and that such documents relate to the Home Equity
Loans identified in the Schedule of Home Equity Loans pursuant to Section
3.06(a) of the Pooling and Servicing Agreement or, in the event that such
documents have not been executed and received or do not so relate to such
Home Equity Loans, any remedial action by the Sellers pursuant to Section
3.06(b) of the Pooling and Servicing Agreement has been completed. The
Trustee makes no certification hereby, however, with respect to any
intervening assignments or assumption and modification agreements.
MANUFACTURERS AND TRADERS TRUST
COMPANY, AS TRUSTEE
By:
------------------------------
Title:
---------------------------
Dated: June __, 1998
F-1
<PAGE>
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
--------------
Manufacturers and Traders Trust Company, as Trustee
One M&T Plaza
Buffalo, New York 14203
Attention: Corporate Trustee Department
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement,
dated as of June 1, 1998 (the "Pooling and Servicing Agreement") among
ContiSecurities Asset Funding Corp. ("ContiSecurities"), as Depositor,
ContiMortgage Corporation, as a seller and the servicer, ContiWest
Corporation, as a seller, and Manufacturers and Traders Trust Company, as
Trustee (the "Trustee"), ContiSecurities HEREBY CERTIFIES that all
conditions precedent to the issuance of the ContiMortgage Home Equity
Loan Trust 1998-2, Home Equity Loan Pass-Through Certificates, Class A,
Class B, Class C, Class R-I, Class R-II 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.
Very truly yours,
CONTISECURITIES ASSET FUNDING CORP.
By:
---------------------------------
Title:
------------------------------
Dated: June __, 1998
G-1
<PAGE>
EXHIBIT H
[RESERVED]
H-1
<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-I, Class R-II or Class R Certificates 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 none of the Class R-I, Class R-II
or Class R Certificates will be owned directly or indirectly by a
disqualified organization; and (iv) it will not transfer such Class R-I,
Class R-II or 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.
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]
I-1
<PAGE>
[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>
EXECUTION COPY
================================================================================
-----------------------
GRANTOR TRUST AGREEMENT
Dated as of June 1, 1998
-----------------------
among
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor,
CONTIMORTGAGE CORPORATION,
as Servicer,
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Grantor Trustee
Pass-Through Certificates
Series 1998-A
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Article I DEFINITIONS; RULES OF CONSTRUCTION.............................................................. 3
Section 1.01. Definitions........................................................................... 3
Section 1.02. Use of Words and Phrases.............................................................. 11
Section 1.03. Captions; Table of Contents........................................................... 11
Section 1.04. Opinions.............................................................................. 11
Article II ESTABLISHMENT AND ORGANIZATION OF THE TRUST.................................................... 13
Section 2.01. Establishment of the Trust............................................................ 13
Section 2.02. Office................................................................................ 13
Section 2.03. Purposes and Powers................................................................... 13
Section 2.04. Appointment of the Grantor Trustee; Declaration of Trust.............................. 13
Section 2.05. Expenses of the Trust................................................................. 13
Section 2.06. Ownership of the Trust................................................................ 14
Section 2.07. Situs of the Trust.................................................................... 14
Section 2.08. [RESERVED]............................................................................ 14
Article III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR.................................... 15
Section 3.01. Representations and Warranties of the Depositor....................................... 15
Section 3.02. Representations and Warranties of the Servicer........................................ 17
Section 3.03. [RESERVED]............................................................................ 19
Section 3.04. [RESERVED]............................................................................ 19
Section 3.05. Conveyance of the Class A-2 Internal Certificates..................................... 19
Section 3.06. Acceptance by Trustee................................................................. 19
Article IV ISSUANCE AND SALE OF CERTIFICATES.............................................................. 20
Section 4.01. Issuance of Certificates.............................................................. 20
Section 4.02. Sale of Certificates.................................................................. 20
Article V CERTIFICATES AND TRANSFER OF INTERESTS.......................................................... 21
Section 5.01. Terms................................................................................. 21
Section 5.02. Forms................................................................................. 21
Section 5.03. Execution, Authentication and Delivery................................................ 21
Section 5.04. Registration and Transfer of Certificates............................................. 22
Section 5.05. Mutilated, Destroyed, Lost or Stolen Certificates..................................... 24
Section 5.06. Persons Deemed Owners................................................................. 25
Section 5.07. Cancellation.......................................................................... 25
Section 5.08. Limitation on Transfer of Ownership Rights............................................ 25
Section 5.09. Assignment of Rights.................................................................. 25
Article VI COVENANTS...................................................................................... 26
Section 6.01. Distributions......................................................................... 26
Section 6.02. Money for Distributions to be Held in Trust; Withholding.............................. 26
Section 6.03. Protection of Trust Estate............................................................ 27
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 6.04. Performance of Obligations............................................................ 28
Section 6.05. Negative Covenants.................................................................... 28
Section 6.06. No Other Powers....................................................................... 28
Section 6.07. Limitation of Suits................................................................... 29
Section 6.08. Unconditional Rights of Owners to Receive Distributions............................... 29
Section 6.09. Rights and Remedies Cumulative........................................................ 30
Section 6.10. Delay or Omission Not Waiver.......................................................... 30
Section 6.11. Control by Owners..................................................................... 30
Section 6.12. Indemnification....................................................................... 30
Section 6.13. Access to Owners of Certificates' Names and Addresses................................. 31
Article VII ACCOUNTS, DISBURSEMENTS AND RELEASES.......................................................... 32
Section 7.01. Collection of Money................................................................... 32
Section 7.02. Establishment of Accounts............................................................. 32
Section 7.03. Flow of Funds......................................................................... 32
Section 7.04. [RESERVED]............................................................................ 34
Section 7.05. Investment of Accounts................................................................ 34
Section 7.06. Payment of Trust Expenses............................................................. 35
Section 7.07. Eligible Investments.................................................................. 35
Section 7.08. Accounting and Directions by Grantor Trustee.......................................... 37
Section 7.09. Reports by Grantor Trustee to Owners and the Certificate Insurer...................... 38
Section 7.10. Reports by Grantor Trustee............................................................ 39
Section 7.11. Preference Payments................................................................... 39
Article VIII SERVICING AND ADMINISTRATION OF ASSETS....................................................... 41
Section 8.01. Servicer.............................................................................. 41
Section 8.02. [RESERVED]............................................................................ 41
Section 8.03. [RESERVED]............................................................................ 41
Section 8.04. [RESERVED]............................................................................ 41
Section 8.05. Indemnification....................................................................... 41
Section 8.06. [RESERVED]............................................................................ 41
Section 8.07. [RESERVED]............................................................................ 41
Section 8.08. Grantor Trust Account................................................................. 41
Section 8.09. [RESERVED]............................................................................ 43
Section 8.10. Servicing Compensation................................................................ 43
Section 8.11. Annual Statement as to Compliance..................................................... 43
Section 8.12. [RESERVED]............................................................................ 43
Section 8.13. Access to Certain Documentation and Information Regarding the Class A-2 Internal
Certificates. 43
Section 8.14. Assignment of Agreement............................................................... 43
Section 8.15. Removal of Servicer; Resignation of Servicer.......................................... 44
Section 8.16. Inspections by Certificate Insurer; Errors and Omissions Insurance.................... 45
Article IX TERMINATION OF TRUST........................................................................... 46
Section 9.01. Termination of Trust.................................................................. 46
Section 9.02. [RESERVED]............................................................................ 46
Section 9.03. [RESERVED]............................................................................ 46
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 9.04. Disposition of Proceeds............................................................... 46
Article X THE GRANTOR TRUSTEE............................................................................. 47
Section 10.01. Certain Duties and Responsibilities.................................................. 47
Section 10.02. Removal of Grantor Trustee for Cause................................................. 48
Section 10.03. Certain Rights of the Grantor Trustee................................................ 49
Section 10.04. Not Responsible for Recitals or Issuance of Certificates............................. 50
Section 10.05. May Hold Certificates................................................................ 51
Section 10.06. Money Held in Trust.................................................................. 51
Section 10.07. Compensation and Reimbursement; No Lien for Fees..................................... 51
Section 10.08. Corporate Grantor Trustee Required; Eligibility...................................... 51
Section 10.09. Resignation and Removal; Appointment of Successor.................................... 52
Section 10.10. Acceptance of Appointment by Successor Grantor Trustee............................... 53
Section 10.11. Merger, Conversion, Consolidation or Succession to Business of the Grantor Trustee... 54
Section 10.12. Tax Returns and Reports.............................................................. 54
Section 10.13. Liability of the Grantor Trustee..................................................... 54
Section 10.14. Appointment of Co-Grantor Trustee or Separate Grantor Trustee........................ 55
Article XI MISCELLANEOUS.................................................................................. 57
Section 11.01. Compliance Certificates and Opinions................................................. 57
Section 11.02. Form of Documents Delivered to the Grantor Trustee................................... 57
Section 11.03. Acts of Owners....................................................................... 58
Section 11.04. Notices, etc. to Grantor Trustee..................................................... 58
Section 11.05. Notices and Reports to Owners; Waiver of Notices..................................... 59
Section 11.06. Rules by Grantor Trustee............................................................. 59
Section 11.07. Successors and Assigns............................................................... 59
Section 11.08. Severability......................................................................... 60
Section 11.09. Benefits of Agreement................................................................ 60
Section 11.10. Legal Holidays....................................................................... 60
Section 11.11. Governing Law; Submission to Jurisdiction............................................ 60
Section 11.12. Counterparts......................................................................... 61
Section 11.13. Usury................................................................................ 61
Section 11.14. Amendment............................................................................ 61
Section 11.15. Paying Agent; Appointment and Acceptance of Duties................................... 62
Section 11.16. [RESERVED]........................................................................... 63
Section 11.17. Additional Limitation on Action and Imposition of Tax................................ 63
Section 11.18. [RESERVED]........................................................................... 63
Section 11.19. The Certificate Insurer.............................................................. 63
Section 11.20. [RESERVED]........................................................................... 63
Section 11.21. Third Party Rights................................................................... 63
Section 11.22. Notices.............................................................................. 63
</TABLE>
EXHIBIT A
EXHIBIT B
EXHIBIT C
iii
<PAGE>
GRANTOR TRUST AGREEMENT, relating to CONTIMORTGAGE GRANTOR TRUST 1998-A
(the "Trust"), dated as of June 1, 1998 by and among CONTISECURITIES ASSET
FUNDING CORP., a Delaware corporation, in its capacity as Depositor (the
"Depositor"), CONTIMORTGAGE CORPORATION, a Delaware corporation in its capacity
as a Servicer (the "Servicer") and MANUFACTURERS AND TRADERS TRUST COMPANY, a
New York banking corporation, in its capacity as the Grantor Trustee (the
"Grantor Trustee").
WHEREAS, the Depositor wishes to establish the Trust and provide for
the allocation and sale of the beneficial interests therein and the maintenance
and distribution thereof;
WHEREAS, the Servicer has agreed to service the ContiMortgage Home
Equity Loan Trust 1998-A Pass Through Certificates Class A-2 Internal (the
"Class A-2 Internal Certificates") which, along with the Swap Agreement dated
June 1, 1998 between National Westminster Bank, Plc (the "Swap Counterparty")
and the Grantor Trustee (the "Swap Agreement"), and the related MBIA Certificate
Insurance Policy constitute the principal assets of the Trust Estate;
WHEREAS, pursuant to the Swap Agreement the Grantor Trustee will
distribute to the Swap Counterparty on each Payment Date all amounts in respect
of interest received on the Class A-2 Internal Certificates on such Payment Date
and shall have the right to receive from the Swap Counterparty on the related
Swap Payment Date an amount equal to interest due on such Payment Date on the
Class A-2 Floating Certificates at the Class A-2 Floating Pass-Through Rate;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Grantor Trustee, valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have been
done;
WHEREAS, Manufacturers and Traders Trust Company is willing to serve in
the capacity of Grantor Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Servicer, and the Grantor
Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the interest on and/or principal of
the Certificates in accordance with their terms, all of the sums distributable
under this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, the Depositor hereby bargains, sells,
conveys, assigns and transfers to the Trust, without recourse and for the
exclusive benefit of the Owners of the Certificates and the Certificate Insurer,
all of its respective right, title and interest in and to any and all benefits
accruing to it from (a) the Class A-2 Internal Certificates issued by the
ContiMortgage Home Equity Loan Trust 1998-2 (the "Home Equity Trust") pursuant
to a Pooling and Servicing Agreement dated June 1, 1998 among ContiSecurities
Asset Funding Corp., as Depositor,
<PAGE>
ContiMortgage Corporation, as Seller and
Servicer, ContiWest Corporation, as Seller and Manufacturers and Traders Trust
Company, as Trustee (the "Pooling and Servicing Agreement"); (b) the Insurance
Agreement; (c) the Certificate Insurance Policy; (d) the Swap Agreement and (e)
proceeds of all the foregoing (including, but not by way of limitation, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified herein ((a)-(e) above shall be collectively referred
to herein as the "Trust Estate").
The Grantor Trustee acknowledges such sale, accepts the Trust hereunder
in accordance with the provisions hereof and agrees to perform the duties herein
to the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
2
<PAGE>
Article I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01. Definitions . For all purposes of this Agreement, the
following terms shall have the meanings set forth below, unless the context
clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Certificates and any Payment
Date, the period commencing on the immediately preceding Payment Date (or the
Closing Date in the case of the first Payment Date) to and including the day
prior to the current Payment Date. All calculations of interest on the
Certificates will be made on the basis of the actual number of days elapsed in
the related Accrual Period and in a year of 360 days.
"Agreement": This Grantor Trust Agreement, as it may be amended from
time to time, including the Exhibits and Schedules hereto.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to the
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Servicer, initially including those individuals whose names
appear on the lists of Authorized Officers delivered at the Closing; with
respect to the Grantor Trustee, any Vice President, Assistant Vice President,
Trust Officer or any Officer of the Grantor Trustee located at the Corporate
Trust Office.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which the Certificate Insurer or commercial banking institutions in The City of
New York, or in the city in which the principal corporate trust office of the
Grantor Trustee is located, are authorized or obligated by law or executive
order to be closed.
"Certificate": Any of the Class A-2 Floating Certificates, each
representing the interests and rights described under this Agreement.
"Certificate Insurance Policy": The certificate guaranty insurance
policy (number 29885) dated June 29, 1998 issued by the Certificate Insurer for
the benefit of the Owners of the Certificates pursuant to which the Certificate
Insurer guarantees Insured Payments.
"Certificate Insurer": MBIA Insurance Corporation, a New York stock
insurance company, or any successor thereto, as issuer of the Certificate
Insurance Policy.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required under
the Certificate Insurance Policy in accordance with its terms; or
(b) (i) the entry by a court having jurisdiction in the premises of (A)
a final and nonappealable decree or order for relief in respect of the
Certificate Insurer in an
3
<PAGE>
involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency, rehabilitation, reorganization or
other similar law or (B) a final and nonappealable decree or order adjudging
the Certificate Insurer as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganizing, rehabilitation, arrangement,
adjustment or composition of or in respect of the Certificate Insurer under
any applicable United States federal or state law, or appointing a
custodian, receiver, liquidator, rehabilitator, assignee, Grantor Trustee,
sequestrator or other similar official of the Certificate Insurer or of any
substantial part of its property, or ordering the winding-up or liquidation
of its affairs, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a period of 60
consecutive days; or
(ii) the commencement by the Certificate Insurer of a voluntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect
of the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the acquiescence by the
Certificate Insurer to the filing of such petition or to the appointment of
or the taking possession by a custodian, receiver, liquidator, assignee,
Grantor Trustee, sequestrator or similar official of the Certificate Insurer
or of any substantial part of its property, or the failure of the
Certificate Insurer to pay debts generally as they become due, or the
admission by the Certificate Insurer in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by the
Certificate Insurer in furtherance of any such action.
"Certificate Principal Balance": As of any time of determination, the
Certificate Principal Balance as of the Startup Day of all Class A-2 Floating
Certificates less any amounts actually distributed on such Class A-2 Floating
Certificates with respect to the Principal Distribution Amount pursuant to
Section 7.03(d) hereof with respect to principal thereon on all prior Payment
Dates.
"Class": The Class A-2 Floating Certificates.
"Class A-2 Floating Certificate": Any one of the Certificates
designated on the face thereof as a Class A-2 Floating Certificate,
substantially in the form annexed hereto as Exhibit A, authenticated and
delivered by the Grantor Trustee, representing the right to distributions as set
forth herein.
"Class A-2 Floating Distribution Amount": With respect to any Payment
Date, the sum of Current Interest, the Interest Carry Forward Amount and the
Principal Distribution Amount.
"Class A-2 Floating Termination Date": The Payment Date on which the
Certificate Principal Balance the Certificates has been reduced to zero.
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"Class A-2 Floating Pass-Through Rate": For any Payment Date, LIBOR
plus 0.03% per annum.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"ContiMortgage": ContiMortgage Corporation, a Delaware corporation that
is the Servicer.
"Corporate Trust Office": The principal office of the Grantor Trustee
at One M&T Plaza, Buffalo, New York 14203.
"Current Interest": With respect to any Payment Date, the amount of
interest accrued on the Certificate Principal Balance immediately prior to such
Payment Date during the related Accrual Period at the Class A-2 Floating
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-2
Floating Certificates as it relates to interest previously paid on the Class A-2
Floating Certificates.
"Depositor": ContiSecurities Asset Funding Corp., a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 7 Hanover Square, New York,
New York 10004, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the Grantor Trust
Account, a trust account maintained by the trust department of a federal or
state chartered depository institution acceptable to the Certificate Insurer
acting in its fiduciary capacity, having combined capital and surplus of at
least $50,000,000; provided, however, that if the Grantor Trust Account is not
maintained with the Grantor Trustee, (i) such institution shall have a long-term
debt rating of at least "A2" by Moody's, and, if rated by Fitch, at least "A" by
Fitch (ii) a short-term debt rating of at least "A-1" by Standard & Poor's and
(iii) if such Principal and Interest Account is moved to a new institution, the
Servicer shall provide the Grantor Trustee, the Certificate Insurer and the
Owners with a statement identifying the location of the Grantor Trust Account.
"Determination Date": As to each Payment Date, the third Business Day
next preceding such Payment Date.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"FannieMae": 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.
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"FannieMae Guide": FannieMae's Servicing Guide, as the same may be
amended by FannieMae from time to time, and the Servicer shall elect to apply
such amendments in accordance with Section 8.01 hereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"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.
"Final Determination": [RESERVED]
"Final Scheduled Payment Date": March 15, 2013.
"Fiscal Agent": State Street Bank and Trust Company, N.A., as Fiscal
Agent for the Certificate Insurer under the Certificate Insurer Policy or any
successor thereto appointed by the Certificate Insurer.
"Fitch": Fitch IBCA, Inc.
"Grantor Trust Account": The certificate account established in
accordance with Section 7.02 hereof and maintained in the corporate trust
department of the Grantor Trustee; provided that the funds in such account shall
not be commingled with other funds held by the Grantor Trustee.
"Grantor Trustee": Manufacturers and Traders Trust Company, a New York
banking corporation, the Corporate Trust Department of which is located on the
date of execution of this Agreement at One M&T Plaza, Buffalo, New York 14203,
not in its individual capacity but solely as Grantor Trustee under this
Agreement, and any successor hereunder.
"Grantor Trustee Fee": The fee payable monthly on each Payment Date
under the Pooling and Servicing Agreement as the "Trustee Fee" shall be deemed
to include any fee payable to the Grantor Trustee.
"Highest Lawful Rate": As defined in Section 11.13.
"Insurance Agreement": The Insurance Agreement dated as of June 1,
1998, among the Depositor, the Sellers, the Servicer, the Certificate Insurer
and the Grantor Trustee, as it may be amended from time to time.
"Insurance Commitment Letter": The letter dated June 29, 1998 from MBIA
to ContiMortgage Corporation.
"Insured Payment": With respect to any Payment Date, without
duplication, (A) the excess, if any, of (i) the sum of the aggregate Current
Interest for the Class A-2 Floating Certificates at the Class A-2 Floating
Pass-Through Rate over (ii) the amounts available to the Grantor Trustee for
distribution of Current Interest on the Class A-2 Floating Certificates (less
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any such amounts that cannot be distributed to the Owners of the Class A-2
Floating Certificates as a result of proceedings under the United States
Bankruptcy Code) without regard to any related Insured Payment to be made with
respect to such Payment Date plus (B) an amount equal to the Preference Amount
with respect to the Class A-2 Floating Certificates.
"Insurance Proceeds": Payments received with respect to any Insurance
Policy, except the Certificate Insurance Policy.
"Interest Amount Available": As of any Payment Date, the Interest
Remittance Amount.
"Interest Carry Forward Amount": With respect to any Payment Date, the
sum of (x) the amount, if any, by which (i) the sum of (A) the Current Interest
as of the immediately preceding Payment Date and (B) any unpaid Interest Carry
Forward Amount from all previous Payment Dates exceeds (ii) the amount of the
actual distribution with respect to interest made to the Owners of the
Certificates on such immediately preceding Payment Date and (y) 30 days'
interest on such amount at the Class A-2 Floating Pass-Through Rate.
"Interest Remittance Amount": As of any Payment Date, all interest due
on such Payment Date with respect to the Class A-2 Internal Certificates.
"LIBOR": (A) With respect to any Accrual Period for the Certificates,
the rate determined by the Grantor 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 Grantor Trustee will request the principal London office of each
of the Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations (rounded upwards if necessary to the nearest whole multiple of
1/16%). If fewer than two quotations are provided as requested, the rate for
that date will be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Servicer, at approximately 11:00 a.m. (New York City
time) on such date for one-month U.S. dollar loan to leading European banks.
"LIBOR Determination Date": With respect to any Accrual Period for the
Certificates, the first London Business Day preceding the commencement of such
Accrual Period.
"London Business Day": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"Monthly Excess Interest Amount": [RESERVED]
"Monthly Remittance Amount": As of any Payment Date, the sum of (i) the
Interest Remittance Amount and (ii) the Principal Remittance Amount for such
Payment Date.
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"Moody's": Moody's Investors Service, Inc.
"Offered Certificates": Collectively, the Class A-2 Floating
Certificates.
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Grantor Trustee.
"Operative Documents": Collectively, this Agreement, the Underwriting
Agreement, the Certificates, the Certificate Insurance Policy, the Insurance
Agreement and the Indemnification Agreement.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or delivered to
the Registrar for cancellation;
Certificates or portions thereof for which full and final payment of
money in the necessary amount has been theretofore deposited with the Grantor
Trustee or any Paying Agent in trust for the Owners of such Certificates;
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 Grantor Trustee is presented that any such Certificates are
held by a bona fide purchaser;
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
Certificates as to which the Grantor Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned to the
Grantor Trustee.
"Owner": The Person in whose name a Certificate is registered in the
Register and the Certificate Insurer to the extent described in Section 5.06
hereof, respectively hereof; provided that solely for the purposes of
determining the exercise of any voting rights hereunder, if any Offered
Certificates are beneficially owned by a Seller or any affiliate thereof, such
Seller or such affiliate shall not be considered an Owner hereunder.
"Paying Agent": Initially, the Grantor Trustee, and thereafter, the
Grantor 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 Grantor
Trustee and the Depositor to make payments on the Certificates on behalf of the
Grantor Trustee.
"Payment Date": Any date on which the Grantor Trustee is required to
make distributions to the Owners, which shall be the 15th day of each month or
if such day is not a Business Day, the next Business Day thereafter, commencing
in the month following the Startup Day.
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"Percentage Interest": With respect to a Class of the Offered
Certificates, a fraction, expressed as a percentage, the numerator of which is
the initial Certificate Principal Balance represented by such Certificate and
the denominator of which is the aggregate initial Certificate Principal Balance
represented by all the Certificates in such Class.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pooling and Servicing Agreement": The Pooling and Servicing Agreement,
dated as of June 1, 1998, among the Depositor, ContiMortgage, ContiWest
Corporation and Manufacturers and Traders Trust Company, as Trustee.
"Preference Amount": With respect to the Offered Certificates, any
amounts of Current Interest included in previous distributions to the Owners of
such Certificates which are recoverable and are sought to be recovered from such
Owners as a voidable preference by a Grantor Trustee in bankruptcy pursuant to
the United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction and which have not theretofore
been repaid to such Owners.
"Premium Amount": As defined in the Insurance Commitment Letter.
"Principal Distribution Amount": As of any Payment Date, an amount
equal to the Principal Remittance Amount.
"Principal Remittance Amount": As of any Payment Date, the principal
received by the Trust with respect to the payment due under the Class A-2
Internal Certificates for such Payment Date.
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Prospectus": The Prospectus dated December 16, 1997 constituting part
of the Registration Statement.
"Prospectus Supplement": The ContiMortgage Home Equity Loan
Pass-Through Certificates, Series 1998-2 Prospectus Supplement dated June 9,
1998 to the Prospectus.
"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.
"Rating Agencies": Collectively, Moody's, Standard & Poor's and Fitch
or any successors thereto.
"Record Date": With respect to the Class A-2 Floating Certificates, the
day immediately preceding such Payment Date.
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"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank
of Tokyo and National Westminster Bank Plc, provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Grantor which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with either Seller or any affiliate thereof, (iii) whose
quotations appear on Telerate Page 3750 on the relevant LIBOR Determination Date
and (iv) which have been designated as such by the Grantor 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 Grantor Trustee, acting in its capacity as Registrar
appointed pursuant to Section 5.04 hereof, or any duly appointed and eligible
successor thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-39505), including all amendments thereto and including the Prospectus
relating to the Offered Certificates constituting a part thereof.
"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.
"Servicer": ContiMortgage Corporation, a Delaware corporation, and its
permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicing Fee": The fees payable under the Pooling and Servicing
Agreement as the "Servicing Fee" thereunder shall be deemed to include any fee
payable under this Agreement to the Servicer.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies, Inc.
"Startup Day": June 29, 1998.
"Swap Payment": On each Swap Payment Date, (A) the amount that is
payable to the Grantor Trustee from the Swap Counterparty equal to Current
Interest on the Class A-2 Floating Certificates or (B) the amount that is
payable to the Swap Counterparty from the Grantor Trustee, equal to interest
received on such Payment Date on the Class A-2 Internal Certificates, in each
case in accordance with the terms of the Swap Agreement.
"Swap Payment Date": (A) In the case of the Swap Counterparty the third
Business Day prior to a Payment Date and (B) in the case of the Grantor Trustee
such Payment Date.
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"Tax Return": The federal income tax return to be filed on behalf of
the Trust together with any and all other information reports or returns that
may be required to be furnished to the Owners of the Certificates or filed with
the Internal Revenue Service as any other governmental taxing authority under
any applicable provision of federal, state or local tax laws.
"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).
"Total Available Funds": As of any Payment Date, the Interest Amount
Available, less any such amount that cannot be distributed to the Owners of the
Class A-2 Internal Certificates as a result of proceedings under the United
States Bankruptcy Code.
"Trust": ContiMortgage Grantor Trust 1998-A, the trust created under
this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Underwriters": Greenwich Capital Markets, Inc., Bear, Stearns & Co.,
ContiFinancial Services Corporation, Credit Suisse First Boston Corporation,
Merrill Lynch, Pierce, Fenner & Smith, Inc., Morgan Stanley Dean Witter and
Nomura Securities International, Inc.
Section 1.02. Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03. Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04. Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
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,
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and such opinion may state that it is given in reasonable reliance upon an
opinion of another, a copy of which must be attached, concerning the laws of a
foreign jurisdiction.
END OF ARTICLE I
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Article II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01. Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "ContiMortgage Grantor Trust 1998-A".
Section 2.02. Office.
The office of the Trust shall be in care of the Grantor Trustee,
addressed to One M&T Plaza, Buffalo, New York 14203, Attention Corporate Trust
Administration, or at such other address as the Grantor Trustee may designate by
notice to the Depositor, the Seller, the Certificate Insurer and the Servicer.
Section 2.03. Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and distribution of
payments thereon and the acquiring, owning and holding of the ContiMortgage Home
Equity Loan Trust 1998-2, Pass Through Certificates, Class A-2 Internal
Certificates, executing the Swap Agreement and making and receiving payments
thereunder and the Trust Estate in connection therewith, and the Certificate
Insurance Policy; (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.
Section 2.04. Appointment of the Grantor Trustee; Declaration of Trust.
The Depositor hereby appoints the Grantor Trustee as Grantor Trustee of
the Trust effective as of the Startup Day, to have all the rights, powers and
duties set forth herein. The Grantor Trustee hereby acknowledges and accepts
such appointment, represents and warrants its eligibility as of the Startup Day
to serve as Grantor Trustee pursuant to Section 10.08 hereof and declares that
it will hold the Trust Estate in trust upon and subject to the conditions set
forth herein for the benefit of the Owners.
Section 2.05. Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Grantor
Trustee (including any portion of the Grantor Trustee Fee not paid pursuant to
Section 7.03(b) hereof), (ii) any reasonable expenses of the Grantor Trustee,
and (iii) any other expenses of the Trust that have been reviewed by
ContiMortgage, which review shall not be required in connection with the
enforcement of a remedy by the Grantor Trustee resulting from a default under
this Agreement, shall be paid directly by ContiMortgage. ContiMortgage shall pay
directly the reasonable fees and expenses of counsel to the Grantor Trustee. The
reasonable fees and expenses of the Grantor Trustee's counsel in connection with
the review and delivery of this Agreement and related documentation shall be
paid by ContiMortgage on the Startup Day.
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Section 2.06. Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07. Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Grantor Trustee on behalf of
the Trust will be located in, the State of New York. The Trust will not have any
employees and will not have any real or personal property located in any state
other than in the State of New York and payments will be received by the Grantor
Trustee only in the State of New York and payments from the Grantor Trustee will
be made only from the State of New York. The Trust's only office will be at the
office of the Grantor Trustee as set forth in Section 2.02 hereof.
Section 2.08. [RESERVED]
END OF ARTICLE II
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Article III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR
Section 3.01. Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Grantor
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder or under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor which litigation might have consequences that
would prohibit its entering into this Agreement or 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
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might have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. There is no fact known
to the Depositor that materially adversely affects or in the future may (so far
as the Depositor can now reasonably foresee) materially adversely affect the
Depositor or the Home Equity Loans or the ownership interests therein
represented by the Certificates that has not been set forth in the Registration
Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Class A-2 Internal Certificates, nor is the Depositor aware
of any pending insolvency.
(k) The transfer, assignment and conveyance of the Class A-2 Internal
Certificates by the Depositor hereunder are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(l) The Depositor is not transferring the Class A-2 Internal
Certificates to the Grantor Trustee with any intent to hinder, delay or defraud
its creditors.
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(m) The transfer of the Class A-2 Internal Certificates is not required
to be registered under the Securities Act of 1933, as amended.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Class A-2
Internal Certificates to the Grantor Trustee.
Section 3.02. Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Grantor
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, is in compliance with
the laws of each state to the extent necessary to enable it to perform its
obligations hereunder and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Servicer has all requisite
corporate power and authority to own and operate its properties, to carry out
its business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been duly
authorized by all necessary corporate action on the part of the Servicer and
will not violate the Servicer's Certificate of Incorporation or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which the Servicer is a party or by
which the Servicer is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the Servicer is
a party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder or under the
other Operative Documents to which the Servicer is a party.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or
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any other Operative Documents to which the Servicer is a party or that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder and the other
Operative Documents to which the Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Document or which are attributed to
the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer, in light of the circumstances under which they which
they were made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Class A-2 Internal
Certificates to the Grantor Trustee.
Upon discovery by any of either the Servicer, any Owner, the
Certificate Insurer or the Grantor 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
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shall give prompt written notice to the other parties. Within 60 days of its
discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects and, upon the Servicer's continued failure to
cure such breach, may thereafter be removed by the Grantor Trustee pursuant to
Section 8.20 hereof; provided, however, that if any party can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the written
approval of the Certificate Insurer.
Section 3.03. [RESERVED]
Section 3.04. [RESERVED]
Section 3.05. Conveyance of the Class A-2 Internal Certificates.
On the Startup Day the Depositor, concurrently with the execution and
delivery hereof, transfers, assigns, sets over and otherwise conveys, without
recourse, to the Trust all of its respective right, title and interest in and to
the Trust Estate. The transfer by the Depositor of the Class A-2 Internal
Certificates to the Trustee is absolute and is intended by the Owners and all
parties hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Class A-2 Internal Certificates
conveying good title thereto free and clear of any liens and encumbrances from
the Depositor to the Trust and that the Class A-2 Internal Certificates not be
part of the Depositor's estate in the event of insolvency. In the event that
such conveyance is deemed to be a loan, the parties intend that the Depositor
shall be deemed to have granted to the Trustee a first priority perfected
security interest in the Trust Estate, and that this Agreement shall constitute
a security agreement under applicable law.
Section 3.06. Acceptance by Trustee.
The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by each of the Sellers and the
Depositor in the form attached as Exhibit B hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definitions of Trust Estate and
delivered to the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners.
END OF ARTICLE III
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Article IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01. Issuance of Certificates.
On the Startup Day, upon the Grantor Trustee's receipt from the
Depositor of an executed Delivery Order in the form set forth as Exhibit C
hereto, the Grantor Trustee shall execute, authenticate and deliver the
Certificates on behalf of the Trust.
Section 4.02. Sale of Certificates.
At 11 a.m. New York City time on the Startup Day (the "Closing"), at
the offices of Dewey Ballantine LLP, 180 Maiden Lane, New York, New York, the
Depositor will sell and convey the Class A-2 Internal Certificates, instruments
and other property related thereto to the Grantor Trustee, and the Grantor
Trustee will deliver to the Underwriters the Class A-2 Floating Certificates
with an aggregate Percentage Interest equal to 100%, registered in the name of
Cede & Co., or in such other names as the Underwriters shall direct, against
payment of the purchase price thereof by wire transfer of immediately available
funds to the Grantor Trustee.
Upon the Grantor Trustee's receipt of the entire net proceeds of the
sale of the Class A-2 Floating Certificates, the Grantor Trustee shall remit the
entire balance of such net proceeds to the Depositor in accordance with
instructions delivered by the Depositor.
END OF ARTICLE IV
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Article V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01. Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Certificates guaranteed by any Person except
for the rights of the Grantor Trustee on behalf of the Owners of the
Certificates with respect to the Certificate Insurance Policy. The Certificates
are payable solely from payments received on or with respect to the Class A-2
Internal Certificates, payments received by the Grantor Trustee under the Swap
Agreement, moneys in the Grantor Trust Account, earnings on moneys and the
proceeds of property held as a part of the Trust Estate and the Certificate
Insurance Policy. Each Certificate entitles the Owner thereof to receive monthly
on each Payment Date, in order of priority of distributions with respect to such
Certificates as set forth in Section 7.03, a specified portion of such payments
with respect to the Class A-2 Internal Certificates, pro rata in accordance with
such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Grantor
Trustee any Certificate with respect to which the Grantor Trustee has made the
final distribution due thereon. Any such Certificate as to which the Grantor
Trustee has made the final distribution thereon shall be deemed canceled and
shall no longer be Outstanding for any purpose of this Agreement, whether or not
such Certificate is ever returned to the Grantor Trustee.
Section 5.02. Forms.
The Class A-2 Internal Certificates shall be in substantially the forms
set forth in Exhibit A hereof, respectively, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement or as may in the Depositor's judgment be necessary, appropriate
or convenient to comply, or facilitate compliance, with applicable laws, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
applicable securities laws or as may, consistently herewith, be determined by
the Authorized Officer of the Depositor executing such Certificates, as
evidenced by his execution thereof.
Section 5.03. Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated by the manual or
facsimile signature of one of the Grantor Trustee's Authorized Officers. Upon
proper authentication by the Grantor Trustee, the Certificates shall bind the
Trust.
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.
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Section 5.04. Registration and Transfer of Certificates.
(a) The Grantor Trustee shall cause to be kept a register (the
"Register") in which, subject to such reasonable regulations as it may
prescribe, the Grantor Trustee shall provide for the registration of
Certificates and the registration of transfer of Certificates. The Grantor
Trustee is hereby initially appointed Registrar for the purpose of registering
Certificates and transfers of Certificates as herein provided. The Owners, the
Certificate Insurer and the Grantor Trustee shall have the right to inspect the
Register during the Grantor Trustee's normal hours and to obtain copies thereof,
and the Grantor 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 Grantor Trustee is appointed as Registrar by
the Owners of a majority of the aggregate Percentage Interests represented by
the Certificates then Outstanding with the consent of the Certificate Insurer,
the Grantor Trustee will give the Owners and the Certificate Insurer prompt
written notice of the appointment of such Registrar and of the location, and any
change in the location, of the Register. In connection with any such appointment
the annual fees of the bank then serving as Grantor Trustee and Registrar shall
thenceforth be reduced by the amount to be agreed upon by the Grantor Trustee
and the Depositor at such time and the reasonable fees of the Registrar shall be
paid, as expenses of the Trust, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Grantor Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of a like Class and in the aggregate principal amount or percentage interest of
the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Grantor 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
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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 Grantor 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 Certificates be registered so as to
participate in a global book entry system with the Depository, as set forth
herein. The 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 no less than $1,000 and integral multiples thereof.
The Depositor and the Grantor Trustee are hereby authorized to execute
and deliver the Representation Letter with the Depository.
With respect to the 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 Grantor 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 Grantor 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 Certificates, (ii) the delivery to any Direct or Indirect
Participant or any other Person, other than a registered Owner of a Certificate
as shown in the Register, of any notice with respect to the Certificates or
(iii) the payment to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Certificate as shown in the Register, of any
amount with respect to any distribution of principal or interest on the
Certificates. No Person other than a registered Owner of a Certificate as shown
in the Register shall receive a certificate evidencing such Certificate.
Upon delivery by the Depository to the Grantor 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 Certificates appearing as registered Owners in the
registration books maintained by the Grantor 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
Grantor 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 Certificates and the Depositor or
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the Grantor 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 Certificates shall no longer be restricted to being
registered in the Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Depositor may determine that the
Certificates shall be registered in the name of and deposited with a successor
depository operating a global book-entry system, as may be acceptable to the
Depositor and at the Depositor's expense, or such depository's agent or designee
but, if the Depositor does not select such alternative global book-entry system,
then the Offered Certificates may be registered in whatever name or names
registered Owners of the Certificates transferring the Certificates shall
designate, in accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any of the Certificates is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Offered Certificates and all notices with respect to such Offered
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Grantor Trustee,
or the Grantor 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
Grantor Trustee, and in the case of any destroyed, lost or stolen Certificate,
there shall be first delivered to the Grantor Trustee such security or indemnity
as may be reasonably required by it to hold the Grantor Trustee and the
Certificate Insurer harmless, then, in the absence of notice to the Grantor
Trustee or the Registrar that such Certificate has been acquired by a bona fide
purchaser, the Depositor shall execute and the Grantor Trustee shall
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 Grantor Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto; any other expenses in connection with such issuance shall be an expense
of the Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute 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.
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Section 5.06. Persons Deemed Owners.
The Grantor Trustee and the Certificate Insurer and any agent of the
Grantor Trustee may treat the Person in whose name any Certificate is registered
as the Owner of such Certificate for the purpose of receiving distributions with
respect to such Certificate and for all other purposes whatsoever and the
Grantor Trustee and the Certificate Insurer or any agent of the Grantor Trustee
shall not be affected by notice to the contrary.
Section 5.07. Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Grantor Trustee, be delivered
to the Grantor 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 Grantor Trustee in accordance with its
standard retention policy.
Section 5.08. Limitation on Transfer of Ownership Rights.
No sale or other transfer of any Offered Certificate may be made to the
Depositor or the Servicer.
Section 5.09. Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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Article VI
COVENANTS
Section 6.01. Distributions.
On each Payment Date, the Grantor Trustee will withdraw amounts from
the Grantor Trust Account and make the distributions with respect to the
Certificates and the Swap Agreement in accordance with the terms of the
Certificates, the Swap Agreement and this Agreement. Such distributions shall be
made (i) by check or draft mailed on each Payment Date or (ii) if requested by
any Owner of (A) Certificate in writing not later than one Business Day prior to
the applicable Record Date (which request does not have to be repeated unless it
has been withdrawn), to such Owner by wire transfer to an account within the
United States designated no later than five Business Days prior to the related
Record Date, made on each Payment Date, in each case to each Owner of record on
the immediately preceding Record Date.
Section 6.02. Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Grantor Trust
Account, shall be made by and on behalf of the Grantor Trustee, and no amounts
so withdrawn from the Grantor Trust Account, for payments of Certificates and
under the Swap Agreement except as provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Grantor Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Grantor Trustee all sums held in trust by such Paying Agent, such sums to be
held by the Grantor 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
Grantor Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
(d) The Depositor shall require each Paying Agent, including the
Grantor 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 Grantor Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Certificate and 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 paid to the Servicer; and the
Owner of such Certificate shall thereafter, as an unsecured general creditor,
look only to Servicer for payment thereof and all liability of the Grantor
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the
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Grantor 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. The Grantor Trustee shall, at
the direction of the Depositor, also adopt and employ, at the expense of the
Trust, any other reasonable means of notification of such payment (including but
not limited to mailing notice of such payment to Owners whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Registrar, the Grantor Trustee or any Paying Agent, at the last
address of record for each such Owner).
Section 6.03. Protection of Trust Estate.
(a) The Grantor Trustee will hold the Trust Estate in trust for the
benefit of the Owners and the Certificate Insurer and, upon request of the
Certificate Insurer or, with the consent of the Certificate Insurer at the
request of the Depositor, will from time to time execute and deliver all such
supplements and amendments hereto pursuant to Section 11.14 hereof and all
instruments of further assurance and other instruments, and will take such other
action upon such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any grant
made or to be made by this Agreement;
(iii) enforce the Class A-2 Internal Certificate;
(iv) enforce the Swap Agreement; or
(v) preserve and defend title to the Trust Estate and the rights of the
Grantor Trustee, and the ownership interests of the Owners represented
thereby, in such Trust Estate against the claims of all Persons and parties.
The Grantor Trustee shall send copies of any request received from the
Depositor or the Certificate Insurer to take any action pursuant to this Section
6.03 to the other parties hereto.
(b) The Grantor Trustee shall have the power to enforce, and shall
enforce the obligations and rights of the other parties to this Agreement, the
obligations of the ContiMortgage Home Equity Loan Trust 1998-2 under the Class
A-2 Fixed Certificate, the obligations of the Swap Counterparty under the Swap
Agreement and the obligations of the Certificate Insurer under the Certificate
Insurance Policy; in addition, the Certificate Insurer or the Owners, by action,
suit or proceeding at law or equity 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 and/or the Owners as such
rights are set forth in this Agreement, provided, however, that nothing in this
Section shall require any action by the Grantor Trustee unless the Grantor
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 Owners of a majority of the Percentage Interests represented by the
Certificates then Outstanding with the
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consent of the Certificate Insurer; provided, further, however, that if there is
a dispute with respect to payments under a Certificate Insurance Policy, the
Grantor Trustee's sole responsibility is to the Owners.
(c) The Grantor Trustee shall execute any instrument required pursuant
to this Section so long as such instrument does not conflict with this Agreement
or with the Grantor Trustee's fiduciary duties, or adversely affect its rights
and immunities hereunder.
Section 6.04. Performance of Obligations.
The Grantor 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 Grantor Trustee may contract with other Persons to assist it in
performing its duties hereunder pursuant to Section 10.03(g).
Section 6.05. Negative Covenants.
The Grantor Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of the Trust
Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the distributions
payable in respect of, the Certificates (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Owner by reason of the payment of any taxes levied or
assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person except
pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except pursuant to
Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement to be
impaired, or permit any Person to be released from any covenants or
obligations with respect to the Trust or to the Certificates under this
Agreement, except as may be expressly permitted hereby or (B) permit any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or burden
the Trust Estate or any part thereof or any interest therein or the proceeds
thereof.
Section 6.06. No Other Powers.
The Grantor Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
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Section 6.07. Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement, the Insurance Agreement, the Swap
Agreement, the Certificate Insurance Policies or for the appointment of a
receiver or Grantor 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 Grantor Trustee of such Owner's intention to
institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests represented
by the Offered Certificates then Outstanding, shall have made written
request to the Grantor Trustee to institute such proceeding in its own
name as Grantor Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Grantor Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Grantor 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 Certificates are Outstanding or any Reimbursement Amount
(as defined in the Insurance Agreement) remains unpaid, the Certificate
Insurer consented in writing thereto (unless the Certificate Insurer is
the party against whom the proceeding is directed); and
(6) no direction inconsistent with such written request has been given to
the Grantor Trustee during such 60-day period by the Owners of a
majority of the Percentage Interests represented by the Certificates or;
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 Grantor 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)-(5) of this Section 6.07, the Certificate
Insurer in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provision of this Agreement (unless the
Certificate Insurer is the party against whom the proceeding is directed).
Section 6.08. Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have
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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
Grantor Trustee, the Certificate Insurer or the Owners is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. Except as otherwise provided herein, the assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10. Delay or Omission Not Waiver. No delay of the Grantor
Trustee, the Certificate Insurer or any Owner of any Certificate to exercise any
right or remedy under this Agreement with respect to any event described in
Section 8.20(a) or (b) shall impair any such right or remedy or constitute a
waiver of any such event or an acquiescence therein. Every right and remedy
given by this Article VI or by law to the Grantor Trustee, the Certificate
Insurer or the Owners may be exercised from time to time, and as often as may be
deemed expedient, by the Grantor Trustee, the Certificate Insurer or the Owners,
as the case may be.
Section 6.11. Control by Owners. The Certificate Insurer or the Owners
of a majority of the Percentage Interests represented by the Certificates then
Outstanding with the consent of the Certificate Insurer may direct the time,
method and place of conducting any proceeding for any remedy available to the
Grantor Trustee with respect to the Certificates or exercising any trust or
power conferred on the Grantor Trustee with respect to the Certificates or the
Trust Estate, including, but not limited to, those powers set forth in Section
6.03, provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Agreement;
(2) the Grantor Trustee shall have been provided with indemnity satisfactory
to it; and
(3) the Grantor Trustee may take any other action deemed proper by the
Grantor Trustee, as the case may be, which is not inconsistent with such
direction; provided, however, that the Grantor Trustee need take any
action which it determines might involve it in liability or may be
unjustly prejudicial to the Owners not so directing.
Section 6.12. Indemnification. The Depositor agrees to indemnify and
hold the Grantor Trustee, 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
Grantor Trustee, the Certificate Insurer and any Owner may sustain in any way
related to the failure of the Depositor to perform its duties in compliance with
the terms of this Agreement. The Depositor shall immediately notify the Grantor
Trustee, the Certificate Insurer and each Owner if such a claim is made by a
third party with respect to this Agreement, and the Depositor shall assume (with
the consent of the Grantor Trustee) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
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promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, either of the Sellers, the Grantor Trustee, the
Certificate Insurer and/or any Owner in respect of such claim. The provisions of
this Section 6.12 shall survive the termination of this Agreement and the
payment of the outstanding Certificates.
Section 6.13. Access to Owners of Certificates' Names and Addresses.
(a) If any Owner (for purposes of this Section 6.13, an "Applicant")
applies in writing to the Grantor Trustee, and such application states that the
Applicant desires to communicate with other Owners with respect to their rights
under this Agreement or under the Certificates and is accompanied by a copy of
the communication which such Applicant proposes to transmit, then the Grantor
Trustee shall, at the expense of such Applicant, within ten (10) Business Days
after the receipt of such application, furnish or cause to be furnished to such
Applicant a list of the names and addresses of the Owners of record as of the
most recent Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Grantor Trustee that the Grantor Trustee shall not be held accountable in any
way by reason of the disclosure of any information as to the names and addresses
of the Owners hereunder, regardless of the source from which such information
was derived.
END OF ARTICLE VI
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Article VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01. Collection of Money.
Except as otherwise expressly provided herein, the Grantor Trustee
shall demand payment or delivery of all money and other property payable to or
receivable by the Grantor Trustee pursuant to this Agreement, the Swap
Agreement, the Class A-2 Fixed Certificate, or the Certificate Insurance Policy.
The Grantor Trustee shall hold all such money and property received by it, other
than pursuant to or as contemplated by Section 6.02(e) hereof, as part of the
Trust Estate and shall apply it as provided in this Agreement.
Section 7.02. Establishment of Accounts.
The Depositor shall cause to be established on the Startup Day, and the
Grantor Trustee shall maintain, at the Corporate Trust Office, the Grantor Trust
Account, which is to be held by the Grantor Trustee on behalf of the Owners of
the Certificates, the Certificate Insurer and the Grantor Trustee.
Section 7.03. Flow of Funds. The Grantor Trustee shall deposit to the
Grantor Trust Account, without duplication, upon receipt, any payments received
under the Swap Agreement, any Insured Payments, the proceeds of any liquidation
of the assets of the Trust, all remittances made to the Grantor Trustee pursuant
to Section 8.08(b) and the Monthly Remittance Amount received from the
ContiMortgage Home Equity Loan Trust 1998-2.
(b) On each Payment Date, the Grantor Trustee shall make the following
disbursements from the Interest Remittance Amount (including the interest
component of any Insured Payments which is available only for the payment of the
amount described in Second below), in the following order of priority, and each
such disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) First, to the Swap Counterparty, any regularly scheduled payment
due to the Swap Counterparty under Section 2(a) of the Swap Agreement;
(ii) Second, to the Owners of the Certificates, the Current Interest
plus the related Interest Carry Forward Amount with respect the Certificates
without any priority among the Certificateholders; provided, that if the
Interest Amount Available plus the interest component of any Insured Payment
is not sufficient to make a full distribution of interest with respect to
all Certificates, and the amount of the shortfall will be carried forward as
the Interest Carry Forward Amount.
(iii) [RESERVED]
(c) [RESERVED]
(d) On each Payment Date, the Trustee shall make the following
disbursements from amounts relating to principal and each such disbursement
shall be treated as having
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occurred only after all preceding disbursements have
occurred: 100% of the Principal Distribution Amount to the Owners of the Class
A-2 Floating Certificates.
(e) [RESERVED]
(f) [RESERVED]
(g) [RESERVED]
(h) [RESERVED]
(i) [RESERVED]
(j) [RESERVED]
(k) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of the Owners of the Certificates, the Grantor Trustee shall deposit such
Insured Payments in the Grantor Trust Account and shall distribute such Insured
Payments, or the proceeds thereof as provided in paragraph (b) above.
(l) Anything herein to the contrary notwithstanding, any payment with
respect to interest on any of the Certificates which is made with moneys
received pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of such Certificates from the Trust and shall not result in
the payment of or the provision for the payment of the interest on such
Certificates within the meaning of Section 7.03. The Depositor, the Servicer and
the Grantor 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 Grantor Trustee or the
Registrar (a) to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of interest on any Certificates to the Owners of such
Certificates, the Certificate Insurer will be fully subrogated to the rights of
such Owners to receive such interest together with any interest thereon of the
applicable Pass-Through Rate from the Trust and (b) the Certificate Insurer
shall be paid such interest only from the sources and in the manner provided
herein for the payment of such interest.
It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any Payment
Date for amounts previously paid by it unless on such Payment Date the Owners of
the Certificates shall also have received the full amount of the Class A-2
Floating Distribution Amount for such Payment Date.
The Grantor Trustee or Paying Agent shall (i) receive as
attorney-in-fact of each Owner of Certificates any Insured Payment from the
Certificate Insurer and (ii) disburse the same to the Owners of the related
Certificates as set forth in Section 7.03(b). Insured Payments disbursed by the
Grantor Trustee or Paying Agent from proceeds of a Certificate Insurance Policy
shall not be considered payment by the Trust, nor shall such payments discharge
the obligation of the Trust with respect to such Certificates and the
Certificate Insurer shall be entitled to receive the related Reimbursement
Amount pursuant to the Pooling and Servicing Agreement.
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The rights of the Owners to receive distributions from the proceeds of
the Trust Estate and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement.
Section 7.04. [RESERVED]
Section 7.05. Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Grantor Trustee for the benefit of the Owners and the
Certificate Insurer shall be invested and reinvested by the Grantor Trustee in
the name of the Grantor Trustee for the benefit of the Owners and the
Certificate Insurer, as directed in writing by the Depositor, in one or more
Eligible Investments bearing interest or sold at a discount; provided that the
proceeds of the Certificate Insurance Policy shall not be so invested. The bank
serving as Grantor Trustee or any affiliate thereof may be the obligor on any
investment which otherwise qualifies as an Eligible Investment. No investment in
any Account shall mature later than the Business Day immediately preceding the
next Payment Date.
(b) If any amounts are needed for disbursement from any Account held by
the Grantor Trustee and sufficient uninvested funds are not available to make
such disbursement, the Grantor Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. No
investments will be liquidated prior to maturity unless the proceeds thereof are
needed for disbursement.
(c) Subject to Section 10.01 hereof, the Grantor Trustee shall not in
any way be held liable by reason of any insufficiency in any Account held by the
Grantor Trustee resulting from any loss on any Eligible Investment included
therein (except to the extent that the bank serving as Grantor Trustee is the
obligor thereon).
(d) The Grantor Trustee shall invest and reinvest funds in the Accounts
held by the Grantor Trustee, in accordance with the written instructions
delivered to the Grantor Trustee on the Startup Day, but only in one or more
Eligible Investments bearing interest or sold at a discount.
If the Depositor shall have failed to give investment directions to the
Grantor Trustee then the Grantor Trustee shall invest in money market funds
described in Section 7.07(g); to be redeemable without penalty no later than the
Business Day immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account held by
the Grantor Trustee shall be for the account of the Servicer and shall be
distributed to the Servicer immediately prior to any distribution under Section
7.03 hereof on any Payment Date, and any loss resulting from such investments
shall be for the account of the Servicer and promptly upon the realization of
such loss the Servicer contribute funds in an amount equal to such loss to such
Account.
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Section 7.06. Payment of Trust Expenses.
(a) The Grantor Trustee shall make demand on ContiMortgage to pay the
amount of the expenses of the Trust (other than payments of premiums to the
Certificate Insurer and the Grantor Trustee's Fees) and ContiMortgage shall
promptly pay such expenses directly to the Persons to whom such amounts are due.
(b) The Depositor shall pay directly the reasonable fees and expenses
of counsel to the Grantor Trustee.
Section 7.07. Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FannieMae senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; and consolidated senior debt obligations of any
Federal Home Loan Banks; provided, that any such investment shall be rated in
one of the two highest ratings categories by each Rating Agency;
(c) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated F-1+ or
better by Fitch, A-1+ or better by Standard & Poor's and P-1 by Moody's;
(d) 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 each of Standard
& Poor's and Fitch) which has combined capital, surplus and undivided profits of
at least $50,000,000 which deposits are insured by the FDIC and held up to the
limits insured by the FDIC;
(e) Investment agreements approved by the Certificate Insurer,
provided:
(1) The agreement is with a bank or insurance company which has unsecured,
uninsured and unguaranteed senior debt obligations rated Aa2 or better
by Moody's and AA or better by each of Standard & Poor's and Fitch, and
(2) Moneys invested thereunder may be withdrawn without any penalty, premium
or charge upon not more than one day's notice (provided such notice may
be amended or canceled at any time prior to the withdrawal date), and
(3) The agreement is not subordinated to any other obligations of such
insurance company or bank, and
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(4) The same guaranteed interest rate will be paid on any future deposits
made pursuant to such agreement, and
(5) The Grantor Trustee receives an opinion of counsel that such agreement
is an enforceable obligation of such insurance company or bank;
(f) Repurchase agreements collateralized by securities described in (a)
above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
short-term or long-term obligation rated P-1 or Aa2, respectively, or better by
Moody's A-1+ or AA, respectively or better by Standard & Poor's and F-1+ or AA,
respectively, or better by Fitch, provided:
a. A master repurchase agreement or specific written repurchase agreement
governs the transaction, and
b. The securities are held free and clear of any lien by the Grantor
Trustee or an independent third party acting solely as agent for the
Grantor Trustee, and such third party is (a) a Federal Reserve Bank or
(b) a bank which is a member of the FDIC and which has combined capital,
surplus and undivided profits of not less than $125 million, or (c) a
bank approved in writing for such purpose by the Certificate Insurer and
the Grantor Trustee shall have received written confirmation from such
third party that it holds such securities, free and clear of any lien,
as agent for the Grantor Trustee, and
c. A perfected first security interest under the Uniform Commercial Code,
or book entry procedures prescribed at 31 CFR 306.1 et seq. or 31 CFR
350.0 et seq., in such securities is created for the benefit of the
Grantor Trustee, and
d. The repurchase agreement has a term of thirty days or less and the
Grantor Trustee will value the collateral securities no less frequently
than weekly and will liquidate the collateral securities if any
deficiency in the required collateral percentage is not restored within
two business days of such valuation, and
e. The fair market value of the collateral securities in relation to the
amount of the repurchase obligation, including principal and interest,
is equal to at least 106% and such collateral securities must be valued
weekly and market-to-market at current market price plus accrued
interest.
(g) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each Rating Agency;
and
(h) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated AAAm or AAAm-G by Standard & Poor's, Aaa by Moody's, and AAA, if
rated by Fitch;
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provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08. Accounting and Directions by Grantor Trustee.
(a) (i) The Grantor Trustee shall determine whether an Insured Payment
will be required to be made by the Certificate Insurer on the following Payment
Date and if so then no later than 12:00 noon on the second Business Day
immediately preceding the related Payment Date the Grantor Trustee shall furnish
the Certificate Insurer and the Depositor with a completed Notice in the form
set forth as Exhibit A to the Certificate Insurance Policy. The Notice shall
specify the amount of Insured Payment and shall constitute a claim for an
Insured Payment pursuant to the Certificate Insurance Policy.
(ii) The Grantor Trustee shall determine (a) the payment due to the
Grantor Trustee under the Swap Agreement (which shall equal Current Interest for
the related Payment Date on the Class A-2 Floating Certificates) and (b) the
payment due to the Swap Counterparty under the Swap Agreement (which shall equal
interest to be received on the related Payment Date on the Class A-2 Internal
Certificates) not later than 12:00 noon on the fourth Business Day immediately
preceding the related Payment Date and the Grantor Trustee shall notify the Swap
Counterparty and the Certificate Insurer of such amounts to be received and to
be paid under the Swap Agreement.
(b) By 12:00 noon New York time, on the [third] Business Day preceding
each Payment Date (or such earlier period as shall be agreed by the Depositor
and the Grantor Trustee), the Grantor Trustee shall notify (subject to the terms
of Section 10.03(j) hereof, based solely on information provided to the Grantor
Trustee by the Servicer) the Depositor, the Certificate Insurer and each Owner
of the following information with respect to the next Payment Date (which
notification may be given by facsimile or by telephone promptly confirmed in
writing):
(1) The aggregate amount then on deposit in the Grantor Trust Account;
(2) The Class A-2 Floating Distribution Amount, with respect to the Class
A-2 Floating Certificates, on the next Payment Date;
(3) The amount of any Insured Payment to be made by the Certificate Insurer
on such Payment Date;
(4) The application of the amounts described in clause (1) preceding to the
allocation and distribution of the related Class A-2 Floating
Distribution Amount, on such Payment Date in accordance with Section
7.03 hereof;
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(5) The Certificate Principal Balance of the Certificates, the aggregate
amount of the principal of each Class of Certificates to be paid on such
Payment Date and the remaining Certificate Principal Balance of the
Class A-2 Floating Certificates following any such payment;
(6) The amount of any Swap Payment due to the Grantor Trustee on the related
Swap Payment Date; and
(7) The amount of any Swap Payment received by the Grantor Trustee on the
related Swap Payment Date.
Section 7.09. Reports by Grantor Trustee to Owners and the Certificate
Insurer.
(a) On each Payment Date the Grantor Trustee shall report in writing to
the Depositor, each Owner, the Certificate Insurer, the Underwriters and the
Rating Agencies:
(i) the amount of the distribution with respect to such Owners'
Certificates (based on a Certificate in the original principal amount of
$1,000);
(ii) the amount of such Owner's distributions allocable to principal;
(iii) the amount of such Owner's distributions allocable to interest
(based on a Certificate in the original principal amount of $1,000;
(iv) the Interest Carry Forward Amount;
(v) the principal amount of the Certificates (based on a Certificate in
the original principal amount of $1,000 which will be Outstanding after
giving effect to any payment of principal on such Payment Date;
(vi) based upon information furnished by the Depositor, 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;
(vii) the amount of any Insured Payment included in the distribution to
Owners of Certificates;
(viii) the amount of the Swap Payment received from the Swap
Counterparty and the amount of the Swap Payment paid by the Grantor Trustee
to the Swap Counterparty on the applicable Swap Payment Date;
(ix) all information received by the Grantor Trust Owner of the Class
A-2 Fixed Certificate; and
(x) the Class A-2 Floating Pass-Through Rate.
The Servicer shall provide to the Grantor Trustee the information
described in Section 8.08(d)(iii) and in clause (b) below to enable the Grantor
Trustee to perform its reporting
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obligations under this Section, and such obligations of the Grantor Trustee
under this Section are conditioned upon such information being received and the
information provided in clauses (ix) shall be based solely upon information
contained in the monthly servicing report provided by the Servicer to the
Grantor Trustee pursuant to Section 8.01 hereof.
(b) The Servicer shall furnish to the Grantor Trustee and to the
Certificate Insurer during the term of this Agreement, such periodic, special,
or other reports or information not specifically provided for herein, as may be
necessary, reasonable, or appropriate with respect to the Grantor Trustee or the
Certificate Insurer, as the case may be, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the
Grantor Trustee or the Certificate Insurer may reasonably require; provided,
that the Servicer shall be entitled to be reimbursed by the requesting party for
the fees and actual expenses associated with providing such reports, if such
reports are not generally produced in the ordinary course of business.
Section 7.10. Reports by Grantor Trustee.
(a) The Grantor Trustee shall report to the Depositor, each of the
Sellers, the Underwriters, the Certificate Insurer and each Owner, with respect
to the amount on deposit in the Grantor Trust Account and the identity of the
investments included therein, as the Depositor or the Certificate Insurer may
from time to time request. Without limiting the generality of the foregoing, the
Grantor Trustee shall, at the request of the Depositor or the Certificate
Insurer transmit promptly to the Depositor and the Certificate Insurer copies of
all accounting of receipts in respect of the Class A-2 Internal Certificates
furnished to it by the Servicer and shall notify the Certificate Insurer if any
Monthly Remittance Amount has not been received by the Grantor Trustee when due.
(b) The Grantor 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 3.04(b) hereof are inaccurate.
Section 7.11. Preference Payments.
The Certificate Insurer will pay any Insured Payment that is a
Preference Amount on the Business Day following receipt on a Business Day by the
Fiscal Agent of (i) a certified copy of the order requiring the return of such
Preference Amount, (ii) an opinion of counsel satisfactory to the Certificate
Insurer that such order is final and not subject to appeal, (iii) an assignment
in such form as is reasonably required by the Certificate Insurer, irrevocably
assigning to the Certificate Insurer all rights and claims of the Owners
relating to or arising under the Class A-2 Floating Certificates against the
debtor which made such preference payment or otherwise with respect to such
preference payment and (iv) appropriate instruments to effect the appointment of
the Certificate Insurer as agent for such Owner in any legal proceeding related
to such preference payment, such instruments being in a form satisfactory to the
Certificate Insurer, provided that if such documents are received after 12:00
noon New York City time on such Business Day, they will be deemed to be received
on the following Business Day. Such payment shall be disbursed to the receiver
or trustee in bankruptcy named in the final court order of the
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court exercising jurisdiction on behalf of the Owner and not to any Owner
directly unless such Owner has returned principal or interest paid on the Class
A-2 Floating Certificates to such receiver or trustee in bankruptcy in which
case payment will be disbursed to the Owner.
Each Owner by its purchase of Class A-2 Floating Certificates, the
Servicer and the Grantor Trustee hereby agree that the Certificate Insurer may
at any time during the continuation of any proceeding relating to a preference
claim direct all matters relating to such preference claim, including, without
limitation, the direction of any appeal of any order relating to such preference
claim and the posting of any surety or performance bond pending any such appeal.
In addition and without limitation of the foregoing, the Certificate Insurer
shall be subrogated to the rights of the Servicer, the Grantor Trustee and the
Owners of each Certificate in the conduct of any such preference claim,
including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such preference claim.
END OF ARTICLE VII
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Article VIII
SERVICING AND ADMINISTRATION
OF ASSETS
Section 8.01. Servicer.
The Servicer shall give prompt notice to the Grantor 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.
Section 8.02. [RESERVED].
Section 8.03. [RESERVED].
Section 8.04. [RESERVED].
Section 8.05. Indemnification.
(a) [RESERVED]
(b) The Servicer (except Manufacturers and Traders Trust Company if it
is required to succeed the Servicer hereunder) agrees to indemnify and hold the
Grantor Trustee, 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 Grantor Trustee, 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 Class A-2 Internal
Certificates in compliance with the terms of this Agreement. The Servicer shall
immediately notify the Grantor Trustee, the Certificate Insurer and each Owner
if a claim is made by a third party with respect to this Agreement, and the
Servicer shall assume (with the consent of the Grantor 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 Grantor Trustee, the Certificate Insurer and/or Owner in respect
of such claim. The provisions of this Section 8.05 shall survive the termination
of this Agreement and the payment of the outstanding Certificates.
Section 8.06. [RESERVED]
Section 8.07. [RESERVED]
Section 8.08. Grantor Trust Account.
(a) The Grantor Trustee shall establish and maintain at one or more
Designated Depository Institutions selected by the Servicer the Grantor Trust
Account to be held as a trust account. The Grantor Trust Account shall be
identified on the records of the Designated Depository Institution as follows:
"Manufacturers and Traders Trust Company, as Grantor Trustee under the Grantor
Trust Agreement dated as of June 1, 1998". If the institution at any time
holding the Grantor Trust Account ceases to be eligible as a Designated
Depository Institution hereunder, then the Servicer shall, within 30 days, be
required to name a successor institution meeting the requirements for a
Designated Depository Institution hereunder and notify
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the Grantor Trustee
thereof. If the Servicer fails to name such a successor institution, then the
Grantor Trust Account shall thenceforth be held as a trust account with a
qualifying Designated Depository Institution selected by the Grantor Trustee.
The Grantor Trustee shall notify the Certificate Insurer and the Owners if there
is a change in the name, account number or institution holding the Grantor Trust
Account.
(b) All funds in the Grantor Trust Account shall be held (i) uninvested
(up to the limits insured by the FDIC) or (ii) invested in Eligible Investments.
Any investments of funds in the Grantor Trust Account shall mature or be
withdrawable at par on or prior to the immediately succeeding Payment Date. The
Grantor Trust Account shall be held in trust in the name of the Grantor Trustee
for the benefit of the Owners and the Certificate Insurer. Any investment
earnings net of investment losses (which losses have not previously been
contributed by the Servicer) on funds held in the Grantor Trust Account shall be
for the account of the Servicer and shall be disbursed by the Grantor Trustee
from the Grantor Trust Account to the Servicer immediately prior to the
distributions under Section 7.03 hereof on any Payment Date. Any investment
losses on funds held in the Grantor Trust Account shall be for the account of
the Servicer and promptly upon the realization of such loss shall be contributed
by the Servicer to the Grantor Trust Account. Any references herein to amounts
on deposit in the Grantor Trust Account shall refer to amounts net of such
investment earnings.
(c) [RESERVED]
(d) (i) The Trustee may make withdrawals account from the amounts on
deposit in the Grantor Trust Account, with respect to the Class A-2 Internal
Certificates, for the following purposes:
(A) to make a disbursement to the Servicer on each Payment Date immediately
prior to the disbursements under Section 7.03 hereof of investment
earnings (net of investment losses) on amounts on deposit in the
Grantor Trust Account;
(B) [RESERVED]
(C) to withdraw amounts that have been deposited to the Grantor Trust
Account in error; and
(D) to clear and terminate the Grantor Trust Account following the
termination of the Trust pursuant to Article IX.
(ii) On the Business Day preceding each Payment Date, the Servicer shall
deliver to the Grantor Trustee and the Certificate Insurer, a monthly
servicing report with respect to the Class A-2 Internal Certificates,
containing the following information: principal and interest to be received
on the related Payment Date with respect to the Class A-2 Internal
Certificates, any Swap Payments to be received by the Grantor Trustee or to
be made by the Grantor Trustee under the Swap Agreement on the applicable
Swap Payment Date, the Class A-2 Floating Pass-Through Rate, principal and
interest to be paid on the related Payment Date to the Owners of the Class
A-2 Floating Certificates, the amount of the Insured Payment, if any, to be
received by the Grantor Trustee with
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respect to the related Payment Date and other similar information concerning
the Trust Estate.
(iii) The Servicer shall provide to the Grantor Trustee the information
described in Section 8.08(d)(ii) and in Section 7.09(a) to enable the
Grantor Trustee to perform its reporting requirements under Section 7.09 and
the Grantor Trustee shall forward such information to the Underwriters
within five Business Days of receipt thereof.
Section 8.09. [RESERVED]
Section 8.10. Servicing Compensation.
The fee payable to the Servicer under the Pooling and Servicing
Agreement shall be, in part, compensation for the activities of the Servicer
hereunder and the Servicer shall not be entitled to any further compensation
other than earnings (net of losses) on investments in the Grantor Trust Account.
Section 8.11. Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Grantor Trustee,
the Depositor, the Certificate Insurer and the Rating Agencies, on or before
March 31 of each year, commencing in 1999, an Officer's Certificate stating, as
to each signer thereof, that (i) a review of the activities of the Servicer
during such preceding calendar year and of performance under this Agreement has
been made under such officers' supervision, and (ii) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement for such year, or, if there has been a default
in the fulfillment of all such obligations, specifying each such default known
to such officers and the nature and status thereof including the steps being
taken by the Servicer to remedy such default.
Section 8.12. [RESERVED]
Section 8.13. Access to Certain Documentation and Information Regarding
the Class A-2 Internal Certificates..
The Grantor Trustee shall provide to the Certificate Insurer, the FDIC
and the supervisory agents and examiners of each of the foregoing (which, in the
case of supervisory agents and examiners, may be required by applicable state
and federal regulations) access to the documentation regarding the Class A-2
Internal Certificates, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Grantor Trustee designated by it.
Section 8.14. Assignment of Agreement.
The Servicer may not assign its obligations under this Agreement, in
whole or in part, unless it shall have first obtained the written consent of the
Grantor Trustee and the Certificate Insurer, which consent shall not be
unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 8.20(i) of the Pooling and
Servicing Agreement for a successor servicer.
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Section 8.15. Removal of Servicer; Resignation of Servicer.
(a) The removal or resignation pursuant to the Pooling and Servicing
Agreement of the Servicer as defined in the Pooling and Servicing Agreement
shall also constitute a removal or resignation of the Servicer hereunder. The
Certificate Insurer shall have the same rights concerning removal or resignation
of the Servicer hereunder as it does in the Pooling and Servicing Agreement.
(b) The successor servicer appointed pursuant to the Pooling and
Servicing Agreement shall become the successor servicer hereunder.
(c) No removal or resignation of the Servicer shall become effective
hereunder until the Trustee under the Pooling and Servicing Agreement or a
successor servicer shall have assumed the Servicer's responsibilities and
obligations in accordance with the Pooling and Servicing Agreement.
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Grantor Trustee and the Certificate
Insurer, which opinion shall be at the Servicer's expense.
(e) [RESERVED]
(f) [RESERVED]
(g) 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 or the Grantor Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Class A-2 Internal Certificates, 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.
(h) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Grantor Trustee and remitted directly
and immediately to the Grantor Trustee or the successor Servicer.
(i) [RESERVED]
(j) [RESERVED]
(k) The Grantor Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the Grantor Trustee and any
successor Servicer in effecting the termination of
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the Servicer's servicing responsibilities and rights hereunder and shall
promptly provide the Grantor Trustee or such successor Servicer, as applicable,
all documents and records reasonably requested by it to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the Grantor
Trustee or such successor Servicer, as applicable, all amounts which then have
been or should have been deposited in the Principal and Interest Account by the
Servicer or which are thereafter received with respect to the Class A-2. Neither
the Grantor Trustee nor any other successor 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 Servicer agrees
to reimburse the Trust, the Certificate Insurer and the Owners for the costs and
expenses associated with the transfer of servicing to the replacement Servicer.
(l) The Servicer which is being removed or is resigning shall give
notice to the, the Certificate Insurer and the Rating Agencies of the transfer
of the servicing to the successor Servicer.
(m) The Grantor Trustee shall give notice to the Owners, the Grantor
Trustee, the Certificate Insurer and the Rating Agencies of the occurrence of
any event described in paragraphs (a) or (b) above of which the Grantor Trustee
is aware.
Section 8.16. Inspections by Certificate Insurer; Errors and Omissions
Insurance.
(a) At any reasonable time and from time to time upon reasonable
notice, the Grantor Trustee, the Certificate Insurer 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 agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FannieMae Guide or any successor provision thereof; provided, however, that
if the Grantor Trustee shall become the Servicer, any customary insurance
coverage that the Grantor Trustee maintains shall be deemed sufficient
hereunder; provided, further, that in the event that the fidelity bond or the
errors and omissions coverage is no longer in effect, the Grantor Trustee shall
promptly give such notice to the Certificate Insurer and the Owners. Upon the
request of the Grantor Trustee or the Certificate Insurer, the Servicer shall
cause to be delivered to such requesting Person a certified true copy of such
fidelity bond or errors and omission policy.
END OF ARTICLE VIII
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Article IX
TERMINATION OF TRUST
Section 9.01. Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates,
from amounts other than those available under the Certificate Insurance Policy,
of all amounts held by the Grantor Trustee and required to be paid to such
Owners pursuant to this Agreement upon the latest to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
Class A-2 Internal Certificates in the Trust Estate and (b) the final payment to
the Certificate Insurer of all amounts then owing to it. In no event, however,
will the Trust created by this Agreement continue beyond the expiration of
twenty-one (21) years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of
Saint James, living on the date hereof. The Grantor 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. [RESERVED]
Section 9.03. [RESERVED]
Section 9.04. Disposition of Proceeds.
The Grantor Trustee shall, upon receipt thereof, deposit the proceeds
of any liquidation of the Trust Estate pursuant to this Article IX to the
Certificate Account.
END OF ARTICLE IX
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Article X
THE GRANTOR TRUSTEE
Section 10.01. Certain Duties and Responsibilities.
(a) The Grantor 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 Grantor
Trustee and (B) the banking institution that is the Grantor Trustee shall serve
as the Grantor Trustee at all times under this Agreement, and (ii) in the
absence of bad faith on its part, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Grantor Trustee, shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Grantor 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 Grantor Trustee, and that all parties hereto agree
that, prior to any termination of the Servicer, the Servicer and, thereafter,
the Grantor Trustee or any other successor servicer shall perform such duties.
(c) No provision of this Agreement shall be construed to relieve the
Grantor Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Grantor 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 Grantor Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Grantor Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Certificate Insurer or the Owners of a majority in
Percentage Interest of the Certificates of the affected Class or
Classes and the Certificate Insurer relating to the time, method and
place of conducting any proceeding for any remedy available to the
Grantor Trustee, or exercising any trust or power conferred upon the
Grantor Trustee, under this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Grantor Trustee shall be subject to the provisions
of this Section.
(e) No provision of this Agreement shall require the Grantor 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
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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 Grantor 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 Grantor 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 Grantor Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and the Grantor
Trustee shall not be answerable for other than its own negligence or willful
misconduct.
(g) The Grantor Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Agreement, or to take any
steps in the execution of the trusts hereby created or in the enforcement of any
rights and powers hereunder until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements and against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, in
connection with any action so taken.
Section 10.02. Removal of Grantor Trustee for Cause.
(a) The Grantor 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 Grantor Trustee shall fail to distribute to the Owners entitled
hereto on any Payment Date amounts available for distribution in
accordance with the terms hereof; (provided, however, that any such
failure which is due to circumstances beyond the control of the Grantor
Trustee shall not be a cause for removal hereunder); or
(2) the Grantor Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Grantor Trustee in this Agreement, or if
any representation or warranty of the Grantor 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 Grantor Trustee by the Depositor, the Certificate Insurer
or by the Owners of at least 25% of the aggregate Percentage Interests
in the Trust Estate represented by the Certificates then Outstanding, 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, marshaling of
assets and liabilities or similar proceedings, or
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for the winding-up or liquidation of its affairs, shall have been
entered against the Grantor 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 Grantor Trustee is appointed in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Grantor Trustee or relating to all or
substantially all of its property; or
(5) the Grantor Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing.
The Depositor shall give notice to the Certificate Insurer and the Rating
Agencies of the occurrence of any such event of which the Depositor is aware.
(b) if any event described in paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Offered Certificates or if there are no Offered Certificates
then outstanding by such majority of the Percentage Interests represented by the
Retained Certificates, may, whether or not the Grantor Trustee resigns pursuant
to Section 10.09(b) hereof, immediately, concurrently with the giving of notice
to the Grantor Trustee, and without delaying the 30 days required for notice
therein, appoint a successor Grantor Trustee pursuant to the terms of Section
10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the
removal of the Grantor Trustee or the appointment of a new Grantor Trustee.
Section 10.03. Certain Rights of the Grantor Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Grantor Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Depositor, 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 Grantor
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Grantor Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate;
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(d) the Grantor Trustee may consult with counsel, and the written
advice of such counsel (selected in good faith by the Grantor Trustee) shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reasonable reliance
thereon;
(e) the Grantor 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 Grantor 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 Grantor Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Grantor Trustee in its discretion may
make such further inquiry or investigation into such facts or matters as it may
see fit;
(g) the Grantor Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, attorneys or custodians;
(h) the Grantor Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Grantor Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Grantor
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 Grantor Trustee from time to time certain information and to
make various calculations which are relevant to the performance of the Grantor
Trustee's duties under this Agreement. The Grantor 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
Grantor Trustee has actual knowledge, or is advised by any Owner of a
Certificate (either in writing or orally with prompt written or telecopies
confirmation), that such information or calculations is or are incorrect, or
(ii) unless there is a manifest error in any such information; and
(k) the Grantor Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust Estate created hereby or the
powers granted hereunder.
Section 10.04. Not Responsible for Recitals or Issuance of
Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Grantor Trustee, shall be taken as the statements of the Depositor and the
Grantor Trustee assumes no responsibility for their correctness. The Grantor
Trustee makes no representation as to the validity or sufficiency of this
Agreement, of the Certificates, or the Trust Estate or document related thereto
other than as to
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validity and sufficiency of its authentication of the Certificates. The Grantor
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, in respect of the Class A-2
Internal Certificates deposited into or withdrawn from the Grantor Trust Account
by 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. The Grantor 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 Grantor Trustee shall have received written notice
thereof or an Authorized Officer has actual knowledge thereof. In the absence of
receipt of such notice, the Grantor Trustee may conclusively assume that no
default has occurred.
Section 10.05. May Hold Certificates.
The Grantor Trustee, any Paying Agent, Registrar or any other agent of
the Trust, in its individual or any other capacity, may become an Owner or
pledgee of Certificates and may otherwise deal with the Trust with the same
rights it would have if it were not Grantor Trustee, any Paying Agent, Registrar
or such other agent.
Section 10.06. Money Held in Trust.
Money held by the Grantor Trustee in trust hereunder need not be
segregated from other trust funds except to the extent required herein or
required by law, however such money shall be kept in a separate and segregated
trust account in accordance with Section 7.02 hereof. The Grantor Trustee shall
be under no liability for interest on any money received by it hereunder except
as otherwise agreed with the Seller and except to the extent of income or other
gain on investments which are deposits in or certificates of deposit of the
Grantor Trustee in its commercial capacity.
Section 10.07. Compensation and Reimbursement; No Lien for Fees.
The Grantor Trustee shall receive compensation for fees and
reimbursement for expenses pursuant to Section 2.05 and Section 7.06 hereof. The
Grantor Trustee shall have no lien on the Trust Estate for the payment of such
fees and expenses.
Section 10.08. Corporate Grantor Trustee Required; Eligibility.
There shall at all times be a Grantor Trustee hereunder which shall be
a corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a deposit rating of at
least A2 by Moody's (or such lower rating as may be acceptable to Moody's), and
deposit rating of A- by Standard & Poor's (or such lower rating as may be
acceptable to Standard & Poor's) and, if rated by Fitch, having a rating of at
least A- from Fitch (or such lower rating as may be acceptable to Fitch). If
such Grantor Trustee publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
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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 Grantor Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall, upon the request of
ContiMortgage with the consent of the Certificate Insurer (which consent shall
not be unreasonably withheld) or of the Certificate Insurer, resign immediately
in the manner and with the effect hereinafter specified in this Article X.
Section 10.09. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Grantor Trustee and no appointment
of a successor Grantor Trustee pursuant to this Article X shall become effective
until the acceptance of appointment by the successor Grantor Trustee under
Section 10.10 hereof.
(b) The Grantor Trustee, or any Grantor Trustee or Grantor Trustees
hereafter appointed, may resign at any time by giving written notice of
resignation to the Depositor and by mailing notice of resignation by first-class
mail, postage prepaid, to the Certificate Insurer and the Owners at their
addresses appearing on the Register; provided, that the Grantor Trustee cannot
resign solely for the failure to receive the Grantor Trustee Fee. A copy of such
notice shall be sent by the resigning Grantor Trustee to the Rating Agencies.
Upon receiving notice of resignation, the Depositor shall promptly appoint a
successor Grantor Trustee or Grantor Trustees acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of ContiMortgage, one copy of which instrument shall be
delivered to the Grantor Trustee so resigning and one copy to the successor
Grantor Trustee or Grantor Trustees. If no successor Grantor Trustee shall have
been appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Grantor Trustee may petition any court
of competent jurisdiction for the appointment of a successor Grantor Trustee, or
any Owner may, on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor Grantor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and appropriate,
appoint a successor Grantor Trustee.
(c) If at any time the Grantor Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written request therefor by
the Depositor or the Certificate Insurer, the Certificate Insurer or the
Depositor with the consent of the Certificate Insurer may remove the Grantor
Trustee and appoint a successor Grantor 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 Grantor Trustee so removed and one copy to the successor
Grantor Trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Class A-2 Floating Certificates with the consent of the Certificate Insurer,
may at any time remove the Grantor Trustee and appoint a successor Grantor
Trustee acceptable to the Certificate Insurer by delivering to the Grantor
Trustee to be removed, to the successor Grantor Trustee so appointed, to the
Depositor, to the Certificate Insurer and to the Servicer copies of the record
of the act taken by the Owners, as provided for in Section 11.03 hereof.
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(e) If the Grantor 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 Grantor Trustee, the Certificate Insurer may remove the
Grantor Trustee and appoint a successor Grantor 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 Grantor Trustee so removed and one complete set to the successor Grantor
Trustee so appointed.
(f) If the Grantor Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of the Grantor Trustee for
any cause, ContiMortgage shall promptly appoint a successor Grantor Trustee
acceptable to the Certificate Insurer. If within one year after such
resignation, removal or incapability or the occurrence of such vacancy, a
successor Grantor Trustee shall be appointed by act of the Certificate Insurer
or the Owners of a majority of the Percentage Interests represented by the
Certificates then Outstanding with the consent of the Certificate Insurer, the
successor Grantor Trustee so appointed shall forthwith upon its acceptance of
such appointment become the successor Grantor Trustee and supersede the
successor Grantor Trustee appointed by the Depositor. If no successor Grantor
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 Grantor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Grantor Trustee.
(g) The Depositor shall give notice of any removal of the Grantor
Trustee by mailing notice of such event by first-class mail, postage prepaid, to
the Certificate Insurer, the Rating Agencies and to the Owners as their names
and addresses appear in the Register. Each notice shall include the name of the
successor Grantor Trustee and the address of its corporate trust office.
Section 10.10. Acceptance of Appointment by Successor Grantor Trustee.
Every successor Grantor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor on behalf of the Trust and to its
predecessor Grantor Trustee an instrument accepting such appointment hereunder
and stating its eligibility to serve as Grantor Trustee hereunder, and thereupon
the resignation or removal of the predecessor Grantor Trustee shall become
effective and such successor Grantor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts, duties and
obligations of its predecessor hereunder; but, on request of the Depositor or
the successor Grantor Trustee, such predecessor Grantor Trustee shall, upon
payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor Grantor Trustee all of the rights, powers and
trusts of the Grantor Trustee so ceasing to act, and shall duly assign, transfer
and deliver to such successor Grantor Trustee all property and money held by
such Grantor Trustee so ceasing to act hereunder. Upon request of any such
successor Grantor 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 Grantor Trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Grantor Trustee as
provided in this Section, the Depositor shall mail notice thereof by first-class
mail, postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of
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such notice to the Rating Agencies. If the Depositor fails to mail such notice
within ten days after acceptance of appointment by the successor Grantor
Trustee, the successor Grantor Trustee shall cause such notice to be mailed at
the expense of the Trust.
No successor Grantor 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 Grantor Trustee.
Any corporation or association into which the Grantor 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
Grantor Trustee shall be a party, or any corporation or association succeeding
to all or substantially all of the corporate trust business of the Grantor
Trustee, shall be the successor of the Grantor Trustee hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation or association shall be
otherwise qualified and eligible under this Article X. In case any Certificates
have been executed, but not delivered, by the Grantor Trustee then in office,
any successor by merger, conversion or consolidation to such Grantor Trustee may
adopt such execution and deliver the Certificates so executed with the same
effect as if such successor Grantor Trustee had itself executed such
Certificates.
Section 10.12. Tax Returns and Reports.
(a) The Grantor Trustee, upon request, will furnish the Servicer with
all such information as may be reasonably required in connection with the
Servicer's preparation of all Tax Returns of the Trust and, upon request within
five (5) Business Days after its receipt thereof, shall (i) sign on behalf of
the Trust any Tax Return that the Grantor Trustee is required to sign pursuant
to applicable federal, state or local tax laws, and (ii) cause such Tax Return
to have been returned to the Servicer for filing.
(b) The Servicer shall prepare and file or cause to be filed with the
Internal Revenue Service Federal tax information returns with respect to the
Trust and the Certificates containing such information and at the times and in
the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Owner of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. The Grantor Trustee
shall sign all tax information returns filed pursuant to this Section and any
other returns as may be required by the Code, and in doing so shall rely
entirely upon, and shall have no liability for information provided by, or
calculations provided by, the Servicer.
Section 10.13. Liability of the Grantor Trustee.
The Grantor Trustee shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Grantor Trustee herein. Neither the Grantor Trustee nor any of the directors,
officers, employees or agents of the Grantor Trustee shall be under any
liability on any Certificate or otherwise to the Depositor, the Servicer, the
Certificate Insurer or any Owner for any action taken or for refraining from the
taking of any
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action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Grantor 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 Grantor Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Grantor Trustee is the obligor). In
addition, the Depositor and Servicer covenant and agree to indemnify the Grantor
Trustee, and when the Grantor Trustee is acting as Servicer, the Servicer, from,
and hold it harmless against, any and all losses, liabilities, damages, claims
or expenses (including legal fees and expenses) of whatsoever kind arising out
of or in connection with the performance of its duties hereunder other than
those resulting from the negligence or bad faith of the Grantor Trustee, and the
Depositor shall pay all amounts not otherwise paid pursuant to Sections 2.05 and
7.06 hereof. The Grantor Trustee and any director, officer, employee or agent of
the Grantor 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-Grantor Trustee or Separate Grantor
Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Grantor Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Grantor Trustee and reasonably acceptable to the Certificate Insurer to act
as co-Grantor Trustee or co-Grantor Trustees, jointly with the Grantor Trustee,
of all or any part of the Trust Estate or separate Grantor Trustee or separate
Grantor Trustees of any part of the Trust Estate, and to vest in such Person or
Persons, in such capacity and for the benefit of the Owners, such title to the
Trust Estate, or any part thereof, and, subject to the other provisions of this
Section 10.14, such powers, duties, obligations, rights and trusts as the
Servicer and the Grantor 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 Grantor Trustee
subject to reasonable approval of the Certificate Insurer alone shall have the
power to make such appointment. No co-Grantor Trustee or separate Grantor
Trustee hereunder shall be required to meet the terms of eligibility as a
successor Grantor Trustee under Section 10.08 and no notice to Owners of the
appointment of any co-Grantor Trustee or separate Grantor Trustee shall be
required under Section 10.09.
Every separate Grantor Trustee and co-Grantor 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 Grantor Trustee shall be conferred or imposed upon and exercised or
performed by the Grantor Trustee and such separate Grantor Trustee or
co-Grantor Trustee jointly (it being understood that such separate Grantor
Trustee or co-Grantor Trustee is not authorized to
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act separately without the Grantor 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 Grantor Trustee hereunder or as
successor to the Servicer hereunder), the Grantor 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 Grantor Trustee or
co-Grantor Trustee, but solely at the direction of the Grantor Trustee;
(ii) No co-Grantor Trustee hereunder shall be held personally liable by
reason of any act or omission of any other co-Grantor Trustee hereunder; and
(iii) The Servicer, the Certificate Insurer and the Grantor Trustee
acting jointly may at any time accept the resignation of or remove any
separate Grantor Trustee or co-Grantor Trustee.
Any notice, request or other writing given to the Grantor Trustee shall
be deemed to have been given to each of the then separate Grantor Trustees and
co-Grantor Trustees, as effectively as if given to each of them. Every
instrument appointing any separate Grantor Trustee or co-Grantor Trustee shall
refer to this Agreement and the conditions of this Section 10.14. Each separate
Grantor Trustee and co-Grantor 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 Grantor 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
Grantor Trustee. Every such instrument shall be filed with the Grantor Trustee
and a copy thereof given to the Servicer.
Any separate Grantor Trustee or co-Grantor Trustee may, at any time,
constitute the Grantor 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
Grantor Trustee or co-Grantor 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 Grantor Trustee, to the extent
permitted by law, without the appointment of a new or successor Grantor Trustee.
END OF ARTICLE X
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Article XI
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Certificate
Insurer or the Owners to the Grantor 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 Grantor 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 Grantor 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 Grantor
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 Grantor Trustee or any opinion of counsel may be
based, insofar as it relates to factual matters upon a certificate or opinion
of, or representations by, one or more Authorized Officers of the Depositor, 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
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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
Grantor Trustee, stating that the information with respect to such matters is in
the possession of the Grantor 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 Grantor 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 Grantor 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 Grantor 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 Grantor 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 Grantor 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
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or furnished to, or filed with the Grantor Trustee by any Owner, the Depositor
or the Certificate Insurer shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with and received by the
Grantor Trustee at the Corporate Trust Office.
Section 11.05. Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigns or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Grantor 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 Grantor 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 Grantor Trustee.
The Grantor Trustee may make reasonable rules for any meeting of
Owners.
Section 11.07. Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
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Section 11.08. Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.10. Legal Holidays.
In any case where the date of any Payment Date, any other date on which
any distribution to any Owner is proposed to be paid, or any date on which a
notice is required to be sent to any Person pursuant to the terms of this
Agreement shall not be a Business Day, then (notwithstanding any other provision
of the Certificates or this Agreement) payment or mailing need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made or mailed on the nominal date of any such Payment
Date, or such other date for the payment of any distribution to any Owner or the
mailing of such notice, as the case may be, and no interest shall accrue for the
period from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.
Section 11.11. Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or
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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 Grantor 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. The Servicer
agrees that service of such process upon the Grantor 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 Certificate Insurer or the Servicer or any third-party
beneficiary hereunder, as the case may be, to serve process in any other manner
permitted by law or to start legal proceedings relating to the Class A-2
Floating Certificate 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 Grantor 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 Grantor 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 Grantor 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 Grantor Trustee, the Depositor, and the Servicer may, at any
time and from time to time, and without notice to or the consent of the Owners
but with the consent of the Certificate Insurer amend this Agreement, subject to
the provisions of Section 11.17 and the Grantor Trustee shall consent to such
amendment, for the purpose of (i) curing any ambiguity, correcting or
supplementing any provision hereof which may be inconsistent with any other
provision hereof, or adding provisions hereto which are not inconsistent with
the provisions hereof; (ii) upon receipt of an opinion of counsel experienced in
federal income tax matters to the
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effect that no entity-level tax will be imposed on the Trust, removing the
restriction on transfer set forth in Section 5.08(b) hereof or (iii) complying
with the requirements of the Code and the regulations proposed or promulgated
thereunder or (iv) for any other purpose, provided that in the case of this
clause (iv) such amendment shall not adversely affect in any material respect
any Owner. Any such amendment shall be deemed not to adversely affect in any
material respect any Owner if there is delivered to the Grantor Trustee written
notification from each Rating Agency that such amendment will not cause such
Rating Agency to reduce its then current rating assigned to the Certificates
without regard to the Certificate Insurance Policy. Notwithstanding anything to
the contrary herein, no such amendment shall (a) change in any manner the amount
of, or change the timing of, payments which are required to be distributed to
any Owner without the consent of the Owner of such Certificate, or (b) which
affects in any manner the terms or provisions of the Certificate Insurance
Policy.
(b) Promptly after the execution of any such amendment, the Grantor
Trustee shall furnish written notification of the substance of such amendment to
the Certificate Insurer and each Owner in the manner set forth in Section 11.05,
and to the Rating Agencies.
(c) The Rating Agencies shall be provided with copies of any amendments
to this Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
Section 11.15. Paying Agent; Appointment and Acceptance of Duties.
The Grantor Trustee is hereby appointed Paying Agent. The Depositor
may, subject to the eligibility requirements for the Grantor Trustee set forth
in Section 10.08 hereof, appoint one or more other Paying Agents or successor
Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Grantor Trustee.
Each such Paying Agent other than the Grantor Trustee shall execute and
deliver to the Grantor Trustee an instrument in which such Paying Agent shall
agree with the Grantor Trustee, subject to the provisions of Section 6.02, that
such Paying Agent will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the Grantor
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 Grantor 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 Grantor Trustee. Any such
Paying Agent may be removed at any time by an instrument filed with such Paying
Agent and signed by the Grantor Trustee.
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In the event of the resignation or removal of any Paying Agent other
than the Grantor 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 Grantor Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Grantor Trustee shall notify the Certificate Insurer and the Owners
by mailing notice thereof at their addresses appearing on the Register.
Section 11.16. [RESERVED]
Section 11.17. Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Grantor Trustee shall not, without having obtained an opinion of counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
to the effect that such transaction does not result in a tax imposed on the
Trust (i) sell any assets in the Trust Estate, (ii) accept any contribution of
assets after the Startup Day or (iii) agree to any modification of this
Agreement.
Section 11.18. [RESERVED]
Section 11.19. The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
the Certificate Insurer is in default in its payment obligations under the
Certificate Insurance Policy. At such time as the Certificates and any
Reimbursement Amounts are no longer Outstanding hereunder, the Certificate
Insurer's rights hereunder shall terminate.
Section 11.20. [RESERVED]
Section 11.21. Third Party Rights.
The Grantor Trustee, the Depositor and the Owners agree that the
Certificate Insurer shall be deemed a third-party beneficiary of this Agreement
as if it were a party hereto.
Section 11.22. Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Grantor Trustee: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
Tel: (716) 842-5589
Fax: (716) 842-5905
Attention: Corporate Trust Administration
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The Depositor: ContiSecurities Asset Funding Corp.
3811 West Charleston Blvd., Suite 104
Las Vegas, NV 89102
Attention: Chief Counsel
Tel: (702) 822-5836
Fax: (702) 822-5839
The Servicer: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: Senior Vice President
and Chief Counsel
Tel: (215) 347-3000
Fax: (215) 347-3400
The Certificate
Insurer: MBIA Insurance Corporation
113 King St.
Armonk, NY 10504
Attention: Insured Portfolio Management - SF
(ContiMortgage Grantor Trust 1998-A)
Tel: (914) 273-4545
Fax: (914) 765-3810
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: The Home Equity Monitoring
Department
Tel: (212) 553-0300
Fax: (212) 553-4773
Fitch: Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Tel: (800) 753-4824
Fax: (212) 376-6964
Standard & Poor's: Standard & Poor's
26 Broadway, 15th Floor
New York, New York 10004
Tel: (212) 208-8000
Fax: (212) 412-0224
Attention: Manager of Structured Finance
Operations Group
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Underwriters: Merrill Lynch, Pierce, Fenner & Smith, Inc.
26th Floor
World Financial Center, North Tower
New York, New York 10281-1326
Tel: (212) 449-1000
Fax: (212) 449-9015
Greenwich Capital Markets, Inc.
600 Steamboat Rd.
Greenwich, CT 06830
Tel: (203) 622-5693
Fax: (203) 622-3650
Bear, Stearns & Co.
245 Park Avenue, 4th Floor
New York, New York 10167
Tel: (212) 272-3311
Fax: (212) 272-7294
ContiFinancial Services Corporation
277 Park Avenue, 38th Floor
New York, New York 10172
Attention: Chief Counsel, Chief
Financial Officer and Chief Operating Officer
Tel: (212) 207-2822
Fax: (212) 207-5251
Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Attention: Asset Finance
Tel: (212) 325-2000
Fax: (212) 325-8261
Morgan Stanley Dean Witter
1585 Broadway
New York, New York 10036
Tel: (212) 761-4000
Fax: (212) 761-0782
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Nomura Securities International, Inc.
2 World Financial Center
Building B
21st Floor
New York, New York 10281-1198
Tel: (212) 667-9087
Fax: (212) 667-1391
Attention: Helaine Hebble
Owners: As set forth in the Register.
Others: Any notice to the Depositor or the Servicer
shall also be furnished to:
ContiTrade Services L.L.C.
Chief Counsel
277 Park Avenue, 38th Floor
New York, New York 10172
Tel: (212) 207-2822
Fax: (212) 207-5251
END OF ARTICLE XI
66
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Grantor Trustee have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized, all as of the day and year first
above written.
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By:
--------------------------------------
Title:
By:
--------------------------------------
Title:
CONTIMORTGAGE CORPORATION, as Servicer
By:
--------------------------------------
Title:
By:
--------------------------------------
Title:
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Grantor Trustee
By:
--------------------------------------
Title: Assistant Vice President
[Signature Page to the Grantor Trust Agreement]
<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the th day of June, 1998, before me personally came and
, to me known, who, being by me duly sworn, did depose and say that
he/she resides at and , respectively;
that he/she is an Authorized Signatory of ContiSecurities Asset Funding Corp., a
Delaware Corporation; and that he/she signed his/her name thereto by order of
the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the day of June, 1998, before me personally came , to
me known, who, being by me duly sworn, did depose and say that he/she resides at
Bucks County; that he/she is a of ContiMortgage 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
<PAGE>
I-1
GRA7-17.doc
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 26th day of June, 1998, before me personally came Neil Witoff,
to me known, who, being by me duly sworn did depose and say that he resides at
Clarence, New York; that he is an Assistant Vice President of Manufacturers and
Traders Trust Company, the New York banking corporation described in and that
executed the above instrument as Grantor Trustee; and that he signed his name
thereto by order of the Board of Directors of said New York banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
<PAGE>
EXHIBIT A
FORM OF CLASS A-2 FLOATING CERTIFICATE
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.
CONTIMORTGAGE GRANTOR TRUST 1998-A
PASS-THROUGH CERTIFICATE
CLASS A-2 Floating
(Floating Rate Pass-Through Rate)
Representing Certain Interests in a Serviced by
CONTIMORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor is it insured or guaranteed by, ContiSecurities Asset Funding Corp., or
ContiMortgage Corporation. This Certificate represents a fractional ownership
interest in the ContiMortgage Home Equity Loan Trust 1998-2, Class A-2 Internal
Certificates and certain other property held by the Grantor Trust.)
Unless this certificate is presented by an authorized representative of
the Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("ContiMortgage Grantor Trust 1998-A") or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the
name of the Cede & Co. or in such other name as is requested by an authorized
representative of the DTC (and any payment is made to the 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, the Cede & Co., has an
interest herein.
No: A-2 Floating 21075WHF5
CUSIP
$175,000,000 June 29, 1998 March 15, 2013
- ------------ ------------- --------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the ContiMortgage Home Equity Loan Trust 1998-2,
Class A-2 Internal Certificates (the "Class A-2 Internal Certificates"); (b) the
Swap Agreement; (c) the Insurance
<PAGE>
Policy; (d) such amounts as may be held by the Grantor Trustee in the Grantor
Trust Account whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer); and (e)
proceeds of all the foregoing (including, but not by way of limitation, 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 Grantor Trust Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-2 Floating
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to July 15, 1998 (the first Payment
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 Grantor Trustee. The Grantor Trust
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
cancelled for all purposes under the Grantor Trust Agreement.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JULY 15, 1998 (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 ContiMortgage Grantor Trust 1998-A Pass-Through Certificates,
Class A-2 Floating (the "Class A-2 Floating Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Grantor Trust
Agreement dated as of June 1, 1998 (the "Grantor Trust Agreement") by and among
ContiMortgage Corporation, in its capacity as a Servicer (the "Servicer"),
ContiSecurities Asset Funding Corp., in its capacity as Depositor, (the
"Depositor") and Manufacturers and Traders Trust Company, a New York banking
corporation, in its capacity as the Grantor Trustee (the "Grantor Trustee"), to
which Grantor Trust Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Terms capitalized
herein and not otherwise defined herein shall have the respective meanings set
forth in the Grantor Trust Agreement.
On the 15th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing July 15, 1998, the Owners of the Class A-2 Floating Certificates as
of the close of business on the day preceding the day on which a Payment Date
occurs (the "Record Date") will be entitled to receive the Class A-2 Floating
Distribution Amount relating to such Certificate on such Payment Date.
Distributions will be made in immediately available funds to Owners of
Certificates having an aggregate original Class A-2 Floating 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
2
<PAGE>
appropriate facilities therefor, if such Owner has so notified the Grantor
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-2 Floating Certificate will be
entitled to receive such Owner's Percentage Interest in the amounts due on such
Payment Date to the Owners of the Class A-2 Floating Certificates. The
Percentage Interest of each Class A-2 Floating 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-2 Floating Certificate on the
Startup Day by the aggregate Class A-2 Floating Certificate Principal Balance on
the Startup Day.
The Grantor 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 Grantor Trust 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 Grantor Trustee to such Owner for all
purposes of the Grantor Trust Agreement.
The Class A-2 Floating Certificates will be serviced by the Servicer
pursuant to the Grantor Trust Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, or guaranteed by, ContiSecurities Asset Funding Corp. or
ContiMortgage Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Class A-2 Internal Certificates and amounts on deposit in the Grantor Trust
Account (except as otherwise provided in the Grantor Trust Agreement).
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Grantor Trust Agreement, or for the appointment
of a receiver or trustee, or for any other remedy under the Grantor Trust
Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Grantor Trust Agreement,
the Owner of any Certificate shall have the right which is absolute and
unconditional to receive distributions to the extent provided in the Grantor
Trust 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 Grantor Trust Agreement provides that the obligations created
thereby will terminate upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the Class A-2
Internal Certificate in the Grantor Trust Estate or (b) the final payment to the
Certificate Insurer of all amounts then owing to it.
The Grantor Trustee shall give written notice of termination of the
Grantor Trust Agreement to each Owner in the manner set forth therein.
As provided in the Grantor Trust 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
3
<PAGE>
and a like Percentage Interest will be issued to the designated transferee or
transferees.
The Grantor Trust 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 Grantor Trustee, and the
Servicer at any time and from time to time, and without the consent of the
Owners; provided, that in certain circumstances provided for in the Grantor
Trust 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 Grantor Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Grantor Trust Agreement.
The Class A-2 Floating Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Grantor Trust Agreement and subject to certain
limitations therein set forth, Class A-2 Floating Certificates are exchangeable
for new Class A-2 Floating 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 Grantor Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Grantor Trustee and any agent of the Grantor Trustee may treat the
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Grantor Trustee or any such agent shall be affected by
notice to the contrary, except as may otherwise be specifically provided in the
Grantor Trust Agreement.
4
<PAGE>
IN WITNESS WHEREOF, the Grantor Trustee has caused this Certificate to
be duly executed.
MANUFACTURERS AND TRADERS
TRUST COMPANY, as Grantor Trustee
By:
-------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Grantor Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Grantor Trustee
By:
-----------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: June 29, 1998
5
<PAGE>
EXHIBIT B
FORM OF GRANTOR TRUSTEE'S RECEIPT
GRANTOR TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
-------------------------------------------
Manufacturers and Traders Trust Company, in its capacity as Grantor
Trustee (the "Grantor Trustee") under that certain Grantor Trust Agreement dated
as of June 1, 1998 (the "Grantor Trust Agreement") among ContiSecurities Asset
Funding Corp., as Depositor, ContiMortgage Corporation, a Delaware corporation,
as the servicer ("ContiMortgage") and Manufacturers and Traders Trust Company,
as trustee (the "Grantor Trustee"), hereby acknowledges receipt of the Class A-2
Internal Certificates pursuant to Section 3.05 the Grantor Trust Agreement.
MANUFACTURERS AND TRADERS TRUST
COMPANY, AS GRANTOR TRUSTEE
By:
------------------------------
Name: Neil B. Witoff
Title: Assistant Vice President
Dated: June 29, 1998
<PAGE>
EXHIBIT C
FORM OF DELIVERY ORDER
DELIVERY ORDER
--------------
Manufacturers and Traders Trust Company, as Grantor Trustee
under the Grantor Trust Agreement
One M&T Plaza
Buffalo, New York 14203
Attention: Corporate Trust Department
Dear Ladies and Gentlemen:
Pursuant to Section 4.01 of the Grantor Trust Agreement, dated as of
June 1, 1998 (the "Pooling and Servicing Agreement"), among ContiSecurities
Asset Funding Corp. ("ContiSecurities"), as Depositor, ContiMortgage
Corporation, as the servicer and Manufacturers and Traders Trust Company, as
trustee (the "Grantor Trustee"), ContiSecurities HEREBY CERTIFIES that all
conditions precedent to the issuance of the Grantor Trust 1998-A, Pass-Through
Certificates, Class A-2 Floating (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.
Very truly yours,
CONTISECURITIES ASSET FUNDING CORP.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
Dated: June 29, 1998
<PAGE>
Exhibit 8.1
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
July 16, 1998
ContiSecurities Asset Funding Corp.
277 Park Avenue
New York, New York 10172
Re: ContiSecurities Asset Funding Corp.
ContiMortgage Home Equity Loan Trust 1998-2
Registration Statement on Form S-3
(No. 333-39505)
-------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for ContiSecurities Asset Funding
Corp. in connection with the preparation and filing of the registration
statement on Form S-3 (such registration statement, the "Registration
Statement") filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Act"), in respect of ContiMortgage
Home Equity Loan Pass-Through Certificates, Series 1998-2 (the "Certificates").
Our advice formed the basis for the description of federal income tax
consequences appearing under the heading "Certain Federal Income Tax
Consequences" in the prospectus supplement contained in the Registration
Statement. Such description does not purport to discuss all possible federal
income tax consequences of an investment in Certificates but with respect to
those tax consequences which are discussed, it is our opinion that the
description is accurate. In addition, assuming (i) the REMIC elections are
made, (ii) the Pooling and Servicing Agreement is fully executed, delivered and
enforceable against the parties thereto in accordance with its terms, (iii) the
transaction described in the prospectus supplement is completed on
substantially the terms and conditions set forth therein, and (iv) continuing
compliance with the Pooling and Servicing Agreement, it is our opinion that,
for federal income tax purposes, REMIC I, REMIC II and REMIC III will each be
treated as a REMIC, each Class of the Class A, Class B and Class C Certificates
will be treated as "regular interests" in a REMIC, the Class R-II Certificates
will be treated as the sole "residual interest" in REMIC II, the Class R-I
Certificates will be treated as the sole "residual interest" in REMIC I and the
Class R Certificates will be treated as the sole "residual interest" in REMIC
III.
Very truly yours,
DEWEY BALLANTINE LLP
