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EXHIBIT 4.1
________________________________________________________________________________
AVCO ABS RECEIVABLES CORP.,
as Seller,
and
AVCO FINANCIAL SERVICES MANAGEMENT COMPANY,
as Master Servicer,
and
AVCO FINANCIAL SERVICES, INC.
as Representative,
and
____________________________________________
as Trustee
and
THE ORIGINATORS LISTED HEREIN
____________________________________________
FORM OF POOLING AND SERVICING AGREEMENT
Dated as of ________________
____________________________
Home Equity Loan Asset-Backed Certificates
Series 199_-_
________________________________________________________________________________
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE II
CONVEYANCE OF HOME EQUITY LOANS; ORIGINAL
ISSUANCE OF CERTIFICATES; TAX TREATMENT
Section 2.01. Conveyance of Home Equity Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.03. Representations and Warranties Regarding the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.04. Representations and Warranties Regarding the Representative and the Originators . . . . . . . . . . . . . 33
Section 2.05. Representations and Warranties of the Originators Regarding the Home Equity Loans . . . . . . . . . . . . 38
Section 2.06. Representations and Warranties of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 2.07. Substitution of Home Equity Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 2.08. Execution and Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 2.09. Designation of Interests in REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 2.10. Designation of Startup Day of REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 2.11. REMIC Certificate Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 2.12. Tax Returns and Reports to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 2.13. Tax Matters Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 2.14. REMIC Related Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE III
ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS
Section 3.01. The Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 3.02. Collection of Certain Home Equity Loan Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 3.03. Withdrawals from the Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 3.04. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.05. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.06. Management and Realization Upon Defaulted Home Equity Loans . . . . . . . . . . . . . . . . . . . . . . . 59
Section 3.07. Trustee to Cooperate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 3.08. Servicing Compensation; Payment of Certain Expenses by Master Servicer . . . . . . . . . . . . . . . . . . 62
Section 3.09. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 3.10. Annual Servicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
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Section 3.11. Access to Certain Documentation and Information Regarding the Home Equity Loans . . . . . . . . . . . . . 63
Section 3.12. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 3.13. Reports to the Securities and Exchange Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged Properties, Returns Relating to
Mortgage Interest Received from Individuals and Returns Relating to Cancellation of Indebtedness . . . . . 63
Section 3.15. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.16. Optional Purchase of Defaulted Home Equity Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.17. Superior Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 3.18. Assumption Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 3.19. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE IV
CERTIFICATE INSURANCE POLICY
Section 4.01. Certificate Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 4.02. Claims Upon the Certificate Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE V
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS;
RIGHTS OF CERTIFICATEHOLDERS
Section 5.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 5.02. Compensating Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 5.03. Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 5.04. Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 5.05. Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE VI
THE CERTIFICATES
Section 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.02. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 6.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 6.05. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE VII
THE SELLER, THE MASTER SERVICER AND THE
REPRESENTATIVE
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Section 7.01. Liability of the Seller, the Master Servicer and the Representative . . . . . . . . . . . . . . . . . . . 81
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations of, the Seller, the
Master Servicer or the Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 7.03. Limitation on Liability of the Master Servicer and Others . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 7.04. Master Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 7.05. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 7.06. Indemnification of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 7.07. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE VIII
DEFAULT
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 8.02. Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.03. Waiver of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 8.04. Rights of the Certificate Insurer to Exercise Rights of Class A Certificateholders . . . . . . . . . . . . 87
Section 8.05. Trustee to Act Solely with Consent of the Certificate Insurer . . . . . . . . . . . . . . . . . . . . . . 88
Section 8.06. Home Equity Loans, Trust and Accounts Held for Benefit of the Certificate Insurer . . . . . . . . . . . . 89
Section 8.07. Certificate Insurer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 8.08. Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE IX
THE TRUSTEE
Section 9.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.03. Trustee Not Liable for Certificates or Home Equity Loans . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 9.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 9.05. Master Servicer to Pay Trustee Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 9.06. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 9.07. Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 9.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.09. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 9.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 9.11. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 9.12. Trustee May Enforce Claims Without Possession of Certificates; Inspection . . . . . . . . . . . . . . . . 101
Section 9.13. Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
ARTICLE X
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TERMINATION
Section 10.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 10.02. Additional Termination Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 11.02. Recordation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 11.03. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 11.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 11.06. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.07. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.08. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.09. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.11. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 11.12. Insurance Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 11.13. Claims Upon the Certificate Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 11.14. Effect of Payments by the Certificate Insurer; Subrogation . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 11.15. Notices to the Certificate Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
EXHIBITS
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This Pooling and Servicing Agreement, dated as of ____________, 199_,
among Avco ABS Receivables Corp., as Seller (the "Seller"), Avco Financial
Services Management Company, as Master Servicer (the "Master Servicer"), Avco
Financial Services, Inc., as Representative (the "Representative"), the
entities listed on Exhibit D hereto (collectively, the "Originators") and
_________________________________________, as Trustee (the "Trustee").
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Accounts: Collectively, the Collection Account and the Distribution
Account.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of
a Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise and "controlling" and "controlled" shall
have meanings correlative to the foregoing.
Aggregate Class A Principal Balance: As to any Distribution Date, the
sum of the Class Principal Balances of each Class of Class A Certificates
immediately prior to such Distribution Date.
Aggregate Principal Balance: As of any date of determination, the sum
of all the Principal Balances of the Home Equity Loans.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Amortized Overcollateralized Amount Requirement: With respect to any
Distribution Date, the product of (x) _____% and (y) the Aggregate Principal
Balance of the Home Equity Loans at the end of the related Due Period.
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Appraised Value: The appraised value of the Mortgaged Property based
upon the appraisal made by or for the originator at the time of the origination
of the related Home Equity Loan or sales price of such property at such time.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee.
Authorized Newspaper: A newspaper of general circulation in the
Borough of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
Available Funds: As to any Distribution Date, the sum of all amounts
described in clauses (i) through (vii) inclusive, of Section 3.02(b) received
by the Master Servicer (including any amounts paid by the Master Servicer and
the Seller and excluding (a) any amounts not required to be deposited in the
Collection Account pursuant to Section 3.02(b), (b) any amounts paid to the
Master Servicer pursuant to Sections 3.03(ii), (iii), (iv), (v), (vi), (vii)
and (viii) in respect of the Home Equity Loans as of the related Determination
Date and (c) any amounts paid by the Seller pursuant to clause (iv) of the
definition of Purchase Price or clause (d) of the definition of Substitution
Adjustment in respect of the Home Equity Loans to the extent such payment is in
respect of amounts incurred by or imposed on the Seller or the Trustee) during
the related Due Period and deposited into the Collection Account as of the
Determination Date. No amount included in this definition by virtue of being
described by any component of the definition thereof shall be included twice by
virtue of also being described by any other component or otherwise.
Balloon Loan: Any Home Equity Loan that provided on the date of
origination for scheduled monthly payment in level amounts substantially lower
than the amount of the final scheduled payment.
BIF: The Bank Insurance Fund, as from time to time constituted,
created under the Financial Institutions Reform, Recovery and Enhancement Act
of 1989, or, if at any time after the execution of this Agreement the Bank
Insurance Fund is not existing and performing duties now assigned to it, the
body performing such duties on such date.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificate: Any Class A Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
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Business Day: Any day other than a Saturday, a Sunday or a day on
which the Certificate Insurer or banking institutions in New York City or the
city in which the corporate trust office of the Trustee under this Agreement is
located are authorized or obligated by law or executive order to close.
Certificate: Any one of the Class A Certificates or the Class R
Certificates.
Certificate Principal Balance: As to any date of determination, the
aggregate of the Class Principal Balances of the Classes of Certificates.
Certificate Insurance Policy: The Financial Guaranty Insurance Policy
(No._____) with respect to the Class A Certificates, and all endorsements
thereto dated, the Closing Date, issued by the Certificate Insurer for the
benefit of the Holders of the Class A Certificates.
Certificate Insurer: _______________________, a ______________ company
organized and created under the laws of _____________, or any successor
thereto.
Certificate Insurer Default: The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment
required under the Certificate Insurance Policy in accordance with its
terms; or
(b) the entry by a court having jurisdiction in the
premises of (i) 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,
rehabilitation, reorganization or other similar law or (ii) a decree
or order adjudging the Certificate Insurer a bankrupt or insolvent or
approving as properly filed a petition seeking reorganization,
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
(c) 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 a
bankrupt or insolvent, or the consent by 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,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Certificate
Insurer, or the filing by the Certificate Insurer of a
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petition or answer or consent seeking reorganization or relief under
any applicable United States federal or state law, or the consent 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
making by the Certificate Insurer of an assignment for the benefit of
its creditors, or the failure by 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 Owner: The Person who is the beneficial owner of a
Book-Entry Certificate.
Certificate Rate: As to any Class of Certificates, the respective per
annum rate set forth or described below:
Class Certificate Rate
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A-1 %
A-2 %
A-3 %
A-4 %
R (1)
___________________
(1) The Class R Certificates have no Certificate Rate.
Certificate Register and Certificate Registrar: The register
maintained and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement,
(x) any Certificate registered in the name of the Seller or any Person known to
a Responsible Officer to be an Affiliate of the Seller and (y) any Certificate
for which the Seller or any Person known to a Responsible Officer to be an
Affiliate of the Seller is the Certificate Owner or Holder shall be deemed not
to be outstanding (unless to the knowledge of a Responsible Officer (i) the
Seller or such Affiliate is acting as trustee or nominee for a Person who is
not an Affiliate of such Seller and who makes the voting decision with respect
to such Certificates or (ii) the Seller or such Affiliate is the Certificate
Owner or Holder of all the Certificates of a Class, but only with respect to
the Class as to which the Seller or such Affiliate owns all the Certificates)
and the Percentage Interest evidenced thereby shall not be taken into
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account in determining whether the requisite amount of Percentage Interests
necessary to effect any such consent, direction, waiver or request has been
obtained.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
Civil Relief Act Interest Shortfall: With respect to any Distribution
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 Due Period
as a result of the application of the Civil Relief Act, the amount by which (i)
interest collectible on such Home Equity Loan during such Due Period is less
than (ii) one month's interest on the Principal Balance of such Home Equity
Loan at the Loan Rate for such Home Equity Loan before giving effect to the
application of the Civil Relief Act.
Class: All Certificates having the same designation.
Class A Certificate: Any certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A and designated as a
Class A-1, Class A-2, Class A-3 or Class A-4 Certificate pursuant to Section
6.01.
Class A Certificateholder: A Holder of a Class A Certificate.
Class A Monthly Principal Distributable Amount: With respect to any
Distribution Date, the amount equal to the sum of the following amounts
(without duplication) with respect to the immediately preceding Due Period: (i)
that portion of all Monthly Payments allocable to principal on Home Equity
Loans, including all full and partial principal prepayments received during the
related Due Period, (ii) the Principal Balance of all Home Equity Loans that
became Liquidated Home Equity Loans for the first time during the related Due
Period, (iii) the portion of the Purchase Price allocable to principal of all
Defective Home Equity Loans that were repurchased during the related Due
Period, and any Substitution Adjustments for Home Equity Loans, deposited to
the Distribution Account pursuant to Section 2.06 on or prior to the related
Determination Date and not previously distributed, and (iv) Distributable
Excess Spread.
Class A Principal Shortfall Amount: With respect to any Distribution
Date, the amount, if any by which the Aggregate Class A Principal Balance,
after giving effect to all distributions of the Class A Monthly Principal
Distributable Amount (exclusive of Distributable Excess Spread) and any draws
under the Certificate Insurance Policy for such Distribution Date, exceeds the
Aggregate Principal Balance as of the end of the related Due Period.
Class A Principal Distribution: With respect to any Distribution Date
(other than the Final Scheduled Distribution Date), the excess of (A) the sum
of the Class A Monthly Principal Distributable Amount for such Distribution
Date and Class A Principal Shortfall Amount over (B) the O/C Reduction Amount
for such Distribution Date; provided, however, that the Class A Principal
Distribution shall not exceed the Aggregate Class A Principal Balance. The
"Class A
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Principal Distribution" on the Final Scheduled Distribution Date will equal the
Aggregate Class A Principal Balance as of such Distribution Date.
Class A-1 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-1 Certificate pursuant to Section 6.01.
Class A-2 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-2 Certificate pursuant to Section 6.01.
Class A-3 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-3 Certificate pursuant to Section 6.01.
Class A-4 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-4 Certificate pursuant to Section 6.01.
"Class A-4 Lockout Distribution Amount": With respect to any
Distribution Date means the product of (i) the applicable Class A-4 Lockout
Percentage for such Distribution Date and (ii) the Class A-4 Lockout Pro Rata
Distribution Amount for such Distribution Date.
"Class A-4 Lockout Percentage": With respect to each Distribution Date
occurring during the indicated periods means the indicated percentage:
Class A-4
Period Lockout Percentage
------ ------------------
___________ 199_ - ______ 200_ __%
___________ 200_- ______ 200_ __%
___________ 200_ - ______ 200_ __%
___________ 200_ - ______ 200_ __%
___________ 200_ and thereafter __%
"Class A-4 Lockout Pro Rata Distribution Amount": With respect to any
Distribution Date means an amount equal to the product of (x) a fraction, the
numerator of which is the Class Principal Balance of the Class A-4 Certificates
immediately prior to such Distribution Date and the denominator of which is the
Aggregate Class Principal Balance immediately prior to such Distribution Date,
and (y) the Class A Monthly Principal Distribution Amount for such Distribution
Date.
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Class Interest Carryover Shortfall: With respect to any Class of Class
A Certificates and any Distribution Date, the amount by which the Class
Interest Distribution for such Class for each prior Distribution Date exceeded
the amount of interest actually distributed on such prior Distribution Dates.
Class Interest Distribution: With respect to any Distribution Date and
each Class of Class A Certificates, the sum of (i) the applicable Class Monthly
Interest Distributable Amount for such Class on such Distribution Date and (ii)
the applicable Outstanding Class Interest Carryover Shortfall for such Class on
such Distribution Date.
Class Monthly Interest Distributable Amount: As to any Distribution
Date and Class of Class A Certificates, interest accrued during the related
Interest Period at the applicable Certificate Rate on the related Class
Principal Balance, reduced by an amount equal to such Class' pro rata share
(based on the amount of interest to which such Class would have otherwise been
entitled) of the related Civil Relief Act Interest Shortfall, if any, for such
Distribution Date.
Class Principal Balance: As of any date of determination and Class of
Class A Certificates, the Original Class Certificate Principal Balance for such
Class reduced by the sum of all amounts previously distributed to the
Certificateholders of such Class in respect of principal on all previous
Distribution Dates.
Class R Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form set forth in Exhibit
B hereto.
Class R Certificateholder: The Holder of a Residual Certificate.
Closing Date: ___________, 199_.
Code: The Internal Revenue Code of 1986, as the same may be amended
from time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Certificateholders pursuant to Section
3.02(b). The Collection Account shall be an Eligible Account.
Combined Loan-to-Value Ratio or CLTV: With respect to any Home Equity
Loan, the sum of the original principal balance of such Home Equity Loan and
the outstanding principal balance of the First Lien, if any, as of the date of
origination of the Home Equity Loan, divided by the Appraised Value.
[Compensating Interest: As to any Distribution Date, the amount
calculated pursuant to Section 5.02.]
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Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Home Equity Loan secured by Cooperative Shares
and a Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, including the allocation of individual dwelling units
to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The principal office of the Trustee at which
at any particular time its corporate business shall be administered, which
office on the Closing Date is located at _______________________, Attention:
_________________.
Cumulative Net Losses: The amount by which the aggregate Principal
Balance of, and accrued interest on, all Liquidated Home Equity Loans exceeds
the Net Liquidation Proceeds for such Home Equity Loans allocated to principal
and accrued interest.
Curtailment: With respect to a Home Equity Loan, any payment of
principal received during a Due Period as part of a payment that is in excess
of the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Home Equity Loan in full, nor is intended to cure a
delinquency.
Cut-Off Date: The close of business on ___________, 199_.
Cut-Off Date Pool Principal Balance: $______________.
Cut-Off Date Principal Balance: With respect to any Home Equity Loan,
the unpaid principal balance thereof as of the Cut-Off Date (or as of the
applicable date of substitution with respect to an Eligible Substitute Home
Equity Loan pursuant to Section 2.02 or 2.04).
Defective Home Equity Loan: Any Home Equity Loan subject to repurchase
or substitution pursuant to Section 2.02 or 2.04.
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Deficiency Amount: With respect to any Distribution Date, the excess,
if any, of (A) (i) the Class Monthly Interest Distributable Amount for each
Class of Class A Certificates (net of any Civil Relief Act Interest Shortfalls)
plus any Outstanding Class Interest Carryover Shortfall for each Class of Class
A Certificates and (ii) the Guaranteed Principal Distribution Amount over (B)
Available Funds without regard to any Insured Payments to be made as of such
Distribution Date).
Definitive Certificates: As defined in Section 6.02(c).
Delinquency Loss Factor: The sum of:
(a) the principal balance of all loans 30-59 days
contractually delinquent multiplied by ____%;
(b) the principal balance of all loans 60-89 days
contractually delinquent multiplied by _____%; and
(c) the principal balance of all loans 90 or more days
(including loans in foreclosure and REO) contractually delinquent
multiplied by ____%.
Delinquent: A Home Equity Loan is "Delinquent" if any Monthly Payment
due thereon is not made by the close of business on the day the related Monthly
Payment is scheduled to be due. A Home Equity Loan is "30 days Delinquent" if
such Monthly Payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
Monthly Payment was due, or, if there is not 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.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of Class
A-1, Class A-2, Class A-3 and Class A-4, Certificates. The Depository shall at
all times be a "clearing corporation" as defined in Section 8-102(3) of the UCC
of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the _____
Business Day prior to such Distribution Date.
Distributable Excess Spread: As to any Distribution Date, the excess,
if any, of the Specified O/C Amount for such Distribution Date over the O/C
Amount on such date.
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Distribution Account: The account established by the Trustee pursuant
to Section 5.04. The Distribution Account shall be an Eligible Account.
Distribution Date: The _______ day of each month, or, if such day is
not a Business Day, then the next Business Day, beginning in ______ 199_.
Due Date: As to any Home Equity Loan, the day of the month on which
the Monthly Payment is due from the Mortgagor.
Due Period: With respect to (a) the first Determination Date (i) for
collections of principal, the period from and including __________, 199_
through and including __________, 199_ and (ii) for collections of interest,
the period from and including __________, 199_ through and including
__________, 199_ and (b) with respect to each Determination Date thereafter,
for collections of both interest and principal, the period from and including
the ____ day of the month preceding the month of such Determination Date to and
including the ____ day of the month of such Determination Date.
Electronic Ledger: The electronic master record of Home Equity Loans
maintained by the Master Servicer.
Eligible Account: A segregated account that is (i) maintained with a
depository institution whose short-term debt obligations and long- term debt
obligations at the time of any deposit therein and throughout the time the
interest is maintained are rated at least "P-1" by Moody's, "A-1" by Standard &
Poor's and "F-1" by Fitch and "A2" by Moody's and "A" by Standard & Poor's and
Fitch, respectively, and that the deposits in such account or accounts are
fully insured by either the BIF or the SAIF and which is any of (a) a federal
savings and loan association duly organized, validly existing and in good
standing under the applicable banking laws of any state, (b) an institution
duly organized, validly existing and in good standing under the applicable
banking laws of any state, (c) a national banking association duly organized,
validly existing and in good standing under the federal banking laws or (d) a
principal subsidiary of a bank holding company, and in each case of (a)-(d),
approved in writing by the Certificate Insurer, (ii) a segregated trust account
maintained with the corporate trust department of a federal or state chartered
depository or trust company, having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity, or (iii) an account otherwise
acceptable to each Rating Agency and the Certificate Insurer as evidenced by a
letter from each Rating Agency and the Certificate Insurer to the Trustee,
without reduction or withdrawal of the then current ratings of the
Certificates.
Eligible Investments: One or more of the following (excluding any
callable investments purchased at a premium):
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(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and interest by, the
United States or any agency or instrumentality thereof, provided that
such obligations are backed by the full faith and credit of the United
States;
(ii) repurchase agreements on obligations specified in
clause (i) maturing not more than three months from the date of
acquisition thereof, provided that the short-term unsecured debt
obligations of the party agreeing to repurchase such obligations are
at the time rated by each Rating Agency in its highest short-term
rating category (which, if Standard & Poor's and/or ▇▇▇▇▇'▇ is a
rating Agency, is "A-1+" for Standard & Poor's and "P-1" for Moody's);
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if ▇▇▇▇▇'▇ is a Rating Agency, shall each have an
original maturity of not more than 90 days) of any U.S. depository
institution or trust company incorporated under the laws of the United
States or any state thereof and subject to supervision and examination
by federal and/or state banking authorities, provided that the
unsecured short-term debt obligations of such depository institution
or trust company at the date of acquisition thereof have been rated by
each Rating Agency in its highest unsecured short-term debt rating
category;
(iv) commercial paper (having original maturities of not
more than 90 days) of any corporation incorporated under the laws of
the United States or any state thereof which on the date of
acquisition has been rated by each Rating Agency in its highest
short-term rating categories;
(v) short term investment funds ("STIFS") sponsored by
any trust company or national banking association incorporated under
the laws of the United States or any state thereof which on the date
of acquisition has been rated by each Rating Agency in its highest
rating category of long term unsecured debt;
(vi) interests in any money market fund which at the date
of acquisition of the interests in such fund and throughout the time
as the interest is held in such fund has a rating of "Aaa" by Moody's
and either "AAAm" or "AAAm-G" by Standard & Poor's; and
(vii) other obligations or securities that are acceptable
to each Rating Agency and the Certificate Insurer as an Eligible
Investment hereunder and will not result in a reduction in the then
current rating of the Certificates without regard to the Certificate
Insurance Policy, as evidenced by a letter to such effect from such
Rating Agency and the Certificate Insurer and with respect to which
the Master Servicer has received confirmation that, for tax purposes,
the investment complies with the last clause of this definition;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest
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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 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 its
stated maturity.
Eligible Substitute Home Equity Loan: A Home Equity Loan substituted
by the Representative or the applicable Originator for a Defective Home Equity
Loan which must, on the date of such substitution, (i) have an outstanding
Principal Balance (or in the case of a substitution of more than one Home
Equity Loan for a Defective Home Equity Loan, an aggregate Principal Balance),
not in excess of and not more than 5% less than the Principal Balance of the
Defective Home Equity Loan; (ii) have a Loan Rate not less than the Loan Rate
of the Defective Home Equity Loan and not more than 2% in excess of the Loan
Rate of such Defective Home Equity Loan; (iii) have a Mortgage of the same or
higher level of priority as the Mortgage relating to the Defective Home Equity
Loan at the time such Mortgage was transferred to the Trust; (v) have a
remaining term to maturity not more than two years earlier and not later than
the remaining term to maturity of the Defective Home Equity Loan; (v) comply
with each representation and warranty set forth in Section 2.05 (deemed to be
made as of the date of substitution); (vi) have an original Combined
Loan-to-Value Ratio not greater than that of the Defective Home Equity Loan;
and (vii) be of the same type of Mortgaged Property as the Defective Home
Equity Loan or a detached single family residence. More than one Eligible
Substitute Home Equity Loan may be substituted for a Defective Home Equity Loan
if such Eligible Substitute Home Equity Loans meet the foregoing attributes in
the aggregate and such substitution is approved in writing in advance by the
Certificate Insurer.
Event of Default: As defined in Section 8.01.
Excess O/C Amount: As to any Distribution Date, the amount by which
(i) the O/C Amount for such Distribution Date exceeds (ii) the Specified O/C
Amount for such Distribution Date.
Excess Spread: With respect to any Distribution Date, the excess, if
any, of (x) Available Funds for such Distribution Date over (y) (a) the amount
required to be distributed pursuant to Section 5.01(a)(i)(1)-(4), on such
Distribution Date.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation.
Final Scheduled Distribution Date: The Distribution Date in
___________.
First Lien: With respect to any Home Equity Loan which is a second
priority lien, the Home Equity Loan relating to the corresponding Mortgaged
Property having a first priority lien.
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Fiscal Agent: As defined in the Certificate Insurance Policy.
Fitch: Fitch IBCA, Inc., or it successor in interest.
FNMA: The Federal National Mortgage Association.
Foreclosure Profits: With respect to a Liquidated Home Equity Loan,
the amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid
through the date of receipt of the final Liquidation Proceeds) of such
Liquidated Home Equity Loan immediately prior to the final recovery of its
Liquidation Proceeds.
Guaranteed Principal Distribution Amount: With respect to any
Distribution Date, (a) the amount, if any, by which the Certificate Principal
Balance exceeds the Pool Principal Balance at the end of the previous month
(after giving effect to all distributions of principal on the related Class A
Certificates on such Distribution Date).
Home Equity Loan Schedule: With respect to any date, the schedule of
Home Equity Loans transferred to the Trust on the Closing Date and constituting
assets of the Trust. The Home Equity Loan Schedule is the schedule set forth
herein as Exhibit C, which schedule sets forth as to each Home Equity Loan: (i)
the Cut-Off Date Principal Balance, (ii) the account number, (iii) the original
principal amount, (iv) the CLTV as of the date of the origination of the
related Home Equity Loan, (v) the Due Date, (vi) the Loan Rate as of the
Cut-Off Date, (vii) the first date on which a Monthly Payment is or was due
under the Mortgage Note, (viii) the original stated maturity date of the
Mortgage Note and if the Home Equity Loan is a Balloon Loan, the amortization
terms, (ix) the remaining number of months to maturity as of the Cut-Off Date,
(x) the state in which the related Mortgaged Property is situated, (xi) the
type of property and (xii) the lien status. The Seller shall indicate to the
Trustee which Home Equity Loans are Cooperative Loans. The Home Equity Loan
Schedule will be amended from time to time to reflect the substitution of an
Eligible Substitute Home Equity Loan for a Defective Home Equity Loan from time
to time hereunder.
Home Equity Loans: The Home Equity Loans that are transferred and
assigned to the Trustee pursuant to Sections 2.01, 2.07 and 2.14, together with
the Related Documents, exclusive of Home Equity Loans that are transferred to
the Representative, an Originator or the Seller, as the case may be, from time
to time pursuant to Section 2.02, 2.05 or 3.16, as from time to time are held
as a part of the Trust, such Home Equity Loans originally so held being
identified in the Home Equity Loan Schedule delivered on the Closing Date.
Insurance Agreement: The Insurance Agreement dated as of ___________,
199_ among the Master Servicer, the Seller, the Trustee, the Representative,
the Originators listed therein and the Certificate Insurer, including any
amendments and supplements thereto.
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Insurance Proceeds: Proceeds paid by any insurer (other than the
Certificate Insurer) pursuant to any insurance policy covering a Home Equity
Loan or Mortgaged Property, [or amounts required to be paid by the Master
Servicer pursuant to Section 3.05], net of any component thereof (i) covering
any expenses incurred by or on behalf of the Master Servicer in connection with
obtaining such proceeds, (ii) applied to the restoration or repair of the
related Mortgaged Property, (iii) released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures or (iv) required to be paid
to any holder of a mortgage senior to such Home Equity Loan.
Insured Payment: With respect to any Distribution Date, (i) any
Deficiency Amount and (ii) any Preference Amount.
Interest Period: With respect to any Distribution Date, the period
from the first day of the calendar month preceding the month of such
Distribution Date through the last day of such calendar month.
Late Payment Rate: For any Distribution Date, the lesser of (i) the
rate of interest, [as it is publicly announced by Citibank, N.A. at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date such change is announced by
Citibank, N.A.), plus 2%] and (ii) the maximum rate permissible under any
applicable law limiting interest rates. The Late Payment Rate shall be
computed on the basis of a 365-day year and the actual number of days elapsed.
Liquidated Home Equity Loan: As to any Distribution Date, any Home
Equity Loan in respect of which the Master Servicer has determined, in
accordance with the servicing procedures specified herein, as of the end of the
related Due Period, that all Liquidation Proceeds which it expects to recover
with respect to the liquidation of the Home Equity Loan or disposition of the
related REO Property have been recovered.
Liquidation Loan Losses: For each Liquidated Home Equity Loan the
amount, if any, by which the Principal Balance thereof plus accrued and unpaid
interest thereon plus unreimbursed Servicing Advances is in excess of the
Liquidation Proceeds realized thereon.
Liquidation Proceeds: Proceeds (including Insurance Proceeds but not
including amounts drawn under the Certificate Insurance Policy) received in
connection with the liquidation of any Home Equity Loan or related REO
Property, whether through trustee's sale, foreclosure sale or otherwise.
Loan Losses: The aggregate of the Liquidation Loan Losses for all
Liquidated Home Equity Loans.
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Loan Rate: With respect to any Home Equity Loan as of any day, the per
annum rate of interest applicable under the related Mortgage Note to the
calculation of interest for such day on the Principal Balance.
Loss Factor: For the first 30 Distribution Dates, (i) if the
Cumulative Net Losses divided by the Maximum Collateral Amount is less than or
equal to _________, then the Loss Factor shall be equal to one and (ii) if the
Cumulative Net Losses divided by the Maximum Collateral Amount is greater than
_________ the Loss Factor shall be equal to ___________. Thereafter, (i) if
the Cumulative Net Losses divided by the Maximum Collateral Amount is less than
or equal to _________ and the Cumulative Net Losses were not in excess of the
product of _________ and the Maximum Collateral Amount at the close of the
period described in clause (a) of the definition of Specified O/C Amount, then
the Loss Factor shall be equal to one and (ii) if the Cumulative Net Losses
divided by the Maximum Collateral Amount is greater than _________ the Loss
Factor shall be equal to _______; provided, however, that if the Loss Factor
pursuant to the first sentence of this definition was ______ on the 30th
Distribution Date, the factor referred to above shall remain ________.
Maintenance: With respect to any Cooperative Unit, the rent paid by
the Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
Majority Certificateholder: The Holder or Holders of Class A
Certificates evidencing Voting Rights in excess of 51% in the aggregate.
Master Servicer: Avco Financial Services Management Company, or its
successors or assigns.
Maximum Collateral Amount: The Aggregate Principal Balance as of the
Cut-Off Date.
Monthly Advance: An advance made by the Master Servicer pursuant to
Section 3.15.
Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Home Equity Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in
interest.
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 Home Equity Loan.
Mortgage File: The mortgage documents listed in Section 2.01
pertaining to a particular Home Equity Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
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Mortgage Note: With respect to a Home Equity Loan, the note pursuant
to which the related mortgagor agrees to pay the indebtedness evidenced thereby
which is secured by the related Mortgage.
Mortgaged Property: The underlying property, including real property
and improvements thereon, securing a Home Equity Loan, which, with respect to a
Cooperative Loan, is the related Cooperative Shares and Proprietary Lease.
Mortgagor: The obligor or obligors under a Mortgage Note.
Net Liquidation Proceeds: With respect to any Liquidated Home Equity
Loan, Liquidation Proceeds net of unreimbursed Servicing Fees, Servicing
Advances and Monthly Advances with respect thereto.
Net Loan Rate: With respect to any Home Equity Loan as to any day, the
Loan Rate less the Servicing Fee Rate.
Nonrecoverable Advances: With respect to any Home Equity Loan, (i) any
Servicing Advance or Monthly Advance previously made and not reimbursed
pursuant to Section 3.03(ii) or (ii) a Servicing Advance or Monthly Advance
proposed to be made in respect of a Home Equity Loan or REO Property which, in
the good faith business judgment of the Master Servicer, as evidenced by an
Officer's Certificate delivered to the Certificate Insurer, the Seller and the
Trustee no later than the Business Day following such determination, would not
be ultimately recoverable pursuant to Sections 3.03(ii) or (vi) or
5.01(a)(ii)(2) or (3).
O/C Amount: As to any Distribution Date, the excess, if any, of (a)
the Pool Principal Balance as of the close of business on the last day of the
related Due Period over (b) the Aggregate Class A Principal Balance (after
giving effect to amounts otherwise available in respect of the Class A Monthly
Principal Distributable Amount for such Distribution Date).
O/C Reduction Amount: As to any Distribution Date, an amount equal to
the lesser of (i) the Excess O/C Amount for such Distribution Date and (ii)
Available Funds remaining after making the distributions required to be made
pursuant to Section 5.01(a)(i)(1) and (2).
Officer's Certificate: A certificate signed by the President, an
Executive Vice President, a Senior Vice President, a First Vice President, a
Vice President, Assistant Vice President, the Treasurer, Assistant Treasurer,
Assistant Secretary, Controller or Assistant Controller of the Master Servicer
and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel reasonably acceptable
to the Trustee, who may be in-house counsel for the Master Servicer or the
Seller (except that any opinion relating to the qualification of the Trust as a
REMIC or compliance with the REMIC Provisions must be an
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opinion of independent outside counsel) and who, in the case of opinions
delivered to each of the Certificate Insurer and the Rating Agency, is
reasonably acceptable to it.
Optional Termination Date: The Distribution Date following the Due
Period at the end of which the Pool Principal Balance is less than 10% of the
Aggregate Principal Balance as of the Cut-off Date.
Original Class Certificate Principal Balance: As to any Class, the
respective amount set forth below opposite such Class:
Original Class Certificate
Class Principal Balance
-------- -----------------
A-1 $
A-2 $
A-3 $
A-4 $
R (1)
----------
(1) This Class has no Class Certificate Principal Balance.
Originator: Any of the entities listed on Exhibit D hereto, each of
which is a direct or indirect wholly-owned subsidiary of the Representative.
Outstanding Class Interest Carryover Shortfall: As to any Class of
Class A Certificates and any Distribution Date, the amount of Class Interest
Carryover Shortfall for such Distribution Date plus one month's interest
thereon, at the related Certificate Rate, to the extent permitted by law.
Ownership Interest: As to any Certificate or security interest in such
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or
beneficial, as owner or as pledgee.
Paying Agent: Any paying agent appointed pursuant to Section 6.05.
Percentage Interest: With respect to any Class A Certificate, the
percentage obtained by dividing the principal denomination of such Certificate
by the aggregate of the principal denominations of all Class A Certificates of
the same Class. With respect to the Class R Certificates, the portion of the
Class evidenced thereby as stated on the face thereof, which shall be either
99.999999% or, but only with respect to the Tax Matters Person Residual
Interest held by the Tax Matters Person, 0.000001%.
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Permitted Transferee: Any Person other than (i) the United States or
any State or any political subdivision thereof or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives describe in Code section
521) on any excess inclusions (as defined in section 860E(c)(1) of the Code)
with respect to any Class R Certificate, (iv) rural electric and telephone
cooperatives described in Code section 1381(a)(2)(C), (v) a Person that is not
a citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States unless such Person has furnished the
transferor and the Trustee with a duly completed Internal Revenue Service Form
4224, and (vi) any other Person so designated by the Trustee based on an
Opinion of Counsel to the effect that any transfer to such Person may cause the
Trust to fail to qualify as a REMIC at any time the Certificates are
outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality
of the United States or of any State or political subdivision thereof if all of
its activities are subject to tax, and, with the exception of the FHLMC, a
majority of its board of directors is not selected by such governmental unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Principal Balance: With respect to any date, the aggregate of the
Principal Balances of all Home Equity Loans as of such date.
Preference Amount: Any amount previously distributed to a Mortgagor on
a Home Equity Loan that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
Preference Claim: As defined in Section 4.03.
Premium Amount: As to any Distribution Date occurring on or after
______ 199_, the product of the Premium Percentage and the Aggregate Class A
Principal Balance after giving effect to distributions to be made on such
Distribution Date.
Premium Percentage: As defined in the Insurance Agreement.
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[Prepayment Assumption: A conditional rate of prepayment equal to
______% per annum in the first month of the life of the Home Equity Loans and
an additional ______% (precisely in each month thereafter until the tenth
month; beginning in the tenth month and in each month thereafter during the
life of the Home Equity Loans, a conditional prepayment rate of ______% per
annum each month is assumed.]
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Home Equity Loan that was the subject during the related Due Period of
a Principal Prepayment in full an amount equal to the excess, if any, of (i) 30
days' interest on the Principal Balance of such Home Equity Loan at the Net
Loan Rate (or at such lower rate as may be in effect for such Home Equity Loan
pursuant to application of the Civil Relief Act) over (ii) the amount of
interest actually remitted by the Mortgagor in connection with such Principal
Prepayment less the Servicing Fee for such Home Equity Loan in such month.
Principal Balance: As to any Home Equity Loan and any day, other than
a Liquidated Home Equity Loan, the related Cut-Off Date Principal Balance,
minus all collections credited against the Principal Balance of any such Home
Equity Loan. For purposes of this definition, a Liquidated Home Equity Loan
shall be deemed to have a Principal Balance equal to the Principal Balance of
the related Home Equity Loan immediately prior to the final recovery of related
Liquidation Proceeds and a Principal Balance of zero thereafter.
Principal Prepayment: Any payment or other recovery of principal on a
Home Equity Loan equal to the outstanding principal balance thereof, received
in advance of the final scheduled Due Date which is intended to satisfy a Home
Equity Loan in full.
Projected Monthly Excess Cashflow: As of any date of calculations,
[five] times the Excess Spread existing on the Distribution Date immediately
preceding such date of calculation.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The base prospectus of the Seller dated ________, 199_.
Prospectus Supplement: The prospectus supplement dated ____________,
199_, relating to the offering of the Class A Certificates.
Purchase Price: As to any Home Equity Loan repurchased on any date
pursuant to Section 2.02 or 2.05, an amount equal to the sum of (i) the unpaid
Principal Balance thereof, (ii) the greater of (a) all unpaid accrued interest
thereon to the end of the Due Period preceding the Distribution Date on which
such Purchase Price is included in Available Funds and (b) 30 days' interest
thereon, computed at the applicable Loan Rate, (iii) (x) any unreimbursed
Servicing Advances with respect to such Home Equity Loan and (y) expenses
reasonably incurred or to be incurred by the Master
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Servicer, the Trust or the Trustee in respect of the breach or defect giving
rise to the purchase obligation and (iv) the amount of any penalties, fines,
forfeitures, legal fees and related costs, judgments and any other costs, fees
and expenses incurred by or imposed on the Seller, the Trustee or the Trust or
with respect to which any of them are liable arising from a breach by the
Representative or the applicable Originator of its representations and
warranties in Section 2.05.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Class A Certificates at the request of the Seller at the time of
the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Seller, notice of which
designation shall be given to the Trustee. References herein to the highest
short term unsecured rating category of a Rating Agency shall mean "A-1+" or
better in the case of Standard & Poor's and "P-1" or better in the case of
Moody's and in the case of any other Rating Agency shall mean such equivalent
ratings. References herein to the highest long-term rating category of a
Rating Agency shall mean "AAA" in the case of Standard & Poor's and "Aaa" in
the case of Moody's and in the case of any other Rating Agency, such equivalent
rating.
Rating Agency Condition: With respect to any action, that (i) each
Rating Agency (other than Standard & Poor's) shall have been given 10 days'
prior notice thereof (or such shorter period as shall be acceptable to the
Rating Agencies) and that none of the Rating Agencies shall have notified the
Seller, the Master Servicer or the Trustee in writing that such action will, in
and of itself, result in a reduction or withdrawal of the then current rating
of any class of the Certificates and (ii) Standard & Poor's, if it is still a
Rating Agency, shall have notified the Seller, the Master Servicer or the
Trustee in writing that such action will not, in and of itself, result in a
reduction or the withdrawal of the then current rating of any class of the
Certificates.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the Cooperative Corporation and the originator of such Home
Equity Loan, which establishes the rights of such originator in the Cooperative
Property.
Record Date: The last Business Day of the month immediately preceding
the month in which the related Distribution Date occurs.
Regular Certificates: The Class A-1, Class A-2, Class A-3, and Class
A-4, Certificates.
Reimbursement Amount: As of any Distribution Date, the sum of (x) (i)
Insured Payments previously received by the Trustee and not previously re-paid
to the Certificate Insurer pursuant to Sections 5.01(a)(i)(4) and
5.01(a)(ii)(3) plus (ii) interest accrued on such Insured Payment not
previously repaid calculated at the Late Payment Rate from the date the Trustee
received such Insured Payment and (y) (i) the amount of any Premium Amount not
paid on the date due plus (ii) interest on such amount at the Late Payment Rate
and (z) (i) any other amounts then owing to the Certificate Insurer under the
Insurance Agreement plus (ii) interest on such amounts at the Late
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Payment Rate. The Certificate Insurer shall notify the Trustee and the Seller
of the amount of any Reimbursement Amount.
Related Documents: As defined in Section 2.01.
Released Mortgaged Property Proceeds: As to any Home Equity Loan,
proceeds received by the Master Servicer in connection with (a) a taking of an
entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (b) any release of part of the Mortgaged Property from the lien
of the related Mortgage, whether by partial condemnation, sale or otherwise,
which are not released to the Mortgagor in accordance with applicable law and
mortgage servicing standards the Master Servicer would use in servicing Home
Equity Loans for its own account and this Agreement.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Certificate Maturity Date: The "latest possible maturity date"
as that term is defined in Section 2.11.
REMIC Change of Law: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to REMICs and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REO Property: A Mortgaged Property that is acquired by the Master
Servicer on behalf of the Trustee in foreclosure or by deed in lieu of
foreclosure.
Representative: Avco Financial Services, Inc., or any successor
thereto or successor hereunder.
Residential Dwelling: A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development or a townhouse.
Residual Certificates: The Class R Certificates.
Responsible Officer: When used with respect to the Trustee, any
officer assigned to the corporate trust group (or any successor thereto),
including any vice president, assistant vice president, trust officer, any
assistant secretary, any trust officer or any other officer of the Trustee
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customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
this Agreement. When used with respect to the Seller, the Master Servicer or
the Representative, the President or any Vice President, Assistant Vice
President or any Secretary or Assistant Secretary.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or, if at any time after the execution of this
Agreement the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Security Agreement: With respect to any Cooperative Loan, the
agreement between the owner of the related Cooperative Shares and the
originator of the related Mortgage Note, which defines the terms of the
security interest in such Cooperative Shares and the related Proprietary Lease.
Seller: Avco ABS Receivables Corp. a Nevada corporation, or any
successor thereto.
Servicing Advances: All reasonable and customary "out of pocket" costs
and expenses incurred in the performance by the Master Servicer of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property, including reasonable fees paid
to any independent contractor in connection therewith, (iv) compliance with the
obligations under Section 3.04, 3.06 or 3.19 and (v) in connection with the
liquidation of a Home Equity Loan, expenditures relating to the purchase or
maintenance of the First Lien pursuant to Section 3.17, all of which reasonable
and customary out-of-pocket costs and expenses are reimbursable to the Master
Servicer to the extent provided in Sections 3.03(ii) and (vi), 3.06 and
5.01(a)(ii)(2).
Servicing Certificate: A certificate completed and executed by a
Servicing Officer on behalf of the Master Servicer.
Servicing Compensation: The Servicing Fee and other amounts to which
the Master Servicer is entitled pursuant to Section 3.08.
Servicing Fee: As to each Distribution Date and each Home Equity Loan,
the annual fee payable to the Master Servicer, which subject to Section 3.02 is
calculated as an amount equal to the product of the Servicing Fee Rate and the
Principal Balance thereof at the beginning of the related Due Period. The
Master Servicer will pay any fees due the Sub-Servicers from the Servicing Fee.
Servicing Fee Rate: ___% per annum.
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Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Home Equity Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Trustee (with a copy to the Certificate Insurer) by the Master
Servicer, as such list may be amended from time to time.
Specified O/C Amount: (a) For any Distribution Date occurring during
the period commencing on the Closing Date and ending on the later of the date
upon which principal in the amount of one-half the Maximum Collateral Amount
has been received by the Class A Certificateholders and the 30th Distribution
Date following the Closing Day, the greater of (i) an amount equal to ______%
of the related Maximum Collateral Amount and (ii) the product of the applicable
Loss Factor and the excess of (A) one-half of the aggregate Principal Balances
of the sum of (x) all Home Equity Loans which are 90 or more days Delinquent or
for which foreclosure proceedings have commenced and (y) of Home Equity Loans
with respect to which the related Mortgaged Property is REO Property and which
became REO Property prior to the related Home Equity Loan becoming 90 days'
Delinquent over (B) the related Projected Monthly Excess Cash Flow as of such
Distribution Date;
(b) for any Distribution Date occurring after the end of
the period in clause (a) above, the greatest of (i) an amount equal to
the lesser of (A) ______% of the Maximum Collateral Amount and (B) the
Amortized Overcollateralized Amount Requirement, (ii) the product of
the applicable Loss Factor and the excess of (A) one-half of the
aggregate Principal Balances of the sum of (x) all Home Equity Loans
which are 90 or more days Delinquent or for which foreclosure
proceedings have commenced and (y) of Home Equity Loans with respect
to which the related Mortgaged Property is REO Property and which
became REO Property prior to the Home Equity Loan becoming 90 days'
Delinquent over (B) the Projected Monthly Excess Cashflow as of such
date, (iii) an amount equal to ______% of the Maximum Collateral
Amount and (iv) the sum of the three largest Principal Balances; and
(c) notwithstanding anything to the contrary set forth in
clauses (a) and (b) above, on the earlier of (i) any Distribution Date
on which an Event of Default has occurred and is continuing and (ii)
any Distribution Date after which there has been a draw on the
Certificate Insurance Policy, the Specified O/C Amount shall be the
same as the Specified O/C Amount which existed on the last
Distribution Date on which an event specified in clause (i) or (ii) as
applicable had not occurred and was not continuing;
provided, however, that the Certificate Insurer may, in its sole discretion, at
the request of the Seller, modify clause (a) and/or clause (b) above for the
purpose of reducing or eliminating, in whole or in part, the application of
clause (a) and/or clause (b) above and the Trustee and the Rating Agencies
shall be notified in writing of such modification prior to the related
Distribution Date and such modification shall not result in a downgrading of
the then-current ratings of the Certificates.
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Standard & Poor's: Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or its successor in interest.
Startup Day: The day designated as such pursuant to Section 2.10.
Stayed Funds: As defined in Section 8.02(b).
Sub-Servicer: Any Person with whom the Master Servicer has entered
into a Sub-Servicing Agreement and who satisfies the requirements set forth in
Section 3.01(b) in respect of the qualification of a Sub-Servicer.
Sub-Servicing Agreement: Any agreement between the Master Servicer and
any Sub-Servicer relating to sub-servicing and/or administration of certain
Home Equity Loans as provided in Section 3.01(b), a copy of which shall be
delivered, along with any modifications thereto, to the Trustee and the
Certificate Insurer.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.06, the sum of (a) the excess of (i) the aggregate
Principal Balances of all Defective Home Equity Loans to be replaced by
Eligible Substitute Home Equity Loans (after application of principal payments
received on or before the date of substitution of any Eligible Substitute Home
Equity Loans as of the date of substitution) over (ii) the Principal Balance of
such Eligible Substitute Home Equity Loans and (b) the greater of (x) accrued
and unpaid interest on such excess through the Due Period relating to the
Distribution Date for which such Substitution Adjustment will be included as
part of Available Funds and (y) 30 days' interest on such excess calculated on
a 360-day year in each case at the Loan Rate and (c) the amount of any
unreimbursed Servicing Advances made by the Master Servicer with respect to
such Defective Home Equity Loan and (d) the amount referred to in clause (iv)
of the definition of Purchase Price in respect of such Defective Home Equity
Loan.
Tax Matters Person: As defined in Section 2.13.
Tax Matters Person Residual Interest: A 0.000001% interest in the
Class R Certificates, which shall be issued to and held by the Trustee
throughout the term hereof unless another person shall accept an assignment of
such interest and the designation of Tax Matters Person pursuant to Section
2.13.
Total Expected Losses: The sum of the (i) Cumulative Net Losses from
the Closing Date through and including the date of determination and (ii) the
Delinquency Loss Factor.
Trust: The trust created by this Agreement, the corpus of which
consists of the Home Equity Loans, such assets as shall from time to time be
deposited in the Collection Account and the Distribution Account in accordance
with this Agreement, property that secured a Home Equity
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Loan and that has become REO Property, the Certificate Insurance Policy,
certain hazard insurance policies maintained by the Mortgagors [or the Master
Servicer] in respect of the Home Equity Loans, and all proceeds of each of the
foregoing.
Trustee: _______________________, or any successor Trustee appointed
in accordance with this Agreement that has accepted such appointment in
accordance with this Agreement.
Trustee Fee: The fee owed to the Trustee pursuant to a letter
agreement between the Master Servicer and the Trustee.
Trustee Fee Rate: The per annum rate at which the Trustee Fee is
calculated.
Voting Rights: The right to vote evidenced by a Certificate as
follows: The Class A Certificates, in the aggregate, shall evidence 99% of all
Voting Rights and the Class R Certificates shall evidence 1% of all Voting
Rights. The Voting Rights allocated to the Class A Certificates shall be
allocated among the Classes thereof in proportion to their respective Class
Principal Balances. Voting Rights allocated to a Class of Certificates shall
be allocated among the Certificates of such Class in proportion to their
respective Percentage Interests.
Section 1.02. Interest Calculations. All calculations of interest
that are made in respect of the Principal Balance of a simple interest Home
Equity Loan shall be made on the basis of a 365-day year and the actual number
of days elapsed. [All calculations of interest that are made in respect of the
Principal Balance of an actuarial Home Equity Loan shall be made on the basis
of a 360-day year consisting of twelve 30-day months.] The Certificate Rate for
the Class A Certificates shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. The calculation of the Servicing Fee and
the Trustee Fee shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All dollar amounts calculated hereunder shall be rounded
to the nearest ▇▇▇▇▇ with one-half of one ▇▇▇▇▇ being rounded down.
ARTICLE II
Conveyance of Home Equity Loans; Original Issuance of
Certificates; Tax Treatment
Section 2.01. Conveyance of Home Equity Loans (a) The Originators,
concurrently with the execution and delivery of this Agreement, hereby
transfer, assign, set over and otherwise convey to the Seller and the Seller
does hereby transfer, assign, set over and otherwise convey to the Trustee for
the benefit of the Certificateholders, without recourse (subject to Sections
2.02 and 2.05) (i) all of Originators' right, title and interest in and to each
Home Equity Loan, including the Cut-Off Date Principal Balance and all
collections in respect of interest and principal received after the Cut-Off
Date (other than payments in respect of accrued interest due on or before
___________,
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199_); (ii) property which secured such Home Equity Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure; (iii) the Originators'
interest in any insurance policies in respect of the Home Equity Loans and (iv)
all proceeds of any of the foregoing. In addition, on or prior to the Closing
Date, the Seller shall cause the Certificate Insurer to deliver the Certificate
Insurance Policy to the Trustee.
In connection with such transfer, assignment and conveyance by the
Originators to the Seller and by the Seller to the Trustee on behalf of the
Certificateholders, the Seller has delivered or caused to be delivered to, the
Trustee for the benefit of the Certificateholders, on or before the Closing
Date, the following documents or instruments with respect to each Home Equity
Loan (the "Related Documents") and the related Home Equity Loan Schedule in
computer readable format and:
(i) The original Mortgage Note, with all prior and
intervening endorsements showing a complete chain of endorsements from
the originator of the Home Equity Loan to the Person so endorsing the
Home Equity Loan to the Trustee, endorsed by such Person "Pay to the
order of ______________________ without recourse" and signed, by
facsimile or manual signature, in the name of the Person delivering
the Mortgage Note by a Responsible Officer;
(ii) Any of: (1) the original Mortgage and related power
of attorney, if any, with evidence of recording thereon, (2) a copy of
the Mortgage and related power of attorney, if any, certified as a
true copy of the original Mortgage or power of attorney by a
Responsible Officer by facsimile or manual signature or by the closing
attorney or by an officer of the title insurer or agent of the title
insurer that issued the related title insurance policy, in each case,
if the original has been transmitted for recording until such time as
the original is returned by the public recording office or (3) a copy
of the original recorded Mortgage and related power of attorney, if
any, certified by the public recording office;
(iii) The original Assignment of Mortgage in recordable
form, from the Person delivering such Assignment to [Name of Trustee];
(iv) The original lender's policy of title insurance or a
true copy thereof or, if such original lender's title insurance policy
has been lost, a copy thereof certified by the appropriate title
insurer to be true and complete or, if such lender's title insurance
policy has not been issued as of the Closing Date, a marked up
commitment (binder) to issue such policy;
(v) All intervening assignments, if any, showing a
complete chain of assignments from the originator to the Person
delivering such assignment, including any recorded warehousing
assignments, with evidence of recording thereon, or a copy thereof
certified by a Responsible Officer by facsimile or manual signature,
or by the closing
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attorney or by an officer of the title insurer or agent of the title
insurer that issued the related title insurance policy, as a true copy
of the original of such intervening assignments if the original has
been transmitted for recording until such time as the original is
returned by the public recording office or a copy of the original
recorded intervening assignments certified by the public recording
office;
(vi) Originals of all assumption, written assurance,
substitution and modification agreements, if any; and
(vii) in the case of a Cooperative Loan, the originals of
the following documents or instruments:
(a) The Cooperative Shares, together with a stock power
in blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition Agreement;
(f) The executed UCC-1 financing statement with evidence
of recording thereon which have been filed in all
places required to perfect the applicable
Originator's interest in the Cooperative Shares and
the Proprietary Lease; and
(g) Executed UCC-3 financing statements or other
appropriate UCC financing statements required by
state law, evidencing a complete and unbroken line
from the mortgagee to the Trustee with evidence of
recording thereon (or in a form suitable for
recordation).
In instances where the original recorded Mortgage is not delivered as
provided above, and in instances where intervening assignments called for by
clause (v) above are unavailable, the Seller will deliver or cause to be
delivered the original recorded Mortgage and intervening assignments to the
Trustee promptly upon receipt thereof but in no event later than one year after
the Closing Date.
The Master Servicer hereby confirms to the Trustee that it has caused
the portions of the Electronic Ledger relating to the Home Equity Loans to be
clearly and unambiguously marked, and has made and caused each Originator to
make the appropriate entries in its general accounting records, to indicate
that such Home Equity Loans have been transferred to the Trustee and constitute
part of the Trust in accordance with the terms of the trust created hereunder.
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(h) The parties hereto intend that the transactions set
forth herein be a sale by the Originators to the Seller and by the Seller to
the Trust of all right, title and interest of the applicable Originator in and
to each Home Equity Loan and other property described above. In the event
either of the transactions set forth herein is deemed not to be a sale, this
Agreement shall constitute a security agreement under applicable law. The
Seller, the Master Servicer, the Representative, the Originators and the
Trustee shall, to the extent consistent with this Agreement, take such actions
as may be necessary to ensure that, if this Agreement were deemed to be a
security agreement, the related security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement.
Except as may otherwise expressly be provided herein, neither the
Seller, the Master Servicer, the Representative, any Originator nor the Trustee
shall (and the Master Servicer shall ensure that no Sub-Servicer shall) assign,
sell, dispose of or transfer any interest in the Trust or any portion thereof,
or permit the Trust or any portion thereof to be subject to any lien, claim,
mortgage, security interest, pledge or other encumbrance of, any other Person.
In the event that the parties hereto have failed to transfer the
entire legal ownership in and to each Home Equity Loan to the Trust, the
parties hereto intend that this document operate to transfer the entire
equitable ownership interest in and to each Home Equity Loan to the Trust.
(i) Within 30 days of the Closing Date, the Master
Servicer, shall prepare and send, or cause to be prepared and sent, for
recording the Assignments of Mortgage in favor of the Trustee in the
appropriate real property or other records. With respect to any Assignment of
Mortgage as to which the related recording information is unavailable within 30
days following the Closing Date, such Assignment of Mortgage shall be submitted
for recording within 30 days after receipt of such information but in no event
later than one year after the Closing Date. The Trustee shall be required to
retain a copy of each Assignment of Mortgage submitted for recording. In the
event that any such Assignment of Mortgage is lost or returned unrecorded
because of a defect therein, the Master Servicer shall promptly prepare, or
cause to be prepared, a substitute Assignment of Mortgage or cure such defect,
or cause such defect to be cured, as the case may be, and thereafter the Master
Servicer shall be required to submit, or cause to be submitted, each such
Assignment of Mortgage for recording. Any failure of the Master Servicer to
comply with this Section 2.01(c) shall result in the obligation of the
Representative to purchase or substitute, or cause the applicable Originator to
purchase or substitute, for the related Home Equity Loans pursuant to the
provisions of Section 2.02.
(j) The Trustee shall have no responsibility for
reviewing any Mortgage File except as expressly provided in Section 2.02.
Without limiting the effect of the preceding sentence, in reviewing any
Mortgage File pursuant to such subsection, the Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any
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assignment or endorsement is in proper or recordable form (except, if
applicable, to determine if the Trustee is the assignee or endorsee), 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, but shall not be required to
determine whether any Person executing any document is authorized to do so or
whether any signature thereon is genuine.
Section 2.02. Acceptance by Trustee. The Trustee hereby acknowledges
its receipt of the Certificate Insurance Policy and the sale and assignment of
the Home Equity Loans, and, subject to the review and period for delivery
provided for in Section 2.01, its receipt of the Mortgage Files, and declares
that the Trustee holds and will hold such documents and all amounts received by
it thereunder and hereunder in trust, upon the terms herein set forth, for the
use and benefit of all present and future Certificateholders and the
Certificate Insurer. If the Seller and the Representative are given notice
under this Section 2.02 that a Mortgage File is defective or incomplete and if
the Representative does not cause such omission or defect to be corrected or
cured within the 60-day period specified in Section 2.02, the Representative
shall purchase, or cause the applicable Originator to purchase, such Home
Equity Loan from the Trustee (i) on the Determination Date in the month
following the month in which such 60-day period expired at the Purchase Price
of such Home Equity Loan or (ii) upon the expiration of such 60-day period if
the omission or defect would result in the related Home Equity Loan not being a
Qualified Home Equity Loan for purposes of Section 860G(a)(3) of the Code. The
Purchase Price for the purchased Home Equity Loan shall be deposited in the
Collection Account no later than the applicable Determination Date or the
Business Day preceding the expiration of such 60-day period, as the case may
be; provided that the Trustee shall remit to the Seller the portion of the
amount, if any, of the Purchase Price referred to in clause (iv) of the
definition thereof to the extent such amount is incurred by or imposed on the
Seller, and, upon receipt by the Trustee of written notification of such
deposit signed by an officer of the Representative, the Trustee shall release
to the Representative or the applicable Originator the related Mortgage File
and the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as shall be necessary to vest in the
Representative, the applicable Originator or any designee or the Representative
or such Originator, as applicable, any Home Equity Loan released pursuant
hereto. It is understood and agreed that the obligation of the Representative
to purchase, or cause to be purchased, any Home Equity Loan as to which a
material defect in or omission of a constituent document exists shall
constitute the sole remedy against the Representative and the applicable
Originator respecting such defect or omission available to the Certificate
Insurer, the Certificateholders or the Trustee on behalf of Certificateholders.
An Opinion of Counsel to the effect set forth in Section 2.07(d) shall be
delivered to the Trustee and the Certificate Insurer in connection with any
such repurchase.
The Master Servicer, promptly following the transfer of (i) a
Defective Home Equity Loan from or (ii) an Eligible Substitute Home Equity Loan
to the Trust pursuant to this Section 2.02 or
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Section 2.07, as the case may be, shall amend the Home Equity Loan Schedule,
appropriately ▇▇▇▇ the Electronic Ledger and make appropriate entries in its
general account records to reflect such transfer and the addition of any
Eligible Substitute Home Equity Loan, if applicable.
No later than the 30th day following the Closing Date, the Trustee
shall certify to the Seller, the Certificate Insurer, the Representative and
the Master Servicer that it has reviewed each Mortgage File and that, as to
each Home Equity Loan listed in the related Home Equity Loan Schedule (other
than any Home Equity Loan paid in full or any Home Equity Loan specifically
identified in the certification in the form annexed hereto as Exhibit M as not
covered by such certification), (i) all documents constituting part of such
Mortgage File required to be delivered to it pursuant to paragraphs (i) - (v)
of Section 2.01(a) are in its possession, (ii) such documents have been
reviewed by it and appear regular on their face and relate to such Home Equity
Loan, (iii) based on its examination and only as to the foregoing, the
information set forth in the Home Equity Loan Schedule which corresponds to
items (i), (ii), (iii), (v) and (vii) of the definition of "Home Equity Loan
Schedule" accurately reflects information set forth in the Mortgage File. If
within such 30-day period the Trustee finds any document constituting a part of
a Mortgage File not to have been executed or received or to be unrelated to the
Home Equity Loans identified in said Home Equity Loan Schedule or, if in the
course of its review, the Trustee determines that such Mortgage File is
otherwise defective in any material respect, the Trustee shall promptly upon
the conclusion of its review notify the Seller, the Representative and the
Certificate Insurer, in the form of an exception report and the Seller shall
have a period of 60 days after such notice within which to cause any such
defect to be corrected or cured.
On the 360th day following the Closing Date, the Trustee shall deliver
to the Seller, the Master Servicer, the Representative and the Certificate
Insurer an updated exception report showing the documents outstanding pursuant
to Section 2.01(a) along with a final certification annexed hereto as Exhibit N
from the previous certification issued in the form of Exhibit M. The Trustee
shall also maintain records adequate to determine the date on which any
document required to be delivered to it after such 360th day following the
Closing Date must be delivered to it, and on each such date, the Trustee shall
review the related Mortgage File to determine whether such document has, in
fact, been delivered. After the delivery of the final certification, a form of
which is attached hereto as Exhibit N, (i) the Trustee shall provide to the
Seller, the Master Servicer, the Representative and the Certificate Insurer, no
less frequently than monthly, updated exception reports showing the documents
outstanding pursuant to Section 2.01(a) until all such exceptions have been
eliminated and (ii) the Seller shall provide to the Certificate Insurer, the
Trustee, the Master Servicer and the Representative, no less frequently than
monthly, updated certifications indicating the then current status of
exceptions until all such exceptions have been eliminated; provided that the
delivery of the final certification shall not act as a waiver of any of the
rights the Certificate Insurer and the Certificateholders may have with respect
to such exceptions, and all rights are reserved with respect thereto.
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The Trustee makes no representations as to and shall not be
responsible to verify (i) the validity, sufficiency, legality, due
authorization, recordation or genuineness of any document or (ii) the
collectibility, insurability or effectiveness of any of the Home Equity Loans.
Section 2.03. Representations and Warranties Regarding the Master
Servicer. The Master Servicer represents and warrants that, as of the Closing
Date:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and is in compliance with the laws of each state in which any
Mortgaged Property is located and is in good standing in each
jurisdiction in which the nature of its business, or the properties
owned or leased by it make such qualification necessary. The Master
Servicer has, and had at all relevant times, full corporate power, to
own its property, to carry on its business as presently conducted and
to enter into and perform its obligations under this Agreement and
each Sub-Servicing Agreement.
(ii) The execution and delivery of this Agreement and each
Sub-Servicing Agreement by the Master Servicer and the performance by
the Master Servicer of and compliance with the terms of this Agreement
and each Sub-Servicing Agreement will not violate the Master
Servicer's articles of incorporation 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;
(iii) The Master Servicer has the full power and authority
to enter into and consummate all transactions contemplated by this
Agreement and each Sub-Servicing Agreement to be consummated by it,
has duly authorized the execution, delivery and performance of this
Agreement and each Sub-Servicing Agreement, and has duly executed and
delivered this Agreement and each Sub-Servicing Agreement. This
Agreement and each Sub-Servicing Agreement, assuming due
authorization, execution and delivery by the other parties hereto and
thereto, constitutes a valid, legal and binding obligation of the
Master Servicer, enforceable against it in accordance with the terms
hereof and thereof, 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);
(iv) The Master Servicer is not in violation of, and the
execution and delivery of this Agreement and each Sub-Servicing
Agreement by the Master Servicer and the performance by the Master
Servicer and compliance with the terms of this Agreement and each
Sub-Servicing Agreement will not constitute a violation with respect
to, any order or
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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 any of its
properties or materially and adversely affect the performance of any
of its duties hereunder or thereunder;
(v) There are no actions or proceedings against, or
investigations of, the Master Servicer pending or, to the knowledge of
the Master Servicer, threatened, before any court, administrative
agency or other tribunal (A) that, if determined adversely, would
prohibit its entering into this Agreement or any Sub-Servicing
Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any Sub-Servicing
Agreement or (C) that, if determined adversely, would prohibit or
materially and adversely affect the performance by the Master Servicer
of any of its obligations under, or the validity or enforceability of,
this Agreement or any Sub-Servicing Agreement;
(vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Master Servicer of, or compliance by
the Master Servicer with, this Agreement and each Sub- Servicing
Agreement, or for the consummation of the transactions contemplated by
this Agreement and each Sub-Servicing Agreement, except for such
consents, approvals, authorizations and orders, if any, that have been
obtained prior to the Closing Date;
(vii) The collection practices used by the Master Servicer
with respect to the Home Equity Loans have been, in all material
respects, legal, proper, prudent and customary in the non-conforming
mortgage servicing business;
(viii) No Officer's Certificate, statement, report or other
document prepared by the Master Servicer and furnished or to be
furnished by it pursuant to this Agreement or any Sub-Servicing
Agreement or in connection with the transactions contemplated hereby
or thereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained
herein or therein not misleading;
(ix) The Master Servicer believes that the Servicing Fee
Rate provides a reasonable level of base compensation to the Master
Servicer for master servicing the Home Equity Loans on the terms set
forth herein;
(x) The transactions contemplated by this Agreement and
each Sub-Servicing Agreement are in the ordinary course of business of
the Master Servicer; and
(xi) The statements contained in the Registration
Statement which describe the Master Servicer or matters or activities
for which the Master Servicer is responsible in accordance with the
Registration Statement, this Agreement and all documents referred to
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therein or delivered in connection therewith, or which are
attributable to the Master 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 Master
Servicer and does not omit to state a material fact necessary to make
the statements contained therein with respect to the Master Servicer
not misleading. The Master Servicer is not aware that the
Registration Statement contains any untrue statement of a material
fact or omits to state any material fact necessary to make the
statements contained therein not misleading. There is no fact
peculiar to the Master Servicer or the Home Equity Loans and known to
the Master Servicer that materially adversely affects or in the future
may (so far as the Master Servicer can now reasonably foresee)
materially adversely affect the Master Servicer or the Home Equity
Loans or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration
Statement; and
(xii) The Master Servicer has caused or hereby agrees to
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 the Home Equity Loans, 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.
The representations and warranties set forth in this Section 2.03 shall survive
the sale and assignment of the Home Equity Loans to the Trust. Upon discovery
of a breach of any representations and warranties which materially and
adversely affects the interests of the Certificateholders or the Certificate
Insurer, the Person discovering such breach shall give prompt written notice to
the other parties and to the Certificate Insurer. Within 60 days of its
discovery or its receipt of notice of such breach, or, with the prior written
consent of a Responsible Officer of the Trustee and the Certificate Insurer,
such longer period specified in such consent, the Master Servicer shall cure
such breach in all material respects.
Section 2.04. Representations and Warranties Regarding the
Representative and the Originators. (a) The Representative represents and
warrants that, as of the Closing Date:
(i) The Representative is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and is in compliance with the laws of each state in which any
Mortgaged Property is located to the extent necessary to enable it to
perform its obligations hereunder and is in good standing in each
jurisdiction in which the nature of its business, or the property
owned or leased by it make such a qualification necessary. The
Representative has, and had at all relevant times, full corporate
power to own its property, to carry on its business as presently
conducted and to enter into and perform its obligations under this
Agreement;
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(ii) The execution and delivery of this Agreement by the
Representative and the performance by the Representative and
compliance with the terms of this Agreement will not violate the
Representative's articles of incorporation 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 Representative is a party or which may be applicable to
the Representative or any of its assets;
(iii) The Representative 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 other parties hereto, constitutes a
valid, legal and binding obligation of the Representative 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);
(iv) The Representative is not in violation of, and the
execution and delivery of this Agreement by the Representative and the
performance by the Representative 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 Representative or any of
its properties or materially and adversely affect the performance of
any of its duties hereunder;
(v) There are no actions or proceedings against, or
investigations of, the Representative pending or, to the knowledge of
the Representative, threatened, before any court, administrative
agency or other tribunal (A) that, if determined adversely, would
prohibit its entering into this Agreement, (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement
or (C) that, if determined adversely, would prohibit or materially and
adversely affect the performance by the Representative of any of its
obligations under, or the validity or enforceability of, this
Agreement;
(vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Representative of, or compliance by
the Representative with, this Agreement, or for the consummation of
the transactions contemplated by this Agreement, except for such
consents, approvals, authorizations and orders, if any, that have been
obtained prior to the Closing Date;
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(vii) No Officer's Certificate, statement, report or other
document prepared by the Representative and furnished or to be
furnished by it pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading;
(viii) The transactions contemplated by this Agreement are
in the ordinary course of business of the Representative;
(ix) The statements contained in the Registration
Statement which describe the Representative or matters or activities
for which the Representative is responsible in accordance with the
Registration Statement, this Agreement and all documents referred to
therein or delivered in connection therewith, or which are
attributable to the Representative 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 Representative
and does not omit to state a material fact necessary to make the
statements contained therein with respect to the Representative not
misleading. The Representative is not aware that the Registration
Statement contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements contained
therein not misleading. There is no fact peculiar to the
Representative or the Home Equity Loans and known to the
Representative that materially adversely affects or in the future may
(so far as the Representative can now reasonably foresee) materially
adversely affect the Representative or the Home Equity Loans or the
ownership interests therein represented by the Certificates that has
not been set forth in the Registration Statement;
(x) Each Originator received fair consideration and
reasonably equivalent value in exchange for the sale of the interest
in the Home Equity Loans;
(xi) No Originator sold any interest in any Home Equity
Loan, evidenced by the Certificates, as provided in the Agreement,
with any intent to hinder, delay or defraud any of its respective
creditors; and
(xii) The Originators are solvent and the Originators will
not be rendered insolvent as a result of the sale of the Home Equity
Loans to the Seller or the sale of the Certificates.
(b) Each Originator represents and warrants that, as of
the Closing Date:
(i) Such Originator is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is licensed by and in compliance
with the laws of each state in which any Mortgaged Property relating
to a Home
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Equity Loan originated by it and/or to be serviced by it to the extent
necessary to enable it to perform its obligations under this Agreement
and the Sub-Servicing Agreement to which it is a party and is in good
standing in each jurisdiction in which the nature of its business, or
the property owned or leased by it make such qualification necessary.
Such Originator has, and had at all relevant times, full corporate
power to originate the Home Equity Loans originated by it, to own its
property, to carry on its business as presently conducted and to enter
into and perform its obligations under this Agreement and the
Sub-Servicing Agreement to which it is a party;
(ii) The execution and delivery of this Agreement and the
Sub-Servicing Agreement to which it is a party by such Originator and
the performance by such Originator of and compliance with the terms of
this Agreement and the Sub-Servicing Agreement to which it is a party
will not violate such Originator's articles of incorporation 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 such Originator is a party or which may be
applicable to the such Originator or any of its assets;
(iii) Such Originator has the full power and authority to
enter into and consummate all transactions contemplated by this
Agreement and the Sub-Servicing Agreement to which it is a party to be
consummated by it, has duly authorized the execution, delivery and
performance of this Agreement and the Sub-Servicing Agreement to which
it is a party, and has duly executed and delivered this Agreement and
the Sub-Servicing Agreement to which it is a party. Each of this
Agreement and the Sub-Servicing Agreement to which it is a party,
assuming due authorization, execution and delivery by the other
parties hereto and thereto, constitutes a valid, legal and binding
obligation of such Originator, 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);
(iv) Such Originator is not in violation of, and the
execution and delivery of this Agreement and the Sub-Servicing
Agreement to which it is a party by such Originator and the
performance by such Originator and compliance with the terms of this
Agreement and the Sub-Servicing Agreement to which it is a party 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 such Originator or any of its properties or
materially and adversely affect the performance of any of its duties
hereunder or thereunder;
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(v) There are no actions or proceedings against, or
investigations of, such Originator pending or, to the knowledge of
such Originator, threatened, before any court, administrative agency
or other tribunal (A) that, if determined adversely, would prohibit
its entering into this Agreement or the Sub-Servicing Agreement to
which it is a party, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or the Sub-Servicing
Agreement to which it is a party or (C) that, if determined adversely,
would prohibit or materially and adversely affect the performance such
Originator of any of its obligations under, or the validity or
enforceability of, this Agreement or the Sub-Servicing Agreement to
which it is a party;
(vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by such Originator of, or compliance by such
Originator with, this Agreement or the Sub-Servicing Agreement to
which it is a party, or for the consummation of the transactions
contemplated by this Agreement or the Sub-Servicing Agreement to which
it is a party, except for such consents, approvals, authorizations and
orders, if any, that have been obtained prior to the Closing Date;
(vii) No Officer's Certificate, statement, report or other
document prepared by such Originator and furnished or to be furnished
by it pursuant to this Agreement or the Sub-Servicing Agreement to
which it is a party or in connection with the transactions
contemplated hereby or thereby contains any untrue statement of
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading;
(viii) The statements contained in the Registration
Statement which describe such Originator or matters or activities for
which such Originator is responsible in accordance with the
Registration Statement, this Agreement and all documents referred to
therein or delivered in connection therewith, or which are
attributable to such Originator 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 such Originator or
the Home Equity Loans and does not omit to state a material fact
necessary to make the statements contained therein with respect to
such Originator or the Home Equity Loans not misleading. Such
Originator is not aware that the Registration Statement contains any
untrue statement of a material fact or omits to state any material
fact necessary to make the statements contained therein not
misleading. There is no fact peculiar to such Originator or the Home
Equity Loans and known to such Originator that materially and
adversely affects or in the future may (so far as such Originator can
now reasonably foresee) materially and adversely affect such
Originator or the Home Equity Loans or the ownership interests therein
represented by the Certificates that has not been set forth in the
Registration Statement;
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(ix) Upon the receipt of each Mortgage File by the
Trustee, the Trustee will have good and marketable title on behalf of
the Trust to each Home Equity Loan and such other items comprising the
corpus of the Trust free and clear of any lien (other than liens which
will be simultaneously released);
(x) The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by such Originator pursuant to this
Agreement are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction;
(xi) The origination and collection practices used by such
Originator with respect to each Mortgage Note and Mortgage relating to
the Home Equity Loans have been, in all material respects, legal, and
in accordance with the Originator's policies and procedures in effect
at the time;
(xii) Each Home Equity Loan was randomly selected from
among the existing Home Equity Loans in the respective Originator's
portfolio at the date hereof;
(xiii) Such Originator received fair consideration and
reasonably equivalent value in exchange for the sale of its interest
in the Home Equity Loans evidenced by the Certificates;
(xiv) Such Originator did not sell any interest in any Home
Equity Loan evidenced by the Certificates with any intent to hinder,
delay or defraud any of its respective creditors; and
(xv) Such Originator is solvent, and such Originator will
not be rendered insolvent as a result of the sale of the Home Equity
Loans to the Seller or the sale of the Certificates.
The representations and warranties set forth in this Section 2.04 shall survive
the sale and assignment of the Home Equity Loans to the Trust. Upon discovery
of a breach of any representations and warranties which materially and
adversely affects the interests of the Certificateholders or the Certificate
Insurer, the Person discovering such breach shall give prompt written notice to
the other parties and to the Certificate Insurer. Within 60 days of its
discovery or its receipt of notice of such breach, or, with the prior written
consent of a Responsible Officer of the Trustee and the Certificate Insurer,
such longer period specified in such consent, the Representative or the
applicable Originator shall cure such breach in all material respects.
Section 2.05. Representations and Warranties of the Originators
Regarding the Home Equity Loans. (a) Each Originator with respect to each Home
Equity Loan it has conveyed hereunder represents and warrants to the Trustee on
behalf of the Certificateholders as follows as of the Closing Date:
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(i) The information set forth on the Home Equity Loan
Schedule relating to the Home Equity Loans is complete, true and
correct as of the Cut-Off Date;
(ii) The Mortgage Notes and the Mortgages have not been
assigned or pledged by the applicable Originator to any Person, and
immediately prior to the transfer and assignment of the Home Equity
Loans by the Originators to the Seller herein contemplated, the
applicable Originator had good and marketable title thereto, and was
the sole owner and holder of the Home Equity Loans free and clear of
any and all liens, claims, encumbrances, participation interests,
equities, pledges, charges or security interests of any nature
(collectively, a "Lien"), other than any such Lien released
simultaneously with the sale contemplated herein, and had full right
and authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign the same pursuant
to this Agreement, and immediately upon the transfer and assignment of
the Home Equity Loans by the Originators to the Seller and by the
Seller to the Trustee on behalf of the Certificateholders as
contemplated herein, the Trustee will be the sole beneficial owner of,
each Home Equity Loan free and clear of any lien, claim, participation
interest, mortgage, security interest, pledge, charge or other
encumbrance or other interest of any nature;
(iii) Each Mortgage is a valid and existing lien on the
property therein described, and each Mortgaged Property is free and
clear of all encumbrances and liens having priority over the lien of
the Mortgage, except (i) liens for real estate taxes and special
assessments not yet due and payable, (ii) in the case of a Mortgaged
Property that is a condominium or an individual unit in a planned unit
development, liens for common charges permitted by statute, (iii) in
the case of a Home Equity Loan secured by a second lien on the related
Mortgaged Property, the related First Lien and (iv) easements, mineral
rights and covenants, conditions and restrictions of record. Any
security agreement, chattel mortgage or equivalent document related to
the Mortgage and delivered to the Trustee establishes in the
applicable Originator a valid and subsisting lien on the property
described therein, and such Originator has full right to sell and
assign the same hereunder;
(iv) The terms of each Mortgage Note and 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
interests of the Certificateholders and the Certificate Insurer, and
which has been delivered to the Trustee. The substance of any such
alteration or modification is reflected on the Home Equity Loan
Schedule;
(v) 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
[carve-out for sale of one of multiple parcels];
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(vi) Except with respect to delinquencies described in
clause (xiii) hereof, to the best of the Originator's knowledge, no
Mortgagor is in default in complying with the terms of its Mortgage
Note or Mortgage, and no Originator has waived any default, breach,
violation or event of acceleration except that an Originator may have
accepted late payments, and all taxes, governmental assessments,
insurance premiums or water, sewer and municipal charges which
previously became due and owing have been paid. No Originator has
advanced funds or induced, solicited or knowingly received any advance
of funds by a party other than the Mortgagor, directly or indirectly,
for the payment of any amount required by the Mortgage, except for
interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is more recent, to
the day which precedes by one month the Due Date of the first
installment of principal and interest;
(vii) To the best of the Originator's knowledge, there is
no proceeding pending or threatened for the total or partial
condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or otherwise,
so as to affect adversely the value of the Mortgaged Property as
security for the Home Equity Loan or the use for which the premises
were intended;
(viii) To the best of the Originator's knowledge, there are
no mechanics' or similar liens or claims which have been filed for
work, labor or material (and no rights are outstanding that under law
could give rise to such lien) affecting any Mortgaged Property which
are, or may be, liens prior or equal to, or coordinate with, the lien
of the Mortgage except those that are stated in the title insurance
policy and for which related losses are affirmatively insured against
by such policy;
(ix) To the best of the Originator's knowledge, all of the
improvements that were included for the purpose of determining the
Appraised Value of each Mortgaged Property lie wholly within the
boundaries and building restriction lines of such property, and no
improvements on adjoining properties encroach upon the Mortgaged
Property except those that are stated in the title insurance policy
and for which related losses are affirmatively insured against by such
policy;
(x) To the best of the Originator's knowledge, there do
not exist any circumstances or conditions with respect to any Home
Equity Loan, any Mortgaged Property, any Mortgagor or any Mortgagor's
credit standing that can be reasonably expected to adversely affect
the value or marketability of the Home Equity Loan;
(xi) To the best of the Originator's knowledge, no
improvement located on or being part of any Mortgaged Property is in
violation of any applicable zoning law or
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regulation. All inspections, licenses and certificates required to be
made or issued with respect to all occupied portions of the Mortgaged
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 the Mortgaged Property is lawfully
occupied under applicable law;
(xii) To the best of the Originator's knowledge, all
parties that have had any interest in any Home Equity Loan, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in
compliance with any and all licensing requirements of the United
States and of the laws of the state wherein the Mortgaged Property is
located that are applicable to such parties and (2)(A) organized under
the laws of such state or (B) qualified to do business in such state
or exempt from such qualification in a manner so as not to affect
adversely the enforceability of such Home Equity Loan or (C) federal
savings and loan associations or national banks having principal
offices in such state or (D) not doing business in such state;
(xiii) With respect to the Home Equity Loans, as of the
Cut-Off Date, (i) all payments required to be made on each Initial
Home Equity Loan under the terms of the related Mortgage Note have
been made [except for ___% of the Home Equity Loans (by Cut-Off Date
Pool Principal Balance) are up to 60 days Delinquent and (ii) no
payment required to be made on any Home Equity Loan has been more than
60 days Delinquent more than once during the twelve month period
immediately preceding the Cut-Off Date];
(xiv) Each of the documents and instruments included in a
Mortgage File is duly executed and in due and proper form and each
such document or instrument is in a form generally acceptable to
prudent institutional mortgage lenders that regularly originate or
purchase Home Equity Loans;
(xv) The Mortgage Notes and the related Mortgages are
genuine, and each is the legal, valid and binding obligation of the
maker thereof, enforceable in accordance with its terms, 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). All parties to the
Mortgage Note and the Mortgage had legal capacity to execute the
Mortgage Note and the Mortgage, and each Mortgage Note and Mortgage
have been duly and properly executed by such parties. The Mortgagor
is a natural person who is a party to the Mortgage Note and the
Mortgage in an individual capacity, and not in the capacity of a
trustee or otherwise;
(xvi) Any and all requirements of any federal, state or
local law, including, without limitation, usury, truth-in-lending,
real estate settlement procedures, consumer credit protection, equal
credit opportunity or disclosure laws, applicable to the origination
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and servicing of the Home Equity Loans or otherwise applicable to the
Home Equity Loans have been complied with, and the Representative has
and shall maintain, or shall cause the applicable Originator to
maintain, in its possession, available for the Trustee's inspection,
and shall deliver to the Trustee upon demand, evidence of compliance
with all such requirements;
(xvii) The proceeds of the Home Equity Loans have been fully
disbursed, there is no requirement for future advances thereunder and
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,
closing or recording the Home Equity Loan have been paid;
(xviii) [Except for _____ Home Equity Loans with an aggregate
original principal balance of $__________ for which an attorney's
opinion of title has been obtained,] each Home Equity Loan with an
original principal balance greater than $10,000 is covered by an ALTA
mortgage title insurance policy or such other form of policy
acceptable to FNMA or FHLMC, issued by and constituting the valid and
binding obligation of a title insurer approved by the applicable
Originator and qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the applicable Originator, its
successors and assigns, as to the first priority lien of the Mortgage
in the case of a Home Equity Loan secured by a First Lien on the
related Mortgaged Property and the second priority lien of the
Mortgage in the case of a Home Equity Loan secured by a second lien on
the related Mortgaged Property, in the original principal amount of
the Home Equity Loan. The applicable Originator is the sole named
insured of such mortgage title insurance policy. The assignment to
the Trustees, as assignee of the Seller, of the Originator's interest
in such mortgage title insurance policy does not require the consent
of or notification to the insurer or the same has been obtained, and
such mortgage title insurance policy is in full force and effect and
will be in full force and effect and inure to the benefit of the
Trustee, as assignee of the Seller, upon the consummation of the
transactions contemplated by this Agreement. No claims have been made
under such mortgage title insurance policy and no prior holder of the
related Mortgage, including the applicable Originator, has done, by
act or omission, anything that would impair the coverage of such
mortgage title insurance policy;
(xix) The Mortgage obligates the Mortgagor thereunder to
maintain all hazard insurance at the Mortgagor's cost and expense;
(xx) No Home Equity Loan is subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of any Mortgage Note
or the related Mortgage, or the exercise of any right thereunder in
accordance with the terms thereof, render either the Mortgage Note or
the Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim
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or defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
(xxi) Each Home Equity Loan was originated or purchased and
reunderwritten by an Originator. No more than __% of the Home Equity
Loans, measured by outstanding principal balances as of the Cut-Off
Date, were originated by independent originators and acquired by an
Originator;
(xxii) Except with respect to any Balloon Loan, each Home
Equity Loan is payable in substantially equal monthly installments of
principal and interest which would be sufficient, in the absence of
late payments, to fully amortize such loan within the term thereof,
beginning no later than 60 days after disbursement of the proceeds of
the Home Equity Loan. Each Home Equity Loan bears a fixed interest
rate for the term of the Home Equity Loan. Each Balloon Loan has an
original term of not less than [five (5)] years and provides for level
monthly payments based on a thirty (30) year amortization schedule and
a final Monthly Payment substantially greater than the preceding
Monthly Payments;
(xxiii) Each Mortgage contains a provision for the
acceleration of the payment of the unpaid principal balance of the
Home Equity Loan in the event the related Mortgaged Property is sold
without the prior consent of the holder thereunder;
(xxiv) No Home Equity Loan is a loan for which the
disbursements are made as construction proceeds;
(xxv) Reserved;
(xxvi) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (ii) otherwise by
judicial or nonjudicial foreclosure. There is no homestead or other
exemption available to the Mortgagor that would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
(xxvii) 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 Trustee or the Certificateholders to the trustee under
the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor, which fees and expenses shall constitute
Servicing Advances;
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(xxviii) Each Mortgaged Property is located in the
state identified in the Home Equity Loan Schedule and consists of at
least one parcel of real property with a one family residence erected
thereon, or a two- to four-family dwelling, or an individual
condominium unit or townhome, provided, however, that no residence or
dwelling is a mobile home or a manufactured dwelling. [No Mortgaged
Properties are held under a ground lease];
(xxix) The Home Equity Loans were underwritten in accordance
with the Originators' underwriting guidelines described in the
Prospectus Supplement under the heading "THE HOME EQUITY LOAN PROGRAM
-- Underwriting Standards;"
(xxx) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no other
charges or payments due an Originator have been capitalized under any
Mortgage or the related Mortgage Note;
(xxxi) No Home Equity Loan was originated under a buy-down
plan;
(xxxii) Other than as provided by this Agreement, there is no
obligation on the part of an Originator or any other party to make
payments in addition to those made by the Mortgagors;
(xxxiii) With respect to each Home Equity Loan, the
Trustee is in possession of a complete Mortgage File, and there are no
custodial agreements in effect adversely affecting the right or
ability of the applicable Person to make the document deliveries
required hereby;
(xxxiv) No Home Equity Loan was selected for inclusion under
this Agreement on any basis which was intended to have a material
adverse effect on the Certificateholders or the Certificate Insurer;
(xxxv) No Home Equity Loan has a shared appreciation or
other contingent interest feature;
(xxxvi) With respect to each Home Equity Loan secured by a
second lien on the related Mortgaged Property:
(a) if the Combined Loan-to-Value Ratio is higher
than __%, either the related First Lien does not provide for a balloon
payment or, if the related First Lien does provide for a balloon
payment, the maturity date of the second lien is prior to the maturity
date of the First Lien;
(b) the related First Lien does not provide for
negative amortization; and
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(c) either no consent for the Home Equity Loan
secured by a second lien on the related Mortgaged Property is required
by the holder of the related First Lien or such consent has been
obtained and is contained in the Mortgage File.
(xxxvii) Each Home Equity Loan conforms, and all the
Home Equity Loans in the aggregate conform, in all material respects
to the description thereof set forth in the Prospectus Supplement;
(xxxviii) A full appraisal on forms approved by the
Originator was performed in connection with the origination of each
Home Equity Loan. Each appraisal meets guidelines that would be
generally acceptable to prudent mortgage lenders that regularly
originate or purchase Home Equity Loans comparable to the Home Equity
Loans for sale to prudent investors in the secondary market that
invest in Home Equity Loans such as the Home Equity Loans;
(xxxix) To the best knowledge of the Representative and the
applicable Originator, no Mortgaged Property was, as of the related
Cut-Off Date, located within a one-mile radius of any site listed in
the National Priorities List as defined under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, or on any similar state list of hazardous waste sites which
are known to contain any hazardous substance or hazardous waste;
(xl) None of the Home Equity Loans are subject to a
bankruptcy proceeding;
(xli) No more than __% of the aggregate Principal Balance
of all the Home Equity Loans as of Cut-Off Date relates to Home Equity
Loans originated or purchased under the Originators' limited
documentation program for self-employed borrowers;
(xlii) The range of points financed or "net funded" on Home
Equity Loans originated after ________________ is 0% to __%;
(xliii) Each Home Equity Loan constitutes a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code;
(xliv) With respect to any Home Equity Loan that is not a
Cooperative Loan, each Mortgage is a valid and enforceable first or
second lien on the Mortgaged Property subject only to (a) the lien of
non-delinquent current real property taxes and assessments, (b)
covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in
the appraisal made in connection with the origination of the related
Home Equity Loan, (c)
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other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to
be provided by such Mortgage and (d) the related First Lien, if any;
(xlv) Each Cooperative Loan is secured by a valid,
subsisting and enforceable perfected first or second lien and security
interest in the related Mortgaged Property, subject only to (i) the
rights of the Cooperative Corporation to collect Maintenance and
assessments from the Mortgagor, (ii) the lien of the Blanket Mortgage,
if any, on the Cooperative Property and of real property taxes, water
and sewer charges, rents and assessments on the Cooperative Property
not yet due and payable, (iii) the related First Lien, if any and (iv)
other matters to which like Cooperative Units are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by the Security Agreement or the use,
enjoyment, value or marketability of the Cooperative Unit. Each
original UCC financing statement, continuation statement or other
governmental filing or recordation necessary to create or preserve the
perfection and priority of the first or second, as applicable,
priority lien and security interest in the Cooperative Shares and
Proprietary Lease has been timely and properly made. Any security
agreement, chattel mortgage or equivalent document related to the
Cooperative Loan and delivered to the applicable Originator or any
designee of the applicable Originator establishes in such Person a
valid and subsisting perfected first or second, as applicable, lien on
and security interest in the property described therein, and such
Person has full right to sell and assign the same;
(xlvi) Each Cooperative Corporation qualifies as a
"cooperative housing corporation" as defined in Section 216 of the
Code; and
(xlvii) Each Mortgaged Property is free of substantial damage
and is in reasonably good repair.
(b) It is understood and agreed that the representations
and warranties set forth in this Section 2.05 shall survive delivery of the
respective Mortgage Files to the Trustee and the termination of the rights and
obligations of the Master Servicer pursuant to Section 7.04 or 8.01. Upon
discovery by the Seller, the Master Servicer, the Representative, an
Originator, the Certificate Insurer or a Responsible Officer of the Trustee of
a breach of any of the foregoing representations and warranties (disregarding
any qualification with respect to knowledge), which materially and adversely
affects the interests of the Trust or the Certificateholders or the Certificate
Insurer in the related Home Equity Loan, the party discovering such breach
shall give prompt written notice to the other parties and the Certificate
Insurer. Within 60 days of its discovery or its receipt of notice of breach,
the Representative shall use all reasonable efforts to cure, or cause the
applicable Originator to cure, such breach in all material respects or shall
purchase, or cause the applicable Originator to purchase, such Home Equity Loan
from the Trust or substitute, or cause the applicable Originator to substitute,
an Eligible Substitute Home Equity Loan as provided in Section 2.07 for such
Home Equity Loan. Any such purchase by the Representative or an Originator
shall
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be at the Purchase Price, and in each case shall be accomplished in the manner
set forth in Section 2.02. It is understood and agreed that the obligation of
the Representative to cure, substitute or purchase, or to cause the applicable
Originator to cure, substitute or purchase, any Home Equity Loan as to which
such a breach has occurred and is continuing shall constitute the sole remedy
against the Representative and the applicable Originator, or another affiliate
of the Representative respecting such breach available to Certificateholders or
the Trustee on behalf of Certificateholders. An Officer's Certificate and
Opinion of Counsel to the effect set forth in Section 2.07(d) shall be
delivered to the Trustee in connection with any such repurchase.
Section 2.06. Representations and Warranties of the Seller. (a) The
Seller represents and warrants to the Trustee on behalf of the
Certificateholders as follows:
(i) The Seller 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 Seller 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;
(ii) This Agreement constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforcement may be
limited by general principles of equity (whether considered in a
proceeding at law or in equity);
(iii) Immediately prior to the sale and assignment
by the Seller to the Trustee of each Home Equity Loan, the Seller was
the sole beneficial owner of each Home Equity Loan (insofar as such
title was conveyed to it by the applicable Originator) subject to no
prior lien, claim, participation interest, mortgage, security
interest, pledge, charge or other encumbrance or other interest of any
nature;
(iv) As of the Closing Date, the Seller has
transferred all right, title and interest in the Home Equity Loans to
the Trustee; and
(v) The Seller has not transferred the Home
Equity Loans to the Trustee with any intent to hinder, delay or
defraud any of its creditors.
Section 2.07. Substitution of Home Equity Loans (a) On a
Determination Date within [two] years following the Closing Date and which is
on or before the date on which the Representative would otherwise be required
to repurchase, or cause the applicable Originator to repurchase, such
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Home Equity Loan under Section 2.02 or 2.05, the Representative may deliver to
the Trustee one or more Eligible Substitute Home Equity Loans in substitution
for any one or more of the Defective Home Equity Loans which the Representative
would otherwise be required to repurchase, or cause the applicable Originator
to repurchase, pursuant to Section 2.02 or 2.05.
(b) The Representative shall notify the Master Servicer
and the Trustee in writing not less than five Business Days before the related
Determination Date which is on or before the date on which the Representative
would otherwise be required to repurchase, or cause the applicable Originator
to repurchase, such Home Equity Loan pursuant to Section 2.02 or 2.05 of its or
the applicable Originator's intention to effect a substitution under this
Section 2.07. On such Determination Date (the "Substitution Date"), the
Representative shall deliver, or cause the applicable Originator to deliver, to
the Trustee (1) the Eligible Substitute Home Equity Loans to be substituted for
the Defective Home Equity Loans, (2) a list of the Defective Home Equity Loans
to be substituted for by such Eligible Substitute Home Equity Loans, (3) an
Officer's Certificate (A) stating that no failure by the Master Servicer
described in Section 8.01 shall have occurred and be continuing, (B) stating
that the aggregate Principal Balance of all Eligible Substitute Home Equity
Loans (determined with respect to each Eligible Substitute Home Equity Loan as
of the Determination Date on which it was substituted) including the principal
balance of Eligible Substitute Home Equity Loans being substituted on such
Determination Date does not exceed an amount equal to 5% of the Aggregate
Principal Balance as of the Closing Date, (C) stating that all conditions
precedent to such substitution specified in subsection (a) have been satisfied
and attaching as an exhibit a supplemental Home Equity Loan schedule (the
"Supplemental Home Equity Loan Schedule") setting forth the same type of
information as appears on the Home Equity Loan Schedule and representing as to
the accuracy thereof and (D) confirming that the representations and warranties
contained in Section 2.05 are true and correct in all material respects with
respect to the Substitute Home Equity Loans on and as of such Determination
Date, provided that remedies for the inaccuracy of such representations are
limited as set forth in Sections 2.02, 2.05 and this Section 2.07, (4) an
Opinion of Counsel to the effect set forth below and (5) a certificate stating
that cash in the amount of the related Substitution Adjustment, if any, has
been deposited to the Collection Account; provided that the Trustee shall remit
to the Seller the portion of the amount, if any, of the Substitution Adjustment
referred to in clause (b) of the definition thereof to the extent such amount
is incurred by or imposed on the Seller. Upon receipt of the foregoing, the
Trustee shall release such Defective Home Equity Loans to the Representative or
the applicable Originator.
(c) Concurrently with the satisfaction of the conditions
set forth in Sections 2.07(a) and (b) above and the transfer of such Eligible
Substitute Home Equity Loans to the Trustee pursuant to Section 2.07(a),
Exhibit C to this Agreement shall be deemed to be amended to exclude all Home
Equity Loans being replaced by such Eligible Substitute Home Equity Loans and
to include the information set forth on the Supplemental Home Equity Loan
Schedule with respect to such Eligible Substitute Home Equity Loans, and all
references in this Agreement to Home Equity Loans shall include such Eligible
Substitute Home Equity Loans and be deemed to be made on or
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after the related Substitution Date, as the case may be, as to such Eligible
Substitute Home Equity Loans.
(d) In connection with any Home Equity Loan that the
Representative is required to purchase or replace, or cause the applicable
Originator to replace, the Representative shall deliver, or cause the
applicable Originator to deliver, to the Trustee and the Certificate Insurer an
Opinion of Counsel to the effect that such purchase or substitution will not
cause (x) any federal tax to be imposed on the Trust, including, without
limitation, any Federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the start-up day" under
Section 860G(d)(1) of the Code or (y) any portion of the Trust to fail to
qualify as a REMIC at any time that any Certificate is outstanding. In the
event that such opinion indicates that a repurchase or substitution will result
in the imposition of a prohibited transaction tax, give rise to net taxable
income or be deemed a contribution to a REMIC after its Startup Day, the
Representative shall not be required to cause any such Home Equity Loan to be
repurchased or replaced unless and until the Master Servicer has determined
there is an actual or imminent default with respect thereto or that such defect
or breach adversely affects the enforceability of such Home Equity Loan.
Section 2.08. Execution and Authentication of Certificates. The
Trustee on behalf of the Trust shall cause to be executed, authenticated and
delivered on the Closing Date to or upon the order of the Seller, in exchange
for the Home Equity Loans, concurrently with the sale, assignment and
conveyance to the Trustee of the Home Equity Loans, each Class of Regular
Certificates in authorized denominations and the Residual Certificates,
together evidencing the ownership of the entire Trust.
Section 2.09. Designation of Interests in REMIC. (a) For Federal tax
purposes, the Trust will consist of a single REMIC. The beneficial ownership
interest in the REMIC created hereunder shall be evidenced by the interests
having the following characteristics and terms as follows:
Original Class Certificate
Class Designation Principal Balance
----------------- -----------------
Class A-1 $
Class A-2 $
Class A-3 $
Class A-4 $
Class R (1)
------------
(1) The Class R Certificates do not have a Certificate Principal Balance.
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(b) The Seller hereby designates the Regular Certificates
as "regular interests," and the Residual Certificates as the single class of
"residual interests" in the REMIC created hereunder for purposes of the REMIC
Provisions.
Section 2.10. Designation of Startup Day of REMIC. The Closing Date
is hereby designated as the "start-up day" of the REMIC created hereunder
within the meaning of Section 860G(a)(9) of the Code.
Section 2.11. REMIC Certificate Maturity Date. Solely for purposes
of satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the
"latest possible maturity date" of the REMIC created hereunder is the
Distribution Date in __________________.
Section 2.12. Tax Returns and Reports to Certificateholders. (a) For
Federal income tax purposes, the Trust shall have a calendar year and shall
maintain its books on the accrual method of accounting.
(b) The Trustee shall prepare, or cause to be prepared,
execute and deliver to the Master Servicer or Certificateholders, as
applicable, any income tax information returns for each taxable year with
respect to the Trust containing such information at the times and in the manner
as may be required by the Code or state or local tax laws, regulations or
rules, and shall furnish or cause to be furnished to the Trust and the
Certificateholders the schedules, statements or information at such times and
in such manner as may be required thereby. Within thirty (30) days of the
Closing Date, the Trustee shall furnish or cause to be furnished to the
Internal Revenue Service, on Form 8811 or as otherwise required by the Code,
the name, title, address and telephone number of the person that Holders of the
Certificates may contact for tax information relating thereto, together with
such additional information at the time or times and in the manner required by
the Code. Such federal, state or local income tax or information returns shall
be signed by the Trustee or such other Person as may be required to sign such
returns by the Code or state or local tax laws, regulations or rules.
(c) In the first federal income tax return of the Trust
for its short taxable year ending December 31, 199_, a REMIC election shall be
made for such taxable year and all succeeding taxable years.
(d) The Trustee will maintain or cause to be maintained
such records relating to the Trust, including, but not limited to, the income,
expenses, assets and liabilities of the Trust, and the fair market value and
adjusted basis of the Trust property and assets determined at such intervals as
may be required by the Code, as may be necessary to prepare the foregoing
returns, schedules, statements or information.
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(e) The Master Servicer, upon request, shall promptly
furnish the Trustee with all such information as may be required in connection
with the Trustee's REMIC reporting obligations pursuant to this Agreement.
Section 2.13. Tax Matters Person. A Tax Matters Person will be
appointed for the REMIC created hereunder 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 the
REMIC created hereunder shall be the Trustee as long as it owns a Class R
Certificate. If the Trustee does not own a Class R Certificate, the Tax Matters
Person may be any other entity that owns a Class R Certificate and accepts a
designation hereunder as Tax Matters Person by delivering an affidavit in the
form of Exhibit G.
Section 2.14. REMIC Related Covenants. For as long as the Trust
shall exist, the Trustee shall act in accordance herewith to assure continuing
treatment of the REMIC created hereunder as a REMIC and avoid the imposition of
tax on the Trust. In particular:
(a) The Trustee shall not create, or permit the creation
of, any "interests" in the REMIC created hereunder within the meaning of Code
Section 860D(a)(2) other than the interests represented by the Regular
Certificates and the Residual Certificates.
(b) Except as otherwise provided in the Code, neither the
Seller nor any Originator shall grant and the Trustee shall not accept property
unless (i) substantially all of the property held in the Trust constitutes
either "qualified mortgages" or "permitted investments" as defined in Code
Sections 860G(a)(3) and (5), respectively, and (ii) no property shall be
contributed to the Trust after the Startup Day unless such grant would not
subject the Trust to the 100% tax on contributions to a REMIC after its Startup
Day imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the Trust
any fee or other compensation for services (other than as otherwise provided
herein) and shall not accept on behalf of the Trust any income from assets
other than those permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all
or any portion of the Home Equity Loans (other than in accordance with Section
2.02, 2.05 or 3.16), unless such sale is pursuant to a "qualified liquidation"
as defined in Code Section 860F(a)(4)(A) and in accordance with Article VIII.
(e) The Trustee shall maintain books with respect to the
REMIC created hereunder on a calendar year and on an accrual basis.
(f) Upon filing with the Internal Revenue Service, the
Trustee shall furnish to the Holders of the Residual Certificates the Form 1066
and each Form 1066Q for the REMIC
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created hereunder and shall respond promptly to written requests made not more
frequently than quarterly by any Holder of Residual Certificates with respect
to the following matters:
(i) The original projected principal and interest cash
flows on the Closing Date on each class of regular and residual
interests created hereunder and on the Home Equity Loans, based on the
applicable Prepayment Assumption;
(ii) The projected remaining principal and interest cash
flows as of the end of any calendar quarter with respect to each class
of regular and residual interests created hereunder and the Home
Equity Loans, based on the applicable Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and interest
cash flows described above;
(iv) The original issue discount (or, in the case of the
Home Equity Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each class of
regular or residual interests created hereunder and with respect to
the Home Equity Loans, together with each constant yield to maturity
used in computing the same;
(v) The treatment of losses realized with respect to the
Home Equity Loans or the regular interests created hereunder,
including the timing and amount of any cancellation of indebtedness
income of the REMIC created hereunder with respect to such regular
interests or bad debt deductions claimed with respect to the Home
Equity Loans;
(vi) The amount and timing of any non-interest expenses of
the REMIC created hereunder; and
(vii) Any taxes (including penalties and interest) imposed
on the REMIC created hereunder, including, without limitation, taxes
on "prohibited transactions," "contributions" or "net income from
foreclosure property" or state or local income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of
the Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of a REMIC as defined in Section 860G(c) of the Code, on
any contribution to the Trust after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax (other than any minimum tax imposed by Section
23151(a) or 23153(a) of the California Revenue and Taxation Code) is imposed,
such tax shall be paid by (i) the Trustee, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under this Agreement,
(ii) the Master Servicer, if such tax arises out of or results from a breach by
the Master Servicer of any of its obligations under this Agreement, (iii) the
Representative or the applicable Originator, if such tax arises out of or
results from a breach by the Representative or such Originator of any of their
respective obligations hereunder or (iv) otherwise
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the Holders of the Residual Certificates in proportion to their Percentage
Interests. Notwithstanding the previous sentence, any tax imposed on the Trust
by Section 23151 or Section 23153 of the California Revenue and Taxation Code
shall be timely paid by the Trustee out of its own funds without right of
reimbursement therefor if such taxes arise solely from the Trustee's presence
in California, and otherwise by the Master Servicer. To the extent any tax is
chargeable against the Holders of the Residual Certificates, notwithstanding
anything to the contrary contained herein, the Trustee is hereby authorized to
retain from amounts otherwise distributable to the Holders of the Residual
Certificates on any Distribution Date sufficient funds to reimburse the Trustee
for the payment of such tax (to the extent that the Trustee has not been
previously reimbursed or indemnified therefor).
The Trustee shall not engage in a "prohibited transaction" (as defined
in Code Section 860F(a)(2)), except that, with the prior written consent of the
Seller, the Trustee may engage in the activities otherwise prohibited by the
foregoing clauses (b), (c) and (d), provided that the Seller shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a contribution or prohibited
transaction tax on the Trust and will not disqualify the REMIC from treatment
as a REMIC; and provided that the Seller shall have demonstrated to the
satisfaction of the Trustee that such action will not adversely affect the
rights of the holders of the Certificates and the Trustee and that such action
will not adversely impact the ratings of the Class A Certificates.
(g) Except as provided below, the Trustee shall pay out
of its own funds, without any right of reimbursement, any and all tax related
expenses of the Trust (including, but not limited to, tax return preparation
and filing expenses and any professional fees or expenses related to audits or
any administrative or judicial proceedings with respect to the Trust that
involve the Internal Revenue Service or state tax authorities), other than the
expense of obtaining any Opinion of Counsel required pursuant to Sections 2.07,
3.07 and 10.02 and other than taxes except as specified herein. The Trustee
shall be entitled to be reimbursed for any professional fees or expenses
related to audits or any administrative or judicial proceedings that do not
result from any breach of the Trustee's duties hereunder.
ARTICLE III
Administration and Servicing
of Home Equity Loans
Section 3.01. The Master Servicer. (a) It is intended that the Trust
formed hereunder shall constitute, and that the affairs of the Trust shall be
conducted so as to qualify the Trust as, a "real estate mortgage investment
conduit" ("REMIC") as defined in and in accordance with the REMIC Provisions.
In furtherance of such intentions, the Master Servicer covenants and agrees
that it shall
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not knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of the Trust.
(b) The Master Servicer shall service and administer the
Home Equity Loans and shall have full power and authority, acting alone and/or
through Sub-Servicers, to do or cause to be done any and all things in
connection with such servicing and administration which the Master Servicer may
deem necessary or desirable and consistent with the terms of this Agreement.
The Master Servicer may enter into Sub- Servicing Agreements for any servicing
and administration of Home Equity Loans with any institution which (i) is in
compliance with the laws of each state necessary to enable it to perform its
obligations under such Sub-Servicing Agreement and (ii) (w) has been designated
an approved Seller-Servicer by FHLMC or FNMA for first and second Home Equity
Loans, (x) is one of the Originators, (y) is an affiliate of the Master
Servicer and satisfactory to the Certificate Insurer or (z) is otherwise
approved by the Certificate Insurer. The Master Servicer shall give notice to
the Certificate Insurer and the Trustee of the appointment of any Sub-Servicer.
Any such Sub-Servicing Agreement shall be consistent with and not violate the
provisions of this Agreement. The Master Servicer shall be entitled to
terminate any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement and either itself directly service
the related Home Equity Loans or enter into a Sub-Servicing Agreement with a
successor Sub-Servicer which qualifies hereunder. The Master Servicer hereby
appoints each Originator to initially act as Sub-Servicer with respect to the
Home Equity Loans sold by such Originator to the Seller. The Originators, as
Sub-Servicers shall service the Home Equity Loans in accordance with the terms
of this Agreement.
(c) Notwithstanding any Sub-Servicing Agreement or any of
the provisions of this Agreement relating to agreements or arrangements between
the Master Servicer and a Sub-Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall remain obligated and
primarily liable for the servicing and administering of the Home Equity Loans
in accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such Sub-Servicing Agreements or
arrangements or by virtue of indemnification from the Sub-Servicer and to the
same extent and under the same terms and conditions as if the Master Servicer
alone were servicing and administering the Home Equity Loans. For purposes of
this Agreement, the Master Servicer shall be deemed to have received payments
on Home Equity Loans when the Sub-Servicer has received such payments. The
Master Servicer shall be entitled to enter into any agreement with a
Sub-Servicer for indemnification of the Master Servicer by such Sub-Servicer,
and nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
(d) Any Sub-Servicing Agreement that may be entered into
and any transactions or services relating to the Home Equity Loans involving a
Sub-Servicer in its capacity as such and not as an Originator shall be deemed
to be between the Sub-Servicer and the Master Servicer alone, and the Trustee
and Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Sub-Servicer except as set forth in Section
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3.01(e). The Master Servicer shall be solely liable for all fees owed by it to
any Sub-Servicer irrespective of whether the Master Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.
(e) In the event the Master Servicer shall for any reason
no longer be the Master Servicer (including by reason of an Event of Default),
the Trustee or its designee approved by the Certificate Insurer shall thereupon
assume all of the rights and obligations of the Master Servicer under each
Sub-Servicing Agreement that the Master Servicer may have entered into, unless
the Trustee or its designee approved by the Certificate Insurer elects to
terminate any Sub-Servicing Agreement. Any fee payable in connection with such
a termination will be payable by the outgoing Master Servicer. If the Trustee
does not terminate the Sub-Servicing Agreements, the Trustee, its designee or
the successor Master Servicer for the Trustee shall be deemed to have assumed
all of the Master Servicer's interest therein and to have replaced the Master
Servicer as a party to each Sub-Servicing Agreement to the same extent as if
the Sub-Servicing Agreements had been assigned to the assuming party, except
that the Master Servicer shall not thereby be relieved of any liability or
obligations under the Sub-Servicing Agreements with regard to events that
occurred prior to the date the Master Servicer ceased to be the Master Servicer
hereunder. The Master Servicer, at its expense and without right of
reimbursement therefor, shall, upon the request of the Trustee, deliver to the
assuming party all documents and records relating to each Sub-Servicing
Agreement and the Home Equity Loans then being serviced and an accounting of
amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party.
(f) Consistent with the terms of this Agreement, the
Master Servicer may waive, modify or vary any term of any Home Equity Loan or
consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to any Mortgagor if in the Master Servicer's good faith
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Certificateholders and the
Certificate Insurer, provided, however, that (unless (x) the Mortgagor is in
default with respect to the Home Equity Loan, or such default is, in the
judgment of the Master Servicer, imminent, (y) with respect to any modification
lowering the Loan Rate or effecting the forgiveness of any amount owed under
the Mortgage Note, or extending the final maturity date on such Home Equity
Loan, the Certificate Insurer has consented to such modification and (z) such
waiver, modification, postponement or indulgence would not cause the REMIC
created hereunder to be disqualified or otherwise cause a tax to be imposed on
the REMIC) the Master Servicer may not permit any modification with respect to
any Home Equity Loan that would change the Loan Rate, defer or forgive the
payment of any principal or interest (unless in connection with the liquidation
of the related Home Equity Loan) or extend the final maturity date on the Home
Equity Loan. No costs incurred by the Master Servicer or any Sub-Servicer in
respect of Servicing Advances shall, for the purposes of distributions to
Certificateholders, be added to the amount owing under the related Home Equity
Loan. Without limiting the generality of the foregoing, the Master Servicer
shall continue, and is hereby authorized and empowered to execute and deliver
on behalf of the Trustee and each
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Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments with
respect to the Home Equity Loans and with respect to the Mortgaged Properties.
If reasonably required by the Master Servicer, the Trustee shall furnish the
Master Servicer with any powers of attorney and other documents necessary or
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement.
Notwithstanding anything to the contrary contained herein, the Master
Servicer, in servicing and administering the Home Equity Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
Property management procedures) and exercise the same care that it customarily
employs and exercises in servicing and administering Home Equity Loans for its
own account, in accordance with accepted mortgage servicing practices of
prudent lending institutions servicing Home Equity Loans similar to the Home
Equity Loans and giving due consideration to the Certificate Insurer's and the
Certificateholders' reliance on the Master Servicer.
(g) On and after such time as the Trustee receives the
resignation of, or notice of the removal of, the Master Servicer from its
rights and obligations under this Agreement, and with respect to resignation
pursuant to Section 7.04, after receipt by the Trustee and the Certificate
Insurer of the Opinion of Counsel required pursuant to Section 7.04, the
Trustee or its designee approved by the Certificate Insurer shall assume all of
the rights and obligations of the Master Servicer, subject to Section 8.02.
The Master Servicer shall, upon request of the Trustee but at the expense of
the Master Servicer, deliver to the Trustee all documents and records relating
to the Home Equity Loans and each Sub-Servicing Agreement and an accounting of
amounts collected and held by the Master Servicer and otherwise use its best
efforts to effect the orderly and efficient transfer of servicing rights and
obligations to the assuming party.
(h) The Master Servicer shall deliver a list of Servicing
Officers to the Trustee and the Certificate Insurer on or before the Closing
Date.
(i) Consistent with the terms of this Agreement, the
Master Servicer may consent to the placing of a lien senior to that of the
Mortgage on the related Mortgaged Property; provided that such senior lien
secures a Home Equity Loan that refinances a First Lien and the Combined
Loan-to-Value ratio of the related Home Equity Loan immediately following the
refinancing (based on the outstanding principal balance of the Home Equity Loan
and the original principal balance of such refinanced Home Equity Loan) is not
greater than the Combined Loan-to-Value Ratio of such Home Equity Loan as of
the related Cut-Off Date.
Section 3.02. Collection of Certain Home Equity Loan Payments. (a)
The Master 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, follow
such collection procedures as it follows with respect to Home Equity Loans in
its servicing portfolio comparable to the Home Equity Loans. Consistent with
the foregoing, and
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without limiting the generality of the foregoing, the Master Servicer may in
its discretion (i) waive any prepayment penalty or late payment charge or any
assumption fees or other fees which may be collected in the ordinary course of
servicing such Home Equity Loan and (ii) arrange with a Mortgagor a schedule
for the payment of interest due and unpaid; provided that such arrangement is
consistent with the Master Servicer's policies with respect to the Home Equity
Loans it owns or services; provided, further, that notwithstanding such
arrangement such Home Equity Loans will be included in the monthly information
delivered by the Master Servicer to the Trustee pursuant to Section 5.03.
(b) The Master Servicer shall establish and maintain a
separate trust account (the "Collection Account") titled "[Trustee], as
Trustee, in trust for the registered holders of Avco Financial Home Equity Loan
Asset-Backed Certificates, Series 199__." The Collection Account shall be an
Eligible Account. Unless the conditions specified in Section 3.02(c) are
satisfied, the Master Servicer shall on the Closing Date deposit or cause to be
deposited any amounts representing payments on and any collections in respect
of the Home Equity Loans received after the related Cut-Off Date and prior to
the Closing Date, and thereafter shall use its best efforts to deposit or cause
to be deposited within one Business Day, and shall in any event deposit or
cause to be deposited within two Business Days, following receipt thereof the
following payments and collections received or made by it (without
duplication):
(i) all payments received after the related Cut-Off Date
on account of principal on the Home Equity Loans and all Principal
Prepayments and Curtailments collected after the related Cut-Off Date;
(ii) all payments received after the related Cut-Off Date
on account of interest on the Home Equity Loans (exclusive of payments
in respect of interest on the Home Equity Loans which have accrued and
were due on or prior to _____________, 199_);
(iii) all Net Liquidation Proceeds net of Foreclosure
Profits;
(iv) all Insurance Proceeds other than any portion thereof
constituting Net Liquidation Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase
of any Home Equity Loan and the amount of any Substitution Adjustment
pursuant to Sections 2.02, 2.05, 2.07 and 3.16; and
(vii) any amount required to be deposited in the Collection
Account pursuant to Sections 3.06, 3.07, 5.02 or 5.05;
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provided, however, that, with respect to each Due Period, the Master Servicer
shall be permitted to retain (x) from payments in respect of interest on a Home
Equity Loan, the Servicing Fee for such Home Equity Loan and (y) from payments
from Mortgagors, Liquidation Proceeds, Insurance Proceeds and Released
Mortgaged Property Proceeds, any unreimbursed Servicing Advances and Monthly
Advances related thereto. The foregoing requirements respecting deposits to
the Collection Account are exclusive, it being understood that, without
limiting the generality of the foregoing, the Master Servicer need not deposit
in the Collection Account amounts representing Servicing Compensation or
amounts received by the Master Servicer for the accounts of Mortgagors for
application toward the payment of taxes, insurance premiums, assessments and
similar items.
The Master Servicer may cause the institution maintaining the
Collection Account to invest any funds in the Collection Account in Eligible
Investments (including obligations of the Master Servicer or any of its
Affiliates, if such obligations otherwise qualify as Eligible Investments)
pursuant to Section 5.05.
(c) For so long as (i) the Master Servicer is Avco
Financial Services Management Company, (ii) no Event of Default shall have
occurred and be continuing, (iii) if the Servicer does not have a short term
debt rating or deposit rating as applicable, of at least A-1 from Standard &
Poor's and P-1 from Moody's, a guaranty, letter of credit, surety bond or other
similar instrument is issued covering the amounts described in the definition
of Available Funds, which is acceptable to the Rating Agencies and issued by an
entity, which has a short- term debt or deposit rating, as applicable, of at
least A-1 from Standard & Poor's and P-1 from Moody's; and (iv) the Rating
Agency Condition shall have been satisfied (and any conditions or limitations
imposed by the Rating Agencies in connection therewith are complied with), the
Servicer shall remit such collections to the Collection Account on or before
the second Business Day preceding the related Distribution Date. The Rating
Agency Condition with respect to this Section 3.2 and the Closing Date shall be
deemed to be satisfied upon the issuance to the Seller of the rating letters on
the Closing Date.
Section 3.03. Withdrawals from the Collection Account. The Master
Servicer shall withdraw or cause to be withdrawn funds from the Collection
Account for the following purposes:
(i) on the second Business Day preceding each
Distribution Date, to withdraw the portion of Available Funds then in
the Collection Account and remit such funds to the Trustee for deposit
to the Distribution Account;
(ii) to reimburse the Master Servicer for any accrued
unpaid Servicing Compensation which the Master Servicer would not have
been required to deposit in the Collection Account and for
unreimbursed Monthly Advances and Servicing Advances. The Master
Servicer's right to reimbursement for unpaid Servicing Fees and
unreimbursed Servicing Advances shall be limited to late collections
on the related Home Equity Loan,
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including Liquidation Proceeds, Released Mortgaged Property Proceeds,
Insurance Proceeds and such other amounts as may be collected by the
Master Servicer from the related Mortgagor or otherwise relating to
the Home Equity Loan in respect of which such reimbursed amounts are
owed. The Master Servicer's right to reimbursement for unreimbursed
Monthly Advances shall be limited to late collections of interest on
any Home Equity Loan and to Liquidation Proceeds, Released Mortgaged
Property Proceeds and Insurance Proceeds on related Home Equity Loans;
(iii) to withdraw any amount received from a Mortgagor that
is recoverable and sought to be recovered 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;
(iv) to withdraw any funds deposited in the Collection
Account that were not required to be deposited therein (such as
Servicing Compensation) or were deposited therein in error and to pay
such funds to the appropriate Person;
(v) to withdraw funds necessary for the conservation and
disposition of REO Property pursuant to Section 3.06 to the extent not
advanced by the Master Servicer;
(vi) to reimburse the Master Servicer for Nonrecoverable
Advances that are not, with respect to aggregate Servicing Advances on
any single Home Equity Loan or REO Property, in excess of the
Principal Balance thereof;
(vii) to pay to the applicable Originator collections
received in respect of accrued interest on the Home Equity Loans due
on or before ______________, 199_;
(viii) to pay to the Master Servicer, the Trustee or remit
to the Seller the portion of any Purchase Price in respect of clause
(iv) of the definition thereof or of any Substitution Adjustment in
respect of clause (b) of the definition thereof to the extent paid in
respect of amounts incurred by or imposed on the Master Servicer, the
Seller or the Trustee, as the case may be; and
(ix) to clear and terminate the Collection Account upon
the termination of this Agreement.
Section 3.04. Reserved.
Section 3.05. Reserved.
Section 3.06. Management and Realization Upon Defaulted Home Equity
Loans. The Master Servicer shall manage, conserve, protect and operate each
REO Property for the
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Certificateholders solely for the purpose of its prudent and prompt disposition
and sale. The Master Servicer shall, either itself or through an agent
selected by the Master Servicer, manage, conserve, protect and operate the REO
Property in the same manner that it manages, conserves, protects and operates
other foreclosed property for its own account, and in the same manner that
similar property in the same locality as the REO Property is managed. The
Master Servicer shall attempt to sell the same (and may temporarily rent the
same) on such terms and conditions as the Master Servicer deems to be in the
best interest of the Certificate Insurer and the Certificateholders.
The Master Servicer shall cause to be deposited, no later than two
Business Days after the receipt thereof, in the Collection Account, all
revenues received with respect to the related REO Property and shall retain, or
cause the Trustee to withdraw therefrom, funds necessary for the proper
operation, management and maintenance of the REO Property and the fees of any
managing agent acting on behalf of the Master Servicer.
The disposition of REO Property shall be carried out by the Master
Servicer for cash at such price, and upon such terms and conditions, as the
Master Servicer deems to be in the best interest of the Certificateholders and,
as soon as practicable thereafter, the expenses of such sale shall be paid.
The cash proceeds of sale of the REO Property shall be promptly deposited in
the Collection Account, net of Foreclosure Profits and of any related
unreimbursed Servicing Advances, accrued and unpaid Servicing Fees and
unreimbursed Monthly Advances payable to the Master Servicer in accordance with
Section 3.03, for distribution to the Certificateholders in accordance with
Section 5.01.
The Master Servicer shall foreclose upon or otherwise comparably
convert to ownership Mortgaged Properties securing such of the Home Equity
Loans as come into and continue in default either when no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.02 subject to the provisions contained in the last paragraph of this
Section 3.06.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee or to its nominee on behalf of
Certificateholders and the Certificate Insurer.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Home Equity
Loan, the Master Servicer shall (i) dispose of such Mortgaged Property within
two years after its acquisition or (ii) prior to the expiration of any
extension to such two-year grace period which is requested on behalf of the
Trust by the Master Servicer (at the expense of the Trust) more than 60 days
prior to the end of such two-year grace period and granted by the Internal
Revenue Service, unless the Master Servicer shall have received an Opinion of
Counsel to the effect that the holding of such Mortgaged Property subsequent to
two years after its acquisition will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code or cause the
REMIC created hereunder to fail to qualify as a
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REMIC at any time that any Class A Certificates are outstanding.
Notwithstanding any other provision of this Agreement, (i) no Mortgaged
Property acquired by the Master Servicer pursuant to this Section 3.06 shall be
rented (or allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the Trust and (ii) no construction
shall take place on such Mortgaged Property in such a manner or pursuant to any
terms, in either case, that would cause such Mortgaged 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 the Trust of any "net income from
foreclosure property" which is subject to taxation within the meaning of
Sections 860G(c) and 857(b)(4)(B) of the Code. If a period greater than two
years is permitted under this Agreement and is necessary to sell any REO
Property, the Master Servicer shall give appropriate notice to the Trustee and
the Certificate Insurer and shall report monthly to the Trustee as to the
progress being made in selling such REO Property.
If the Master Servicer has actual knowledge that a Mortgaged Property
which the Master Servicer is contemplating acquiring in foreclosure or by deed
in lieu of foreclosure is located within a one-mile radius of any site with
environmental or hazardous waste risks known to the Master Servicer, the Master
Servicer will notify the Certificate Insurer prior to acquiring the Mortgaged
Property and shall not take any action without prior written approval to the
Certificate Insurer. Nothing in this Section 3.06 shall affect the Master
Servicer's right to deem certain advances proposed to be made Nonrecoverable
Advances. For the purpose of this Section 3.06, actual knowledge of the Master
Servicer means actual knowledge of a Responsible Officer of the Master Servicer
or any Sub-Servicer involved in the servicing of the relevant Home Equity Loan.
Actual knowledge of the Master Servicer does not include knowledge imputable by
virtue of the availability of or accessibility to information relating to
environmental or hazardous waste sites or the locations thereof.
Section 3.07. Trustee to Cooperate. Upon any Principal Prepayment,
the Master Servicer is authorized to execute, pursuant to the authorization
contained in Section 3.01(f), if the related Assignment of Mortgage has been
recorded or an Opinion of Counsel has been delivered as required hereunder, an
instrument of satisfaction regarding the related Mortgage, which instrument of
satisfaction shall be recorded by the Master Servicer if required by applicable
law and be delivered to the Person entitled thereto. It is understood and
agreed that no expenses incurred in connection with such instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account. If the Trustee is holding the Mortgage Files, from time to
time and as appropriate for the servicing or foreclosure of any Home Equity
Loan, the Trustee shall, upon request of the Master Servicer and delivery to
the Trustee of a Request for Release, in the form annexed hereto as Exhibit I,
signed by a Servicing Officer, release the related Mortgage File to the Master
Servicer, and the Trustee shall execute such documents, in the forms provided
by the Master Servicer, as shall be necessary for the prosecution of any such
proceedings or the taking of other servicing actions. Such Request for Release
shall obligate the Master Servicer to return the Mortgage File to the Trustee
when the need therefor by the Master Servicer no longer exists unless the Home
Equity Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing
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Officer similar to that hereinabove specified, the Request for Release shall be
released by the Trustee to the Master Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Home Equity Loan that is in default following recordation of the related
Assignment of Mortgage in accordance with the provisions hereof, the Trustee
shall, if so requested in writing by the Master Servicer, execute an
appropriate assignment in the form provided to the Trustee by the Master
Servicer to assign such Home Equity Loan for the purpose of collection to the
Master Servicer (any such assignment shall unambiguously indicate that the
assignment is for the purpose of collection only) and, upon such assignment,
such assignee for collection will thereupon bring all required actions in its
own name and otherwise enforce the terms of the Home Equity Loan and deposit or
credit the Net Liquidation Proceeds, exclusive of Foreclosure Profits, received
with respect thereto in the Collection Account. In the event that all
delinquent payments due under any such Home Equity Loan are paid by the
Mortgagor and any other defaults are cured then the assignee for collection
shall promptly reassign such Home Equity Loan to the Trustee and return it to
the place where the related Mortgage File was being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Master Servicer. Subject to Section 5.02, the Master Servicer shall be
entitled to retain the Servicing Fee in accordance with Section 3.02 as
compensation for its services in connection with servicing the Home Equity
Loans. Moreover, additional servicing compensation in the form of prepayment
penalties or late payment charges or other receipts not required to be
deposited in the Collection Account, including, without limitation, Foreclosure
Profits and, subject to Section 5.05, investment income on the Accounts shall
be retained by the Master Servicer. The Master Servicer will pay any fees due
the Sub-Servicers from the Servicing Fee. The Master Servicer shall be
required to pay or to cause to be paid by the applicable Sub-Servicer all
expenses incurred by it in connection with its activities hereunder (including
payment of all other fees and expenses not expressly stated hereunder to be for
the account of the Trust or the Certificateholders) and shall not be entitled
to reimbursement therefor except as specifically provided herein.
Section 3.09. Annual Statement as to Compliance. (a) The Master
Servicer will deliver to the Trustee, the Certificate Insurer, the
Representative and the Rating Agencies, on or before the last day of the fourth
month following the end of the Master Servicer's fiscal year (December 31),
beginning in 199_, an Officer's Certificate stating that (i) a review of the
activities of the Master Servicer during the preceding fiscal year and of its
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Master Servicer has fulfilled all its material obligations under this Agreement
throughout such fiscal year, or, if there has been a default in the fulfillment
of any such obligation, specifying each such default known to such officer and
the nature and status thereof. The Master Servicer shall promptly notify the
Certificate Insurer, the Seller, the Trustee and the Rating Agencies upon any
change in the basis on which its fiscal year is determined.
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(b) The Master Servicer shall deliver to the Trustee, the
Certificate Insurer, the Seller, the Representative and each of the Rating
Agencies, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event which, with the giving of notice or the
lapse of time or both, would become an Event of Default.
Section 3.10. Annual Servicing. Not later than the last day of the
fourth month following the end of the Master Servicer's fiscal year (December
31), beginning in 199_, the Master Servicer, at its expense, shall cause a firm
of independent public accountants reasonably acceptable to the Trustee and the
Certificate Insurer to furnish a letter or letters to the Certificate Insurer,
the Trustee and the Rating Agencies to the effect that such firm has, with
respect to the Master Servicer's overall servicing operations, examined such
operations in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.
Section 3.11. Access to Certain Documentation and Information
Regarding the Home Equity Loans. The Master Servicer shall provide to the
Trustee, the Certificate Insurer, the Certificateholders which are federally
insured savings and loan associations, the Office of Thrift Supervision, the
FDIC and the supervisory agents and examiners of the Office of Thrift
Supervision access to the documentation regarding the Home Equity Loans
required by applicable regulations of the Office of Thrift Supervision and the
FDIC (acting as operator of the SAIF or the BIF), such access being afforded
without charge but only upon reasonable request and during normal business
hours at the offices designated by the Master Servicer. Nothing in this
Section 3.11 shall derogate from the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Master Servicer to provide access as provided
in this Section 3.11 as a result of such obligation shall not constitute a
breach of this Section 3.11.
Section 3.12. Reserved.
Section 3.13. Reports to the Securities and Exchange Commission. The
Trustee shall, on behalf of the Trust, cause to be filed with the Securities
and Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission thereunder. Upon the
request of the Trustee, each of the Seller, the Master Servicer and the
Representative shall cooperate with the Trustee in the preparation of any such
report and shall provide to the Trustee in a timely manner all such information
or documentation as the Trustee may reasonably request in connection with the
performance of its duties and obligations under this Section 3.13.
Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Master Servicer shall
make reports of foreclosures and
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abandonments of any Mortgaged Property for each year beginning in 199_. The
Master Servicer shall file reports relating to each instance occurring during
the previous calendar year in which the Master Servicer (i) on behalf of the
Trustee acquires an interest in any Mortgaged Property through foreclosure or
other comparable conversion in full or partial satisfaction of a Home Equity
Loan or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Master Servicer shall be in form and substance
sufficient to meet the reporting requirements imposed by Sections 6050J, 6050H
and 6050P of the Code.
Section 3.15. Advances. (a) Not later than 12:00 noon _____________
time on the Determination Date, the Master Servicer shall remit to the Trustee
for deposit in the Distribution Account an amount to be distributed on the
related Distribution Date pursuant to Section 5.01, equal to the interest
accrued on each Home Equity Loan through the related Due Date, but not received
as of the close of business on the last day of the related Due Period (net of
the Servicing Fee); such amount being defined herein as the "Monthly Advance."
The obligation to make Monthly Advances with respect to each Home Equity Loan
shall continue until such Home Equity Loan becomes a Liquidated Home Equity
Loan.
(b) Notwithstanding anything herein to the contrary, no
Servicing Advance or Monthly Advance shall be required to be made hereunder if
the Master Servicer determines that such Servicing Advance or Monthly Advance
would, if made, constitute a Nonrecoverable Advance.
Section 3.16. Optional Purchase of Defaulted Home Equity Loans. The
Master Servicer, in its sole discretion, shall have the right to elect (by
written notice sent to the Trustee and the Certificate Insurer) to purchase for
its own account from the Trust any Home Equity Loan which is 90 days or more
Delinquent in the manner and at the price specified in Section 2.02. The
Purchase Price for any Home Equity Loan purchased hereunder shall be deposited
in the Collection Account and the Trustee, upon receipt of such deposit, shall
release or cause to be released to the purchaser of such Home Equity Loan the
related Mortgage File and shall execute and deliver such instruments of
transfer or assignment prepared by the purchaser of such Home Equity Loan, in
each case without recourse, as shall be necessary to vest in the purchaser of
such Home Equity Loan any Home Equity Loan released pursuant hereto and the
purchaser of such Home Equity Loan shall succeed to all the Trustee's right,
title and interest in and to such Home Equity Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The purchaser of such Home Equity Loan shall thereupon own
such Home Equity Loan, and all security and documents, free of any further
obligation to the Trustee, the Certificate Insurer or the Certificateholders
with respect thereto.
Notwithstanding the foregoing, unless the Certificate Insurer
consents, the Master Servicer may only exercise its option pursuant to this
Section 3.16 with respect to the Home Equity Loan or Home Equity Loans that
have been delinquent for the longest period at the time of such repurchase.
Any request by the Master Servicer to the Certificate Insurer for consent to
repurchase Home
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Equity Loans that are not the most delinquent shall be accompanied by a
description of the Home Equity Loans that have been delinquent longer than the
Home Equity Loan or Home Equity Loans which the Master Servicer proposes to
repurchase. If the Certificate Insurer fails to respond to such request within
10 Business Days after receipt thereof, the Master Servicer may repurchase the
Home Equity Loan or Home Equity Loans proposed to be repurchased without the
consent of, or any further action by, the Certificate Insurer.
Section 3.17. Superior Liens. If required in order to receive
notice, the Master Servicer shall file (or cause to be filed) a request for
notice of any action by a superior lienholder under a First Lien for the
protection of the Trustee's interest, where permitted by local law and whenever
applicable state law does not require that a junior lienholder be named as a
party defendant in foreclosure proceedings in order to foreclose such junior
lienholder's equity of redemption.
If the Master Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Master Servicer shall take,
on behalf of the Trust, actions in accordance with the Servicer's policies and
procedures to protect the interests of the Certificateholders and the
Certificate Insurer, and/or to preserve the security of the related Home Equity
Loan, subject to the application of the REMIC Provisions in accordance with the
terms of this Agreement. The Master Servicer shall immediately notify the
Trustee and the Certificate Insurer of any such action or circumstances. The
Master Servicer shall advance the necessary funds to cure the default or
reinstate the superior lien, if such advance is in the best interests of the
Certificate Insurer and the Certificateholders in accordance with the servicing
standards in Section 3.01. The Master Servicer shall not make such an advance
except to the extent that it determines in its reasonable good faith judgment
that the advance would be recoverable from Liquidation Proceeds on the related
Home Equity Loan and in no event in an amount that is greater than the
Principal Balance of the related Home Equity Loan, except with the consent of
the Certificate Insurer, which consent shall not be unreasonably withheld. The
Master Servicer shall thereafter take such action as is necessary to recover
the amount so advanced. Any expenses incurred by the Master Servicer pursuant
to this Section 3.17 shall constitute Servicing Advances.
Section 3.18. Assumption Agreements. When a Mortgaged Property has
been or is about to be conveyed by the Mortgagor, the Master Servicer shall, to
the extent it has knowledge of such conveyance or prospective conveyance,
exercise its right to accelerate the maturity of the related Home Equity Loan
under any "due-on-sale" clause contained in the related Mortgage or Mortgage
Note; provided, however, that the Master Servicer shall not exercise any such
right if the "due-on-sale" clause, in the reasonable belief of the Master
Servicer, is not enforceable under applicable law. In such event, the Master
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 shall become liable under the Mortgage Note and, unless
prohibited by applicable law, the Mortgagor shall remain liable thereon. The
Master Servicer, in accordance with accepted Home
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Equity Loan servicing standards for Home Equity Loans similar to the Home
Equity Loans, is also authorized to enter into a substitution of liability
whereby such person is substituted as mortgagor and becomes liable under the
Mortgage Note. The Master Servicer shall notify the Trustee and the
Certificate Insurer that any such substitution or assumption agreement has been
completed by forwarding to the Trustee the original of such substitution or
assumption agreement and a duplicate thereof to the Certificate Insurer, which
original shall be added by the Trustee to the related Mortgage File and shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. In
connection with any assumption or substitution agreement entered into pursuant
to this Section 3.18, the Master Servicer shall not change the Loan Rate or the
Monthly Payment, defer or forgive the payment of principal or interest, reduce
the outstanding principal amount or extend the final maturity date on such Home
Equity Loan.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master 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 Master
Servicer may be restricted by law from preventing, for any reason whatsoever.
Section 3.19. Reserved.
ARTICLE IV
Certificate Insurance Policy
Section 4.01. Certificate Insurance Policy. As soon as possible, and
in no event later than _______, New York time, on the third Business Day
immediately preceding each Distribution Date, the Trustee shall determine the
amount of Available Funds for such Distribution Date minus the amount of any
Premium Amount and any Trustee Fee to be paid on such Distribution Date.
If for any Distribution Date a Deficiency Amount exists, the Trustee
shall complete a notice in the form set forth as Exhibit A to the Certificate
Insurance Policy (the "Notice") and shall submit such Notice to the Fiscal
Agent no later than _________, New York time, on the second Business Day
preceding such Distribution Date. The Notice shall constitute a claim for an
Insured Payment pursuant to the Certificate Insurance Policy for an amount
equal to such excess. Upon receipt of the Insured Payment, at or prior to the
latest time payments of the Insured Payment are to be made by the Certificate
Insurer pursuant to the Certificate Insurance Policy, on behalf of the Class A
Certificateholders, the Trustee shall deposit such Insured Payments in the
Distribution Account and shall distribute such Insured Payments only in
accordance with Sections 5.01(a)(i)(2) and (3).
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The Trustee shall receive, as attorney-in-fact of each Holder of a
Class A Certificate, any Insured Payment from the Certificate Insurer and
disburse the same to each Holder of a Class A Certificate in accordance with
the provisions of Article V. Insured Payments disbursed by the Trustee from
proceeds of the 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 Certificate, and the Certificate Insurer shall become
the owner of such unpaid amounts due from the Trust in respect of such Insured
Payments as the deemed assignee of such Holder and shall be entitled to receive
the Reimbursement Amount pursuant to Sections 5.01(a)(i)(4) and 5.01(a)(ii)(3).
The Trustee hereby agrees on behalf of each Holder of a Class A Certificate for
the benefit of the Certificate Insurer that it and they recognize that to the
extent the Certificate Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the Class A
Certificateholders, the Certificate Insurer will be entitled to receive the
Reimbursement Amount pursuant to Sections 5.01(a)(i)(3) and 5.01(a)(ii)(3).
It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any
Distribution Date for amounts previously paid by it unless on such Distribution
Date the Class A Certificateholders shall also have received the full amount of
the Insured Payment for such Distribution Date.
Section 4.02. Claims Upon the Certificate Insurance Policy. (a) The
Trustee shall comply with the provisions of the Certificate Insurance Policy
with respect to claims upon the Certificate Insurance Policy.
(b) The Trustee shall keep a complete and accurate record
of the amount of interest and principal paid in respect of any Class A
Certificate from moneys received under the Certificate Insurance Policy. The
Certificate Insurer shall have the right to inspect such records at reasonable
times during normal business hours upon one Business Day's prior written notice
to the Trustee.
(c) The Trustee shall promptly notify the Certificate
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Trustee has actual knowledge, seeking the avoidance
as a preferential transfer under the Bankruptcy Code (a "Preference Claim") of
any distribution made with respect to the Class A Certificates. Each
Certificateholder of Class A Certificates, by its purchase of Class A
Certificates, the Master Servicer, the Seller, the Representative, the
Originators and the Trustee hereby agree that the Certificate Insurer (so long
as no Certificate Insurer Default exists) 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, (i)
the direction of any appeal of any order relating to such Preference Claim and
(ii) the posting of any surety, supersedes or performance bond pending any such
appeal.
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ARTICLE V
Payments and Statements to Certificateholders; Rights of
Certificateholders
Section 5.01. Distributions. (a) On each Distribution Date, the
Trustee shall withdraw from the Distribution Account the Available Funds and
make distributions thereof as described below:
(i) With respect to the Class A Certificates, the
Available Funds with respect to the Class A Certificates in the
following order of priority:
(1) to the Trustee, the Trustee Fee for such
Distribution Date and to the Certificate Insurer, the Premium
Amount for such Distribution Date;
(2) concurrently to the Holders of the Class A-1,
Class A-2, Class A-3 and Class A-4 Certificates, an amount
equal to the respective Class Interest Distribution for such
Distribution Date;
(3) the Class A Principal Distribution, in the
following order of priority:
(A) first, to the Holders of the Class
A-4 Certificates, the Class A-4 Lockout Distribution
Amount;
(B) second, sequentially, to the Holders
of the Class A-1, Class A-2 and Class A-3
Certificates, in that order, until the related Class
Principal Balance of each such Class is reduced to
zero; and
(C) third, to the Holders of the Class
A-4 Certificates until the related Class Principal
Balance is reduced to zero; and
(4) to the Certificate Insurer, the amount owing
to the Certificate Insurer under the Insurance Agreement for
reimbursement for draws made on the Policy.
(ii) After making the distributions referred to in clause
(i) above, the Trustee shall make distributions in the following order
of priority, to the extent of the balance of the Available Funds:
(1) to the Master Servicer, the amount of any
accrued and unpaid Servicing Fee;
(2) to the Master Servicer, the amount of
Nonrecoverable Advances not previously reimbursed and any
amounts reimbursable to the Master Servicer pursuant to
Section 7.03 hereof;
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(3) to the Certificate Insurer, any Reimbursement
Amount; and
(4) to the Class R Certificateholders, the
balance, if any.
On any Distribution Date as to which a Certificate Insurer Default has
occurred and is continuing the amount to be distributed on the Class A
Certificates pursuant to clause (a)(i) above shall be distributed pro rata on
each such Class of Class A Certificates based on the Class Principal Balance of
each such Class immediately prior to such Distribution Date.
(b) Distribution of Insured Payments. With respect to
any Distribution Date, in the event of an Insured Payment, the Trustee shall
make such payments from the amount drawn under the Certificate Insurance Policy
for such Distribution Date pursuant to Section 4.01. Any Insured Payment not
required to make distributions pursuant to clauses (i)(2) and (i)(3) of Section
5.01(a) shall be returned to the Certificate Insurer.
(c) Method of Distribution. The Trustee shall make
distributions in respect of a Distribution Date to each Certificateholder of
record on the related Record Date (other than as provided in Section 10.01
respecting the final distribution), in the case of Class A Certificateholders,
by check or money order mailed to such Certificateholder at the address
appearing in the Certificate Register, or, upon written request by a Class A
Certificateholder delivered to the Trustee at least five Business Days prior to
such Record Date, by wire transfer (but only if such Class A Certificateholder
is the Depository or such Class A Certificateholder owns of record one or more
Class A Certificates aggregating at least $1,000,000 Original Class Certificate
Principal Balance), and, in the case of Holders of Residual Certificates, by
wire transfer. Distributions among Certificateholders shall be made in
proportion to the Percentage Interests evidenced by the Certificates held by
such Certificateholders.
(d) Distributions on Book-Entry Certificates. Each
distribution with respect to a Book-Entry Certificate shall be paid to the
Depository, which shall credit the amount of such distribution to the accounts
of its Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing
funds to the Certificate Owners that it represents. All such credits and
disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Certificates. None of the Trustee, the Paying Agent, the Certificate
Registrar, the Seller, the Master Servicer, the Representative or the
Originator shall have any responsibility therefor except as otherwise provided
by applicable law.
[Section 5.02. Compensating Interest. Not later than the
Determination Date, the Master Servicer shall remit to the Trustee for deposit
to the Collection Account an amount equal to the lesser of (A) the aggregate of
the Prepayment Interest Shortfalls for the related Distribution Date
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resulting from Principal Prepayments during the related Due Period and (B) its
aggregate Servicing Fees received in the related Due Period. The Master
Servicer shall not have the right to reimbursement for any amounts deposited to
the Collection Account pursuant to this Section 5.02.]
Section 5.03. Statements. (a) Not later than 12:00 noon, __________
time, on the fifth Business Day prior to each Distribution Date, the Master
Servicer shall deliver to the Trustee by electronic modem a computer file
containing the information called for by clauses (i) through (xxi) below as of
the end of the preceding Due Period and such other information as the Trustee
shall reasonably require. Not later than 12:00 noon, __________ time, on each
Determination Date, the Trustee shall deliver to the Master Servicer, the
Seller, the Representative and to the Certificate Insurer, by telecopy, with a
hard copy thereof to be delivered on the succeeding Distribution Date, a
confirmation of the items in clause (i) below. Not later than one Business Day
prior to each Distribution Date the Trustee shall deliver a statement (the
"Trustee's Remittance Report") containing the information set forth below with
respect to such Distribution Date, which information shall be based upon the
information furnished by the Master Servicer upon which the Trustee shall
conclusively rely without independent verification or calculation thereof:
(i) The Available Funds for the related Distribution
Date;
(ii) The Class Principal Balance of each Class of Class A
Certificates and the Aggregate Class A Principal Balance as reported
in the prior Trustee's Remittance Report pursuant to subclause (xi)
below, or, in the case of the first Determination Date, the Original
Class Principal Balance of each Class and the Cut-Off Date Pool
Principal Balance;
(iii) The number and Principal Balances of all Home Equity
Loans that were the subject of Principal Prepayments during the Due
Period;
(iv) The amount of all Curtailments that were received
during the Due Period;
(v) The principal portion of all Monthly Payments
received during the Due Period;
(vi) The interest portion of all Monthly Payments received
on the Home Equity Loans during the Due Period;
(vii) The amount of the Monthly Advances and the
Compensating Interest payment to be made on the Determination Date;
(viii) The Class A Principal Distribution, the portion
thereof to be distributed on each Class of Class A Certificates then
entitled to distributions of principal, and the Class Interest
Distribution to be distributed on each Class of Class A Certificates;
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(ix) The amount of the Insured Payments, if any, to be
made on the Distribution Date;
(x) The amount to be distributed to the Class R
Certificateholders for the Distribution Date;
(xi) The Class Principal Balance of each Class of Class A
Certificates and the Aggregate Class A Principal Balance after giving
effect to the distribution to be made on the Distribution Date;
(xii) The weighted average remaining term to maturity of
the Home Equity Loans and the weighted average Loan Rate;
(xiii) The Servicing Fee and the Premium Amount and
Reimbursement Amount to be paid to the Certificate Insurer pursuant to
Section 5.01;
(xiv) The amount of all payments or reimbursements to the
Master Servicer pursuant to Sections 3.03(ii) and (vi);
(xv) The O/C Amount and the Specified O/C Amount for such
Distribution Date;
(xvi) The amounts which are reimbursable to the Master
Servicer or the Seller, as appropriate, pursuant to Section
5.01(a)(ii)(2) and the amount paid to Class R Certificateholders
pursuant to Section 5.01(a)(ii)(4);
(xvii) The number of Home Equity Loans outstanding at the
beginning and at the end of the related Due Period;
(xviii) The amount of Liquidation Loan Losses experienced
during the preceding Due Period and the Loan Losses and the Cumulative
Net Losses as a percentage of the Cut-Off Date Pool Principal Balance;
and
(xix) As of the end of the preceding calendar month, the
number and Principal Balance of Home Equity Loans which are 30-59 days
delinquent; the number and Principal Balance of Home Equity Loans
which are 60-89 days delinquent; the number and Principal Balance of
Home Equity Loans which are more than 90 days delinquent; the number
and Principal Balance of Home Equity Loans which are in foreclosure;
and the number and Principal Balance of Home Equity Loans which are
REO Property.
The Trustee shall forward such report to the Master Servicer, the
Seller, the Certificate Insurer, the Representative, the Certificateholders,
the Rating Agencies, [Bloomberg (at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ____________) and [Intex Solutions (at 35
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▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ______________)] on
the Distribution Date; provided, however that the Trustee shall remove the
Premium Amount to be paid the Certificate Insurer from clause (xiii) of such
report prior to submission of the report to [Bloomberg and Intex Solutions].
The Trustee may fully rely upon and shall have no liability with respect to
information provided by the Master Servicer. The Master Servicer shall
calculate all items in clauses (i) - (xix) above.
To the extent that there are inconsistencies between the telecopy of
the Trustee's Remittance Report and the hard copy thereof, the Master Servicer
may rely upon the latter.
In the case of information furnished pursuant to subclauses (ii), (xi)
and (xvi) above, the amounts shall be expressed in a separate section of the
report as a dollar amount for each Class for each $1,000 original dollar amount
as of the related Cut-Off Date.
(b) Within a reasonable period of time after the end of
each calendar year, the Trustee shall furnish to each Person who at any time
during the calendar year was a Holder of a Class A Certificate, if requested in
writing by such Person, such information as is reasonably necessary to provide
to such Person a statement containing the information set forth in subclauses
(vii) and (xiii) above, aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished by the
Trustee to Certificateholders pursuant to any requirements of the Code as are
in force from time to time.
(c) On each Distribution Date, the Trustee shall forward
to the Class R Certificateholders a copy of the reports forwarded to the
Holders of the Class A Certificates in respect of such Distribution Date and a
statement setting forth the amounts actually distributed to the Class R
Certificateholders on such Distribution Date together with such other
information as the Trustee deems necessary or appropriate.
(d) Within a reasonable period of time after the end of
each calendar year, the Trustee shall deliver to each Person who at any time
during the calendar year was a Class R Certificateholder, if requested in
writing by such Person, such information as is reasonably necessary to provide
to such Person a statement containing the information provided pursuant to the
previous paragraph aggregated for such calendar year or applicable portion
thereof during which such Person was a Class R Certificateholder. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be prepared and furnished to
Certificateholders by the Trustee pursuant to any requirements of the Code as
from time to time in force.
(e) The Master Servicer and the Trustee shall furnish to
each Certificateholder and to the Certificate Insurer (if requested in
writing), during the term of this Agreement, such
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periodic, special or other reports or information, whether or not provided for
herein, as shall be necessary, reasonable or appropriate with respect to the
Certificateholder 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 (if requested in writing) as the Certificateholder or the
Certificate Insurer, as the case may be, may reasonably require; provided that
the Master Servicer and the Trustee shall be entitled to be reimbursed by such
Certificateholder or the Certificate Insurer, as the case may be, for their
respective fees and actual expenses associated with providing such reports, if
such reports are not generally produced in the ordinary course of their
respective businesses or readily obtainable.
(f) Reports and computer diskettes or files furnished by
the Master Servicer pursuant to this Agreement shall be deemed confidential and
of a proprietary nature, and shall not be copied or distributed except to the
extent required by law or for the internal use of the Certificate Insurer and
its counsel or to the Rating Agencies, the Seller, Representative or any
Originator, the Certificate Insurer's reinsurers, parent, regulators, liquidity
providers and auditors, provided that the Certificate Insurer shall attempt in
good faith to cause such additional Persons to acknowledge in writing the
foregoing restrictions, and in connection with the purposes and requirements of
this Agreement. No Person entitled to receive copies of such reports or
diskettes or files or lists of Certificateholders shall use the information
therein for the purpose of soliciting the customers of the Representative or
any Originator or for any other purpose except as set forth in this Agreement.
Section 5.04. Distribution Account. The Trustee shall establish with
_________________, a separate trust account (the "Distribution Account") titled
"[Name of Trustee], as Trustee, in trust for the registered holders of Avco
Financial Home Equity Loan Asset-Backed Certificates, Series 199_-_." The
Distribution Account shall be an Eligible Account. The Trustee shall deposit
any amounts representing payments on and any collections in respect of the Home
Equity Loans received by it immediately following receipt thereof, including,
without limitation, all amounts withdrawn by the Master Servicer from the
Collection Account pursuant to Section 3.03 for deposit to the Distribution
Account. Amounts on deposit in the Distribution Account may be invested in
Eligible Investments pursuant to Section 5.05.
Section 5.05. Investment of Accounts. (a) So long as no Event of
Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account held by the Trustee
shall be invested and reinvested by the Trustee, as directed in writing by the
Master Servicer, in one or more Eligible Investments bearing interest or sold
at a discount. If an Event of Default shall have occurred and be continuing or
if the Master Servicer does not provide investment directions, the Trustee
shall invest all Accounts in Eligible Investments described in paragraph (vi)
of the definition of Eligible Investments. No such investment in any Account
shall mature later than the Business Day immediately preceding the next
Distribution Date (except that (i) if such Eligible Investment is an obligation
of the Trustee, then such Eligible Investment shall mature not later than such
Distribution Date and (ii) any other date may be approved by the Rating
Agencies and the Certificate Insurer).
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(b) If any amounts are needed for disbursement from any
Account held by the Trustee and sufficient uninvested funds are not available
to make such disbursement, the Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. The
Trustee shall not be liable for any investment loss or other charge resulting
therefrom unless the Trustee's failure to perform in accordance with this
Section 5.05 is the cause of such loss or charge.
(c) Subject to Section 9.01, 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 investment loss on any Eligible Investment included
therein (except to the extent that the Trustee is the obligor and has defaulted
thereon or as provided in subsection (b) of this Section 5.05).
(d) The Trustee shall invest and reinvest funds in the
Accounts held by the Trustee, to the fullest extent practicable, in such manner
as the Master Servicer shall from time to time direct as set forth in Section
5.05(a), but only in one or more Eligible Investments.
(e) So long as no Event of Default shall have occurred
and be continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in the Collection Account and the Distribution
Account shall be for the benefit of the Master Servicer as servicing
compensation (in addition to the Servicing Fee), and shall be subject to
withdrawal on or before the first Business Day of the month following the month
in which such income or gain is received. The Master Servicer shall deposit in
the Collection Account or the Distribution Account, as the case may be, the
amount of any loss incurred in respect of any Eligible Investment held therein
which is in excess of the income and gain thereon immediately upon realization
of such loss, without any right to reimbursement therefore from its own funds.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. Each of the Class A Certificates and
the Class R Certificates shall be substantially in the forms set forth in
Exhibits A and B, respectively, and shall, on original issue, be executed,
authenticated and delivered by the Trustee to or upon the order of the Seller
concurrently with the sale and assignment to the Trustee of the Trust. Each
Class of Class A Certificates shall be initially evidenced by one or more
certificates representing a fraction of the Original Class A Certificate
Principal Balance and shall be held in minimum dollar denominations of $25,000
and integral multiples of $1,000 in excess thereof, except that one of each of
the Class A Certificate may be in a different denomination so that the sum of
the denominations of all outstanding Class A Certificates shall equal the
Original Class A Certificate Principal Balance.
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The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by a Responsible Officer. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless such Certificate shall have been manually authenticated by the
Trustee substantially in the form provided for herein, and such authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. Subject to
Section 6.02(c), the Class A Certificates shall be Book-Entry Certificates.
The Class R Certificates shall not be Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at the Corporate Trust
Office a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar
for the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, and, in the case of the Class R
Certificates, upon satisfaction of the conditions set forth below, the Trustee
on behalf of the Trust shall execute, authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Certificates of the
same aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute and authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the Trustee or the Certificate
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the
Book-Entry Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to another
Depository; (ii) the Depository shall maintain book-entry records with respect
to the Certificate Owners and with respect to ownership and transfers of such
Certificates; (iii) ownership and transfers of registration of such
Certificates on the books of the Depository shall be governed by applicable
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rules established by the Depository; (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall deal with the Depository as representative of the Certificate
Owners of the Certificates for purposes of exercising the rights of Holders
under this Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Trustee may rely and
shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and
Persons shown on the books of such indirect participating firms as direct or
indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates
shall be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners that it represents or of brokerage firms for which it acts
as agent in accordance with the Depository's normal procedures. The parties
hereto are hereby authorized to execute a Letter of Representations with the
Depository or take such other action as may be necessary or desirable to
register a Book-Entry Certificate to the Depository. In the event of any
conflict between the terms of any such Letter of Representation and this
Agreement the terms of this Agreement shall control.
(c) If (i)(x) 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 Depository and (y) the Trustee or
the Seller is unable to locate a qualified successor, (i) the Seller, at its
sole option, with the consent of the Trustee, elects to terminate the
book-entry system through the Depository or (iii) after the occurrence of an
Event of Default, the Certificate Owners of each Class of Class A Certificates
representing Percentage Interests aggregating not less than 51% advises the
Trustee and Depository through the Financial Intermediaries and the Depository
Participants in writing that the continuation of a book-entry system through
the Depository to the exclusion of definitive, fully registered certificates
(the "Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners. Upon surrender to the Certificate
Registrar of each Class of Class A Certificates by the Depository, accompanied
by registration instructions from the Depository for registration, the Trustee
shall, at the Seller's expense, execute and authenticate the Definitive
Certificates. Neither the Seller nor the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Certificate Registrar, the Master Servicer, any
Paying Agent and the Seller shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
(d) No transfer, sale, pledge or other disposition of a
Class R Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, other than the
transfer of
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the Tax Matters Person Residual Interest to the Trustee (i) unless such
transfer is made in reliance upon Rule 144A under the 1933 Act, the Trustee and
the Seller shall require a written Opinion of Counsel (which may be in-house
counsel) acceptable to and in form and substance reasonably satisfactory to the
Trustee and the Seller that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the 1933 Act
or is being made pursuant to the 1933 Act, which Opinion of Counsel shall not
be an expense of the Trustee or the Seller or (ii) the Trustee shall require
the transferor to execute a transferor certificate (in substantially the form
attached hereto as Exhibit H) and the transferee to execute an investment
letter (in substantially the form of either Exhibit J, Exhibit K or Exhibit L
attached hereto) acceptable to and in form and substance reasonably
satisfactory to the Seller and the Trustee certifying to the Seller and the
Trustee the facts surrounding such transfer, which investment letter shall not
be an expense of the Trustee or the Seller. The Holder of a Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Seller 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.
No transfer of a Class R Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
J, Exhibit K or Exhibit L, as appropriate), to the effect that such transferee
is not an employee benefit plan or arrangement subject to Section 406 of ERISA
or a plan subject to Section 4975 of the Code, nor a person acting on behalf of
any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such transfer or (ii) if the purchaser is an insurance
company, a representation that the purchaser is an insurance company which is
purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60") and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Class R Certificate presented for registration in the name of an
employee benefit plan subject to ERISA or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets,
an Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel
shall not be an expense of either the Trustee or the Trust, addressed to the
Trustee, to the effect that the purchase or holding of such Class R Certificate
will not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. Notwithstanding anything
else to the contrary herein, any purported transfer of a Class R Certificate to
or on behalf of an employee benefit plan subject to ERISA or to the Code
without the delivery to the Trustee of an Opinion of Counsel satisfactory to
the Trustee as described above shall be void and of no effect.
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Each Person who has or who acquires any Ownership Interest in
a Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Seller or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (iv)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Class R Certificate are expressly subject
to the following provisions:
(i) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall be a Permitted Transferee and
shall promptly notify the Trustee of any change or impending change in
its status as a Permitted Transferee.
(ii) In connection with any proposed transfer of any
Ownership Interest in a Class R Certificate, the Trustee shall as a
condition to registration of the transfer, require delivery to it, in
form and substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G from
the proposed transferee to the effect that such transferee is
a Permitted Transferee and that it is not acquiring its
Ownership Interest in the Class R Certificate that is the
subject of the proposed transfer as a nominee, trustee or
agent for any Person who is not a Permitted Transferee; and
(B) a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by and
to abide by the transfer restrictions applicable to the Class
R Certificates.
(iii) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 6.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee
shall, in violation of the provisions of this Section 6.02, become a
Holder of a Class R Certificate, then the prior Holder of such Class R
Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Class R Certificate was not in
fact permitted by this Section 6.02, be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Class R Certificate. The Trustee shall be under no liability to
any Person for any registration of transfer of a Class R Certificate
that is in fact not permitted by this Section 6.02 or for making any
distributions due on such Class R Certificate to the Holder thereof or
taking any other action with respect to such Holder under the
provisions of the Agreement so long as the Trustee received the
documents specified in clause (ii). The Trustee shall be entitled to
recover from any Holder of a Class R Certificate that was in fact not
a Permitted Transferee at the time such distributions were made all
distributions made on such Class R Certificate. Any such
distributions so
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recovered by the Trustee shall be distributed and delivered by the
Trustee to the prior Holder of such Class R Certificate that is a
Permitted Transferee.
(iv) If any Person other than a Permitted Transferee
acquires any Ownership Interest in a Class R Certificate in violation
of the restrictions in this Section 6.02, then the Trustee shall have
the right but not the obligation, without notice to the Holder of such
Class R Certificate or any other Person having an Ownership Interest
therein, to notify the Seller to arrange for the sale of such Class R
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Seller or its affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of such Class R
Certificate that is a Permitted Transferee, except that in the event
that the Trustee determines that the Holder of such Class R
Certificate may be liable for any amount due under this Section 6.02
or any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (iv) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Class R
Certificate as a result of its exercise of such discretion.
(v) If any Person other than a Permitted Transferee
acquires any Ownership Interest in a Class R Certificate in violation
of the restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Seller will provide to the
Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply (and the
applicable portions of the legend on a Class R Certificate may be deleted) to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee,
(i) written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion
of Counsel to the effect that such removal will not cause the REMIC created
hereunder to fail to qualify as a REMIC.
(e) No service charge shall be made for any registration
of transfer or exchange of Certificates of any Class, but the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be canceled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
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Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(i) any mutilated Certificate is surrendered to the Certificate Registrar or
the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Seller and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, 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
tenor and Percentage Interest. Upon the issuance of any new Certificate under
this Section 6.03, the Trustee or the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee and the Certificate Registrar) in connection
therewith. Any duplicate Certificate issued pursuant to this Section 6.03,
shall constitute complete and indefeasible evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Master Servicer, the Seller, the
Trustee, the Certificate Registrar, the Certificate Insurer, any Paying Agent
and any agent of the Master Servicer, the Seller, the Trustee, the Certificate
Insurer, any Paying Agent or the Certificate Registrar may treat the Person,
including a Depository, in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant
to Section 5.01 and for all other purposes whatsoever, and none of the Master
Servicer, the Trustee, the Certificate Registrar nor any agent of any of them
shall be affected by notice to the contrary; provided, however, that to the
extent the Certificate Insurer makes an Insured Payment with respect to a
Certificate it shall be deemed to be the owner of such Certificate to the
extent provided in Section 4.01.
Section 6.05. Appointment of Paying Agent. (a) The Paying Agent
shall make distributions to Certificateholders from the Distribution Account
pursuant to Section 5.01 and shall report the amounts of such distributions to
the Trustee. The duties of the Paying Agent may include the obligation (i) to
withdraw funds from the Collection Account pursuant to Section 3.03 and for the
purpose of making the distributions referred to above and (ii) to distribute
statements and provide information to Certificateholders as required hereunder.
The Paying Agent hereunder shall at all times be a corporation duly
incorporated and validly existing under the laws of the United States of
America or any state thereof, authorized under such laws to exercise corporate
trust powers and subject to supervision or examination by federal or state
authorities. The Paying Agent shall initially be the Trustee. The Trustee may
appoint a successor to act as Paying Agent, which appointment shall be
reasonably satisfactory to the Seller.
(b) The Trustee shall cause the Paying Agent (if other
than the Trustee) to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee that such Paying Agent shall
hold all sums, if any, held by it for payment to the Certificateholders in
trust for the benefit of the Certificateholders entitled thereto until such
sums
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shall be paid to such Certificateholders and shall agree that it shall comply
with all requirements of the Code regarding the withholding of payments in
respect of Federal income taxes due from Certificate Owners and otherwise
comply with the provisions of this Agreement applicable to it.
ARTICLE VII
The Seller, the Master Servicer and the Representative
Section 7.01. Liability of the Seller, the Master Servicer and the
Representative. The Seller, the Master Servicer and the Representative shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Seller, the Master Servicer or
the Representative, as the case may be, herein.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Master Servicer or the Representative. Any
corporation into which the Seller, the Master Servicer or the Representative
may be merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Seller, the Master Servicer or the
Representative shall be a party, or any corporation succeeding to the business
of the Seller, the Master Servicer or the Representative, shall be the
successor of the Seller, the Master Servicer or the Representative, as the case
may be, hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor Master Servicer shall
satisfy all the requirements of Section 8.02 with respect to the qualifications
of a successor Master Servicer.
Section 7.03. Limitation on Liability of the Master Servicer and
Others. Neither the Master Servicer nor any of the directors or officers or
employees or agents of the Master Servicer shall be under any liability to the
Trust or the Certificateholders for any action taken or for refraining from the
taking of any action by the Master Servicer 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
which would otherwise be imposed by reason of its willful misfeasance, bad
faith or negligence in the performance of duties of the Master Servicer or by
reason of its reckless disregard of its obligations and duties of the Master
Servicer hereunder; provided, further, that this provision shall not be
construed to entitle the Master Servicer to indemnity in the event that amounts
advanced by the Master Servicer to retire any senior lien exceed Net
Liquidation Proceeds realized with respect to the related Home Equity Loan.
The preceding sentence shall not limit the obligations of the Master Servicer
pursuant to Section 9.05. The Master Servicer and any director or officer or
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. The Master Servicer and any director
or officer or employee or agent of the Master Servicer shall be indemnified by
the Trust and held harmless against any loss, liability or expense incurred in
connection with any legal action relating to this
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Agreement or the Certificates, other than any loss, liability or expense
related to any specific Home Equity Loan or Home Equity Loans (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) and any loss, liability or expense incurred by reason of its
willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of its reckless disregard of obligations and duties
hereunder and such amounts shall be payable only pursuant to Section
5.01(a)(ii)(2). The Master Servicer may with the consent of the Certificate
Insurer undertake any such action which it may deem necessary or desirable in
respect of this Agreement, and the rights and duties of the parties hereto and
the interests of the Certificateholders hereunder. In such event, the
reasonable legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust and the Master
Servicer shall be entitled to be reimbursed therefor only pursuant to Section
5.01(a)(ii)(2). The Master Servicer's right to indemnity or reimbursement
pursuant to this Section 7.03 shall survive any resignation or termination of
the Master Servicer pursuant to Section 7.04 or 8.01 with respect to any
losses, expenses, costs or liabilities arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation or
termination). This paragraph shall apply to the Master Servicer solely in its
capacity as Master Servicer hereunder and in no other capacities.
Section 7.04. Master Servicer Not to Resign. Subject to the
provisions of Section 7.02, the Master Servicer shall not resign from the
obligations and duties hereby imposed on it except (i) upon determination that
the performance of its obligations or 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 or its subsidiaries
or Affiliates, the other activities of the Master Servicer so causing such a
conflict being of a type and nature carried on by the Master Servicer or its
subsidiaries or Affiliates at the date of this Agreement or (ii) upon
satisfaction of each of the following conditions: (a) the Master Servicer has
proposed a successor master servicer to the Trustee in writing and such
proposed successor master servicer is reasonably acceptable to the Trustee; (b)
each Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor master servicer stating that the proposed
appointment of such successor master servicer as Master Servicer hereunder will
not result in the reduction or withdrawal of the then current rating of the
Class A Certificates without regard to the Certificate Insurance Policy; and
(c) such proposed successor master servicer is reasonably acceptable to the
Certificate Insurer and consented to by the Certificate Insurer, as evidenced
by a letter to the Trustee; provided, however, that no such resignation by the
Master Servicer shall become effective until such successor master servicer or,
in the case of (i) above, the Trustee shall have assumed the Master Servicer's
responsibilities and obligations hereunder or the Trustee shall have designated
a successor master servicer in accordance with Section 8.02. Any such
resignation shall not relieve the Master Servicer of responsibility for any of
the obligations specified in Sections 8.01 and 8.02 as obligations that survive
the resignation or termination of the Master Servicer. Any such determination
permitting the resignation of the Master Servicer pursuant to clause (i) above
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Trustee and the Certificate Insurer.
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Section 7.05. Delegation of Duties. In the ordinary course of
business, the Master Servicer at any time may delegate any of its duties
hereunder to any Person, including any of its Affiliates, who agrees to conduct
such duties in accordance with standards comparable to those set forth in
Section 3.01. Such delegation shall not relieve the Master Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 7.04. The Master
Servicer shall provide the Certificate Insurer and the Trustee with written
notice prior to the delegation of any of its duties to any Person other than
any of the Master Servicer's Affiliates or their respective successors and
assigns.
Section 7.06. Indemnification of the Trust. (a) The Master Servicer
shall indemnify and hold harmless the Trust and the Trustee from and against
any loss, liability, expense, damage or injury suffered or sustained by reason
of the Master Servicer's willful misfeasance, bad faith or negligence in the
performance of its activities in servicing or administering the Home Equity
Loans pursuant to this Agreement, including, but not limited to, any judgment,
award, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim related to the Master Servicer's misfeasance, bad faith or
negligence. Any such indemnification shall not be payable from the assets of
the Trust. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof.
(b) The Representative shall indemnify and hold harmless
the Trust and the Trustee from and against any loss, liability, expense, damage
or injury suffered or sustained by reason of the Representative's willful
misfeasance, bad faith or negligence in the performance of its activities
pursuant to this Agreement, including, but not limited to, any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim related to the Representative's misfeasance, bad faith or negligence.
Any such indemnification shall not be payable from the assets of the Trust.
The provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof.
The provisions of this Section 7.06 shall survive the termination of
this Agreement.
Section 7.07. Inspection. The Master Servicer shall (and shall
require any Sub-Servicer in the related Sub-Servicing Agreement to) afford the
Certificate Insurer, upon reasonable notice, during normal business hours,
access to all records maintained by the Master Servicer in respect of its
rights and obligations hereunder and access to officers of the Master Servicer
and each Sub-Servicer responsible for such obligations. Upon request, the
Master Servicer shall furnish to the Certificate Insurer the Master Servicer's
most recent publicly available financial statements and each Sub-Servicer's
most recent financial statements (annual or quarterly statements, as the case
may be) and such other information relating to their capacity to perform their
obligations under this Agreement as the Master Servicer or such Sub-Servicer
possesses.
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ARTICLE VIII
Default
Section 8.01. Events of Default (a) If any one of the following
events ("Events of Default") shall occur and be continuing:
(i) (A) The failure by the Master Servicer to make any
Monthly Advance; or (B) any other failure by the Master Servicer to
deposit in the Collection Account or the Distribution Account any
deposit required to be made under the terms of this Agreement which
continues unremedied for a period of three Business Days after the
date upon which payment was required to have been made; or
(ii) The failure by the Master Servicer to make any
required Servicing Advance which failure continues unremedied for a
period of 30 days, or the failure by the Master Servicer duly to
observe or perform, in any material respect, any other covenants,
obligations or agreements of the Master Servicer as set forth in this
Agreement, which failure continues unremedied for a period of 30 days,
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Master Servicer by
the Trustee or to the Master Servicer and the Trustee by any Holder
with Certificates evidencing Voting Interests of at least 25% or the
Certificate Insurer; or
(iii) The entry against the Master Servicer of a decree or
order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding up
or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 30 consecutive days;
or
(iv) The Master Servicer shall voluntarily go into
liquidation, consent to the appointment of a conservator or receiver
or liquidator or similar person in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of
or relating to the Master Servicer or of or relating to all or
substantially all of its property, or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises
for the appointment of a conservator, receiver, liquidator or similar
person 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 Master
Servicer and such decree or order shall have remained in force
undischarged, unbonded or unstayed for a period of 30 days; or the
Master Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
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applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations; or
(v) Any failure by the Master Servicer to pay when due
any amount payable by it under the Insurance Agreement which results
in a drawing under the Certificate Insurance Policy.
(b) then, and in each and every such case, so long as an
Event of Default shall not have been remedied, (x) with respect solely to
clause (i)(A) above, if such Monthly Advance is not made by 12:00 noon, New
York time, on the second Business Day preceding the applicable Distribution
Date, the Trustee, upon receipt of written notice or discovery by a Responsible
Officer of such failure, shall give immediate telephonic notice of such failure
to a Servicing Officer of the Master Servicer and to the Certificate Insurer
and the Trustee shall terminate all of the rights and obligations of the Master
Servicer under this Agreement and the Trustee, or a successor master servicer
appointed in accordance with Section 8.02, shall immediately make such Monthly
Advance and assume, pursuant to Section 8.02, the duties of a successor Master
Servicer and (y) in the case of (i)(B), (ii), (iii), (iv), [(v)] and (vi)
above, the Trustee shall, at the direction of the Certificate Insurer or the
Holders of each Class of Class A Certificates evidencing Voting Rights
aggregating not less than 51% (with the consent of the Certificate Insurer so
long as no Certificate Insurer Default shall have occurred and be continuing,
by notice then given in writing to the Master Servicer (and to the Trustee if
given by Holders of Certificates), terminate all of the rights and obligations
of the Master Servicer as master servicer under this Agreement. Any such
notice to the Master Servicer shall also be given to each Rating Agency, the
Seller and the Certificate Insurer. On or after the receipt by the Master
Servicer of such written notice, all authority and power of the Master Servicer
under this Agreement, whether with respect to the Certificates or the Home
Equity Loans or otherwise, shall pass to and be vested in the Trustee pursuant
to and under this Section 8.01; and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of each Home Equity Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Trustee in effecting the termination of the responsibilities and rights of the
Master Servicer hereunder, including, without limitation, the transfer to the
Trustee for the administration by it of all cash amounts that shall at the time
be held by the Master Servicer and to be deposited by it in the Collection
Account, or that have been deposited by the Master Servicer in the Collection
Account or thereafter received by the Master Servicer with respect to the Home
Equity Loans. All reasonable out-of-pocket costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the successor Master Servicer and amending this Agreement to reflect such
succession as Master Servicer pursuant to this Section 8.01 shall be paid by
the predecessor Master Servicer (or if the predecessor Master Servicer is the
Trustee, the initial Master Servicer) upon presentation of reasonable
documentation of such costs and expenses.
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Section 8.02. Trustee to Act; Appointment of Successor (a) On and
after the time the Master Servicer receives a notice of termination pursuant to
Section 8.01 or 7.04, the Trustee shall be the successor in all respects to the
Master Servicer in its capacity as master 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 Master
Servicer by the terms and provisions hereof arising on and after its
succession. As compensation therefor, the Trustee shall be entitled to such
compensation as the Master Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, (i) if
the Trustee is unwilling to act as successor Master Servicer or (ii) if the
Trustee is legally unable so to act, the Trustee shall appoint or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution, bank or other Home Equity Loan or home equity loan
servicer having a net worth of not less than [$25,000,000] as the successor to
the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder;
provided that any such successor Master Servicer shall be acceptable to the
Certificate Insurer, as evidenced by the Certificate Insurer's prior written
consent which consent shall not be unreasonably withheld and provided, further,
that the appointment of any such successor Master Servicer will not result in
the qualification, reduction or withdrawal of the ratings assigned to the Class
A Certificates by the Rating Agencies. Pending appointment of a successor to
the Master Servicer hereunder, unless the Trustee is prohibited by law from so
acting, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the successor shall be
entitled to receive compensation out of payments on the Home Equity Loans in an
amount equal to the compensation which the Master Servicer would otherwise have
received pursuant to Section 3.08 (or such lesser compensation as the Trustee
and such successor shall agree). The appointment of a successor Master
Servicer shall not affect any liability of the predecessor Master Servicer
which may have arisen under this Agreement prior to its termination as Master
Servicer to pay any deductible under an insurance policy pursuant to Section
3.05 or to indemnify the Trustee pursuant to Section 7.06), nor shall any
successor Master Servicer be liable for any acts or omissions of the
predecessor Master Servicer or for any breach by such Master Servicer of any of
its representations or warranties contained herein or in any related document
or agreement. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
(b) Any successor, including the Trustee, to the Master
Servicer as master servicer shall during the term of its service as master
servicer (i) continue to service and administer the Home Equity Loans for the
benefit of Certificateholders and the Certificate Insurer, (ii) maintain in
force a policy or policies of insurance covering errors and omissions in the
performance of its obligations as Master Servicer hereunder and a fidelity bond
in respect of its officers, employees and agents to the same extent as the
Master Servicer is so required pursuant to Section 3.12.
If an Event of Default of the type described in Section 8.01(a)(i)
(for purposes of this Section 8.02(b), such default shall be termed the failure
to make a "Remittance") occurs because the
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Master Servicer is the subject of a proceeding under the Bankruptcy Code and
the making of such Remittance is prohibited by Section 362 of the Bankruptcy
Code, the Trustee shall upon notice of such prohibition, regardless of whether
it has received or given a notice of termination under Section 8.01, advance,
the amount of such Remittance by depositing such amount in the Distribution
Account on the related Distribution Date. The Trustee shall be obligated to
make such advance only if (i) such advance, in the good faith judgment of the
Trustee, can reasonably be expected to be ultimately recoverable from funds
which are in the custody of the Master Servicer, a trustee in bankruptcy or a
federal bankruptcy court and should have been the subject of such Remittance
absent such prohibition (the "Stayed Funds") and (ii) the Trustee is not
prohibited by law from making such advance or obligating itself to do so. Upon
remittance of the Stayed Funds to the Trustee or the deposit thereof in the
Distribution Account by the Master Servicer, a trustee in bankruptcy or a
federal bankruptcy court, the Trustee may recover the amount so advanced,
without interest, by withdrawing such amount from the Distribution Account;
however, nothing in this Agreement shall be deemed to affect the Trustee's
rights to recover from the Master Servicer's own funds interest on any such
Stayed Funds. If the Trustee at any time makes an advance under this
Subsection which it later determines in its good faith judgment will not be
ultimately recoverable from the Stayed Funds with respect to which such advance
was made, the Trustee shall, upon certification of such nonrecoverability to
the Certificate Insurer, be entitled to reimburse itself (or direct the
successor Master Servicer to reimburse it) for such advance, without interest,
by withdrawing an amount equal to such advance from the Distribution Account.
Section 8.03. Waiver of Defaults. The Certificate Insurer or the
Majority Certificateholders with the consent of the Certificate Insurer may, on
behalf of all Certificateholders, waive any events permitting removal of the
Master Servicer as master servicer pursuant to this Article VIII, provided,
however, that the Majority Certificateholders may not waive a default in making
a required distribution on a Certificate without the consent of the Holder of
such Certificate. Upon any waiver of a past default, such default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereto
except to the extent expressly so waived. Notice of any such waiver shall be
given by the Trustee to the Rating Agencies.
Section 8.04. Rights of the Certificate Insurer to Exercise Rights of
Class A Certificateholders. By accepting its Certificate, each Class A
Certificateholder agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall be deemed to be the Certificateholders for all
purposes (other than with respect to payment on the Certificates) and shall
have the right to exercise all rights of the Class A Certificateholders under
this Agreement and under each Class of Class A Certificates without any further
consent of the Class A Certificateholders, including, without limitation:
(a) the right to require the Representative or the
applicable Originator to repurchase Home Equity Loans pursuant to Section 2.02
or 2.05;
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(b) the right to give notices of breach or to terminate
the rights and obligations of the Master Servicer as master servicer pursuant
to Section 8.01 and to consent to or direct waivers of Master Servicer defaults
pursuant to Section 8.03;
(c) the right to direct the actions of the Trustee during
the continuance of a Master Servicer default pursuant to Sections 8.01 and
8.02;
(d) the right to institute proceedings against the Master
Servicer pursuant to Section 8.01;
(e) the right to direct the Trustee to investigate
certain matters pursuant to Section 9.02;
(f) the right to remove the Trustee pursuant to Section
9.07;
(g) the right to direct foreclosures upon the failure of
the Master Servicer to do so in accordance with this Agreement; and
(h) any rights or remedies expressly given the Majority
Certificateholders.
In addition, each Certificateholder agrees that unless a Certificate Insurer
Default exists, the rights specifically enumerated in this Agreement may be
exercised by the Certificateholders only with the prior written consent of the
Certificate Insurer.
Section 8.05. Trustee to Act Solely with Consent of the Certificate
Insurer. Unless a Certificate Insurer Default exists, the Trustee shall not,
without the Certificate Insurer's consent or unless directed by the Certificate
Insurer:
(a) terminate the rights and obligations of the Master
Servicer as Master Servicer pursuant to Section 8.01;
(b) agree to any amendment pursuant to Article XI,
provided, however, that such consent shall not be unreasonably withheld; or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Section 8.04, 8.05 or 8.06 or any
requirement for the Certificate Insurer's consent for any period of time.
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Section 8.06. Home Equity Loans, Trust and Accounts Held for Benefit
of the Certificate Insurer. The Trustee shall hold the Trust and the Mortgage
Files for the benefit of the Certificateholders and the Certificate Insurer and
all references in this Agreement and in the Certificates "on behalf of" or to
the benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. The Trustee shall cooperate in all reasonable respects
with any reasonable request by the Certificate Insurer for action to preserve
or enforce the Certificate Insurer's rights or interests under this Agreement
and the Certificates unless, as stated in an Opinion of Counsel addressed to
the Trustee and the Certificate Insurer, such action is adverse to the
interests of the Certificateholders or diminishes the rights of the
Certificateholders or imposes additional burdens or restrictions on the
Certificateholders.
The Master Servicer hereby acknowledges and agrees that it shall
service the Home Equity Loans for the benefit of the Certificateholders and for
the benefit of the Certificate Insurer, and all references in this Agreement to
the benefit of or actions on behalf of the Certificateholders shall be deemed
to include the Certificate Insurer.
Section 8.07. Certificate Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of its rights, the provisions of
this Article VIII and all other provisions of this Agreement which (a) permit
the Certificate Insurer to exercise rights of the Certificateholders, (b)
restrict the ability of the Certificateholders, the Master Servicer, the
Representative or the Trustee to act without the consent or approval of the
Certificate Insurer, (c) provide that a particular act or thing must be
acceptable to the Certificate Insurer, (d) permit the Certificate Insurer to
direct (or otherwise to require) the actions of the Trustee, the Master
Servicer, the Representative or the Certificateholders, (e) provide that any
action or omission taken with the consent, approval or authorization of the
Certificate Insurer shall be authorized hereunder or shall not subject the
party taking or omitting to take such action to any liability hereunder or (f)
which have a similar effect, shall be of no further force and effect and the
Trustee shall administer the Trust and perform its obligations hereunder solely
for the benefit of the Holders of the Certificates; provided, however, that the
Certificate Insurer's rights shall be immediately reinstated following the cure
of such Certificate Insurer Default. Nothing in the foregoing sentence, nor
any action taken pursuant thereto or in compliance therewith, shall be deemed
to have released the Certificate Insurer from any obligation or liability it
may have to any party or to the Certificateholders hereunder, under any other
agreement, instrument or document (including, without limitation, the
Certificate Insurance Policy) or under applicable law.
Section 8.08. Notification to Certificateholders. Upon any
termination or appointment of a successor to the Master Servicer pursuant to
this Article VIII or Section 7.04, the Trustee shall give prompt written notice
thereof to the Certificateholders at their respective addresses appearing in
the Certificate Register, the Certificate Insurer and each Rating Agency.
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ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Default has
occurred (which has not been cured) of which a Responsible Officer has
knowledge, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to be in the form specified in this Agreement, on its face, the Trustee
shall take action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will, at the expense of the Master Servicer, provide notice thereof to the
Certificate Insurer and will, at the expense of the Master Servicer, which
expense shall be reasonable given the scope and nature of the required action,
take such further action as directed by the Certificate Insurer.
The Trustee may, in accordance with its duties hereunder, do all
things necessary and proper as may be required in connection with any secondary
mortgage licensing laws and similar requirements, including, but not limited
to, consenting to jurisdiction, and the appointment of agents for service of
process, in jurisdictions in which the Mortgaged Properties are located.
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 misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement;
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(ii) the Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the consent or direction of the
Certificate Insurer or in accordance with the direction of the Holders
of Class A Certificates evidencing Percentage Interests aggregating
not less than 51% (subject to the Certificate Insurer's prior written
consent) relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising or
omitting to exercise any trust or power conferred upon the Trustee,
under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of
any failure by the Master Servicer to comply with the obligations of
the Master Servicer referred to in clauses (i) and (ii) of Section
8.01 unless a Responsible Officer of the Trustee at the Corporate
Trust Office obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Master Servicer, the
Certificate Insurer or the Holders of Class A Certificates evidencing
Percentage Interests aggregating not less than 51%. This paragraph
shall not be construed to limit the effect of the first paragraph of
this Section 9.01.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
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 Master 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 Master Servicer in accordance
with the terms of this Agreement.
Section 9.02. Certain Matters Affecting the Trustee. (a) Except as
otherwise provided in Section 9.01:
(i) the Trustee may request and rely upon, and shall be
protected in acting or refraining from acting upon, any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and any written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect
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of any action taken or suffered or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the
Certificateholders or the Certificate Insurer, pursuant to the
provisions of this Agreement, unless such Certificateholders or the
Certificate Insurer shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; 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
any such act; nothing contained herein shall, however, relieve the
Trustee of the obligations, upon the occurrence of an Event of Default
(which has not been cured) of which a Responsible Officer has
knowledge, to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(iv) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) prior to the occurrence of an Event of Default and
after the curing of all Events of Default which may have occurred, 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, consent, order, approval, bond or
other paper or documents, unless requested in writing to do so by the
Certificate Insurer or by Holders of Certificates evidencing
Percentage Interests aggregating not less than 51% (subject to the
Certificate Insurer's prior written consent); provided, however, that
if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against
such cost, expense or liability as a condition to such proceeding.
The reasonable expense of every such examination shall be paid by the
Master Servicer or, if paid by the Trustee, shall be reimbursed by the
Master Servicer upon demand. Nothing in this clause (v) shall
derogate from the obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Mortgagors;
(vi) the Trustee shall not be accountable, shall have no
liability and makes no representation as to any acts or omissions
hereunder of the Master Servicer until such time as the Trustee may be
required to act as Master Servicer pursuant to Section 8.02;
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(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian; and
(viii) 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.
(b) It is intended that the REMIC formed hereunder shall
constitute, and that the affairs of the REMIC shall be conducted so as to
qualify it as, a REMIC as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Trustee covenants and agrees
that it shall act as agent (and the Trustee is hereby appointed to act as
agent) and as Tax Matters Person on behalf of the REMIC formed hereunder, and
that in such capacities, it shall:
(i) prepare, sign and file, or cause to be prepared and
filed, in a timely manner, a U.S. Real Estate Mortgage Investment
Conduit Income Tax Return (Form 1066) and any other Tax Return
required to be filed by the REMIC created hereunder, using a calendar
year as the taxable year for such REMIC;
(ii) make, or cause to be made, an election, on behalf of
the REMIC created hereunder, to be treated as a REMIC on the federal
tax return of such REMIC for its first taxable year;
(iii) prepare and forward, or cause to be prepared and
forwarded, to the Master Servicer, the Seller, the Certificateholders
and to the Internal Revenue Service and any other relevant
governmental taxing authority all information returns or reports as
and when required to be provided to them in accordance with the REMIC
Provisions;
(iv) to the extent that the affairs of the REMIC created
hereunder are within its control, conduct such affairs of such REMIC
at all times that any Certificates are outstanding so as to maintain
the status of such REMIC as a REMIC under the REMIC Provisions and any
other applicable federal, state and local laws, including, without
limitation, information reports relating to "original issue discount,"
as defined in the Code, based upon ______% of the Prepayment
Assumption and calculated by using the issue price of the
Certificates;
(v) not knowingly or intentionally take any action or
omit to take any action that would cause the termination of the REMIC
status of the REMIC created hereunder;
(vi) pay the amount of any and all federal, state and
local taxes, including, without limitation, any minimum tax imposed by
Sections 23151(a) and 23153(a) of the California Revenue and Taxation
Code upon the Trustee or the Certificateholders in
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connection with the Trust or the Home Equity Loans, prohibited
transaction taxes as defined in Section 860F of the Code, other than
any amount due as a result of a transfer or attempted or purported
transfer in violation of Section 6.02, imposed on the Trust when and
as the same shall be due and payable (but such obligation shall not
prevent the Trustee or any other appropriate Person from contesting
any such tax in appropriate proceedings and shall not prevent the
Trustee from withholding payment of such tax, if permitted by law,
pending the outcome of such proceedings). The Trustee shall be
entitled to reimbursement in accordance with Section 2.14;
(vii) ensure that any such returns or reports filed on
behalf of the Trust by the Trustee are properly executed by the
appropriate person;
(viii) represent the Trust in any administrative or judicial
proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any
taxable year of the Trust, enter into settlement agreements with any
government taxing agency, extend any statute of limitations relating
to any item of the Trust and otherwise act on behalf of the Trust in
relation to any tax matter involving the Trust;
(ix) as provided in Section 2.12, make available
information necessary for the computation of any tax imposed (1) on
transferors of residual interests to transferees that are not
Permitted Transferees or (2) on pass-through entities, any interest in
which is held by an entity which is not a Permitted Transferee. The
Trustee covenants and agrees that it will cooperate with the Master
Servicer in the foregoing matters and that it will sign, as Trustee,
any and all Tax Returns required to be filed by the Trust.
Notwithstanding the foregoing, at such time as the Trustee becomes the
successor Master Servicer, the holder of the largest percentage of the
Class R Certificates shall serve as Tax Matters Person until such time
as an entity is appointed to succeed the Trustee as Master Servicer;
(x) make available to the Internal Revenue Service and
those Persons specified by the REMIC Provisions all information
necessary to compute any tax imposed (A) as a result of the Transfer
of an Ownership Interest in a Class R Certificate to any Person who is
not a Permitted Transferee, including the information described in
Treasury regulations sections 1.860D-1(b)(5) and 1.860E- 2(a)(5) with
respect to the "excess inclusions" of such Residual Certificate and
(B) as a result of any regulated investment company, real estate
investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an
Ownership Interest in a Class R Certificate having as among its record
holders at any time any Person that is not a Permitted Transferee.
Reasonable compensation for providing such information may be accepted
by the Trustee; and
(xi) pay out of its own funds, without any right of
reimbursement, any and all tax-related expenses of the Trust
(including, but not limited to, tax return preparation and
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filing expenses and any professional fees or expenses related to
audits or any administrative or judicial proceedings with respect to
the Trust that involve the Internal Revenue Service or state tax
authorities), other than (A) the expense of obtaining any Opinion of
Counsel required pursuant to Sections [2.07, 2.14, 6.02, 7.04, 8.06,
9.02, 11.01 or 11.02], (B) any expenses for which the Trustee is
otherwise indemnified pursuant to Section 9.05 and (C) taxes except as
specified herein.
(xii) Upon filing with the Internal Revenue Service, the
Trustee shall furnish to the Holders of the Residual Certificates the
Form 1066 and each Form 1066Q for the REMIC created hereunder and
shall respond promptly to written requests made not more frequently
than quarterly by any Holder of Residual Certificates with respect to
the following matters:
(1) The original projected principal and interest
cash flows on the Closing Date on each class of regular and
residual interests created hereunder and on the Home Equity
Loans, based on the applicable Prepayment Assumption;
(2) The projected remaining principal and
interest cash flows as of the end of any calendar quarter with
respect to each class of regular and residual interests
created hereunder and the Home Equity Loans, based on the
applicable Prepayment Assumption;
(3) The Prepayment Assumption and any interest
rate assumptions used in determining the projected principal
and interest cash flows described above;
(4) The original issue discount (or, in the case
of the Home Equity Loans, market discount) or premium accrued
or amortized through the end of such calendar quarter with
respect to each class of regular or residual interests created
hereunder and with respect to the Home Equity Loans, together
with each constant yield to maturity used in computing the
same;
(5) The treatment of losses realized with respect
to the Home Equity Loans or the regular interests created
hereunder, including the timing and amount of any cancellation
of indebtedness income of the REMIC created hereunder with
respect to such regular interests or bad debt deductions
claims with respect to the Home Equity Loans;
(6) The amount and timing of any non-interest
expenses of the REMIC hereunder; and
(7) Any taxes (including penalties and interest)
imposed on the REMIC created hereunder, including, without
limitation, taxes on "prohibited transactions,"
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"contribution" or "net income from foreclosure property" or
state or local income or franchise taxes.
(xiii) Following the Closing Date, and except as otherwise
provided in this Agreement, the Trustee shall not knowingly accept any
contribution of assets to the Trust unless it shall have been provided
with an Opinion of Counsel at the expense of the party delivering such
assets acceptable to it and the Certificate Insurer to the effect that
the inclusion of such assets in the REMIC created hereunder will not
cause the REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject the Trust to any tax under the
REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.
(xiv) The Trustee agrees to indemnify the Trust, the
Certificate Insurer and the Master Servicer for any taxes and costs,
including, without limitation, any reasonable attorneys' fees imposed
on or incurred by the Trust, the Certificate Insurer or the Master
Servicer, as a result of a breach of the Trustee's covenants set forth
in Section 9.02(b).
Section 9.03. Trustee Not Liable for Certificates or Home Equity
Loans. The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Agreement or of the Certificates (other than
the signature and authentication of the Trustee on the Certificates) or of any
Home Equity Loan or related document. The Trustee shall not be accountable for
the use or application by the Master Servicer or for the use or application of
any funds paid to the Master Servicer in respect of the Home Equity Loans or
deposited in or withdrawn from the Collection Account by the Master Servicer.
The Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of any Mortgage or any
Home Equity Loan, or the perfection and priority of any Mortgage or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust or its ability to generate the payments to be
distributed to Certificateholders under this Agreement, including, without
limitation: the existence, condition and ownership of any Mortgaged Property;
the existence and enforceability of any hazard insurance thereon (other than if
the Trustee shall assume the duties of the Master Servicer pursuant to Section
8.02); the validity of the assignment of any Home Equity Loan to the Trustee or
of any intervening assignment; the completeness of any Home Equity Loan; the
performance or enforcement of any Home Equity Loan (other than if the Trustee
shall assume the duties of the Master Servicer pursuant to Section 8.02); the
compliance by the Seller, the Master Servicer, the Representative or any
Originator with any warranty or representation made under this Agreement or in
any related document or the accuracy of any such warranty or representation
prior to the Trustee's receipt of notice or other discovery of any
non-compliance therewith or any breach thereof; any investment of monies by or
at the direction of the Master Servicer or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any Trust
property that it may hold in its individual capacity;
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the acts or omissions of any of the Master Servicer (other than if the Trustee
shall assume the duties of the Master Servicer pursuant to Section 8.02), any
Sub-Servicer, the Representative, an Originator or any Mortgagor; any action of
the Master Servicer (other than if the Trustee shall assume the duties of the
Master Servicer pursuant to Section 8.02) or any Sub-Servicer taken in the name
of the Trustee; the failure of the Master Servicer or any Sub-Servicer to act
or perform any duties required of it as agent of the Trustee hereunder; or any
action by the Trustee taken at the instruction of the Master Servicer (other
than if the Trustee shall assume the duties of the Master Servicer pursuant to
Section 8.02); provided, however, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement,
including, without limitation, the Trustee's duty to review the Mortgage Files
pursuant to Section 2.02. Until such time as the Trustee shall have become the
successor Master Servicer, the Trustee shall have no responsibility to perfect
or maintain the perfection of any security interest or lien granted to it
hereunder.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Certificates with the same rights as it would have if it were not Trustee and
may transact any banking and trust business with the Seller, the Master
Servicer or the Representative.
Section 9.05. Master Servicer to Pay Trustee Fees and Expenses.
The Master Servicer will pay or reimburse, except as provided in Section
2.14(g), the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement or the Insurance Agreement (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or which
is the responsibility of Certificateholders hereunder. In addition, except as
provided in Section 2.14(g), the Master Servicer covenants and agrees to
indemnify the Trustee and its officers, directors, employees and agents from,
and hold it harmless against, any and all losses, liabilities, damages, claims
or expenses (i) incurred in connection with or relating to this Agreement, the
Insurance Agreement or the Certificates, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence of
the Trustee in the performance of its duties hereunder or by reason of the
Trustee's reckless disregard of obligations and duties hereunder or (ii)
resulting from any error in any tax or information return prepared by the
Master Servicer. This Section 9.05 shall survive termination of this Agreement
or the resignation or removal of any Trustee hereunder.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of "Baa3", and subject to supervision or examination by federal or
state authority, and is reasonably acceptable to the Certificate Insurer. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining
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authority, then for the purposes of this Section 9.06, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
principal office of the Trustee (other than the initial Trustee) shall be in a
state with respect to which an Opinion of Counsel has been delivered to such
Trustee at the time such Trustee is appointed Trustee to the effect that the
Trust will not be a taxable entity under the laws of such state. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Seller, the Master Servicer, the Certificate
Insurer and each Rating Agency. Upon receiving such notice of resignation, the
Seller shall promptly appoint a successor Trustee (approved in writing by the
Certificate Insurer and the Master Servicer, so long as such approval shall not
unreasonably be withheld) by written instrument, in duplicate, copies of which
instrument shall be delivered to the resigning Trustee, the Certificate Insurer
and the successor Trustee; provided, however, that any such successor Trustee
shall be subject to the prior written approval of the Master Servicer. If no
successor Trustee shall have been so appointed and having 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.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Seller or the Certificate Insurer, or if at any time
the Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Seller, the Master Servicer or the Certificate Insurer
may remove the Trustee. If the Seller, the Master Servicer or the Certificate
Insurer removes the Trustee under the authority of the immediately preceding
sentence, the Depositor shall promptly appoint a successor Trustee (approved in
writing by the Certificate Insurer, so long as such approval is not
unreasonably withheld) by written instrument, in duplicate, copies of which
instrument shall be delivered to the Trustee so removed, the Certificate
Insurer and to the successor Trustee.
The Holders of Certificates evidencing Voting Rights aggregating over
50% of all Voting Rights may, with the prior written consent of the Certificate
Insurer, at any time remove the Trustee by written instrument or instruments
delivered to the Master Servicer, the Seller and the Trustee; shall thereupon
use its best efforts to appoint a successor trustee in accordance with this
Section 9.07.
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Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.07 shall
not become effective until acceptance of appointment by the successor Trustee
as provided in Section 9.08.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the Trustee may not be removed by the
Seller or the Certificateholders without the prior written consent of the
Certificate Insurer, which consent shall not be unreasonably withheld.
Section 9.08. Successor Trustee. Any successor Trustee appointed
as provided in Section 9.07 shall execute, acknowledge and deliver to the
Seller, the Master Servicer and to its predecessor Trustee and the Certificate
Insurer an instrument accepting such appointment 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 fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee. The
Seller, the Master Servicer and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Trustee all
such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the Master Servicer shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency. If the Master
Servicer fails to mail such notice within 30 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the appointment of any successor Trustee
pursuant to any provision of this Agreement will be subject to the prior
written consent of the Certificate Insurer, which consent shall not be
unreasonably withheld.
Section 9.09. Merger or Consolidation of Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the
Trustee hereunder, provided that such corporation shall be eligible under the
provisions of Section 9.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto
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other than the prior written consent of the Certificate Insurer, which consent
shall not be unreasonably withheld.
Section 9.10. 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 or any Mortgaged Property may at the time be located, the Seller
and the Trustee acting jointly and with the consent of the Certificate Insurer
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee and the Certificate Insurer to act
as co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders and
the Certificate Insurer, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section 9.10, such powers, duties,
obligations, rights and trusts as the Master Servicer and the Trustee may
consider necessary or desirable. Any such co-trustee or separate trustee shall
be subject to the written approval of the Master Servicer. If the Master
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 an Event of Default shall
have occurred and be continuing, the Trustee alone and with the consent of the
Certificate Insurer shall have the power to make such appointment. Subject to
the Certificate Insurer's written approval, no co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 9.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 9.08.
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master 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 or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable
by reason of any act or omission of any other trustee hereunder; and
(iii) the Master Servicer and the Trustee acting jointly
and with the consent of the Certificate Insurer may at any time accept
the resignation of or remove any separate trustee or co-trustee except
that following the occurrence of an Event of Default, the Trustee
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acting with the consent of the Certificate Insurer may accept the
resignation or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article IX. 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 Seller, the Certificate Insurer and the
Master 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.
Section 9.11. Limitation of Liability. The Certificates are
executed by the Trustee, not in its individual capacity but solely as Trustee
of the Trust, in the exercise of the powers and authority conferred and vested
in it by this Agreement. Each of the undertakings and agreements made on the
part of the Trustee in the Certificates is made and intended not as a personal
undertaking or agreement by the Trustee but is made and intended for the
purpose of binding only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection. (a) All rights of action and claims under this
Agreement or the Certificates may be prosecuted and enforced by the Trustee or
the Certificate Insurer without the possession of any of the Certificates or
the production thereof in any proceeding relating thereto, and such proceeding
instituted by the Trustee shall be brought in its own name or in its capacity
as Trustee. Any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursement and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders or the Certificate Insurer in respect of which such judgment
has been recovered.
(b) The Trustee shall afford the Seller, the Master Servicer, the
Certificate Insurer, the Representative and each Certificateholder upon
reasonable notice during normal business hours, access to all records
maintained by the Trustee in respect of its duties hereunder and access to
officers of the Trustee responsible for performing such duties. Upon request,
the Trustee shall furnish the Seller, the Master Servicer, the Certificate
Insurer, the Representative and any requesting Certificateholder with its most
recent financial statements. The Trustee shall cooperate
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fully with the Seller, the Master Servicer, the Certificate Insurer, the
Representative and such Certificateholder and shall make available to the
Seller, the Master Servicer, the Certificate Insurer, the Representative and
such Certificateholder for review and copying such books, documents or records
as may be requested with respect to the Trustee's duties hereunder. The
Seller, the Master Servicer, the Certificate Insurer, the Representative and
the Certificateholders shall not have any responsibility or liability for any
action or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 9.13 Suits for Enforcement. In case an Event of Default
or other default by the Master Servicer, the Seller, the Representative or any
Originator hereunder shall occur and be continuing, the Trustee may, with the
consent of the Certificate Insurer and shall at the direction of the
Certificate Insurer, proceed to protect and enforce its rights and the rights
of the Certificateholders or the Certificate Insurer under this Agreement by a
suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement
or in aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy, as the Certificate
Insurer, or if a Certificate Insurer Default shall have occurred and be
continuing, the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Certificate Insurer
and the Certificateholders and the Certificate Insurer.
ARTICLE X
Termination
Section 10.01. Termination. (a) The respective obligations and
responsibilities of the Seller, the Master Servicer, the Trustee, the
Representative and the Originators created hereby (other than the obligation of
the Trustee to make certain payments to Certificateholders after the final
Distribution Date and the obligation of the Master Servicer to send certain
notices as hereinafter set forth) shall terminate upon notice to the Trustee of
the later of (x) the distribution to Certificateholders of the final payment or
collection with respect to the last Home Equity Loan (or Monthly Advances of
same by the Master Servicer), (y) the disposition of all funds with respect to
the last Home Equity Loan and the remittance of all funds due under the
Agreement and the payment of all amounts due and payable to the Certificate
Insurer and the Trustee and (z) the Distribution Date in ______________.
Notwithstanding the foregoing, in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United States to
the Court of St. ▇▇▇▇▇, living on the date hereof.
The Master Servicer may, at its option, terminate this Agreement on
any Distribution Date on or after the Optional Termination Date, by purchasing,
on the such Distribution Date, all of the outstanding Home Equity Loans and REO
Properties at a price equal to the sum of (x) 100% of the
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aggregate Principal Balance of the Home Equity Loans and REO Properties, plus
(y) the greater of (i) the aggregate amount of accrued and unpaid interest on
the Home Equity Loans through the related Due Period and (ii) 30 days' accrued
interest thereon at a rate equal to the Loan Rate, in each case net of the
Servicing Fee plus (z) any Reimbursement Amounts due to the Certificate Insurer
and any other amounts due to the Certificate Insurer under the Insurance
Agreement (the "Termination Price").
In connection with any such purchase pursuant to the preceding
paragraph, the Master Servicer shall deposit in the Distribution Account all
amounts then on deposit in the Collection Account (less amounts permitted to be
withdrawn by the Master Servicer pursuant to Section 3.03), which deposit shall
be deemed to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price.
(b) Notice of any termination, specifying the
Distribution Date (which shall be a date that would otherwise be a Distribution
Date) upon which the Certificateholders may surrender their Certificates to the
Trustee for payment of the final distribution and cancellation, shall be given
promptly by the Trustee to the Certificate Insurer by letter to
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution
specifying (iii) the Distribution Date upon which final distribution of the
Certificates will be made upon presentation and surrender of Certificates at
the office or agency of the Trustee therein designated, (iv) the amount of any
such final distribution and (v) that the Record Date otherwise applicable to
such Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified.
(c) Upon presentation and surrender of the Certificates,
the Trustee shall cause to be distributed to the holders of Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Certificates and to the extent that funds are
available for such purpose, an amount equal to the amount required to be
distributed to Certificateholders pursuant to Section 5.01 for such
Distribution Date. On the final Distribution Date, the Trustee will withdraw
from the Distribution Account and remit to the Certificate Insurer the lesser
of (x) the amount available for distribution on such final Distribution Date,
net of any portion thereof necessary to pay the Class A Certificateholders
pursuant to Sections 5.01(a)(i)(2) and (3) and (y) the unpaid amounts due and
owing to the Certificate Insurer pursuant to Section 5.01(a).
(d) In the event that all of the Class A
Certificateholders shall not surrender their Certificates for final payment and
cancellation on or before such final Distribution Date, the Trustee shall
promptly following such date cause all funds in the Distribution Account not
distributed in final distribution to Class A Certificateholders to be withdrawn
therefrom and credited to the
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remaining Class A Certificateholders by depositing such funds in a separate
escrow account for the benefit of such Class A Certificateholders and the
Master Servicer (if the Master Servicer has exercised its right to purchase the
Home Equity Loans) or the Trustee (in any other case) shall give a second
written notice to the remaining Class A Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Class A
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Class A Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds on deposit in
such escrow account.
Section 10.02. Additional Termination Requirements. (a) In the
event that the Master Servicer exercises its purchase option as provided in
Section 10.01, the Trust shall be terminated in accordance with the following
additional requirements, unless the Trustee and the Certificate Insurer have
been furnished with an Opinion of Counsel to the effect that the failure of the
Trust to comply with the requirements of this Section 10.02 will not (i) result
in the imposition of taxes on "prohibited transactions" of the Trust as defined
in Section 860F of the Code or (ii) cause the REMIC hereunder to fail to
qualify as a REMIC at any time that any Regular Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date,
the Master Servicer shall adopt and the Trustee shall sign a plan of
complete liquidation for the REMIC hereunder meeting the requirements
of a "Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder; and
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date,
the Trustee shall sell all of the assets of the Trust to the Master
Servicer for cash.
(b) By their acceptance of the Certificates, the Holders thereof
hereby agree to appoint the Trustee as their attorney in fact to: (i) adopt
such a plan of complete liquidation (and the Certificateholders hereby appoint
the Trustee as their attorney in fact to sign such plan) as appropriate or upon
the written request of the Certificate Insurer and (ii) to take such other
action in connection therewith as may be reasonably required to carry out such
plan of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time
to time by the Seller, the Master Servicer, the Trustee, the Representative and
the Originators in each case without
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the consent of any of the Certificateholders, but only with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld), (i) to
cure any ambiguity, (ii) to correct any defective provisions or to correct or
supplement any provisions herein that may be inconsistent with any other
provisions herein, (iii) to add to the duties of the Master Servicer, the
Representative or the Originators, (iv) to add any other provisions with
respect to matters or questions arising under this Agreement or the Certificate
Insurance Policy, as the case may be, which shall not be inconsistent with the
provisions of this Agreement, (v) to add or amend any provisions of this
Agreement as required by any Rating Agency or any other nationally recognized
statistical rating agency in order to maintain or improve any rating of each
Class of Class A Certificates, without regard to the Certificate Insurance
Policy (it being understood that, after obtaining the ratings in effect on the
Closing Date, neither the Trustee, the Certificate Insurer, the Seller, the
Master Servicer, the Representative or the Originators is obligated to obtain,
maintain or improve any such rating) or (vi) to add or amend any provisions of
this Agreement to such extent as shall be necessary to maintain the
qualification of the REMIC hereunder as a REMIC; provided, however, that (x) as
evidenced by an Opinion of Counsel (at the expense of the requesting party) in
each case such action shall not adversely affect in any material respect the
interest of any Certificateholder, (y) in each case, such action is necessary
or desirable to maintain the qualification of the REMIC hereunder as a REMIC or
shall not adversely affect such qualification and (z) if the opinion called for
in clause (x) cannot be delivered with regard to an amendment pursuant to
clause (vi) above, such amendment is necessary to maintain the qualification of
the REMIC hereunder as a REMIC; and provided, further, that the amendment shall
not be deemed to adversely affect in any material respect the interests of the
Certificateholders and no Opinion of Counsel to that effect shall be required
if the Person requesting the amendment obtains a letter from the Rating Agency
stating that the amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Class A Certificates without regard
to the Certificate Insurance Policy.
This Agreement also may be amended from time to time by the Seller,
the Master Servicer, the Trustee, the Representative and the Originators and
the Master Servicer and the Certificate Insurer, may from time to time consent
to the amendment of the Certificate Insurance Policy with the consent of the
Holders of each Class of Class A Certificates which is affected by such
amendment, evidencing Voting Rights aggregating not less than 51%, and in the
case of an amendment to this Agreement, with the consent of the Certificate
Insurer, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments on the Certificates or distributions or payments under the Certificate
Insurance Policy which are required to be made on any Certificate without the
consent of the Holder of such Certificate or (ii) reduce the aforesaid
percentage required to consent to any such amendment, without the consent of
the Holders of all Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee and the Certificate Insurer
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with an Opinion of Counsel stating whether such amendment would adversely
affect the qualification of the REMIC hereunder as a REMIC and notice of the
conclusion expressed in such Opinion of Counsel shall be included with any such
solicitation. An amendment made with the consent of all Certificateholders and
the Certificate Insurer and executed in accordance with this Section 11.01
shall be permitted or authorized by this Agreement notwithstanding that such
Opinion of Counsel may conclude that such amendment would adversely affect the
qualification of the REMIC created hereunder as a REMIC.
Prior to the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Rating
Agency. In addition, promptly after the execution of any such amendment made
with the consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
fully executed original counterparts of the instruments effecting such
amendment to the Certificate Insurer.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable requirements as the Trustee may prescribe.
Section 11.02. Recordation of Agreement. This Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon direction of Certificateholders or the Certificate
Insurer accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of
Certificateholders or the Certificate Insurer, as applicable. The
Certificateholders or the Certificate Insurer, as the case may be, requesting
such recordation shall bear all costs and expenses of such recordation. The
Trustee shall have no obligation to ascertain whether such recordation so
affects the interests of the Certificateholders or the Certificate Insurer.
Section 11.03. Limitation on Rights of Certificateholders. The
death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
in Sections 8.01, 9.01, 9.02 and 11.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners
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or members of an association; nor shall any Certificateholder be under any
liability to any third person by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Class A Certificates evidencing Voting Rights aggregating
not less than 51% shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee hereunder and shall
have offered to the Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit
or proceeding; it being understood and intended, and being expressly covenanted
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 11.03, each and every Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or
in equity.
Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 11.05 Notices. (a) All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) in the case of the Seller, ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: _________________, (b) in the case of the Master Servicer, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: _______________, (c) in
the case of the Trustee, at the Corporate Trust Office, (d) in the case of the
Certificate Insurer, ________________ Attention: ______________ (in each case
in which notice or other communication to the Certificate Insurer refers to an
Event of Default, a claim on the Certificate Insurance Policy or with respect
to which failure on the part of the Certificate Insurer to respond shall be
deemed to constitute consent or acceptance, then a copy of such notice or other
communication shall be marked to indicate "URGENT MATERIAL ENCLOSED"), (e) in
the case of the Representative and each Originator, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ____________________, (f) in the case of
[Rating Agency], _____________________,
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Attention: ________________________, or (g) as to each party, at such other
address as shall be designated by such party in a written notice to each other
party. Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice. Any
notice or other document required to be delivered or mailed by the Trustee to
any Rating Agency shall be given on a best efforts basis and only as a matter of
courtesy and accommodation and the Trustee shall have no liability for failure
to delivery such notice or document to any Rating Agency.
(b) Notice to the Rating Agencies. The Trustee and the
Master Servicer shall each be obligated to use its best efforts promptly to
provide notice, at the expense of the Master Servicer, to the Rating Agencies
with respect to each of the following of which a Responsible Officer of the
Trustee or Master Servicer, as the case may be, has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not
been cured or waived;
(iii) The resignation or termination of the Master Servicer
or the Trustee;
(iv) The final payment to Holders of the Certificates of
any Class;
(v) Any change in the location of any Account; and
(vi) Any event that would result in the inability of the
Trustee to make advances regarding Delinquent Home Equity Loans.
(c) In addition, (i) the Trustee shall promptly furnish
to each Rating Agency copies of the following:
(A) Each annual report to Certificateholders
described in Section 5.03; and
(B) Each Statement to Certificateholders
described in Section 5.03; and
(vii) The Master Servicer shall promptly furnish to each
Rating Agency copies of the following:
(A) Each annual statement as to compliance
described in Section 3.09;
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(B) Each annual independent public accountants'
servicing report described in Section 3.10; and
(C) Each notice delivered pursuant to Section
8.01(b) which relates to the fact that the Master Servicer has
not made a Delinquency Advance.
Any such notice pursuant to this Section 11.05 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to the
addresses specified above for each such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
Section 11.07. Successors and Assigns. All covenants and agreements
in this Agreement by any party hereto shall bind its successors and assigns,
whether so expressed or not.
Section 11.08. Certificates Nonassessable and Fully Paid. The
parties agree that the Certificateholders shall not be personally liable for
obligations of the Trust, that the beneficial ownership interests represented
by the Certificates shall be nonassessable for any losses or expenses of the
Trust or for any reason whatsoever, and that the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 6.02 are
and shall be deemed fully paid.
Section 11.09. Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the
Certificateholders, the Certificate Owners, the Certificate Insurer and their
respective successors and permitted assigns. The Certificate Insurer shall be
a third-party beneficiary of this Agreement, entitled to enforce the provisions
hereof as if a party hereto. Except as otherwise provided in this Agreement,
no other person will have any right or obligation hereunder.
Section 11.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.11. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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Section 11.12. Insurance Agreement. The Trustee is authorized and
directed to execute and deliver the Insurance Agreement and to perform the
obligations of the Trustee thereunder.
Section 11.13. Claims Upon the Certificate Insurance Policy. (a)
The Trustee shall comply with the provisions of the Certificate Insurance
Policy with respect to claims upon the Certificate Insurance Policy.
(b) The Trustee shall keep a complete and accurate record
of the amount of interest and principal paid in respect of any Class A
Certificate from moneys received under the Certificate Insurance Policy. The
Certificate Insurer shall have the right to inspect such records at reasonable
times during normal business hours upon one Business Day's prior written notice
to the Trustee.
(c) The Trustee shall promptly notify the Certificate
Insurer of any proceeding or the institution of any action, of which a
Responsible Officer of the Trustee has actual knowledge, seeking the avoidance
as a preferential transfer under the Bankruptcy Code (a "Preference Claim") of
any distribution made with respect to the Class A Certificates. Each
Certificateholder of Class A Certificates, by its purchase of Class A
Certificates, the Master Servicer, the Seller, the Trustee, the Representative
and each Originator hereby agree that the Certificate Insurer (so long as no
Certificate Insurer Default exists) 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, (i) the direction of any
appeal of any order relating to such Preference Claim and (ii) the posting of
any surety, supersedes or performance bond pending any such appeal.
Section 11.14. Effect of Payments by the Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Class A Certificates which is made
with moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Class A 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 the Class A Certificates within the meaning of
Section 5.01. The Seller, the Master Servicer, the Trustee, the Representative
and each Originator acknowledge, and each Holder by its acceptance of a Class A
Certificate agrees, that without the need for any further action on the part of
the Certificate Insurer, the Seller, the Master Servicer, the Trustee, the
Representative, any Originator or the Certificate Registrar, to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on the Class A Certificates to the Holders of such
Certificates, (i) the Certificate Insurer will be fully subrogated to the
rights of such Holders to receive such principal and interest from the Trust
and (ii) the Certificate Insurer shall be paid such principal and interest but
only from the sources and in the manner provided herein for the payment of such
principal and interest.
The Trustee, Seller the Master Servicer, the Representative and each
Originator shall cooperate in all respects with any reasonable request by the
Certificate Insurer for action to preserve
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or enforce the Certificate Insurer's rights or interests under this Agreement
without limiting the rights or affecting the interests of the Holders as
otherwise set forth herein.
Section 11.15. Notices to the Certificate Insurer. All notices,
statements, reports, certificates or opinions required by this Agreement to be
sent to any other party hereto or to the Certificateholders shall also be sent
to the Certificate Insurer.
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IN WITNESS WHEREOF, the Seller, the Master Servicer, the
Representative, the Trustee and each Originator have caused this Agreement to
be duly executed by their respective officers all as of the day and year first
above written.
AVCO ABS RECEIVABLES CORP.,
as Seller
By:______________________________________
Name:
Title:
AVCO FINANCIAL SERVICES MANAGEMENT
COMPANY, as Master Servicer
By:______________________________________
Name:
Title:
AVCO FINANCIAL SERVICES, INC.,
as Representative
By:______________________________________
Name:
Title:
THE ORIGINATORS:
By:______________________________________
Name:
Title:
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State of ______________________ )
) ss.:
County of ____________________ )
On the ____ day of _____________, 199_ before me, a notary
public in and for the State of _______________, personally appeared
_________________, known to me who, being by me duly sworn, did depose and say
that he is the _____________________ of Avco ABS Receivables Corp., a Nevada
corporation, one of the parties that executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of said corporation; and that he signed his name thereto by like order.
______________________________
Notary Public
[Notarial Seal]
119
State of ______________________ )
) ss.:
County of ____________________ )
On the ____ day of _____________, 199_ before me, a notary
public in and for the State of _______________, personally appeared
_________________, known to me who, being by me duly sworn, did depose and say
that he is the _____________________ of Avco Financial Services Management
Company, a Delaware corporation, one of the parties that executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation; and that he signed his name thereto
by like order.
______________________________
Notary Public
[Notarial Seal]
120
State of ____________________ )
) ss.:
County of ____________________ )
On the ____ day of _____________, 199_ before me, a notary
public in and for the State of Delaware, personally appeared _________________,
known to me who, being by me duly sworn, did depose and say that he is the
_____________________ of Avco Financial Services, Inc., a Delaware corporation,
one of the parties that executed the foregoing instrument; and that he signed
his name thereto by order of the Board of Directors of said association.
______________________________
Notary Public
[Notarial Seal]
121
State of ______________________ )
) ss.:
County of ____________________ )
On the ____ day of _____________, 199_ before me, a notary
public in and for the State of _______________, personally appeared
_________________, known to me who, being by me duly sworn, did depose and say
that he is the _____________________ of [Name of Trustee], a
_______________________, one of the parties that executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation; and that he signed his name thereto
by like order.
______________________________
Notary Public
[Notarial Seal]
122
State of ______________________ )
) ss.:
County of ____________________ )
On the ____ day of _____________, 199_ before me, a notary
public in and for the State of _______________, personally appeared
_________________, known to me who, being by me duly sworn, did depose and say
that he is the _____________________ of each Originator listed on Exhibit D to
the within Instrument, each a party that executed the foregoing instrument; and
that he signed his name thereto by like order of the Board of Directors of each
said corporation.
______________________________
Notary Public
[Notarial Seal]
123
EXHIBIT A
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
Certificate No. : A-
Cut-Off Date :
First Distribution Date :
Initial Certificate Principal
Balance of this Certificate
("Denomination") : $
Initial Class Principal
Balance : $
Pass-Through Rate : __%
CUSIP :
Class : ▇-
▇-▇
▇▇▇
▇▇▇▇ FINANCIAL HOME EQUITY LOAN TRUST 199_-__
Home Equity Loan Asset-Backed Certificates, Series 199_-__
Class A-
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Home
Equity Loans")
AVCO ABS RECEIVABLES CORP., as Seller
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A- Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Class A-
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Seller, the Master Servicer, the Representative or the
Trustee referred to below or any of their respective affiliates. Neither this
Class A- Certificate nor the Home Equity Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Class A- Certificate (obtained by
dividing the Denomination of this Class A- Certificate by the Class Principal
Balance) in certain monthly distributions with respect to a Trust consisting
primarily of the Home Equity Loans sold by Avco ABS Receivables Corp. (the
"Seller"). The Trust was created pursuant to a Pooling and Servicing Agreement
dated as of the Cut-Off Date specified above (the "Agreement") among the
Seller, Avco Financial Services Management Company, as master servicer (the
"Master Servicer"), Avco Financial Services, Inc., as representative (the
"Representative"), the Originators listed on Exhibit D thereto (collectively,
the "Originators") and [Name of Trustee], as trustee (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Class A- Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class A- Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class A-
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class A- Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-2
125
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ____________ __, 199_
[NAME OF TRUSTEE],
as Trustee
By ___________________________
This is one of the Class A- Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
[Name of Trustee]
A-3
126
[Reverse of Class A- Certificate]
AVCO FINANCIAL HOME EQUITY LOAN TRUST 199_-__
Home Equity Loan Asset-Backed Certificates,
Series 199_-__
This Certificate is one of a duly authorized issue of Certificates
designated as Avco Financial Home Equity Loan Trust 199_-__, Home Equity Loan
Asset-Backed Certificates, Series 199_-__(herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate will have the benefit of an irrevocable and
unconditional certificate guaranty insurance policy issued by [Name of
Certificate Insurer] (the "Certificate Insurer").
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the ____day of each month or, if such ____ day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is [the last day of the month preceding
the month of such Distribution Date] [the day immediately preceding such
Distribution Date].
Distributions on this Certificate shall be made by check or money
order mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning Class A
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the
A-4
127
Certificateholders under the Agreement at any time by the Seller, the Master
Servicer, the Representative, each Originator and the Trustee with the consent
of the Certificate Insurer and of Holders of the requisite percentage of the
Voting Rights of each Class of Certificates affected by such amendment, as
specified in the Agreement. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
___________________, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the
Pool Principal Balance is less than 10% of the Cut-Off Date Pool Principal
Balances, the Master Servicer will have the option to repurchase, in whole,
from the Trust the Home Equity Loans at a purchase price determined as provided
in the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
the later of (A) payment in full of all amounts owing to the Certificate
Insurer unless the Certificate Insurer shall otherwise consent and (B) the
earliest of (i) the day following the Distribution Date on which the Aggregate
Class A Principal Balance has been reduced to zero, (ii) the final payment or
other liquidation of the last Home Equity Loan in the Trust and (iii) the
Distribution Date in __________, ____. In no event, however, will the trust
created by the Agreement continue beyond the expiration
A-5
128
of 21 years from the death of the last survivor of the descendants living at
the date of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
A-6
129
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address: ______________
_________________________________________________.
Dated: _____________
________________________________________
Signature by or on behalf of assignor
A-7
130
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _for the account of _____________________ ,
account number _______, or, if mailed by check, to _______________________.
Applicable statements should be mailed to _____________________ .
This information is provided by _____________, the assignee named
above, or _________________, as its agent.
A-8
131
EXHIBIT B
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF CERTAIN DUTIES
SPECIFIED IN THE AGREEMENT.]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R-__ CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST
AND WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO
SECTION 4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE
TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON
BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID
AND OF NO EFFECT.
B-1
132
Certificate No. : R-
Percentage Interest
evidenced by this
Certificate : [0.000001%][99.999999%]
AVCO FINANCIAL HOME EQUITY LOAN TRUST 199_-_
Home Equity Loan Asset-Backed Certificates, Series 199_-_
Class R-__
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of pool of closed-end fixed rate home equity
loans (the "Home Equity Loans")
AVCO ABS RECEIVABLES CORP., as Seller
This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Seller, the Master Servicer, the
Representative or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Home Equity Loans are guaranteed
or insured by any governmental agency or instrumentality.
This certifies that ________________________________________ is the
registered owner of the Percentage Interest evidenced by this Certificate
specified above in the interest represented by all Certificates of the Class to
which this Certificate belongs in a Trust consisting primarily of the Home
Equity Loans sold by Avco ABS Receivables Corp. (the "Seller"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-Off
Date specified above (the "Agreement") among the Seller, Avco Financial
Services Management Company, as master servicer (the "Master Servicer"), Avco
Financial Services, Inc., as representative (the "Representative), the
Originators listed on Exhibit D thereto (collectively, the "Originators") and
[Name of Trustee], as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
___________.
B-2
133
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act
and such laws, in order to assure compliance with the Securities Act and such
laws, the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer
is to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement, there shall also be delivered (except
in the case of a transfer pursuant to Rule 144A of the Securities Act) to the
Trustee of an Opinion of Counsel that such transfer may be made pursuant to an
exemption from the Securities Act, which Opinion of Counsel shall not be
obtained at the expense of the Trustee or the Seller. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee and the Seller 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.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such 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 or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Class R Certificate presented for registration in the name of an
employee benefit plan subject to ERISA, or Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan or any other person acting on behalf of any such plan, an Opinion of
Counsel satisfactory to the Trustee to the effect that the purchase or holding
of such Certificate will not result in the assets of the Trust being deemed to
be "plan assets" and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee to any obligation in addition to
those undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Trustee or the Trust. Notwithstanding anything else to the
contrary herein, any purported transfer of a Certificate of this Class to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
opinion of counsel satisfactory to the Trustee as described above shall be void
and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest
in this Certificate must be a Permitted Transferee, (ii) no Ownership Interest
in this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring
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any Ownership Interest in this Certificate must agree to require a transfer
affidavit and to deliver a transfer certificate to the Trustee as required
pursuant to the Agreement, (iv) each person holding or acquiring an Ownership
Interest in this Certificate must agree not to transfer an Ownership Interest
in this Certificate if it has actual knowledge that the proposed transferee is
not a Permitted Transferee and (v) any attempted or purported transfer of any
Ownership Interest in this Certificate in violation of such restrictions will
be absolutely null and void and will vest no rights in the purported
transferee.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
* * *
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: ____________ __, 199_
[NAME OF TRUSTEE]
as Trustee
By ___________________________
This is one of the Class R-__ Certificates
referenced in the within-mentioned Agreement
By ________________________________
Authorized Signatory of
[NAME OF TRUSTEE]
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[Reverse of Class R-__ Certificate]
AVCO FINANCIAL HOME EQUITY LOAN TRUST 199_-_
Home Equity Loan Asset-Backed Certificates,
Series 199_-_
This Certificate is one of a duly authorized issue of Certificates
designated as Avco Financial Home Equity Loan Trust 199_-_, Home Equity Loan
Asset-Backed Certificates, Series 199_-_ (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the ____ day of each month or, if such ____ day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is [the last Business Day of the month
preceding the month of such Distribution Date] [the day immediately preceding
such Distribution Date].
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the office or agency of the
Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Seller, the Master Servicer, the
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Representative, each Originator and the Trustee with the consent of the
Certificate Insurer and of Holders of the requisite percentage of the
Percentage Interests of each Class of Certificates affected by such amendment,
as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of
such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the
Pool Principal Balance is less than 10% of the Cut-Off Date Pool Principal
Balances, the Master Servicer will have the option to repurchase, in whole,
from the Trust the Home Equity Loans at a purchase price determined as provided
in the Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
the later of (A) payment in full of all amounts owing to the Certificate
Insurer unless the Certificate Insurer shall otherwise consent and (B) the
earliest of (i) the day following the Distribution Date on which the Aggregate
Class A Principal Balance has been reduced to zero, (ii) the final payment or
other liquidation of the last Home Equity Loan in the Trust and (iii) the
Distribution Date in __________, ____. In no event, however, will the trust
created by the Agreement continue beyond the expiration of 21 years from the
death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
_________________________________________________________.
Dated: _____________
________________________________________
Signature by or on behalf of assignor
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DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _______________________ for the account of
______________________, account number _______, or, if mailed by check, to
__________________________________. Applicable statements should be mailed to.
This information is provided by _____________, the assignee named
above, or _________________, as its agent.
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140
EXHIBIT C
HOME EQUITY LOAN SCHEDULE
C-1
141
EXHIBIT D
LIST OF ORIGINATORS
D-1
142
EXHIBIT E
FORM OF MORTGAGE NOTE
E-1
143
EXHIBIT F
FORM OF MORTGAGE
F-1
144
EXHIBIT G
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES
PURSUANT TO SECTION 6.02(d)
AVCO FINANCIAL HOME EQUITY LOAN TRUST 199_-_
Home Equity Loan Asset-Backed Certificates,
Series 199_-_
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of __________, the proposed
Transferee of an Ownership Interest in a Residual Certificate (the
"Certificate") issued pursuant to the Pooling Agreement, (the "Agreement"),
relating to the above-referenced Series, by and among Avco ABS Receivables
Corp., as Seller (the "Seller"), Avco Financial Services Management Company, as
master servicer (the "Master Servicer"), Avco Financial Services, Inc., as
representative (the "Representative"), each Originator listed on Exhibit D
thereto and [NAME OF TRUSTEE], as trustee (the "Trustee"). Capitalized terms
used, but not defined herein or in Exhibit 1 hereto, shall have the meanings
ascribed to such terms in the Agreement. The Transferee has authorized the
undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of
the date of the Transfer, a Permitted Transferee. The Transferee is acquiring
its Ownership Interest in the Certificate either (i) for its own account or
(ii) as nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit.
The Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a
tax will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
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4. The Transferee has been advised of, and understands that a tax
will be imposed on a "pass-through entity" holding the Certificate if at any
time during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 6.02(d)
of the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 6.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit H to the Agreement (a "Transferor Certificate") to
the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the
assessment or collection of any tax legally required to be paid with respect to
the Certificate.
8. The Transferee's taxpayer identification number is
_________________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a
"noneconomic residual interest" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.
▇-▇
▇▇▇
▇▇. The Transferee is not an employee benefit plan that is subject
to ERISA or a plan that is subject to Section 4975 of the Code, nor are we
acting on behalf of such a plan.
* * *
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IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this __ day of ________________, 19_.
[NAME OF TRANSFEREE]
By:________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
______________
[Assistant] Secretary
Personally appeared before me the above-named ______, known or proved
to me to be the same person who executed the foregoing instrument and to be the
__________of the Transferee, and acknowledged that he executed the same as his
free act and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this __ day of ____, 19_.
__________________________________
NOTARY PUBLIC
My Commission expires the ___day
of ______________, 19__.
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EXHIBIT 1 to EXHIBIT G
Certain Definitions
"Ownership Interest": As to any Certificate, any ownership interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee": Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, International Organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Code section 511 on unrelated business taxable income) on any excess inclusions
(as defined in section 860E(c)(1) of the Code) with respect to any Class R
Certificate, (iv) rural electric and telephone cooperatives described in Code
section 1381(a)(2)(c), (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership, or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
or an estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States unless such Person has furnished the transferor and the Trustee
with a duly completed Internal Revenue Service Form 4224, and (vi) any other
Person so designated by the Trustee based upon an Opinion of Counsel that the
Transfer of an Ownership Interest in a Residual Certificate to such Person may
cause the Trust to fail to qualify as a REMIC at any time that certain
Certificates are outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in Code Section
7701 or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof if all of its activities are subject to tax, and, with the exception of
the FHLMC, a majority of its board of directors is not selected by such
governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
bank, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political
subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Seller.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
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EXHIBIT 2 to EXHIBIT G
Section 6.02(d) of the Agreement
(d) No transfer, sale, pledge or other disposition of a
Class R Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, other than the
transfer of the Tax Matters Person Residual Interest to the Trustee (i) unless
such transfer is made in reliance upon Rule 144A under the 1933 Act, the
Trustee and the Seller shall require a written Opinion of Counsel (which may be
in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Trustee and the Seller that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall not be an expense of the Trustee or the Seller or (ii)
the Trustee shall require the transferor to execute a transferor certificate
(in substantially the form attached hereto as Exhibit H) and the transferee to
execute an investment letter (in substantially the form of either Exhibit J,
Exhibit K or Exhibit L attached hereto) acceptable to and in form and substance
reasonably satisfactory to the Seller and the Trustee certifying to the Seller
and the Trustee the facts surrounding such transfer, which investment letter
shall not be an expense of the Trustee or the Seller. The Holder of a Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Seller 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.
No transfer of a Class R Certificate shall be made unless the Trustee
shall have received either (i) a representation from the transferee of such
Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
J, Exhibit K or Exhibit L, as appropriate), to the effect that such transferee
is not an employee benefit plan or arrangement subject to Section 406 of ERISA
or a plan subject to Section 4975 of the Code, nor a person acting on behalf of
any such plan or arrangement nor using the assets of any such plan or
arrangement to effect such transfer or (ii) if the purchaser is an insurance
company, a representation that the purchaser is an insurance company which is
purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60") and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Class R Certificate presented for registration in the name of an
employee benefit plan subject to ERISA or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets,
an Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel
shall not be an expense of either the Trustee or the Trust, addressed to the
Trustee, to the effect that the purchase or holding of such Class R Certificate
will
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not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. Notwithstanding anything
else to the contrary herein, any purported transfer of a Class R Certificate to
or on behalf of an employee benefit plan subject to ERISA or to the Code
without the delivery to the Trustee of an Opinion of Counsel satisfactory to
the Trustee as described above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Seller or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (iv)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Class R Certificate are expressly subject
to the following provisions:
(i) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall be a Permitted Transferee and
shall promptly notify the Trustee of any change or impending change in
its status as a Permitted Transferee.
(ii) In connection with any proposed transfer of any
Ownership Interest in a Class R Certificate, the Trustee shall as a
condition to registration of the transfer, require delivery to it, in
form and substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G from
the proposed transferee to the effect that such transferee is
a Permitted Transferee and that it is not acquiring its
Ownership Interest in the Class R Certificate that is the
subject of the proposed transfer as a nominee, trustee or
agent for any Person who is not a Permitted Transferee; and
(B) a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by and
to abide by the transfer restrictions applicable to the Class
R Certificates.
(iii) Any attempted or purported transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 6.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee
shall, in violation of the provisions of this Section 6.02, become a
Holder of a Class R Certificate, then the prior Holder of such Class R
Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Class R Certificate was not in
fact permitted by this Section 6.02, be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Class R Certificate. The Trustee shall be under no liability to
any Person for any registration of transfer of a Class R Certificate
that is in fact not permitted by this Section 6.02 or for making any
distributions due on such Class R
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151
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of the Agreement so long
as the Trustee received the documents specified in clause (ii). The
Trustee shall be entitled to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at the time
such distributions were made all distributions made on such Class R
Certificate. Any such distributions so recovered by the Trustee shall
be distributed and delivered by the Trustee to the prior Holder of
such Class R Certificate that is a Permitted Transferee.
(iv) If any Person other than a Permitted Transferee
acquires any Ownership Interest in a Class R Certificate in violation
of the restrictions in this Section 6.02, then the Trustee shall have
the right but not the obligation, without notice to the Holder of such
Class R Certificate or any other Person having an Ownership Interest
therein, to notify the Seller to arrange for the sale of such Class R
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Seller or its affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of such Class R
Certificate that is a Permitted Transferee, except that in the event
that the Trustee determines that the Holder of such Class R
Certificate may be liable for any amount due under this Section 6.02
or any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (iv) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Class R
Certificate as a result of its exercise of such discretion.
(v) If any Person other than a Permitted Transferee
acquires any Ownership Interest in a Class R Certificate in violation
of the restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Seller will provide to the
Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply (and the
applicable portions of the legend on a Class R Certificate may be deleted) to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee,
(i) written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion
of Counsel to the effect that such removal will not cause the REMIC created
hereunder to fail to qualify as a REMIC.
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EXHIBIT H
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Avco ABS Receivables Corp.
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
[Trustee]
[Trustee Address]
Re:: Avco Financial Home Equity Loan Trust 199_-_
Home Equity Loan Asset-Backed Certificates,
Series 199_-_, Class [ ]
Ladies and Gentlemen:
In connection without disposition of the above certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being
disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to,
or solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner that
would be deemed, or taken any other action which would result in, a violation
of Section 5 of the Act and (c) to the extent we are disposing of a Class R
Certificate, we have knowledge the Transferee is not a Permitted Transferee.
Very truly yours,
___________________________
Print Name of Transferor
By: ______________________
Authorized Officer
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EXHIBIT I
FORM OF REQUEST FOR RELEASE
[DATE]
[Trustee]
[Trustee Address]
Re: Avco Financial Home Equity Loan Trust 199_-_
Home Equity Loan Asset-Backed Certificates, Series 199_-_
Ladies and Gentlemen:
In connection with the administration of the Home Equity Loans held by
you as Trustee under the Pooling and Servicing Agreement dated as of
______________ ___, 199_, among Avco ABS Receivables Corp., as Seller, Avco
Financial Services Management Company, as Master Servicer, Avco Financial
Services, Inc., as Representative, each of the Originators listed on Exhibit D
thereto and you, as Trustee (the "Agreement"), we hereby request a release of
the Mortgage File held by you as Trustee with respect to the following
described Home Equity Loan for the reason indicated below.
Loan No.:_
Reason for requesting file:
____ 1. Home Equity Loan paid in full. (The Master Servicer hereby
certifies that all amounts received in connection with the
payment in full of the Home Equity Loan which are required to
be deposited in the Collection Account pursuant to Section
3.02 of the Agreement have been so deposited).
____ 2. Retransfer of Home Equity Loan. (The Master Servicer hereby
certifies that the Purchase Price has been deposited in the
Collection Account pursuant to the Agreement.)
____ 3. The Home Equity Loan is being foreclosed.
____ 4. The Home Equity Loan is being re-financed by another
depository institution. (The Master Servicer hereby certifies
that all amounts received in connection with the
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payment in full of the Home Equity Loan which are required to
be deposited in the Collection Account pursuant to Section
3.02 of the Agreement have been so deposited).
____ 5. Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
promptly be returned to the Trustee when the need therefor by the Master
Servicer no longer exists unless the Home Equity Loan has been liquidated.
Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.
AVCO FINANCIAL SERVICES
MANAGEMENT COMPANY
By: ______________________________
Name:
Title: Servicing Officer
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155
EXHIBIT J
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
Avco ABS Receivables Corp.
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
[Trustee]
[Trustee Address]
Re: Avco Financial Home Equity Loan Trust 199_-_
Home Equity Loan Asset-Backed Certificates,
Series 199_-_, Class [ ]
--------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Seller concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan, (e) we are
acquiring the Certificates for investment for our own account and not with a
view to any distribution of such Certificates (but without prejudice to our
right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (g) below), (f) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, or
taken any other action which would result in a violation of Section 5 of the
Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense
provide an opinion of counsel satisfactory to the addressees of
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156
this Certificate that such sale, transfer or other disposition may be made
pursuant to an exemption from the Act, (2) the purchaser or transferee of such
Certificate has executed and delivered to you a certificate to substantially
the same effect as this certificate, and (3) the purchaser or transferee has
otherwise complied with any conditions for transfer set forth in the Pooling
Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By: ______________________________
Authorized Officer
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157
EXHIBIT K
FORM OF RULE 144A LETTER
[DATE]
Avco ABS Receivables Corp.
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
[Trustee]
[Trustee Address]
Re: Avco Financial Home Equity Loan Trust 199_-_
Home Equity Loan Asset-Backed Certificates,
Series 199_-_, Class [ ]
--------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates
we certify that (a) we understand that the Certificates are not being
registered under the Securities Act of 1933, as amended (the "Act"), or any
state securities laws and are being transferred to us in a transaction that is
exempt from the registration requirements of the Act and any such laws, (b) we
have had the opportunity to ask questions of and receive answers from the
Seller concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (c) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or
a plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (d) we have not, nor has
anyone acting on our behalf offered, transferred, pledged, sold or otherwise
disposed of the Certificates, any interest in the Certificates or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security from, or otherwise approached or negotiated with
respect to the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates
under the Securities Act or that would render the disposition of the
Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(e) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities
K-1
158
Act and have completed either of the forms of certification to that effect
attached hereto as Annex 1 or Annex 2. We are aware that the sale to us is
being made in reliance on Rule 144A. We are acquiring the Certificates for our
own account or for resale pursuant to Rule 144A and further, understand that
such Certificates may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases for
its own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in reliance
on Rule 144A, or (ii) pursuant to another exemption from registration under the
Securities Act.
K-2
159
ANNEX 1 TO EXHIBIT K
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of
the Buyer.
(b) In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $______(1) in securities (except for
the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A
and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business
trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business
of which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank
or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which
is attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and
loan association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority
---------------------------------
(1) Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case, Buyer
must own and/or invest on a discretionary basis at least $10,000,000 in
securities.
1-K-1
160
having supervision over any such institutions or is a
foreign savings and loan association or equivalent
institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is
attached hereto.
___ Broker-dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange
Act of 1934.
___ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is
the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
subject to supervision by the insurance commissioner
or a similar official or agency of a State, territory
or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established
and maintained by a State, its political
subdivisions, or any agency or instrumentality of the
State or its political subdivisions, for the benefit
of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment
advisor registered under the Investment Advisors
Act of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S.
Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940.
(c) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
(d) For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their
1-K-2
161
market value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market. Further, in determining such
aggregate amount, the Buyer may have included securities owned by subsidiaries
of the Buyer, but only if such subsidiaries are consolidated with the Buyer in
its financial statements prepared in accordance with generally accepted
accounting principles and if the investments of such subsidiaries are managed
under the Buyer's direction. However, such securities were not included if the
Buyer is a majority-owned, consolidated subsidiary of another enterprise and
the Buyer is not itself a reporting company under the Securities Exchange Act
of 1934, as amended.
(e) The Buyer acknowledges that it is familiar with Rule 144A
and understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule 144A.
(f) Until the date of purchase of the Rule 144A Securities,
the Buyer will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a reaffirmation
of this certification as of the date of such purchase. In addition, if the
Buyer is a bank or savings and loan is provided above, the Buyer agrees that it
will furnish to such parties updated annual financial statements promptly after
they become available.
Print Name of Buyer
By:___________________________
Name:
Title:
Date:
1-K-3
162
ANNEX 2 TO EXHIBIT K
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(g) As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
1. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment Companies,
the cost of such securities was used, except (i) where the Buyer or the Buyer's
Family of Investment Companies reports its securities holdings in its financial
statements on the basis of their market value, and (ii) no current information
with respect to the cost of those securities has been published. If clause
(ii) in the preceding sentence applies, the securities may be valued at market.
___ The Buyer owned $______ in securities (other than the
excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $_____in securities
(other than the excluded securities referred to
below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in
accordance with Rule 144A).
2. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
2-K-1
163
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
4. The Buyer is familiar with Rule 144A and under-stands that
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
5. Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
Print Name of Buyer or Adviser
By:___________________________
Name:
Title:
IF AN ADVISER:
______________________________
Print Name of Buyer
Date:
2-K-2
164
EXHIBIT L
FORM OF INSURANCE COMPANY LETTER
[DATE]
Avco ABS Receivables Corp.
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
[Trustee]
[Trustee Address]
Re: Avco Financial Home Equity Loan Trust 199_-_
Home Equity Loan Asset-Backed Certificates,
Series 199_-_, Class [ ]
--------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition o the above-captioned Certificates,
[Name of Officer] certifies that:
a. That he [she] is [Title of Officer] of [Name of Transferee]
(the "Transferee"), an insurance company duly authorized and existing under the
laws of the State of _________, on behalf of which he [she] makes this
representation (the "Representation").
b. The Transferee is an insurance company investing assets of its
"insurance company general account" and the exemption provided by Section
III(a) of Department of Labor Prohibited Transaction Class Exemption 95-60, 60
Fed. Reg. 35925 (July 12, 1995) applies to the Transferee's acquisition and
holding of such Certificate.
c. The Transferee hereby acknowledges that under the terms of the
Agreement, no transfer of any ERISA-restricted Certificate shall be permitted
unless the Trustee has received either (i) a representation from the transferee
of such Certificate acceptable to and in form and substance satisfactory to the
Trustee, that such transferee is not an employee benefit plan or arrangement (a
"Plan") subject to section 406 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or subject to section 4975 of the internal
Revenue Code of 1986, as amended (the "Code"), nor a person acting on behalf of
any such Plan, nor using the assets of such
L-1
165
Plan to effect such transfer, (ii) if the purchaser is an insurance company
purchasing such Certificate with funds in its general account, a representation
in effect similar to this Representation, or (iii) an Opinion of Counsel
satisfactory to the Trustee, to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code.
d. All terms used and not otherwise defined in this
Representation shall have the same meanings assigned to them in the Agreement.
[e. The Certificates shall be registered in the name of
______________, as nominee for the Transferee.]
IN WITNESS HEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer], this day of _______, 199_.
______________________________
[Name of Transferee]
By: __________________________
Name:
Title:
The undersigned hereby acknowledges that
it is holding and will hold the Certifi-
cate at the exclusive direction of and as
nominee of the Transferee named above.
______________________________
[Name of Transferee]
By: __________________________
Name:
Title:
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166
EXHIBIT M
FORM OF TRUSTEE INITIAL CERTIFICATION
__________, 199__
[Certificate Insurer]
[Certificate Insurer Address]
Avco ABS Receivables Corp.
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Avco Financial Services Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Avco Financial Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of ________
__, 199_relating to Avco Financial Home Equity Loan
Trust 199_-_
-----------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the attachment hereto, if any (the "Loan Exception Report"), it or
the Custodian on its behalf has received an Assignment of Mortgage, or a
certified copy thereof, and a Mortgage Note with respect to each Home Equity
Loan listed in the Home Equity Loan Schedule and the documents contained
therein appear to bear original signatures.
The Trustee has made no independent examination of any such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Home Equity Loans identified on the Home
M-1
167
Equity Loan Schedule, or (ii) the collectibility, insurability, effectiveness
or suitability of any such Home Equity Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[NAME OF TRUSTEE]
as Trustee
By: __________________________
Name: __________________________
Title: __________________________
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168
EXHIBIT N
FORM OF TRUSTEE FINAL CERTIFICATION
__________, 199__
[Certificate Insurer]
[Certificate Insurer Address]
Avco ABS Receivables Corp.
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Avco Financial Services Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Avco Financial Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of ________
__, 199_relating to Avco Financial Home Equity Loan
Trust 199_-_
-----------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the attachment hereto, as to each Home Equity Loan listed in the
Home Equity Loan Schedule (other than any Home Equity Loan paid in full or
listed on the attachment hereto) it or the Custodian on its behalf has reviewed
the documents delivered to it or to the Custodian on its behalf pursuant to
Section 2.01 (other than items listed in Section 2.01(a)(vii) and (viii)) of
the Pooling and Servicing Agreement and has determined that (i) all such
documents are in its possession or in the possession of the Custodian on its
behalf, (ii) such documents have been reviewed by it and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such
Home Equity Loan, (iii) based on its examination, and only as to the foregoing
documents, the information set forth in the Home Equity Loan Schedule
respecting such Home Equity Loan is correct and (iv) each Mortgage Note has
been
N-1
169
endorsed as provided in Section 2.01 of the Pooling and Servicing Agreement.
Further, each Mortgaged Property is a Residential dwelling of the type set
forth in the appraisal obtained in connection with the origination of the
related Home Equity Loan.
The Trustee has made no independent examination of such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Home Equity Loans identified on the Home Equity
Loan Schedule, or (ii) the collectibility, insurability, effectiveness or
suitability of any such Home Equity Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[NAME OF TRUSTEE],
as Trustee
By: __________________________
Name: __________________________
Title: __________________________
N-2