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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) March 4,1999
ContiMortgage Home Equity Loan Trust 1999-1
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(Exact name of registrant as specified in its charter)
New York 333-61863 Application Pending
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) (ID Number)
3811 West Charleston Boulevard, Suite 104, Las Vegas, Nevada 89102
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (702) 822-5836
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On October 1,1999 the ContiMortgage Home Equity Loan Trust 1999-1
entered into an amendment to the Pooling and Servicing Agreement dated as of
March 4, 1999, the Amended and Restated Pooling and Servicing Agreement,
attached hereto as Exhibit 99.1.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99.1 Amended and Restated Pooling and Servicing Agreement dated as of
October 1, 1999, by and among ContiSecurities Asset Funding Corp., as
Depositor, ContiMortgage Corporation as Seller and Servicer, ContiWest
Corporation, as Seller, Manufacturers and Traders Trust Company, as
the Trustee, and Norwest Bank Minnesota, as the Master Servicer.
<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/ Alan Fishman
-------------------------------
Name: Alan Fishman
Title: Authorized Signatory
By: /s/ Frank Baier
-------------------------------
Name: Frank Baier
Title: Authorized Signatory
Dated: January 26, 2000
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EXHIBIT INDEX
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Exhibit Page
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99.1 Amended and Restated Pooling and Servicing Agreement dated as of
October 1, 1999, by and among ContiSecurities Asset Funding Corp.,
as Depositor, ContiMortgage Corporation as Seller and Servicer,
ContiWest Corporation, as Seller, Manufacturers and Traders Trust
Company, as the Trustee, and Norwest Bank Minnesota, as the Master
Servicer.
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EXECUTION COPY
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AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1999
Amending and Restating the 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
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Master Servicer
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Trustee
HOME EQUITY LOAN PASS-THROUGH CERTIFICATES
SERIES 1999-1
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TABLE OF CONTENTS
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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..................................................................33
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...................................39
Section 3.01 Representations and Warranties of the Depositor.........................................39
Section 3.02 Representations and Warranties of the Servicer..........................................41
Section 3.03 Representations and Warranties of the Sellers...........................................43
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.................56
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans; Certification by
Trustee...............................................................................60
Article IV ISSUANCE AND SALE OF CERTIFICATES..........................................................62
Section 4.01 Issuance of Certificates................................................................62
Section 4.02 Sale of Certificates....................................................................62
Article V CERTIFICATES AND TRANSFER OF INTERESTS.....................................................63
Section 5.01 Terms...................................................................................63
Section 5.02 Forms...................................................................................63
Section 5.03 Execution, Authentication and Delivery..................................................63
Section 5.04 Registration and Transfer of Certificates...............................................64
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.......................................66
Section 5.06 Persons Deemed Owners...................................................................66
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Section 5.07 Cancellation............................................................................66
Section 5.08 Limitation on Transfer of Ownership Rights..............................................67
Section 5.09 Assignment of Rights....................................................................68
Article VI COVENANTS..................................................................................69
Section 6.01 Distributions...........................................................................69
Section 6.02 Money for Distributions to be Held in Trust; Withholding................................69
Section 6.03 Protection of Trust Estate..............................................................70
Section 6.04 Performance of Obligations..............................................................70
Section 6.05 Negative Covenants......................................................................71
Section 6.06 No Other Powers.........................................................................71
Section 6.07 Limitation of Suits.....................................................................71
Section 6.08 Unconditional Rights of Owners to Receive Distributions.................................72
Section 6.09 Rights and Remedies Cumulative..........................................................72
Section 6.10 Delay or Omission Not Waiver............................................................72
Section 6.11 Control by Owners.......................................................................73
Section 6.12 Indemnification.........................................................................73
Section 6.13 Access to Names and Addresses of Owners of Certificates.................................74
Article VII ACCOUNTS, DISBURSEMENTS AND RELEASES.......................................................75
Section 7.01 Collection of Money.....................................................................75
Section 7.02 Establishment of Accounts...............................................................75
Section 7.03 Flow of Funds...........................................................................75
Section 7.04 [Reserved]..............................................................................78
Section 7.05 Investment of Accounts..................................................................78
Section 7.06 Payment of Trust Expenses...............................................................79
Section 7.07 Eligible Investments....................................................................79
Section 7.08 Accounting and Directions by Trustee....................................................82
Section 7.09 Reports by Trustee to Owners and the Certificate Insurer................................82
Section 7.10 Reports by Trustee......................................................................86
Section 7.11 Preference Payments.....................................................................86
Article VIII SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS..........................................88
Section 8.01 Servicer and Sub-Servicers..............................................................88
Section 8.02 Collection of Certain Home Equity Loan Payments.........................................89
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers.............................89
Section 8.04 Successor Sub-Servicers.................................................................89
Section 8.05 Liability of Servicer; Indemnification..................................................90
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee, Certificate Insurer or
the Owners............................................................................90
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee.........................90
Section 8.08 Principal and Interest Account..........................................................91
Section 8.09 Delinquency Advances and Servicing Advances.............................................93
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans..................................93
Section 8.11 Maintenance of Insurance................................................................94
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Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.............................95
Section 8.13 Realization Upon Defaulted Home Equity Loans; Modification..............................95
Section 8.14 Trustee to Cooperate; Release of Files..................................................97
Section 8.15 Servicing Compensation..................................................................98
Section 8.16 Annual Statement as to Compliance.......................................................98
Section 8.17 Annual Independent Certified Public Accountants' Reports................................98
Section 8.18 Access to Certain Documentation and Information Regarding the Home Equity Loans.........99
Section 8.19 Assignment of Agreement.................................................................99
Section 8.20 Removal of Servicer; Resignation of Servicer............................................99
Section 8.21 Successor Servicers....................................................................102
Section 8.22 Inspections by Certificate Insurer; Errors and Omissions Insurance.....................105
Article IX TERMINATION OF TRUST......................................................................107
Section 9.01 Termination of Trust...................................................................107
Section 9.02 Termination Upon Option of Owners of Class R-I Certificates............................107
Section 9.03 Termination Upon Loss of REMIC Status..................................................108
Section 9.04 Disposition of Proceeds................................................................110
Article X THE TRUSTEE...............................................................................111
Section 10.01 Certain Duties and Responsibilities....................................................111
Section 10.02 Removal of Trustee for Cause...........................................................112
Section 10.03 Certain Rights of the Trustee..........................................................113
Section 10.04 Not Responsible for Recitals or Issuance of Certificates...............................114
Section 10.05 May Hold Certificates..................................................................115
Section 10.06 Money Held in Trust....................................................................115
Section 10.07 Compensation and Reimbursement; No Lien for Fees.......................................115
Section 10.08 Corporate Trustee Required; Eligibility................................................115
Section 10.09 Resignation and Removal; Appointment of Successor......................................116
Section 10.10 Acceptance of Appointment by Successor Trustee.........................................117
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the Trustee.............117
Section 10.12 Reporting; Withholding.................................................................118
Section 10.13 Liability of the Trustee...............................................................118
Section 10.14 Appointment of Co-Trustee or Separate Trustee..........................................119
Article XI MISCELLANEOUS........................................................................................121
Section 11.01 Compliance Certificates and Opinions...................................................121
Section 11.02 Form of Documents Delivered to the Trustee.............................................121
Section 11.03 Acts of Owners.........................................................................122
Section 11.04 Notices, etc. to Trustee...............................................................122
Section 11.05 Notices and Reports to Owners; Waiver of Notices.......................................122
Section 11.06 Rules by Trustee.......................................................................123
Section 11.07 Successors and Assigns.................................................................123
Section 11.08 Severability...........................................................................123
Section 11.09 Benefits of Agreement..................................................................123
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Section 11.10 Legal Holidays.........................................................................123
Section 11.11 Governing Law; Submission to Jurisdiction..............................................124
Section 11.12 Counterparts...........................................................................124
Section 11.13 Usury..................................................................................125
Section 11.14 Amendment..............................................................................126
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.....................................126
Section 11.16 REMIC Status...........................................................................127
Section 11.17 Additional Limitation on Action and Imposition of Tax..................................128
Section 11.18 Appointment of Tax Matters Person......................................................129
Section 11.19 The Certificate Insurer................................................................129
Section 11.20 Reserved...............................................................................129
Section 11.21 Third Party Rights.....................................................................129
Section 11.22 Notices................................................................................129
Article XII THE MASTER SERVICER.................................................................................133
Section 12.01 Appointment and Duties of the Master Servicer..........................................133
Section 12.02 Representations, Warranties and Covenants of the Master Servicer.......................135
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
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AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, relating to
CONTIMORTGAGE HOME EQUITY LOAN TRUST 1999-1 as of October 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") NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, in its capacity as the Master Servicer (the
"Master Servicer") 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, the Master Servicer has agreed to perform the master servicing
functions described herein;
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
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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); (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.
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DEFINITIONS; RULES OF CONSTRUCTION
Definitions.
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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.
"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
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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).
"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 either principal corporate trust office of the
Trustee is located or the master servicing offices of the Master Servicer, if
applicable, 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.
"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:
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(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:
INITIAL CERTIFICATE
CLASS PRINCIPAL BALANCE
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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.
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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.
"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
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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
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;
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and
(y) the excess of (1) the Combined Pool
Balance as of the 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.
"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.
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<PAGE>
"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, 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
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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, 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
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<PAGE>
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 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
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<PAGE>
to S ection 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 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.
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<PAGE>
"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.
"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 lesser of (i) the aggregate amount of the
Servicing Fee for such Remittance Period and (ii) the actual aggregate amount of
Compensating Interest funded by the Servicer and/or the Master Servicer with
respect to such Payment Date.
"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.
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<PAGE>
"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.
"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.
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<PAGE>
"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 Master Servicer, the
Certificate Insurer and the Owners with a statement identifying the location of
the Principal and Interest Account.
"Determination Date": As to each Payment Date, the third Business Day
next preceding such Payment Date.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"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.
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"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 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, the related Master Servicing Fee (so long as the Master
Servicer is engaged under this Agreement), 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.
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"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 Master Servicing Fee (so long as the
Master Servicer is engaged under this Agreement), 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.
"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;
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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.
"Home Equity Loan Documents": With respect to any Home Equity Loan, all
agreements, instruments, promissory notes, financing statements, mortgages,
security agreements, assignments and other documents executed and delivered by
any Person in connection with such Home Equity Loan, whether such documents are
in the possession or under the control of the Trustee, the Servicer or any other
Person (including any Sub-Servicer).
"Indemnification Agreement": The Indemnification Agreement dated March
4, 1999 among the Certificate Insurer, the Depositor, the Sellers, the Servicer,
and the Underwriters.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Offered Certificate.
"Insurance 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.
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"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), (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 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,
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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 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
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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 and the Master Servicer have 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.
"Master Servicer": Norwest Bank Minnesota, National Association, a
national banking association, and its permitted successors and assigns.
"Master Servicing Fee": With respect to any Home Equity Loan, the amount
to be paid to the Master Servicer on each Payment Date as compensation for its
master servicing duties relating to such Home Equity Loan, and equal to the
Master Servicing Fee Rate times the then outstanding principal amount of such
Home Equity Loan as of the first day of the calendar month preceding the month
of such Payment Date.
"Master Servicing Fee Rate": 0.05% per annum.
"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.
"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
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Remittance Amount, in each case with respect to such Loan Group, for such
Monthly Remittance Date.
"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.
"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.
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"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).
"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.
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"Percentage Interest": With respect to a Class of the Offered
Certificates, a fraction, expressed as a percentage, the numerator of which is
the initial Certificate Principal Balance represented by such Certificate and
the denominator of which is the aggregate initial Certificate Principal Balance
represented by all the Certificates in such Class. With respect to the Class
A-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 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.
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"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.
"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
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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.
"Records": With respect to any Home Equity Loan, all Home Equity Loan
Documents and other material documents held or maintained by or for the Sellers,
the Depositor, the Trustee, the Servicer or any other Person (including any
Sub-Servicer) with respect to such Home Equity Loan and/or the related
Mortgagor, including the File and any and all Servicing Records.
"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 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.
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"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 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.
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"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.
"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.
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"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 amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 8.15 and equal to the
Servicing Fee Rate times the then outstanding principal amount of such Home
Equity Loan as of the first day of each calendar month payable on a monthly
basis.
"Servicing Fee Rate": 0.50% per annum less, for so long as the Master
Servicer is engaged under this Agreement, the per annum rate payable to the
Master Servicer in excess of an annualized rate of 0.04%.
"Servicing Records": With respect to any Home Equity Loan, all books and
records in any form or format whatsoever (including records kept in electronic
form) that have been maintained by or for the Servicer or any Sub-Servicer with
respect to such Home Equity Loan, including all documents (whether originals or
copies), files, records, databases, computer tapes, floppy disks, tax bills,
assessment notices, binders and other proof of insurance coverage, insurance
policies, insurance premium notices, appraisals, other closing documentation,
payment history records, agreements, and any other records in any way relating
to or evidencing the servicing of any of such Home Equity Loan.
"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, the aggregate Trustee Fee and the aggregate Master
Servicing Fee (if the Master Servicer is then engaged under this Agreement) 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).
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"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.
"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:
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(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
(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.
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"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.
"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.
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.
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.
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
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ESTABLISHMENT AND ORGANIZATION OF THE TRUST
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."
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, the Master Servicer and
the Servicer.
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.
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.
Expenses of the Trust.
- ----------------------
The expenses of the Trust, including (i) the fees of the Trustee
(including any portion of the Trustee Fee not paid pursuant to Section 7.03(b)
hereof), (ii) any reasonable expenses of the Trustee, and (iii) any other
expenses of the Trust that have been reviewed by ContiMortgage, which review
shall not be required in connection with the enforcement of a remedy by the
Trustee resulting from a default under this Agreement, shall be paid directly by
ContiMortgage. ContiMortgage shall pay directly the reasonable fees and expenses
of counsel to the Trustee. The reasonable fees and expenses of the Trustee's
counsel in connection with the review and delivery of this Agreement and related
documentation shall be paid by ContiMortgage on the Startup Day.
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
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therein. Thereafter, transfer of any ownership interest shall be governed by
Sections 5.04 and 5.08 hereof.
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.
Miscellaneous REMIC Provisions.
- -------------------------------
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.
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).
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.
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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.
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 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
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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.
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:
Pass-
REMIC II Initial Through Allocation Allocation
Certificates Balance Rate of Principal of Interest
- ------------ ------------ ------- ------------ -----------
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)
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Pass-
REMIC II Initial Through Allocation Allocation
Certificates Balance Rate of Principal of Interest
- ------------ ------------ ------- ------------ -----------
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)
- -----------
(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.
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.
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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.
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.
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.
The Trustee shall provide to the Internal Revenue Service and to the
persons described in Section 860E(e)(3) and (6) of the Code, the information
described in Treasury regulations Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto, with respect to each of REMIC I, REMIC II and REMIC III.
Such information will be provided in the manner described in Treasury
regulations Section 1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
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<PAGE>
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLERS;
COVENANT OF SELLERS TO CONVEY HOME EQUITY LOANS
Representations and Warranties of the Depositor.
- ------------------------------------------------
The Depositor hereby represents, warrants and covenants to the Trustee,
the Master Servicer, the Certificate Insurer and the Owners that as of the
Startup Day:
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<PAGE>
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.
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.
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).
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.
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.
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.
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
-40-
<PAGE>
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.
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.
The transactions contemplated by this Agreement are in the ordinary course of
business of the Depositor.
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.
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.
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.
Representations and Warranties of the Servicer.
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The Servicer hereby represents, warrants and covenants to the Trustee,
the Master Servicer, the Certificate Insurer and the Owners that as of the
Startup Day:
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
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subordinated debt of at least $1,500,000, as determined in accordance with
generally accepted accounting principles.
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.
This Agreement and the Operative Documents to which the Servicer is a party,
assuming due authorization, execution and delivery by the other parties hereto
and thereto, each constitutes a valid, legal and binding obligation of the
Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
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.
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.
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.
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.
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. 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
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or from any federal, state or other governmental authority or agency (other than
any such actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Servicer makes no such
representation or warranty), that are necessary or advisable in connection with
the execution and delivery by the Servicer of the Operative Documents to which
it is a party, have been duly taken, given or obtained, as the case may be, are
in full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the part of
the Servicer and the performance by the Servicer of its obligations under this
Agreement and such of the other Operative Documents to which it is a party.
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.
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, the Master
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.
Representations and Warranties of the Sellers.
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(1) ContiMortgage hereby represents, warrants and covenants to the
Trustee, the Master Servicer, the Certificate Insurer and the Owners that as of
the Startup Day:
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.
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
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default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in a breach of, any material contract,
agreement or other instrument to which ContiMortgage is a party or by which
ContiMortgage is bound or violate any statute or any order, rule or regulation
of any court, governmental agency or body or other tribunal having jurisdiction
over ContiMortgage or any of its properties.
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).
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.
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.
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.
The statements contained in the Registration Statement which describe
ContiMortgage or matters or activities for which ContiMortgage is responsible in
accordance with the Operative Documents or which are attributable to
ContiMortgage therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiMortgage required to be stated therein or necessary to make
the statements contained therein with respect to ContiMortgage, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to ContiMortgage that
materially adversely affects or in the future may (so far as ContiMortgage can
now reasonably foresee) materially adversely affect ContiMortgage or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
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,
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mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released).
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.
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.
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.
The transactions contemplated by this Agreement are in the ordinary course of
business of ContiMortgage.
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.
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.
ContiMortgage is not transferring the Home Equity Loans to the Depositor with
any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03(1) shall survive delivery of the respective Home
Equity Loans to the Trustee.
Upon discovery by any of the Servicer, the Master 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
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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 and the Master Servicer have
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 Master Servicer, the Certificate Insurer and the Owners that as of the
Startup Day:
(a) ContiWest is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it, make such qualification
necessary. ContiWest has all requisite corporate power and authority to own and
operate its properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations under
this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by ContiWest and its
performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of ContiWest and will not violate
ContiWest's Certificate of Incorporation or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which ContiWest is a party or by which ContiWest is bound or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over ContiWest or any of
its properties.
(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
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creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law).
(d) ContiWest is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of ContiWest or its properties or
the consequences of which would materially and adversely affect its performance
hereunder and under the other Operative Documents to which ContiWest is a party.
(e) No litigation is pending with respect to which ContiWest has
received service of process or, to the best of ContiWest's knowledge, threatened
against ContiWest which litigation might have consequences that would prohibit
its entering into this Agreement or any other Operative Documents to which it is
a party or that would materially and adversely affect the condition (financial
or otherwise) or operations of ContiWest or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which ContiWest is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by ContiWest contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe ContiWest or matters or activities for which ContiWest is responsible
in accordance with the Operative Documents or which are attributable to
ContiWest therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to ContiWest required to be stated therein or necessary to make the
statements contained therein with respect to ContiWest, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to ContiWest that materially
adversely affects or in the future may (so far as ContiWest can now reasonably
foresee) materially adversely affect ContiWest or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has not been
set forth in the Registration Statement.
(h) Upon the receipt of each Home Equity Loan (including the related
Note) and other items of the Trust Estate delivered by ContiWest to the
Depositor and by the Depositor to the Trustee under this Agreement, the Trust
will have good title to such Home Equity Loan (including the related Note) and
such other items of the Trust Estate free and clear of any lien, 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
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agency (other than any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to which ContiWest
makes no such representation or warranty), that are necessary or advisable in
connection with the purchase and sale of the Certificates and the execution and
delivery by ContiWest of the Operative Documents to which it is a party, have
been duly taken, given or obtained, as the case may be, are in full force and
effect on the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of ContiWest and the performance
by ContiWest of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of ContiWest.
(k) ContiWest is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is ContiWest aware of any pending
insolvency.
(l) The transfer, assignment and conveyance of the Notes and the
Mortgages by ContiWest hereunder are not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
(m) ContiWest is not transferring the Home Equity Loans to the Depositor
with any intent to hinder, delay or defraud its creditors.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03(2) shall survive delivery of the respective Home
Equity Loans to the Trustee.
Upon discovery by any of the Servicer, any Sub-Servicer, either Seller,
the Certificate Insurer or the Trustee (each, for purposes of this paragraph, a
"party") of a breach of any of the representations and warranties set forth in
this Section 3.03 which materially and adversely affects the interests of the
Owners or of the Certificate Insurer, the party discovering such breach shall
give prompt written notice to the other parties. ContiWest hereby covenants and
agrees that within 60 days of its discovery or its receipt of notice of breach,
it shall cure such breach in all material respects or, with respect to a breach
of clause (h) above, ContiWest may (or may cause an affiliate of ContiWest to)
on the Monthly Remittance Date next succeeding such discovery or receipt of
notice (i) if such monthly Remittance Date is within two years of the startup
day substitute in lieu of any Home Equity Loan not in compliance with clause (h)
a Qualified Replacement Mortgage and, if the outstanding principal amount of
such Qualified Replacement Mortgage as of the applicable Replacement Cut-Off
Date is less than the Loan 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 and the Master Servicer have
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
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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.
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Covenants of the Sellers to Take Certain Actions with Respect to the Home Equity
Loans In Certain Situations.
Upon the discovery by either Seller, the Servicer, any Sub-Servicer, the
Certificate Insurer or the Trustee (i) that any of the statements set forth in
subsection (b) below were untrue as of the Startup Day with the result that the
interests of the Owners or the Certificate Insurer are materially and adversely
affected or (ii) that statements set forth in Clauses (ix), (x), (xiii),
(xxxvi), (xl), or (xli) of subsection (b) below were untrue in any material
respect as of the Startup Day, the party discovering such breach shall give
prompt written notice to the other parties. Upon the earliest to occur of such
Seller's discovery, its receipt of notice of breach from any one of the other
parties or such time as a situation resulting from an existing statement which
is untrue materially and adversely affects the interests of the Owners or of the
Certificate Insurer, such Seller hereby covenants and warrants that it shall
promptly cure such breach in all material respects or subject to the last two
sentences of Section 3.03 it shall on the second Monthly Remittance Date next
succeeding such discovery, receipt of notice or such time (i) if such Monthly
Remittance Date is within two years of the Startup Day substitute in lieu of
each Home Equity Loan which has given rise to the requirement for action by such
Seller a Qualified Replacement Mortgage and deliver the Substitution Amount to
the Servicer for deposit in the Principal and Interest Account or (ii) purchase
such Home Equity Loan from the Trust at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be delivered to the Servicer
for deposit in the Principal and Interest Account. Other than as specified in
Section 6.12 hereof, it is understood and agreed that the obligation of a Seller
so to substitute or purchase any Home Equity Loan as to which such a statement
set forth below is untrue in any material respect and has not been remedied
shall constitute the sole remedy under this Agreement respecting a discovery of
any such statement which is untrue in any material respect in this Section 3.04
available to the Owners, the Certificate Insurer and the Trustee, the
Certificate Insurer.
The information set out below speaks as of the Startup Day, unless a different
date is specified: 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;
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;
Each Home Equity Loan being transferred to the Trust is a Qualified Mortgage;
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;
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%,
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except 21.72% of such Home Equity Loans which have a Loan-to-Value Ratio not
greater than 100%;
Each Home Equity Loan is being serviced by the Servicer;
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%;
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);
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;
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;
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;
There is no delinquent tax or assessment lien on any Property, and each Property
is free of substantial damage and is in good repair;
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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;
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;
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;
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 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;
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;
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;
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;
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
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Loan had full legal capacity to execute all documents relating to such Home
Equity Loan and convey the estate therein purported to be conveyed;
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;
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;
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);
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;
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;
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;
No Home Equity Loan was originated under a buydown plan;
No Home Equity Loan has a shared appreciation feature, or other contingent
interest feature;
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;
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;
Any advances made after the date of origination of a Home Equity Loan but prior
to the Cut-Off Date have been consolidated with the outstanding principal amount
secured by the related Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term reflected
on the respective Schedule of Home Equity Loans. The consolidated principal
amount does not exceed the original principal amount of the related Home Equity
Loan. No Note permits or obligates the Servicer to make future advances to the
related Mortgagor at the option of the Mortgagor;
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;
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
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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;
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;
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;
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;
There is no default, breach, violation or event of acceleration existing under
any Mortgage or the related Note and no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration; and neither the Servicer
nor the related Seller has waived any default, breach, violation or event of
acceleration;
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;
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;
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;
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;
Each Home Equity Loan was originated based upon a full appraisal, which included
an interior inspection of the subject property;
The Home Equity Loans were not selected for inclusion in the Trust by the
Sellers on any basis intended to adversely affect the Trust;
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);
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;
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
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Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation on any
Property;
Both Sellers were properly licensed or otherwise authorized, to the extent
required by applicable law, to originate or purchase each Home Equity Loan; and
the consummation of the transactions herein contemplated, including, without
limitation, the receipt of interest by the Owners and the ownership of the Home
Equity Loans by the Trustee as trustee of the Trust will not involve the
violation of such laws;
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;
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;
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;
All of the Adjustable Rate Home Equity Loans are in a first lien position;
As of the Cut-off Date, each Home Equity Loan has an outstanding balance of less
than $411,762.96;
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;
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
The weighted average margin of the Home Equity Loans in Loan Group II is 6.47%.
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
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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.
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.
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.
Conveyance of the Home Equity Loans and Qualified Replacement Mortgages.
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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.
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
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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.
In connection with the transfer and assignment of the Home Equity Loans, the
Depositor agrees to:
deliver without recourse to the Trustee on the Startup Day with respect to each
Home Equity Loan (A) the original Notes endorsed in blank or to the order of the
Trustee, (B) the original title insurance policy or a copy certified by the
issuer of the title insurance policy, or the attorney's opinion of title, (C)
originals or certified copies of all intervening assignments, showing a complete
chain of title from origination to the Trustee, if any, including warehousing
assignments, with evidence of recording thereon, (D) originals of all assumption
and modification agreements, if any and (E) either: (1) the original Mortgage,
with evidence of recording thereon (if such original Mortgage has been returned
to the related Seller from the applicable recording office or a certified copy
thereof if such original Mortgage has not been returned to the related Seller
from the applicable recording office), or (2) a copy of the Mortgage certified
by the public recording office in those instances where the original recorded
Mortgage has been lost;
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
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
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8.20 hereof or (c) notification to the Trustee of the occurrence of a bankruptcy
or insolvency relating to the Mortgagor.
Notwithstanding anything to the contrary contained in this Section 3.05,
in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee of a copy of
such Mortgage, such assignment or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (ii) of the second preceding paragraph, each Seller shall deliver to
the Trustee a list of all Mortgages with respect to Home Equity Loans delivered
by such Seller for which no Mortgage assignment has yet been submitted for
recording by such Seller, which list shall state the reason why such Seller has
not yet submitted such Mortgage assignments for recording. With respect to any
Mortgage assignment disclosed on such list as not yet submitted for recording
for a reason other than a lack of original recording information, the Trustee
shall make an immediate demand on such Seller to prepare such Mortgage
assignments, and shall inform the Certificate Insurer of such Seller's failure
to prepare such Mortgage assignments. Thereafter, the Trustee shall cooperate in
executing any documents prepared by the Certificate Insurer and submitted to the
Trustee in connection with this provision. Following the expiration of the
60-day period referred 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.
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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.
In the case of Home Equity Loans which have been prepaid in full after the
Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of the
foregoing, will deliver within six (6) days after the Startup Day to the Trustee
a certification of an Authorized Officer in the form set forth in Exhibit D.
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. 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. 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).
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. If a
Mortgage assignment is lost during the process of recording, or is returned from
the recorder's office unrecorded due to a defect therein, the Seller that
delivered the corresponding
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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.
Acceptance by Trustee; Certain Substitutions of Home Equity Loans; Certification
by Trustee.
The Trustee agrees to execute and deliver on the Startup Day an acknowledgment
of receipt of the items delivered by each of the Sellers and the Depositor in
the form attached as Exhibit 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. If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Home Equity Loans identified in the Schedule of Home Equity
Loans, or that any Home Equity Loan does not conform to the description thereof
as set forth in the Schedule of Home Equity Loans, the Trustee shall promptly so
notify the Depositor, each of the Sellers, the Certificate Insurer and the
Owners. In performing any such review, the Trustee may conclusively rely as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's review of the items delivered by each
of the Sellers pursuant to Section 3.05(b)(i) is limited solely to confirming
that the documents listed in Section 3.05(b)(i) have been executed and received,
relate to the Files identified in the Schedule of Home Equity Loans and conform
to the description thereof in the Schedule of Home Equity Loans. Each Seller
agrees to use reasonable efforts to remedy a material defect in a document
constituting part of a File delivered by such
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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.
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
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ISSUANCE AND SALE OF CERTIFICATES
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.
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
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CERTIFICATES AND TRANSFER OF INTERESTS
Terms.
- ------
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.
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.
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.
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.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
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Registration and Transfer of Certificates.
- ------------------------------------------
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.
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.
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.
All Certificates issued upon any registration of transfer or exchange of
Certificates shall be valid evidence of the same ownership interests in the
Trust and entitled to the same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange. 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.
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.
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
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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.
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.
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
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registered Owners of Offered Certificates transferring the Offered Certificates
shall designate, in accordance with the provisions hereof.
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.
Mutilated, Destroyed, Lost or Stolen Certificates.
- --------------------------------------------------
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless, then, in the absence of
notice to the Trustee or the Registrar that such Certificate has been acquired
by a bona fide purchaser, and the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like Class, tenor and aggregate
principal amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for or
in lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in 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.
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.
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
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Agreement. All canceled Certificates may be held by the Trustee in accordance
with its standard retention policy.
Limitation on Transfer of Ownership Rights.
- -------------------------------------------
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.
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.
[RESERVED].
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
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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. 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.
Assignment of Rights.
- ---------------------
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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COVENANTS
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.
Money for Distributions to be Held in Trust; Withholding.
- ---------------------------------------------------------
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.
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.
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.
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.
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
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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).
Protection of Trust Estate.
- ---------------------------
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:
more effectively hold in trust all or any portion of the Trust Estate;
perfect, publish notice of, or protect the validity of any grant made or to be
made by this Agreement;
enforce any of the Home Equity Loans; or
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.
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 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.
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.
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
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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).
Negative Covenants.
- -------------------
The Trustee will not permit the Trust to:
sell, transfer, exchange or otherwise dispose of any of the Trust Estate except
as expressly permitted by this Agreement;
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;
incur, assume or guaranty any indebtedness of any Person except pursuant to this
Agreement; dissolve or liquidate in whole or in part, except pursuant to Article
IX hereof; or
(A) permit the validity or effectiveness of this Agreement to be impaired, or
permit any Person to be released from any covenants or obligations with respect
to the Trust or to the Certificates under this Agreement, except as may be
expressly permitted hereby or (B) permit any lien, charge, adverse claim,
security interest, mortgage or other encumbrance to be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof.
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.
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;
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(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, 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).
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.
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.
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
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as may be deemed expedient, by the Trustee, the Certificate Insurer or the
Owners, as the case may be.
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 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.
Indemnification.
- ----------------
The Depositor agrees to indemnify and hold the Trustee, the Master
Servicer, 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 Master
Servicer, 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
Master Servicer, 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 Master Servicer,
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 Master Servicer, 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 Master Servicer, 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
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amended. The provisions of this Section 6.12 shall survive the termination of
this Agreement and the payment of the outstanding Certificates.
Access to Names and Addresses of Owners of Certificates.
- --------------------------------------------------------
If any Owner (for purposes of this Section 6.13, an "Applicant") applies in
writing to the Trustee, and such application states that the Applicant desires
to communicate with other Owners with respect to their rights under this
Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicant proposes to transmit, then the Trustee shall,
at the expense of such Applicant, within ten (10) Business Days after the
receipt of such application, furnish or cause to be furnished to such Applicant
a list of the names and addresses of the Owners of record as of the most recent
Payment Date.
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
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ACCOUNTS, DISBURSEMENTS AND RELEASES
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.
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.
Flow of Funds.
- --------------
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.
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:
First, for the payment of certain fees, concurrently, to the Trustee, the
Trustee Fee, to the Certificate Insurer, the Premium Amount and to the Master
Servicer, the Master Servicing Fee (as long as the Master Servicer is engaged
under this Agreement);
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 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;
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;
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;
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,
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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;
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;
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;
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 Master Servicer, to the extent of (i) any
unreimbursed Delinquency Advances, (ii) any servicing
transition expenses incurred by the Master Servicer
or its designee in assuming the direct servicing of
the Home Equity Loans and (iii) any other documented
costs and expenses incurred by the Master Servicer;
(c) to the Servicer to the extent of any unreimbursed
Delinquency Advances or Servicing Advances and any
other costs and expenses incurred by the Servicer;
(d) from the Class C Distribution Amount, to fund the
Class B Available Funds Cap Carry-Forward Amount;
(e) to fund a distribution to Owners of the Class C
Certificates in an amount equal to the remaining
Class C Distribution Amount; and
(f) to fund a distribution to Owners of the Owners of
the Class R Certificates.
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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.
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;
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
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. 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.
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.
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.
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.
[Reserved];
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.
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.
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.
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
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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 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.
[Reserved].
- -----------
Investment of Accounts.
- -----------------------
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. 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
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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.
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).
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.
All income or other gain from investments in any Account held by the Trustee
shall be for the account of the Owners of the Class R-I Certificates and
distributed to the Owners of the Class R-I Certificates immediately prior to any
distribution under Section 7.03 hereof on any Payment Date, and any loss
resulting from such investments shall be for the account of the Servicer and
promptly upon the realization of such loss the Servicer shall contribute funds
in an amount equal to such loss to such Account.
Payment of Trust Expenses.
- --------------------------
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.
The Depositor shall pay directly the reasonable fees and expenses of counsel to
the Trustee.
Eligible Investments.
- ---------------------
The following are Eligible Investments:
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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; 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;
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;
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;
Investment agreements approved by the Certificate Insurer, provided:
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
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
The agreement is not subordinated to any other obligations of such insurance
company or bank, and
The same guaranteed interest rate will be paid on any future deposits made
pursuant to such agreement, and
The Trustee receives an opinion of counsel that such agreement is an enforceable
obligation of such insurance company or bank;
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:
A master repurchase agreement or specific written repurchase agreement governs
the transaction, and
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
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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
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
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
The fair market value of the collateral securities in relation to the amount of
the repurchase obligation, including principal and interest, is equal to at
least 104% and such collateral securities must be valued weekly and
market-to-market at current market price plus accrued interest.
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
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.
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Accounting and Directions by Trustee.
- -------------------------------------
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.
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 Master Servicer, 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):
The aggregate amount then on deposit in the Certificate Account;
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;
The amount of any Insured Payment to be made by the Certificate
Insurer on such Payment Date;
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;
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;
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
The Six-Month Rolling Average Excess Spread and the Six-Month
Rolling Average 90+ Day Delinquency Rate.
Reports by Trustee to Owners and the Certificate Insurer.
- ---------------------------------------------------------
On each Payment Date the Trustee shall report in writing to the Depositor, each
Owner, the Certificate Insurer, the Master Servicer, the Underwriters and the
Rating Agencies: 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;
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;
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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);
the Interest Carry Forward Amount for each Class;
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;
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;
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;
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;
the weighted average Coupon Rate of the Home Equity Loans;
the weighted average Coupon Rate of both Loan Groups and in each Loan Group;
the weighted average remaining term of both Loan Groups and in each of Loan
Group;
whether a Cumulative Realized Loss Trigger Event and/or the Cumulative Realized
Loss Termination Trigger Event has occurred;
the Targeted Overcollateralization Amount, Overcollateralization Amount, Class A
Optimal Balance and Class B Optimal Balance;
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;
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;
the Available Funds Cap for each Offered Certificate for such Payment Date, if
any applies;
the amount of any Insured Payment included in the distribution to Owners of
Class A Certificates;
any Reimbursement Amount paid on such Payment Date and any Reimbursement Amount
remaining unpaid;
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;
the three largest Home Equity Loan Balances outstanding; and
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.
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In addition, on each Payment Date the Trustee will distribute to the Depositor,
the Certificate Insurer, the Master Servicer, 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: 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;
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;
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;
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;
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;
the amount of Cumulative Realized Losses for all Home Equity Loans, and in each
Loan Group;
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;
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
the aggregate Loan Balance of Optional Buyout Loans with respect to Loan Group I
and Loan Group II.
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:
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;
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;
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
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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;
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 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;
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;
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;
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;
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;
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;
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;
the number and principal amount with respect to each
product type of all Home Equity Loans of Chapter 13 Loans separately
identifying:
a. those Chapter 13 Loans that are currently meeting their payment
plan;
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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;
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;
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;
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.
Reports by Trustee.
- -------------------
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.
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.
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
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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
Master 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
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SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
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.
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
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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.
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.
Sub-Servicing Agreements Between Servicer and Sub-Servicers.
- ------------------------------------------------------------
The Servicer may enter into Sub-Servicing Agreements for any servicing and
administration of Home Equity Loans with any institution that is acceptable to
the Certificate Insurer and the Master Servicer 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, the Master Servicer
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 the Master Servicer or other successor Servicer shall have the
option to terminate such agreement without payment of any fees if the original
Servicer is terminated or resigns.
The Servicer 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"). Without limitation upon any of the Servicer's or Master Servicer's
obligations hereunder, the Master Servicer hereby consents to the foregoing
arrangement.
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.
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Liability of Servicer; Indemnification.
- ---------------------------------------
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. 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 Master Servicer, 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, the Master
Servicer 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, the Master Servicer 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, the Master Servicer 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, the Master Servicer 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.
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, the Master Servicer 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.
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.
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 Master Servicer, the Trustee or other successor Servicer 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 Master Servicer, the Trustee
or other successor Servicer without act or deed on the part of such Person;
provided, however, that the successor Servicer may terminate the Sub-Servicer as
provided in Section 8.03.
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The Servicer shall, upon the reasonable request of the Master Servicer,
the Trustee or other successor Servicer, 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.
Principal and Interest Account.
- -------------------------------
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 Master Servicer, 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).
All funds in the Principal and Interest Account shall be held (i) uninvested (up
to the limits insured by the FDIC) or (ii) invested in Eligible Investments. Any
investments of funds in the Principal and Interest Account shall mature or be
withdrawable at par on or prior to the immediately succeeding Monthly Remittance
Date. The Principal and Interest Account shall be held in trust in the name of
the Trustee for the benefit of the Owners and the Certificate Insurer. Any
investment earnings on funds held in the Principal and Interest Account shall be
for the account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Monthly Excess Interest Amount included
therein) by the Servicer. Any investment losses on funds held in the Principal
and Interest Account shall be for the account of the Servicer and promptly upon
the realization of such loss shall be contributed by the Servicer to the
Principal and Interest Account. Any references herein to amounts on deposit in
the Principal and Interest Account shall refer to amounts net of such investment
earnings.
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, (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) to the date of such liquidation, and (III) any Realized Losses incurred
during the
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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").
(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 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 Master Servicer, 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 as may reasonably be requested by the
Master Servicer. In addition, the Servicer shall inform the
Master Servicer, 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.
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Delinquency Advances and Servicing Advances.
- --------------------------------------------
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 or the Master Servicer, to the extent described
in Section 12.01(c) hereof, shall make an advance of such amount to the
Certificate Account, but only to the extent that the Servicer, or Master
Servicer, as applicable, 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, or Master Servicer's, as applicable, 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, or Master Servicer, as applicable, 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)(c) hereof,
and the Master Servicer shall recover Delinquency Advances pursuant to Section
7.03(b)(viii)(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
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)(c).
Compensating Interest; Repurchase of Home Equity Loans.
- -------------------------------------------------------
If Prepayment of a Home Equity Loan occurs during any calendar month and if the
amount received in connection therewith represents less than a full month's
interest, any difference between the interest collected from the Mortgagor and
the full month's interest at the Coupon Rate less the Servicing Fee
("Compensating Interest") that is due shall be deposited by the Servicer (but
not in excess of the aggregate Servicing Fee for the related Remittance Period)
to the Principal and Interest Account on the next succeeding Monthly Remittance
Date and shall be
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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.
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.
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.
Maintenance of Insurance.
- -------------------------
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 Master Servicer,
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.
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
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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.
Due-on-Sale Clauses; Assumption and Substitution Agreements.
- ------------------------------------------------------------
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. An opinion of counsel to the
foregoing effect shall conclusively establish the reasonableness of such belief.
In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Note and,
unless prohibited by applicable law or the Mortgage Documents, the Mortgagor
remains liable thereon. If the foregoing is not permitted under applicable law,
the Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Note; provided, however, that to the extent any such substitution of
liability agreement would be delivered by the Servicer outside of its usual
procedures for mortgage loans held in its own portfolio the Servicer shall,
prior to executing and delivering such agreement, obtain the prior written
consent of the Certificate Insurer. The Home Equity Loan, as assumed, shall
conform in all respects to the requirements, representations and warranties of
this Agreement. The Servicer shall notify the Trustee that any such assumption
or substitution 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.
Realization Upon Defaulted Home Equity Loans; Modification.
- -----------------------------------------------------------
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
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foreclosure or other conversion, the Servicer shall exercise such of the rights
and powers vested in it hereunder, and use the same degree of care and skill in
their exercise or use, as prudent mortgage lenders would exercise or use under
the circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FannieMae Guide, including, but not limited
to, advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property before the start of the 12th month of the 3rd
taxable year following the taxable year in which the Trust acquired such
property, at such price as the Servicer deems necessary to comply with this
covenant unless the Seller which delivered the related Home Equity Loan obtains
for the Trustee, the Certificate Insurer and the Servicer an opinion of counsel
experienced in federal income tax matters acceptable to the Trustee and the
Certificate Insurer, addressed to the Trustee, the Certificate Insurer, and the
Servicer, to the effect that the holding by the Trust of such REO Property for
any greater period will not result in the imposition of taxes on "Prohibited
Transactions" of the Trust or any REMIC therein as defined in Section 860F of
the Code or cause any REMIC therein to fail to qualify as a REMIC under the
REMIC Provisions at any time that any Certificates are outstanding.
Notwithstanding the generality of the foregoing provisions, the Servicer shall
manage, conserve, protect and operate each REO Property for the Owners solely
for the purpose of its prompt disposition and sale in a manner which does not
cause such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by any REMIC
of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) 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.
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
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Trustee a report detailing the Liquidation Proceeds received from the Liquidated
Loan, expenses incurred with respect thereto, and any loss incurred in
connection therewith.
The Servicer shall not agree to any modification, waiver or amendment
of any provision of any Home Equity Loan unless, in the Servicer's good faith
judgment, such modification, waiver or amendment would minimize the loss that
might otherwise be experienced with respect to such Home Equity Loan and only in
the event of a payment default with respect to such Home Equity Loan or in the
event that a payment default with respect to such Home Equity Loan is reasonably
foreseeable by the Servicer; provided, however, that no such modification,
waiver or amendment shall extend the maturity date of such Home Equity Loan
beyond the Remittance Period related to the Final Scheduled Payment Date of the
latest Class of Certificates remaining in the Trust. Notwithstanding anything
set out in this Section 8.13(c) or elsewhere in this Agreement to the contrary,
the Servicer shall be permitted to modify, waive or amend any provision of a
Home Equity Loan if required by statute or a court of competent jurisdiction to
do so.
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.
Trustee to Cooperate; Release of Files.
- ---------------------------------------
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.
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
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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.
The Servicer shall have the right to accept applications of Mortgagors for
consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio after any release does not exceed the Loan-to-Value Ratio of
such Home Equity Loan as of the date of origination thereof and any increase in
the Loan-to-Value Ratio shall not exceed 15% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be 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.
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.
Annual Statement as to Compliance.
- ----------------------------------
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor, the Master Servicer, 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.
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 Master Servicer, the Certificate Insurer, any
Owner of a Class B Certificate and the Rating Agencies a
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letter or letters of a firm of independent, nationally recognized certified
public accountants reasonably acceptable to the Certificate Insurer, dated as of
the date of the Servicer's fiscal audit for subsequent letters, stating that
such firm has examined the Servicer's overall servicing operations in accordance
with the requirements of the Uniform Single Attestation Program for Mortgage
Bankers, and stating such firm's conclusions relating thereto.
Access to Certain Documentation and Information Regarding the Home Equity Loans.
- --------------------------------------------------------------------------------
The Servicer shall provide to the Trustee, the Master Servicer, 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.
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.
Removal of Servicer; Resignation of Servicer.
- ---------------------------------------------
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: 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
If without the application, approval or consent of the Servicer, a proceeding
shall be instituted in any court of competent jurisdiction, under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
in respect of the Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or similar entity with respect to the
Servicer or of all or any substantial part of its assets, or other like relief
in respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Servicer in good faith, the same shall (A)
result in the entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and unstayed for any period
of seventy-five (75) consecutive days; or 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
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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
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
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.
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, the Master Servicer, and the Trustee so removing the Servicer:
an Insured Payment is made by the Certificate Insurer; provided, however, that
in the event that the Trustee shall become the Servicer hereunder, if the
Servicer can demonstrate to the reasonable satisfaction of the Certificate
Insurer that such event was due to circumstances beyond the control of the
Servicer, the right of removal hereunder shall not be considered a default by
the Servicer;
the failure by the Servicer to make any required Servicing Advance when due;
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
the failure by the Servicer to make any required Delinquency Advance or to pay
any Compensating Interest, in each case two Business Days following the
Servicer's receipt of a written notice from the Master Servicer, the Trustee or
the Certificate Insurer demanding that the Servicer pay such amount;
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.
The Master Servicer may remove the Servicer upon the failure of the Servicer to
make any required Delinquency Advance or to pay any Compensating Interest, which
failure causes the Master Servicer to remit any such amount to the Trust, in
each case if the Servicer's failure has continued for two Business Days
following the Servicer's receipt of a written notice demanding that the Servicer
pay such amount.
If any event described in sections (a), (b) and (c) above occurs and is
continuing, the Certificate Insurer shall notify the Owners of the Class C
Certificates in writing if the Certificate Insurer
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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 provisions of Section 8.21 hereof shall apply.
The Servicer shall not resign from the obligations and duties hereby imposed on
it, except upon determination that its duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Master Servicer, the Trustee and the
Certificate Insurer, which opinion shall be at the Servicer's expense.
No removal or resignation of the Servicer shall become effective until the
Master Servicer, the Trustee or other successor Servicer shall have assumed the
Servicer's responsibilities and obligations in accordance with this Section.
Upon removal or resignation of the Servicer, the Servicer at its own expense
also shall promptly deliver or cause to be delivered to the Master Servicer, the
Trustee or other successor Servicer all Records, Servicing Records and Home
Equity Loan Documents.
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 Master Servicer, if it is then acting, or otherwise to the
Trustee and remitted directly and immediately to the Trustee or the successor
Servicer.
The Master Servicer, the Trustee, or any successor servicer, shall be reimbursed
for all reasonable costs and expenses incurred in connection with the
appointment of the successor servicer and the replacement of the servicer, which
reimbursement shall be paid (1) first, by the predecessor Servicer, and (2)
second, to the extent that any such costs and expenses are not promptly
reimbursed by the predecessor Servicer, as an expense from amounts in the
Certificate Account, as provided in Section 7.03(b)(viii)(b).
ContiMortgage hereby covenants and agrees to act as the Servicer under the
Agreement for an initial term from the Closing Date to July 31, 1999, which term
shall be renewable by the Certificate Insurer by notice (each, a "Servicer
Extension Notice") to the Servicer, the Master Servicer and to the Trustee for
successive terms of two (2) calendar months each, until either June 30, 2000 or,
if earlier, such time as the Certificate Insurer authorizes ContiMortgage's term
as servicer to extend through to the termination of the Trust pursuant to
Article IX hereof, subject only to removal pursuant to the other paragraphs of
this Section 8.20. ContiMortgage hereby agrees that, upon its receipt of any
such Servicer Extension Notice, ContiMortgage shall become bound for the
duration of the term covered by such Servicer Extension Notice to continue as
the Servicer subject to and in accordance with the other provisions of this
Agreement. The Trustee agrees that if as of the fifteenth (15th) day prior to
the last day of any
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term of ContiMortgage the Trustee shall not have received any Servicer Extension
Notice from the Certificate Insurer, the Trustee will, within five (5) days
thereafter, given written notice of such non-receipt to the Certificate Insurer,
the Master Servicer and, upon expiration of ContiMortgage's term as Servicer,
the Servicer and the provisions of Section 8.21 shall apply.
In the event that ContiMortgage's term as Servicer has not ended prior
to July 1, 2000, then this paragraph (i) shall no longer apply, and
ContiMortgage shall remain as Servicer for the term of the Trust, subject only
to removal pursuant to the other paragraphs of this Section 8.20.
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.
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.
Successor Servicers.
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Appointment of Successor. On and after the occurrence of a Servicer Termination
Event, or the failure of ContiMortgage to be renewed as Servicer pursuant to
Section 8.20(j) hereof, , or a resignation of the Servicer as evidenced by an
opinion of counsel as described in Section 8.20(e) hereof, then the Master
Servicer if it is then acting, within 60 days of the occurrence of such event,
shall have a successor servicer in place to be the successor in all respects to
the Servicer in its capacity as Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof; provided, however, that the successor
servicer shall not be liable for any actions of any servicer prior to it. If a
successor servicer cannot be retained in a timely manner, then the Master
Servicer shall act as the successor Servicer, or if the Master Servicer is not
then acting or cannot act as the successor servicer (as evidenced by an opinion
of counsel delivered by the Master Servicer to the Trustee and the Certificate
Insurer), then the Trustee (x) may solicit bids for a successor servicer as
described in clause (b) below, and (y) pending the appointment of a successor
servicer as a result of soliciting such bids, shall serve as Servicer .
Notwithstanding the foregoing, the parties hereto agree that the Master
Servicer, in its capacity as successor servicer, immediately will assume all of
the obligations of the Servicer to make Delinquency Advances, Servicing Advances
and to pay Compensating Interest and the Master Servicer will assume the other
duties of the Servicer as soon as practicable, but in no event later than 60
days after the Servicer Termination Date. If the Master Servicer or the Trustee,
as applicable, assumes the responsibilities of the Servicer pursuant to this
Section 8.21, then the Master Servicer or the Trustee, as applicable, will make
reasonable efforts consistent with applicable law to become licensed, qualified
and in good standing in each state the laws of which require licensing or
qualification in order to perform its obligations as Servicer hereunder or,
alternatively, shall retain an agent that is so licensed, qualified and in good
standing in any such state. Notwithstanding the foregoing, the Master Servicer,
in its capacity as successor Servicer shall not be responsible for the lack of
information and/or documents that it cannot obtain through reasonable efforts.
If the Master Servicer or the Trustee, as applicable, serves as
successor servicer, then the Master Servicer or the Trustee, as applicable, in
such capacity shall not be liable for any
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servicing of the Home Equity Loans prior to its date of appointment and shall
not be subject to any obligations to repurchase any Home Equity Loans.
Any successor servicer, the Master Servicer or the Trustee shall be
reimbursed for all reasonable costs and expenses incurred in connection with the
appointment of the successor servicer and the replacement of the Servicer which
reimbursement shall be paid (1) first, by the predecessor Servicer, and (2)
second, to the extent that any such costs and expenses are not promptly
reimbursed by the predecessor servicer, as described in Section 7.03(b)(viii)(b)
hereof.
(i) If the Trustee is required to act as the successor servicer it 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. 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.
(ii) In the event the Trustee solicits bids as provided above, the
Trustee shall solicit, by public announcement at least once in The American
Banker and such other publications as directed by the Certificate Insurer, bids
from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer shall be entitled to the
full amount of the aggregate Servicing Fees as servicing compensation, together
with the other servicing compensation in the form of assumption fees, late
payment charges or otherwise as provided in Sections 8.08 and 8.15. Within
thirty days after any such public announcement, the Trustee shall negotiate and
effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party 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.
(iii) The Trustee 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,
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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 (b)(iii)) if, in the Trustee's reasonable good
faith judgment, such Delinquency Advances will ultimately be recoverable from
the Home Equity Loans.
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Successor Servicer Compensation. The compensation of any successor servicer
(including, without limitation, the Master Servicer or 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. If the Master Servicer becomes the
successor servicer, the separate Master Servicing Fee will no longer be payable
and shall be returned in the Certificate Account as part of the Available Funds.
Termination Fee to Prior Servicer. The Master Servicer shall deduct from any sum
received by the Master Servicer from the successor servicer to the Servicer in
respect of the sale, transfer and assignment of the servicing rights for the
Home Equity Loans the sum of (i) all costs and expenses of any public
announcement and of any sale, transfer and assignment of such servicing rights,
(ii) the amount of any unpaid Servicing Fees and unreimbursed Delinquency
Advances or Servicing Advances made by the Master Servicer and (iii) all costs
and expenses of the Master Servicer incurred in connection with the appointment
of the successor servicer. After such deductions, the remainder of such sum
shall be paid by the Master Servicer to the Servicer at the time of such sale,
transfer and assignment to the Servicer's successor. The Servicer shall not be
entitled to any termination fee, if it is terminated pursuant to Section 8.20
hereof but shall be entitled to any accrued and unpaid Servicing Fees to the
date of termination.
Cooperation of Prior Servicer with Succession. The Master Servicer, the Trustee,
the Servicer and any such successor servicer shall take such action, consistent
with this Agreement, as shall be necessary to effect any such succession. Any
collections received by the Servicer after removal or resignation shall be
endorsed by it to the Trustee, and remitted directly to the Trustee or, at the
direction of the Trustee, to the successor servicer. The Servicer agrees to
cooperate with the Master Servicer, the Trustee and any successor Servicer, as
applicable, in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Master
Servicer, 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 any Account maintained by the Servicer or which are
thereafter received with respect to the Home Equity Loans.
Effectiveness of Appointment. Neither the Master Servicer, the Trustee nor any
other successor Servicer, as applicable, shall be held liable by reason of any
failure to make, or any delay in making, any payment or 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
hereunder. No appointment of a successor to the Servicer hereunder shall be
effective until (A) the Depositor, the Trustee, the Certificate Insurer and the
Master Servicer shall have consented thereto, except in the case of the
appointment of the Master Servicer or the Trustee as successor to the Servicer
(when no consent shall be required), and (B) written notice of such proposed
appointment shall have been provided by the Master Servicer or the Trustee, as
applicable, to the Trustee, the Certificate Insurer and the Depositor.
Inspections by Certificate Insurer; Errors and Omissions Insurance.
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At any reasonable time and from time to time upon reasonable notice, the
Trustee, the Certificate Insurer, the Master Servicer, 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
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representatives in connection with any such examinations or discussions shall be
paid by the Servicer;
The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FannieMae Guide or any successor provision thereof; provided, however, that
if the Trustee shall become the Servicer, any customary insurance coverage that
the Trustee maintains shall be deemed sufficient hereunder; provided, further,
that in the event that the fidelity bond or the errors and omissions coverage is
no longer in effect, the Trustee shall promptly give such notice to the
Certificate Insurer and the Owners. Upon the request of the Trustee or the
Certificate Insurer, the Servicer shall cause to be delivered to such requesting
Person a certified true copy of such fidelity bond or errors and omission
policy.
END OF ARTICLE VIII
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TERMINATION OF TRUST
Termination of Trust.
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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.
Termination Upon Option of Owners of Class R-I Certificates.
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On any Monthly Remittance Date on or after the Clean-Up Call Date, the
Owners of a majority of the Percentage Interests represented by the Class R-I
Certificates then outstanding or, in the absence of a determination by such
Owners, the Certificate Insurer may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Home Equity Loans and
all property theretofore acquired in respect of any Home Equity Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate (i) on terms agreed upon between the Certificate Insurer and the
Owners of such Class R-I Certificates, or (ii) in the absence of such an
agreement, at a price equal to 100% of the aggregate Loan Balances of the
related Home Equity Loans as of the day of purchase minus amounts remitted from
the Principal and Interest Account to the Certificate Account representing
collections of principal on the Home Equity Loans during the current Remittance
Period, plus one month's interest on such amount computed at the Termination
Date Pass-Through Rate, plus all accrued and unpaid Servicing Fees and unpaid
Master Servicing Fees, if any, 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
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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.
Termination Upon Loss of REMIC Status.
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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 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
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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 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
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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.
Disposition of Proceeds.
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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 (i) any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
or Master Servicer from the Servicer's or Master Servicer's own funds shall be
paid by the Trustee to the Servicer or Master Servicer, as applicable, from the
proceeds of the Trust Estate and (ii) 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
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THE TRUSTEE
Certain Duties and Responsibilities.
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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. 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 Master Servicer,
the Trustee or any other successor servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee if it shall
become the successor Servicer, have the power and duty during its performance as
successor Servicer:
to collect Mortgagor payments;
to foreclose on defaulted Home Equity Loans;
to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
to deliver instruments of satisfaction pursuant to Section 8.14;
to enforce the Home Equity Loans; and
to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest. 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: this subsection shall not be construed to limit the effect
of subsection (a) of this Section; 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
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.
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.
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
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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.
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.
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.
Removal of Trustee for Cause.
- -----------------------------
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): 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
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
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
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
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
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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.
If any event described in paragraph (a) occurs and is continuing, then and in
every such case (i) the Certificate Insurer or (ii) with the prior written
consent (which shall not be unreasonably withheld) of the Certificate Insurer,
the Depositor and the Owners of a majority of the Percentage Interests
represented by the Offered Certificates or if there are no Offered Certificates
then outstanding by such majority of the Percentage Interests represented by the
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. The
Servicer shall not be liable for any costs relating to the removal of the
Trustee or the appointment of a new Trustee.
Certain Rights of the Trustee.
- ------------------------------
Except as otherwise provided in Section 10.01 hereof:
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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;
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; 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;
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; 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;
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;
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;
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;
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;
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
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.
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
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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.
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.
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.
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.
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
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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.
Resignation and Removal; Appointment of Successor.
- --------------------------------------------------
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.
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. 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.
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.
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.
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
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trustee acceptable to the Certificate Insurer. If within one year after such
resignation, removal or incapability or the occurrence of such vacancy, a
successor trustee shall be appointed by act of the Certificate Insurer or the
Owners of a majority of the Percentage Interests represented by the Class A
Certificates then Outstanding with the consent of the Certificate Insurer, 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.
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.
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.
Merger, Conversion, Consolidation or Succession to Business of the Trustee.
- ---------------------------------------------------------------------------
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee,
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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.
Reporting; Withholding.
- -----------------------
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.
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.
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. 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.
Liability of the Trustee.
- -------------------------
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Depositor, either of the Sellers, the Servicer, the Certificate
Insurer or any Owner for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Trustee, its
directors, officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. Subject to
the foregoing sentence, the Trustee shall not be liable for losses on
investments of amounts in the Certificate Account (except for any losses on
obligations on which the bank serving as Trustee is the obligor). In addition,
the Depositor, each of the Sellers and Servicer covenant and agree to indemnify
the Trustee, and when the Trustee is acting as Servicer, the Servicer, from, and
hold it harmless against, any and all losses, liabilities, damages, claims or
expenses (including legal fees and
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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.
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:
All rights, powers, duties and obligations conferred or imposed upon the Trustee
shall be conferred or imposed upon and exercised or performed by the Trustee and
such separate Trustee or co-Trustee jointly (it being understood that such
separate Trustee or co-Trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed (whether as
Trustee hereunder or as successor to the Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Estate or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate Trustee or co-Trustee, but solely at the
direction of the Trustee;
No co-Trustee hereunder shall be held personally liable by reason of any act or
omission of any other co-Trustee hereunder; and
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
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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
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MISCELLANEOUS
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 statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
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
a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
Form of Documents Delivered to the Trustee.
- -------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any opinion of counsel may be based, insofar as it
relates to factual matters upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, either of the Sellers or
the Servicer, stating that the information with respect to such factual 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
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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.
Acts of Owners.
- ---------------
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.
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.
The ownership of Certificates shall be proved by the Register.
Any request, demand, authorization, direction, notice, consent, waiver or other
action by the Owner of any Certificate shall bind the Owner of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Trust in reliance thereon, whether or not notation of such action
is made upon such Certificates.
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.
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
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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.
Rules by Trustee.
- -----------------
The Trustee may make reasonable rules for any meeting of Owners.
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.
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.
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.
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
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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.
Governing Law; Submission to Jurisdiction.
- ------------------------------------------
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.
The parties hereto hereby irrevocably submit to the jurisdiction of the United
States District Court for the Southern District of New York and any court in the
State of New York located in the City and County of New York, and any appellate
court from any thereof, in any action, suit or proceeding brought against it or
in connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby irrevocably and unconditionally agree
that all claims in respect of any such action or proceeding may be heard or
determined in such New York State court or, to the extent permitted by law, in
such federal court. The parties hereto agree that a final judgment in any such
action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts. 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.
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.
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.
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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.
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Amendment.
- ----------
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. 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.
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.
Paying Agent; Appointment and Acceptance of Duties.
- ---------------------------------------------------
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
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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
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.
REMIC Status.
- -------------
The parties hereto intend that each REMIC shall constitute, and that the affairs
of each REMIC shall be conducted so as to qualify it as a REMIC in accordance
with the REMIC Provisions. In furtherance of such intention, ContiFunding
Corporation or such other person designated pursuant to Section 11.18 hereof
shall act as agent for the Trust and as "tax matters person" (as defined in the
REMIC Provisions) for the Trust and in such capacity it shall: (i) prepare or
cause to be prepared and filed, in a timely manner, annual tax returns and any
other tax return required to be filed by each REMIC established hereunder using
a calendar year as the taxable year for each REMIC established hereunder; (ii)
in the related first such tax return, make (or cause to be made) an election
satisfying the requirements of the REMIC Provisions, on behalf of each REMIC,
for it to be treated as a REMIC; (iii) prepare and forward, or cause to be
prepared and forwarded, to the Owners all information, reports or tax returns
required with respect to each REMIC as, when and in the form required to be
provided to the Owners, and to the Internal Revenue Service and any other
relevant governmental taxing authority in accordance with the REMIC Provisions
and any other applicable federal, state or local laws, including without
limitation information reports relating to "original issue discount" as defined
in the Code based upon the prepayment assumption and calculated by using the
"issue price" (within the meaning of Section 1273 of the Code) of the
Certificates of the related Class; (iv) not take any action or omit to take any
action that would cause the termination of the REMIC status of a REMIC, except
as provided under this Agreement; (v) represent the Trust or a REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to a
taxable year of the Trust or a REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust or a REMIC, and otherwise act on behalf of the Trust or a
REMIC therein in relation to any tax matter involving the Trust or the REMIC
therein; (vi) comply with all statutory or regulatory requirements with regard
to its conduct of activities pursuant to the foregoing clauses of this Section
11.16, including, without
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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.
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.
Each REMIC shall, for federal income tax purposes, maintain books on a calendar
year basis and report income on an accrual basis.
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).
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.
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.
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.
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
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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).
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.
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.
Reserved.
- ---------
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.
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
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The Depositor: ContiSecurities Asset Funding Corp.
3811 West Charleston Boulevard
Suite 104
Las Vegas, Nevada 89102
Tel: (702) 822-5836
Fax: (702) 822-5839
The Sellers: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: President and Chief Counsel
Tel: (215) 347-3000
Fax: (215) 347-3400
ContiWest Corporation
3811 West Charleston Boulevard
Suite 104
Las Vegas, Nevada 89102
Tel: (702) 822-5836
Fax: (702) 822-5839
The Servicer: ContiMortgage Corporation
One Conti Park
338 South Warminster Road
Hatboro, Pennsylvania 19040-3430
Attention: Senior Vice President and Chief Counsel
Tel: (215) 347-3000
Fax: (215) 347-3400
The Master Servicer: Norwest Bank Minnesota, N.A.
11000 Broken Land Parkway
Columbia, Maryland 21044
Attention: Master Servicing Department
Tel: (410) 884-2000
Fax: (410) 884-2360
The Certificate Insurer: Ambac Assurance Corporation
One State Street Plaza
New York, NY 10004
Tel:
Fax:
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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
55 Water Street, 41st Floor
New York, New York 10041
Tel: (212) 438-2000
Fax: (212) 438-2664
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
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
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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
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THE MASTER SERVICER
Appointment and Duties of the Master Servicer.
Appointment and Compensation of Master Servicer. The Depositor, the Servicer and
the Trustee hereby assign and appoint the Master Servicer to act as the Master
Servicer for the Home Equity Loans (including all of the duties, obligations and
rights of the Master Servicer) under this Agreement. The Master Servicer hereby
accepts its appointment as the Master Servicer hereunder. The Master Servicer
shall not consent to any material amendment, modification or waiver of the
servicing provisions of this Agreement, without the consent of the Certificate
Insurer, and without having received written confirmation from Standard & Poor's
and Fitch that such action would not cause a downgrade, withdrawal or
qualification of the then current ratings on any Class of Certificates (in the
Class A Certificates, without regard to the Certificate Insurance Policy).
As compensation for its services hereunder, the Master Servicer shall
be entitled to receive the Master Servicing Fee on each Payment Date from the
Certificate Account. The Master Servicer shall be required to pay all expenses
incurred by it in connection with its Master Servicer duties and activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided for herein.
Master Servicer Assumes Servicing Responsibility. If the Servicer Termination
Date occurs, or if ContiMortgage's term as Servicer is not extended pursuant to
Section 8.20(i) hereof, then the Master Servicer shall be obligated (1) to
select a successor servicer subject to Section 8.21 hereof, that is reasonably
acceptable to the Certificate Insurer and the appointment of which would not
cause either Standard & Poor's or Fitch to downgrade, withdraw or qualify the
then current ratings on any Class of Certificates, or (2) to act as the
successor servicer hereunder (in the case of the Class A Certificates, without
regard to the Certificate Insurance Policy). Monitoring of Servicing. The Master
Servicer shall: (i) review the servicing reports, loan level information or
other relevant information prepared by the Servicer (A) to determine whether
such reports are inaccurate or incomplete, in any material respect, (B) to
ascertain whether the Servicer is in compliance, in all material respects, with
its duties and obligations with respect to such reports under this Agreement and
(C) in the event that any servicing report is inaccurate or incomplete, to
prepare and deliver an exception report to the Trustee, the Certificate Insurer
and the Servicer, which describes such inaccuracy or incompleteness; (ii)
otherwise monitor the performance by the Servicer of its duties and obligations
hereunder (other than the provisions of Section 8.13) and notify the Trustee,
the Certificate Insurer, and the Rating Agencies of any Servicer Termination
Event of which it has received notice or has actual knowledge; and (iii) be
obligated to verify that the Servicer, has or has caused to be deposited all
amounts required to be deposited into the Certificate Account as reflected on
the reports of the Servicer; provided, that, with respect to any Home Equity
Loans with respect to which interest accrues on the basis of simple interest,
the Master Servicer's obligation to monitor the Servicer's performance with
respect to such Home Equity Loans shall be limited to a review of a sampling of
such loans as selected by the Master Servicer. Within two Business Days
following each Monthly Remittance Date the Master Servicer, assuming that it has
received the related monthly servicing report from the Servicer not later than
the Monthly Report Date, shall review such report and determine whether the
Servicer has made all required Delinquency Advances and paid all required
Compensating Interest for the related Payment Date. If the Master Servicer
determines that the
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Servicer has not done so, the Master Servicer shall make a written demand on the
Servicer to deposit any shortfall in such required amounts in the Certificate
Account. If, by the end of the second Business Day following such notice the
Servicer has not so deposited such shortfall, the Master Servicer shall deposit
such shortfall into the Certificate Account, provided that the Master Servicer's
obligation to fund any shortfall in respect of Compensating Interest in any one
month shall be limited to the Master Servicing Fee for such month. Pursuant to
Section 8.20(c) the Master Servicer may, but shall not be obligated to, remove
the Servicer for any failure of the Servicer to make any required Delinquency
Advance or to pay any required Compensating Interest.
Successor Servicer. The Master Servicer agrees that it shall at all times be
prepared, to perform the duties and obligations of the Servicer and become the
successor servicer, if the Servicer fails to perform its duties and obligations
hereunder.
Servicer Cooperation. The Servicer shall act, in a good faith and reasonable
manner, to assist and cooperate with the Master Servicer in performing its
duties and obligations under this Section 12.01. On a monthly basis pursuant to
Section 8.08(d)(ii) hereof, the Servicer, shall provide the Master Servicer with
its monthly servicing report in a compatible computer readable format.
Termination and Removal of Master Servicer. (i) The Certificate Insurer, at any
time prior to October 31, 2000, may renew the Master Servicer's contractual
obligations hereunder following the end of the November 2000 Remittance Period.
If the Certificate Insurer does renew the Master Servicer, the Master Servicer
shall remain as Master Servicer after the November 2000 Remittance Period, until
such time, if it occurs, as the Certificate Insurer may dismiss the Master
Servicer. Notwithstanding the foregoing, no dismissal of the Master Servicer
shall occur unless the Trustee has received written confirmation from Standard &
Poor's and from Fitch that such dismissal would not cause (in the case of the
Class A Certificates, without regard to the Certificate Insurance Policy) a
downgrade, withdrawal or qualification of the then current ratings of any Class
of Certificates.
(ii) If the Master Servicer is material default of any of its
obligations hereunder, or is in breach of any of its representations and
warranties set forth below, and such default or breach continues for a period of
30 days following the Master Servicer's receipt of notice of such failure or
such breach from the Trustee or from the Certificate Insurer, then the
Certificate Insurer may remove the Master Servicer. If the Master Servicer is so
removed, the Certificate Insurer will attempt to name a replacement, if the
failure so to name a replacement would cause either Standard & Poor's or Fitch
(in the case of the Class A Certificates, without regard to the Certificate
Insurance Policy) to downgrade, withdraw or qualify the then current ratings on
any Class of Certificates.
Resignation of Master Servicer. The Master Servicer may resign on 60 days' prior
written notice to all parties or immediately if the Master Servicer determines
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 and cannot be cured, provided that such determination shall be
evidenced by an opinion of counsel to such effect delivered to the Servicer, the
Certificate Insurer and the Trustee. No resignation of the Master Servicer shall
become effective until a successor master servicer reasonably acceptable to the
Certificate Insurer, Standard & Poor's and to Fitch shall have assumed the
obligations of the Master Servicer hereunder. Limitation on Liability of Master
Servicer. Neither the Master Servicer nor any director, officer, employee or
agent of the Master Servicer shall be under any liability to the Trustee, the
Servicer,
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the Certificate Insurer, the Owners or any other Person for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Master Servicer or any such Person against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in its performance of its duties or by reason of reckless disregard
for its obligations and duties under this Agreement. The Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder.
Representations, Warranties and Covenants of the Master Servicer.
- -----------------------------------------------------------------
The Master Servicer hereby represents and warrants to the Servicer, the Trustee,
the Owners, the Depositor, and the Certificate Insurer that as of the Closing
Date (except as otherwise specifically provided herein):
The Master Servicer is a national banking association duly organized, validly
existing, and in good standing under the laws of the United States of America.
The execution and delivery of this Agreement by the Master Servicer and its
performance of and compliance with the terms of this Agreement will not violate
the Master Servicer's articles of association or by-laws 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 or acceleration of, any material
contract, agreement or other instrument to which the Master Servicer is a party
or which may be applicable to the Master Servicer or any of its assets.
The Master Servicer has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement to be consummated by
it, has duly authorized the execution, delivery and performance of this
Agreement and has duly executed and delivered this Agreement. This Agreement,
assuming due authorization, execution and delivery by the Trustee, the Servicer,
each Seller, and the Depositor, constitutes a valid, legal and binding
obligation of the Master Servicer, enforceable against it in accordance with the
terms hereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
The Master Servicer is not in violation of, and the execution and delivery of
this Agreement by the Master Servicer and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction, which violation would
materially and adversely affect the condition (financial or otherwise) or
operations of the Master Servicer or its properties or materially and adversely
affect the performance of its duties hereunder.
There are no actions or proceedings against, or investigations of, the Master
Servicer currently pending with regard to which the Master Servicer has received
service of process and no action or proceeding against, or investigation of, the
Master Servicer is, to the knowledge of the Master Servicer, threatened or
otherwise pending, before any court, administrative agency or other tribunal
that (i) if determined adversely, would prohibit its entering into this
Agreement or render the Certificates invalid, (ii) seek to prevent the issuance
of the Certificates or the consummation of any of the transactions contemplated
by this Agreement or (iii) if determined adversely, would prohibit or materially
and adversely affect the sale of the Home Equity Loans to the Depositor,
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<PAGE>
the performance by the Master Servicer of its obligations under, or the validity
or enforceability of, this Agreement or the Certificates.
No consent, approval, authorization or order of any court or governmental agency
or body is required for: (i) the execution, delivery and performance by the
Master Servicer of, or compliance by the Master Servicer with, this Agreement or
the Notes, or (ii) the consummation of the transactions required of it by this
Agreement, except such as shall have been obtained before the Closing Date.
END OF ARTICLE XII
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<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/ Frank Baier
-------------------------------------------------
Name: Frank Baier
Title: Authorized Signatory
By: /s/ Alan Fishman
-------------------------------------------------
Name: Alan Fishman
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
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<PAGE>
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Master Servicer
By: /s/ Randall S. Reider
-------------------------------------------------
Name: Randall S. Reider
Title: Assistant Vice President
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<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the ____ day of ________ 1999, before me personally came
________________ and ________________, to me known, who, being by me duly sworn,
did depose and say that he/she resides at ________________________________ and
________________________________, respectively; that he/she is an Authorized
Signatory 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
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<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the ____ day of ________ 1999, before me personally came
________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________________; that he/she is a Senior Vice
President of ContiMortgage Corporation, 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
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<PAGE>
STATE OF PENNSYLVANIA )
): ss
COUNTY OF MONTGOMERY )
On the ____ day of ________ 1999, before me personally came
________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________________; that he/she is a Senior Vice
President of ContiMortgage Corporation, 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
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<PAGE>
STATE OF NEVADA )
): ss.:
COUNTY OF CLARK )
On the ____ day of ________ 1999, before me personally came
________________ and ________________, to me known, who, being by me duly sworn,
did depose and say that he resides at ________________________________ and
________________________________, 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
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<PAGE>
STATE OF NEW YORK )
): ss.:
COUNTY OF NEW YORK )
On the ____ day of ________ 1999, before me personally came
________________, to me known, who, being by me duly sworn did depose and say
that he resides at ________________________; that he is an ________________ 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
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<PAGE>
STATE OF _______________________ )
): ss.:
COUNTY OF _______________________ )
On the ____ day of ________ 1999, before me personally came
________________, to me known, who, being by me duly sworn did depose and say
that he resides at ________________________; that he is a(n) ________________ of
Norwest Bank Minnesota, National Association, a national banking corporation;
and that he/she signed his/her 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
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<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.
