<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) March 4, 1999
ContiMortgage Home Equity Loan Trust 1999-1
(Exact name of registrant as specified in its charter)
New York 333-61863 Application Pending
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) ID Number)
3811 West Charleston Boulevard, Suite 104, Las Vegas, Nevada 89102
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (702) 822-5836
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
ContiSecurities Asset Funding Corp. registered issuance of up to
$9,000,000,000 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. 333-61863) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, ContiMortgage Home Equity Loan Trust 1999-1 (the
"Registrant" or the "Trust") issued $650,000,000 in aggregate principal amount
of its Home Equity Pass-Through Certificates, Series 1999-1, Class A and Class B
(the "Offered Certificates"), on March 4, 1999. 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 Offered 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 February 1, 1999, 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, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8 and Class A-9IO (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"), 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.
The assets of the Trust initially include two pools 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
thereof (or, in the case of the Class A-9IO Certificates, the Notional Principal
Amount) thereof and the applicable Pass-Through Rate thereof. The Pass-Through
Rates for the Class A Certificates as defined in the Pooling and Servicing
Agreement are as follows: Class A-1, 6.01%, Class A-2, 6.00%; Class A-3, 6.17%;
Class A-4, 6.30%; Class A-5, 6.37%; Class A-6, 6.85%; Class A-7, 6.47% and Class
A-9IO, 7.00%. The Pass-Through Rate for the Class A-8 Certificates is at a
variable rate as defined in the Pooling and Servicing Agreement. The
Pass-Through Rate for the Class B Certificates is 8.50%. The Class A
Certificates have initial aggregate principal amounts as follows: Class A-1;
$164,250,000; Class A-2; $96,940,000; Class A-3; $53,259,000; Class A-4;
$29,905,000; Class A-5; $31,401,000; Class A-6; $53,245,000; Class A-7;
$34,125,000; and Class A-8; $154,375,000. The Class A-9IO Certificates are
interest only and have no Certificate Principal Balance. The
2
<PAGE>
Class B Certificates have initial aggregate principal amounts as follows: Class
B; $32,500,000.
As of the Cut-Off Date, the Home Equity Loans possessed the
characteristics described in the Prospectus dated September 17, 1998 and the
Prospectus Supplement (the "Prospectus Supplement") dated February 24, 1999
filed pursuant to Rule 424(b)(5) of the Act on March 2, 1999.
The Offered Certificates (the "Offered Certificates") as defined in the
Prospectus Supplement, are as follows: 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-9IO and the Class B
Certificates.
Item 5. Other Events.
On November 1, 1998, the ContiMortgage Home Equity Loan Trust 1999-1
entered into a Subservicing Agreement attached hereto as Exhibit 99.1 and an
Addendum Number 1 to Subservicing Agreement attached hereto as Exhibit 99.2.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
4.1 Underwriting Agreement dated as of February 24, 1999 among
ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as a seller and servicer, ContiWest
Corporation, as a seller and Bear, Stearns & Co. Inc., as
representative of the several underwriters.
4.2 Pricing Letter, dated as of March 4, 1999 among
ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as a seller and servicer, ContiWest
Corporation, as a seller and Bear, Stearns & Co. Inc., as
representative of the several underwriters.
4.3 Pooling and Servicing Agreement dated as of March 1, 1999
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.
8.1 Opinion of Dewey Ballantine LLP regarding certain tax
matters.
23.1 Consent of Dewey Ballantine LLP (included in Exhibit
8.1).
3
<PAGE>
99.1 Subservicing Agreement, dated as of November 1, 1998,
among ContiMortgage Corporation, as Servicer and Seller,
ContiWest Corporation, as Seller ContiSecurities Asset Funding
Corp., as Depositor, Continental Grain Company, as Subservicer
and Manufacturers and Traders Trust Company, as Trustee.
99.2 Addendum Number 2 to Subservicing Agreement, dated as of
March 1, 1999 among ContiMortgage Corporation, as Servicer and
Seller, ContiWest Corporation, as Seller ContiSecurities Asset
Funding Corp., as Depositor, Continental Grain Company, as
Subservicer and Manufacturers and Traders Trust Company, as
Trustee.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONTISECURITIES ASSET FUNDING CORP.
By: /s/ Mary Rapoport
----------------------------
Name: Mary Rapoport
Title: Authorized Signatory
By: /s/ John Banu
----------------------------
Name: John Banu
Title: Authorized Signatory
Dated: March 22, 1999
5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Page
- ------- ----
4.1 Underwriting Agreement dated as of February 24,
1999 among ContiSecurities Asset Funding Corp., as
Depositor, ContiMortgage Corporation, as a seller
and servicer, ContiWest Corporation, as a seller
and Bear, Stearns & Co. Inc., as representative of
the several underwriters.
4.2 Pricing Letter, dated as of March 4, 1999 among
ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as a seller and
servicer, ContiWest Corporation, as a seller and
Bear, Stearns & Co. Inc., as representative of the
several underwriters.
4.3 Pooling and Servicing Agreement dated as of March
1, 1999, 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.
8.1 Opinion of Dewey Ballantine LLP regarding certain
tax matters.
23.1 Consent of Dewey Ballantine LLP (included in
Exhibit 8.1).
99.1 Subservicing Agreement, dated as of November 1,
1998, among ContiMortgage Corporation, as Servicer,
ContiWest Corporation, as Seller, ContiSecurities
Asset Funding Corp., as Depositor, Continental
Grain Company, as Subservicer and Manufacturers and
Traders Trust Company, as Trustee.
99.2 Addendum Number 2 to Subservicing Agreement, dated
as of March 1, 1999 among ContiMortgage
Corporation, as Servicer, ContiWest Corporation, as
Seller, ContiSecurities Asset Funding Corp., as
Depositor, Continental Grain Company, as
Subservicer and Manufacturers and Traders Trust
Company, as Trustee.
<PAGE>
Exhibit 4.1
EXECUTION COPY
$650,000,000
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
Home Equity Loan Pass-Through Certificates
Series 1999-1
UNDERWRITING AGREEMENT
February 24, 1999
Bear, Stearns & Co. Inc.
as Representative of the Several Underwriters
245 Park Avenue, 4th Floor
New York, NY 10167
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 1999-1, 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 IO (the "Class A
Certificates") and Class B (the "Class B Certificates" and, together with the
Class A Certificates, the "Offered Certificates"). Also issued are the Class C
Certificates, the Class R Certificates, the Class R-I Certificates and the Class
R-II Certificates (the "Retained Certificates"). The Class A Certificates, the
Class B Certificates and the Retained Certificates are collectively 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. Bear, Stearns & Co. Inc. is acting
as representative of the several Underwriters and in such capacity is
hereinafter referred to as the "Representative."
The Certificates will be issued under a pooling and servicing
agreement (the "Pooling and Servicing Agreement"), to be dated as of February 1,
1999 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 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 home equity loans
and the other comprised of adjustable rate home equity loans, having a
<PAGE>
Cut-Off Date as of the close of business on February 10, 1999 (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 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.
The Class A Certificates will be entitled to the benefits of a
certificate guaranty insurance policy (the "Policy") issued by Ambac Assurance
Corporation ("Ambac"). The Depositor, ContiMortgage and ContiWest will also
enter into an Indemnification Agreement (the "Indemnification Agreement") dated
as of February 1, 1999 among the Underwriters, the Depositor, ContiMortgage,
ContiWest and Ambac, 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 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. 333-61863), 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 September 17, 1998; 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
2
<PAGE>
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 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
3
<PAGE>
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.
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 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 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, this Agreement or the Certificates.
G. This Agreement has been, 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 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
4
<PAGE>
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,
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 or 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 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, or 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 to
authenticate, issue and deliver the Certificates has been duly authorized by the
Depositor, and, assuming the Trustee has been duly authorized to undertake such
actions, when executed, authenticated, issued and delivered by the Trustee, as
applicable, in accordance with the Pooling and Servicing 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.
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 or 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
5
<PAGE>
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 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 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 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 Class B Certificates) shall have been rated in the highest rating category
by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's, a division of
the McGraw-Hill Companies, Inc. ("Standard & Poor's") and Fitch IBCA, Inc.
("Fitch"), and the Class B 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 and 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 Pooling and Servicing Agreement will be true and correct in all material
respects.
6
<PAGE>
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.
W. Reserved.
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.
Notwithstanding anything herein to the contrary, the purchase
price of the Class B Certificates will be subject to the negotiated price to be
determined on or prior to the Closing Date, as set forth in a letter between the
parties hereto (the "Pricing Letter") which Pricing Letter, a form of which is
attached hereto as Exhibit B, shall be deemed to be incorporated by reference as
part of Schedule A hereto. Any reference to delivery and payment of the Offered
Certificates shall only include the Class B Certificates to the extent that the
Pricing Letter has been fully executed. The failure of the parties hereto to
agree on a purchase price for the Class B Certificates shall not in any way
affect the obligation of the parties hereto with respect to the purchase and
delivery of the other Offered Certificates. Upon the execution of the Pricing
Letter by the parties hereto, the purchase and sale of the Class B Certificates
shall otherwise be subject to all of the terms and conditions contained in this
agreement.
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 March 4, 1999 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
Offered 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.
7
<PAGE>
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 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
8
<PAGE>
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
Underwriter's 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 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
9
<PAGE>
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.
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
10
<PAGE>
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 Pooling and
Servicing Agreement, the Certificates, the Registration Statement and the
Prospectus, and all other legal matters relating to this Agreement and the
transactions 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 Ambac their written opinion, as counsel to the Depositor,
addressed to the Underwriters and Ambac and dated the Closing Date, in form and
substance satisfactory to the Underwriters and Ambac, 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
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.
11
<PAGE>
(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.
(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 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 Certificates, the Class B Certificates
and the Class C Certificates will be treated as "regular interests" in
a REMIC, and the Class R, Class R-I and Class R-II Certificates will be
treated as the sole "residual interest" in a REMIC. 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 Certificates, Class B
and Class C 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, REMIC II and REMIC III as REMICs, interest on the Class A, Class B
and Class C 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 assets are treated as "real estate assets"
under Section 856(c) of the Code.
(xi) Reserved.
(xii) Reserved.
12
<PAGE>
(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 Ambac a written
statement, addressed to the Underwriters and Ambac and dated the Closing Date,
in form and substance satisfactory to the Underwriters and Ambac 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 Ambac their written
opinion, as counsel to ContiMortgage and ContiWest, addressed to the
Underwriters and Ambac 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.
(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.
13
<PAGE>
(iii) The Pooling and Servicing 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 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.
(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).
14
<PAGE>
(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 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 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 Ambac 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 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
15
<PAGE>
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 Ambac his written opinion, addressed to
the Underwriters and Ambac and dated the Closing Date, in form and substance
satisfactory to the Underwriters and Ambac, 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 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
16
<PAGE>
might materially and adversely affect the properties or assets, taken
as a whole, of the Depositor.
(iii) This 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 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 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
ability to perform its obligations under this Agreement and the Pooling
and Servicing Agreement.
(v) The direction by the Depositor to the Trustee to
issue, authenticate and deliver the Certificates has been duly
authorized by the Depositor and, assuming that the Trustee has been
duly authorized to do so, when executed, authenticated and delivered by
the Trustee in accordance with the Pooling and Servicing Agreement, the
Certificates will be validly issued and outstanding and will be
entitled to the benefits of the Pooling and Servicing 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
17
<PAGE>
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 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 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,
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 Ambac shall have received the
favorable opinion of counsel to the Trustee, dated the Closing Date, addressed
to the Underwriters and in form and scope satisfactory to counsel to the
Underwriters, to the effect that:
(i) The Trustee is a banking corporation duly
incorporated and validly existing under the law of the State of New
York.
(ii) The Trustee has the full corporate trust power
to execute, deliver and perform its obligations under the Pooling and
Servicing Agreement.
(iii) The execution and delivery by the Trustee of
the Pooling and Servicing Agreement, and the performance by the Trustee
of its obligations under the Pooling and Servicing Agreement, have been
duly authorized by all necessary corporate action of the Trustee.
(iv) The Pooling and Servicing Agreement is a valid
and legally binding obligation of the Trustee enforceable against the
Trustee.
(v) The execution and delivery by the Trustee of the
Pooling and Servicing Agreement does not (a) violate the Organization
Certificate of the Trustee or the by-laws of the Trustee, (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 the Trustee 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
18
<PAGE>
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 Certificates have been duly executed,
authenticated and delivered by the 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 the Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if decided
adversely to the Trustee, would materially and adversely affect the
ability of the Trustee to carry out the transactions contemplated in
the Pooling and Servicing Agreement.
J. The Underwriters and Ambac 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. Reserved.
L. The Depositor, ContiMortgage, ContiWest and ContiFinancial
shall each have furnished to the Underwriters and Ambac 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
19
<PAGE>
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 December 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 December 31, 1998 other than as disclosed in
ContiFinancial's Form 10-Q dated February 16, 1999. No publicly-held
debt of ContiFinancial shall have been downgraded or put on credit
watch for possible downgrade, nor is ContiFinancial aware of any
anticipated downgrading or credit watch situation regarding
ContiFinancial, in each case since February 18, 1999, other than as
previously disclosed to the underwriter on or prior to the date hereof;
there has been no suspension of trading in ContiFinancial's
publicly-held common stock since December 31, 1998.
M. The Trustee shall have furnished to the Underwriters and
Ambac 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 Policy 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 Class B
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 Class B 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
20
<PAGE>
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 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 Policy 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
Ambac and the other parties thereto at or prior to the Closing Date.
V. The Underwriters shall have received a favorable opinion of
Thacher, Proffitt and Wood counsel to Ambac, dated the Closing Date and in form
and substance satisfactory to counsel for the Underwriters, to the effect that:
(i) Ambac is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of
Wisconsin. Ambac is validly licensed to do business in Wisconsin and is
authorized to issue the Policy and perform its obligations under the
Policy in accordance with the terms thereof.
(ii) The execution and delivery by Ambac of the
Policy and the Indemnification Agreement are within the corporate power
of Ambac and have been
21
<PAGE>
authorized by all necessary corporate action on the part of Ambac; the
Policy has 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 Policy 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) Ambac 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 Ambac 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.
In rendering this opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of Ambac 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 Ambac.
W. The Underwriters shall have received from Ambac a
certificate, signed by the president, a senior vice president or a vice
president of Ambac, dated the Closing Date, to the effect that the signer of
such certificate has carefully examined the Policy, 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 Ambac which, if adversely
determined, individually or in the aggregate, would adversely affect
the Insurer's performance under the Policy or the Indemnification
Agreement;
(ii) Each person who as an officer or representative
of Ambac, signed or signs the Policy, 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 Policy" 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 Policy or the ability of Ambac to
meet its payment obligations under the Policy;
22
<PAGE>
(iv) The tables regarding Ambac's capitalization set
forth under the caption "The Certificate Insurer" presents fairly the
capitalization of the Insurer as of September 30, 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 Ambac by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of the Securities Act;
(vi) The audited balance sheet of Ambac as of
December 31, 1998 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 financial condition of Ambac 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 Ambac as of December 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 Ambac 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, 1998 audited
statements.
(vii) to the best knowledge of such officer, since
December 31, 1998, no material adverse change has occurred in the
financial position of Ambac other than as set forth in the Prospectus
Supplement.
The officer of Ambac certifying to items (v) - (vii) shall be
an officer in charge of a principal financial function.
Ambac 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:
23
<PAGE>
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
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
24
<PAGE>
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, and shall reimburse such Underwriter and any
such director, officer or controlling person for any legal or other expenses
reasonably incurred by such Underwriter 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 the Depositor may otherwise 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
25
<PAGE>
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 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
26
<PAGE>
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 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
27
<PAGE>
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 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-9 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
28
<PAGE>
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.
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 including such information
as to which an accountant's letter was not furnished to the Underwriter or the
Seller.
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
29
<PAGE>
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 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 Depositor 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 Bear, Stearns & Co. Inc., 245 Park Avenue,
4th Floor, New York, New York 10167, Attention: Tom Dunstan; 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 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
30
<PAGE>
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.
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. Reserved.
31
<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: /s/ John Banu
----------------------------
Name: John Banu
Title: Authorized Signatory
By: /s/ Mary Rapoport
-----------------------------
Name: Mary Rapoport
Title: Authorized Signatory
CONFIRMED AND ACCEPTED, as of the date first above written:
BEAR, STEARNS & CO. INC.
Acting on its own behalf and as Representative
of the Several Underwriters
referred to in the foregoing agreement
By: /s/ Thomas S. Dunstan
--------------------------------
Name: Thomas S. Dunstan
Title: Managing Director
CONTIMORTGAGE CORPORATION CONTIWEST CORPORATION
Accepts and hereby agrees solely Accepts and hereby agrees solely
to the provisions of Section V (H) to the provisions of Section V (I)
By: /s/ Margaret M. Curry By: /s/ Joy Tolbert
----------------------------- -----------------------------
Name: Margaret M. Curry Name: Joy Tolbert
Title: Senior Vice President Title: Vice President
By: /s/ Robert Davis By: /s/ Todd Hart
----------------------------- -----------------------------
Name: Robert Davis Name: Todd Hart
Title: Senior Vice President Title: Assistant Secretary
<PAGE>
SCHEDULE A
Class A-1 Certificates
<TABLE>
<CAPTION>
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $32,850,000 99.99184% 0.140% 99.85184%
Credit Suisse First Boston Corporation $32,850,000 99.99184% 0.140% 99.85184%
Greenwich Capital Markets, Inc. $32,850,000 99.99184% 0.140% 99.85184%
Merrill Lynch, Pierce, Fenner & Smith $32,850,000 99.99184% 0.140% 99.85184%
Incorporated
PaineWebber Incorporated $32,850,000 99.99184% 0.140% 99.85184%
<CAPTION>
Class A-2 Certificates
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $19,388,000 99.99718% 0.175% 99.82218%
Credit Suisse First Boston Corporation $19,388,000 99.99718% 0.175% 99.82218%
Greenwich Capital Markets, Inc. $19,388,000 99.99718% 0.175% 99.82218%
Merrill Lynch, Pierce, Fenner & Smith $19,388,000 99.99718% 0.175% 99.82218%
Incorporated
PaineWebber Incorporated $19,388,000 99.99718% 0.175% 99.82218%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A-3 Certificates
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $10,651,800 99.98992% 0.200% 99.78992%
Credit Suisse First Boston Corporation $10,651,800 99.98992% 0.200% 99.78992%
Greenwich Capital Markets, Inc. $10,651,800 99.98992% 0.200% 99.78992%
Merrill Lynch, Pierce, Fenner & Smith $10,651,800 99.98992% 0.200% 99.78992%
Incorporated
PaineWebber Incorporated $10,651,800 99.98992% 0.200% 99.78992%
<CAPTION>
Class A-4 Certificates
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $5,981,000 99.97163% 0.225% 99.74663%
Credit Suisse First Boston Corporation $5,981,000 99.97163% 0.225% 99.74663%
Greenwich Capital Markets, Inc. $5,981,000 99.97163% 0.225% 99.74663%
Merrill Lynch, Pierce, Fenner & Smith $5,981,000 99.97163% 0.225% 99.74663%
Incorporated
PaineWebber Incorporated $5,981,000 99.97163% 0.225% 99.74663%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A-5 Certificates
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $6,280,200 99.99438% 0.275% 99.71938%
Credit Suisse First Boston Corporation $6,280,200 99.99438% 0.275% 99.71938%
Greenwich Capital Markets, Inc. $6,280,200 99.99438% 0.275% 99.71938%
Merrill Lynch, Pierce, Fenner & Smith $6,280,200 99.99438% 0.275% 99.71938%
Incorporated
PaineWebber Incorporated $6,280,200 99.99438% 0.275% 99.71938%
<CAPTION>
Class A-6 Certificates
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $10,649,000 99.96192% 0.375% 99.58692%
Credit Suisse First Boston Corporation $10,649,000 99.96192% 0.375% 99.58692%
Greenwich Capital Markets, Inc. $10,649,000 99.96192% 0.375% 99.58692%
Merrill Lynch, Pierce, Fenner & Smith $10,649,000 99.96192% 0.375% 99.58692%
Incorporated
PaineWebber Incorporated $10,649,000 99.96192% 0.375% 99.58692%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A-7 Certificates
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $6,825,000 99.99819% 0.350% 99.64819%
Credit Suisse First Boston Corporation $6,825,000 99.99819% 0.350% 99.64819%
Greenwich Capital Markets, Inc. $6,825,000 99.99819% 0.350% 99.64819%
Merrill Lynch, Pierce, Fenner & Smith $6,825,000 99.99819% 0.350% 99.64819%
Incorporated
PaineWebber Incorporated $6,825,000 99.99819% 0.350% 99.64819%
<CAPTION>
Class A-8 Certificates
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $28,875,000 100.00000% 0.250% 99.75000%
ContiFinancial Services Corporation $10,000,000 100.00000% 0.250% 99.75000%
Credit Suisse First Boston Corporation $28,875,000 100.00000% 0.250% 99.75000%
Greenwich Capital Markets, Inc. $28,875,000 100.00000% 0.250% 99.75000%
Merrill Lynch, Pierce, Fenner & Smith $28,875,000 100.00000% 0.250% 99.75000%
Incorporated
PaineWebber Incorporated $28,875,000 100.00000% 0.250% 99.75000%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A-9 IO Certificates
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. 100% 15.90905% 0.0795% 15.82955%
</TABLE>
<PAGE>
EXHIBIT A
[Letterhead of CONTIFINANCIAL CORPORATION]
February ___, 1999
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
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 Bear, Stearns & Co. Inc., as Representative of the
Several Underwriters, with its principal office at 245 Park Madison Avenue, New
York, New York 10167.
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 February __, 1999, between Depositor and Bear, Stearns &
Co. Inc., 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 February __, 1999
BEAR, STEARNS & CO. INC.
as Representative of the Several Underwriters
By:
--------------------------
Name:
Title:
<PAGE>
EXHIBIT B
[FORM OF PRICING LETTER]
March ___, 1999
Bear, Stearns & Co. Inc.
as Representative of the Several Underwriters
245 Park Avenue, 4th Floor
New York, NY 10167
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement (the "Underwriting
Agreement") dated as of February __, 1999, among ContiSecurities Asset Funding
Corp., ContiMortgage Corporation, ContiWest Corporation and Bear, Stearns & Co.
Inc., as representative of the Several Underwriters. Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Underwriting Agreement.
This letter shall constitute the Pricing Letter referred to in Section
II of the Underwriting Agreement and shall be deemed to be incorporated by
reference as part of Schedule A thereto.
The parties hereto agree on the following purchase price for the Class
B Certificates:
<TABLE>
<CAPTION>
Class B Certificates
Underwriter Principal Amount Price to Public Underwriting Purchase Price
- ----------- ---------------- --------------- Discount --------------
--------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $6,500,000 $__________ 0.800% $__________
Credit Suisse First Boston Corporation $6,500,000 $__________ 0.800% $__________
Greenwich Capital Markets, Inc. $6,500,000 $__________ 0.800% $__________
Merrill Lynch, Pierce, Fenner & Smith $6,500,000 $__________ 0.800% $__________
Incorporated
PaineWebber Incorporated $6,500,000 $__________ 0.800% $__________
</TABLE>
<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:
BEAR, STEARNS & CO. INC.
Acting on its own behalf and as
Representative of the Several Underwriters
referred to in the Underwriting Agreement
By:
-----------------------
Name:
Title:
CONTIMORTGAGE CORPORATION CONTIWEST CORPORATION
By: By:
----------------------- -----------------------
Name: Name:
Title: Title:
By: By:
----------------------- -----------------------
Name: Name:
Title: Title:
<PAGE>
Exhibit 4.2
March 4, 1999
Bear, Stearns & Co. Inc.
as Representative of the Several Underwriters
245 Park Avenue, 4th Floor
New York, NY 10167
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement (the "Underwriting
Agreement") dated as of February 24, 1999, among ContiSecurities Asset Funding
Corp., ContiMortgage Corporation, ContiWest Corporation and Bear, Stearns & Co.
Inc., as representative of the Several Underwriters. Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Underwriting Agreement.
This letter shall constitute the Pricing Letter referred to in Section
II of the Underwriting Agreement and shall be deemed to be incorporated by
reference as part of Schedule A thereto.
The parties hereto agree on the following purchase price for the Class
B Certificates:
<TABLE>
<CAPTION>
Class B Certificates
Underwriting
Underwriter Principal Amount Price to Public Discount Purchase Price
- ----------- ---------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Bear, Stearns & Co. Inc. $6,500,000 90.27770% 0.800% 89.47770%
Credit Suisse First Boston Corporation $6,500,000 90.27770% 0.800% 89.47770%
Greenwich Capital Markets, Inc. $6,500,000 90.27770% 0.800% 89.47770%
Merrill Lynch, Pierce, Fenner & Smith $6,500,000 90.27770% 0.800% 89.47770%
Incorporated
PaineWebber Incorporated $6,500,000 90.27770% 0.800% 89.47770%
</TABLE>
<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: /s/ John Banu
----------------------------
Name: John Banu
Title: Authorized Signatory
By: /s/ Mary Rapoport
----------------------------
Name: Mary Rapoport
Title: Authorized Signatory
CONFIRMED AND ACCEPTED, as of the date first above written:
BEAR, STEARNS & CO. INC.
Acting on its own behalf and as
Representative of the Several Underwriters
referred to in the Underwriting Agreement
By: /s/ Thomas S. Dunstan
---------------------------
Name: Thomas S. Dunstan
Title: Managing Director
CONTIMORTGAGE CORPORATION CONTIWEST CORPORATION
By: /s/ Margaret M. Curry By: /s/ Joy Tolbert
--------------------------- -----------------------------
Name: Margaret M. Curry Name: Joy Tolbert
Title: Senior Vice President Title: Vice President
By: /s/ Robert Davis By: /s/ Todd Hart
--------------------------- -----------------------------
Name: Robert Davis Name: Todd Hart
Title: Senior Vice President Title: Assistant Secretary
<PAGE>
EXECUTION COPY
================================================================================
----------
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1999
----------
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 1999-1
================================================================================
<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................................................................32
Section 1.03 Captions; Table of Contents.............................................................32
Section 1.04 Opinions................................................................................32
Article II ESTABLISHMENT AND ORGANIZATION OF THE TRUST.....................................................33
Section 2.01 Establishment of the Trust..............................................................33
Section 2.02 Office..................................................................................33
Section 2.03 Purposes and Powers.....................................................................33
Section 2.04 Appointment of the Trustee; Declaration of Trust........................................33
Section 2.05 Expenses of the Trust...................................................................33
Section 2.06 Ownership of the Trust..................................................................34
Section 2.07 Situs of the Trust......................................................................34
Section 2.08 Miscellaneous REMIC Provisions..........................................................34
Article III REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS.................................................40
Section 3.01 Representations and Warranties of the Depositor.........................................40
Section 3.02 Representations and Warranties of the Servicer..........................................42
Section 3.03 Representations and Warranties of the Sellers...........................................44
Section 3.04 Covenants of the Sellers to Take Certain Actions with Respect to the
Home Equity Loans In Certain Situations.................................................50
Section 3.05 Conveyance of the Home Equity Loans and Qualified Replacement
Mortgages...............................................................................59
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
Certification by Trustee................................................................64
Article IV ISSUANCE AND SALE OF CERTIFICATES...............................................................66
Section 4.01 Issuance of Certificates................................................................66
Section 4.02 Sale of Certificates....................................................................66
Article V CERTIFICATES AND TRANSFER OF INTERESTS..........................................................67
Section 5.01 Terms...................................................................................67
Section 5.02 Forms...................................................................................67
Section 5.03 Execution, Authentication and Delivery..................................................67
Section 5.04 Registration and Transfer of Certificates...............................................68
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.......................................70
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 5.06 Persons Deemed Owners...................................................................71
Section 5.07 Cancellation............................................................................71
Section 5.08 Limitation on Transfer of Ownership Rights..............................................71
Section 5.09 Assignment of Rights....................................................................73
Article VI COVENANTS.......................................................................................74
Section 6.01 Distributions...........................................................................74
Section 6.02 Money for Distributions to be Held in Trust; Withholding................................74
Section 6.03 Protection of Trust Estate..............................................................75
Section 6.04 Performance of Obligations..............................................................76
Section 6.05 Negative Covenants......................................................................76
Section 6.06 No Other Powers.........................................................................77
Section 6.07 Limitation of Suits.....................................................................77
Section 6.08 Unconditional Rights of Owners to Receive Distributions.................................78
Section 6.09 Rights and Remedies Cumulative..........................................................78
Section 6.10 Delay or Omission Not Waiver............................................................78
Section 6.11 Control by Owners.......................................................................78
Section 6.12 Indemnification.........................................................................79
Section 6.13 Access to Names and Addresses of Owners of Certificates.................................79
Article VII ACCOUNTS, DISBURSEMENTS AND RELEASES............................................................81
Section 7.01 Collection of Money.....................................................................81
Section 7.02 Establishment of Accounts...............................................................81
Section 7.03 Flow of Funds...........................................................................81
Section 7.04 [Reserved]..............................................................................85
Section 7.05 Investment of Accounts..................................................................85
Section 7.06 Payment of Trust Expenses...............................................................86
Section 7.07 Eligible Investments....................................................................86
Section 7.08 Accounting and Directions by Trustee....................................................88
Section 7.09 Reports by Trustee to Owners and the Certificate Insurer................................89
Section 7.10 Reports by Trustee......................................................................94
Section 7.11 Preference Payments.....................................................................95
Article VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS...............................................96
Section 8.01 Servicer and Sub-Servicers..............................................................96
Section 8.02 Collection of Certain Home Equity Loan Payments.........................................97
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers.............................97
Section 8.04 Successor Sub-Servicers.................................................................98
Section 8.05 Liability of Servicer; Indemnification..................................................98
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee,
Certificate Insurer or the Owners.......................................................98
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee.........................99
Section 8.08 Principal and Interest Account..........................................................99
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Section 8.09 Delinquency Advances and Servicing Advances............................................101
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.................................102
Section 8.11 Maintenance of Insurance...............................................................103
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements............................103
Section 8.13 Realization Upon Defaulted Home Equity Loans; Modification.............................104
Section 8.14 Trustee to Cooperate; Release of Files.................................................106
Section 8.15 Servicing Compensation.................................................................107
Section 8.16 Annual Statement as to Compliance......................................................107
Section 8.17 Annual Independent Certified Public Accountants' Reports...............................107
Section 8.18 Access to Certain Documentation and Information Regarding the
Home Equity Loans......................................................................108
Section 8.19 Assignment of Agreement................................................................108
Section 8.20 Removal of Servicer; Resignation of Servicer...........................................108
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions Insurance.....................113
Article IX TERMINATION OF TRUST...........................................................................114
Section 9.01 Termination of Trust...................................................................114
Section 9.02 Termination Upon Option of Owners of Class R-I Certificates............................114
Section 9.03 Termination Upon Loss of REMIC Status..................................................115
Section 9.04 Disposition of Proceeds................................................................117
Article X THE TRUSTEE....................................................................................118
Section 10.01 Certain Duties and Responsibilities....................................................118
Section 10.02 Removal of Trustee for Cause...........................................................119
Section 10.03 Certain Rights of the Trustee..........................................................121
Section 10.04 Not Responsible for Recitals or Issuance of Certificates...............................122
Section 10.05 May Hold Certificates..................................................................123
Section 10.06 Money Held in Trust....................................................................123
Section 10.07 Compensation and Reimbursement; No Lien for Fees.......................................123
Section 10.08 Corporate Trustee Required; Eligibility................................................123
Section 10.09 Resignation and Removal; Appointment of Successor......................................123
Section 10.10 Acceptance of Appointment by Successor Trustee.........................................125
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the Trustee.............125
Section 10.12 Reporting; Withholding.................................................................126
Section 10.13 Liability of the Trustee...............................................................126
Section 10.14 Appointment of Co-Trustee or Separate Trustee..........................................127
Article XI MISCELLANEOUS..................................................................................129
Section 11.01 Compliance Certificates and Opinions...................................................129
Section 11.02 Form of Documents Delivered to the Trustee.............................................129
Section 11.03 Acts of Owners.........................................................................130
Section 11.04 Notices, etc. to Trustee...............................................................131
Section 11.05 Notices and Reports to Owners; Waiver of Notices.......................................131
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
Section 11.06 Rules by Trustee.......................................................................131
Section 11.07 Successors and Assigns.................................................................132
Section 11.08 Severability...........................................................................132
Section 11.09 Benefits of Agreement..................................................................132
Section 11.10 Legal Holidays.........................................................................132
Section 11.11 Governing Law; Submission to Jurisdiction..............................................132
Section 11.12 Counterparts...........................................................................133
Section 11.13 Usury..................................................................................133
Section 11.14 Amendment..............................................................................134
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.....................................134
Section 11.16 REMIC Status...........................................................................135
Section 11.17 Additional Limitation on Action and Imposition of Tax..................................137
Section 11.18 Appointment of Tax Matters Person......................................................137
Section 11.19 The Certificate Insurer................................................................137
Section 11.20 Reserved...............................................................................138
Section 11.21 Third Party Rights.....................................................................138
Section 11.22 Notices................................................................................138
SCHEDULE I-A...................................................................................I-A-1
SCHEDULE I-B...................................................................................I-B-1
SCHEDULE II....................................................................................II-1
SCHEDULE III...................................................................................III-1
SCHEDULE IV....................................................................................IV-1
EXHIBIT A-1....................................................................................A-1-1
EXHIBIT A-2....................................................................................A-2-1
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-9IO..................................................................................A-9-IO-1
EXHIBIT B......................................................................................B-1
EXHIBIT C .....................................................................................C-1
EXHIBIT R......................................................................................R-1
EXHIBIT R-I....................................................................................R-I-1
EXHIBIT R-II...................................................................................R-II-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
</TABLE>
-iv-
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to CONTIMORTGAGE HOME EQUITY LOAN
TRUST 1999-1 as of March 1, 1999 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") of the Trust.
WHEREAS, the Depositor wishes to establish the Trust and two subtrusts
thereof and to 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 received thereon on or prior to the Cut-Off Date, and interest
accrued thereon on or prior to February 28, 1999) listed in Schedules I-A and
I-B 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
-1-
<PAGE>
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); (c) the
Insurance and Indemnity 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 and any
Payment Date, the calendar month immediately preceding the month in which the
Payment Date occurs. A "calendar month" shall be deemed to be 30 days. With
respect to the Class A-8 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 Class A-8 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 Home Equity Loans": The Home Equity Loans identified in
Schedule I-B hereto as having adjustable Coupon Rates, including any Qualified
Replacement Mortgages delivered in replacement thereof.
"Aggregate Certificate Principal Balance": As of any time of determination,
the sum of the Aggregate Class A Certificate Principal Balance plus the Class B
Certificate Principal Balance. Unless otherwise specified herein with respect to
any particular provision with respect to a Payment Date the "Aggregate
Certificate Principal Balance" shall be calculated after taking into account the
Class A Principal Distribution Amount and the Class B Principal Distribution
Amount on such Payment Date.
"Aggregate Class A Certificate Principal Balance": As of any time of
determination, the sum of the Class A Certificate Principal Balances of all
Class A Certificates. Unless otherwise specified herein with respect to any
particular provision, with respect to a Payment Date, the "Aggregate Class A
Certificate Principal Balance" shall be calculated after taking into account the
Class A Principal Distribution Amount 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 plus the
Class B Principal Distribution Amount over (y) the Principal Remittance Amount
with respect to both Loan Groups, in each case with respect to such Payment
Date.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
-3-
<PAGE>
"Applied Class B Realized Loss Amount": As of any Payment Date, the excess
of (x) the Aggregate Certificate Principal Balance on such Payment Date, after
taking into account all distributions of principal of the Class A 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(h), if any,
on such Payment Date over (y) the Combined Pool Balance as of the end of the
related Remittance Period.
"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).
"Back-Up Servicer": The "Back-Up Servicer", if any, appointed pursuant to
Section 2.02(f) of the Insurance and Indemnity Agreement.
"Back-Up Servicer Fee": The fee payable monthly on each Payment Date to the
Back-Up Servicer, if one is appointed. The Servicer shall inform the Trustee in
writing of the identity of any Back-Up Servicer and the Back-Up Servicer Fee.
"Balloon Loans": Home Equity Loans having scheduled amortization based on a
longer remaining term than the actual remaining term, with the result that a
relatively large principal amount is due on the final scheduled due date (i.e.,
"30 due in 10").
"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.
"Certificate": Any one of the Class A Certificates, Class B Certificates or
Class R Certificates, each representing the interests and the rights described
in this Agreement.
"Certificates": The Offered Certificates, the Class C Certificates and the
Class R Certificates.
"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.
-4-
<PAGE>
"Certificate Insurance Policy": With respect to the Class A Certificates,
the certificate guaranty insurance policy (number AB0239BE) dated March 4, 1999
issued by the Certificate Insurer for the benefit of the Owners of the Class A
Certificates pursuant to which the Certificate Insurer guarantees Insured
Payments.
"Certificate Insurer": Ambac Assurance Corporation, a Wisconsin 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 a
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 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:
-5-
<PAGE>
Class Initial
----- Certificate
Principal
Balance
------------
Class A-1 $164,250,000
Class A-2 $96,940,000
Class A-3 $53,259,000
Class A-4 $29,905,000
Class A-5 $31,401,000
Class A-6 $53,245,000
Class A-7 $34,125,000
Class A-8 $154,375,000
Class A-9-IO N/A
Class B $32,500,000
Class C N/A
The Class A-9IO and the Residual 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 the
Class B Certificates, less the amount of any reduction in the Class B
Certificate Principal Balance on all prior Payment Dates pursuant to Section
7.03(i).
"Chapter 13 Loan": A Home Equity Loan with a Mortgagor in bankruptcy under
a "Chapter 13" Plan.
"Class": Any Class of the Class A Certificates, the Class B Certificates,
the Class C Certificates or the Residual Certificates.
"Class A Certificate": Any one of the Certificates designed on the face
thereof as a Class A Certificate, substantially in the form annexed hereto as
Exhibit A, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A Certificate Principal Balance": As of any time of determination
and with respect to any Class of Class A Certificates, the Certificate Principal
Balance as of the Startup Day of all Class A Certificates of such Class plus any
amount previously distributed thereon with respect to principal that is
recovered as a voidable preference by a trustee in bankruptcy pursuant to a
final nonappealable order less any amounts actually distributed to the Owners of
such Class of the Class A Certificates with respect to the related Class A
Principal Distribution Amount pursuant to Sections 7.03(a) and 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).
"Class A Current Interest": With respect to any Payment Date and with
respect to any individual Class of Class A Certificates, the amount of interest
accrued on the Class A Certificate Principal Balance (or, with respect to the
Class A-9IO Certificates, the Class A-9IO Notional Principal Amount) immediately
prior to such Payment Date during the related Accrual Period at the related
Class A Pass-Through Rate.
-6-
<PAGE>
"Class A Distribution Amount": With respect to any Payment Date, and with
respect to any individual Class of Class A Certificates, the sum of (x) the
related Class A Current Interest, (y) the related Class A Interest Carry Forward
Amount and (z) except for the Class A-9IO Certificates, the portion of Class A
Principal Distribution Amount payable to the Owners of the Class A Certificates
of such Class pursuant to Sections 7.03(c) and 7.03(d) hereof.
"Class A Interest Carry Forward Amount": With respect to any Payment Date
and with respect to any Class of Class A Certificates, the sum of (x) the
amount, if any, by which (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 with respect to such Class as of the immediately
preceding Payment Date exceeds (ii) the amount of the actual distribution with
respect to interest made to the Owners of such Class of Class A Certificates on
such immediately preceding Payment Date and (y) 30 days' interest on such amount
at the related Class A Pass-Through Rate.
"Class A Optimal Balance": As of any Payment Date and with respect to both
Loan Groups together, as follows, but in no event less than zero:
I. Prior to the Stepdown Date, the lesser of:
(a) (i) if a Cumulative Realized Loss Trigger Event is not then
in effect, the excess of :
(x) the Combined Pool Balance as of the end of the related
Remittance Period
over
(y) an amount equal to (i) prior to the 7th Payment Date,
5.00% of the Original Combined Pool Balance, and (ii)
on and after the 7th Payment Date, 7.55% of the
Original Combined Pool Balance; or
(ii)if a Cumulative Realized Loss Trigger Event is in
effect, the excess of (x) the Combined Pool Balance as of
the end of the related Remittance Period over (y) an amount
equal to 8.00% of the Original Combined Pool Balance;
(b) the product of :
(x) 100% minus two times the excess of :
(a) one-half of the Six-Month Rolling Average 90+ Day
Delinquency Rate over
(b) three times the Six-Month Rolling Average Excess
Spread
-7-
<PAGE>
and
(y) the Combined Pool Balance as of the end of the related
Remittance Period.
II. On and after the Stepdown Date, the least of:
(a) (i) if a Cumulative Realized Loss Trigger Event is not then
in effect, the greater of:
(x) the product of (1) 84.90% and (2) the Combined Pool
Balance as of the end of the related Remittance Period;
and
(y) the excess of (1) the Combined Pool Balance as of the
end of the related Remittance Period over (2) an amount
equal to 7.55% of the Original Combined Pool Balance;
(ii) if a Cumulative Realized Loss Trigger Event is then in
effect, the product of (x) 89% minus the percentage
equivalent of a fraction, the numerator of which is 3.50%
of the Original Combined Pool Balance and the denominator
of which is the Combined Pool Balance as of the end of the
related Remittance Period and (y) the Combined Pool Balance
as of the end of the related Remittance Period;
(b) the product of:
(x) 100.00% minus two times the excess of
(a) one-half of the Six-Month Rolling Average 90+ Day
Delinquency Rate over
(b) three times the Six-Month Rolling Average Excess
Spread and
(y) the Combined Pool Balance as of the end of the related
Remittance Period;
(c) the excess of (x) the Combined Pool Balance as of the end of
the related Remittance Period over (y) an amount equal to
0.50% of the Original Combined Pool Balance; or
(d) the excess of (x) the Combined Pool Balance as of the end of
the related Remittance Period over (y) the sum of the Loan
Balances as of the end of the related Remittance Period of
the three Home Equity Loans having the largest Loan
Balances.
-8-
<PAGE>
"Class A Overcollateralization Deficit": For any Payment Date means the
excess of the Aggregate Class A Certificate Principal Balance over the
outstanding Combined Pool Balance as of the last day of the related Remittance
Period.
"Class A Pass-Through Rate": As applicable, the Class A-1 Pass-Through
Rate, the Class A-2 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 and the Class A-9IO Pass-Through Rate.
"Class A Principal Distribution Amount": As of any Payment Date, the actual
amount distributed as principal to the Owners of the Class A Certificates
pursuant to Section 7.03(b)(v) on such Payment Date.
"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, 6.01% per
annum.
"Class A-2 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-2 Certificate, substantially in the form annexed hereto as
Exhibit A-2, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-2 Pass-Through Rate": With respect to any Payment Date, 6.00% 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, 6.17% 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, 6.30% 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,
-9-
<PAGE>
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 (x) 6.37% per annum and (y) 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": For any Payment Date, the lesser of (i)(a)
with respect to any Payment Date which occurs on or prior to the Step-Up Payment
Date, 6.85% per annum, or (b) with respect to any Payment Date thereafter, 7.35%
per annum or (ii) the Group I Available Funds Cap for such Payment Date.
"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": For any Payment Date, the lesser of (i)(a)
with respect to any Payment Date which occurs on or prior to the Step-Up Payment
Date, 6.47% per annum, or (b) with respect to any Payment Date thereafter, 6.97%
per annum or (ii) the Group I Available Funds Cap Rate for such Payment Date.
"Class A-7 Principal Distribution Amount": For any Payment Date occurring
during the periods set forth below is the "applicable percentage" set forth
below of the Class A-7 Pro Rata Principal Distribution Amount with respect to
such Payment Date:
Payment Date Applicable Percentage
----------------------------------------------------------
1-36 0%
37-60 45%
61-72 80%
73-84 100%
85-end 300%
"Class A-7 Pro Rata Principal Distribution Amount": For any Payment Date is
the product of (x) the Class A Principal Distribution Amount for such Payment
Date and (y) a fraction, the numerator of which is the Class A-7 Certificate
Principal Balance immediately prior to such Payment Date and the denominator of
which is the Group I Class A Certificate Principal Balance immediately prior to
such Payment Date.
"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,
-10-
<PAGE>
authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein.
"Class A-8 Pass-Through Rate": With respect to any Payment Date, the lesser
of (x) (i) if such Payment Date occurs on or prior to the Step-Up Payment Date,
LIBOR plus 0.28% per annum and (ii) if such Payment Date occurs after the
Step-Up Payment Date, LIBOR plus 0.56% per annum and (y) the Group II Available
Funds Cap.
"Class A-9IO Certificate": Any one of the Certificates designated on the
face thereof as a Class A-9IO Certificate, substantially in the form annexed
hereto as Exhibit A-9IO, executed, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein.
"Class A-9IO Notional Principal Amount": With respect to any Payment Date
occurring on or prior to the 30th Payment Date the Certificate Principal Balance
of the Class A-7 Certificates immediately prior to such Payment Date; with
respect to any Payment Date thereafter, zero.
"Class A-9IO Pass-Through Rate": With respect to any Payment Date, 7.00%
per annum.
"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 such Class B Certificate Principal
Balance pursuant to Section 7.03(h), if any, on such Payment Date) and (y) the
Applied Class B Realized Loss Amount as of such Payment Date.
"Class B Available Funds Cap Carry-Forward Amount": With respect to any
Payment Date, the excess of (x) the sum of all Class B Available Funds Cap
Shortfall Amounts on all prior Payment Dates, plus interest thereon at the
applicable rate described in clause (i) of the definition of "Class B
Pass-Through Rate" to the date on which such amount was paid pursuant to Section
7.03(b)(viii)(c), over (y) the amount distributed on all prior Payment Dates
pursuant to Section 7.03(b)(viii)(c).
"Class B Available Funds Cap Shortfall Amount": With respect to any Payment
Date, the excess of (x) the interest due on the Class B Certificates on such
Payment Date, calculated without regard to the limitation described in clause
(ii) of the definition of "Class B Pass-Through Rate", over (y) the interest due
on the Class B Certificates on such Payment Date, calculated at the Class B
Pass-Through Rate for such Payment Date.
"Class B Certificates": 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
and with respect to the Class B Certificates, the Certificate Principal Balance
as of the Startup Day of all
-11-
<PAGE>
Class B Certificates plus any amount previously distributed thereon 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 such Class B Certificates pursuant to Section 7.03(b)(vii) 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 and with
respect to the Class B Certificates, the amount of interest accrued during the
related Accrual Period 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.
"Class B Distribution Amount": With respect to any Payment Date and with
respect to the Class B Certificates, 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)(vii) 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
and with respect to the Class B Certificates, 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
as of the immediately preceding Payment Date 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 Pass-Through Rate": For any Payment Date, the lesser of (i)(a)
with respect to any Payment Date which occurs on or prior to the Step-Up Payment
Date, 8.50% per annum, or (b) with respect to any Payment Date thereafter, 9.00%
per annum or (ii) the lesser of (x) the Group I Available Funds Cap for such
Payment Date or (y) the Group II Available Funds Cap for such Payment Date.
"Class B Principal Distribution Amount": With respect to any Payment Date,
the actual amount distributed as principal to the Owners of the Class B
Certificates in accordance with Section 7.03(b)(vii) hereof on such Payment
Date.
"Class B Optimal Balance": As of any Payment Date:
I. Prior to the Stepdown Date and if the Aggregate Class A 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
Certificate Principal Balance then equals zero, the excess of (a) the
Combined Pool Balance as of the end of the related Remittance Period
over (b) the Aggregate Class A Certificate Principal Balance (after
taking into account
-12-
<PAGE>
any reduction thereof on such Payment Date) plus the Targeted
Overcollateralization Amount.
"Class B Realized Loss Amortization Amount": As of any Payment Date and
with respect to the Class B Certificates, the lesser of (x) the Unpaid Class B
Realized Loss Amount as of such Payment Date and (y) the amount of Available
Funds remaining after funding priorities "First" through "Seventh" of Section
7.03(b) hereof.
"Class C Certificates": Any one of the Certificates designated on the face
thereof as a Class C Certificate, substantially in the form annexed hereto as
Exhibit C, executed 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 the Class C pursuant to footnotes 5 and 6 of Section 2.08(c)
Certificates.
"Class C Pass-Through Rate": With respect to any Payment Date, the interest
payable on the Group I and Group II Loans in excess of the interest payable on
the Class A and Class B Certificates.
"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, 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 Combined Pool Balance has declined to
$65,000,000 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
-13-
<PAGE>
"Combined Pool Balance": As of any date, the aggregate outstanding Loan
Balance of the Home Equity Loans in Loan Group I and Loan Group II as of the
close of business on such date.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Compensating Interest Shortfall": With respect to any Payment Date, the
excess, if any, of (x) the aggregate amount of Compensating Interest for the
related Remittance Period over (y) the aggregate amount of the Servicing Fee for
such Remittance Period.
"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.
"Coupon Rate": The rate of interest borne by each Note.
"Cumulative Realized Loss Trigger Event": A Cumulative Realized Loss
Trigger Event occurs on any date of determination if the amount of Cumulative
Realized Losses with respect to both Loan Groups expressed as a percentage of
the Original Combined Pool Balance on any date of determination equals or
exceeds the percentage for such date set out below:
Date Percentage
---- ----------
April 1999 - March 2001 1.05%
April 2001 - March 2002 1.80%
April 2002 - March 2003 2.40%
April 2003 - March 2004 2.85%
April 2004 and thereafter 3.15%
"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.
"Curtailment": Prepayment of principal by a Mortgagor which does not
satisfy the Note in full, and which is not intended as a Prepaid Installment.
"Cut-Off Date": As of the close of business on February 10, 1999.
"Daily Collections": As defined in Section 8.08(c) hereof.
-14-
<PAGE>
"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.
"Deed in Lieu": The Servicer's acceptance of a deed in lieu of foreclosure.
"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.
"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 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.
-15-
<PAGE>
"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.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"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.
"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.
"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.
"Fitch": Fitch IBCA, Inc.
"Fixed Rate Loans": Home Equity Loans bearing interest at fixed rate.
"Fixed Rate Certificates": The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-9IO and Class B Certificates.
"Freddie Mac": 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.
"Group I Available Funds Cap": With respect to 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) the annualized percentage
-16-
<PAGE>
equivalent of a fraction equal to (a) the sum of the related Premium Amount plus
the sum of the related Trustee Fee, the related Servicing Fee and the related
Back-Up Servicer Fee divided by (b) the aggregate Pool Balance of Loan Group I
as of the opening of business on the first day of the related Remittance Period,
and (ii) during the period commencing on the first Payment Date and ending on
the 30th Payment Date, the annualized percentage equivalent of the product of
(a) the Class A-9IO Pass-Through Rate and (b) the Class A-9IO Notional Principal
Amount divided by the outstanding aggregate Pool Balance of Loan Group I as of
the opening of business on the first day of the related Remittance Period.
"Group I Class A Optimal Balance": With respect to any Payment Date is an
amount equal to the product of:
(x) the Group I Pool Balance as of the end of the related Remittance
Period; and
(y) a fraction, the numerator of which is equal to (i) the Aggregate
Class A Certificate Principal Balance immediately prior to such Payment
Date minus (ii) the Class A Principal Distribution Amount for such Payment
Date and the denominator of which is (y) the Combined Pool Balance as of
the end of the related Remittance Period.
"Group I Class A Principal Distribution Amount": For any Payment Date is an
amount equal to the lesser of:
(I) the excess of (x) the aggregate Certificate Principal Balance of
the Class A Group I Certificates immediately prior to such Payment Date
over (y) the Group I Class A Optimal Balance with respect to such Payment
Date; and
(II) the Class A Principal Distribution Amount with respect to such
Payment Date;
provided, however, that in no event will the aggregate Certificate
Principal Balance of the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5,
Class A-6 and Class A-7 Certificates exceed the Group I Pool Balance as of the
last day of the related Remittance Period.
"Group I Pool Balance": For any date, the aggregate outstanding Loan
Balance of the Home Equity Loans in Loan Group I as of the close of business on
such date.
"Group II Available Funds Cap": With respect to 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) the annualized percentage equivalent of a fraction equal to (a) the
sum of the related Premium Amount plus the sum of the related Trustee Fee, the
related Servicing Fee and the related Back-Up Servicer Fee divided by (b) the
aggregate 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.
-17-
<PAGE>
"Group II Class A Optimal Balance": With respect to any Payment Date is an
amount equal to the product of:
(x) the aggregate Group II Pool Balance as of the end of the related
Remittance Period; and
(y) a fraction, the numerator of which is equal to (i) the Aggregate
Class A Certificate Principal Balance immediately prior to such Payment
Date minus (ii) the Class A Principal Distribution Amount for such Payment
Date and the denominator of which is (y) the Combined Pool Balance as of
the end of the related Remittance Period.
"Group II Class A Principal Distribution Amount": For any Payment Date is
an amount equal to the lesser of:
(I) the excess of (x) the aggregate Certificate Principal Balance of
the Class A Group II Certificates immediately prior to such Payment Date
over (y) the Group II Class A Optimal Balance with respect to such Payment
Date; and
(II) the Class A Principal Distribution Amount with respect to such
Payment Date;
provided, however, that in no event will the Certificate Principal Balance
of the Class A-8 Certificates exceed the Group II Pool Balance as of the last
day of the related Remittance Period.
"Group II Loans": The Home Equity Loans in Loan Group II.
"Group II Pool Balance": For any date, the aggregate outstanding Loan
Balance of the Home Equity Loans in Loan Group II as of the close of business on
such date.
"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 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 March 4,
1999 among the Certificate Insurer, the Depositor, the Sellers, the Servicer,
and the Underwriters.
-18-
<PAGE>
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Offered Certificate.
"Insurance and Indemnity Agreement": The Insurance and Indemnity Agreement
dated as of March 4, 1999, among the Depositor, the Sellers, the Servicer, the
Certificate Insurer and the Trustee as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary mortgage insurance
policy relating to a Home Equity Loan plus any amount remitted under Section
8.11 hereof.
"Insurance Proceeds": Payments received with respect to any Insurance
Policy, except the Certificate Insurance Policy.
"Insured Payment": With respect to any Payment Date, without duplication,
(A) the excess, if any, of (i) the sum of the aggregate Current Interest of the
Class A Certificates (less any Relief Act Shortfalls or Compensating Interest
Shortfalls) and the then existing Class A Overcollateralization Deficit, if any,
over (ii) the amount of the Monthly Remittance Amount or deposit in the
Certificate Account on such Payment Date, less the aggregate amount of the
Trustee Fee and the Premium Amount, plus (B) an amount equal to the aggregate
Preference Amount with respect to the Class A Certificates.
"Interest Amount Available": As defined in Section 7.03(b) hereof.
"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, and collected or advanced (less the Servicing Fee with respect
to such Home Equity Loans (except for any portion of the Servicing Fee to be
used to pay any Back-Up Servicer Fee)), (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 the
Home Equity Loans in such Loan Group substituted during the related Remittance
Period, (iv) the portion of any Loan Purchase Price relating to interest on any
such Home Equity Loan in such Loan Group repurchased during the related
Remittance Period and (v) the portion of Net Liquidation Proceeds relating to
interest in such in Home Equity Loans in such Loan Group liquidated during the
related Remittance Period, in all cases after taking into account items which
are withdrawn from the Principal and Interest Account pursuant to Section
8.08(d) hereof.
"Involuntary Payoff": The amount of Net Liquidation Proceeds received with
respect to a Liquidated Loan.
"Late Payment Rate": As defined in the Insurance and Indemnity Agreement.
"LIBOR": With respect to any Accrual Period for the Class A-8 Certificates,
the rate determined by the Trustee on the related LIBOR Determination Date on
the basis of the
-19-
<PAGE>
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 Dates": are:
o March 2, 1999, for the Accrual Period for the Class A-8 Certificates
beginning on and including the Closing Date and ending on and
excluding March 25, 1999;
o March 23, 1999 for the Accrual Period for the Class A-8 Certificates
beginning on and including March 25, 1999 and ending on and excluding
April 25, 1999; and
o the second London Business Day prior to the first day of each Accrual
Period for the Class A-8 Certificates following the first 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.
"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.
"Liquidity Agreement": As defined in Section 8.3(b).
"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
-20-
<PAGE>
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": The Home Equity Loans identified in Schedule I-A hereto,
including any Qualified Replacement Mortgages delivered in replacement thereof.
Loan Group I will constitute a separate sub-trust of the Trust.
"Loan Group II": The Home Equity Loans identified in Schedule I-B hereto,
including any Qualified Replacement Mortgages delivered in replacement thereof.
Loan Group II will constitute a separate sub-trust of the 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 Certificate Insurer Current Reimbursement Amount" With respect to
any Payment Date, equals the lesser of (x) the Available Funds remaining in the
Certificate Account after taking into account all distributions described in
clauses "First" through "Third" in Section 7.03(b) hereof and (y) the excess of
(1) the sum of (a) the aggregate Loan Balance with respect to such Loan Group
plus (b) the amount described in the immediately preceding clause (x) over (2)
the Aggregate Class A Certificate Principal Balance prior to taking into account
any payment of principal on such Payment Date.
-21-
<PAGE>
"Monthly Excess Cashflow Amount": As defined in Section 7.03(b)(viii)
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 less any Back-Up Servicer Fee.
"Monthly Remittance Date": The 20th 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.
"Net Post-REMIC Recovery Proceeds": With respect to any Optional Buyout
Loan, Post-REMIC Recovery Proceeds less the costs and expenses incurred by the
Servicer in conducting its loss mitigation strategy with respect thereto,
including, without limitation, legal fees and expenses.
"No Equity Secured Mortgage": A Home Equity Loan in which no material
equity in the related Mortgaged Property secures the related Note.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Offered Certificates": The Class A Certificates and the Class B
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 Insurance and
Indemnity Agreement and the Indemnification Agreement.
"Optional Buyout Loan": A Home Equity Loan repurchased from the Trust for
the purpose of allowing the Servicer to use its loss mitigation strategy in
maximizing the Post-REMIC Recovery Proceeds thereof.
-22-
<PAGE>
"Original Group I Pool Balance": The original aggregate Loan Balance of the
Home Equity Loans in Loan Group I as of the Cut-Off Date.
"Original Group II Pool Balance": The original aggregate Loan Balance of
the Home Equity Loans in Loan Group II as of the Cut-Off Date.
"Original Pool Balance": The applicable Original Group I Loan Balance or
Original Group II Loan Balance.
"Original Combined Pool Balance": The sum of the Original Group I Pool
Balance and the Original Group II Pool Balance.
"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 Amount": As of any Payment Date means the positive
difference, if any, between (x) the Combined Pool Balance and (y) the Aggregate
Certificate Principal Balance.
"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 (m) 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.
"Overcollateralization Floor": An amount equal to 0.50% of the Original
Combined Pool Balance ($3,250,000).
-23-
<PAGE>
"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 25th 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.
"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-9IO Certificates, a fraction, expressed as a percentage, the numerator of
which is the initial Class A-9IO Notional Principal Amount represented by such
Class A-9IO Certificate and the denominator of which is the aggregate initial
Class A-9IO Notional Principal Amount represented by all of the Class A-9IO
Certificates. With respect to a Class R, Class R-I or Class R-II Certificates,
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%.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Balance": As of any date, the aggregate outstanding Loan Balance of
the Home Equity Loans in the related Loan Group as of the last day of the close
of business on such date.
"Post-REMIC Recovery Proceeds": With respect to any Optional Buyout Loan,
any amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Optional Buyout Loan, whether through trustee's
sale, foreclosure sale, a "short sale", or otherwise.
"Preference Amount": With respect to the Class A Certificates and Class B
Certificates, any amounts of Current Interest and principal included in previous
distributions to the Owners of such Certificates which are 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, the product of (x) one-twelfth of
the Premium Percentage and (y) the Aggregate Class A Certificate Principal
Balance.
"Premium Percentage": As defined in the Insurance and Indemnity Agreement.
"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
-24-
<PAGE>
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, 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), in all cases after taking into
account items which are withdrawn from the Principal and Interest Account
pursuant to Section 8.08(d) hereof.
"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 September 17, 1998 constituting part of
the Registration Statement.
"Prospectus Supplement": The ContiMortgage Home Equity Loan Trust 1999-1
Prospectus Supplement dated February 24, 1999 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03 hereof.
-25-
<PAGE>
"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 March 31, 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 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.
As to any Optional Buyout Loan, the amount, if any, by which the Loan Balance
thereof as of the date of the Servicer's final loss determination with respect
thereto is in excess of the Net Post-REMIC Recovery Proceeds realized thereon
applied in reduction of such Loan Balance.
"Record Date": With respect to the Fixed Rate 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 Class A-8
Certificates, the day immediately preceding the related Payment Date.
"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
-26-
<PAGE>
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 the Certificate
Insurance Policy, the sum of (x)(i) all Insured Payments previously paid to the
Trustee by the Certificate Insurer and not previously repaid to the Certificate
Insurer pursuant to Section 7.03(b)(iv) 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 and Indemnity 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.
"Relief Act Shortfall": With respect to any Payment Date, for any Home
Equity Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended Remittance Period as a result of
the application of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, the amount, if any, by which (a) the interest collectible on such Home
Equity Loan during such Remittance Period is less than (b) the interest due on
such Home Equity Loan during such Remittance Period, calculated at the related
Coupon Rate.
"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
-27-
<PAGE>
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.
"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 Loan Group I and Loan Group II, 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.
-28-
<PAGE>
"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, the sum of (i) the
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, plus (ii) any Back-Up Servicer Fee.
"Servicing Fee Rate": 0.50% per annum less the per annum rate payable to
the Back-Up Servicer in excess of an annualized rate of 0.04%.
"Six-Month Rolling Average 90+ Day Delinquency Rate": With respect to any
Payment Date, the fraction, expressed as a percentage (A) the numerator of which
is the sum of the following six (or lesser number of Remittance Periods which
have elapsed since the Closing Date) percentages for each of the past six (or
such lesser number) Remittance Periods (x) the aggregate outstanding Loan
Balance of all 90+ Day Delinquent Loans as of the last day of the related
Remittance Period divided by (x) the Combined Pool Balance as of the end of the
related Remittance Period and (B) the denominator of which is six (or such
lesser number).
"Six-Month Rolling Average Excess Spread": With respect to any Payment
Date, the fraction, expressed as a percentage (A) the numerator of which is the
sum of the following six (or lesser number of Remittance Periods) which have
elapsed since the Closing Date) percentages for each of the past six (or such
lesser number) Remittance Periods (x) the weighted average Coupon Rate of the
Home Equity Loans as of the opening of business on the first day of the related
Remittance Period, less (a) the sum of (i) the aggregate Premium Amount, the
aggregate Servicing Fee and the aggregate Trustee Fee for such Remittance
Period, (ii) the aggregate Current Interest for the Class A and Class B
Certificates with respect to such Payment Date and (iii) Realized Losses which
occurred during such Remittance Period divided by (b) the Combined Pool Balance
as of the end of the related Remittance Period and (B) the denominator of which
is six (or such lesser number).
"90+ 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, three 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.
-29-
<PAGE>
"Short Sale": A sale of a Home Equity Loan at a price less than the
outstanding Loan Balance thereof.
"Six-Month LIBOR Loans": Home Equity Loans bearing interest at an
adjustable rate indexed to six-month LIBOR.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc.
"Startup Day": March 4, 1999.
"Stepdown Date": The later to occur of (x) the Payment Date in April 2002
and (y) the first Payment Date on which the Aggregate Class A Certificate
Principal Balance is less than or equal to the Class A Optimal Balance for such
Payment Date.
"Step-Up Payment Date": The first Payment Date which occurs after the
Clean-Up Call Date.
"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, 2.55%
of the Original Combined Pool Balance (i.e., $16,575,000); or
(B) if a Cumulative Realized Loss Trigger Event is in effect, an
amount equal to 3.00% of the Original Combined Pool Balance (i.e.,
$19,500,000);
(iii) on and after the Stepdown Date:
(A) if a Cumulative Realized Loss Trigger Event is not in effect, the
greater of (I) the lesser of (x) 2.55% of the Original Combined
Pool Balance (i.e., $16,525,000) and (y) 5.10% of the Combined
Pool Balance and (II) 0.50% of the Original Combined Pool Balance
(i.e., $3,250,000); or
-30-
<PAGE>
(B) if a Cumulative Realized Loss Trigger Event is in effect, an
amount equal to 3.00% of the Original Combined Pool Balance
(i.e., $19,500,000).
"Tax Matters Certificate": The Residual Certificate initially issued to
ContiFunding Corporation as the initial Tax Matters Person for each REMIC.
"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 each Class
of the Residual Certificates 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
Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03 hereof.
"3/27 Loans": Home Equity Loans which bear interest for the first three
years following origination at a fixed rate, and at an adjustable rate
thereafter.
"Trust": ContiMortgage Home Equity Loan Trust 1999-1, 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) 0.0032% multiplied by the
then-outstanding Aggregate Certificate Principal Balance and (ii) $4,750.00.
"2/28 Loans": Home Equity Loans which bear interest for the first two years
following origination at a fixed rate, and at an adjustable rate thereafter.
-31-
<PAGE>
"Underwriters": Bear, Stearns & Co. Inc., ContiFinancial Services
Corporation, Credit Suisse First Boston Corporation, Greenwich Capital Markets,
Inc., Merrill Lynch, Pierce Fenner & Smith, Incorporated, and Paine Webber
Incorporated.
"Unpaid Class B Realized Loss Amount": With respect to any Payment Date and
each Loan Group, the excess of (x) the aggregate cumulative amount of Class B
Applied Realized Loss Amounts with respect to the Class B Certificates related
to such Loan Group for all prior Payment Dates over (y) the aggregate,
cumulative amount of Class B Realized Loss Amortization Amounts with respect to
the Class B Certificates related to such Loan Group for all prior Payment Dates.
"Voluntary Payoff": A Prepayment which satisfies the related Note in full,
and did not result from a liquidation of the related Home Equity Loan, or its
repurchase from the Trust.
.2 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.
.3 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.
.4 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, 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
-32-
<PAGE>
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 1999-1."
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
-33-
<PAGE>
the Trustee. The reasonable fees and expenses of the 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.
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 (as defined below) shall constitute the assets of
REMIC III.
(b) 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 REMIC I
and (y) the Class R-I Certificates, which are hereby designated as the single
"residual interest" in 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 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 initial principal balance of the Class A-7 Certificates (that is,
$34,125,000). 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 Certificates (that is, $453,352,925). The
Class IC Certificates shall have an initial principal balance equal to the
Original Group II Loan Balance (that is, $162,522,163).
-34-
<PAGE>
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-7 Certificates shall be payable on the Class IA Certificates and the
remaining principal collections shall be payable to the Class IB Certificates.
On each Payment Date, to the extent that any of the Aggregate Extra Principal
Distribution Amount is paid to the Class 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-7 Certificates shall be allocable
to the Class IA Certificates and the remaining Realized Losses shall be
allocable to the Class IB Certificates.
On each Payment Date, all principal collections and Realized Losses on the
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, 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 shall have a
Pass-Through Rate equal to the weighted average Coupon Rate of the Group II Home
Equity Loans 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 (the sum
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) 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-9IO, Class II-B-1, Class II-B-2, 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 REMIC II and (y) the Class R-II Certificates, which are hereby
designated as the single "residual interest" in REMIC II (the REMIC II Regular
Interests, together with the Class R-II Certificates, the "REMIC II
Certificates"). The REMIC II Regular Interests shall be recorded on the records
of REMIC II as being issued to and held by the Trustee on behalf of REMIC III.
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-B-1 and Class II-B-2 Certificates
-35-
<PAGE>
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 and, with respect to both the Class II-B-1 and Class II-B-2
Certificates, to Class B Certificates, respectively (and will be accrued and
added to principal on the Class II-M-1 and Class II-M-2 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-A-3, Class II-A-4, Class II-A-5, Class II-A-6,
Class II-A-7, Class II-A-8, Class II-B-1 and Class II-B-2 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-B-1 and Class II-B-2 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 and, with respect to both
the Class II-B-1 and Class II-B-2 Certificates, to 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 distributions have
been made on such Payment Date 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, and the sum of the Class II-B-1 and Class II-B-2 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 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-B-1 and Class II-B-2 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.
-36-
<PAGE>
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>
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal Interest
------------ ------- ---- --------- --------
<S> <C> <C> <C> <C>
II-A-1 $1,642,000 (1) (5) (6)
II-A-2 $969,400 (1) (5) (6)
II-A-3 $532,590 (1) (5) (6)
II-A-4 $299,050 (1) (5) (6)
II-A-5 $314,010 (1) (5) (6)
II-A-6 $532,450 (1) (5) (6)
II-A-7 $341,250 (1) (5) (6)
II-A-8 $1,543,750 (1) (5) (6)
II-A-9IO (notional) (2) (notional) (7)
II-B-I $243,738 (1) (5) (6)
II-B-2 $81,261 (1) (5) (6)
II-M-1 $4,874,779 (3) (5) (6)
II-M-2 $1,625,221 (4) (5) (6)
II-M-3 $637,000,087 (1) (5) (6)
R-II 0 (8) (8) (8)
</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) 7.0% for the first 30 Payment Dates and (b) 0.0%
thereafter
(2) Interest on the Class II-A-9IO will equal 7.0% per annum on the principal
balance of the Class IA Certificate for the first 30 Payment Dates and 0.0%
thereafter.
(3) 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) 7.0% for the
first 30 Payment Dates and (b) 0.0% thereafter.
(4) 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 Certificate.
(5) 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 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 balances of the
Class A and Class B Certificates have been reduced to zero.
(6) Except as provided in the next sentence, 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-9IO and Class B Certificates in the same proportion
as interest is payable on such Certificates.
-37-
<PAGE>
Any interest with respect to each 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-9IO, Class II-B-1, Class II-B-2, 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-9IO and, with respect to the Class II-B-1 and Class II-B-2
Certificates, the 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 each such 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) to Class A-9IO
(8) 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.
-38-
<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-9IO, 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 REMIC III. On each Payment Date,
available funds, if any, remaining in 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-9IO Certificates) is hereby set to
be the Payment Date of April 25, 2030 and for the Class A-9IO Certificates is
hereby set to be the Payment Date of September 25, 2001.
(f) 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.
(g) 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
-39-
<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.
-40-
<PAGE>
(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 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.
-41-
<PAGE>
(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.
(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
-42-
<PAGE>
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 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
-43-
<PAGE>
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 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.
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
-44-
<PAGE>
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 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
-45-
<PAGE>
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).
(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.
-46-
<PAGE>
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 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
-47-
<PAGE>
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.
(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
-48-
<PAGE>
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,
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.
-49-
<PAGE>
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 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 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
-50-
<PAGE>
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 in this Section 3.04 available to the Owners, the
Certificate Insurer and the Trustee, the Certificate Insurer.
(b) The information set out below speaks as of the Startup Day, unless a
different date is specified:
(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 0.06% and 0.12% of
the aggregate Loan Balance of the Home Equity Loans in Loan
Group I and Loan Group II, respectively, are secured by
condominiums with more than four stories and no more than 0.50%
and 1.46% of the Loan Balance of the Home Equity Loans in Loan
Group I and Loan Group II, respectively, are secured by
condominiums of less than four stories;
(v) No Home Equity Loan in Loan Group I has a Loan-to-Value Ratio in
excess of 85%, except 25.03% of such Home Equity Loans which
have a combined Loan-to-Value Ratio not greater than 100%; no
Home Equity Loan in Loan Group II has a Loan-to-Value Ratio in
excess of 85%, except
-51-
<PAGE>
21.72% of such Home Equity Loans which have a Loan-to-Value
Ratio 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 Loan Group I
bears a fixed Coupon Rate of at least 6.85% per annum; the Note
related to each Home Equity Loan in Loan Group II bears a
current Coupon Rate of at least 6.90% per annum. The weighted
average Coupon Rate of the Home Equity Loans in the Loan Group I
is approximately 10.31%; the weighted average Coupon Rate of the
Home Equity Loans in Loan Group II is approximately 10.07%;
(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 30.38% of the aggregate Loan
Balance of the fixed rate Home Equity Loans or 0.26% of the
adjustable rate Home Equity Loans, which may provide for a
"balloon" payment due on a maturity date which 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;
-52-
<PAGE>
(xi) As of the Startup Day, (a) no more than 1.68% and 1.48% of the
Home Equity Loans in Loan Group I and Loan Group II,
respectively, as a percentage of the outstanding aggregate Loan
Balance of such Home Equity Loans are 30-59 days Delinquent, (b)
no more than 0.03% and 0.24% of the Home Equity Loans in Loan
Group I and Loan Group II, 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;
(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 Combined Pool
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
-53-
<PAGE>
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) 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;
-54-
<PAGE>
(xxii) As of the Startup Day, no more than 0.38% of the aggregate Loan
Balance of the Home Equity Loans Loan Group I and 0.62% in Loan
Group II, 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;
(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
-55-
<PAGE>
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, unless any such improvements 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 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
-56-
<PAGE>
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 4.41% and 7.67% of the aggregate Loan Balance of
the Home Equity Loans in the Loan Group I and Loan Group II,
respectively, are secured by Properties that are non-owner
occupied Properties (i.e., investor-owned and vacation);
(xlv) No more than 3.81% and 7.17% of the aggregate Loan Balance of
the Home Equity Loans in Loan Group I and Loan Group II,
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 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
-57-
<PAGE>
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 $411,762.96;
(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 $895,000.00;
(liv) No more than 7.52% of the Fixed Rate Home Equity Loans and none
of the Adjustable Rate Home Equity Loans are in a second
priority position; and
-58-
<PAGE>
(lv) The weighted average margin of the Home Equity Loans in Loan
Group II is 6.47%.
(c) In the event that any action required by paragraph (a) above 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 on or prior to the Cut-Off Date and all interest accrued on or prior
to February 28, 1999. 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.
-59-
<PAGE>
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 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
-60-
<PAGE>
(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;
(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 1999-1 under the Pooling and
Servicing Agreement dated as of March 1, 1999" 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.
-61-
<PAGE>
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 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
-62-
<PAGE>
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 for the benefit of the Owners of the
Certificates and of the Certificate Insurer 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.
(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 for the benefit of the Owners of the
Certificates and the Certificate Insurer, 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
-63-
<PAGE>
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 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
-64-
<PAGE>
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 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 [6]th 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
-65-
<PAGE>
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
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 and
(ii) to the respective registered Owners thereof, the Class C Certificates and a
Residual Certificate of each Class, each with a Percentage Interest equal to
99.999%, registered in the name of ContiSecurities Holding Corporation and a
Residual Certificate of each Class, 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
-66-
<PAGE>
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 Certificates with respect to
the Certificate Insurance Policies. The Certificates are payable solely from
payments received on or with respect to the Home Equity Loans (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, the Class A-2, the Class A-3, the Class A-4, the Class A-5,
the Class A-6, the Class A-7, the Class A-8, the Class A-9-IO, Class B, Class C
and the Class R, Class R-I, Class R-II Certificates shall be in substantially
the forms set forth in Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9-IO,
B, C and R, R-I, R-II 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.
-67-
<PAGE>
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
Certificates and the Class B Certificates then Outstanding with the consent of
the Certificate Insurer, or if there are no longer any Class A Certificates or
Class B Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class C 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
-68-
<PAGE>
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-9IO
Certificates) shall be issued in denominations of no less than $1,000 and
integral multiples thereof. On the Startup Day, the Class A-9IO Certificates
shall be issued in denominations of no less than $1,000 (based on the Class
A-9IO Notional Principal Amounts 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.
-69-
<PAGE>
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.
-70-
<PAGE>
Every new Certificate issued pursuant to this Section in exchange for or in
lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in the Trust, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other
Certificates of the same Class duly issued hereunder and such mutilated,
destroyed, lost or stolen Certificate shall not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
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 Residual Certificates are not transferable except that the Owner of the Tax
Matters Person Residual Interest may assign its interest to another Person who
accepts such assignment and the designation as Tax Matters Person pursuant to
Section 11.18 hereof.
-71-
<PAGE>
(b) No other sale or other transfer of record or beneficial ownership of a
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
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 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) No transfer of a Class R Certificate shall be made unless the Trustee
shall have received a representation letter from the transferee of such Class R
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, 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 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.
(e) 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.
-72-
<PAGE>
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
-73-
<PAGE>
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-9IO Certificates) having an original principal balance of not less than
$1,000,000, (B) a Class A-9IO Certificate having an original Notional Amount of
not less than $1,000,000 or (C) Class C or Residual 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.
-74-
<PAGE>
(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 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 C Certificates; and the Owner of such Offered Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class C Certificates for payment thereof (but only to the extent of the amounts
so paid to the Owners of the Class C 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 C
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 each 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
-75-
<PAGE>
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 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
-76-
<PAGE>
respect to the Trust or to the Certificates under this Agreement,
except as may be expressly permitted hereby or (B) permit any lien,
charge, adverse claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or
the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business activity or
transaction other than those activities permitted by Section 2.03 hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement, the Insurance and Indemnity
Agreement, the Indemnification Agreement or the Certificate Insurance Policy 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 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 C 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 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 and Class B
Certificates or, if there are no Class A or Class B Certificates then
Outstanding, by such majority of the Percentage Interests represented
by the Class C 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,
-77-
<PAGE>
disturb or prejudice the rights of any other Owner of the same Class or to
obtain or to seek to obtain priority or preference over any other Owner of the
same Class or to enforce any right under this Agreement, except in the manner
herein provided and for the equal and ratable benefit of all the Owners of the
same Class.
In the event the Trustee shall receive conflicting or inconsistent requests
and indemnity from two or more groups of Owners, each representing less than a
majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(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 or
Class B Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class C 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
-78-
<PAGE>
with respect to the Certificates or the Trust Estate, including, but not limited
to, those powers set forth in Section 6.03 and Section 8.20 hereof, provided
that:
(1) such direction shall not be in conflict with any rule of law or with
this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory to
it; and
(3) the Trustee may take any other action deemed proper by the Trustee, as
the case may be, which is not inconsistent with such direction;
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 C 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
-79-
<PAGE>
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.
END OF ARTICLE VI
-80-
<PAGE>
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 plus any Back-Up Servicer
Fee remitted by the Servicer with respect to each Loan Group. The Trustee shall
remit the Back-Up Servicer Fee to the Back-Up Servicer before any distributions
are made pursuant to Section 7.03(b) herein.
(b) On each Payment Date, the Monthly Remittance Amount plus amounts
described in Section 7.03(a) which are then on deposit in the Certificate
Account (such amount, the "Available Funds") will be applied in the following
order of priority:
(i) First, for the payment of certain fees, concurrently, to the Trustee,
the Trustee Fee, to the Certificate Insurer, the Premium Amount;
(ii) Second, for the payment of that Class A Certificate interest, to the
extent of the Available Funds then remaining in the Certificate
Account, plus the interest component of any related Insured Payment,
(such amount, the "Interest Amount Available"), to the Owners of the
Class A Certificates, the related Current Interest plus the Interest
Carry Forward Amount with respect to each such Class of related Class
A Certificates without any priority among such Class A Certificates;
provided, that if the Interest Amount Available is not sufficient to
make a full distribution of interest with respect to all Classes of
the related Class A Certificates, then such
-81-
<PAGE>
amount will be distributed among the outstanding Classes of related
Class A 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;
(iii) Third, for the payment of Class B Certificate interest, to the extent
of the Available Funds then remaining in the Certificate Account, to
the Owners of the Class B Certificates, an amount equal to the Current
Interest for the Class B Certificates;
(iv) Fourth, for the payment of the Reimbursement Amount, if any, then due
to the Certificate Insurer, to the extent of the Available Funds then
remaining in the Certificate Account the lesser of (x) the
Reimbursement Amount then owed to the Certificate Insurer and (y) the
Maximum Insurer Current Reimbursement Amount with respect to such
Payment Date;
(v) Fifth, for the payment of the Class A Certificate principal, to the
extent of the Available Funds then remaining in the Certificate
Account plus the principal component of an Insured Payment, to the
Owners of the Class A Certificates, an amount necessary to reduce the
Class A Certificate Principal Balance of such related Class A
Certificates to the Class A Optimal Balance for such Payment Date;
(vi) Sixth, to fund the Interest Carry Forward Amount, if any, with respect
to the Class B Certificates, to the extent of the Available Funds then
remaining in the Certificate Account;
(vii) Seventh, for the payment of Class B Certificate principal, to the
extent of the amount then remaining in the Certificate Account, an
amount necessary to reduce the Class B Principal Balance to the Class
B Optimal Balance for such Payment Date;
(viii) Eighth, 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 in the following order of
priority:
(a) to fund the Class B Realized Loss Amortization Amount for such
Payment Date;
(b) to the Servicer to the extent of any unreimbursed Delinquency
Advances or Servicing Advances and any other costs and expenses
incurred by the Servicer; and
(c) from the Class C Distribution Amount, to fund the Class B
Available Funds Cap Carry-Forward Amount;
-82-
<PAGE>
(d) to fund a distribution to Owners of the Class C Certificates in
an amount equal to the remaining Class C Distribution Amount.
(e) to fund a distribution to Owners of the Owners of the Class R
Certificates.
(c) The Class A Principal Distribution Amount shall be distributed on each
Payment Date, pari passu, to (i) the Group I Class A Certificates, in an amount
equal to the Group I Principal Distribution Amount and (ii) the Class A-8
Certificates, in an amount equal to the Loan Group II Principal Distribution
Amount.
(d) The Group I Class A Principal Distribution Amount shall be distributed
on each Payment Date in the following order of priority:
(i) first, to the Class A-7 Certificates, in an amount equal to the lesser
of (a) the Class A-7 Principal Distribution Amount for such Payment
Date and (b) the Class A-7 Certificate Principal Balance on such
Payment Date;
(ii) second, to the to the Class A-1 through the Class A-6 Certificates,
sequentially, in the amounts necessary to reduce their respective
Certificate Principal Balances to zero; and
(iii) third, to the Class A-7 Certificates, without regard to the Class A-7
Principal Distribution Amount, any remaining amount of the Group I
Principal Distribution Amount for such Payment Date, until the Class
A-7 Certificate Principal Balance has been reduced to zero.
(e) The Group II Class A Principal Distribution Amount is required to be
distributed on each Payment Date to the Class A-8 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.
(f) Notwithstanding the foregoing, on any Payment Date on which the Class B
Certificate Principal Balance and the 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 Certificates shall be distributed
pro rata without regard to order of priority.
(g) For federal income tax purposes amounts paid to the Owners of the Class
B Certificates on account of the Class B Available Funds Cap Carry-Forward
Amount shall be deemed first to have been paid to the Owners of the Class C
Certificates as a distribution of the Class C Distribution Amount.
(h) 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
Certificate Principal Balance over the Combined Loan Balance as of the end of
the related Remittance Period to reduce such Class B Certificate Principal
Balance, but not below zero.
(i) [Reserved];
-83-
<PAGE>
(j) 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.
(k) 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.
(l) Upon receipt of Insured Payments from the Certificate Insurer on behalf
of the Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Certificate Account and shall distribute such Insured
Payments, or the proceeds thereof as provided in paragraph (b) above.
(m) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A 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 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 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 Certificates any Insured Payment from the Certificate Insurer
and (ii) disburse the same to the Owners of the related Class A 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 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
-84-
<PAGE>
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.
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
-85-
<PAGE>
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.
(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 A 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
-86-
<PAGE>
(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
(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
-87-
<PAGE>
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;
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 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;
-88-
<PAGE>
(iv) The application of the amounts described in clause (i) preceding to
the allocation and distribution of the Class A Distribution Amounts,
and the 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 and
Class B Certificates, the Class A-9IO 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-9IO Notional Principal Amount) of each Class of
Certificates following any such payment;
(vi) The amount, if any, of any Realized Losses for the related Remittance
Period in the aggregate and for each of the Loan Group I and Loan
Group II and the amount of Cumulative Realized Losses as of the last
day of the related Remittance Period; and
(vii) The Six-Month Rolling Average Excess Spread and the Six-Month Rolling
Average 90+ 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 the each Class of
Certificates (based on a Certificate in the original principal
amount of $1,000;
(ii) the amount of such distribution allocable to principal on the
Home Equity Loans in both Loan Groups, separately identifying
the aggregate amount of any Prepayments, Loan Purchase Price
amounts or other recoveries of principal included therein and
any Aggregate Group Extra Principal Distribution Amount;
(iii) the amount of such distribution allocable to interest on the
Home Equity Loans in each Loan Group (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 and the Planned Principal Balance, if any,
of each Class of the Offered 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;
-89-
<PAGE>
(vi) the aggregate Loan Balance of all Home Equity Loans in both Loan
Groups and in each Loan Group, as of the last day of the related
Remittance Period;
(vii) based upon information furnished by the Seller 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;
(viii) the total of any Substitution Amounts or Loan Purchase Price
amounts included in such distribution with respect to both Loan
Groups and in each Loan Group;
(ix) the weighted average Coupon Rate of the Home Equity Loans;
(x) the weighted average Coupon Rate of both Loan Groups and in each
Loan Group;
(xi) the weighted average remaining term of both Loan Groups and in
each of Loan Group;
(xii) whether a Cumulative Realized Loss Trigger Event and/or the
Cumulative Realized Loss Termination Trigger Event has occurred;
(xiii) the Targeted Overcollateralization Amount, Overcollateralization
Amount, Class A Optimal Balance and Class B Optimal Balance;
(xiv) the amount of any Applied Realized Loss Amount, Realized Loss
Amortization Amount and Unpaid Realized Loss Amount for the
Class B Certificates as of the close of such Payment Date;
(xv) the Pass-Through Rate for the Class A-8 Certificates applicable
to the related Accrual Period and if the Pass-Through Rate was
based on the applicable Available Funds Cap, that such
Pass-Through Rate would have been in the absence thereof;
(xvi) the Available Funds Cap for each Offered Certificate for such
Payment Date, if any applies;
(xvii) the amount of any Insured Payment included in the distribution
to Owners of Class A Certificates;
(xviii) any Reimbursement Amount paid on such Payment Date and any
Reimbursement Amount remaining unpaid;
-90-
<PAGE>
(xix) such other information as the Certificate Insurer may reasonably
request with respect to Home Equity Loans that are Delinquent in
Loan Group I and Loan Group II;
(xx) the three largest Home Equity Loan Balances outstanding; and
(xxi) the Class B Available Funds Cap Carry-Forward Amount.
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), (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 number and aggregate principal balances of all Home Equity
Loans in each Loan Group that are: (i) 30-59 days delinquent,
(ii) 60-89 days delinquent and (iii) 90 or more days delinquent,
as of the close of business on the last business day of the
calendar month next preceding the Payment Date and the aggregate
number and aggregate Loan Balance of such Loans;
(ii) the status and the number and dollar amounts of all Home Equity
Loans in each Loan Group that are in foreclosure proceedings as
of the close of business on the last business day of the
calendar month next preceding such Payment Date;
(iii) the number of Mortgagors and the Loan Balances of the related
Mortgages for all Home Equity Loans, and in each Loan Group
involved in bankruptcy proceedings as of the close of business
on the last business day of the calendar month next preceding
such Payment Date;
(iv) the existence and status of any Properties for all Home Equity
Loans, and in each Loan Group as to which title has been taken
in the name of, or on behalf of the Trustee, as of the close of
business of the last business day of the month next preceding
the Payment Date;
(v) the book value of any real estate acquired through foreclosure
or grant of a deed in lieu of foreclosure for all Home Equity
Loans, and in each Loan Group as of the close of business on the
last business day of the calendar month next preceding the
Payment Date;
-91-
<PAGE>
(vi) the amount of Cumulative Realized Losses for all Home Equity
Loans, and in each Loan Group;
(vii) the aggregate Loan Balance of 90+ Day Delinquent Loans for all
Home Equity Loans and the Home Equity Loans in Loan Group I and
Loan Group II;
(viii) the Three-Month Rolling Average 90+ Day Delinquency Rate for all
Home Equity Loans and the Home Equity Loans in Loan Group I and
Loan Group II, the Six-Month Rolling Average Excess Spread and
whether a Cumulative Realized Loss Trigger Event is in effect;
and
(ix) the aggregate Loan Balance of Optional Buyout Loans with respect
to Loan Group I and Loan Group II.
(c) In addition, on each Payment Date the Trustee will distribute to the
Depositor, together with the information described in Subsection (a) and (b)
preceding, the following information with respect to all the Home Equity Loans
by each product type: Fixed Rate Loans, 6 Month LIBOR Loans, 2/28 Mortgage
Loans, 3/27 Loans, Balloon Loans, which information is hereby required to be
prepared by the Servicer and furnished to the trustee on or prior to the related
Monthly Remittance Date:
(i) the number and aggregate principal balances of all Home Equity
Loans with respect to each product type as of the close of
business on the last business day of the calendar month next
preceding the Payment Date;
(ii) the amount received from scheduled principal payments with
respect to each product type as of the close of business on the
last business day of the calendar month next preceding the
Payment Date;
(iii) the amount of Prepayments received from all Home Equity Loans
separately identifying the aggregate amount received from:
a. Curtailments (or partial prepayments)
b. Voluntary Payoffs
c. Involuntary Payoffs (the amount of Net Liquidation
Proceeds applicable to the unpaid principal balance from
the loan)
d. loans purchased from the Trust
with respect to each product type as of the close of business on the last
business day of the calendar month next preceding the Payment Date;
(iv) the number and principal balance with respect to each product
type of all Home Equity Loans that are a. 30 - 59 days
delinquent, b. 60-89 days
-92-
<PAGE>
delinquent, c. 90 or more days delinquent as of the close of
business on the last business day of the calendar month next
preceding the Payment Date;
(v) the number and principal balance with respect to each product
type of all Home Equity Loans that are in foreclosure
proceedings as of the close of business on the last business day
of the calendar month next preceding the Payment Date;
(vi) the number and principal balance with respect to each product
type of all Home Equity Loans that are in bankruptcy proceedings
as of the close of business on the last business day of the
calendar month next preceding the Payment Date;
(vii) the number and principal balance with respect to each product
type of all Home Equity Loans that were acquired through
foreclosure or grant of a deed in lieu of foreclosure as of the
close of business on the last business day of the calendar month
next preceding the Payment Date;
(viii) the number and principal balance with respect to each product
type of all Home Equity Loans that are in bankruptcy proceedings
as of the close of business on the last business day of the
calendar month next preceding the Payment Date;
(ix) the number and principal balance with respect to each product
type of all Home Equity Loans that are subject to loss
mitigation as of the close of business on the last business day
of the calendar month next preceding the Payment Date;
(x) the amount of current and cumulative realized losses (separately
identifying principal and interest losses) from following
resolution types:
a. REO Property sold
b. Short Sale
c. Deed in Lieu
d. No equity second mortgages
e. Other
as of the close of business on the last business day of the calendar month next
preceding the Payment Date;
(xi) the number and principal amount with respect to each product
type of all Home Equity Loans of Chapter 13 Loans separately
identifying:
-93-
<PAGE>
a. those Chapter 13 Loans that are currently meeting their
payment plan;
b. those Chapter 13 Loans that are 1 to 2 payments behind
their payment plan;
c. those Chapter 13 Loans that are 2 to 3 payments behind
their payment plan;
d. and, those Chapter 13 Loans that are greater than 3
payments behind their payment plan;
(xii) the weighted average remaining term to maturity with respect to
each product type of all Home Equity Loans as of the close of
business on the last Business Day of the calendar month next
preceding the Payment Date;
(xiii) the weighted average Coupon Rate with respect to each product
type of all Home Equity Loans as of the close of business on the
last Business Day of the calendar month next preceding the
Payment Date;
(d) The Servicer shall furnish to the Trustee, to each Owner of a Class B
Certificate and to the Certificate Insurer, in each case 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.
-94-
<PAGE>
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 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 Certificates to
such receiver or trustee in bankruptcy in which case payment will be disbursed
to the Owner.
Each Owner of a Class A Certificate, by its purchase of Class A
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 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
-95-
<PAGE>
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 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.
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 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.
-96-
<PAGE>
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.
(a) 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.
(b) The Servicer and the Trust shall execute, by joinder with the prior
written consent of the Certificate Insurer, the Sub-Servicing Agreement dated as
of November 1, 1998 among the Servicer, the Trustee, Continental Grain Company
and the other trusts listed therein (such Sub-Servicing Agreement, the
"Liquidity Agreement").
-97-
<PAGE>
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 C 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,
Certificate Insurer 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.
-98-
<PAGE>
Notwithstanding the foregoing, the Trust and the Trustee shall be parties
to, and have the rights set forth in, the Liquidity Agreement, as set forth
therein.
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
March 1, 1999." 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
-99-
<PAGE>
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.
(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 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, and all
interest accrued after February 28, 1999, 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 (exclusive of any portion of the
Servicing Fee to be used to pay any Back-Up Servicer Fee), (ii) principal
collected on or prior to the Cut-Off Date and interest accrued on or prior to
February 28, 1999, (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 (exclusive of any portion of
the Servicing Fee to be used to pay any Back-Up Servicer 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 March 1, 1999;
(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
-100-
<PAGE>
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 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, on any Monthly Remittance Date, the interest component (net of the
Servicing Fee) of any Mortgagor payment due during the preceding Remittance
Period has not yet been received, the Servicer shall make an advance of such
amount to the Certificate Account, but only to the extent that the Servicer
reasonably believes that the amount of such advance will be recoverable from
subsequent collections on the related Home Equity Loan, and would increase Net
Liquidation Proceeds on such Home Equity Loan, were such Home Equity Loan to
continue to be delinquent and ultimately liquidated. Such amounts of the
Servicer's own funds so advanced are "Delinquency Advances," and include but are
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 previously
reimbursed therefor, the Servicer shall recover Delinquency Advances pursuant to
Section 7.03(b)(viii)(b).
(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 reasonably
believes such costs and expenses will be recoverable from the related Home
Equity Loan. Each
-101-
<PAGE>
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(b)(viii)(b).
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 (exclusive of any portion used to pay any
Back-Up Servicer Fee ("Compensating Interest") that is due shall be deposited by
the Servicer (but not in excess of the aggregate Servicing Fee (exclusive of any
portion used to pay any Back-Up Servicer 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.
-102-
<PAGE>
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 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
-103-
<PAGE>
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
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
-104-
<PAGE>
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) 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,
-105-
<PAGE>
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.
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
-106-
<PAGE>
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 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, any Owner of a Class B Certificate and the
Rating Agencies, on or before March 31 of each year, commencing in 2000, an
Officer's Certificate stating, as to each signer thereof, that (i) a review of
the activities of the Servicer during such preceding calendar year and of
performance under this Agreement has been made under such officers' supervision,
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement for such year,
or, if there has been a default in the fulfillment of all such obligations,
specifying each such default known to such officers and the nature and status
thereof including the steps being taken by the Servicer to remedy such default.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
On or before June 30 of any year, commencing in 2000, 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, any Owner of a Class B
Certificate 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
-107-
<PAGE>
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, any
Owner of a Class B Certificate, 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 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
-108-
<PAGE>
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; 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.
(b) The Certificate Insurer may remove the Servicer upon the occurrence of
any of the following events, if the Certificate Insurer has delivered written
notice to the Servicer and the Trustee so removing the Servicer:
(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
-109-
<PAGE>
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) the occurrence of a Servicer Termination Delinquency Rate Trigger or
a Servicer Termination Loss Trigger (each as defined in the Insurance
and Indemnity Agreement); 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, 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) [Reserved]
(d) If any event described in sections (a) and (b) above occurs and is
continuing, the Certificate Insurer shall notify the Owners of the Class C
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 C
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
C 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 C
Certificates and the Certificate Insurer conclude that the event is the result
of the former, or if the Owner of the Class C Certificates and the Certificate
Insurer cannot agree as to the cause of the event, the Certificate Insurer may
terminate the Servicer in accordance with this Section and the Trustee shall act
as successor Servicer; provided that if no Back-Up Servicer has been appointed,
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.
(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
-110-
<PAGE>
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, the Back-Up Servicer if one has been previously appointed or other
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 the 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 and if no Back-Up Servicer
has previously been appointed, 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 Freddie Mac 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 C 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.
(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
-111-
<PAGE>
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 approved by the Certificate
Insurer 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.
-112-
<PAGE>
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, any Owner of a Class B Certificate or any
agents thereof may inspect the Servicer's servicing operations and discuss the
servicing operations of the Servicer during the Servicer's normal business hours
with any of its officers or directors; provided, however, that the costs and
expenses incurred by the Servicer or its agents or representatives in connection
with any such examinations or discussions shall be paid by the Servicer;
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
-113-
<PAGE>
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 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
-114-
<PAGE>
interest on such amount computed at the Termination Date Pass-Through Rate, plus
all accrued and unpaid 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 and Indemnity
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 and Class B
Certificates, plus the Class B Unpaid Realized Loss Amount, plus any amounts due
and owing the Certificate Insurer under the Insurance and Indemnity Agreement.
If any such termination would result in a draw on the Certificate Insurance
Policy, then the prior consent of the Certificate Insurer is required. 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 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
-115-
<PAGE>
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
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), as reasonably
determined by the Servicer based upon at least three market quotes (or such
fewer number of quotes as are reasonably obtainable), (y) one month's interest
on such amount computed at the Termination Date 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 Class R-I 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 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 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 and Class B 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 and Class B 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
-116-
<PAGE>
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 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 and the amount of any Class B Unpaid Realized
Loss Amount shall be paid to the Owners of the Class B Certificates.
END OF ARTICLE IX
-117-
<PAGE>
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;
-118-
<PAGE>
(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):
-119-
<PAGE>
(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; (provided, however, that any such failure which is
due to circumstances beyond the control of the Trustee shall not be a
cause for removal hereunder); or
(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 C 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
-120-
<PAGE>
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 Class R 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.
(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;
-121-
<PAGE>
(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;
(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.
-122-
<PAGE>
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 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 (and a short-term rating of A-1 or better) 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.
-123-
<PAGE>
(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 (or, if no Class A Certificates are then outstanding, to the Owners of a
majority in Percentage Interest of the Class B Certificates then Outstanding) 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 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 Certificates with the consent of the Certificate Insurer or, if there
are no Class A Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class B 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
-124-
<PAGE>
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer, or, if there are no Class A Certificates
then Outstanding, by such majority of the Percentage Interests represented by
the Class B Certificates, 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.
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
-125-
<PAGE>
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 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
-126-
<PAGE>
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 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
-127-
<PAGE>
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 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.
END OF ARTICLE X
-128-
<PAGE>
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
-129-
<PAGE>
of the Depositor, either of the Sellers or the Servicer, stating that the
information with respect to such factual 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
-130-
<PAGE>
anything done, omitted or suffered to be done by the Trustee or the Trust in
reliance thereon, whether or not notation of such action is made upon such
Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver or
act of the Owners or other documents provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with the Trustee by any Owner, the
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.
-131-
<PAGE>
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto shall
bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any 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
-132-
<PAGE>
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Each of the Depositor, 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.
-133-
<PAGE>
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 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 (x) the Class A
Certificates without regard to the Certificate Insurance Policies or (y) to the
Class B Certificates. 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 Policies.
(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; provided, that any Owner of a Class B Certificate shall
receive a full copy of any such amendment, together with all opinions delivered
in connection therewith.
(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.
-134-
<PAGE>
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.
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
-135-
<PAGE>
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 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.
-136-
<PAGE>
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
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 Policies. At such time as the Class A Certificates and any
Reimbursement Amounts are no longer Outstanding hereunder, the Certificate
Insurer's rights hereunder shall terminate.
-137-
<PAGE>
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
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
-138-
<PAGE>
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: Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Tel:
Fax:
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: Residential Mortgage
Surveillance Group
Underwriters: 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
-139-
<PAGE>
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
Greenwich Capital Markets, Inc.
600 Steamboat Rd.
Greenwich, CT 06830
Tel: (203) 622-5693
Fax: (203) 622-3650
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
Paine Webber Incorporated
1285 Avenue of the Americas
11th Floor
New York, NY 10019
Tel: (212) 713-8601
Fax: (212) 713-7999
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
-140-
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the Trustee
have caused this Pooling and Servicing 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: /s/ John Banu
------------------------------------------
Name: John Banu
Title: Authorized Signatory
By: /s/ Mary Rapoport
------------------------------------------
Name: Mary Rapoport
Title: Authorized Signatory
CONTIMORTGAGE CORPORATION,
as Seller and Servicer
By: /s/ Margaret Curry
------------------------------------------
Name: Margaret Curry
Title: Senior Vice President
By: /s/ Daniel Egan
------------------------------------------
Name: Daniel Egan
Title: Senior Vice President
CONTIWEST CORPORATION,
as Seller
By: /s/ Joy Tolbert
------------------------------------------
Name: Joy Tolbert
Title: Vice President
By: /s/ Todd Hart
------------------------------------------
Name: Todd Hart
Title: Assistant Vice President
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By: /s/ Neil Witoff
------------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
-141-
<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 3rd day of March 1999, before me personally came John Banu and Mary
Rapoport, to me known, who, being by me duly sworn, did depose and say that
he/she resides at 27 Trotters Lane, Mahwah, NJ 07430 and 295 CPW, New York, New
York 10024, respectively; that he/she is an Authorized Signatory and an
Authorized Signatory, 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
/s/ Rosalyn Middlemark
Rosalyn Middlemark
Notary Public, State of New York
No. 01MI5057564
Qualified in New York County
Commission Expires March 25, 2000
-142-
<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the 2nd day of March 1999, before me personally came Daniel Egan, to me
known, who, being by me duly sworn, did depose and say that he/she resides at
Montgomery County; that he/she is a Senior Vice President 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
/s/ Carolyn B. Traczykiewsicz
Notarial Seal
Carolyn B. Traczykiewsicz, Notary Public
Hatboro Borough, Montgomery County
My Commission Expires April 17, 2000
-143-
<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the 2nd day of March 1999, before me personally came Margaret Curry, to
me known, who, being by me duly sworn, did depose and say that she resides at
Montgomery County; that she is a Senior Vice President 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
/s/ Carolyn B. Traczykiewsicz
Notarial Seal
Carolyn B. Traczykiewsicz, Notary Public
Hatboro Borough, Montgomery County
My Commission Expires April 17, 2000
-144-
<PAGE>
STATE OF NEVADA )
): ss.:
COUNTY OF CLARK )
On the 4th day of March 1999, before me personally came Joy Tolbert and
Todd Hart, to me known, who, being by me duly sworn, did depose and say that he
resides at 3024 Kenner Dr., Las Vegas, Nevada 89030 and 3901 W. Charleston #102,
Las Vegas, Nevada 89102 respectively; that he is a Vice President and Assistant
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
/s/ Denise Mechling
Denise Mechling
Notary Public - State of Nevada
Clark County
My appt. Expires November 26, 2000
-145-
<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the 4th day of March 1999, 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
/s/ Robin Kay Danks
Robin Kay Danks
Notary Public, State of New York
No. 01DA6016717
Qualified in Suffolk County
Commission Expires November 30, 2000
-146-
<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 GROUP II 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 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.
II-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.
III-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.
A-II-1
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(____% 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 ompany, a New York corporation ("DTC"), to the Issuer
("ContiMortgage Home Equity Loan Trust 1999-1") 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-1-1
CUSIP
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
and 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
1
<PAGE>
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 April 26, 1999 (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 APRIL 26, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as ContiMortgage Home Equity Loan Trust 1999-1, 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 March 1, 1999 (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
1999-1 Home Equity Loan Pass-Through Certificates, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9IO, (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 25th 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 April 26, 1999, 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
2
<PAGE>
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).
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.
3
<PAGE>
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-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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(_____% 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 1999-1") 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-2-1
CUSIP
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
and 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
1
<PAGE>
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 April 26, 1999 (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 APRIL 26, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as ContiMortgage Home Equity Loan Trust 1999-1, Home Equity Loan
Pass-Through Certificates, Class A-2 (the "Class A-2 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of March 1, 1999 (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
1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9IO, (collectively,
including the Class A-2 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 25th 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 April 26, 1999, the Owners of the Class A-2 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 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 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
2
<PAGE>
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 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 Certificates. The Percentage Interest of
each Class A-2 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 Certificate on the Startup Day by the aggregate Class A-2
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 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.
3
<PAGE>
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-2 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 Certificates are exchangeable
for new Class A-2 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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(______% 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 1999-1") 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-3-1
CUSIP
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 and 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
1
<PAGE>
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 April 26, 1999 (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 APRIL 26, 1999 (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1999-1, 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 March 1, 1999 (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
1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9IO, (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 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 25th 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 April 26, 1999, 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
2
<PAGE>
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 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.
3
<PAGE>
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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(_____% 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 1999-1") 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-4-1
CUSIP
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 and 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
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-4 Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 26, 1999 (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 APRIL 26, 1999 (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1999-1, 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 March 1, 1999 (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
1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9IO, (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 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 25th 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 April 26, 1999, 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
2
<PAGE>
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 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.
3
<PAGE>
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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(______% 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 1999-1") 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-5-1
CUSIP
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 and 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
<PAGE>
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 April 26, 1999 (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 APRIL 26, 1999 (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1999-1, 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 March 1, 1999 (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
1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-6, Class A-7, Class A-8, Class A-9IO, (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 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 25th 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 April 26, 1999, 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
2
<PAGE>
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 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.
3
<PAGE>
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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(____% 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 1999-1") 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-6-1
CUSIP
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 and 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
<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-6 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to April 26, 1999 (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 APRIL 26, 1999 (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1999-1, 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 March 1, 1999 (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
1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-7, Class A-8, Class A-9IO, (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 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 25th 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 April 26, 1999, 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
2
<PAGE>
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 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.
3
<PAGE>
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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT A-7
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-7
(____% 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 1999-1") 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-7-1
CUSIP
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 and 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
<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-7 Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 26, 1999 (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 APRIL 26, 1999 (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1999-1, 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 March 1, 1999 (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
1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-8, Class A-9IO, (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 "Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th 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 April 26, 1999, 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
2
<PAGE>
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 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.
3
<PAGE>
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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
<PAGE>
EXHIBIT A-8
FORM OF CLASS A-8 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
Class A-8
(______ 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 1999-1") 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-8-1
CUSIP
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 and 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,
<PAGE>
- - 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 April 26, 1999 (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 APRIL 26, 1999 (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized
Certificates designated as ContiMortgage Home Equity Loan Trust 1999-1, 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 March
1, 1999 (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 1999-1 Home Equity Loan Pass-Through Certificates, Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-9IO, (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.
On the 25th 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 April 26, 1999, 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
2
<PAGE>
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 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.
3
<PAGE>
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 $1,000 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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT A-9IO
FORM OF CLASS A-9IO CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTION 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-9IO
(_____% 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-9IO-1
CUSIP
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 and 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.
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
<PAGE>
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-9IO
CERTIFICATE IS 7.00%. 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 $15,909.00 OF OID PER
$1,000,000 OF CLASS A-9IO NOTIONAL PRINCIPAL AMOUNT AND THE ANNUAL YIELD TO
MATURITY WILL BE 7.00% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO THE
LONG FIRST ACCRUAL PERIOD IS $530.32 PER $1,000,000 OF CLASS A-9IO 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 1999-1, Home
Equity Loan Pass-Through Certificates, Class A-9IO (the "Class A-9IO
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of March 1,
1999 (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 1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and
(collectively, including the Class A-9IO 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 25th 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 April 26, 1999, the Owners of the Class A-9IO
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-9IO 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-9IO 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-9IO 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-9IO Certificates. The Percentage
Interest of each Class A-9IO 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.
2
<PAGE>
"Class A-9 IO Notional Principal Amount": The Class A-9IO
"Notional Amount will equal (a) on any Payment Date prior to the 30th Payment
Date the aggregate outstanding Certificate Principal Balance of the Class A-7
Certificates and (b) on or after the 30th 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
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.
3
<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-9IO Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 based on the Class A-9IO
Notional Principal Amount. As provided in the Pooling and Servicing Agreement
and subject to certain limitations therein set forth, Class A-9IO Certificates
are exchangeable for new Class A-9IO 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 shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
--------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT B
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2,
CLASS A-2 INTERNAL, CLASS A-3, CLASS A-4, CLASS A-5, CLASS A-6, CLASS A-7, CLASS
A-8 AND CLASS A-91O 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 1999-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS B
(____% 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 1999-1") 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-1
CUSIP
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 and 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
<PAGE>
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 April 26, 1999 (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 INITIAL PER ANNUM RATE OF INTEREST ON THIS CLASS B
CERTIFICATE IS 8.10%. 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 $35,227.00 OF OID PER
$1,000,000 OF CLASS B PRINCIPAL AMOUNT AND THE ANNUAL YIELD TO MATURITY WILL BE
9.058% (COMPOUNDED MONTHLY); THE AMOUNT OF OID ALLOCABLE TO THE LONG FIRST
ACCRUAL PERIOD IS $6,853.50 PER $1,000,000 OF CLASS B PRINCIPAL AMOUNT COMPUTED
USING DAILY COMPOUNDING.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 26, 1999 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
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 1999-1, 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 March 1, 1999 (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
2
<PAGE>
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 1999-1 Home Equity Loan
Pass-Through Certificates, 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-9IO (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"), 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 25th 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 April 26, 1999, 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.
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.
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 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 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
4
<PAGE>
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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
6
<PAGE>
EXHIBIT C
FORM OF CLASS C CERTIFICATE
THIS CERTIFICATE IS SUBORDINATE 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-9IO
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 1999-1
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-1
Percentage Interest:
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 and 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.
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.
<PAGE>
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 1999-1, 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 March 1, 1999 (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 1999-1 Home
Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, and Class A-9IO (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 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 25th 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 April 26, 1999 (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
2
<PAGE>
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.
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
3
<PAGE>
(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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT R
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS 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.
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.
<PAGE>
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
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:
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 and 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.
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 1999-1, 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 March 1, 1999 (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 1999-1 Home
Equity Loan Pass-Through Certificates, 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-9IO (collectively, the
"Class A Certificates"), Class B (the "Class
2
<PAGE>
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 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
3
<PAGE>
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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT R
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS 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.
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.
<PAGE>
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
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:
0.001% 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 Initial Home Equity Loans listed in
Schedules I-A and 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.
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 1999-1, 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 March 1, 1999 (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 1999-1 Home
Equity Loan Pass-Through Certificates, 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-9IO (collectively, the
"Class A Certificates"), Class B (the "Class
2
<PAGE>
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 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.
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 earlier of (i) 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 the Pooling and Servicing Agreement upon
the later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Home Equity Loan 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 of the REMIC I, REMIC II or
REMIC II 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,
3
<PAGE>
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 Upper-Tier 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, Class R Certificates are exchangeable for
new Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
<PAGE>
EXHIBIT R-I
FORM OF CLASS R-I CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS 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.
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.
<PAGE>
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
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:
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 and 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.
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 1999-1, 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 March 1, 1999 (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
1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9IO
(collectively, the "Class A Certificates"), Class B (the
2
<PAGE>
"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 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.
3
<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 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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT R-I
FORM OF CLASS R-I CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS 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-2 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.
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.
<PAGE>
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
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:
0.001% 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 Initial Home Equity Loans listed in
Schedules I-A and 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.
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 1999-1, 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 March 1, 1999 (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
1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9IO
(collectively, the "Class A Certificates"), Class B (the
2
<PAGE>
"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
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 earlier of (i) 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 the Pooling and Servicing Agreement upon
the later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Home Equity Loan 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, 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,
3
<PAGE>
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-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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT R-II
FORM OF CLASS R-II CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS 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.
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.
<PAGE>
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
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:
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 and 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.
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 1999-1, 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 March 1,
1999 (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 1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class
A-9IO (collectively, the "Class A Certificates"), Class B (the
2
<PAGE>
"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 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.
3
<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 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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<PAGE>
EXHIBIT R-II
FORM OF CLASS R-II CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS 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.
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.
<PAGE>
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1
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:
0.001% 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 Initial Home Equity Loans listed in
Schedules I-A and 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.
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 1999-1, 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 March 1,
1999 (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 1999-1 Home Equity Loan Pass-Through Certificates, Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class
A-9IO (collectively, the "Class A Certificates"), Class B (the
2
<PAGE>
"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 together
with the Class R and Class R-II 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 earlier of (i) 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 the Pooling and Servicing Agreement upon
the later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Home Equity Loan 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 the 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,
3
<PAGE>
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.
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.
4
<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: Neil Witoff
Title: Assistant Vice President
Trustee Authentication
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By:
-------------------------------------
Name: Neil Witoff
Title: Assistant Vice President
Date of Authentication: March , 1999
--
5
<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 March 1, 1999
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 Number Name Original Amount Current Balance Date Paid Off Pool
- -------------- ---- --------------- --------------- ------------- ----
Dated: March , 1999
--
CONTIMORTGAGE CORPORATION
By:
------------------------------
Title:
---------------------------
D-6
<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 March 1, 1999 (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: March , 1999
--
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 March 1, 1999 (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: March , 1999
--
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 March 1, 1999 (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 1999-1, Home Equity
Loan Pass-Through Certificates, Class A, Class B, Class C, Class RI, Class RII
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: March , 1999
--
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 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 Certificates will be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
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
--- ------------------, -------.
I-2
<PAGE>
Exhibit 8.1
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
March 23, 1999
ContiSecurities Asset Funding Corp.
3811 West Charleston Boulevard, Suite 104
Las Vegas, Nevada 89102
Re: ContiSecurities Asset Funding Corp.
ContiMortgage Home Equity Loan Trust 1999-1
Registration Statement on Form S-3
(No. 333-61863)
-------------------------------------------
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 1999-1 (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
<PAGE>
EXECUTION COPY
SUBSERVICING AGREEMENT
SUBSERVICING AGREEMENT dated as of November 1, 1998 by and among
ContiMortgage Corporation, a Delaware corporation (the "Servicer"), ContiWest
Corporation, a Nevada corporation, ContiSecurities Asset Funding Corp., a
Delaware corporation (the "Depositor"), Continental Grain Company, a Delaware
corporation (the "Subservicer") and Manufacturers and Traders Trust Company, a
New York banking corporation (the "Trustee"), in its capacity as Trustee under
various Pooling and Servicing Agreements listed on the attached Schedule A,
which Schedule may be amended from time to time by delivery of notice thereof to
the parties hereto and to the related Certificate Insurers (the "Pooling
Agreements") and on behalf of the related securitization trusts (the "Trusts")
formed pursuant to the Pooling Agreements.
WHEREAS, the Servicer and the Trustee have previously entered into the
Pooling Agreements, among the Servicer, the Trustee, the Depositor and the other
parties named therein pursuant to which the Servicer is to act as servicer to
service and administer certain mortgage loans (the "Mortgage Loans") owned by
the Trusts in accordance with the Pooling Agreements;
WHEREAS, the Servicer, pursuant to Section 8.03 of the Pooling Agreements,
desires to appoint the Subservicer to perform certain of the Servicer's
servicing obligations under the Pooling Agreements;
WHEREAS, the Depositor on behalf of the Trusts desires the Subservicer to
perform certain of the Servicer's servicing obligations to benefit the Trusts;
and
WHEREAS, the Trusts wish to obtain the benefit of the subservicing
arrangements to be provided by the Subservicer.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms have the following meanings
when used in this Agreement.
"Agreement" means this Subservicing Agreement, and all amendments
hereof and supplements hereto.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which 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, and when used with reference to the determination of LIBOR, shall
also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
<PAGE>
"Delinquency Advances" with respect to any Trust, has the meaning set
forth in the related Pooling Agreement.
"Depositor" has the meaning set forth in the introductory paragraph
hereto.
"LIBOR" means, with respect to any period commencing on a Monthly
Remittance Date and ending on the day before the next Monthly Remittance
Date, the rate of interest (calculated on a per annum basis) equal to the
one month London Interbank Offered Rate as reported on the display
designated as "Page 3750" on the Telerate Service (or such other display as
may replace Page 3750 on the Telerate Service) on the related LIBOR
Determination Date.
"LIBOR Determination Date" means, with respect to any period
commencing on a Monthly Remittance Date and ending on the day before the
next Monthly Remittance Date, the second Business Day prior to such earlier
Monthly Remittance Date.
"Monthly Remittance Date" means the 10th day of each month or, if such
day is not a Business Day, the Business Day succeeding such day.
"Mortgage Loans" has the meaning set forth in the first WHEREAS clause
in the Recitals.
"Person" means any legal person, including any individual,
corporation, limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pooling Agreements" has the meaning set forth in the introductory
paragraph hereto.
"Reimbursement Available Funds" has the meaning set forth in Section
2.03(b) hereof.
"Right" has the meaning set forth in Section 6.02 hereof.
"Servicer" has the meaning set forth in the introductory paragraph
hereto.
"Subservicer" has the meaning set forth in the introductory paragraph
hereto.
"Subservicer Advance" has the meaning set forth in Section 2.02(a)
hereof.
"Subservicer Advance Notice" has the meaning set forth in Section
2.02(b) hereof.
"Subservicing Fee" has the meaning set forth in Section 2.03(a)
hereof.
"Trustee" has the meaning set forth in the introductory paragraph
hereto
"Trusts" has the meaning set forth in the introductory paragraph
hereto.
2
<PAGE>
SECTION 1.02. Other Terms. Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the related Pooling
Agreements.
ARTICLE II
THE SERVICER AND THE SUBSERVICER
SECTION 2.01. Appointment of the Subservicer; Direction to Trustee.
Pursuant to the Pooling Agreements, the Servicer and the Trusts hereby appoint
the Subservicer to perform certain of the Servicer's servicing obligations under
the Pooling Agreements as set forth in Section 2.02 hereof, which appointment
the Subservicer hereby accepts. The Subservicer agrees to perform the
obligations set forth in Section 2.02 hereof in accordance with the servicing
standards set forth in the Pooling Agreements. The Subservicer undertakes no
obligations of the Servicer under the Pooling Agreements other than those
expressly set forth in Section 2.02 hereof. Nothing in this Agreement shall
relieve the Servicer of its obligations under the Pooling Agreements or in any
way limit such obligations.
The Depositor hereby directs the Trustee to execute and deliver this
Agreement on behalf of each Trust.
SECTION 2.02. Obligations of the Subservicer.
(a) The Subservicer hereby agrees to advance, until such advancing
obligation terminates pursuant to Section 4.01(a) hereof, to the Trustee on
behalf of the Trusts, on a Trust-by-Trust basis, on each Monthly Remittance
Date, an amount (the "Subservicer Advance") equal to the Delinquency Advance (if
any) for each Trust for such Monthly Remittance Date, provided that, in no event
shall the Subservicer be required to advance on any Monthly Remittance Date
aggregate Subservicer Advances for all Trusts in excess of $85,000,000, less the
amount of any outstanding unreimbursed Subservicer Advances. In the event that
the aggregate Subservicer Advances which Subservicer makes on any Monthly
Remittance Date are less than the aggregate Delinquency Advances required to be
made to the Trusts on that Monthly Remittance Date under the Pooling Agreements,
then the Subservicer shall allocate the Subservicer Advances among the Trusts
pro rata to the Delinquency Advances for each Trust, and the difference between
the Subservicer Advance and the total Delinquency Advance shall be advanced to
the Trust by the Servicer as a Delinquency Advance. The parties hereto agree
that if the Servicer is not required to advance any portion of a Delinquency
Advance as set forth in the relevant sections of the Pooling Agreements, then
the Subservicer shall likewise not be required to make any Subservicer Advance
with respect thereto.
(b) No later than Noon on the Business Day preceding each Monthly
Remittance Date, the Servicer shall deliver to the Subservicer and the Trustee a
notice (the "Subservicer Advance Notice"), in the form of Exhibit I hereto,
setting forth the amount of the Subservicer Advance, if any, due on such Monthly
Remittance Date.
3
<PAGE>
SECTION 2.03. Subservicing Fee; Reimbursement for Subservicer Advances;
Priority.
(a) As compensation for the rendering of the services specified herein, the
Subservicer shall be entitled to receive a subservicing fee (the "Subservicing
Fee") from each Trust. The Subservicing Fee for any period shall equal the
product of (i) LIBOR plus 137 basis points, (ii) 1/360, (iii) the number of days
in the period, and (iv) the average amount of unreimbursed Subservicer Advances
during the period. In no event shall the Subservicing Fee payable to the
Subservicer for any month exceed the Servicing Fee payable to the Servicer. The
amount of any Subservicer Fee paid to the Subservicer shall reduce,
dollar-for-dollar, the amount of the Servicing Fee payable to the Servicer.
(b) (i) The Servicer collects principal, interest and certain fees on the
Mortgage Loans, as agent for and on behalf of the Trusts pursuant to and in
accordance with the Pooling Agreements. The portion of these collections that is
available, in accordance with the terms and provisions of the Pooling
Agreements, for the reimbursement of Delinquency Advances and the payment of the
Servicing Fee is referred to herein as the "Reimbursement Available Funds." The
Reimbursement Available Funds are owned by, and are the property of, the related
Trusts.
(ii) The Servicer agrees that it shall have no claim against the
Trusts to receive or retain any portion of the reimbursement for Subservicer
Advances. The Subservicer acknowledges that the Servicer, in paying the
Subservicing Fee and such reimbursement amounts to the Subservicer, is paying
such amounts on behalf of the Trusts only, solely from funds and assets of the
Trust, and is not liable to the Subservicer to pay any such amounts from its own
funds. The parties hereto agree that the Servicer shall be acting in the
capacity as agent of the Trusts when it performs its collection duties in
accordance with the Pooling Agreements and remittance duties hereunder.
(c) On each Business Day, the Subservicer shall be paid, by remittance by
the Servicer acting as an agent of the Trusts, out of the Reimbursement
Available Funds, available on that day, an amount equal to any accrued but
unpaid Subservicing Fee through the end of the prior day. After payment of the
Subservicing Fee, the Servicer shall be paid, by remittance by the Servicer
acting as an agent of the Trusts, out of the Reimbursement Available Funds an
amount equal to any accrued but unpaid Servicing Fee. The excess of the
Subservicer Fee due on any Business Day over the amount of Subservicer Fee
actually paid on such Business Day shall be carried forward and shall be paid
first out of the Reimbursement Available Funds before any other amounts are paid
under this subsection on each Business Day thereafter until such carried-forward
amounts are paid in full.
(d) On each Business Day, following the payment of the Subservicing Fee and
the Servicing Fee, the remaining amount, if any, of available Reimbursement
Available Funds shall be used to reimburse the Subservicer, by remittance by the
Servicer acting as an agent of the Trusts, for Subservicer Advances made by the
Subservicer and the Servicer for Delinquency Advances made by the Servicer
through the prior day. Prior to the termination pursuant to Section 4.01(a) of
the Subservicer's obligation to advance, the remaining Reimbursement Available
Funds shall be reimbursed to the Subservicer and the Servicer in the proportion
that the outstanding unreimbursed
4
<PAGE>
Subservicer Advances made by the Subservicer bear to the outstanding
unreimbursed Delinquency Advances made by the Servicer. After the Subservicer's
obligations to advance have been terminated pursuant to Section 4.01(a) hereof,
all remaining Reimbursement Available Funds shall first be used to reimburse the
Subservicer for outstanding unreimbursed Subservicer Advances.
(e) Notwithstanding anything herein to the contrary, the parties hereto
agree that the sum of (i) the Subservicing Fee paid to the Subservicer, plus
(ii) the Servicing Fee paid to the Servicer, shall never exceed the Servicing
Fee which would otherwise be payable under the terms of the Pooling Agreements,
if the effect of this Agreement were not taken into account. Notwithstanding
anything herein to the contrary, the parties hereto agree that the sum of (i)
any reimbursement for Subservicer Advances made by the Subservicer, plus (ii)
any reimbursement for Delinquency Advances made by the Servicer, shall never
exceed the reimbursement for Delinquency Advances which would otherwise be
payable under the terms of the Pooling Agreements, if the effect of this
Agreement were not taken into account.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01. Representations, Warranties and Covenants of the Subservicer.
The Subservicer hereby represents and warrants to the Trustee as follows:
(a) The Subservicer is a Delaware corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
is in compliance with the laws of each state necessary to enable it to
perform its obligations under the terms of this Agreement; the Subservicer
has the full corporate power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery
and performance of this Agreement by the Subservicer and the consummation
of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Subservicer; and all requisite corporate action has been
taken by the Subservicer to make this Agreement valid and binding upon the
Subservicer in accordance with its terms;
(b) Neither the execution and delivery of this Agreement, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Subservicer's charter or by-laws or any
material agreement or instrument to which the Subservicer is now a party or
by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Subservicer or its
property is subject;
(c) There is no action, suit, proceeding, or investigation pending or,
to the knowledge of the Subservicer, threatened against the Subservicer
which, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition,
properties or assets of the Subservicer, or in any material impairment of
the right or ability of the Subservicer to carry on its business, or of any
action taken or to be taken in connection with the obligations of the
Subservicer contemplated
5
<PAGE>
herein, or which would materially impair the ability of the Subservicer to
perform under the terms of this Agreement; and
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Subservicer of or compliance by the Subservicer with
this Agreement or the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the
date hereof.
SECTION 3.02. Representations, Warranties and Covenants of the Servicer.
The Servicer hereby represents and warrants to the Subservicer and the Trustee
as follows:
(a) The Servicer is a Delaware corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
is in compliance with the laws of each state necessary to enable it to
perform its obligations under the terms of this Agreement; the Servicer has
the full corporate power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery
and performance of this Agreement by the Servicer and the consummation of
the transactions contemplated hereby have been duly and validly authorized;
this Agreement evidences the valid, binding and enforceable obligation of
the Servicer; and all requisite corporate action has been taken by the
Servicer to make this Agreement valid and binding upon the Servicer in
accordance with its terms;
(b) Neither the execution and delivery of this Agreement, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Servicer's charter or by-laws or any
material agreement or instrument to which the Servicer is now a party or by
which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Servicer or its property
is subject;
(c) There is no action, suit, proceeding, or investigation pending or,
to the knowledge of the Servicer, threatened against the Servicer which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties
or assets of the Servicer, or in any material impairment of the right or
ability of the Servicer to carry on its business substantially as now
conducted, or of any action taken or to be taken in connection with the
obligations of the Servicer contemplated herein, or which would materially
impair the ability of the Servicer to perform under the terms of this
Agreement; and
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of or compliance by the Servicer with this
Agreement or the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the
date hereof.
6
<PAGE>
ARTICLE IV
REMOVAL; RESIGNATION; MERGER; ASSIGNMENT
SECTION 4.01. Term of Agreement; Termination of Subservicing.
(a) (i) The Subservicer's obligation to make Subservicer Advances hereunder
shall terminate on October 15, 1999 except as such obligation may be terminated
earlier as set forth in this Section 4.01(a) and such obligation may be extended
if agreed to in writing by the Servicer and the Subservicer, with notice given
to the other parties hereto and the related Certificate Insurers. The Servicer
may terminate the Subservicer upon five days prior written notice to each of the
other parties hereto and the related Certificate Insurers, and upon such
termination the Subservicer's obligation to make Subservicer Advances shall
simultaneously terminate. In the event that the Servicer resigns or is
terminated pursuant to the terms of the Pooling Agreements, (x) the Trustee or a
successor servicer may terminate the Subservicer without payment of any fee and
upon such termination the Subservicer's obligation to make Subservicer Advances
shall simultaneously terminate or (y) the Subservicer may immediately terminate
its obligation to make Subservicer Advances upon notice to the parties hereto
and the related Certificate Insurers.
(ii) In the event that the Subservicer fails to timely receive any
amounts due and payable to it from any Trust, the Subservicer may terminate its
obligation to make Subservicer Advances upon five days notice to each of the
other parties hereto and the related Certificate Insurers.
(b) Notwithstanding any termination of the Subservicer's advancing
obligation, the Subservicer's right to reimbursement for unpaid Subservicing
Fees and unreimbursed Subservicer Advances shall survive any such termination
until such amounts have been paid in full. Following any termination of the
Subservicer hereunder, the Servicer (or, if applicable, the successor Servicer
appointed pursuant to the related Pooling Agreement) shall, on behalf of the
related Trust, be required to continue to remit to the Subservicer amounts due
to it in respect of unpaid Subservicing Fees and unreimbursed Subservicer
Advances, as calculated in and provided by Article II hereof until such amounts
have been paid in full.
SECTION 4.02. Merger or Consolidation of the Subservicer. The Subservicer
may be merged or consolidated with or into any Person, or transfer all or
substantially all of its assets to any Person, in which case any Person
resulting from any merger or consolidation to which the Subservicer shall be a
party, or any Person succeeding to the business of the Subservicer, shall be the
successor of the Subservicer, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereof, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Subservicer shall be
qualified to act as a subservicer in accordance with Section 8.03 of the Pooling
Agreements.
SECTION 4.03. Assignment. With the prior written consent of the Servicer
and the Certificate Insurer with respect to the related Trust, the Subservicer
may assign its rights and obligations hereunder to any institution which
qualifies as a "Subservicer" under each Pooling Agreement.
7
<PAGE>
ARTICLE V
LIMITATION ON LIABILITY; INDEMNIFICATION
SECTION 5.01. Limitation on Liability of the Subservicer; Indemnification.
(a) The Subservicer and any director, officer, employee or agent of the
Subservicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any Person respecting any matters
arising thereunder. The Subservicer and any director, officer, employee or agent
of the Subservicer shall be indemnified and held harmless by the Servicer
against any loss, liability or expense incurred in connection with any legal
action relating to this Agreement or the Pooling Agreements, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties hereunder.
(b) To the extent that the Subservicer incurs any loss, liability or
expense arising out of or in connection with this Agreement, the Servicer hereby
assigns to the Subservicer the Servicer's right to indemnification from the
Trust Estate pursuant to Section 8.05 of the Pooling Agreements; provided,
however, that in the event the Servicer seeks indemnification pursuant to
Section 8.05 of the Pooling Agreements for itself from the Trust Estate, the
Subservicer shall be indemnified pursuant to clause (a) hereof.
(c) The Subservicer shall not be under any obligation to appear in,
prosecute or defend any legal action unless such action is directly related to
its duties under this Agreement and, in its opinion, does not involve it in any
expense or liability; provided, however, that the Subservicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties hereto.
In such event, pursuant to clause (b) above, the legal expenses and costs of
such action and any liability resulting therefrom (except any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder) shall be expenses, costs and liabilities
of either the Servicer or the Trust Estate. In the case of such reimbursement
from the Trust Estate, the Subservicer shall be entitled to be reimbursed
therefor only from the amounts otherwise distributable on the Class R
Certificates as and to the extent provided in Section 8.05 of the Pooling
Agreements, any such right of reimbursement being prior to the rights of the
Class R Certificateholders to receive any such amount.
SECTION 5.02. Indemnification of the Trustee. The Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified and held harmless
by the Servicer against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Pooling Agreements,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence by the Trustee or by reason of
reckless disregard of its obligations and duties hereunder.
8
<PAGE>
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Inconsistencies with Pooling Agreements; Amendment to
Subservicing Agreement and the Pooling Agreements.
(a) This Agreement may be amended from time to time by written agreement
signed by the parties hereto.
(b) The Servicer hereby agrees that it shall not amend the Pooling
Agreements in any way that would affect the rights or obligations of the
Subservicer hereunder without the prior written consent of the Subservicer.
(c) In the event that this Agreement is determined to constitute an
amendment to the Pooling Agreements, then this Agreement shall be deemed to
amend the Pooling Agreement as follows: (i) The Servicer, the Trustee and the
Trust may enter into Sub-servicing Agreements with a Person meeting the
qualifications set forth in the Pooling Agreement and may have obligations under
such agreement with respect to the subservicer including without limitation the
obligation to make reimbursements for Delinquency Advances and to pay the
Servicing Fee, provided that such obligations do not exceed the obligations
otherwise set forth in the Pooling Agreements with respect to the Servicer; and
(ii) Continental Grain Company and any other Person to which the Servicer, the
Trustee and the Certificate Insurer have consented in writing shall be eligible
to act as a sub-servicer notwithstanding anything to the contrary therein.
SECTION 6.02. Indulgences, Etc. Neither the failure nor any delay on the
part of any party to exercise any right, remedy, power or privilege (each, a
"Right") under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any Right preclude any other or further exercise
of the same or of any other Right, nor shall any waiver of any Right with
respect to any occurrence be construed as a waiver of such Right with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.
SECTION 6.03. Controlling Law; Jurisdiction.
(a) This Agreement and all questions relating to its validity,
interpretation, performance and enforcement (including, without limitation,
provisions concerning limitations of actions), shall be governed by and
construed in accordance with the laws of the State of New York, notwithstanding
any conflict-of-laws doctrines of the State of New York or other jurisdictions
to the contrary, and without the aid of any canon, custom or rule of law
requiring construction against the draftsman.
(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
9
<PAGE>
respect of any such action or proceeding may be heard or determined in such New
York State court or, to the extent permitted by law, in such federal court. The
parties hereto agree that a final judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. To the extent
permitted by applicable law, the parties hereto hereby waive and agree not to
assert by way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such courts, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that the
related documents or the subject matter thereof may not be litigated in or by
such courts.
SECTION 6.04. Waiver of Jury Trial. Each of the parties hereby irrevocably
waives all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, any other transaction document or
any instrument or document delivered hereunder or thereunder.
SECTION 6.05. Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
delivered (personally, by courier service such as FedEx, or by other messenger)
against receipt or three days after when deposited in the United States mails,
first class postage prepaid, addressed as set forth below:
(i) If to Servicer:
ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: Senior Vice President
and Chief Counsel
Telephone: (215) 347-3404
Fax: (215) 347-3400
(ii) If to Subservicer:
Continental Grain Company
277 Park Avenue
New York, New York 10172
Attention: Senior Corporate Vice President
and Chief Legal Counsel
Telephone: (212) 207-5100
Fax: (212) 207-5799
(iii) If to the Trustee:
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
10
<PAGE>
Telephone: (716) 842-4387
Fax: (716) 842-5905
Attention: Corporate Trust Administration
In addition, notice by mail shall be by air mail if posted outside of the
continental United States. Any party may alter the address to which
communications or copies are to be sent by giving notice of such change of
address in conformity with the provisions of this paragraph for the giving of
notice.
SECTION 6.06. Binding Nature of Agreement. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns notwithstanding any provision of any Pooling
Agreement that might deem this Agreement to be binding only upon the Servicer or
Subservicer.
SECTION 6.07. Provisions Separable. The provisions of this Agreement are
independent of and separate from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
SECTION 6.08. Counterparts. For the purpose of facilitating the execution
of this Agreement and or other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed to
be an original, and together shall constitute and be one and the same
instrument.
SECTION 6.09. Entire Agreement; Amendment of this Agreement. This Agreement
contains the entire understanding between the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements
and understandings, inducements or conditions, express or implied, oral or
written, except as herein contained. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other
than by an agreement in writing. This Agreement may not be amended in a manner
adverse to the interests of the related Certificate Insurers without the prior
written consent of such related Certificate Insurers.
SECTION 6.10. Paragraph Headings. The paragraph headings in this Agreement
are for convenience only; they form no part of this Agreement and shall not
affect its interpretation.
SECTION 6.11. Advice from Counsel. The parties understand that this
Agreement is a legally binding agreement that may affect such party's rights.
Each party represents to the other that it has received legal advice from
counsel of its choice regarding meaning and legal significance of this Agreement
and that it is satisfied with its legal counsel and the advice received from it.
SECTION 6.12. Judicial Interpretation. Should any provision of this
Agreement or any of the other transaction documents require judicial
interpretation, it is agreed that a court interpreting or construing the same
shall not apply a presumption that the terms hereof shall be more strictly
construed against any Person by reason of the rule of construction that a
document is
11
<PAGE>
to be construed more strictly against the Person who itself or through its agent
prepared the same, it being agreed that all Parties have participated in the
preparation of this Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
12
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their proper and duly authorized officers as of the date first
above written.
CONTIMORTGAGE CORPORATION,
as Servicer and as Seller
By: /s/ Margaret M. Curry
---------------------------------
Name: Margaret M. Curry
Title: Senior Vice President
By: /s/ Daniel J. Egan
---------------------------------
Name: Daniel J. Egan
Title: Senior Vice President
CONTINENTAL GRAIN COMPANY,
as Subservicer
By: /s/ Mark R. Baker
---------------------------------
Name: Mark R. Baker
Title: Senior Vice President and
Chief Legal Officer
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By: /s/ John Banu
---------------------------------
Name: John Banu
Title: Authorized Signatory
By: /s/ Jay Remis
---------------------------------
Name: Jay Remis
Title: Authorized Signatory
CONTIWEST CORPORATION,
as Seller
By: /s/ Joy Tolbert
---------------------------------
Name: Joy Tolbert
Title: Vice President
By: /s/ Todd Hart
---------------------------------
Name: Todd Hart
Title: Assistant Vice President
[Signature Page to Subservicing Agreement]
<PAGE>
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee and on behalf of the Trusts
By: /s/ Neil B. Witoff
---------------------------------
Name: Neil B. Witoff
Title: Assistant Vice President
For the purpose of Section 6.01(c) only
and as to acceptability of Subservicer
under the related Pooling Agreements
CONSENTED TO BY:
MBIA INSURANCE CORPORATION,
By: /s/ Theresa M. Murray
---------------------------
Name: Theresa M. Murray
Title: Vice President
FINANCIAL GUARANTY INSURANCE COMPANY
By: /s/ Barry Lites
---------------------------
Name: Barry Lites
Title: Vice President
[Signature Page to Subservicing Agreement--con't]
<PAGE>
SCHEDULE A
List of Pooling Agreements
SERIES POOLING AGREEMENT
1994-3 Pooling and Servicing Agreement, dated as of June 1, 1994, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1994-4 Pooling and Servicing Agreement, dated as of August 1, 1994, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1994-5 Pooling and Servicing Agreement, dated as of December 1, 1994, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1995-1 Pooling and Servicing Agreement, dated as of March 1, 1995, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1995-2 Pooling and Servicing Agreement, dated as of May 1, 1995, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1995-3 Pooling and Servicing Agreement, dated as of August 1, 1995, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1995-4 Pooling and Servicing Agreement, dated as of November 1, 1995, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1996-1 Pooling and Servicing Agreement, dated as of February 1, 1996, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1996-2 Pooling and Servicing Agreement, dated as of June 1, 1996, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as
A-1
<PAGE>
Seller and Manufacturers and Traders Trust Company, as Trustee
1996-3 Pooling and Servicing Agreement, dated as of August 1, 1996, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller and Manufacturers and Traders
Trust Company, as Trustee
1996-4 Pooling and Servicing Agreement, dated as of December 1, 1996, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1997-1 Pooling and Servicing Agreement, dated as of February 1, 1997, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1997-2 Pooling and Servicing Agreement, dated as of March 1, 1997, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1997-3 Pooling and Servicing Agreement, dated as of June 1, 1997, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1997-4 Pooling and Servicing Agreement, dated as of September 1, 1997, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1997-5 Pooling and Servicing Agreement, dated as of December 1, 1997, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
A-2
<PAGE>
1998-1 Pooling and Servicing Agreement, dated as of March 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1998-2 Pooling and Servicing Agreement, dated as of June 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
1998-3 Pooling and Servicing Agreement, dated as of September 1, 1998, among
ContiSecurities Asset Funding Corp., as Depositor, ContiMortgage
Corporation, as Servicer and as Seller, ContiWest Corporation, as
Seller and Manufacturers and Traders Trust Company, as Trustee
A-3
<PAGE>
EXHIBIT I
Form of Subservicer Advance Notice
________, ____
Continental Grain Company
277 Park Avenue
New York, New York 10172
Attention: _____________
Re: Subservicing Agreement, dated November 1, 1998;
Notice of Subservicer Advance
Pursuant to Section 2.02(b) of the Subservicing Agreement, dated as of
November 1, 1998 (the "Subservicing Agreement"), among ContiMortgage Corporation
(the "Servicer"), ContiWest Corporation, as Seller, ContiSecurities Asset
Funding Corp., as Depositor, Continental Grain Company (the "Subservicer") and
Manufacturers and Traders Trust Company (the "Trustee"), the undersigned hereby
notifies you that a Subservicer Advance in the amount of $_________ is due on
the Monthly Remittance Date occurring on ________, ____. The computation of the
amount of the Subservicer Advance is set forth below.
Sum of Interest Amount on deposit
Remittance Amount in related Amount of Amount of
and Principal Principal and Delinquency Subservicer
Name of Trust Remittance Amount Interest Account Advance Advance
- --------------- ----------------- ----------------- ----------- -----------
________________________________________________________________________________
Totals
Please remit the amount of the Subservicer Advance directly to
Manufacturers and Traders Trust Company (the "Trustee") at the account listed
below by Noon on the Business Day preceding the Monthly Remittance Date.
To:
Account No:
Reference:
I-1
<PAGE>
Very truly yours,
CONTIMORTGAGE CORPORATION, as Servicer
By: /s/ Margaret M. Curry
-----------------------------
Name: Margaret M. Curry
Title: Senior Vice President
cc: Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14203-2399
Tel: (716) 842-4387
Fax: (716) 842-5905
Attention: Corporate Trust Administration
I-2
<PAGE>
Exhibit 99.2
ADDENDUM NUMBER 2 TO SUBSERVICING AGREEMENT
Dated as of March 1, 1999
Reference is made to that certain Subservicing Agreement dated as of
November 1, 1998 (the "Sub-Servicing Agreement") by and among ContiMortgage
Corporation, a Delaware corporation (the "Servicer"), ContiWest Corporation, a
Nevada corporation, ContiSecurities Asset Funding Corp., a Delaware corporation
(the "Depositor"), Continental Grain Company, a Delaware corporation (the
"Subservicer") and Manufacturers and Traders Trust Company, a New York banking
corporation (the "Trustee"), in its capacity as Trustee under various Pooling
and Servicing Agreements listed on attached thereto which Schedule may be
amended from time to time by delivery of notice thereof to the parties hereto
and to the related Certificate Insurers (the "Pooling Agreements") and on behalf
of the related securitization trusts (the "Trusts") formed pursuant to the
Pooling Agreements.
Terms capitalized herein and not defined herein shall have their
respective meanings set forth in the Sub-Servicing Agreement.
The parties to the Sub-Servicing Agreement hereby agree to amend the
Schedule to the Sub-Servicing Agreement by adding thereto a reference to the
Pooling Agreement relating to the Depositor's Series 1999-1 securitization
Trust, with the result that the Series 1999-1 Trust will be one of the Trusts
covered by the Sub-Servicing Agreement.
Consistent with the foregoing, the following is hereby added to the
Schedule:
Series Pooling Agreement
- ------ -----------------
1999-1 Pooling and Servicing Agreement, dated as of March 1, 1999
among ContiSecurities Asset Funding Corp., as Depositor,
ContiMortgage Corporation, as Servicer and as Seller,
ContiWest Corporation, as Seller and Manufacturers and Traders
Trust Company, as Trustee.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Addendum Number 2 to
be executed and delivered by their proper and duly authorized officers as of the
date first above written.
CONTIMORTGAGE CORPORATION,
as Servicer and as Seller
By: /s/ Margaret Curry
----------------------------------
Name: Margaret Curry
Title: Senior Vice President
By: /s/ Daniel Egan
----------------------------------
Name: Daniel Egan
Title: Senior Vice President
CONTINENTAL GRAIN COMPANY,
as Subservicer
By: /s/ Mark R. Baker
----------------------------------
Name: Mark R. Baker
Title: Corporate Senior Vice
President
CONTISECURITIES ASSET FUNDING CORP.,
as Depositor
By: /s/ John Banu
----------------------------------
Name: John Banu
Title: Authorized Signatory
By: /s/ Mary Rapoport
----------------------------------
Name: Mary Rapoport
Title: Authorized Signatory
CONTIWEST CORPORATION,
as Seller
By: /s/ Joy Tolbert
----------------------------------
Name: Joy Tolbert
Title: Vice President
By: /s/ Todd Hart
----------------------------------
Name: Todd Hart
Title: Assistant Secretary
MANUFACTURERS AND TRADERS
TRUST COMPANY,
as Trustee and on behalf of the Trusts
By: /s/ Neil Witoff
----------------------------------
Name: Neil Witoff
Title: Assistant Vice President
