-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ikal8iYvZ8vW73Pf3nuv7eDTU9UR/SiEXbC31qFOl7lORvzlaz+7cQTQUx8RLdp7 7G6sb3HHa4LCzsJQ5yFBwg== 0000950123-98-008900.txt : 19981012 0000950123-98-008900.hdr.sgml : 19981012 ACCESSION NUMBER: 0000950123-98-008900 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980924 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981009 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANC ONE ABS CORP CENTRAL INDEX KEY: 0001013866 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 311467431 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-03457 FILM NUMBER: 98723654 BUSINESS ADDRESS: STREET 1: 201 NORTH CENTRAL AVE STREET 2: C/O BANK ONE ARIZONA N A CITY: PHOENIX STATE: AZ ZIP: 85004 BUSINESS PHONE: 6142486347 MAIL ADDRESS: STREET 1: 100 EAST BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43271-0133 8-K 1 BANC ONE ABS CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT ----------------------- Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): September 24, 1998 BANC ONE ABS CORPORATION (Exact Name of Registrant as Specified in Its Charter) United States 333-59845 None Available (State or Other (Commission File Number) (IRS Employer Jurisdiction of Identification Nos.) Incorporation) 100 East Broad Street Columbus, Ohio 43271-0158 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (614) 248-5700 Not Applicable (Former Name or Former Address if Changed Since Last Report) Exhibit Index located at Page 2 2 Items 1 through 4 and Items 6, 8 and 9 are not included because they are not applicable. Item 5. Other Events. On September 24, 1998, Banc One ABS Corporation, as Depositor and Bank One, N.A., as Servicer (the "Depositor" and "Servicer") entered into a Pooling and Servicing Agreement, dated as of August 31, 1998 (the "Pooling and Servicing Agreement"), with The Bank of New York, as trustee (the "Trustee"). Pursuant to the Pooling and Servicing Agreement, a Trust was created into which the Depositor deposited the Mortgage Loans listed in the Mortgage Loan Schedule attached as Exhibit C to the Pooling and Servicing Agreement. The Trust issued $850,000,000 HELOC Asset-Backed Certificates, Series 1998-1 (the "Certificates"). The Underwriting Agreement between the Depositor and Credit Suisse First Boston Corporation, as representative of the several underwriters (the "Underwriters") relating to the sales of the Certificates, the Pooling and Servicing Agreement and the Mortgage Loan Purchase Agreement among Bank One, N.A., Bank One, Arizona, N.A., Bank One, Colorado, N.A., Bank One Illinois, N.A., Bank One, Indiana, N.A., Bank One, Kentucky, N.A., Bank One, Utah, N.A., Bank One, West Virginia, N.A., Bank One, Wisconsin, (each a "Seller," and collectively, the "Sellers") and the Depositor, are attached as Exhibits. The aggregate Cut-Off Date Pool Balance of the Mortgage Loans was approximately $867,346,931, as indicated in more detail in the Mortgage Loan Schedule attached as Exhibit C to the Pooling and Servicing Agreement. Capitalized terms used herein and not defined herein have the same meaning ascribed to such terms in the Pooling and Servicing Agreement. Item 7. Exhibits. (a) Executed exhibits - The following exhibits to the Form S-3 Registration Statement of the Registrant are hereby filed:
Exhibit Sequentially Number Numbered Exhibit Page --------------------------------------------------------------------------------------------- 1.1 Underwriting Agreement 4.1 Pooling and Servicing Agreement 10.1 Mortgage Loan Purchase Agreement
2 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BANC ONE ABS CORPORATION (Registrant) September 24, 1998 By: /s/ Suzanne Bachman ------------------------------- Name: Suzanne Bachman Title: Securitization Manager 3 4 Exhibit Index -------------
Exhibit Sequentially Number Numbered Exhibit Page --------------------------------------------------------------------------------------------- 1.1 Underwriting Agreement 4.1 Pooling and Servicing Agreement 10.1 Mortgage Loan Purchase Agreement
EX-1.1 2 UNDERWRITING AGREEMENT 1 EXHIBIT 1.1 Banc One HELOC Trust 1998-1 $850,000,000 HELOC ASSET-BACKED CERTIFICATES, Series 1998-1 Banc One ABS Corporation (DEPOSITOR) UNDERWRITING AGREEMENT September 16, 1998 CREDIT SUISSE FIRST BOSTON CORPORATION as Representative (the "Representative") of the Several Underwriters named herein 11 Madison Avenue New York, NY 10010 Ladies and Gentlemen: 1. Introductory. Banc One ABS Corporation, an Ohio corporation (the "Depositor") and a wholly-owned subsidiary of BANC ONE CORPORATION, proposes to cause Banc One HELOC Trust 1998-1 (the "Trust") to issue and sell $850,000,000 principal amount of its HELOC Asset-Backed Certificates, Series 1998-1 (the "Certificates") to the several underwriters named in Schedule I attached hereto (the "Underwriters"), for whom you (the "Representative") are acting as representative. The assets of the Trust include, among other things, a pool of adjustable rate home equity revolving credit line loans made or to be made in the future (the "Mortgage Loans"), under certain home equity revolving credit line loan agreements (the "Credit Line Agreements") and secured by either first or second deeds of trust or mortgages on primarily one- to four-family residential properties (the "Mortgaged Properties"); the collections in respect of the Mortgage Loans received after August 31, 1998 (the "Cut-off Date"); property that secured a Mortgage Loan which has been acquired by foreclosure or deed in lieu of foreclosure; an irrevocable and unconditional certificate guaranty insurance policy (the "Policy") to be issued by MBIA Insurance Corporation (the "Insurer"); an assignment of the Depositor's rights under the Mortgage Loan Purchase Agreement (as defined herein); rights under certain hazard insurance policies covering the Mortgaged Properties; and certain other property. The Trust will be formed, and the Certificates will be issued, pursuant to a Pooling and Servicing Agreement to be dated as of August 31, 1998 (the "Pooling and Servicing Agreement") among the Depositor, Bank One, N.A., a national banking association, as servicer (the "Servicer") and The Bank of New York, as trustee (the "Trustee"). The Mortgage Loans and 2 certain other assets of the Trust Fund will be sold by each of Bank One, N.A., Bank One, Arizona, N.A., Bank One, Wisconsin, Bank One, Indiana, N.A., Bank One, Illinois, N.A., Bank One, Kentucky, N.A., Bank One, Colorado, N.A., Bank One, Utah, N.A. and Bank One, West Virginia, N.A. (each, a "Seller" and together the "Sellers") to the Depositor pursuant to the Mortgage Loan Purchase Agreement to be dated as of August 31, 1998 (the "Mortgage Loan Purchase Agreement") among the Depositor and the Sellers and, by the Depositor to the Trust pursuant to the Pooling and Servicing Agreement. This Agreement, the Pooling and Servicing Agreement, the Mortgage Loan Purchase Agreement, the letter agreement (the "Letter Agreement") attached as Exhibit A hereto and each agreement to which the Depositor and the Insurer are parties (the "Insurance Agreements") are collectively referred to herein as the "Basic Documents." Capitalized terms used and not otherwise defined herein shall have the meanings given them in the Pooling and Servicing Agreement. 2. Representations and Warranties of the Depositor. (a) The Depositor represents and warrants to and agrees with the Underwriters that: (i) The Depositor has filed with the Securities and Exchange Commission (the "Commission"), a registration statement (No. 333-59845) on Form S-3, including a prospectus, relating to the Certificates, which has become effective. Such registration statement, as amended as of the date of this Agreement, is hereinafter referred to as the "Registration Statement," and the prospectus included in such Registration Statement, as supplemented to reflect the terms of the Certificates as first filed with the Commission after the date of this Agreement pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under the Securities Act of 1933, as amended (the "Act"), including all material incorporated by reference therein, is hereinafter referred to as the "Prospectus." A "preliminary prospectus" means any form of prospectus, including any prospectus supplement, relating to the Certificates used prior to the date of this Agreement that is subject to completion. (ii) On September 11, 1998, the effective date of the Registration Statement, such Registration Statement conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder (the "Rules and Regulations") and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and on the date of this Agreement the Registration Statement conform, and at the time of the filing of the Prospectus in accordance with Rule 424(b), the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the Rules and Regulations, and neither of such documents will include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the foregoing does not apply to -2- 3 statements in or omissions from any of such documents based upon (i) written information furnished to the Depositor by any Underwriter through the Representative specifically for use therein, it being understood that the only such information consists of the Underwriters' Information (as defined in Section 2(b)) or (ii) the Derived Information (as defined in Section 7 below) contained in the Current Report (as defined in Section 5(n) below) or in any amendment thereof or supplement thereto, incorporated by reference in such Registration Statement or such Prospectus (or any amendment thereof or supplement thereto). The Depositor acknowledges that any information furnished by any of the Underwriters specifically for use in the Registration Statement, any preliminary prospectus or the Prospectus is the Underwriters' Information (as defined in Section 2(b) below). (iii) The Certificates meet the requirements for use of Form S-3 under the Act. (iv) This Agreement has been duly authorized, executed and delivered by the Depositor. The execution, delivery and performance of this Agreement and each of the other Basic Documents to which it is a party and the issuance and sale of the Certificates and compliance with the terms and provisions hereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any agreement or instrument to which the Depositor is a party or by which the Depositor is bound or to which any of the properties of the Depositor is subject which could reasonably be expected to have a material adverse effect on the transactions contemplated herein. The Depositor has full corporate power and authority to cause the Trust to (a) authorize, the Trustee to execute and deliver the Certificates to the Seller and (b) sell the Certificates to the Underwriters, all as contemplated by this Agreement. (v) Other than as contemplated by this Agreement or as disclosed in the Prospectus, there is no broker, finder or other party that is entitled to receive from or on behalf of the Depositor any brokerage or finder's fee or other fee or commission as a result of any of the transactions contemplated by this Agreement. (vi) All material legal or governmental proceedings, contracts or documents of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement have been so described or filed as required. (vii) The documents incorporated by reference in the Registration Statement and Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder. (viii) As of the Closing Date (as defined below), the representations and warranties of (a) the Depositor herein shall be true and correct in all material respects and (b) the Depositor, the Sellers and the Servicer in the Basic Documents to which each is a -3- 4 party will be true and correct in all material respects and each such representation and warranty is so incorporated herein by reference. (ix) The Certificates, when duly and validly authorized by the Depositor, and, when executed and authenticated as specified in the Pooling and Servicing Agreement, and delivered and paid for pursuant hereto will be validly issued and outstanding and will be entitled to the benefits of the Pooling and Servicing Agreement. (x) As of the Closing Date, the Mortgage Loans and related property will have been duly and validly assigned to the Trustee in accordance with the Basic Documents; and when such assignment is effected, a duly and validly perfected transfer of all such Mortgage Loans will have occurred, subject to no prior lien, mortgage, security interest, pledge, charge or other encumbrance created by the Depositor or the Sellers. (xi) Neither the transfer from the Depositor to the Trustee, acting on behalf of the Trust, of the Mortgage Loans and other Trust Assets conveyed by it to the Trust pursuant to the Pooling and Servicing Agreement, nor the issuance, sale and delivery of the Certificates, nor the fulfillment of the terms of the Certificates, will conflict with, or result in a breach, violation or acceleration of, or constitute a default under, any term or provision of the organizational documents of the Depositor or any material indenture or other material agreement or instrument to which the Depositor is a party or by which it or its properties is bound or result in a violation of or contravene the terms of any statute, order or regulation applicable to the Depositor of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Depositor or will result in the creation of any lien upon any material property or assets of the Depositor. (xii) The Depositor has caused the Servicer to deliver to the Underwriters or to counsel for the Underwriters complete and correct copies of publicly available portions of the Consolidated Reports of Condition and Income of the Servicer for the close of business June 30, 1998, as submitted to the Board of Governors of the Federal Reserve System; except as set forth in or contemplated in the Registration Statement and the Prospectus, there has been no material adverse change in the financial condition or results of operations of the Servicer since June 30, 1998. (xiii) Any taxes, fees and other governmental charges in connection with the execution, delivery and performance by the Depositor of the Basic Documents and the execution, delivery and sale of the Certificates shall have been paid or will be paid by or on behalf of the Depositor at or prior to the Closing Date to the extent then due. (xiv) The Depositor has filed the preliminary prospectus supplement relating to the Certificates pursuant to and in accordance with Rule 424(b). -4- 5 (b) The Depositor hereby agrees with the Underwriters that, for all purposes of this Agreement, the only information furnished to the Depositor by the Underwriters specifically for use in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus, are the final two paragraphs on the cover page of, statements with respect to stabilization on the second page of, and the statements under the caption "Underwriting" in, the preliminary prospectus and the Prospectus (collectively, the "Underwriters' Information"). 3. Purchase, Sale and Delivery of the Certificates. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Depositor agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Depositor, the entire principal amount of the Certificates set forth opposite the name of such Underwriter in Schedule I hereto at a purchase price of 99.75% of the principal amount thereof. The Investor Certificate Rate for each Interest Period shall equal one-month LIBOR for such Interest Period (determined in accordance with the Pooling and Servicing Agreement) plus 0.25%. The Depositor will deliver the Certificates to the Representative, for the account of the Underwriters, against payment of the purchase price to or upon the order of the Depositor by wire transfer or check in Federal (same day) Funds, at the office of Orrick, Herrington & Sutcliffe, LLP, 666 Fifth Avenue, New York, New York 10103 at 10:00 a.m., New York time on September 24, 1998, or at such other time not later than seven full business days thereafter as the Representative and the Depositor determine, such time being herein referred to as the "Closing Date." The Certificates to be so delivered will be initially represented by one or more Certificates registered in the name of Cede & Co., as the nominee of The Depository Trust Company ("DTC") or one of the relevant depositories. The interests of beneficial owners of the Certificates will be represented by book entries on the records of, as directed by the Representative, DTC in the United States or Cedel Bank, societe anonyme or the Euroclear System in Europe, and participating members thereof. Definitive Certificates will be available only under the limited circumstances specified in the Pooling and Servicing Agreement. 4. Offering by the Underwriters. It is understood that, the several Underwriters propose to offer the Certificates for sale to the public (which may include selected dealers) on the terms set forth in the Prospectus. 5. Covenants of the Depositor. The Depositor covenants and agrees with the several Underwriters that: (a) The Depositor will file the Prospectus, properly completed, with the Commission pursuant to and in accordance with subparagraph (2) (or, if applicable and if consented to by the Representative, subparagraph (5)) of Rule 424(b) not later than the second business day following the execution and delivery of this Agreement. The Depositor will advise the Representative promptly of any such filing pursuant to Rule 424(b). -5- 6 (b) The Depositor will advise the Representative promptly of any proposal (on or prior to any date within 90 days of the date of the Prospectus) to amend or supplement the Registration Statement as filed or the related prospectus or the Registration Statement or the Prospectus and will not effect such amendment or supplementation without the consent of the Representative, which consent shall not be unreasonably withheld or delayed; the Depositor will also advise the Representative promptly of any request by the Commission (on or prior to any date within 90 days of the date of the Prospectus) for any amendment of or supplement to the Registration Statement or the Prospectus or for any additional information; and the Depositor will also advise the Representative promptly of the effectiveness of the Registration Statement (if the effective time is subsequent to the execution of this Agreement) and of any amendment or supplement to the Registration Statement or the Prospectus and of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threat of any proceeding for that purpose and the Depositor will use its reasonable best efforts to prevent the issuance of any such stop order and to obtain as soon as possible the lifting of any issued stop order. (c) If, at any time when a prospectus relating to the Certificates is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Depositor promptly will prepare and file with the Commission an amendment or supplement which will correct such statement or omission, or an amendment or supplement which will effect such compliance. Neither the consent of the Representative to, nor the delivery by the Representative of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6. (d) The Depositor will timely prepare and file all periodic reports required to be filed pursuant to Section 15(d) of the Exchange Act as interpreted by the Commission through certain No-Action Letters, on behalf of the Trust, with the Commission until no longer required to do so as permitted by Section 15(d) of the Exchange Act. (e) The Depositor will furnish to the Representative and its counsel copies of the Registration Statement (including all exhibits), each related preliminary prospectus supplement, the Prospectus and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Representative reasonably requests. (f) The Depositor will take all actions which are reasonably necessary to arrange for the qualification of the Certificates for sale under the laws of such jurisdictions as the Representative designates and will continue such qualifications in effect so long as required for the distribution; provided, however, that in no event shall the Depositor be obligated to qualify as a foreign corporation or to execute a general or unlimited consent to service of process in any such jurisdiction. -6- 7 (g) For a period from the date of this Agreement until the retirement of the Certificates, or until such time as the Underwriters shall cease to maintain a secondary market in the Certificates, whichever occurs first, the Depositor will deliver to the Representative, if requested, the annual statements of compliance and the annual independent certified public accountants' reports furnished to the Trustee pursuant to the Pooling and Servicing Agreement, as soon as such statements and reports are furnished to the Trustee. (h) So long as any of the Certificates are outstanding, the Depositor will furnish to the Representative (i) as soon as practicable after the end of the fiscal year all documents required to be distributed to Certificateholders or filed with the Commission on behalf of the Trust pursuant to the Exchange Act, or any order of the Commission thereunder and (ii) from time to time, any other information concerning the Depositor as the Representative may reasonably request only insofar as such information reasonably relates to the Registration Statement or the transactions contemplated by the Basic Documents. (i) On or before the Closing Date, the Depositor shall and shall cause each Seller to mark each of its respective books and records (including any computer records) relating to the Mortgage Loans to show the absolute ownership by the Trustee on behalf of the Trust of the Mortgage Loans, and from and after the Closing Date none of the Depositor, the Sellers or the Servicer, shall take any action inconsistent with the ownership by the Trustee on behalf of the Trust of such Mortgage Loans, other than as permitted by the Pooling and Servicing Agreement. (j) To the extent, if any, that any of the ratings provided with respect to the Certificates by the rating agency or agencies that initially rate the Certificates are conditional upon the furnishing of documents or the taking of any other actions by the Depositor, on or prior to the Closing Date, the Depositor shall furnish such documents and take any such other actions. A copy of any such document shall be provided to the Representative at the time it is delivered to the rating agencies. (k) For the period beginning on the date of this Agreement and ending on the Closing Date, neither the Depositor nor any Affiliate or trust originated, directly or indirectly, by the Depositor or any Affiliate (or any trust, partnership or other entity sponsored by the Depositor or any Affiliate or in which the Depositor or any Affiliate is a partner or a stockholder) will, without the prior written consent of the Representative, offer to issue or issue notes collateralized by, or certificates (other than the Certificates) evidencing an ownership interest in, Mortgage Loans; provided, however, that except as otherwise provided by the Basic Documents, this shall not be construed to prevent (i) the sale of Mortgage Loans by any Affiliate of the Depositor to any person or (ii) any sales or grants of participations in and to Mortgage Loans by one or more Affiliates of the Depositor to one or more other Affiliates of the Depositor. (l) The Depositor will apply the net proceeds of the sale of the Certificates that it receives in the manner set forth in the Prospectus under the caption "Use of Proceeds." -7- 8 (m) The Depositor will pay or cause to be paid all costs and expenses incident to the performance of its obligations under this Agreement, including but not limited to (i) the printing and filing of the documents (including the Registration Statement, preliminary prospectuses and Prospectus), (ii) the preparation, issuance and delivery of the Certificates to the Representative, (iii) the fees and disbursements of the Depositor's counsel and accountants, (iv) the qualification of the Certificates under securities laws in accordance with the provisions of Section 5(f), including filing fees and the fees and disbursements of counsel for the Representative in connection therewith and in connection with the preparation of any blue sky or legal investment survey, if any is requested, (v) the printing and delivery to the Underwriters, of copies of the Registration Statement as originally filed and of each amendment thereto, (vi) the printing and delivery to the Underwriters of copies of any blue sky or legal investment survey prepared in connection with the Certificates, (vii) any fees charged by rating agencies for the rating of the Certificates, and (viii) the fees and expenses of Orrick, Herrington & Sutcliffe, LLP. (n) To the extent that any Underwriter (i) has provided Collateral Term Sheets to the Depositor that such Underwriter has provided to a prospective investor, the Depositor has filed such Collateral Term Sheets (as defined in Section 7 below) as an Exhibit to a Current Report on Form 8-K within two business days of its receipt thereof, (ii) has provided Structural Term Sheets or Computational Materials to the Depositor that such Underwriter has provided to a prospective investor, the Depositor will file or cause to be filed with the Commission a report on a Current Report on Form 8-K containing such Structural Term Sheets and Computational Materials, as soon as reasonably practicable after the date of this Agreement, but in any event, not later than the date on which the Prospectus is filed with the Commission pursuant to Rule 424 under the Act, or (iii) has provided Series Term Sheets (as defined in Section 7 below) to the Depositor that such Underwriter has provided to a prospective investor, the Depositor has filed such Series Term Sheets as an Exhibit to a Current Report on Form 8-K within two business days of its receipt thereof. The Current Reports on Form 8-K referred to in the preceding sentence are collectively referred to herein as the "Current Report." (o) On or prior to the date of issuance of the Certificates, the Depositor will obtain one or more certificate insurance policies (each, a "Policy") issued by the Insurer for the benefit of the holders of the Certificates. 6. Conditions of the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Certificates will be subject to the accuracy, as of the date hereof and as of the Closing Date, of the representations and warranties contained or incorporated herein, to the accuracy of the written statements of officers of the Depositor, made pursuant to the provisions of this Section, to the performance by the Depositor, of its obligations hereunder and to the following additional conditions precedent: (a) The Prospectus and any supplements thereto shall have been filed with the Commission in accordance with the Rules and Regulations and Section 5(a) hereof. Prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have -8- 9 been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Depositor or the Representative, shall be contemplated by the Commission. (b) The Representative shall have received a letter, on or prior to the date of this Agreement of Arthur Andersen LLP with respect to certain agreed-upon procedures, confirming that such accountants are independent public accountants within the meaning of the Act and the Rules and Regulations, and substantially in the form of the draft to which the Representative has previously agreed and otherwise in form and substance reasonably satisfactory to the Representative and counsel for the Underwriters. (c) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development involving a prospective change materially and adversely affecting (A) the property of the Trust taken as a whole or (B) the business or properties of the Depositor, the Sellers, the Servicer or BANC ONE CORPORATION which, in the reasonable judgment of a majority in interest of the Underwriters (including the Representative) in the case of either (A) or (B) makes it impractical or inadvisable to market the Certificates on the terms and in the manner contemplated in the Prospectus; (ii) any downgrading (other than a downgrade by Standard & Poor's, in connection with the "CreditWatch with negative implication" previously announced on September 3, 1998) in the rating of any debt securities of BANC ONE CORPORATION or any of its Affiliates by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), or any public announcement that any such organization has under surveillance or review its rating of any such debt securities (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange; (iv) any suspension of trading of any securities of BANC ONE CORPORATION on any exchange or in the over-the-counter market; (v) any banking moratorium declared by Federal or New York authorities; or (vi) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress, or any other substantial national or international calamity or emergency if, in the judgment of a majority in interest of the Underwriters (including the Representative), the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Certificates. It is understood that on or about October 1, 1998, BANC ONE CORPORATION will be merged with and into its wholly owned subsidiary, BANK ONE CORPORATION (the "Merger"). As a result, following such Merger, all references to BANC ONE CORPORATION as set forth in this Section 6(c) shall be deemed to be references to BANK ONE CORPORATION. (d) The Representative shall have received an opinion of counsel to the Depositor acceptable to the Representative and counsel for the Underwriters, dated the Closing Date, satisfactory in form and substance to the Representative and counsel for the Underwriters, to the effect that: -9- 10 (i) The Depositor has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Ohio, with corporate power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted and to enter into and perform its obligations under the Basic Documents to which it is a party. (ii) The Depositor has duly authorized, executed and delivered the written order to the Trustee to execute and deliver the Certificates. (iii) The Depositor has duly authorized, executed, and delivered the Basic Documents to which it is a party. (iv) Neither the transfer of the property of the Trust by the Depositor to the Trustee on behalf of the Trust, nor the execution and delivery by the Depositor of the Basic Documents to which it is a party, nor the consummation by the Depositor of the transactions contemplated by the Basic Documents to which it is a party nor the performance by the Depositor of its obligations thereunder will (i) violate the articles of incorporation or the by-laws, each as amended, of the Depositor or (ii) violate or contravene the terms of applicable provisions of statutory law or regulation. (v) To such counsel's knowledge, there are no actions, proceedings or investigations pending against the Depositor or threatened against the Depositor before any court, administrative agency, or tribunal (i) asserting the invalidity of the Trust or any of the Basic Documents, (ii) seeking to prevent the consummation of any of the transactions contemplated by the Basic Documents or the execution and delivery thereof, or (iii) that could reasonably be expected to materially and adversely affect the enforceability of the Basic Documents against the Depositor or the ability of the Depositor to perform its obligations thereunder. (vi) No consent, license, approval, authorization or order of, or filing with, any court or governmental agency or body is required of the Depositor for the consummation of the transactions contemplated in the Basic Documents, except such consents, licenses, approvals, authorizations or orders as have been obtained or such filings as have been made and except where the failure to obtain the same would not have a material adverse effect upon the rights of the Certificateholders. Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of this type and are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they are admitted to practice only in the State of Ohio and that they are not admitted to the Bar in any other State, that they express no opinion as to the laws of any jurisdiction other than the federal law of the United States of America and the laws of the State of Ohio. -10- 11 (e) The Representative shall have received the opinion of Orrick, Herrington & Sutcliffe, special counsel to the Sellers and the Servicer, or such other counsel acceptable to the Representative and counsel for the Underwriters, dated the Closing Date, satisfactory in form and substance to the Representative and counsel for the Underwriters, to the effect that: (i) When the Certificates have been duly executed, delivered and authenticated in accordance with the Pooling and Servicing Agreement and delivered and paid for pursuant to the Underwriting Agreement, the Certificates will be validly issued, outstanding and entitled to the benefits of the Pooling and Servicing Agreement, subject as to enforceability to the effects of applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar laws now or hereafter in effect relating to creditors' rights generally and subject to general principles of equity (whether in a proceeding at law or in equity). (ii) The Basic Documents are legal, valid, and binding obligations of the Depositor, enforceable against the Depositor in accordance with their respective terms, subject as to enforceability to the effects of applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar laws now or hereafter in effect relating to creditors' rights generally and subject to general principles of equity (whether applied in a proceeding at law or in equity). (iii) The Depositor is not, and will not as a result of the offer and sale of the Certificates as contemplated in the Prospectus and the Underwriting Agreement become, an "investment company" as defined in the Investment Company Act or a company "controlled by" an "investment company" within the meaning of the Investment Company Act. (iv) The Pooling and Servicing Agreement need not be qualified under the Trust Indenture Act and the Trust is not required to register under the Investment Company Act. (v) The statements in the Prospectus under the headings "Summary -- Federal Tax Considerations," "Certain Federal Income Tax Consequences," "State Taxes," "ERISA Considerations," "Summary of Terms -- Federal Income Tax Considerations," "Federal Income Tax Considerations," "State Tax Considerations," "Summary of Terms--ERISA Considerations" and "ERISA Considerations," to the extent that they constitute statements of matters of law or legal conclusions with respect thereto, have been reviewed by such counsel and accurately describe the material consequences to holders of the Certificates under the Code and ERISA. (vi) Such counsel shall state that they have participated in the preparation of the Registration Statement and that nothing has come to their attention to cause them to believe that the Registration Statement, as of the Effective Time, contained an untrue -11- 12 statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading or that the Prospectus, as of its date or the Closing Date, contains any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that such counsel need not express any view with respect to the financial, statistical or computational material contained in the Registration Statement or the Prospectus. Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of this type and are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they are admitted to practice only in the State of New York and that they are not admitted to the Bar in any other State, that they express no opinion as to the laws of any jurisdiction other than the federal law of the United States of America, the General Corporate Law of the State of Delaware and the laws of the State of New York. (f) The Representative shall have received the opinion of counsel to the Sellers and the Servicer acceptable to the Representative and counsel for the Underwriters, dated the Closing Date, satisfactory in form and substance to the Representative and counsel for the Underwriters, to the effect that: (i) Each of the Sellers and the Servicer has been duly organized and is validly existing as a national banking association (except in the case of Bank One, Wisconsin which is a Wisconsin state bank) in good standing under the laws of the United States of America (or in the case of Bank One, Wisconsin the laws of the state of Wisconsin), with corporate power and authority to own its properties, to conduct its business as now conducted and as proposed to be conducted by it and to enter into and perform its obligations under the Basic Documents to which it is a party and the Servicer has the power, authority and legal right to service the Mortgage Loans. (ii) The Servicer has obtained all necessary licenses and approvals in each jurisdiction in which the failure to obtain such licenses or approvals would materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, any Basic Documents to which it is a party. (iii) Each of the Sellers and the Servicer has duly authorized, executed and delivered the Basic Documents to which it is a party, and the Basic Documents to which it is a party are the legal, valid and binding obligations of each of the Sellers and the Servicer, as applicable, enforceable against each of the Sellers and the Servicer, as applicable, in accordance with the respective terms thereof, subject as to enforceability, to the effects of applicable insolvency, receivership, conservatorship and other similar laws affecting the rights of creditors' generally or the rights of creditors of institutions the deposits in which are insured by the Federal Deposit Insurance Corporation ("FDIC") and -12- 13 subject to general principles of equity (whether applied in a proceeding at law or in equity). (iv) Neither the execution and delivery by any of the Sellers or the Servicer of any Basic Documents to which it is a party nor the consummation by any of the Sellers or the Servicer of the transactions contemplated therein nor the fulfillment of the terms thereof by any of the Sellers or the Servicer will conflict with, result in a breach, violation or acceleration of, or constitute a default under, any term or provision of the articles of association or by-laws of any of the Sellers or the Servicer or result in a violation of or contravene the terms of any statute, order or regulation applicable to any of the Sellers or the Servicer of any court, regulatory body, administrative agency or governmental body having jurisdiction over it. (v) To such counsel's knowledge, there are no actions, proceedings or investigations pending or threatened against any of the Sellers or the Servicer before or by any governmental authority that could reasonably be expected to materially and adversely affect the performance by any of the Sellers or the Servicer of its obligations under, or the validity or enforceability of, any Basic Documents to which any of the Sellers or the Servicer is a party. (vi) Neither the execution and delivery by any of the Sellers or the Servicer nor the consummation by any of the Sellers or the Servicer of the transactions contemplated therein nor the fulfillment of the terms thereof by any of the Sellers or the Servicer will result in a breach, violation or acceleration of, or constitute a default under, any term or provision of any indenture or other agreement or instrument of which such counsel has knowledge after due inquiry to which any of the Sellers or the Servicer is a party or by which it is bound. Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of this type and are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they express no opinion as to the laws of any jurisdiction other than the federal law of the United States of America and the laws of the States of Wisconsin and New York. (g) The Representative shall have received an opinion addressed to it of Stroock & Stroock & Lavan LLP, in its capacity as special counsel to the Underwriters, dated the Closing Date, with respect to the validity of the Certificates and such other related matters as the Representative shall reasonably require and the Depositor shall have furnished or caused to be furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass upon such matters. (h) The Policy shall have been duly authorized, executed, issued and delivered by the Insurer, all fees due and payable to the Insurer as of the Closing Date shall have been paid in full at or prior to the Closing Date, and the Policy shall conform in all material respects to the -13- 14 description thereof in the Registration Statement and the Prospectus (and any supplements thereto). (i) The Representative shall have received the opinion of Shaw, Pittman, Potts & Trowbridge, counsel to the Insurer, or such other counsel acceptable to the Representative and counsel to the Underwriters, dated the Closing Date, satisfactory in form and substance to the Representative and counsel to the Underwriters, to the effect that: (i) The Insurer is duly organized and validly existing under the laws of the jurisdiction of its incorporation, is duly qualified and/or licensed to do business in all jurisdictions where the nature of its operations as contemplated in the Insurance Agreements requires such qualification, and has the power and authority (corporate and other) to issue the Policy and to enter into the Insurance Agreements and to perform its obligations under the Insurance Agreements. (ii) The execution, delivery and performance by the Insurer of the Insurance Agreements and the Policy have been duly authorized by all necessary corporate action on the part of the Insurer. (iii) The execution, delivery and performance by the Insurer of the Insurance Agreements and the Policy do not require the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of any state or other governmental agency or authority which has not previously been effected. (iv) The Insurance Agreements and the Policy have been duly authorized, executed and delivered by the Insurer, and constitute legal, valid and binding obligations of the Insurer, enforceable against the Insurer in accordance with their respective terms, except to the extent that the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, conservatorship, moratorium or other similar laws now or hereafter in effect relating to creditors' rights as such laws would apply in the event of the insolvency, liquidation or reorganization or other similar occurrence with respect to the Insurer or the event of any moratorium or similar occurrence affecting the Insurer. (v) The obligations of the Insurer under the Policy will rank equally with the general obligations and all other unsecured indebtedness of the Insurer outstanding on the Closing Date or thereafter that are not contractually subordinated to the payment of such obligations under the Policy. (vi) The Policy is not required to be registered under the Act in connection with the offer and sale of the Certificates in the manner contemplated in the Prospectus. Such opinions may be subject to such counsel's customary practices and limitations relating to the scope of such counsel's participation in the preparation of the Registration Statement and the Prospectus and its investigation or verification of information -14- 15 contained therein, such counsel also shall state that it has no reason to believe that as of the Closing Date any of the information contained in the Prospectus in (x) the paragraph titled "The Certificate Insurer" under the heading "Summary" or (y) under the heading "The Certificate Insurer" includes any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (other than financial, numerical and statistical information contained therein as to which such counsel need express no opinion). (j) The Representative shall have received a certificate, dated the Closing Date, of a Vice President or more senior officer of the Insurer stating that such officer had no reason to believe that as of the Effective Date any of the information contained in the Prospectus in (x) the paragraph titled "Certificate Insurer" under the heading "Summary" or (y) under the heading "The Certificate Insurer" includes any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) On or prior to the Closing Date, there has been no downgrading, nor shall any notice have been given of (i) any intended or potential downgrading or (ii) any review or possible change in rating, the direction of which has not been indicated, in the rating accorded the Insurer's claims paying ability by any "nationally recognized statistical rating organization" (as such term is defined for purposes of the Exchange Act). (l) The Representative shall have received from counsel an opinion or opinions of counsel dated the Closing Date and satisfactory in form and substance to the Representative and counsel for the Underwriters, as to the income tax treatment of the Certificates in Ohio. (m) The Representative shall have received an opinion of counsel to the Trustee acceptable to the Representative and counsel for the Underwriters, dated the Closing Date, in form and in substance satisfactory to the Representative and counsel for the Underwriters, to the effect that: (i) The Certificates have been duly executed, authenticated and delivered by the Trustee in accordance with the terms of the Pooling & Servicing Agreement. (ii) The Trustee is a banking corporation validly existing under the laws of the state of New York and has the full power and authority to enter into, and to take all action required of it, under the Pooling and Servicing Agreement. (iii) The Pooling and Servicing Agreement has been duly authorized, executed and delivered by the Trustee and, assuming due authorization, execution and delivery of such document by all other parties thereto, constitutes the legal, valid and binding agreement of the Trustee, except as enforceability thereof may be limited by bankruptcy, insolvency, liquidation, reorganization, moratorium or other similar laws affecting the -15- 16 enforcement of rights of creditors against the Trustee generally, as such laws would apply in the event of bankruptcy, insolvency, liquidation, receivership or reorganization or any moratorium or similar occurrence affecting the Trustee, and the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law). (iv) To the best of such counsel's knowledge, there are no actions, proceedings or investigations pending or threatened against the Trustee under the Pooling and Servicing Agreement before any court, administrative agency or other tribunal (A) asserting the invalidity of the Pooling and Servicing Agreement or the Certificates, or (B) seeking to prevent the issuance of the Certificates or consummation of any of the transactions contemplated by the Pooling and Servicing Agreement or the Certificates, or (C) that might materially or adversely affect the performance by the Trustee of its obligations under, or the validity or enforceability of the Pooling and Servicing Agreement and the Certificates. (v) The execution and delivery of the Pooling and Servicing Agreement by the Trustee and the performance by the Trustee of its terms do not conflict with or result in a violation of (a) any law or regulation of the United States of America or the State of New York governing the banking or trust powers of the Trustee, or (b) the articles of association and by-laws of the Trustee. (vi) No consent, approval or authorization of, filing or registration with, or notice to, any court or governmental agency or regulatory authority is required for the Trustee in connection with the execution and delivery of, performance under, or compliance with, the Pooling and Servicing Agreement or the Certificates. (n) The Representative shall have received copies of each opinion (including without limitation, opinions with respect to true sale, FDIA and perfection in Mortgage Loans) of counsel delivered to either rating agency or the Insurer, together with a letter addressed to the Representative, dated the Closing Date, to the effect that each Underwriter may rely on each such opinion to the same extent as though such opinion was addressed to each as of its date. (o) The Underwriters shall have received certificates dated the Closing Date of each of the Depositor, the Sellers, and the Servicer, executed by any one of the Chairman of the Board, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer, any Assistant Treasurer, the Secretary, the principal financial officer or the principal accounting officer of each of the Depositor, the Sellers, and the Servicer, in which such officer of the Depositor, the Sellers, and the Servicer, as the case may be, shall state that, (i) to the best of its knowledge after reasonable investigation, the representations and warranties of the Depositor, the Sellers, and the Servicer, as applicable, contained in the Basic Documents to which each is a party, are true and correct in all material respects, (ii) that the Depositor, the Sellers, or the Servicer, as the case may be, has complied with all agreements and satisfied all conditions on its respective part to be performed or satisfied under such agreements at or prior to -16- 17 the Closing Date, (iii) in the case of the certificate from the Depositor only, that no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission, and (iv) since June 30, 1998, except as may be disclosed in the Prospectus or in such certificate and except with respect to Standard & Poor's placing the debt securities of BANC ONE CORPORATION on "CreditWatch with negative implication," no material adverse change, or any development involving a prospective material adverse change, in or affecting particularly the business or properties of the Depositor, the Sellers, or the Servicer, has occurred. (p) The Underwriters shall have received evidence satisfactory to it that, on or before the Closing Date, UCC-1 financing statements have been or are being filed in the appropriate filing offices reflecting the transfer of the interest in the Mortgage Loans and the proceeds thereof from the Sellers to the Depositor and from the Depositor to the Trustee on behalf of the Trust. (q) The Certificates shall be rated at least "AAA" or its equivalent by Moody's Investors Services, Inc. and Standard & Poor's, a division of The McGraw Hill Companies, Inc., and neither corporation shall have placed the Certificates under surveillance or review with possible negative implications. (r) The issuance of the Certificates shall not have resulted in a reduction or withdrawal by any Rating Agency of the current rating of any outstanding securities issued or originated by the Depositor. (s) The Representative shall have received, upon execution hereof, the duly executed agreement of Bank One, N.A. in the form attached as Exhibit A. (t) The Depositor will provide or cause to be provided to the Representative such conformed copies of such of the foregoing opinions, certificates, letters and documents as the Representative shall reasonably request. 7. Computational Materials. Each Underwriter represents, warrants, covenants and agrees with the Depositor that: (a) It either (A) has not provided any potential investor with a Collateral Term Sheet (that is required to be filed with the Commission within two business days of first use under the terms of the Public Securities Association Letter as described below), or (B) has, substantially contemporaneously with its first delivery of such Collateral Term Sheet to a potential investor, delivered such Collateral Term Sheet (in hard copy and on computer disk) to the Depositor or its counsel. (b) It either (A) has not provided any potential investor with a Structural Term Sheet, Series Term Sheets or Computational Materials, or (B) has promptly provided any such -17- 18 Structural Term Sheet, Series Term Sheets or Computational Materials (in hard copy and on computer disk) to the Depositor or its counsel. (c) Each Collateral Term Sheet bears a legend indicating that the information contained therein will be superseded by the description of the collateral contained in the Prospectus Supplement and, except in the case of the initial Collateral Term Sheet, that such information supersedes the information in all prior Collateral Term Sheets. (d) Each Structural Term Sheet, Series Term Sheet and all Computational Materials bear a legend substantially as follows (or in such other form as may be agreed prior to the date of the this Agreement): This information does not constitute either an offer to sell or a solicitation of an offer to buy any of the securities referred to herein. Information contained herein is confidential and provided for information only, does not purport to be complete and should not be relied upon in connection with any decision to purchase the securities. This information supersedes any prior versions hereof and will be deemed to be superseded by any subsequent versions including, with respect to any description of the securities or the underlying assets, the information contained in the final Prospectus and accompanying Prospectus Supplement. Offers to sell and solicitations of offers to buy the securities are made only by the final Prospectus and the related Prospectus Supplement. (e) It (at its own expense) agrees to obtain and provide to the Depositor one or more accountants' letters relating to the Collateral Term Sheets, Structural Term Sheets, Series Term Sheets and Computational Materials, which accountants' letters shall be addressed to the Depositor. (f) It has not, and will not, without the prior written consent of the Depositor, provide any Collateral Term Sheets, Structural Term Sheets, Series Term Sheets or Computational Materials to any investor after the date of this Agreement. (g) Any Series Term Sheets, Collateral Term Sheet, Structural Term Sheet, Series Term Sheet or Computational Materials do not contain any untrue statement of a material fact and do not omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except to the extent that any such misstatement or omission results from a Depositor Error (as defined in Section 8 below). For purposes of this Agreement, "Series Term Sheets," "Collateral Term Sheets" and "Structural Term Sheets" shall have the respective meanings assigned to them (a) in the case of Series Term Sheets, in the no-action letter addressed to Greenwood Trust Depositor, Discover Card Master Trust I dated April 5, 1996, and (b) in the case of Collateral Term Sheets and Structural Term Sheets, in the February 13, 1995 letter of Cleary, Gottlieb, Steen & Hamilton on -18- 19 behalf of the Public Securities Association (which letter, and the SEC staff's response thereto, are publicly available February 17, 1995). The term "Collateral Term Sheet" as used herein includes any subsequent Collateral Term Sheet that reflects a substantive change in the information presented. "Computational Materials" has the meaning assigned to it in the no-action letter dated May 20, 1994 issued by the Division of Corporation Finance of the Commission to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder Structured Asset Corporation, the no-action letter dated May 27, 1994 issued by the Division of Corporation Finance of the Commission to the Public Securities Association and the no-action letter of February 17, 1995 issued by the Commission to the Public Securities Association. For purposes of this Agreement, as to each Underwriter, the term "Derived Information" means such information, if any, in the Series Term Sheets, Collateral Term Sheets, Structural Term Sheets and/or Computational Materials that is not contained in either (i) the final Prospectus taking into account information incorporated therein by reference (other than information incorporated by reference from the Series Term Sheets, Collateral Term Sheets, Structural Term Sheets and/or Computational Materials) or (ii) any computer tape furnished by the Depositor (the "Computer Tape"). (h) It has not delivered any Series Term Sheets, Collateral Term Sheets, Structural Term Sheets and/or Computational Materials to any investors in the Certificates. 8. Indemnification and Contribution. (a) The Depositor will indemnify and hold each Underwriter harmless against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Depositor will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents (x) in reliance upon and in conformity with the Underwriters' Information or (y) with respect to Derived Information included in any Current Report or any amendment or supplement thereof, except to the extent that any untrue statement or alleged untrue statement therein results (or is alleged to have resulted) from an error or material omission in the information concerning the characteristics of the Mortgage Loans furnished by or on behalf of the Depositor to the Underwriters for use in the preparation of any Collateral Term Sheet, Structural Term Sheet, Series Term Sheet or Computational Materials (the "Depositor Provided Information"), which error was not superseded or corrected by the delivery to the Underwriters of corrected written or -19- 20 electronic information, or for which the Depositor provided written notice of such error to the Underwriters prior to the confirmation of the sale of the applicable Certificates (any such uncorrected information a "Depositor Error"); provided, further, that the Depositor shall not be liable to any Underwriter to the extent that any such loss, claim, damage or liability of such Underwriter arises as a result of a misstatement or omission or alleged misstatement or omission in any related preliminary prospectus that was corrected in the Prospectus (and copies of which Prospectus were furnished to the Underwriters) and such Underwriter, if required by law, failed to give or send to the purchaser, at or prior to the written confirmation of sale, a copy of the Prospectus. (b) (i) Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Depositor against any and all losses, claims, damages or liabilities to which the Depositor may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus or any amendment or supplement thereto, or any related preliminary prospectus or preliminary prospectus supplement, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Depositor by such Underwriter through the Representative specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Depositor in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, it being understood and agreed that the only such information furnished by any Underwriter consists of the Underwriters' Information. (ii) Each Underwriter severally agrees, assuming (a) all information provided by the Depositor (including the Computer Tape and any other Depositor Provided Information) is accurate and complete in all material respects and (b) the Depositor's independent public accountants have determined that the Derived Information agrees with the Computer Tape, to indemnify and hold harmless the Depositor, against any and all losses, claims, damages or liabilities, joint or several, to which they may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement of a material fact contained in the Derived Information prepared by such Underwriter and incorporated by reference into the Registration Statement, or arise out of or are based upon the omission or alleged omission to state in such Derived Information a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that no such indemnity shall be available for any losses, claims, damages or liabilities, or actions in respect thereof to the extent any such untrue statement or alleged untrue statement therein results directly from an error in the information on the Computer Tape or in any other information concerning the Mortgage Loans provided by the Depositor to any Underwriter in writing or through electronic transmission) and agrees to reimburse each such indemnified party for any legal or other -20- 21 expenses reasonably incurred by it in connection with investigating or defending or preparing to defend any such loss, claim, damage, liability or action as such expenses are incurred. (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b). In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by the indemnified party of the counsel appointed by the indemnifying party, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that (i) if the indemnified party or parties reasonably determine that there may be a conflict between the positions of the indemnifying party or parties and of the indemnified party or parties in conducting the defense of such action, suit, investigation, inquiry or proceeding or that there may be legal defenses available to such indemnified party or parties different from or in addition to those available to the indemnifying party or parties, then counsel for the indemnified party or parties shall be entitled to conduct the defense to the extent reasonably determined by such counsel to be necessary to protect the interests of the indemnified party or parties, except that in no event shall the indemnifying party be liable for the expenses of more than one separate counsel representing the indemnified parties who are parties to such action, suit, investigation, inquiry or proceeding and (ii) in any event, the indemnified party or parties shall be entitled, at its or their own expense to have counsel chosen by such indemnified party or parties participate in, but not conduct, the defense. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability from any claims that are the subject matter of such action. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnifying party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Depositor on the one hand and the Underwriters on the other from the offering of the Certificates or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the -21- 22 relative fault of the Depositor on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Depositor on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering of the Certificates (before deducting expenses) received by the Depositor bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Depositor or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total underwriting discounts and or commissions received by the related Underwriter exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The obligations of the Depositor under this Section shall be in addition to any liability which the Depositor may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Depositor, to each officer of the Depositor who has signed the Registration Statement and to each person, if any, who controls the Depositor within the meaning of the Act. 9. Survival of Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Depositor or its officers and of the Underwriters set forth in or made pursuant to this Agreement or contained in certificates of officers of the Depositor submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation or statement as to the results thereof, made by or on behalf of any Underwriter, the Depositor or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Certificates. If for any reason the purchase of the Certificates by the Underwriters is not consummated, the Depositor shall remain responsible for the expenses to be paid or reimbursed by the Depositor pursuant to Section 5(m) hereof and the respective obligations of the Depositor and the Underwriters pursuant to Section 8 shall remain in effect. If for any reason the purchase of the Certificates by the Underwriters is not consummated (other than because of a failure to satisfy -22- 23 the conditions set forth in items (iii), (v) and (vi) of Section 6(c) or Section 6(k), the Depositor will reimburse the Underwriters for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Certificates. 10. Failure to Purchase the Certificates. If any Underwriter or Underwriters default in its obligations to purchase the principal amount of Certificates opposite such Underwriter's name on Schedule I hereto, and the aggregate principal amount that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of the Certificates, the Representative may make arrangements satisfactory to the Depositor for the purchase of such Certificates by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing Date, the nondefaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Certificates that such defaulting Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of the Certificates with respect to such default or defaults exceed 10% of the total principal amount of the Certificates, and arrangements satisfactory to the Representative are not made by the Depositor for the purchase of such Certificates by other persons within 48 hours after such default, this Agreement will terminate without liability on the part of any nondefaulting Underwriter or the Depositor, except as provided in Section 9. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter or Underwriters from liability for its default. 11. Notices. Any written request, demand, authorization, direction, notice, consent or waiver shall be personally delivered or mailed certified mail, return receipt requested (or in the form of telex or facsimile notice, followed by written notice as aforesaid) and shall be deemed to have been duly given upon receipt, if sent to the Representative, when delivered to 11 Madison Avenue, 20th Floor, New York, New York 10010, Attention: Investment Banking Department -- Transactions Advisory Group (fax # (212) 318-0532), and if sent to the Depositor, when delivered to 150 East Gay Street, 20th Floor, Columbus, Ohio 43215, Attention: Dan Long (fax # (614) 248-9544). 12. Successors. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8, and no other person will have any right or obligations hereunder. 13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 14. Representation of Underwriters. The Representative will act for the several Underwriters in connection with the transactions described in this Agreement, and any action taken by Representative under this Agreement will be binding upon all the Underwriters. -23- 24 15. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to the choice of law provisions thereof. -24- 25 If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement between the Depositor and the Underwriters in accordance with its terms. Very truly yours, BANC ONE ABS CORPORATION By:_________________________________ Name: Daniel A. Long, Jr. Title: Vice President The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first written above. CREDIT SUISSE FIRST BOSTON CORPORATION By:_____________________________ Name: Nita S. Cherry Title: Director Acting on behalf of itself and as Representative of the several Underwriters -25- 26 SCHEDULE I
INITIAL PRINCIPAL UNDERWRITER AMOUNT OF CERTIFICATES ----------- ---------------------- Credit Suisse First Boston Corporation $170,000,000 Banc One Capital Markets, Inc. $170,000,000 First Chicago Capital Markets, Inc. $170,000,000 Lehman Brothers Inc. $170,000,000 Salomon Smith Barney Inc. $170,000,000
-1- 27 EXHIBIT A September 16, 1998 Credit Suisse First Boston Corporation as Representative of the Several Underwriters 11 Madison Avenue New York, NY 10010 Re: Underwriting Agreement dated September 16, 1998 (the "Underwriting Agreement") between Banc One ABS Corporation (the "Company") and Credit Suisse First Boston Corporation, as representative (the "Representative") of the Several Underwriters named therein (the "Underwriters") Ladies and Gentlemen: Pursuant to the Underwriting Agreement, the Company has undertaken certain financial obligations to the Underwriters. Any financial obligations of the Company (including all fees to be paid) under the Underwriting Agreement, whether or not specifically enumerated in this paragraph, are hereinafter referred to as the "Joint and Several Obligations"; provided, however, that "Joint and Several Obligations" shall mean only the financial obligations of the Company under the Underwriting Agreement (including without limitation the payment of money damages for a breach of any of the Company's representations, warranties or obligations, whether financial or otherwise). As a condition of its execution of the Underwriting Agreement, the Representative has required the undersigned to acknowledge its joint-and-several liability with the Company for the payment of the Joint and Several Obligations under the Underwriting Agreement. Now, therefore, the Representative on behalf of the Underwriters and BANC ONE CORPORATION, do hereby agree that: A-1 28 (i) BANC ONE CORPORATION hereby agrees to be absolutely and unconditionally jointly and severally liable with the Company to the Underwriters for the payment of the Joint and Several Obligations. (ii) BANC ONE CORPORATION may honor its obligations hereunder either by direct payment of any Joint and Several Obligations or by causing any Joint and Several Obligations to be paid to the Underwriters by the Company or another affiliate of BANC ONE CORPORATION (iii) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to the choice of law provisions thereof. (iv) This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. (v) This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8 of the Underwriting Agreement, and no other person will have any right or obligations hereunder. (vi) Any written request, demand, authorization, direction, notice, consent, or waiver shall be personally delivered or mailed certified mail, return receipt requested (or in the form of telex or facsimile notice, followed by written notice as aforesaid) and shall be deemed to have been duly given upon receipt, if sent to the Representative, when delivered to 11 Madison Avenue, New York, NY 10010, Attention: Investment Banking Department--Transactions Advisory Group (fax # (212) 318-0532); and if sent to BANC ONE CORPORATION, when delivered to 150 East Gay Street, 20th Floor, Columbus, Ohio 43215, Attention: Dan Long (fax # (614) 248-9544). A-2 29 Capitalized terms used herein and not defined herein shall have their respective meanings as set forth in the Agreement. Very truly yours, BANC ONE CORPORATION By:______________________________ Name: Peter W. Atwater Title: Treasurer Acknowledged and Agreed: CREDIT SUISSE FIRST BOSTON CORPORATION By:_____________________________ Name: Nita S. Cherry Title: Director Acting on behalf of itself and as Representative of the several Underwriters. A-3 EX-4.1 3 POOLING AND SERVICING AGREEMENT 1 Exhibit 4.1 EXECUTION COPY BANC ONE ABS CORPORATION, as Depositor, BANK ONE, N.A., as Servicer, and THE BANK OF NEW YORK, as Trustee ------------------------ POOLING AND SERVICING AGREEMENT Dated as of August 31, 1998 ------------------------ HELOC Asset-Backed Certificates Series 1998-1 2 TABLE OF CONTENTS ARTICLE I Definition
PAGE Section 1.01. Definitions...........................................................................1 Section 1.02. Interest Calculations................................................................17 ARTICLE II Conveyance of Mortgage Loans; Original Issuance of Investor Certificates; Tax Treatment Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances Under Credit Line Agreements...............................................................18 Section 2.02. Acceptance by Trustee; Retransfer of Mortgage Loans..................................21 Section 2.03. Representations and Warranties Regarding the Servicer................................23 Section 2.04. Assignment of Representations and Warranties of the Sellers Regarding the Mortgage Loans; Retransfer of Certain Mortgage Loans.................................24 Section 2.05. Covenants of the Depositor...........................................................26 Section 2.06. Retransfers of Mortgage Loans at Election of the Holder of the Transferor Interest.............................................................................27 Section 2.07. Execution and Authentication of Investor Certificates................................28 Section 2.09. Representations and Warranties of the Depositor......................................29 ARTICLE III Administration and Servicing of Mortgage Loans Section 3.01. The Servicer.........................................................................29 Section 3.02. Collection of Certain Mortgage Loan Payments.........................................31 Section 3.03. Withdrawals from the Collection Account..............................................32 Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses........................33 Section 3.05. Assumption and Modification Agreements...............................................34 Section 3.06. Realization Upon Defaulted Mortgage Loans............................................34 Section 3.07. Trustee to Cooperate.................................................................35 Section 3.08. Servicing Compensation; Payment of Certain Expenses by Servicer......................35 Section 3.09. Annual Statement as to Compliance....................................................36 Section 3.10. Annual Servicing Report..............................................................36 Section 3.11. RESERVED.............................................................................36
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PAGE Section 3.12. Access to Certain Documentation and Information Regarding the Mortgage Loans.........36 Section 3.13. Maintenance of Certain Servicing Insurance Policies..................................37 Section 3.14. Reports to the Securities and Exchange Commission....................................37 Section 3.15. Tax Returns..........................................................................37 Section 3.16. Information Required by the Internal Revenue Service Generally and Reports of Foreclosures and Abandonments of Mortgaged Property..................................37 ARTICLE IV Servicing Certificate Section 4.01. Servicing Certificate................................................................38 Section 4.02. Claims upon the Policy; Policy Payments Account......................................41 Section 4.03. Spread Account.......................................................................42 Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation...............................43 ARTICLE V..............................Payments and Statements to Certificateholders; Rights of Certificateholders Section 5.01. Distributions........................................................................44 Section 5.02. Calculation of the Investor Certificate Rate.........................................46 Section 5.03. Statements to Certificateholders.....................................................46 Section 5.04. Rights of Certificateholders and holder of the Transferor Interest...................48 ARTICLE VI The Certificates Section 6.01. The Certificates.....................................................................48 Section 6.02. Registration of Transfer and Exchange of Investor Certificates; Appointment of Registrar............................................................................49 Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates....................................51 Section 6.04. Persons Deemed Owners................................................................51 Section 6.05. Restrictions on Transfer of Transferor Interest......................................51 Section 6.06. Appointment of Paying Agent..........................................................53 Section 6.07. Acceptance of Obligations............................................................54 ARTICLE VII The Servicer, the Seller and the Depositor Section 7.01. Liability of the Servicer and the Depositor..........................................54
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PAGE Section 7.02. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer or the Depositor; Assignment of Servicing to an Affiliate............................54 Section 7.03. Limitation on Liability of the Servicer and Others...................................54 Section 7.04. Servicer Not to Resign...............................................................55 Section 7.05. Delegation of Duties.................................................................55 Section 7.06. Indemnification of the Trust by the Servicer.........................................55 Section 7.07. RESERVED.............................................................................56 Section 7.08. Limitation on Liability of the holder of the Transferor Interest.....................56 ARTICLE VIII Servicing Termination Section 8.01. Events of Servicing Termination......................................................56 Section 8.02. Trustee to Act; Appointment of Successor.............................................58 Section 8.03. Notification to Certificateholders...................................................59 ARTICLE IX The Trustee Section 9.01. Duties of Trustee....................................................................59 Section 9.02. Certain Matters Affecting the Trustee................................................60 Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans................................62 Section 9.04. Trustee May Own Certificates.........................................................62 Section 9.05. Servicer to Pay Trustee's Fees and Expenses; Servicer to Indemnify...................63 Section 9.06. Eligibility Requirements for Trustee.................................................63 Section 9.07. Resignation or Removal of Trustee....................................................63 Section 9.08. Successor Trustee....................................................................64 Section 9.09. Merger or Consolidation of Trustee...................................................65 Section 9.10. Appointment of Co-Trustee or Separate Trustee........................................65 Section 9.11. Limitation of Liability..............................................................66 Section 9.12. Trustee May Enforce Claims Without Possession of Certificates........................66 Section 9.13. Suits for Enforcement................................................................66
-iii- 5 TABLE OF CONTENTS (continued)
PAGE ARTICLE X Termination Section 10.01. Termination..........................................................................67 ARTICLE XI Rapid Amortization Event Section 11.01. Rapid Amortization Events............................................................69 Section 11.02. Additional Rights Upon the Occurrence of Certain Events..............................70 ARTICLE XII Miscellaneous Provisions Section 12.01. Amendment............................................................................71 Section 12.02. Recordation of Agreement.............................................................73 Section 12.03. Limitation on Rights of Investor Certificateholders..................................73 Section 12.04. Governing Law........................................................................74 Section 12.05. Notices..............................................................................74 Section 12.06. Severability of Provisions...........................................................75 Section 12.07. Assignment...........................................................................75 Section 12.08. Investor Certificates Nonassessable and Fully Paid...................................75 Section 12.09. Third-Party Beneficiaries............................................................75 Section 12.10. Counterparts.........................................................................75 Section 12.11. Effect of Headings and Table of Contents.............................................75 Section 12.12. Insurance Agreement..................................................................75
-iv- 6 TABLE OF CONTENTS (continued) PAGE EXHIBITS Exhibit A Form of Investor Certificate A-1 Exhibit B Form of Transferor Interest B-1 Exhibit C Mortgage Loan Schedule C-1 Exhibit D Letter of Representations D-1 Exhibit E Form of Investor Letter E-1 Exhibit F Request for Release F-1 -v- 7 This Pooling and Servicing Agreement, dated as of August 31, 1998, among Banc One ABS Corporation, as Depositor (the "Depositor"), Bank One, N.A., as Servicer (the "Servicer"), and The Bank of New York, 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 Definition 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. Accelerated Principal Distribution Amount: With respect to any Distribution Date, the amount, if any, required to reduce the Investor Certificate Principal Balance (after giving effect to the distribution of all other amounts actually distributed on the Investor Certificates on such Distribution Date) so that the Invested Amount immediately following such Distribution Date exceeds the Investor Certificate Principal Balance (as so reduced) by the Required Overcollateralization Amount. Additional Balance: As to any Mortgage Loan and any date of determination, the aggregate amount of all Draws conveyed to the Trust pursuant to Section 2.01. 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. Agreement: This Pooling and Servicing Agreement and all amendments hereof and supplements hereto. Alternative Principal Payment: As to any Distribution Date, the amount (but not less than zero) equal to Principal Collections for such Distribution Date minus the aggregate of Draws made during the related Collection Period. Appointment Day: As defined in Section 11.02. 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, which assignment, notice of transfer or equivalent instrument may be in the form of one or more blanket assignments covering the Mortgage Loans secured by Mortgaged Properties located in the same jurisdiction. 8 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. 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 instrument the Bank Insurance Fund is not existing and performing duties now assigned to it, the body performing such duties on such date. Billing Cycle: With respect to any Mortgage Loan, the calendar month ending on the day that is 25 days prior to the related Due Date. Book-Entry Certificate: Any Investor 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). Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of New York or Ohio are required or authorized by law to be closed. Certificate Owner: The Person who is the beneficial owner of a Book-Entry Certificate. 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 an Investor 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 Investor Certificate registered in the name of the Servicer, or any Person known to a Responsible Officer to be an Affiliate of either the Depositor or the Servicer and (y) any Investor Certificate for which the Servicer, or any Person known to a Responsible Officer to be an Affiliate of either the Servicer or the Depositor is the Certificate Owner shall be deemed not to be outstanding (unless to the knowledge of a Responsible Officer (i) the Servicer or the Depositor, or such Affiliate is acting as trustee or nominee for a Person who is not an Affiliate of the Servicer or the Depositor and who makes the voting decision with respect to such Investor Certificate or (ii) the Servicer or the Depositor or such Affiliate is the Certificate Owner of all the Investor Certificates) and the Percentage Interest evidenced thereby shall not be taken into account in determining whether the requisite amount of Percentage Interests necessary to effect any such consent, direction, waiver or request has been obtained. Closing Date: September 24, 1998. 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 Investor Certificateholders and the Credit Enhancer pursuant to Section 3.02(b). 2 9 Collection Period: With respect to any Distribution Date (other than the first Distribution Date) and any Mortgage Loan, the calendar month preceding such Distribution Date. With respect to the first Distribution Date, the period beginning on the day immediately following the Cut-Off Date and ending on September 30, 1998. Combined Loan-to-Value Ratio: With respect to any Mortgage Loan as of any date of determination, the percentage equivalent of a fraction, the numerator of which is the sum of (i) the Credit Limit as of origination and (ii) the outstanding principal balance of any senior mortgage loan as of the origination of such Mortgage Loan, and the denominator of which is the value, based on appraised value or other acceptable valuation method in accordance with the applicable Seller's underwriting guidelines, for the related Mortgaged Property determined at origination of such Mortgage Loan. 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 101 Barclay Street, Floor 12E, New York, New York 10286, Attention: Franklin Austin. Credit Enhancement Draw Amount: As to any Distribution Date, an amount equal to the sum of (x) the amount by which the amount to be distributed to Investor Certificateholders on such Distribution Date pursuant to Section 5.01(a)(ii) exceeds the amount of Investor Interest Collections, Reallocated Investor Principal Collections and amounts deposited from the Spread Account on deposit in the Collection Account on the Business Day preceding such Distribution Date, (y) the Guaranteed Principal Distribution Amount for such Distribution Date and (z) any Preference Claim for such Distribution Date. Credit Enhancer: MBIA Insurance Corporation, a New York domiciled insurance company, or any successor thereto. Credit Enhancer Default: The failure by the Credit Enhancer to make a payment required under the Policy in accordance with the terms thereof. Credit Limit: As to any Mortgage Loan, the maximum Principal Balance permitted under the terms of the related Credit Line Agreement. Credit Limit Utilization Rate: As to any Mortgage Loan, the percentage equivalent of a fraction the numerator of which is the Cut-Off Date Principal Balance of such Mortgage Loan, and the denominator of which is the related Credit Limit. Credit Line Agreement: With respect to any Mortgage Loan, the related credit line account agreement executed by the related Mortgagor and any amendment or modification thereto. Custodial Agreement: Any Custodial Agreement between any Custodian and the Trustee relating to the custody of the Mortgage Loans and the Related Documents, which is reasonably acceptable in form and substance to the Credit Enhancer. 3 10 Custodian: Any custodian appointed by the Trustee under a Custodial Agreement (subject to the approval of the Rating Agencies and the Credit Enhancer) to maintain all or a portion of the Mortgage Files pursuant to Section 2.01(b). Cut-Off Date: The end of business on August 31, 1998. Cut-Off Date Pool Balance: The Pool Balance calculated as of the Cut-Off Date. Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the unpaid principal balance thereof as of the Cut-Off Date. Cut-Off Date Weighted Average Gross Margin: 1.38%. Defective Mortgage Loan: A Mortgage Loan subject to retransfer pursuant to Section 2.02 or 2.04. Definitive Certificates: As defined in Section 6.02(c). Depositor: Banc One ABS Corporation, or its successor in interest. Depository: The initial Depository shall be The Depository Trust Company, the nominee of which is Cede & Co., as the registered Holder of Investor Certificates evidencing $850,000,000 in initial aggregate principal amount of the Investor 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 the Depository effects book-entry transfers and pledges of securities deposited with the Depository. Determination Date: With respect to any Distribution Date, the third Business Day prior to such Distribution Date. Distribution Date: The twentieth day of each month, or if such day is not a Business Day, then on the next Business Day, commencing on October 20, 1998. Draw: With respect to any Mortgage Loan, an additional borrowing by the Mortgagor subsequent to the Cut-Off Date in accordance with the related Mortgage Note. Due Date: As to any Mortgage Loan, the day of the month (either the 5th, 10th, 15th, 20th or 25th) on which payments under such Mortgage Loan are due. Electronic Ledger: The electronic master record of home equity revolving credit line mortgage loans maintained by the Servicer or any Seller, as appropriate. Eligible Account: An account that is (i) maintained with a depository institution whose short-term debt obligations at the time of any deposit therein are rated in the highest short-term debt rating category by the Rating Agencies, (ii) an account or accounts maintained with a 4 11 depository institution with a minimum long term unsecured debt rating of Baa1 by Moody's and BBB+ by Standard & Poor's, provided that the deposits in such account or accounts are fully insured by either the BIF or the SAIF, (iii) a segregated trust account maintained with the corporate trust department of the Trustee or an Affiliate of the Trustee, in either case in its fiduciary capacity, or (iv) an account otherwise acceptable to each Rating Agency, as evidenced as of the Closing Date by delivery of a rating letter by each Rating Agency, and otherwise acceptable to the Credit Enhancer, as evidenced as of the Closing Date by delivery of the Policy by the Credit Enhancer and, thereafter, within 30 days of receipt of notice to each Rating Agency and to the Credit Enhancer of such deposit, by written consent of the Credit Enhancer. Eligible Affiliate Servicer: Any Affiliate of Bank One, N.A. to whom the Servicer assigns its rights and obligations hereunder, subject to approval by the Rating Agencies and the Credit Enhancer. Eligible Investment: One or more of the following: (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 is A-l+ for Standard & Poor's and P-1 for Moody's); (iii) certificates of deposit, time deposits and bankers' acceptances, each with an original maturity of not more than 90 days and, in the case of bankers' acceptances, an original maturity of no more than 365 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 (including Bank One, N.A., or any Affiliate thereof); 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 of Moody's and Standard & Poor's in its highest unsecured short-term debt rating category; (iv) commercial paper, with original maturities of not more than 270 days, of any corporation incorporated under the laws of the United States or any state thereof (including Bank One, N.A. or any Affiliate thereof) which on the date of acquisition has been rated by Standard & Poor's and Moody's in their highest short-term debt rating categories; (v) short term investment funds sponsored by any trust company or national banking association incorporated under the laws of the United States or any state thereof (including Bank One, N.A., or any Affiliate thereof) that as of the date of acquisition have been rated by Standard & Poor's and Moody's in their respective highest applicable rating category; 5 12 (vi) interests in any money market fund that, as of the date of acquisition of the interests in such fund and throughout the time such interests are held in such fund, has a rating of Aaa by Moody's and either AAAm or AAAm-G by Standard & Poor's, or such lower rating as will not result in the qualification, downgrading or withdrawal of the then-current rating assigned to the Investor Certificates by each Rating Agency without regard to the Policy; and (vii) other obligations or securities with respect to which the Trustee has notified the Credit Enhancer and each Rating Agency, that (A) are acceptable to the Credit Enhancer as an Eligible Investment hereunder as evidenced by a letter to such effect from the Credit Enhancer, (B) that will not result in a reduction in the then current rating of the Investor Certificates without regard to the Policy and (C) with respect to which the Servicer has received confirmation that, for tax purposes, the investment complies with the last clause of this definition; and (viii) in the case of amounts on deposit in the Spread Account only, in the commercial paper or other short-term debt obligation of Bank One, N.A. or any of its Affiliates; provided that the rating assigned to such commercial paper or other short-term debt obligation is at least "A2" and "P2" by Standard & Poor's and Moody's, respectively, and the long-term unsecured debt of Bank One, N.A. is rated at least "Baa2" and "BBB" by Moody's and Standard & Poor's, respectively, or such lower rating as is agreed to by the Rating Agencies as evidenced by a letter from each such Rating Agency; 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 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 Mortgage Loan: A Mortgage Loan substituted by the applicable Seller for a Defective Mortgage Loan that, as of the date of such substitution, (i) has an outstanding Principal Balance (or in the case of a substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an aggregate Principal Balance) approximately equal to any Transfer Deficiency relating to such Defective Mortgage Loan; (ii) has a Loan Rate not less than the Loan Rate of the Defective Mortgage Loan and not more than l.0% higher than the Loan Rate of such Defective Mortgage Loan; (iii) has a Loan Rate based on the Index and has the same Interest Rate Adjustment Date as that of the Defective Mortgage Loan; (iv) has a Gross Margin that is not less than the Gross Margin of the Defective Mortgage Loan and not more than l00 basis points higher than the Gross Margin of the Defective Mortgage Loan; (v) has a Mortgage of the same or higher level of priority as the Mortgage securing the Defective Mortgage Loan at the time such Mortgage was transferred to the Trust; (vi) has a remaining term to maturity not more than six months earlier and not more than sixty months later than the remaining term to maturity of the Defective Mortgage Loan; (vii) complies with each representation and warranty set forth in Section 2.04 (deemed to be made as of the date of substitution); and (viii) has an 6 13 original Combined Loan-to-Value Ratio not greater than that of the Defective Mortgage Loan. More than one Eligible Substitute Mortgage Loan may be substituted for a Defective Mortgage Loan if such Eligible Substitute Mortgage Loans meet the foregoing attributes in the aggregate and such substitution is approved in writing in advance by the Credit Enhancer. No Mortgage Loan may be substituted for a Defective Mortgage Loan on any date more than 120 days after the Closing Date. ERISA: Employee Retirement Income Security Act of 1974, as amended. Event of Servicing Termination: As defined in Section 8.01. FDIC: The Federal Deposit Insurance Corporation or any successor thereto. Fiscal Agent: As defined in the Policy. Foreclosure Profit: With respect to any Liquidated Mortgage Loan, any amount, by which (i) aggregate Net Liquidation Proceeds exceeds (ii) the related Principal Balance of such Liquidated Mortgage Loan immediately prior to the final recovery of Liquidation Proceeds, 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. Gross Margin: As to any Mortgage Loan (other than the Locked Balance relating to any Mortgage Loan as to which the Lock Feature has been exercised), the percentage set forth as the "Gross Margin" for such Mortgage Loan on Exhibit C hereto. Guaranteed Distribution: With respect to any Distribution Date, the sum of the (i) the Guaranteed Principal Distribution Amount and (ii) the amount to be distributed to Investor Certificateholders pursuant to Section 5.01(a)(ii) for such Distribution Date. Guaranteed Principal Distribution Amount: With respect to (i) any Distribution Date, other than the Distribution Date in January 2020, the amount by which the Investor Certificate Principal Balance (after giving effect to all distributions allocable to principal on the Investor Certificates on such Distribution Date, including without limitation any withdrawals from the Spread Account) exceeds the Invested Amount as of such Distribution Date and (ii) the Distribution Date in January 2020 the amount by which the outstanding Investor Certificate Principal Balance (after giving effect to all distributions allocable to principal on the Investor Certificates on such Distribution Date, including without limitation any withdrawals from the Spread Account) exceeds the aggregate amount on deposit in the Collection Account available to be distributed to the Investor Certificateholders pursuant to Section 5.01(b). HELOC Balance: With respect to any Mortgage Loan, the portion, if any, of the Principal Balance thereof subject to a variable Loan Rate. Index: With respect to each Mortgage Loan (other than any Locked Balance) and any Interest Rate Adjustment Date, the average weekly Bank Prime Loan Rate as published by the Board of Governors of the Federal Reserve System in Statistical Release H.15 for the week that includes the 15th day of the related month. 7 14 Insolvency Event: As defined in Section 11.02. Insurance Agreement: The insurance and reimbursement agreement dated as of the Closing Date among the Depositor, the Servicer, the Trustee and the Credit Enhancer, including any amendments and supplements thereto. Insurance Proceeds: Proceeds paid by any insurer (other than the Credit Enhancer) pursuant to any insurance policy covering a Mortgage Loan, or amounts required to be paid by the Servicer pursuant to the last sentence of Section 3.04, net of any component thereof (i) covering any expenses incurred by or on behalf of the Servicer in connection with obtaining such proceeds, (ii) that is applied to the restoration or repair of the related Mortgaged Property, (iii) released to the Mortgagor in accordance with the Servicer's normal servicing procedures or (iv) required to be paid to any holder of a mortgage senior to such Mortgage Loan. Interest Collections: With respect to any Distribution Date, (i) all payments by or on behalf of Mortgagors and any other amounts constituting interest (including without limitation any portion of Insurance Proceeds and Net Liquidation Proceeds allocable to interest on the applicable Mortgage Loan) collected by the Servicer under the Mortgage Loans (excluding any fees (including annual fees) or late charges or similar administrative fees paid by Mortgagors) plus (ii) any gains and investment earnings from amounts on deposit in the Collection Account during the related Collection Period minus (iii) the Servicing Fee payable to the Servicer with respect to the related Collection Period. The portion of each payment with respect to a Mortgage Loan that constitutes principal or interest shall be determined in accordance with the terms of the related Credit Line Agreement. Interest Period: With respect to any Distribution Date, the period beginning on the preceding Distribution Date (or, in the case of the first Distribution Date, on the Closing Date) and ending on the day preceding such Distribution Date. Interest Rate Adjustment Date: With respect to any Mortgage Loan, the date on which the Loan Rate is adjusted in accordance with the related Credit Line Agreement. Invested Amount: With respect to any Distribution Date, an amount equal to the Original Invested Amount minus the sum of (i) the amount of Investor Principal Collections previously distributed to Investor Certificateholders and (ii) any Investor Loss Amounts applied on prior Distribution Dates and not reimbursed. Investor Certificate: Any certificate executed and authenticated by the Trustee substantially in the form set forth in Exhibit A hereto. Investor Certificate Distribution Amount: As to any Distribution Date, the sum of all amounts to be distributed to the Holders of Investor Certificates pursuant to Article V and Article XI hereof. Investor Certificate Interest: With respect to any Distribution Date, interest for the related Interest Period at the applicable Investor Certificate Rate on the Investor Certificate Principal Balance as of the first day of such Interest Period (after giving effect to the distributions made on the first day of such Interest Period). 8 15 Investor Certificate Principal Balance: With respect to any Distribution Date, (a) the Original Investor Certificate Principal Balance minus (b) the aggregate of amounts actually distributed as principal on the Investor Certificates. Investor Certificate Rate: With respect to each Interest Period, a per annum rate equal to the lesser of (i) the sum of (a) LIBOR as of the second LIBOR Business Day prior to the first day of such Interest Period and (b) 0.25% per annum and (ii) the Net Funds Cap Rate for such Interest Period. Investor Certificateholder: The Holder of an Investor Certificate. Investor Floating Allocation Percentage: With respect to any Distribution Date, the percentage equivalent of a fraction, the numerator of which is the Invested Amount at the close of business on the preceding Distribution Date (or on the Closing Date, in the case of the first Distribution Date), and the denominator of which is the Pool Balance, calculated as of the beginning of the related Collection Period. Investor Fixed Allocation Percentage: 98%. Investor Interest Collections: With respect to any Distribution Date, the product of (i) the Interest Collections for such Distribution Date and (ii) the Investor Floating Allocation Percentage for such Distribution Date. Investor Loss Amount: With respect to any Distribution Date, an amount equal to the product of (i) the Investor Floating Allocation Percentage for such Distribution Date and (ii) the aggregate of any Liquidation Loss Amounts for such Distribution Date. Investor Loss Reduction Amount: With respect to any Distribution Date, the portion, if any, of the Investor Loss Amount for such Distribution Date and all prior Distribution Dates that has not been distributed to Investor Certificateholders on such Distribution Date pursuant to Section 5.01(a)(iii) or 5.01(a)(iv) or by way of the Credit Enhancement Draw Amount. Investor Principal Collections: As to any Distribution Date, the Investor Fixed Allocation Percentage of Principal Collections in respect of such Distribution Date. LIBOR: With respect to any date, the rate for one month United States dollar deposits that appears on the Telerate Screen Page 3750 as of 11:00 A.M., London time on such date. If such rate does not appear on such page (or such other page as may replace that page on that service, or if such service is no longer offered, such other service for displaying LIBOR or comparable rates as may be reasonably selected by or at the direction of the Depositor after consultation with the Trustee), the rate will be the Reference Bank Rate. If no such quotations can be obtained and no Reference Bank Rate is available, LIBOR shall be LIBOR applicable to the preceding Distribution Date. LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of New York or in the City of London, England are required or authorized by law to be closed. 9 16 LIBOR Interest Carryover: With respect to any Distribution Date on or prior to the date on which the Principal Balance of the Certificates has been reduced to zero, if the Investor Certificate Rate is equal to the Net Funds Cap Rate, an amount equal to (i) the excess of (a) an amount equal to the Investor Certificate Interest for such Distribution Date calculated as set forth in the definition of Investor Certificate Rate, but without regard to the Net Funds Cap Rate proviso thereto, over (b) the amount of Investor Certificate Interest payable to the Investor Certificates on such Distribution Date at the Net Funds Cap Rate, plus (ii) the portion of the amount calculated pursuant to clause (i) remaining unpaid from prior Distribution Dates and interest accrued thereon at the then applicable Certificate Rate. Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation, assignment, participation, deposit arrangement, encumbrance, lien (statutory or other), preference, priority right or interest or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC (other than any such financing statement filed for informational purposes only) or comparable law of any jurisdiction to evidence any of the foregoing; provided, however, that any assignment pursuant to Section 7.02 hereof shall not be deemed to constitute a Lien. Lifetime Rate Cap: With respect to each Mortgage Loan with respect to which the related Mortgage Note provides for a lifetime rate cap, the maximum Loan Rate permitted over the life of such Mortgage Loan under the terms of the related Credit Line Agreement, as set forth on Exhibit C hereto. Liquidated Mortgage Loan: With respect to any Distribution Date, any Mortgage Loan in respect of which the Servicer has determined, in accordance with the servicing procedures specified herein, that all Liquidation Proceeds which it expects to recover with respect to the disposition of the related Mortgaged Property or the related REO have been recovered as of the end of the related Collection Period. Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead) that are incurred by the Servicer in connection with the liquidation of any Mortgage Loan and not recovered under any insurance policy, including, without limitation, legal fees and expenses, any unreimbursed expenditures pursuant to Section 3.06 (including, without limitation, amounts advanced to correct defaults on any mortgage loan which is senior to such Mortgage Loan and amounts advanced to keep current or pay off a mortgage loan that is senior to such Mortgage Loan) with respect to the related Mortgage Loan and any related and unreimbursed expenditures with respect to real estate property taxes, water or sewer taxes, condominium association dues, property restoration or preservation or insurance against casualty, loss or damage. Liquidation Loss Amount: With respect to any Distribution Date and any Mortgage Loan that becomes a Liquidated Mortgage Loan during the related Collection Period, the unrecovered Principal Balance thereof at the end of such Collection Period, after giving effect to the Net Liquidation Proceeds applied in reduction of such Principal Balance. 10 17 Liquidation Proceeds: Proceeds (including Insurance Proceeds but not including amounts drawn under the Policy) received in connection with the liquidation of any Mortgage Loan or related REO, whether through trustee's sale, foreclosure sale or otherwise. Loan Rate: With respect to any Mortgage Loan and any date of determination, the variable per annum rate of interest applicable under the related Credit Line Agreement to the calculation of interest or, if the Lock Feature has been exercised, the resulting fixed per annum rate for such date on the Principal Balance of such Mortgage Loan. Lock Feature: An option available to a Mortgagor under a Credit Line Agreement that permits the Mortgagor to convert either the entire outstanding balance due or any portion thereof to a fixed rate closed-end loan. Locked Balance: With respect to any Mortgage Loan as to which the Lock Feature has been exercised, the portion of the Principal Balance thereof subject to a fixed Loan Rate. Managed Amortization Period: The period from the Closing Date to and including the Rapid Amortization Commencement Date. Maximum Principal Payment: With respect to any Distribution Date, the product of the Investor Fixed Allocation Percentage and the Principal Collections for such Distribution Date. Minimum Monthly Payment: With respect to any Mortgage Loan and any month, the minimum amount required to be paid by the related Mortgagor in that month. Minimum Transferor Interest: With respect to any date of determination, an amount equal to the lesser of (a) 5% of the Pool Balance on such date and (b) the Transferor Principal Balance as of the Closing Date. Moody's: 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 a fee simple interest in real property securing a Mortgage Loan. Mortgage File: The mortgage documents listed in Section 2.01 pertaining to a particular Mortgage Loan and any additional documents required to be added to the Mortgage File pursuant to this Agreement. Mortgage Loan Schedule: With respect to any date, the schedule of Mortgage Loans included in the Trust on such date. The initial schedule of Mortgage Loans as of the Cut-Off Date is the schedule set forth herein as Exhibit C, which schedule sets forth as to each Mortgage Loan (i) the Cut-Off Date Principal Balance, separately indicating any Locked Balance and any HELOC Balance, (ii) the Credit Limit, (iii) the Gross Margin, (iv) the Lifetime Rate Cap, (v) the account number, (vi) the current Loan Rate, separately indicating the Loan Rates applicable to any Locked Balance, and any HELOC Balance, (vii) the date of origination, (viii) the original term to maturity or maturity date, (ix) the State in which the Mortgaged Property is located and (x) the related Seller. The Mortgage Loan Schedule will be deemed to be amended from time to time to reflect Additional Balances. 11 18 Mortgage Loans: The mortgage loans that are transferred and assigned to the Trustee pursuant to Section 2.01, including Additional Balances with respect thereto, together with the Related Documents, exclusive of Mortgage Loans that are retransferred to the applicable Seller or the holder of the Transferor Interest from time to time pursuant to Section 2.02, 2.04 or 2.06. The mortgage loans originally so held are identified in the Mortgage Loan Schedule delivered on the Closing Date. The Mortgage Loans also shall include any Eligible Substitute Mortgage Loan substituted by the applicable Seller for a Defective Mortgage Loan pursuant to Sections 2.02 and 2.04. Mortgage Note: With respect to a Mortgage Loan, the Credit Line Agreement pursuant to which the related Mortgagor agrees to pay the indebtedness evidenced thereby and secured by the related Mortgage. Mortgaged Property: The underlying property, including any real property and improvements thereon, securing a Mortgage Loan. Mortgagor: The obligor or obligors under a Credit Line Agreement. Net Funds Cap Rate: With respect to any Interest Period, a per annum rate equal to the weighted average of the Loan Rates on the Mortgage Loans as of the first day of the related Billing Cycle (or, in the case of the first Interest Period, the weighted average of the Loan Rates on the Mortgage Loans as of the Cut-Off Date), less 0.65% per annum (adjusted to an effective rate reflecting accrued interest calculated on the basis of the actual number of days in the Collection Period commencing in the month in which such Interest Period commences and a year assumed to consist of 360 days). Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan, Liquidation Proceeds net of Liquidation Expenses. Officer's Certificate: A certificate signed by the President, an Executive Vice President, a Senior Vice President, a Vice President, an Assistant Vice President, the Treasurer, Assistant Treasurer, Controller or Assistant Controller of the Depositor or the Servicer, as the case may be, and delivered to the Trustee. Opinion of Counsel: A written opinion of counsel acceptable to the Trustee, who may be in-house counsel for the Depositor, a Seller or the Servicer (except that any opinion pursuant to Section 2.06, Section 7.04 or relating to taxation must be an opinion of independent outside counsel) and who, in the case of opinions delivered to the Credit Enhancer and the Rating Agencies, is reasonably acceptable to each such entity. Original Invested Amount: $850,000,000. Original Investor Certificate Principal Balance: $850,000,000. Overcollateralization Amount: With respect to any date of determination, the amount, if any, by which the Invested Amount exceeds the Investor Certificate Principal Balance on such date. 12 19 Overcollateralization Release Amount: With respect to any Distribution Date, the amount, if any, by which the Overcollateralization Amount exceeds the Required Overcollateralization Amount. Paying Agent: Any paying agent appointed pursuant to Section 6.06. Percentage Interest: As to any Investor Certificate, the percentage obtained by dividing the denomination of such Investor Certificate by the Original Investor Certificate Principal Balance. Person: Any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Policy: The financial guaranty insurance policy number 27577, dated as of the Closing Date, issued by the Credit Enhancer to the Trustee for the benefit of the Investor Certificateholders. Policy Payments Account: As defined in Section 4.02(b). Pool Balance: With respect to any date of determination, the aggregate of the Principal Balances of all Mortgage Loans as of such date. Pool Factor: With respect to any Distribution Date, the decimal, carried to seven places, obtained by dividing the Investor Certificate Principal Balance for such Distribution Date by the Original Investor Certificate Principal Balance. Preference Claim: As defined in Section 4.02(d). Premium Fee Rate: As described in the Insurance Agreement. Principal Balance: As to any Mortgage Loan (other than a Liquidated Mortgage Loan) and any date of determination, the related Cut-Off Date Principal Balance, plus (i) any Additional Balances in respect of such Mortgage Loan, minus (ii) all collections credited as principal against the Principal Balance of such Mortgage Loan in accordance with the related Credit Line Agreement. For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to have a Principal Balance of zero. Principal Collections: With respect to any Distribution Date, (i) all payments by or on behalf of Mortgagors and any other amounts constituting principal (including but not limited to any portion of Insurance Proceeds or Net Liquidation Proceeds allocable to principal of the applicable Mortgage Loan collected by the Servicer under the Mortgage Loans during the related Collection Period, but excluding Foreclosure Profits) and (ii) any Transfer Deposit Amounts. The portion of each payment with respect to a Mortgage Loan that constitutes principal or interest shall be determined in accordance with the terms of the related Credit Line Agreement. Purchase Agreement: The Mortgage Loan Purchase Agreement, dated as of the Closing Date, among Bank One, N.A., Bank One, Arizona, N.A., Bank One, Colorado, N.A., Bank One, 13 20 Illinois, N.A., Bank One, Indiana, N.A., Bank One, Kentucky, N.A., Bank One, Utah, N.A., Bank One, West Virginia, N.A. and Bank One, Wisconsin, as Sellers, and the Depositor, as purchaser, with respect to the Mortgage Loans. Rapid Amortization Commencement Date: The earlier of (i) the date immediately following the September 2003 Distribution Date and (ii) the Distribution Date next succeeding the Collection Period in which a Rapid Amortization Event is deemed to occur pursuant to Section 11.01. Rapid Amortization Event: As defined in Section 11.01. Rapid Amortization Period: The period following the Managed Amortization Period until the termination of the Trust pursuant to Section 10.01. Rating Agency: Any statistical credit rating agency, or its successor, that rated the Investor Certificates at the request of the Depositor 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 Depositor and the Credit Enhancer, 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 P-1 or better in the case of Moody's and A-1+ or better in the case of Standard & Poor's and in the case of any other Rating Agency shall mean the ratings such other Rating Agency deems equivalent to the foregoing ratings. References herein to the highest long-term rating category of a Rating Agency shall mean "Aaa" in the case of Moody's and "AAA" in the case of Standard & Poor's and in the case of any other Rating Agency, the rating such other Rating Agency deems equivalent to the foregoing ratings. Reallocated Investor Principal Collections: With respect to any Distribution Date, any Investor Principal Collections applied to amounts payable pursuant to Sections 5.01(a)(i) and (ii), in an amount up to the lesser of (a) the Overcollateralization Amount for such Distribution Date (prior to giving effect to such Reallocated Investor Principal Collections), (b) the Scheduled Principal Collections Distribution Amount for such Distribution Date and (c) the excess, if any, of the aggregate amount payable pursuant to Sections 5.01(a)(i) and (ii) over the amount of Investor Interest Collections for such Distribution Date. Recalculated Weighted Average Gross Margin: With respect to any date of determination, a weighted average calculated as (I) the sum of (a) the weighted average Gross Margin of the HELOC Balances as of such date multiplied by the aggregate outstanding HELOC Balance, plus (b) the product of (i) the difference between the weighted average Loan Rate on all Locked Balances as of such date minus the Index as of such date, multiplied by (ii) the aggregate outstanding Locked Balance, divided by (II) the Pool Balance as of such date. Record Date: The last day preceding the related Distribution Date; provided, however, that following the date on which the Definitive Certificates are available pursuant to Section 6.02(c), the Record Date shall be the last day of the calendar month preceding the month in which the related Distribution Date occurs. 14 21 Recordation Event: The rating of the Servicer's long-term unsecured debt obligations is reduced below Baa1 by Moody's and BBB+ by Standard & Poor's. Reference Bank Rate: With respect to any Interest Period, the arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth of a percent) of the offered rates for one month United States dollar deposits that are offered by the Reference Banks as of 11:00 A.M., London time, on the day that is two LIBOR Business Days prior to the immediately preceding Distribution Date to prime banks in the London interbank market for a period of one month in amounts approximately equal to the outstanding Investor Certificate Principal Balance; provided that at least two such Reference Banks provide such rate. If fewer than two offered rates appear, the Reference Bank Rate will be the arithmetic mean of the rates quoted by one or more major banks in New York City, selected by the Depositor after consultation with the Trustee, as of 11:00 A.M., New York City time, on such date for loans in U.S. Dollars to leading European Banks for a period of one month in amounts approximately equal to the outstanding Investor Certificate Principal Balance. Reference Banks: Three major banks that are engaged in transactions in the London interbank market, selected by the Depositor after consultation with the Trustee. Related Documents: As defined in Section 2.01. REO: A Mortgaged Property that is acquired by the Trust in foreclosure or by deed in lieu of foreclosure. Required Enhancement Amount: With respect to any date on or prior to the thirtieth Distribution Date, an amount equal to the greater of (i) 1.25% of the Invested Amount as of the Cut-Off Date and (ii) 60% of the aggregate Principal Balance of all Mortgage Loans with respect to which any payment is, as of the end of the most recent Collection Period, 90 days or more contractually past due, including all Mortgage Loans 90 days or more contractually past due and in bankruptcy or foreclosure proceedings or REO property, multiplied by the Investor Floating Allocation Percentage and, with respect to any date thereafter, an amount equal to the greater of (i) the lesser of (a) 1.25% of the Invested Amount as of the Cut-Off Date and (b) 2.5% of the Invested Amount as of such Distribution Date and (ii) 60% of the aggregate Principal Balance of all Mortgage Loans with respect to which any payment is, as of the end of the most recent Collection Period, 90 days or more contractually past due, including all Mortgage Loans 90 days or more contractually past due and in bankruptcy or foreclosure proceedings or REO property, multiplied by the Investor Floating Allocation Percentage; provided, however, that in no event shall the Required Enhancement Amount be less than 0.50% of the Invested Amount as of the Cut-Off Date. The Required Enhancement Amount may be amended or modified at any time in accordance with the requirements of the Rating Agencies, to maintain the rating of the Investor Certificates and to maintain the rating of the transactions contemplated herein and in the Pooling and Servicing Agreement, without giving consideration to the Policy, at not less than investment grade, as defined by the Rating Agencies, provided that such Rating Agencies' requirement arises out of the provision of Section 3.01 of this Agreement pursuant to which the Servicer is permitted to enter into modifications of the Credit Line Agreements, including consent to senior liens. The Required Enhancement Amount also may be amended or modified 15 22 at any time at the request of the Depositor with the prior written approvals of the Credit Enhancer and each Rating Agency. Required Overcollateralization Amount: With respect to any date, the excess of the Required Enhancement Amount over the aggregate amounts on deposit in the Spread Account as of such date. Required Spread Account Amount: With respect to any date, 0.25% of the Invested Amount as of such date. Responsible Officer: When used with respect to the Trustee, any officer of the Trustee with direct responsibility for the administration of this Agreement and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. Revolving Period: With respect to each Mortgage Loan, the period specified for such Mortgage Loan in the related Credit Line Agreement, during which the Mortgagor is permitted to make Draws. 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 instrument the Savings Association Insurance Fund is not existing and performing duties now assigned to it, the body performing such duties on such date. Scheduled Principal Collections Distribution Amount: With respect to any Distribution Date during the Managed Amortization Period and the Investor Certificates, an amount equal to the lesser of (i) the Maximum Principal Payment and (ii) the Alternative Principal Payment. Seller: Each of Bank One, N.A., Bank One, Arizona, N.A., Bank One, Colorado, N.A., Bank One, Illinois, N.A., Bank One, Indiana, N.A., Bank One, Kentucky, N.A., Bank One, Utah, N.A., Bank One, West Virginia, N.A. and Bank One, Wisconsin, and any successors thereto. Servicer: Bank One, N.A., a national banking association, and any successor hereunder. Servicing Certificate: A certificate completed and executed by a Servicing Officer in accordance with Section 4.01. Servicing Fee: With respect to any Distribution Date, the product of (i) 1/12th of the Servicing Fee Rate and (ii) the aggregate Principal Balance of the Mortgage Loans on the first day of the Collection Period preceding such Distribution Date (or at the Cut-Off Date with respect to the first Distribution Date). Servicing Fee Rate: 0.50% per annum. Servicing Officer: Any officer of the Servicer involved in, or responsible for, the administration and servicing of the Mortgage Loans whose name and specimen signature appear on a list of servicing officers furnished to the Trustee (with a copy to the Credit Enhancer) by the Servicer on the Closing Date, as such list may be amended from time to time. 16 23 Standard & Poor's: Standard & Poor's, a Division of the McGraw-Hill Companies, Inc., or its successor in interest. Telerate Screen Page 3750: The display designated as page 3750 on the Telerate Service (or such other page as may replace page 3750 on that service for the purpose of displaying London interbank offered rates of major banks). Transfer Date: As defined in Section 2.06. Transfer Deficiency: As defined in Section 2.02. Transfer Deposit Amount: As defined in Section 2.02. Transfer Notice Date: As defined in Section 2.06. Transferor Collections: With respect to any Distribution Date, the sum of the Transferor Interest Collections and the Transferor Principal Collections for such Distribution Date. Transferor Interest: The undivided interest in the Trust not represented by the Investor Certificates, which is issued by the Trustee pursuant to Section 6.01. Transferor Interest Collections: With respect to any Distribution Date, the Interest Collections received during the related Collection Period minus the Investor Interest Collections for such Distribution Date. Transferor Principal Balance: With respect to any Distribution Date, an amount equal to (i) the Pool Balance at the related Collection Period minus (ii) the Invested Amount as of such Distribution Date. Transferor Principal Collections: With respect to any Distribution Date, the Principal Collections received during the related Collection Period minus the portion of such Principal Collections required to be distributed to Investor Certificateholders pursuant to Section 5.01(b). Trust: The trust created by this Agreement, the corpus of which consists of (i) the Mortgage Loans, (ii) such other assets as shall from time to time be deposited in the Collection Account in accordance with this Agreement, (iii) property that secured any Mortgage Loan and that has become REO, (iv) the interest of the Depositor in certain hazard insurance policies maintained by the Mortgagors or the Servicer in respect of the Mortgage Loans, (v) the Policy, (vi) amounts on deposit in the Spread Account, (vii) an assignment of the Depositor's rights under the Purchase Agreement and (viii) all proceeds of each of the foregoing. Trustee: The Bank of New York or any successor Trustee appointed in accordance with this Agreement that has accepted such appointment in accordance with this Agreement. Trustee Fee: The fee paid to the Trustee for its services hereunder, which fee is separately agreed to between the Servicer and the Trustee. 17 24 UCC: The Uniform Commercial Code, as amended from time to time, as in effect in any specified jurisdiction. Unpaid Investor Certificate Interest Shortfall: With respect to any Distribution Date, the aggregate amount of any Investor Certificate Interest that was due on a prior Distribution Date and has not been distributed to Investor Certificateholders. Valuation: With respect to any Mortgaged Property and valuation made prior to the Closing Date, either (a) an appraisal (Uniform Residential Appraisal Report or FHLMC 704/Single Page/Short Form/FNMA 2055) conducted by an independent appraiser or (b) a valuation based upon any one of the following (in order of priority): (i) HUD-1 Settlement Statement (if prepared within the twelve months preceding the date of origination, (ii) tax assessment, (iii) electronic valuation and (iv) any other valuation (for example, based on comparable sales, broker's opinion, drive-by appraisal and/or interior inspection). Section 1.02. Interest Calculations. All calculations of interest hereunder that are made in respect of the Principal Balance of a Mortgage Loan shall be made on a daily basis using a 365-day year. All calculations of interest on the Investor Certificates shall be made on the basis of the actual number of days in an Interest Period and a year assumed to consist of 360 days. The calculation of the Servicing 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 penny with one-half of one penny being rounded down. ARTICLE II Conveyance of Mortgage Loans; Original Issuance of Investor Certificates; Tax Treatment Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund Advances Under Credit Line Agreements. (a) The Depositor, concurrently with the execution and delivery of this Agreement, does hereby transfer, assign, set over and otherwise convey to the Trust without recourse (subject to Sections 2.02 and 2.04) all of its right, title and interest in and to (i) each Mortgage Loan, including its Principal Balance (including all Additional Balances) and all collections in respect thereof received after the Cut-Off Date; (ii) property that secured a Mortgage Loan that is acquired by foreclosure or deed in lieu of foreclosure; (iii) the Depositor's rights (but none of its obligations) under the Purchase Agreement; (iv) the Depositor's rights under the hazard insurance policies, (v) the amounts on deposit in the Spread Account and (vi) all other assets included or to be included in the Trust for the benefit of Investor Certificateholders; provided, however, that neither the Trustee nor the Trust assumes the obligation under any Credit Line Agreement that provides for the funding of future advances to the Mortgagor thereunder, and neither the Trust nor the Trustee shall be obligated or permitted to fund any such future advances. Additional Balances shall be part of the related Principal Balance and are hereby transferred to the Trust on the Closing Date pursuant to this Section 2.01, and therefore part of the Trust property. In addition, on or prior to the Closing Date, the 18 25 Depositor shall cause the Credit Enhancer to deliver the Policy to the Trustee for the benefit of the Investor Certificateholders. The foregoing transfer, assignment and conveyance to the Trust shall be made to the Trustee on behalf of the Trust, and each reference in this Agreement to such transfer, assignment and conveyance shall be construed accordingly. The Depositor agrees to take or cause to be taken such actions and execute such documents (including without limitation the filing of all necessary continuation statements for the UCC-1 financing statements filed in the States of Arizona, California, Colorado, Illinois, Indiana, Kentucky, New York, Ohio, Utah, West Virginia and Wisconsin (which shall have been filed within 90 days of the Closing Date) describing the Cut-Off Date Principal Balances and Additional Balances and naming the Depositor as debtor and the Trustee as secured party, and any amendments to UCC-1 financing statements required to reflect a change in the name or corporate structure of the Depositor or the filing of any additional UCC-1 financing statements due to the change in the principal office of the Depositor (within 30 days of any event necessitating such filing) as are necessary to perfect and protect the Investor Certificateholders' and Credit Enhancer's interests in each Cut-Off Date Principal Balance and Additional Balance and the proceeds thereof (including maintaining possession by the Trustee of the Mortgage Loans and the Mortgage Files). (b) In connection with such transfer and assignment by the Depositor, and pursuant to Section 2.04 of the Purchase Agreement, each Seller will deliver or cause to be delivered within 90 days of the Closing Date to the Trustee (or any Custodian on behalf of the Trustee) with respect to each Mortgage Loan, the original Mortgage Note, endorsed on its face or by allonge attached thereto in blank or to the order of the Trustee in the following form: "Pay to the order of The Bank of New York, as trustee for the registered holders of Banc One HELOC Trust 1998-1, HELOC Asset-Backed Certificates, Series 1998-1, without recourse, representation or warranty, express or implied," and an original Assignment of Mortgage endorsed in blank prepared in recordable form; provided, however, that as to any Mortgage Loan, if (a) as evidenced by an Opinion of Counsel delivered to and in form and substance satisfactory to the Trustee and the Credit Enhancer, (x) an optical image or other representation of the related documents specified above are enforceable in the relevant jurisdictions to the same extent as the original of such document and (y) such optical image or other representation does not impair the ability of an owner of such Mortgage Loan to transfer its interest in such Mortgage Loan, and (b) the retention of such documents in such format will not result in a reduction in the then current rating of the Investor Certificates, without regard to the Policy, such optical image or other representation may be delivered to the Trustee (or any Custodian on behalf of the Trustee) or assignee in lieu of the physical documents specified above. Within 90 days following delivery of the Mortgage Files to the Trustee (or any Custodian on behalf of the Trustee) pursuant to the preceding paragraph, the Trustee (or any Custodian on behalf of the Trustee) shall review each such Mortgage File to ascertain that all required documents set forth in this Section 2.01 have been executed and received, and that such documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule and in so doing the Trustee (or any Custodian on behalf of the Trustee) may rely on the purported due execution and genuineness of any signature thereon. The Trustee shall notify the Servicer in writing upon completion of such review. If within such 90-day period the Trustee (or any Custodian on behalf of the Trustee) finds any document constituting a part of a Mortgage File 19 26 not to have been executed or received or to be unrelated to the Mortgage Loans identified in said Mortgage Loan Schedule or, if in the course of its review, the Trustee (or any Custodian on behalf of the Trustee) determines that such Mortgage File is otherwise defective in any material respect, the Trustee shall promptly upon the conclusion of such review notify the Depositor, the applicable Seller and the Credit Enhancer, and the related Seller shall have a period of 90 days pursuant to Section 3.03 of the Purchase Agreement after such notice to correct or cure any such defect. The Trustee shall have no responsibility for reviewing any Mortgage File except as expressly provided in this Section 2.01. In reviewing any Mortgage File pursuant to this Section, the Trustee shall have no responsibility for determining the content of any document, whether any document is valid and binding or enforceable, whether the text of any 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, whether any Person executing any document is authorized to do so or whether any signature thereon is genuine, but shall only be required to determine whether a document has been executed, that it appears to be what it purports to be, and, where applicable, that it purports to be recorded. The Depositor hereby confirms to the Trustee that it has made the appropriate entries in its general accounting records to indicate that such Mortgage Loans have been transferred to the Trust at its direction. The Servicer hereby confirms to the Trustee that it has clearly and unambiguously made appropriate entries in its general accounting records indicating that such Mortgage Loans constitute part of the Trust and are serviced by it on behalf of the Trust in accordance with the terms hereof. The Servicer agrees not to notify the obligors on the Mortgage Loans of the transfer of the Mortgage Loans to the Trust unless required to do so by the terms of the Mortgage Loans or applicable law. It is the express intent of the parties hereto that the conveyance of the Mortgage Loans by the Depositor to the Trustee as provided in this Agreement be, and be construed as, a sale of all of the Depositor's right, title and interest in the Mortgage Loans by the Depositor to the Trustee. Further, it is not the intention of the parties that such conveyance be deemed a pledge of the Mortgage Loans by the Depositor to the Trustee to secure a debt or other obligation of the Depositor; however, in the event that, notwithstanding the intent of the parties, the Mortgage Loans are held to be property of the Depositor, or if for any reason this Agreement is held or deemed to create a security interest in the Mortgage Loans, then, (a) this Agreement also shall be deemed to be, and hereby is, a security agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code in effect in the applicable state; (b) the conveyance provided for in this Agreement shall be deemed to be, and hereby is, a grant by the Depositor to the Trustee of a security interest in and to all of the Depositor's right, title, and interest, whether now owned or hereafter acquired, in and to: (I) All accounts, contract rights, general intangibles, chattel paper, instruments, documents, money, deposit accounts, certificates of deposit, goods, 20 27 letters of credit, advices of credit, certificated securities and uncertificated securities consisting of, arising from or relating to any of the property described in (A) through (D) below: (A) each Mortgage Loan, including (a) the Mortgage Note and the related Mortgage and (b) its Principal Balance and all Additional Balances and all collections in respect thereof received on or after the Cut-Off Date, identified on the Mortgage Loan Schedule as defined herein, including all Eligible Substitute Mortgage Loans, (B) property that secured a Mortgage Loan that is acquired by foreclosure or deed in lieu of foreclosure; (C) the Purchase Agreement, (D) any hazard insurance policies in respect of the Mortgage Loans; and (E) the amounts on deposit in the Spread Account; and (II) All proceeds of the collateral described in (I). (c) The possession by the Trustee or its designee of the Mortgage Notes, Assignments of Mortgages and such other goods, letters of credit, advices of credit, instruments, money, documents, chattel paper or certificated securities shall be deemed to be "possession by the secured party," or possession by a purchaser or a person designated by him or her, for purposes of perfecting the security interest pursuant to the Uniform Commercial Code (including, without limitation, Sections 9-305, 8-313 or 8-321 thereof) as in force in the relevant jurisdiction; and (d) notifications to persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed to be notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of the Trustee or its designee for the purpose of perfecting such security interest under applicable law. Subject to the provisions herein permitting the Servicer to commingle amounts collected with respect to the Mortgage Loans with other general collections of the Servicer, the Depositor and the Trustee at the direction of the Depositor to the extent consistent with this Agreement, shall take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Mortgage Loans and the proceeds thereof, such 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. In connection herewith, the Trustee shall have all of the rights and remedies of a secured party and creditor under the Uniform Commercial Code as in force in the relevant jurisdiction. Following the occurrence of a Recordation Event, the Trustee shall, as promptly as practicable but in no event more than 90 days after receiving notice of such event, at the Servicer's expense, record an Assignment of Mortgage for each Mortgage Loan in favor of the Trustee (which may be a blanket assignment if permitted by applicable law) in the appropriate real property or other records in the jurisdiction in which the Mortgaged Property is located, or the Depositor shall deliver to the Trustee an Opinion of Counsel addressed to the Trustee and the Credit Enhancer to the effect that recording is not required to protect the Trustee's right, title and interest in and to the related Mortgage Loan or, in case a court should recharacterize the sale of the Mortgage Loans as a financing, to perfect a first priority security interest in favor of the Trustee in the related Mortgage Loan, which Opinion of Counsel also shall be reasonably acceptable to each of the Rating Agencies (as evidenced in writing) and the Credit Enhancer. The Trustee is hereby appointed as the attorney-in-fact of the Servicer with the power to prepare, execute and record Assignments of Mortgages in the event that the Servicer fails to do so on a timely basis as provided in this paragraph. 21 28 Section 2.02. Acceptance by Trustee; Retransfer of Mortgage Loans. (a) The Trustee hereby acknowledges its receipt of the Policy, and declares that the Trustee will hold the Policy and the Mortgage Loans delivered to it pursuant to Section 2.01 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 Credit Enhancer. If the time to cure any defect in respect of any Mortgage Loan of which the Trustee has notified the applicable Seller and the Depositor following the review pursuant to Section 2.01 has expired or if at any time any loss is suffered by the Trustee on behalf of the Certificateholders or the Credit Enhancer, in respect of any Mortgage Loan as a result of (i) a defect in any document constituting a part of its Mortgage File or (ii) an Assignment of Mortgage to the Trustee not having been recorded as required by Section 2.01(b), then on the next succeeding Business Day upon the deposit to the Collection Account of the Transfer Deposit Amount, if any, and upon satisfaction of the applicable conditions described herein, all right, title and interest of the Trust in and to such Mortgage Loan shall be deemed to be retransferred, reassigned and otherwise reconveyed, without recourse, representation or warranty, to the applicable Seller on such Business Day, and the Principal Balance of such Mortgage Loan shall be deducted from the Pool Balance; provided, however, that interest accrued on the Principal Balance of such Mortgage Loan to the end of the related Collection Period shall be the property of the Trust. The Trustee shall determine if the reduction of such Principal Balance from the Pool Balance in accordance with the preceding sentence would cause the Transferor Principal Balance to be less than the Minimum Transferor Interest (a "Transfer Deficiency"), in which event the Trustee shall deliver written notice of such deficiency to the applicable Seller, and within five Business Days after the Business Day of such retransfer the applicable Seller shall either (i) substitute an Eligible Substitute Mortgage Loan or (ii) deposit into the Collection Account an amount (the "Transfer Deposit Amount") in immediately available funds equal to the Transfer Deficiency or a combination of both (i) and (ii) above. Such reduction or substitution and the actual payment of any Transfer Deposit Amount, if any, shall be deemed to be payment in full for such Mortgage Loan. Upon receipt of any Eligible Substitute Mortgage Loan or of written notification signed by a Servicing Officer to the effect that the Transfer Deposit Amount in respect of a Defective Mortgage Loan has been deposited into the Collection Account or, if the Transferor Principal Balance is not reduced below the Minimum Transferor Interest as a result of the deemed retransfer of a Defective Mortgage Loan, then as promptly as practicable following such deemed transfer, the Trustee shall execute such documents and instruments of transfer presented by the applicable Seller, in each case without recourse, representation or warranty, and take such other actions as shall reasonably be requested by the applicable Seller to effect such transfer by the Trust of such Defective Mortgage Loan pursuant to this Section 2.02. It is understood and agreed that the obligation of the applicable Seller to accept a transfer of a Defective Mortgage Loan and to either convey an Eligible Substitute Mortgage Loan or to make a deposit of any related Transfer Deposit Amount into the Collection Account shall constitute the sole remedy respecting such defect available to Certificateholders, the Trustee and the Credit Enhancer against the Depositor or the applicable Seller. The Servicer, promptly following the transfer of a Defective Mortgage Loan from or the transfer of an Eligible Substitute Mortgage Loan to the Trust pursuant to this Section, shall amend the Mortgage Loan Schedule and make appropriate entries in its general account records to reflect such transfer. The Servicer shall, following such retransfer, appropriately mark its records to indicate that it is no longer servicing such Mortgage Loan on behalf of the Trust. 22 29 Pursuant to the Purchase Agreement, the applicable Seller, promptly following such transfer, shall appropriately mark its Electronic Ledger and make appropriate entries in its general account records to reflect such retransfer. Notwithstanding any other provision of this Section, a retransfer of a Defective Mortgage Loan to the applicable Seller pursuant to this Section and Section 3.03 of the Purchase Agreement that would cause the Transferor Principal Balance to be less than the Minimum Transferor Interest shall not occur if the applicable Seller fails to convey an Eligible Substitute Mortgage Loan or to deposit into the Collection Account any related Transfer Deposit Amount required by this Section with respect to the transfer of such Defective Mortgage Loan. (b) As to any Eligible Substitute Mortgage Loan or Loans, pursuant to Section 2.05 of the Purchase Agreement each Seller shall deliver to the Trustee with respect to such Eligible Substitute Mortgage Loan or Loans such documents and agreements as are required to be held by the Trustee in accordance with Section 2.01(b). For any Collection Period during which a Seller substitutes one or more Eligible Substitute Mortgage Loans, the Servicer shall determine the Transfer Deposit Amount, which amount shall be deposited by the applicable Seller in the Collection Account at the time of substitution. Any amounts received in respect of the Eligible Substitute Mortgage Loan or Loans during the Collection Period in which the circumstances giving rise to such substitution occur shall not be a part of the Trust Fund and shall not be deposited by the Servicer in the Collection Account. All amounts received by the Servicer during the Collection Period in which the circumstances giving rise to such substitution occur in respect of any Defective Mortgage Loan so removed by the Trust Fund shall be deposited by the Servicer in the Collection Account. Upon such substitution, the Eligible Substitute Mortgage Loan or Loans shall be subject to the terms of this Agreement in all respects, and the applicable Seller shall be deemed to have made with respect to such Eligible Substitute Mortgage Loan or Loans, as of the date of substitution, the covenants, representations and warranties set forth in Section 2.04. The procedures applied by a Seller in selecting each Eligible Substitute Mortgage Loan shall not be materially adverse to the interests of the Trustee, the Certificateholders and the Credit Enhancer. Section 2.03. Representations and Warranties Regarding the Servicer. The Servicer represents and warrants to the Trustee and the Credit Enhancer that as of the Closing Date: (i) The Servicer is duly organized and validly existing as a national banking association and has the corporate power to own its assets and to transact the business in which it is currently engaged. The Servicer is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or any properties owned or leased by it requires such qualification and in which the failure so to qualify would have a material adverse effect on the business, properties, assets, or financial condition (or other) of the Servicer; (ii) The Servicer has the corporate power and authority to make, execute, deliver and perform this Agreement and all of the transactions contemplated under the Agreement, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of the Servicer 23 30 enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency moratorium, fraudulent conveyance, reorganization and similar laws affecting the enforcement of the rights of creditors of national banking associations, the deposits of which are insured by the FDIC, and subject to general principles of equity, (whether applied in a proceeding at law or in equity or of creditors' rights generally); (iii) The Servicer is not required to obtain the consent of any other party or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement (other than such consents, licenses, approvals or authorizations from, or registrations or declarations with, any governmental authority, bureau or agency that, individually or in the aggregate, would not have a material adverse effect on the transactions contemplated by this Agreement), except for such consent, license, approval or authorization, or registration or declaration, as shall have been obtained or filed, as the case may be, prior to the Closing Date; (iv) The execution, delivery and performance of this Agreement by the Servicer will not violate any provision of any existing law or regulation or any order or decree of any court applicable to the Servicer or any provision of the articles of association or bylaws of the Servicer, or constitute a material breach of any mortgage, indenture, contract or other agreement to which the Servicer is a party or by which the Servicer may be bound (other than violations of such laws, regulations, orders, decrees, mortgages, contracts or other agreements that, individually or in the aggregate, would not have a material adverse effect on the transactions contemplated by this Agreement); and (v) No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Servicer threatened, against the Servicer or any of its properties or with respect to this Agreement or the Investor Certificates or the Transferor Interest, which in the opinion of the Servicer has a reasonable likelihood of resulting in a material adverse effect on the transactions contemplated by this Agreement. The representations and warranties set forth in this Section shall survive the sale and assignment of the Mortgage 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 Credit Enhancer, the person discovering such breach shall give prompt written notice to the other parties and to the Credit Enhancer. Within 90 days of its discovery or its receipt of notice of breach, or, with the prior written consent of a Responsible Officer of the Trustee, such longer period specified in such consent, the Servicer shall cure such breach in all material respects. Section 2.04. Assignment of Representations and Warranties of the Sellers Regarding the Mortgage Loans; Retransfer of Certain Mortgage Loans. (a) The Depositor hereby assigns to the Trustee, for the benefit of the Investor Certificateholders and the Credit Enhancer, each representation and warranty with respect to the Mortgage Loans made by the Sellers in Section 3.02 of the Purchase Agreement, including without limitation the Depositor's right to require the Sellers to repurchase or substitute for any such Mortgage Loan subject to breach of any such 24 31 representation and warranty. With respect to any representations and warranties set forth in Section 3.02 of the Purchase Agreement that are made to the best knowledge of a Seller, if it is discovered by such Seller, the Depositor, the Servicer or a Responsible Officer of the Trustee that the substance of such representation and warranty is inaccurate and such inaccuracy materially and adversely affects the value of the related Mortgage Loan then, notwithstanding such Seller's lack of knowledge with respect to the substance of such representation and warranty being inaccurate at the time the representation or warranty was made, such inaccuracy shall be deemed a breach of the applicable representation or warranty and subject such Seller to the obligations set forth in Section 3.03 of the Purchase Agreement. (b) The Depositor hereby represents and warrants to the Trustee and the Credit Enhancer that as of the Cut-Off Date, except as otherwise specified below: (i) No more than 0.65% of the Mortgage Loans, by Cut-Off Date Pool Balance, are secured by Mortgaged Properties located in one United States postal zip code; (ii) The weighted average remaining term to maturity of the Mortgage Loans on a contractual basis for the Mortgage Loans is approximately 204 months and no Mortgage Loan will mature according to its terms later than December 2018. Over the term of each Mortgage Loan, the Loan Rate may not exceed the related Loan Rate Cap, if any. The Loan Rate Caps range between 18% and 25% per annum. The Gross Margins range between 0.00% and 10.00%. The Loan Rates on such Mortgage Loans range between 5.50% and 18.50% per annum and the weighted average Loan Rate is approximately 9.87% per annum; (iii) No more than 0.23% (by Cut-Off Date Pool Balance) of the Mortgage Loans are secured by real property improved by individual condominium units, planned development units, townhouses or two-to-four family residences erected thereon, and at least 99.77% (by Cut-Off Date Pool Balance) of the Mortgage Loans are secured by real property with a detached one-family residence erected thereon; (iv) The Credit Limits on the Mortgage Loans range between $5,000.01 and $250,000.00 with an average Credit Limit of approximately $40,574.42. No Mortgage Loan had a principal balance in excess of approximately $245,304.00 and the average principal balance of the Mortgage Loans is equal to approximately $24,249.00; and (v) Approximately 26.58%, and 73.42% of the Mortgage Loans, by aggregate principal balance as of the Cut-Off Date for the Mortgage Loans, are first or second liens, respectively; and (vi) The inclusion of newly Locked Balances in any Collection Period will not cause the aggregate amount of the Locked Balances to exceed 10% of total outstanding Pool Balance as of the end of such Collection Period. (c) It is understood and agreed that Depositor's assignment of the representations and warranties set forth in Section 3.02 of the Purchase Agreement and its representations and warranties set forth in Section 2.04(a) and (b) hereof shall survive delivery of 25 32 the respective Mortgage Files to the Trustee pursuant to Section 2.01 and the termination of the rights and obligations of the Servicer pursuant to Section 7.04 or Section 8.02. Upon discovery by any Seller, the Depositor, the Servicer, the Credit Enhancer or a Responsible Officer of the Trustee of (a) a breach of any of the representations and warranties referred to in this Section 2.04(c) that materially and adversely affects the interests of the Trust or the Investor Certificateholders or the Credit Enhancer in the related Mortgage Loan or (b) a breach of the representation and warranty set forth in Section 2.04(b) (vi), the party discovering such breach shall give prompt written notice to the other parties and the Credit Enhancer. Within 90 days of its discovery or its receipt of notice of such breach, pursuant to Section 3.03 of the Purchase Agreement, the applicable Seller shall use all reasonable efforts to cure such breach in all material respects or shall, not later than the Business Day next preceding the Distribution Date in the month following the Collection Period in which any such cure period expired (or such later date that is acceptable to the Trustee and the Credit Enhancer as evidenced by their written consents), either (a) accept a transfer of such Mortgage Loan from the Trust or (b) except in the case of a breach of the representation and warranty set forth in Section 2.04(b)(vi), substitute an Eligible Substitute Mortgage Loan in the same manner and subject to the same conditions as set forth in Section 2.02; provided, however, that the cure for any breach of a representation and warranty relating to the characteristics of the Mortgage Loans in the aggregate shall be a repurchase of or substitution for only the Mortgage Loans necessary to cause such characteristics to be in compliance with the related representation and warranty. Upon accepting such transfer and making any required deposit into the Collection Account or substitution of an Eligible Substitute Mortgage Loan, as the case may be, the applicable Seller shall be entitled to receive an instrument of assignment or transfer from the Trustee to the same extent as set forth in Section 2.02 with respect to the transfer of Mortgage Loans under that Section. It is understood and agreed that the obligation of a Seller to accept a transfer of a Mortgage Loan as to which a breach has occurred and is continuing and to make any required deposit in the Collection Account or to substitute an Eligible Substitute Mortgage Loan, as the case may be, shall constitute the sole remedy against the Depositor or such Seller respecting such breach available to Investor Certificateholders, the Trustee on behalf of Investor Certificateholders and the Credit Enhancer. Notwithstanding the foregoing, with regard to any breach of the representation and warranty set forth in Section 3.02(e) of the Purchase Agreement, the sale and assignment of the affected Mortgage Loans to the Trust shall be deemed void and the applicable Seller shall pay to the Trust the sum of the amount of the related Principal Balances, plus unpaid accrued interest on each such Principal Balance at the applicable Loan Rate to the date of payment. Section 2.05. Covenants of the Depositor. The Depositor hereby covenants that: (a) Security Interests. Except for the transfer hereunder, the Depositor will not sell, pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist any Lien on any Mortgage Loan, whether now existing or hereafter created, or any interest therein; the Depositor will notify the Trustee of the existence of any Lien on any Mortgage Loan immediately upon discovery thereof; and the Depositor will defend the right, title and interest of the Trust in, to and under the Mortgage Loans, whether now existing or hereafter created, against all claims of third parties claiming through or under the Depositor; provided, however, that nothing in this Section 2.05(a) shall prevent or be deemed to prohibit the Depositor from 26 33 suffering to exist upon any of the Mortgage Loans any Liens for municipal or other local taxes and other governmental charges if such taxes or governmental charges shall not at the time be due and payable or if the Depositor shall currently be contesting the validity thereof in good faith by appropriate proceedings and shall have set aside on its books adequate reserves with respect thereto. (b) Negative Pledge. The Depositor hereby agrees not to transfer, assign, exchange, pledge, finance, hypothecate, grant a security interest in or otherwise convey the Transferor Interest except in accordance with Sections 6.05 and 7.02. (c) Additional Indebtedness. So long as the Investor Certificates are outstanding the Depositor shall not incur any debt other than debt that (i) is non-recourse to the assets of the Depositor other than the Mortgage Loans specifically pledged as security for such debt or (ii) is subordinated in right of payment to the rights of the Investor Certificateholders or (iii) is assigned a rating by each of the Rating Agencies that is the same as the then current rating of the Investor Certificates. (d) Downgrading. The Depositor shall not engage in an activity which would result in a downgrading of the Investor Certificates. (e) Amendment to Certificate of Incorporation. The Depositor shall not amend its Certificate of Incorporation without prior written notice to the Rating Agencies and the Credit Enhancer. (f) Principal Place of Business. The Depositor's principal place of business is in Ohio and it will not change its principal place of business without prior written notice to the Rating Agencies. Section 2.06. Retransfers of Mortgage Loans at Election of the Holder of the Transferor Interest. Subject to the conditions set forth below, the holder of the Transferor Interest may, but shall not be obligated to, require the retransfer of Mortgage Loans from the Trust to the holder of the Transferor Interest as of the close of business on a Distribution Date (the "Transfer Date"). On the fifth Business Day (the "Transfer Notice Date") prior to the Transfer Date designated in such notice, the holder of the Transferor Interest shall give the Trustee and the Servicer a notice of the proposed retransfer that contains a list of the Mortgage Loans to be retransferred. Such retransfers of Mortgage Loans shall be permitted upon satisfaction of the following conditions: (i) No Rapid Amortization Event has occurred; (ii) On the Transfer Notice Date the Transferor Principal Balance (after giving effect to the removal from the Trust of the Mortgage Loans proposed to be retransferred) is at least equal to the Minimum Transferor Interest; (iii) The retransfer of any Mortgage Loans on any Transfer Date during the Managed Amortization Period shall not, in the reasonable belief of the holder of the Transferor Interest, cause a Rapid Amortization Event to occur or an event which with notice or lapse of time or both would constitute a Rapid Amortization Event; 27 34 (iv) On or before the Transfer Date, the holder of the Transferor Interest shall have delivered to the Trustee and the Depositor an Opinion of Counsel to the effect that such removal of Mortgage Loans, upon satisfaction of any additional conditions imposed by the Department of Labor, should not result in the unavailability of the exemptive relief under Prohibited Transaction Exemption ("PTE") 89-90, 54 Fed. Reg. 42597 (Oct. 17, 1989) (as amended by PTE 97-34, 62 Fed. Reg. 39021 (July 21, 1997), including any amendments thereto, and the holder of the Transferor Interest shall have satisfied any such additional conditions; (v) On or before the Transfer Date, the holder of the Transferor Interest shall have delivered to the Trustee a revised Mortgage Loan Schedule, reflecting the proposed retransfer and the Transfer Date, and the Servicer shall have marked the Electronic Ledger to show that the Mortgages Loans transferred to the holder of the Transferor Interest are no longer owned by the Trust; (vi) The holder of the Transferor Interest shall represent and warrant that no selection procedures reasonably believed by the holder of the Transferor Interest to be adverse to the interests of the Investor Certificateholders or the Credit Enhancer were utilized in the selection of the Mortgage Loans to be removed from the Trust; (vii) In connection with the first retransfer of Mortgage Loans pursuant to this Section, each Rating Agency shall have received on or prior to the related Transfer Notice Date notice from the holder of the Transferor Interest of such proposed retransfer of Mortgage Loans; (viii) The holder of the Transferor Interest shall have delivered to the Trustee and the Credit Enhancer an officer's certificate certifying that the items set forth in subparagraphs (i) through (vii), inclusive, have been performed or are true and correct, as the case may be. The Trustee may conclusively rely on such Officer's Certificate, shall have no duty to make inquiries with regard to the matters set forth therein and shall incur no liability in so relying. The holder of the Transferor Interest shall not be permitted to require the retransfer of any Mortgage Loan (including any delinquent Mortgage Loan) except under the conditions specified above; provided however, that the holder of the Transferor Interest may be required to accept retransfer of certain Mortgage Loans pursuant to Section 2.04 hereof, to the extent a Seller is the holder of the Transferor Interest. Upon receiving the requisite information from the holder of the Transferor Interest, the Servicer shall perform in a timely manner those acts required of it, as specified above. Upon satisfaction of the above conditions, on the Transfer Date the Trustee shall deliver, or cause to be delivered, to the holder of the Transferor Interest a written itemization of each Mortgage Loan being transferred, together with the Mortgage File for each such Mortgage Loan, and the Trustee shall execute and deliver to the holder of the Transferor Interest such other documents prepared by the holder of the Transferor Interest as shall be reasonably necessary to transfer such Mortgage Loans to the holder of the Transferor Interest. Any such transfer of the Trust's right, title and interest in and to Mortgage Loans shall be without recourse, representation or warranty by or of the Trustee or the Trust to the holder of the Transferor Interest. 28 35 Section 2.07. Execution and Authentication of Investor Certificates. The Trustee, on behalf of the Trust, has caused to be executed, authenticated and delivered to or upon the order of the Depositor, in exchange for the corpus of the Trust, concurrently with the sale, assignment and conveyance to the Trustee of the corpus of the Trust, Investor Certificates in authorized denominations and the Transferor Interest, together evidencing the ownership of the entire Trust. Section 2.08. Tax Treatment. It is the intention of the Depositor, the holder of the Transferor Interest and the Investor Certificateholders that the Investor Certificates will be indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or measured by income. The terms of the Agreement shall be interpreted to further the intent of the parties hereto. The holder of the Transferor Interest, the Depositor, the Trustee and each Investor Certificateholder (or Certificate Owner) by acceptance of its Investor Certificate (or, in the case of a Certificate Owner, by virtue of such Certificate Owner's acquisition of a beneficial interest therein) agrees to treat the Investor Certificates (or beneficial interest therein), for purposes of federal, state and local income or franchise taxes and any other tax imposed on or measured by income, as indebtedness of the holder of the Transferor Interest secured by the assets of the Trust and to report the transactions contemplated by this Agreement on all applicable tax returns in a manner consistent with such treatment. Each Investor Certificateholder agrees that it will cause any Certificate Owner acquiring an interest in an Investor Certificate through it to comply with this Agreement as to treatment of the Investor Certificates as indebtedness for federal, state and local income and franchise tax purposes and for purposes of any other tax imposed on or measured by income. The Trustee will prepare and file all tax reports required hereunder. Section 2.09. Representations and Warranties of the Depositor. The Depositor represents and warrants to the Trustee on behalf of the Certificateholders and the Credit Enhancer as follows: (i) The Depositor has full corporate power and authority to enter into this Agreement. The execution, delivery and performance of this Agreement and compliance with the terms and provisions hereof will not result in a violation of any of the terms and provisions of, or constitute a default under, the Certificate of Incorporation or By-Laws of the Depositor. (ii) This Agreement constitutes a legal, valid and binding obligation of the Depositor, enforceable against the Depositor in accordance with its terms, except as enforceability 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 enforceability 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 Depositor to the Trustee of each Mortgage Loan, the Depositor was the sole beneficial owner of each Mortgage Loan (insofar as such title was conveyed to it by the applicable Seller) subject to no prior lien, claim, participation interest, mortgage, security interest, pledge, charge or other encumbrance or other interest of any nature; 29 36 (iv) As of the Closing Date, the Depositor has transferred all right, title and interest in the Mortgage Loans to the Trustee; and (v) The Depositor has not transferred the Mortgage Loans to the Trustee with any intent to hinder, delay or defraud any of its creditors. ARTICLE III Administration and Servicing of Mortgage Loans Section 3.01. The Servicer. (a) The Servicer shall service and administer the Mortgage Loans in a manner consistent with the terms of this Agreement and with general industry practice and shall have full power and authority, acting alone or through a subservicer, to do any and all things in connection with such servicing and administration which it may deem necessary or desirable, it being understood, however, that the Servicer shall at all times remain responsible to the Trustee, the Certificateholders, the holder of the Transferor Interest and the Credit Enhancer for the performance of its duties and obligations hereunder in accordance with the terms hereof. Any amounts received by any subservicer in respect of a Mortgage Loan shall be deemed to have been received by the Servicer whether or not actually received by it. Without limiting the generality of the foregoing, the Servicer shall continue, and is hereby authorized and empowered by the Trustee, to execute and deliver, on behalf of itself, the Certificateholders and the Trustee, or any of them, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge and all other comparable instruments, with respect to the Mortgage Loans and with respect to the Mortgaged Properties. The Trustee shall, upon the written request of a Servicing Officer, furnish the Servicer with any powers of attorney and other documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. (b) The Servicer in such capacity may consent to the placing of a lien senior to that of any Mortgage on the related Mortgaged Property, provided that (i) such Mortgage became a first lien mortgage after the related Mortgage Loan was conveyed to the Trust and, immediately following the placement of such senior lien, such Mortgage is a second lien mortgage and the outstanding principal amount of the mortgage loan secured by such senior lien is no greater than the outstanding principal amount of the senior mortgage loan secured by the Mortgaged Property as of the date the related Mortgage Loan was originated; or (ii) the Mortgage relating to such Mortgage Loan was in a second lien position as of the Cut-Off Date and the new senior lien secures a mortgage loan that refinances an existing first mortgage loan and the outstanding principal amount of the replacement first mortgage loan immediately following such refinancing is not greater than the outstanding principal amount of such existing first mortgage loan at the date of origination of such Mortgage Loan; and provided, further, that such senior mortgage does not secure a note that provides for negative amortization. 30 37 The Servicer also may, without prior approval from the Rating Agencies or the Credit Enhancer, increase the Credit Limits on Mortgage Loans provided that (i) based upon a new valuation (if required), the Combined Loan-to-Value Ratio of each such Mortgage Loan after giving effect to such increase is no greater than 100%, (ii) such increases are consistent with the Servicer's underwriting policies and (iii) the weighted average Combined Loan to Value Ratio of such Mortgage Loans does not exceed 81.18% as of the last day of any Collection Period. The Servicer also may, without prior approval from the Rating Agencies and the Credit Enhancer, solicit or accept requests from Mortgagors for a reduction in Loan Rates; provided that the aggregate of such reductions shall not cause the difference between the Cut-Off Date Weighted Average Gross Margin and the Recalculated Weighted Average Gross Margin to exceed 0.50%. The Servicer also may, without prior approval from the Rating Agencies and the Credit Enhancer, on each occasion on which the "Skip-a-Pay Program" is offered, permit Mortgagors representing up to 50% of the Pool Balance to forego certain monthly payments under the "Skip-a-Pay Program," provided that such option is not offered more than twice each year and no Mortgagor foregoes a monthly payment under the "Skip-a-Pay Program" more than seven times during the related Mortgage term. The Servicer also may extend the Draw term of any Mortgage Loan. Upon the prior written consent of each of the Rating Agencies and the Credit Enhancer, each of the percentages contained in the immediately preceding five paragraphs may be modified. In addition, the Servicer may agree to changes in the terms of a Mortgage Loan at the request of the Mortgagor, or may solicit Mortgagors to change the terms of Mortgage Loans, provided that such changes (i) do not materially and adversely affect the interests of Certificateholders or the Credit Enhancer and (ii) are consistent with prudent and customary business practice as evidenced by a Certificate signed by a Servicing Officer delivered to the Trustee and the Credit Enhancer. Nothing herein shall limit the right of the Servicer to solicit Mortgagors with respect to new loans (including mortgage loans) that are not Mortgage Loans. The relationship of the Servicer (and of any successor to the Servicer as servicer under this Agreement) to the Trustee under this Agreement is intended by the parties to be that of an independent contractor and not that of a joint venturer, partner or agent. (c) In the event that the rights, duties and obligations of the Servicer are terminated hereunder, any successor to the Servicer in its sole discretion may, to the extent permitted by applicable law, terminate the existing subservicer arrangements with any subservicer or assume the terminated Servicer's rights under such subservicing arrangements which termination or assumption will not violate the terms of such arrangements. Section 3.02. Collection of Certain Mortgage Loan Payments. 31 38 (a) The Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Mortgage Loans, and shall, to the extent such procedures shall be consistent with this Agreement, follow such collection procedures as it follows with respect to mortgage loans in its servicing portfolio comparable to the Mortgage Loans. Consistent with, and without limiting the generality of, the foregoing, the Servicer may in its discretion (i) waive any late payment charge or any assumption fees or other fees which may be collected in the ordinary course of servicing such Mortgage 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 Servicer's policies with respect to the mortgage loans it owns and services; and provided, further, that notwithstanding such arrangement such Mortgage Loans will be included in the information regarding delinquent Mortgage Loans set forth in the Servicing Certificate and monthly statement to Certificateholders pursuant to Section 5.03. (b) The Servicer shall establish and maintain a trust account (the "Collection Account") titled "The Bank of New York, as Trustee, in trust for the registered holders of Banc One ABS Corporation HELOC Asset-Backed Certificates, Series 1998-1 and MBIA." The Collection Account shall be an Eligible Account. On the Closing Date, the Servicer shall deposit any amounts representing payments on, and any collections in respect of, the Mortgage Loans received after the Cut-off Date and prior to the Closing Date, and thereafter the Servicer, or the Seller, as the case may be, shall deposit within two Business Days following receipt thereof the following payments and collections received or made by it (without duplication): (i) all collections on and in respect of the Mortgage Loans; (ii) Net Liquidation Proceeds net of any related Foreclosure Profit; (iii) Insurance Proceeds (including, for this purpose any amount required to be credited by the Servicer pursuant to the last sentence of Section 3.04 and excluding the portion thereof, if any, that has been applied to the restoration or repair of the related Mortgaged Property or released to the related Mortgagor in accordance with the normal servicing procedures of the Servicer); and (iv) any amounts required to be deposited therein pursuant to Section 10.01; provided, however, that with respect to each Collection Period, the Servicer shall be permitted to retain the Servicing Fee for such Collection Period from payments in respect of interest on the Mortgage Loans. The foregoing requirements with respect to deposits to the Collection Account are exclusive, it being understood that, without limiting the generality of the foregoing, the Servicer need not deposit in the Collection Account amounts representing Foreclosure Profits, fees or late charge penalties payable by Mortgagors, or amounts received by the Servicer for the accounts of Mortgagors for application towards the payment of taxes, insurance premiums, assessments, excess pay off amounts and similar items. The Servicer shall remit all Foreclosure Profits to the applicable Seller. Notwithstanding the foregoing, so long as the Servicer's short-term debt obligations are rated at least "A1" and "P1" by Standard & Poor's and Moody's, respectively, all amounts collected by the Servicer may be commingled with other general collections of the Servicer and 32 39 amounts collected on the Mortgage Loans for each Collection Period shall be deposited in same-day funds into the Collection Account no later than one Business Day prior to the related Distribution Date. The Trustee shall hold amounts deposited in the Collection Account as trustee for the Certificateholders and for the Credit Enhancer. Such funds may be invested in Eligible Investments maturing no later than one Business Day prior to the date on which the amount the deposit therein is required to be deposited to the Collection Account, or on such Distribution Date if approved by the Rating Agencies and the Credit Enhancer. In addition, the Servicer shall notify the Trustee and the Credit Enhancer in writing on each Determination Date of the amount of payments and collections in the Collection Account allocable to Interest Collections and Principal Collections for the related Distribution Date. All income and gain, if any, realized from any investment in Eligible Investments of funds in the Collection Account shall be for the benefit of the Investor Certificateholders. The amount of any losses incurred in respect of the principal amount of any such investments shall be deemed not to be on deposit in the Collection Account. Section 3.03. Withdrawals from the Collection Account. From time to time, withdrawals may be made from the Collection Account by the Servicer for the following purposes: (i) To the Servicer as payment for its Servicing Fee pursuant to Section 3.08; (ii) To pay to the Servicer amounts on deposit in the Collection Account that are not to be included in the distributions and payments pursuant to Section 5.01 to the extent provided by the second to the last and the last paragraph of Section 3.02(b); (iii) To make or to permit the Paying Agent to make distributions and payments pursuant to Section 5.01; and (iv) Prior to the Collection Period preceding the Rapid Amortization Commencement Date, to pay to the applicable Seller, an amount equal to the Principal Balance of any Additional Balances as and when created during the related Collection Period; provided that the aggregate amount so paid to such Seller in respect of Additional Balances at any time during any Collection Period shall not exceed the amount of Principal Collections theretofore received for such Collection Period. If the Servicer deposits in the Collection Account any amount not required to be deposited therein or any amount in respect of payments by Mortgagors made by checks subsequently returned for insufficient funds or other reason for non-payment it may at any time withdraw such amount from the Collection Account, and any such amounts shall not be included in the amounts to be deposited in the Collection Account pursuant to Section 3.02(b), any provision herein to the contrary notwithstanding. Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses. The Servicer shall not be obligated to monitor the maintenance of hazard insurance subsequent to the 33 40 origination of a Mortgage Loan. The Servicer shall maintain on property acquired upon foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended coverage in an amount that is at least equal to the lesser of (i) the maximum insurable value from time to time of the improvements which are a part of such Mortgaged Property or (ii) the combined principal balance owing on such Mortgage Loan and any mortgage loan senior to such Mortgage Loan at the time of such foreclosure or deed in lieu of foreclosure plus accrued interest and the good-faith estimate of the Servicer of related Liquidation Expenses to be incurred in connection therewith. Amounts collected by the Servicer under any such policies shall be deposited in the Collection Account to the extent called for by Section 3.02. In cases in which any Mortgaged Property is located in a federally designated flood area, the hazard insurance to be maintained for the related Mortgage Loan shall include flood insurance. All such flood insurance shall be in such amounts as are required under applicable guidelines of the Federal Flood Emergency Act. The Servicer shall be under no obligation to require that any Mortgagor maintain earthquake or other additional insurance and shall be under no obligation itself to maintain any such additional insurance on property acquired in respect of a Mortgage Loan, other than pursuant to such applicable laws and regulations as shall at any time be in force and as shall require such additional insurance. If the Servicer shall obtain and maintain a blanket insurance policy consistent with prudent industry standards insuring against hazard losses on all of the Mortgage Loans in an aggregate amount prudent under industry standards, it shall conclusively be deemed to have satisfied its obligations as set forth in the first sentence of this Section 3.04. Such blanket insurance policy may provide for a deductible. In the event a loss on a Mortgage Property occurs which would have been covered by the hazard insurance policy required by the first sentence of this Section 3.04, the Servicer shall deposit into the Collection Account, the amount not payable under the blanket policy because of such deductible. Section 3.05. Assumption and Modification Agreements. In any case in which a Mortgaged Property has been or is about to be conveyed by the Mortgagor, the Servicer shall exercise its right to accelerate the maturity of such Mortgage Loan consistent with the then current practice of the Servicer and without regard to the inclusion of such Mortgage Loan in the Trust. If it elects not to enforce its right to accelerate or if it is prevented from doing so by applicable law, the Servicer (so long as such action conforms with the underwriting standards generally acceptable in the industry at the time for new origination) is authorized to take or enter into an assumption and modification agreement from or with the Person to whom such Mortgaged Property has been or is about to be conveyed, pursuant to which such Person becomes liable under the Credit Line Agreement and, to the extent permitted by applicable law, the Mortgagor remains liable thereon. The Servicer shall notify the Trustee that any assumption and modification agreement has been completed by delivering to the Trustee an Officer's Certificate certifying that such agreement is in compliance with this Section 3.05 and by forwarding to the applicable Custodian, as agent for the Trustee, the original copy of such assumption and modification agreement. Any such assumption and modification agreement shall, for all purposes, be considered a part of the related Mortgage File to the same extent as all other documents and instruments constituting a part thereof. No change in the terms of the related Credit Line Agreement may be made by the Servicer in connection with any such assumption to the extent that such change would not be permitted to be made in respect of the original Credit Line Agreement pursuant to the fourth paragraph of Section 3.01(a). Any fee collected by the Servicer for entering into any such agreement will be retained by the Servicer as additional servicing compensation. 34 41 Section 3.06. Realization Upon Defaulted Mortgage Loans. The Servicer shall foreclose upon or otherwise comparably convert to ownership Mortgaged Properties securing such of the Mortgage Loans as come into and continue in default when, in the opinion of the Servicer based upon the practices and procedures referred to in the following sentence, no satisfactory arrangements can be made for collection of delinquent payments pursuant to Section 3.02; provided that if the Servicer has actual knowledge or reasonably believes that any Mortgaged Property is affected by hazardous or toxic wastes or substances and that the acquisition of such Mortgaged Property would not be commercially reasonable, then the Servicer will not cause the Trust to acquire title to such Mortgaged Property in a foreclosure or similar proceeding. In connection with such foreclosure or other conversion, the Servicer shall follow such practices (including, in the case of any default on a related senior mortgage loan, the advancing of funds to correct such default) and procedures as it shall deem necessary or advisable and as shall be normal and usual in its general mortgage servicing activities. The foregoing is subject to the proviso that the Servicer shall not be required to expend its own funds in connection with any foreclosure or towards the correction of any default on a related senior mortgage loan or restoration of any property unless it shall determine that such expenditure will increase Net Liquidation Proceeds. If 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. Section 3.07. Trustee to Cooperate. On or before each Distribution Date, the Servicer shall notify the Trustee of the payment in full of the Principal Balance of any Mortgage Loan during the preceding Collection Period, which notification shall be by a certification (which certification shall include a statement to the effect that all amounts received in connection with such payment which are required to be deposited in the Collection Account pursuant to Section 3.02 have been so deposited or credited) of a Servicing Officer. Upon any such payment in full, the Servicer is authorized to execute, pursuant to the authorization contained in Section 3.01, if the assignments of Mortgage have been recorded as required hereunder, an instrument of satisfaction regarding the related Mortgage, which instrument of satisfaction shall be recorded by the 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. From time to time and as appropriate for the servicing or foreclosure of any Mortgage Loan, or in connection with the payment in full of the Principal Balance of any Mortgage Loan, the Trustee shall, upon request of the Servicer and delivery to the Trustee of a Request for Release substantially in the form attached hereto as Exhibit F signed by a Servicing officer, release the related Mortgage File to the Servicer, and the Trustee shall execute such documents, in the forms provided by the Servicer, as shall be necessary to the prosecution of any such proceedings or the taking of other servicing actions. Such trust receipt shall obligate the Servicer to return the Mortgage File to the Trustee when the need therefor by the Servicer no longer unless the Mortgage Loan shall be liquidated, in which case, upon receipt of a Certificate of a Servicing Officer similar to that hereinabove specified, the trust receipt shall be released by the Trustee or such Custodian to the Servicer. 35 42 In order to facilitate the foreclosure of the Mortgage securing any Mortgage Loan that is in default following recordation of the assignments of Mortgage in accordance with the provisions hereof, the Trustee shall, if so requested in writing by the Servicer, execute an appropriate assignment in the form provided to the Trustee by the Servicer to assign such Mortgage Loan for the purpose of collection to the Servicer or to the related subservicer (any such assignment shall unambiguously indicate that the assignment is for the purpose of collection only), and, upon such assignment, the Servicer shall thereupon bring all required actions in its own name and otherwise enforce the terms of the Mortgage Loan and deposit 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 Mortgage Loan are paid by the Mortgagor and any other defaults are cured, then the Servicer shall promptly reassign such Mortgage Loan to the Trustee and return the related Mortgage File to the place where it was being maintained. Section 3.08. Servicing Compensation; Payment of Certain Expenses by Servicer. The Servicer shall be entitled to receive the Servicing Fee pursuant to Section 3.03 as compensation for its services in connection with servicing the Mortgage Loans. Moreover, additional servicing compensation in the form of late payment charges or other receipts not required to be deposited in the Collection Account (other than Foreclosure Profits) shall be retained by the Servicer. The Servicer shall be required to pay 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 Certificateholders) and shall not be entitled to reimbursement therefor except as specifically provided herein. Liquidation Expenses are reimbursable to the Servicer solely from related Liquidation Proceeds. Section 3.09. Annual Statement as to Compliance. (a) The Servicer shall deliver to the Trustee, the Credit Enhancer and the Rating Agencies, on or before May 31 of each year, beginning May 31, 1999, an Officer's Certificate stating that (i) a review of the activities of the Servicer during the preceding fiscal year (or such shorter period as is applicable in the case of the first report) 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 Servicer has fulfilled all of 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. (b) The Servicer shall deliver to the Trustee, the Credit Enhancer 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 Servicing Termination. Section 3.10. Annual Servicing Report. On or before May 31 of each year, beginning May 31, 1999, the Servicer, at its expense, shall cause a firm of nationally recognized independent public accountants (who may also render other services to the Servicer) to furnish a report to the Trustee, the Credit Enhancer and each Rating Agency to the effect that such firm 36 43 has examined certain documents and records relating to the servicing of mortgage loans during the most recent fiscal year then ended under pooling and servicing agreements (substantially similar to this Agreement, including this Agreement) that such examination, was conducted substantially in compliance with the Uniform Single Audit Program for Mortgage Bankers and that such examination has disclosed no items of noncompliance with the provisions of this Agreement which, in the opinion of such firm, are material, except for such items of noncompliance as shall be set forth in such report. Section 3.11. RESERVED Section 3.12. Access to Certain Documentation and Information Regarding the Mortgage Loans. (a) The Servicer shall provide to the Trustee, the Credit Enhancer, any Investor Certificateholders that are federally insured savings and loan associations, the Office of Thrift Supervision, successor to the Federal Home Loan Bank Board, the FDIC and the supervisory agents and examiners of the office of Thrift Supervision access to the documentation regarding the Mortgage 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 of the Servicer. Nothing in this Section 3.12 shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Mortgagors and the failure of the Servicer to provide access as provided in this Section 3.12 as a result of such obligation shall not constitute a breach of this Section 3.12. (b) The Servicer shall supply information in such form as the Trustee shall reasonably request to the Trustee and the Paying Agent, on or before the start of the Determination Date preceding the related Distribution Date, as is required in the Trustee's reasonable judgment to enable the Paying Agent or the Trustee, as the case may be, to make required distributions and to furnish the required reports to Certificateholders and to make any claim under the Policy. Section 3.13. Maintenance of Certain Servicing Insurance Policies. During the term of its service as servicer, the Servicer shall maintain in force (i) a policy or policies of insurance (which may be self-insurance) covering errors and omissions in the performance of its obligations as master servicer hereunder and (ii) a fidelity bond (or self-insurance) in respect of its officers, employees or agents. Each such policy or policies and bond together shall comply with the requirements from time to time of the Federal National Mortgage Association for persons performing servicing for mortgage loans purchased by such Association. Section 3.14. 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 Servicer, the Depositor and the holder of the Transferor Interest 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 37 44 documentation as the Trustee may reasonably request in connection with the performance of its duties and obligations under this Section. Section 3.15. Tax Returns. In accordance with Section 2.08 hereof, the Trustee shall prepare and file any Federal, State or local income and franchise tax return for the Trust as well as any other applicable return and apply for a taxpayer identification number on behalf of the Trust. The holder of the Transferor Interest shall treat the Mortgage Loans as its property for all Federal, State or local tax purposes and shall report all income earned thereon (including amounts payable as fees to the Servicer) as its income for income tax purposes. In the event the Trust shall be required pursuant to an audit or administrative proceeding or change in applicable regulations to file Federal, State or local tax returns, the Trustee shall prepare and file or shall cause to be prepared and filed any tax returns required to be filed by the Trust; the Trustee shall promptly sign such returns and deliver such returns after signature to the Servicer and such returns shall be filed by the Servicer. The Trustee shall also prepare or shall cause to be prepared all tax information required by law to be distributed to Investor Certificateholders. In no event shall the Trustee or the Servicer be liable for any liabilities, costs or expenses of the Trust, the Investor Certificateholders, the holder of the Transferor Interest or the Certificate Owners arising under any tax law, including without limitation Federal, State or local income and franchise or excise taxes or any other tax imposed on or measured by income (or any interest or penalty with respect thereto or arising from a failure to comply therewith. Section 3.16. Information Required by the Internal Revenue Service Generally and Reports of Foreclosures and Abandonments of Mortgaged Property. The Trustee shall prepare and deliver all federal and state information reports when and as required by all applicable state and federal income tax laws including without limitation those under Sections 6050M, 6050J and 6050P of the Code. In particular, with respect to the requirement under Section 6050J of the Code to the effect that the Servicer shall make reports of foreclosures and abandonments of any mortgaged property for each year beginning in 1999, the Servicer shall file reports relating to each instance occurring during the previous calendar year in which the 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 Mortgage Loan, or (ii) knows or has reason to know that any Mortgaged Property has been abandoned. The report from the Servicer shall be in form and substance sufficient to meet the reporting requirements imposed by Section 6050J. ARTICLE IV Servicing Certificate Section 4.01. Servicing Certificate. Not later than each Determination Date, the Servicer shall deliver (a) to the Trustee, the Statement to Certificateholders required to be prepared pursuant to Section 5.03 and (b) to the Trustee, the Seller, the Depositor, the Paying Agent, the Credit Enhancer and each Rating Agency a Servicing Certificate (in written form or the form of computer readable media or such other form as may be agreed to by the Trustee and the Servicer), together with an Officer's Certificate to the effect that such Servicing Certificate is true and correct in all material respects, stating the related Collection Period, Distribution Date, the series number of the Certificates, the date of this Agreement, and: 38 45 (i) the aggregate amount of collections received from the Mortgage Loans on or prior to the Determination Date in respect of such Collection Period; (ii) the aggregate amount of (a) Interest Collections and (b) Principal Collections for such Collection Period; (iii) the Investor Floating Allocation Percentage and the Investor Fixed Allocation Percentage for such Collection Period; (iv) the Investor Interest Collections and Investor Principal Collections for such Collection Period; (v) the Transferor Interest Collections and Transferor Principal Collections for such Collection Period; (vi) the Investor Certificate Interest and the Investor Certificate Rate for the related Interest Period; (vii) the amount, if any, of such Investor Certificate Interest that is not payable on account of insufficient Investor Interest Collections; (viii) the portion of the Unpaid Investor Certificate Interest Shortfall, if any, the amount of interest on such shortfall at the Certificate Rate applicable from time to time (separately stated) to be distributed on such Distribution Date; (ix) the Unpaid Investor Certificate Interest Shortfall, if any, to remain after the distribution on such Distribution Date; (x) the Accelerated Principal Distribution Amount and the portion thereof that will be distributed pursuant to Section 5.01(a)(viii); (xi) the Scheduled Principal Collections Distribution Amount, separately stating the components thereof; (xii) the amount of any Transfer Deposit Amount paid by the Seller or the Depositor pursuant to Section 2.02 or 2.04; (xiii) any accrued and unpaid Servicing Fees for previous Collection Periods and the Servicing Fee for such Collection Period; (xiv) the Investor Loss Amount for such Collection Period; (xv) the aggregate amount, if any, of Investor Loss Reduction Amounts for previous Distribution Dates that have not been previously reimbursed to Investor Certificateholders pursuant to 5.01(a)(iv); (xvi) the aggregate Principal Balance of the Mortgage Loans as of the end of the related Collection Period and as of the end of the Collection Period preceding the related 39 46 Collection Period, separately identifying the aggregate Locked Balances and HELOC Balances, together with the percentage of Locked Balances as of the end of the related Collection Period (calculated by dividing the aggregate Locked Balances by the Pool Balance as of such date); (xvii) the Pool Balance as of the end of the related Collection Period and as of the end of the Collection Period preceding the related Collection Period; (xviii) the Invested Amount as of the end of the related Collection Period; (xix) the Investor Certificate Principal Balance and Pool Factor after giving effect to the distribution on such Distribution Date and to any reduction on account of the Investor Loss Amount; (xx) the Transferor Principal Balance after giving effect to the distribution on such Distribution Date; (xxi) the aggregate amount of Additional Balances created during the related Collection Period; (xxii) the number and aggregate Principal Balances of Mortgage Loans (x) as to which the Minimum Monthly Payment is delinquent for 30-59 days, 60-89 days and 90 or more days, respectively and (y) that have become REO, in each case as of the end of the related Collection Period; (xxiii) whether a Rapid Amortization Event has occurred since the prior Determination Date, specifying each such Rapid Amortization Event if one has occurred; and (xxiv) whether an Event of Servicing Termination has occurred since the prior Determination Date, specifying each such Event of Servicing Termination if one has occurred; (xxv) the amount to be distributed to the Credit Enhancer pursuant to Section 5.01(a)(vi) and Section 5.01(a)(ix), stated separately; (xxvi) the amount to be distributed to the Spread Account pursuant to Section 5.01(a)(vii); (xxvii) the Guaranteed Principal Distribution Amount for such Distribution Date; (xxviii) the Credit Enhancement Draw Amount, if any, for such Distribution Date; (xxix) the amount to be distributed to the holder of the Transferor Interest pursuant to Section 5.01(a)(xii); (xxx) the amount to be paid to the Servicer pursuant to Section 5.01(a)(x); 40 47 (xxxi) the weighted average Loan Rate as of the end of the related Collection Period; (xxxii) the total amount of funds on deposit in the Spread Account (after giving effect to any deposit thereto and withdrawals therefrom), the applicable Required Spread Account Amount and the aggregate amount of any withdrawals from the Spread Account for such Distribution Date; (xxxiii) the Overcollateralization Amount after giving to the distribution to be made on such Distribution Date; (xxxiv) the number and Principal Balances of any Mortgage Loans retransferred to the holder of the Transferor Interest pursuant to Section 2.06; (xxxv) the Recalculated Weighted Average Gross Margin; (xxxvi) the weighted Combined Loan-to-Value Ratio as of the last day of the related Collection Period; and (xxxvii) the number and aggregate Principal Balance of all Mortgage Loans that did not receive a monthly payment during such Collection Period pursuant to the "Skip-a-Pay Program". The Trustee shall conclusively rely upon the information contained in a Servicing Certificate for purposes of making distributions pursuant to Section 5.01, shall have no duty to inquire into such information and shall have no liability in so relying. The format and content of the Servicing Certificate may be modified by the mutual agreement of the Servicer, the Trustee and the Credit Enhancer. The Servicer shall give notice of any such change to the Rating Agencies. Section 4.02. Claims upon the Policy; Policy Payments Account. (a) If, by the close of business on the third Business Day prior to a Distribution Date, the Servicer notifies the Trustee that on such Distribution Date the sum of (i) the funds that will be on deposit in the Collection Account for the related Collection Period which are payable to the Investor Certificateholders pursuant to Sections 5.01(a) and (b) (after giving effect to the distribution of the Trustee Fee and the Premium) and (ii) the amount that will be on deposit in the Spread Account will be insufficient to pay the Guaranteed Distribution on such Distribution Date, then the Trustee shall give notice to the Credit Enhancer by telephone or telecopy of the amount equal to the Credit Enhancement Draw Amount. Such notice of such sum shall be confirmed in writing in the form set forth as Exhibit A to the Policy, to the Credit Enhancer and the Fiscal Agent, if any, at or before 10:00 a.m., New York City time, on the second Business Day prior to such Distribution Date. Following receipt by the Credit Enhancer of such notice in such form, the Credit Enhancer or the Fiscal Agent will pay any amount payable under the Policy on the later to occur of (i) 12:00 noon, New York City time, on the Business Day next succeeding presentation to the Fiscal Agent and (ii) 12:00 noon, New York City time, on the Distribution Date to which such deficiency relates, as provided in the Policy. 41 48 (b) The Trustee shall establish a separate special purpose trust account, which account shall be an Eligible Account, for the benefit of Holders of the Investor Certificates and the Credit Enhancer referred to herein as the "Policy Payments Account" over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall deposit any amount paid under the Policy in the Policy Payments Account and distribute such amount only for purposes of payment to Holders of the Investor Certificates of the Guaranteed Distribution for which a claim was made and such amount may not be applied to satisfy any costs, expenses or liabilities of the Servicer, the Trustee or the Trust Fund. Amounts paid under the Policy shall be transferred to the Collection Account in accordance with the next succeeding paragraph and disbursed by the Trustee to Holders of Investor Certificates in accordance with Section 5.01. It shall not be necessary for such payments to be made by checks or wire transfers separate from the checks or wire transfers used to pay the Guaranteed Distribution with other funds available to make such payment. However, the amount of any payment of principal of or interest on the Investor Certificates to be paid from funds transferred from the Policy Payments Account shall be noted as provided in paragraph (c) below in the Certificate Register and in the statement to be furnished to Holders of the Investor Certificates pursuant to Section 5.03. Funds held in the Policy Payments Account shall not be invested. On any Distribution Date with respect to which a claim has been made under the Policy, the amount of any funds received by the Trustee as a result of any claim under the Policy, to the extent required to make the Guaranteed Distribution on such Distribution Date, shall be withdrawn from the Policy Payments Account and deposited in the Collection Account and applied by the Trustee, together with the other funds to be withdrawn from the Collection Account pursuant to Section 5.01 directly to the payment in full of the Guaranteed Distribution due on the Investor Certificates. Any funds received by the Trustee shall be used solely for payment to the Holders of Investor Certificates and may not be applied to satisfy any costs, expenses or liabilities of the Servicer, the Trustee or the Trust. Any funds remaining in the Policy Payments Account on the first Business Day following a Distribution Date shall be remitted to the Credit Enhancer, pursuant to the instructions of the Credit Enhancer, by the end of such Business Day. (c) The Trustee shall keep a complete and accurate record of the amount of interest and principal paid in respect of any Investor Certificate from moneys received under the Policy. The Credit Enhancer shall have the right to inspect such records at reasonable times during normal business hours upon one Business Day's prior notice to the Trustee. (d) The Trustee shall promptly notify the Credit Enhancer and Fiscal Agent 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 applicable bankruptcy, insolvency, receivership or similar law with respect to a proceeding against or by the Sellers, the Servicer or the Trust (a "Preference Claim") of any distribution made with respect to the Investor Certificates. Each Investor Certificateholder, by its purchase of Investor Certificates, the Servicer and the Trustee hereby agree that, the Credit Enhancer (so long as no Credit Enhancer 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, supersede as or performance bond pending any such appeal. In 42 49 addition and without limitation of the foregoing, the Credit Enhancer shall be subrogated to the rights of the Servicer, the Trustee and each Investor Certificateholder in the conduct of any such Preference Claim, including, without limitation, all rights of any party to an adversary proceeding action with respect to any court order issued in connection with any such Preference Claim. Section 4.03. Spread Account. (a) The Trustee shall establish and maintain a separate trust account (the "Spread Account") titled "The Bank of New York, as Trustee, in trust for the registered holders of Banc One ABS Corporation HELOC Asset-Backed Certificates, Series 1998-1 and MBIA." The Spread Account shall be an Eligible Account. Amounts on deposit in the Spread Account will, at the direction of the holder of the Transferor Interest, be invested in Eligible Investments maturing no later than the day before the next Distribution Date. All income and gain realized from any investment of funds in the Spread Account shall be for the benefit of the holder of the Transferor Interest and shall be subject to its withdrawal from time to time. The amount of any losses incurred in respect of the principal amount of any such investments shall be deemed not to be on deposit in the Spread Account. (b) On each Determination Date the Trustee shall determine (i) the extent to which Investor Interest Collections and Reallocated Investor Principal Collections applied in the order specified in Section 5.01(a) are insufficient to make distributions as provided in clauses (i) and (ii) of Section 5.01(a) or Investor Interest Collections applied in the order specified in Section 5.01(a) are insufficient to make distributions as provided in clauses (i), (ii) and (iii) of Section 5.01(a) and (ii) with respect to the Distribution Date in January 2020, the Guaranteed Principal Distribution Amount for the related Distribution Date. On each Distribution Date, the Trustee shall withdraw from the Spread Account and deposit into the Collection Account the lesser of the amount on deposit in the Spread Account and an amount equal to the sum of the amounts, if any, determined in clauses (i) and (ii) of the preceding sentence. In addition, on each Distribution Date the Trustee shall withdraw the amount, if any, on deposit in the Spread Account (after giving effect to all deposits thereto and withdrawals therefrom on such Distribution Date) in excess of the Required Spread Account Amount and shall deposit such funds in the Collection Account. (c) Following the termination of the Trust pursuant to Section 10.01 or 11.02 hereof, the Trustee shall withdraw all amounts then on deposit in the Spread Account and distribute such amounts, first to any amounts due and owing to the Credit Enhancer, and then to the holder of the Transferor Interest. If on any Distribution Date the amount on deposit in the Spread Account exceeds the Required Spread Account Amount, the Trustee shall withdraw such excess and distribute it to the holder of the Transferor Interest. Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation. Anything herein to the contrary notwithstanding, any payment with respect to principal of or interest on any of the Investor Certificates which is made with monies received pursuant to the terms of the Policy shall not be considered payment of such Investor 43 50 Certificates from the Trust and shall not result in the payment of or the provision for the payment of the principal of or interest on such Investor Certificates within the meaning of Section 5.01. The Depositor, the Servicer and the Trustee acknowledge, and each Holder by its acceptance of an Investor Certificate agrees, that without the need for any further action on the part of the Credit Enhancer, the Depositor, the Servicer, the Trustee or the Certificate Registrar (a) to the extent the Credit Enhancer makes payments, directly or indirectly, on account of principal of or interest on any Investor Certificates to the Holders of such Certificates, the Credit Enhancer will be fully subrogated to the rights of such Holders to receive such principal and interest from the Trust and (b) the Credit Enhancer 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 and the Servicer shall cooperate in all respects with any reasonable request by the Credit Enhancer for action to preserve or enforce the Credit Enhancer's rights or interests under this Agreement without limiting the rights or affecting the interests of the Holders as otherwise set forth herein. Section 4.05. Reallocated Investor Principal Collections. On each Determination Date the Trustee shall determine the extent to which Investor Interest Collections applied in the order specified in Section 5.01(a) are insufficient to make distributions as provided in clauses (i) and (ii) of Section 5.01(a). On each Distribution Date, the Trustee shall apply any Reallocated Investor Principal Collections to make the distribution as provided in clauses (i) and (ii) of Section 5.01(a), and such Reallocated Investor Principal Collections shall no longer be available for distributions of principal as provided in Section 5.01(b). ARTICLE V Payments and Statements to Certificateholders; Rights of Certificateholders Section 5.01. Distributions. (a) Distributions of Investor Interest Collections and Investment Proceeds. Subject to Section 11.02(b), on each Distribution Date, the Trustee or the Paying Agent, as the case may be, shall distribute out of the Collection Account to the extent of (A) Investor Interest Collections collected during the related Collection Period, (B) any Reallocated Investor Principal Collections as determined pursuant to Section 4.05 and (C) any amounts transferred from the Spread Account as determined pursuant to Section 4.03(b), the following amounts and in the following order of priority to the following Persons (based on the information set forth in the Servicing Certificate): (i) the Trustee Fee for such Distribution Date to the Trustee; (ii) the sum of (A) the Investor Certificate Interest for such Distribution Date to the Investor Certificateholders plus (B) any Unpaid Investor Certificate Interest Shortfall, for such Distribution Date to the Investor Certificateholders plus, (C) to the extent legally permissible, interest thereon at the Investor Certificate Rate plus 2% per annum; 44 51 (iii) any Investor Loss Amount for such Collection Period, to the Investor Certificateholders as payment of principal in reduction of the Investor Certificate Principal Balance; (iv) the aggregate amount of any Investor Loss Reduction Amounts for previous Distribution Dates that have not been previously reimbursed to Investor Certificateholders, to the Investor Certificateholders as payment of principal in reduction of the Investor Certificate Principal Balance; (v) the premium pursuant to the Insurance Agreement to the Credit Enhancer; (vi) to reimburse the Credit Enhancer for previously unreimbursed Credit Enhancement Draw Amounts together with interest thereon, calculated as set forth in the Insurance Agreement; (vii) to deposit into the Spread Account, until the aggregate amount of funds therein is equal to the Required Spread Account Amount; (viii) any Accelerated Principal Distribution Amount for such Distribution Date, to the Investor Certificateholders; (ix) to the Credit Enhancer for any amounts owed to the Credit Enhancer pursuant to the Insurance Agreement; (x) to the Servicer for any amount required to be paid to the Servicer pursuant to Section 7.03 that has not been previously paid to the Servicer; (xi) any LIBOR Interest Carryover for such Distribution Date to the Investor Certificateholders; and (xii) any remaining amount to the holder of the Transferor Interest. (b) Distribution of Principal Collections. Subject to Section 11.02(b) and on each Distribution Date other than the Distribution Date in January 2020, the Trustee shall distribute out of the Collection Account to the Investor Certificateholders the Investor Principal Collections (including amounts transferred thereto from the Spread Account pursuant to Section 4.03(b) in respect of the amount determined pursuant to Section 4.03(b)(ii)), up to the Scheduled Principal Collections Distribution Amount (less any Reallocated Investor Principal Collections for such Distribution Date and any Overcollateralization Release Amount for such Distribution Date), but not in excess of the Investor Certificate Principal Balance. On the Distribution Date in January 2020 the Trustee shall distribute to Investor Certificateholders the Investor Principal Collections (including amounts transferred thereto from the Spread Account pursuant to Section 4.03(b) in respect of the amount determined pursuant to Section 4.03(b)(ii)) up to the Investor Certificate Principal Balance. (c) Distribution of Overcollateralization Release Amount. On each Distribution Date, the Trustee shall distribute out of the Collection Account to the holder of the Transferor Interest the Overcollateralization Release Amount, if any, for such Distribution Date. 45 52 (d) Distribution of the Credit Enhancement Draw Amount. With respect to any Distribution Date, to the extent that Investor Interest Collections, Reallocated Investor Principal Collections and amounts transferred from the Spread Account on the related Distribution Date in respect of the amount determined pursuant to Section 4.03(b)(i) applied in the order specified in Section 5.01(a) are insufficient to make distributions as provided in clause (ii) of Section 5.01(a) above, the Trustee will make such payments from the amount drawn under the Policy for such Distribution Date pursuant to Section 4.02. For any Distribution Date as to which there is a Guaranteed Principal Distribution Amount, the Trustee shall distribute the Guaranteed Principal Distribution Amount to Certificateholders from the amount drawn under the Policy for such Distribution Date pursuant to Section 4.02. The aggregate amount of principal distributed to the Investor Certificateholders under this Agreement shall not exceed the Original Investor Certificate Principal Balance. (e) Method of Distribution. The Trustee shall make distributions in respect of a Distribution Date to each Investor Certificateholder of record on the related Record Date (other than as provided in Section 10.01 respecting the final distribution) by check or money order mailed to such Investor Certificateholder at the address appearing in the Certificate Register, or upon written request by an Investor Certificateholder delivered to the Trustee at least five Business Days prior to such Record Date, by wire transfer (but only if such Certificateholder is the Depository or such Certificateholder owns of record one or more Investor Certificates having principal denominations aggregating at least $1,000,000), or by such other means of payment as such Investor Certificateholder and the Trustee shall agree. Distributions among Investor Certificateholders shall be made in proportion to the Percentage Interests evidenced by the Investor Certificates held by such Investor Certificateholders. (f) 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 Investor Certificates. None of the Trustee, the Paying Agent, the Certificate Registrar, the Depositor, the Credit Enhancer or the Servicer shall have any responsibility therefor except as otherwise provided by applicable law. (g) Distributions to holder of the Transferor Interest. On each Distribution Date, the Trustee shall, based upon the information set forth in the Servicing Certificate for such Distribution Date, distribute to the holder of the Transferor Interest (i) the Transferor Interest Collections for the related Collection Period and (ii) the portion of Transferor Principal Collections for the related Collection Period in excess of Additional Balances created during such Collection Period; provided that collections allocable to the Transferor Interest will be distributed to the holder of the Transferor Interest only to the extent that such distribution will not reduce the amount of the Transferor Principal Balance as of the related Distribution Date 46 53 below the Minimum Transferor Interest. Amounts not distributed to the holder of the Transferor Interest because of such limitations will be retained in the Collection Account until the Transferor Principal Balance exceeds the Minimum Transferor Interest, at which time such excess shall be released to the holder of the Transferor Interest. Section 5.02. Calculation of the Investor Certificate Rate. On the second LIBOR Business Day immediately preceding each Distribution Date, the Trustee shall determine LIBOR for the Interest Period commencing on such Distribution Date and inform the Servicer (at the facsimile number given to the Trustee in writing) of such rates. On each Determination Date, the Trustee shall determine the applicable Investor Certificate Rate for the related Distribution Date. Section 5.03. Statements to Certificateholders. Concurrently with each distribution to Investor Certificateholders, the Trustee shall forward to each Investor Certificateholder, the Servicer and each Rating Agency a statement prepared by the Servicer pursuant to Section 4.01 with respect to such distribution setting forth: (i) the Investor Floating Allocation Percentage for the preceding Collection Period; (ii) the Investor Certificate Distribution Amount; (iii) the amount of Investor Certificate Interest in such distribution and the related Investor Certificate Rate; (iv) the amount, if any, of any Unpaid Investor Certificate Interest Shortfall in such distribution; (v) the amount, if any, of the remaining Unpaid Investor Certificate Interest Shortfall after giving effect to such distribution; (vi) the amount, if any, of principal in such distribution, separately stating the components thereof; (vii) the amount, if any, of the reimbursement of previous Investor Loss Reduction Amounts in such distribution; (viii) the amount, if any, of the aggregate of unreimbursed Investor Loss Reduction Amounts after giving effect to such distribution; (ix) the Servicing Fee for such Distribution Date; (x) the Invested Amount, the Investor Certificate Principal Balance and the Pool Factor, each after giving effect to such distribution; (xi) the Pool Balance as of the end of the preceding Collection Period and the aggregate of the Principal Balances of the Mortgage Loans at the close of business on the last day of the related Collection Period; 47 54 (xii) the Credit Enhancement Draw Amount, if any; (xiii) the number and aggregate Principal Balances of Mortgage Loans as to which the Minimum Monthly Payment is delinquent for 30-59 days, 60-89 days and 90 or more days, respectively, as of the end of the preceding Collection Period; (xiv) the book value (within the meaning of 12 C.F.R ? 571.13 or comparable provision) of any real estate acquired through foreclosure or grant of a deed in lieu of foreclosure; (xv) the Investor Certificate Rate applicable to the distribution on the following Distribution Date; (xvi) the Required Spread Account Amount and the amount of funds on deposit in the Spread Account (after giving effect to any deposits thereto and withdrawals therefrom) on such Distribution Date; (xvii) the number and principal balances of any Mortgage Loans retransferred to the Transferor pursuant to (a) Section 2.04 and (b) Section 2.06; (xviii) any LIBOR Interest Carryover for such Distribution Date; and (xix) the Required Overcollateralization Amount for such Distribution Date and the amount of Overcollateralization remaining after giving effect to all distributions on such Distribution Date. In the case of information furnished pursuant to clauses (ii), (iii) in respect of Investor Certificate Interest, (iv) and (viii) above, the amounts shall be expressed as a dollar amount per Investor Certificate with a $1,000 denomination. Within 60 days after the end of each calendar year, the Servicer shall prepare or cause to be prepared and shall forward to the Trustee the information set forth in clauses (iii) and (vi) above aggregated for such calendar year. Such obligation of the Servicer shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Servicer or a Paying Agent pursuant to any requirements of the Code. The Trustee shall prepare or cause to be prepared (in a manner consistent with the treatment of the Investor Certificates as indebtedness of the holder of the Transferor Interest, or as may be otherwise required by Section 3.15) Internal Revenue Service Form 1099 (or any successor form) and any other tax forms required to be filed or furnished to Certificateholders in respect of distributions by the Trustee (or the Paying Agent) on the Investor Certificates and shall file and distribute such forms as required by law. Section 5.04. Rights of Certificateholders and holder of the Transferor Interest. The Investor Certificates shall represent fractional undivided interests in the Trust, including the benefits of the Collection Account and the right to receive Investor Interest Collections, Principal 48 55 Collections and other amounts at the times and in the amounts specified in this Agreement; the Transferor Interest shall represent the remaining interest in the Trust. ARTICLE VI The Certificates Section 6.01. The Certificates. The Investor Certificates shall be substantially in the form set forth in Exhibit A and shall, on original issue, be executed, authenticated and delivered by the Trustee to or upon the order of the Depositor concurrently with the sale and assignment to the Trustee of the Trust. The Investor Certificates shall be initially evidenced by one or more Certificates representing the entire original Investor Certificate Principal Balance and shall be held in minimum dollar denominations of $1,000 and integral dollar multiples in excess thereof, except that one Investor Certificate may be in a different denomination of less than $1,000 so that the sum of the denominations of all outstanding Investor Certificates shall equal the Original Investor Certificate Principal Balance. The sum of the denominations of all outstanding Investor Certificates shall equal the Original Investor Certificate Principal Balance. The Transferor Interest initially shall be an uncertificated interest issued upon the order of the Depositor to the Trustee concurrently with the sale and assignment to the Trustee of the Trust. The Transferor Interest may be certificated pursuant to Section 6.02(a). The Transferor Interest shall represent the entire interest in the assets of the Trust other than that represented by the Investor Certificates and shall initially be issued to the Seller. The Certificates shall be executed by manual or facsimile signature on behalf of the Trustee by an authorized officer under its seal imprinted thereon. 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 Certificates. 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 Investor Certificates shall be Book-Entry Certificates. The Transferor Interest shall not be Book-Entry Certificates. Section 6.02. Registration of Transfer and Exchange of Investor Certificates; Appointment of Registrar. (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 Investor Certificates and the Transferor Interest and of transfers and exchanges of Investor Certificates and the Transferor Interest as herein provided. The First National Bank of Chicago shall initially serve as Certificate Registrar for the purpose of registering Investor Certificates and the Transferor Interest and transfers and exchanges of Investor Certificates and the Transferor Interest as herein provided. 49 56 Upon surrender for registration of transfer of any Investor Certificate at any office or agency of the Certificate Registrar maintained for such purpose pursuant to the foregoing paragraph, 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 Investor Certificates of the same aggregate Percentage Interest. Upon direction by the holder of the Transferor Interest to the Trustee and the Certificate Registrar, the Trustee shall issue the Transferor Interest in a Certificated form substantially in a form as set forth in Exhibit B. Upon notification by the holder of the Transferor Interest to the Certificate Registrar of a transfer of the Transferor Interest and subject to Section 6.05, the Trustee on behalf of the Trust shall note on the Certificate Register the transfer of the Transferor Interest. At the option of the Investor Certificateholders, Investor Certificates may be exchanged for other Investor Certificates in authorized denominations and the same aggregate Percentage Interests, upon surrender of the Investor Certificates to be exchanged at any such office or agency. Whenever any Investor Certificates are so surrendered for exchange, the Trustee shall execute and authenticate and deliver the Investor Certificates which the Investor Certificateholder making the exchange is entitled to receive. Every Investor Certificate presented or surrendered for 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 the Investor 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 Investor Certificates; (iii) ownership and transfers of registration of the Investor Certificates on the books of the Depository shall be governed by applicable 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 Investor 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 50 57 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 Depositor is unable to locate a qualified successor, (ii) the Depositor, 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 Servicing Termination, the Depository, at the direction of Certificate Owners representing Percentage Interests aggregating not less than 51% advises the Trustee in writing that the continuation of a book-entry system through the Depository to the exclusion of definitive, fully registered Investor 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 the Investor Certificates by the Depository, accompanied by registration instructions from the Depository for registration, the Trustee shall execute and authenticate the Definitive Certificates. Neither the Depositor 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, all references herein to obligations imposed upon or to be performed by the Depository shall be deemed to be imposed upon and performed by the Trustee, to the extent applicable with respect to such Definitive Certificates and the Trustee, the Certificate Registrar, the Servicer and the Depositor shall recognize the Holders of the Definitive Certificates as Certificateholders hereunder. No service charge shall be made for any registration of transfer or exchange of Investor Certificates, 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 Investor Certificates surrendered for registration of transfer or exchange shall be cancelled by the Certificate Registrar and disposed of pursuant to its standard procedures. 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 Depositor 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) connected 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. 51 58 Section 6.04. Persons Deemed Owners. Prior to due presentation of a Certificate or the Transferor Interest for registration of transfer, the Servicer, the Depositor, the Trustee, the Certificate Registrar, any Paying Agent and any agent of the Servicer, the Depositor, the Trustee, any Paying Agent or the Certificate Registrar may treat the Person, including a Depository, in whose name any Certificate or the Transferor Interest is registered as the owner of such Certificate or Transferor Interest for the purpose of receiving distributions pursuant to Section 5.01 and for all other purposes whatsoever, and none of the Servicer, the Depositor, the Trustee the Certificate Registrar, any Paying Agent or any agent of any of them shall be affected by notice to the contrary. Section 6.05. Restrictions on Transfer of Transferor Interest. (a) The Transferor Interest shall be assigned, transferred, exchanged, pledged, financed, hypothecated or otherwise conveyed (collectively, for purposes of this Section 6.05 and any other Section referring to the Transferor Interest, "transferred" or a "transfer") only in accordance with this Section 6.05. (b) No transfer of a Transferor Interest shall be made unless such transfer is exempt from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws or is made in accordance with said Act and laws. Except for the initial issuance of the Transferor Interest to the Holder thereof, the Trustee shall require (i) the transferee to execute an investment letter acceptable to and in form and substance satisfactory to the Trustee certifying to the Trustee the facts surrounding such transfer, which investment letter shall not be an expense of the Trustee or (ii) if the investment letter is not delivered, a written Opinion of Counsel acceptable to and in form and substance satisfactory to the Trustee and the Depositor that such transfer may be made pursuant to an exemption, describing the applicable exemption and the basis therefor, from said Act or is being made pursuant to said Act, which Opinion of Counsel shall not be an expense of the Trustee or the Depositor. The Holder of a Transferor Interest desiring to effect such transfer shall, and does hereby agree to, indemnify the Trustee against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws. (c) The Transferor Interest and any interest therein shall not be transferred except upon satisfaction of the following conditions precedent: (i) the Person that acquires a Transferor Interest shall (A) be organized and existing under the laws of the United States of America or any state or the District of Columbia thereof, (B) expressly assume, by an agreement supplemental hereto, executed and delivered to the Trustee, the performance of every covenant and obligation of the holder of the Transferor Interest hereunder and (C) as part of its acquisition of a Transferor Interest, acquire all rights of the holder of the Transferor Interest or any transferee under this Section 6.05(c) to amounts payable to such holder of the Transferor Interest or such transferee under Sections 5.01(a)(xii) and 5.01(g); (ii) the holder of the Transferor Interest shall deliver to the Trustee an Officer's Certificate stating that such transfer and such supplemental agreement comply with this Section 6.05(c) and that all conditions precedent provided by this subsection 6.05(c) have been complied with and an Opinion of Counsel stating that all conditions precedent provided by this subsection 6.05(c) have been complied with, and the Trustee may conclusively rely on such Officer's Certificate, shall have no duty to make inquiries with regard to the matters set forth therein and shall incur no liability in so relying; (iii) 52 59 the holder of the Transferor Interest shall deliver to the Trustee a letter indicating that each Rating Agency and the Credit Enhancer have been notified of such transfer; (iv) the transferee of the Transferor Interest shall deliver to the Trustee an Opinion of Counsel to the effect that (a) such transfer will not adversely affect the treatment of the Investor Certificates after such transfer as debt for federal and applicable state income tax purposes, (b) such transfer will not result in the Trust being subject to tax at the entity level for federal or applicable state tax purposes, (c) such transfer will not have any material adverse impact on the federal or applicable state income taxation of an Investor Certificateholder or any Certificate Owner and (d) such transfer will not result in the arrangement created by this Agreement or any "portion" of the Trust, being treated as a taxable mortgage pool as defined in Section 7701(i) of the Code; (v) all filings and other actions necessary to continue the perfection of the interest of the Trust in the Mortgage Loans and the other property conveyed hereunder shall have been taken or made and (vi) the transferee shall have assumed the obligations of the holder of the Transferor Interest pursuant to Section 7.07 hereof. Notwithstanding the foregoing, the requirement set forth in subclause (i)(A) of this Section 6.05(c) shall not apply in the event the Trustee shall have received a letter from each Rating Agency confirming that its rating of the Investor Certificates, after giving effect to a proposed transfer to a Person that does not meet the requirement set forth in subclause (i)(A), shall not be reduced or withdrawn. Notwithstanding the foregoing, the requirements set forth in this paragraph (c) shall not apply to the initial issuance of the Transferor Interest to the Transferor. (d) Except for the initial issuance of the Transferor Interest, no transfer of a Transferor Interest shall be made unless the Trustee shall have received either (i) a representation letter from the transferee of such Transferor Interest, acceptable to and in form and substance satisfactory to the Trustee, to the effect that such transferee is not an employee benefit or other 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, (ii) if the purchaser is an insurance company, a representation that the purchaser is an insurance company which is purchasing such Transferor Interest 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 Transferor Interest are covered under PTCE 95-60, or (iii) in the case of any Transferor Interest presented for registration in the name of an employee benefit or other plan subject to ERISA or Section 4975 of the Code (or comparable provisions of any subsequent enactment's), or a trustee of any such plan, an Opinion of Counsel to the effect that the purchase or holding of such Transferor Interest 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 Section 4975 of 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 Depositor. Section 6.06. Appointment of Paying Agent. (a) The Paying Agent shall make distributions to Investor Certificateholders from the Collection 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 53 60 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 First National Bank of Chicago. The Trustee may appoint a successor to act as Paying Agent, which appointment shall be reasonably satisfactory to the Depositor. (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 Investor Certificateholders in trust for the benefit of the Investor Certificateholders entitled thereto until such sums 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. Section 6.07. Acceptance of Obligations. The holder of the Transferor Interest, by its acceptance of the Transferor Interest, agrees to be bound by and to perform all the duties of the holder of the Transferor Interest set forth in this Agreement. ARTICLE VII The Servicer, the Seller and the Depositor Section 7.01. Liability of the Servicer and the Depositor. The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically imposed upon and undertaken by the Servicer, herein. The Depositor shall be liable in accordance herewith only to the extent of the obligations specifically imposed upon and undertaken by the Depositor. Section 7.02. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer or the Depositor; Assignment of Servicing to an Affiliate. Any corporation into which the Servicer or the Depositor may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Servicer or the Depositor shall be a party, or any corporation succeeding to the business of the Servicer or the Depositor, shall be the successor of the Servicer or the Depositor, 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. In addition, so long as Bank One, N.A. or an Affiliate thereof is the Servicer, upon delivery of prior written notice to the Rating Agencies and the Credit Enhancer, the Servicer may assign all of its rights and obligations hereunder to any Eligible Affiliate Servicer provided that such Eligible Affiliate Servicer agrees to be bound by the obligations of the Servicer under the Insurance Agreement. Section 7.03. Limitation on Liability of the Servicer and Others. Neither the Servicer nor any of the directors or officers or employees or agents of the 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 Servicer in good faith pursuant to this Agreement, or for errors in judgment; provided, however, that this provision shall not protect the Servicer or any such 54 61 Person against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of duties of the Servicer or by reason of reckless disregard of obligations and duties of the Servicer hereunder. The Servicer and any director or officer or employee or agent of the 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 Servicer and any director or officer or employee or agent of the 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 Agreement or the Certificates, other than any loss, liability or expense related to any specific Mortgage Loan or Mortgage 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 gross negligence in the performance of duties hereunder or by reason of its reckless disregard of obligations and duties hereunder. The Servicer shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to duties to service the Mortgage Loans in accordance with this Agreement, and which in its opinion may involve it in any expense or liability; provided, however, that the Servicer may in its sole discretion 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 Servicer shall only be entitled to be reimbursed therefor pursuant to Section 5.01(a)(x). The Servicer's right to indemnity or reimbursement pursuant to this Section 7.03 shall survive any resignation or termination of the 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). Section 7.04. Servicer Not to Resign. Subject to the provisions of Section 7.02, the 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 Servicer so causing such a conflict being of a type and nature carried on by the Servicer or its subsidiaries or Affiliates at the date of this Agreement, (ii) appointment of an Eligible Affiliate Servicer pursuant to Section 7.02, or (iii) upon satisfaction of the following conditions: (a) the Servicer has proposed a successor servicer to the Trustee and the Credit Enhancer in writing and such proposed successor servicer is reasonably acceptable to the Trustee; (b) each Rating Agency has been notified of the proposed appointment of such successor servicer as Servicer hereunder will not result in the reduction or withdrawal of the then current rating of the Investor Certificates without regard to the Policy; and (c) such proposed successor servicer is reasonably acceptable to the Credit Enhancer, as evidenced by a letter to the Trustee; provided, however, that no such resignation by the Servicer shall become effective until the Trustee or successor servicer designated by the Servicer as provided above shall have assumed the Servicer's responsibilities and obligations hereunder or the Trustee shall have designated a successor servicer in accordance with Section 8.02. Any such resignation shall not relieve the 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 Servicer. Any such determination permitting the resignation of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such effect delivered 55 62 to the Trustee and the Credit Enhancer. The Servicer shall have no claim (whether by subrogation or otherwise) or other action against any Certificateholders or the Credit Enhancer for any amounts paid by the Servicer pursuant to any provision of this Agreement. Section 7.05. Delegation of Duties. In the ordinary course of business, the Servicer at any time may delegate any of its duties hereunder to any Person, including any of its Affiliates, or any subservicer referred to in Section 3.01, who agrees to conduct such duties in accordance with standards comparable to those with which the Servicer complies pursuant to Section 3.01. Such delegation shall not relieve the Servicer of its liabilities and responsibilities with respect to such duties and shall not constitute a resignation within the meaning of Section 7.04. Section 7.06. Indemnification of the Trust by the Servicer. The 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 Servicer's activities or omissions in servicing or administering the Mortgage Loans that are not in accordance with 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; provided, however, that a successor Servicer shall provide such indemnification only against such a loss, liability, expense, damage or injury described in this Section 7.06 that is further caused by the successor Servicer's willful malfeasance, bad faith or gross 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 resignation or removal of the Servicer and termination of this Agreement. Section 7.07. RESERVED. Section 7.08. Limitation on Liability of the holder of the Transferor Interest. None of the directors or officers or employees or agents of the holder of the Transferor Interest shall be under any liability to the Trust, the Trustee or the Certificateholders, it being expressly understood that all such liability is expressly waived and released as a condition of, and as consideration for, the execution of this Agreement and the issuance of the Certificates; provided, however, that this provision shall not protect any such Person against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of the duties hereunder. Except as provided in Section 7.07, the Transferor shall not be under any liability to the Trust, the Trustee or the Certificateholders for any action taken or for refraining from the taking of any action in its capacity as holder of the Transferor Interest pursuant to this Agreement whether arising from express or implied duties under this Agreement; provided, however, that this provision shall not protect the Transferor against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of its obligations and duties hereunder. The Transferor and any director or officer or employee or agent of the Transferor 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. 56 63 ARTICLE VIII Servicing Termination Section 8.01. Events of Servicing Termination. If any one of the following events ("Events of Servicing Termination") shall occur and be continuing: (i) Any failure by the Servicer to deposit in the Collection Account any deposit required to be made under the terms of this Agreement which continues unremedied for a period of five Business Days after the date upon which written notice of such failure shall have been given to the Servicer by the Trustee or to the Servicer and the Trustee by the Credit Enhancer or Holders of Investor Certificates evidencing Percentage Interests aggregating not less than 25%; or (ii) Failure on the part of the Servicer duly to observe or perform in any material respect any other covenants or agreements of the Servicer set forth in the Certificates or in this Agreement, which failure continues unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, and stating that such notice is a "Notice of Default" hereunder, shall have been given to the Servicer by the Trustee or to the Servicer and the Trustee by the Credit Enhancer or the Holders of Investor Certificates evidencing Percentage Interests aggregating not less than 25%; or (iii) The entry against the 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, marshalling 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 60 consecutive days; or (iv) The consent by the Servicer to the appointment of a trustee, conservator, receiver or liquidator in any insolvency, conservatorship, receivership, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Servicer or of or relating to substantially all of its property; or the Servicer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations; then, and in each and every such case, so long as an Event of Servicing Termination shall not have been remedied by the Servicer, either the Trustee, the Credit Enhancer or the Holders of Investor Certificates evidencing Percentage Interests aggregating not less than 51% (with the consent of the Credit Enhancer), by notice then given in writing to the Servicer (and to the Trustee if given by the Credit Enhancer or the Holders of Investor Certificates) may terminate all of the rights and obligations of the Servicer as servicer under this Agreement. Any such notice to the Servicer shall also be given to each Rating Agency and the Credit Enhancer. On or after the receipt by the Servicer of such written notice, all authority and power of the Servicer under this Agreement, whether with respect to the Certificates or the Mortgage Loans or otherwise, 57 64 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 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 Mortgage Loan and related documents, or other-wise. The Servicer agrees to cooperate with the Trustee in effecting the termination of the responsibilities and rights of the 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 Servicer and to be deposited by it in the Collection Account, or that have been deposited by the Servicer in the Collection Account or thereafter received by the Servicer with respect to the Mortgage Loans. All reasonable costs and expenses (including attorneys' fees) incurred in connection with transferring the Mortgage Files to the successor Servicer and amending this Agreement to reflect such succession as Servicer pursuant to this Section 8.01 shall be paid by the predecessor Servicer (or if the predecessor Servicer is the Trustee, the initial Servicer) upon presentation of reasonable documentation of such costs and expenses. Notwithstanding the foregoing, a delay in or failure of performance under Section 8.01(i) for a period of ten Business Days or under Section 8.01(ii) for a period of 60 Business Days, shall not constitute an Event of Servicing Termination if such delay or failure could not be prevented by the exercise of reasonable diligence by the Servicer and such delay or failure was caused by an act of God or the public enemy, acts of declared or undeclared war, public disorder, rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or similar causes. The preceding sentence shall not relieve the Servicer from using its best efforts to perform its respective obligations in a timely manner in accordance with the terms of this Agreement and the Servicer shall provide the Trustee, the holder of the Transferor Interest, the Credit Enhancer and the Investor Certificateholders with an Officers' Certificate giving prompt notice of such failure or delay by it, together with a description of its efforts to so perform its obligations. The Servicer shall immediately notify the Trustee in writing of any Events of Servicing Termination. Section 8.02. Trustee to Act; Appointment of Successor. (a) On and after the time the 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 Servicer in its capacity as servicer under this Agreement and the transactions set forth or provided for herein and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof. Notwithstanding the above, if the Trustee becomes the Servicer hereunder, it shall have no responsibility or obligation (i) of repurchase or substitution with respect to any Mortgage Loan, (ii) with respect to any representation or warranty of the Servicer, and (iii) for any act or omission of either a predecessor or successor Servicer other than the Trustee. As compensation therefor, the Trustee shall be entitled to such compensation as the Servicer would have been entitled to hereunder if no such notice of termination had been given. In addition, the Trustee will be entitled to compensation with respect to its expenses in connection with conversion of certain information, documents and record keeping, as provided in Section 7.04(b). Notwithstanding the above, (i) if the Trustee is unwilling to act as successor Servicer, or (ii) if the Trustee is legally unable so to act, the Trustee may (in the situation 58 65 described in clause (i)) or shall (in the situation described in clause (ii)) appoint or petition a court of competent jurisdiction to appoint, any established housing and home finance institution, bank or other mortgage loan or home equity loan servicer having a net worth of not less than $15,000,000 as the successor to the Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Servicer hereunder; provided that any such successor Servicer shall be acceptable to the Credit Enhancer, as evidenced by the Credit Enhancer's prior written consent, which consent shall not be unreasonably withheld; and provided further that the appointment of any such successor Servicer will not result in the qualification, reduction or withdrawal of the ratings assigned to the Certificates by the Rating Agencies without regard to the Policy. Pending appointment of a successor to the 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 Mortgage Loans in an amount equal to the compensation which the Servicer would otherwise have received pursuant to Section 3.08 (or such lesser compensation as the Trustee and such successor shall agree). 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 Servicer as servicer shall during the term of its service as servicer (i) continue to service and administer the Mortgage Loans for the benefit of Certificateholders and the Credit Enhancer and (ii) maintain in force a policy or policies of insurance covering errors and omissions in the performance of its obligations as Servicer hereunder and a fidelity bond in respect of its officers, employees and agents to the same extent as the Servicer is so required pursuant to Section 3.12. The appointment of a successor Servicer shall not affect any liability of the predecessor Servicer which may have arisen under this Agreement prior to its termination as Servicer (including, without limitation, any deductible under an insurance policy pursuant to Section 3.04), nor shall any successor Servicer be liable for an acts or omissions of the predecessor Servicer or for any breach by such Servicer of any of their representations or warranties contained herein. Section 8.03. Notification to Certificateholders. Upon any termination or appointment of a successor to the 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 Credit Enhancer and each Rating Agency. 59 66 ARTICLE IX The Trustee Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence of an Event of Servicing Termination and after the curing or waiver of all Events of Servicing Termination 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 Servicing Termination has occurred (which has not been cured or waived) 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; provided, however, that if the Trustee is acting as Servicer it shall use the same degree of care and skill as is required of the Servicer under this Agreement. 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. No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct; provided, however, that: (i) prior to the occurrence of an Event of Servicing Termination of which a Responsible Officer of the Trustee has knowledge, and after the curing or waiver of all such Events of Servicing Termination 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; (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 Credit Enhancer or in accordance with the direction of the Holders of Investor Certificates evidencing Percentage Interests aggregating not less than 51% relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement; and 60 67 (iv) the Trustee shall not be charged with knowledge of any failure by the Servicer to comply with the obligations of the Servicer referred to in clauses (i) and (ii) of Section 8.01 or of the occurrence of a Rapid Amortization Event 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 Servicer, the Credit Enhancer or the Holders of Investor Certificates evidencing Percentage Interests aggregating not less than 51%. 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. None of the provisions contained in this Agreement shall in any event require the Trustee to perform, or be responsible for the manner of performance of, any of the obligations of the Servicer under this Agreement, except during such time, if any, as the Trustee shall be the successor to, and be vested with the rights, duties, powers and privileges of, the Servicer in accordance with the terms of this Agreement and in no event shall it be required to perform or accept responsibility for the obligations of the Depositor, the Seller or the Transferor. Section 9.02. Certain Matters Affecting the Trustee. 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 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 Credit Enhancer, pursuant to the provisions of this Agreement, unless such Certificateholders or the Credit Enhancer 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 Servicing Termination (which has not been cured or waived) 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 61 68 and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs, unless it is acting as Servicer; (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 Servicing Termination of which a Responsible Officer has knowledge and after the curing or waiver of all Events of Servicing Termination 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 Holders of Investor Certificates evidencing Percentage Interests aggregating not less than 51%; 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 Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer upon demand. Nothing in this clause (v) shall derogate from the obligation of the 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 Servicer until such time as the Trustee may be required to act as Servicer pursuant to Section 8.02; and (vii) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through an Affiliate, agents or attorneys or a custodian and the Trustee shall not be responsible for any misconduct or negligence on the part of any such Affiliate, agent, attorney or custodian appointed with due care by it hereunder. Section 9.03. Trustee Not Liable for Certificates or Mortgage 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 Depositor, 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 Mortgage Loan or Related Document. The Trustee shall not be accountable for the use or application by the Depositor of any of the Certificates or of the proceeds of such Certificates, or for the use or application of any funds paid to the Depositor or the Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the Collection Account by the 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 Mortgage 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 62 69 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 Servicer pursuant to Section 8.02); the validity of the assignment of any Mortgage Loan to the Trustee or of any intervening assignment; the completeness of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other than if the Trustee shall assume the duties of the Servicer pursuant to Section 8.02); the compliance by the Depositor, the Seller or the Servicer 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 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; the acts or omissions of any of the Depositor, the Servicer (other than if the Trustee shall assume the duties of the Servicer pursuant to Section 8.02), any subservicer or any Mortgagor; any action of the Servicer (other than if the Trustee shall assume the duties of the Servicer pursuant to Section 8.02), or any subservicer taken in the name of the Trustee; the failure of the Servicer or any subservicer 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 Servicer (other than if the Trustee shall assume the duties of the 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. The Trustee shall have no responsibility for filing any financing or continuation statement in any public office at any time or to otherwise perfect or maintain the perfection of any security interest or lien granted to it hereunder (unless the Trustee shall have become the successor Servicer) or to prepare or file any Securities and Exchange Commission filing for the Trust or to record this Agreement. 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 Servicer, the Credit Enhancer or the Depositor. Section 9.05. Servicer to Pay Trustee's Fees and Expenses; Servicer to Indemnify. To the extent not otherwise paid pursuant to Section 5.01(a)(i), the Servicer covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee, and the Servicer will pay or reimburse 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 (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. The Servicer covenants and agrees to indemnify the Trustee from, and hold it harmless against, any and all losses, liabilities, damages, claims or expenses other than those resulting from the gross negligence or bad faith of the Trustee. This section shall survive termination of this Agreement or the resignation or removal of any Trustee hereunder. 63 70 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, subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 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 Transferor, the Depositor, the Servicer, the Credit Enhancer and each Rating Agency. Upon receiving such notice of resignation, the Transferor shall promptly appoint a successor Trustee (approved in writing by the Credit Enhancer, so long as such approval is not unreasonably withheld) by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Trustee (who shall deliver a copy to the Servicer) and one copy to the successor Trustee; provided, however, that any such successor Trustee shall be subject to the prior written approval of the Transferor. If no successor Trustee shall have been so appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. 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 Transferor or the Credit Enhancer, 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, or if a tax is imposed or threatens with respect to the Trust Fund by any state in which the Trustee or the Trust Fund is located (which tax cannot be vacated by the appointment of a co-Trustee or separate trustee pursuant to Section 9.10), then the Transferor or the Credit Enhancer may remove the Trustee. If the Transferor or the Credit Enhancer removes the Trustee under the authority of the immediately preceding sentence, the Transferor shall promptly appoint a successor Trustee (approved in writing by the Credit Enhancer, which approval shall not be unreasonably withheld) by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor Trustee. The Holders of Investor Certificates evidencing Percentage Interests aggregating over 50% of all Investor Certificates may at any time remove the Trustee by written instrument or instruments delivered to the Servicer, the Transferor and the Trustee; the Transferor shall thereupon use its best efforts to appoint a successor trustee in accordance with this Section. 64 71 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. Section 9.08. Successor Trustee. Any successor Trustee appointed as provided in Section 9.07 shall execute, acknowledge and deliver to the Transferor, the Depositor, the Servicer, the Credit Enhancer and to its predecessor Trustee 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 Transferor, the Depositor, the 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 successor Trustee 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 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 Servicer. Section 9.09. Merger or Consolidation of Trustee. Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the business of the Trustee, shall be the successor of the Trustee hereunder, provided such Person 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, any thing herein to the contrary notwithstanding. 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 Transferor and the Trustee acting jointly shall have the power and shall execute and deliver all instruments necessary to appoint one or more Persons approved by the Credit Enhancer 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, 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 Transferor and the Trustee may consider necessary or desirable. Any such co-trustee or separate trustee shall be subject to the written approval of the Servicer and the Credit Enhancer. If the Transferor shall not have joined in such appointment within 15 days after the 65 72 receipt by it of a request so to do, or in the case an Event of Servicing Termination shall have occurred and be continuing, the Trustee alone shall have the power to make such appointment. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 9.06 and no notice to Certificateholders of the appointment of any co-trustee or separate trustee shall be required under Section 9.08. The Servicer shall be responsible for the fees of any co-trustee or separate trustee appointed hereunder. 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 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 Servicer and the Trustee acting jointly 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 Servicing Termination, the Trustee acting alone 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 provide 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 Transferor and the Servicer. Any separate trustee or co-trustee may, at any time, constitute the Trustee, its agent or attorney-in-fact, with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of it 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. 66 73 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 an authority conferred and vested in it by the Trust 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. All rights of action and claims under this Agreement or the Certificates may be prosecuted and enforced by the Trustee 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 it 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 or the Certificateholders in respect of which such judgment has been recovered. Section 9.13. Suits for Enforcement. In case an Event of Servicing Termination or other default by the Servicer, the Transferor, the Depositor or the Seller hereunder shall occur an be continuing, the Trustee, in its discretion, may proceed to protect and enforce its rights and the rights of the Investor Certificateholders 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 Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Trustee and the Certificateholder. 67 74 ARTICLE X Termination Section 10.01. Termination. (a) The respective obligations and responsibilities of the Servicer, the Depositor, the Transferor and the Trustee 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 Servicer to send certain notices as hereinafter set forth) shall terminate upon the last action required to be taken by the Trustee on the final Distribution Date pursuant to this Article X following the later of (A) payment in full of all amounts owing to the Credit Enhancer and (B) the earliest of (i) the transfer, under the conditions specified in Section 10.01(b), to the holder of the Transferor Interest of each Mortgage Loan and all property acquired in respect of any Mortgage Loan remaining in the Trust for an amount equal to the sum of (w) the Investor Certificate Principal Balance, (x) accrued and unpaid Investor Certificate Interest through the day preceding the final Distribution Date, (y) interest accrued on any Unpaid Investor Certificate Interest Shortfall, to the extent legally permissible and (z) any unpaid LIBOR Interest Carryover, (ii) the day following the Distribution Date on which the distribution made to Investor Certificateholders has reduced the Investor Certificate Principal Balance to zero, (iii) the final payment or other liquidation of the last Mortgage Loan remaining in the Trust or the disposition of all property acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan and (iv) the Distribution Date in January 2020; provided, however, that in no event shall the trust created hereby continue beyond the expiration of 21 years from the date of the last survivor descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date hereof. Upon termination in accordance with clause (i) or (ii) of this Section 10.01, the Trustee shall execute such documents and instruments of transfer presented by the holder of the Transferor Interest, in each case without recourse, representation or warranty, and take such other actions as the holder of the Transferor Interest may reasonably request to effect the transfer of the Mortgage Loans to the holder of the Transferor Interest. (b) The holder of the Transferor Interest shall have the right to exercise the option to effect the transfer to the holder of the Transferor Interest of each Mortgage Loan pursuant to Section 10.01(a) above on any Distribution Date on or after the Distribution Date immediately prior to which the Investor Certificate Principal Balance is less than 5 percent (5%) of the Original Investor Certificate Principal Balance and all amounts due and owing to the Credit Enhancer for unpaid premiums and unreimbursed draws on the Policy, together with interest thereon as provided under the Insurance Agreement, have been paid. (c) Notice of any termination, specifying the Distribution Date (which shall be a date that would otherwise be a Distribution Date) upon which the Investor Certificateholders may surrender their Investor Certificates to the Trustee for payment of the final distribution and cancellation, shall be given promptly by the Trustee (upon receipt of written directions from the holder of the Transferor Interest, if the holder of the Transferor Interest is exercising its right to transfer of the Mortgage Loans, given not later than the first day of the month preceding the month of such final distribution) to the Credit Enhancer and to the Servicer by letter to Investor Certificateholders mailed not earlier than the 15th day and not later than the 25th day of the 68 75 month next preceding the month of such final distribution specifying (i) the Distribution Date upon which final distribution of the Investor Certificates will be made upon presentation and surrender of Investor Certificates at the office or agency of the Trustee therein designated, (ii) the amount of any such final distribution and (iii) that the Record Date otherwise applicable to such Distribution Date is not applicable, distributions being made only upon presentation and surrender of the Investor Certificates at the office or agency of the Trustee therein specified. In the event written directions are delivered by the holder of the Transferor Interest to the Trustee as described in the preceding sentence, the holder of the Transferor Interest shall deposit in the Collection Account on or before the Distribution Date for such final distribution in immediately available funds an amount which, when added to the funds on deposit in the Collection Account that are payable to the Investor Certificateholders, will be equal to the retransfer amount for the Mortgage Loans computed as above provided. (d) Upon presentation and surrender of the Investor Certificates, the Trustee shall cause to be distributed to the Holders of Investor Certificates on the Distribution Date for such final distribution, in proportion to the Percentage Interests of their respective Investor Certificates and to the extent that funds are available for such purpose, an amount equal to (i) if such final distribution is not being made pursuant to the transfer to the holder of the Transferor Interest pursuant to Section 10.01(a)(i), the amount required to be distributed to Investor Certificateholders pursuant to Section 5.01 for such Distribution Date and (ii) if such final distribution is being made pursuant to such retransfer, the amount specified in Section 10.01(a)(i). The distribution on such final Distribution Date pursuant to a retransfer pursuant to Section 10.01(a)(i) shall be in lieu of the distribution otherwise required to be made on such Distribution Date in respect of the Certificates. On the final Distribution Date prior to having made the distributions called for above, the Trustee shall, based upon the information set forth in the Servicing Certificate for such Distribution Date, withdraw from the Collection Account and remit to the Credit Enhancer the lesser of (x) the amount available for distribution on such final Distribution Date, net of any portion thereof necessary to pay the amounts described in clauses (d)(i) and (ii) above and (y) the unpaid amounts due and owing to the Credit Enhancer for unpaid premiums and unreimbursed draws on the Policy, together with interest thereon as provided under the Insurance Agreement. (e) In the event that all of the Investor Certificateholders shall not surrender their Investor Certificates for final payment and cancellation on or before such final Distribution Date, the Trustee shall on such date cause all funds in the Collection Account not distributed in final distribution to Investor Certificateholders to be withdrawn therefrom and credited to the remaining Investor Certificateholders by depositing such funds in a separate escrow account for the benefit of such Investor Certificateholders and the holder of the Transferor Interest (if the holder of the Transferor Interest has exercised its right to transfer the Mortgage Loans) or the Trustee (in any other case) shall give a second written notice to the remaining Investor Certificateholders to surrender their Investor Certificates for cancellation and receive the final distribution with respect thereto. If within one year after the second notice all the Investor 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 Investor Certificateholders concerning surrender of their Investor Certificates, and the cost thereof shall be aid out of the funds on deposit in such escrow account. 69 76 (f) Upon payment of all amounts owed under the Policy and cancellation of the Investor Certificates, the Trustee shall provide the Credit Enhancer notice of cancellation of the Investor Certificates and surrender the Policy to the Credit Enhancer. ARTICLE XI Rapid Amortization Event Section 11.01. Rapid Amortization Events. If any one of the following events shall occur during the Managed Amortization Period: (a) failure on the part of the Servicer (i) to make any payment or deposit required by the terms of this Agreement, on or before the date occurring three Business Days after the date such payment or deposit is required to be made herein, or (ii) duly to observe or perform in any material respect the covenants of the Servicer set forth in this Agreement, which failure, in each case, materially and adversely affects the interests of the Certificateholders or the Credit Enhancer and which, in the case of clause (ii), continues unremedied and continues to affect materially and adversely the interests of the Certificateholders for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Seller by the Trustee, or to the Seller and the Trustee by the Holders of Investor Certificates evidencing Percentage Interests aggregating not less than 51%; (b) any representation or warranty made by the Servicer in this Agreement or the Sellers in the Purchase Agreement shall prove to have been incorrect in any material respect when made, as a result of which the interests of the Investor Certificateholders or the Credit Enhancer are materially and adversely affected and which continues to be incorrect in any material respect and continues to affect materially and adversely the interests of the Investor Certificateholders or the Credit Enhancer for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Sellers or the Servicer, as the case may be, by the Trustee, or to the Sellers, the Servicer and the Trustee by either the Credit Enhancer or the Holders of Certificates evidencing Percentage Interests aggregating not less than 51%; provided, however, that a Rapid Amortization Event pursuant to this subparagraph (b) shall not be deemed to have occurred hereunder if a Seller has accepted retransfer of the related Mortgage Loan or Mortgage Loans during such period (or such longer period (not to exceed an additional 60 days) as the Trustee may specify) in accordance with the provisions hereof; (c) any Seller or Bank One, as holder of the Transferor Interest shall go into liquidation, consent to the appointment of a conservator or receiver or liquidator or similar person in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to any Seller or Bank One, as holder of the Transferor Interest, or of or relating to all or substantially all of such Person's 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, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against any Seller or Bank One, as holder of the Transferor Interest and such decree or order shall have remained in force undischarged or unstayed for a period of 30 days; or any Seller or Bank One, as holder of the Transferor Interest shall admit in writing its 70 77 inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations; (d) the Trust shall become subject to registration as an "investment company" under the Investment Company Act of 1940, as amended; or (e) the aggregate of all draws under the Policy exceeds 1% of the Cut-Off Date Pool Balance; then, in the case of any event described in subparagraph (a) or (b) after the applicable grace period, if any, set forth in such subparagraphs, either the Trustee, the Credit Enhancer or the Holders of Certificates evidencing Percentage Interests aggregating more than 51%, by notice given in writing to the holder of the Transferor Interest, the Depositor and the Servicer (and to the Trustee if given by either the Credit Enhancer or the Certificateholders) may declare that an early amortization event (a "Rapid Amortization Event") has occurred as of the date of such notice, and in the case of any event described in subparagraph (c), (d) or (e), a Rapid Amortization Event shall occur without any notice or other action on the part of the Trustee, the Credit Enhancer or the Certificateholders, immediately upon the occurrence of such event. Section 11.02. Additional Rights Upon the Occurrence of Certain Events. (a) If Bank One, as holder of the Transferor Interest, goes into liquidation or consents to the appointment of a conservator or receiver or liquidator or similar person in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to Bank One, as holder of the Transferor Interest or of or relating to all or substantially all 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 or receiver or liquidator or similar person in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against Bank One, as holder of the Transferor Interest and such decree shall have remained in force undischarged or unstayed for a period of 30 days; or Bank One, as holder of the Transferor Interest shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations (such voluntary liquidation, appointment, entering of such decree, admission, filing, making, suspension or violation or other event described above, an "Insolvency Event"), Bank One, as holder of the Transferor Interest shall on the day of such appointment, liquidation, entering of such decree, admission, filing, making, suspension or inability, as the case may be (the "Appointment Day"), promptly give notice to the Trustee, the Servicer and the Credit Enhancer of such Insolvency Event. Within 15 days of the receipt by the Trustee of Bank One's notice of an Insolvency Event, the Trustee, upon the direction of the Credit Enhancer or of the Certificateholders representing more than 51% of the aggregate Principal Balance of the Certificates, with the consent of the Credit Enhancer shall (i) publish a notice in Authorized Newspapers that an Insolvency Event has occurred and that the Trustee intends to direct the Servicer to sell, dispose of or otherwise liquidate the Mortgage Loans in a commercially reasonable manner and (ii) send written notice to the Certificateholders describing the provisions of this Section 11.02, which 71 78 notice shall inform Certificateholders that unless more than 51% of all Certificateholders advise the Trustee in writing that they wish the Trustee to instruct the Servicer not to sell, dispose of or otherwise liquidate the Mortgage Loans within 90 days from the day notice pursuant to clause (i) above is first published (the "Publication Date"), the Trustee shall instruct the Servicer to proceed to sell, dispose of, or otherwise liquidate the Mortgage Loans in a commercially reasonable manner and on commercially reasonable terms, which shall include the solicitation of competitive bids, and shall proceed to consummate the sale, liquidation or disposition of the Mortgage Loans as provided above with the highest bidder for the Mortgage Loans. Bank One, as holder of the Transferor Interest shall be permitted to bid for the Mortgage Loans. The Trustee may obtain a prior determination from such conservator or receiver that the terms and manner of any proposed sale, disposition or liquidation are commercially reasonable. The provisions of Sections 11.01 and 11.02 shall not be deemed to be mutually exclusive. (b) The proceeds from the sale, disposition or liquidation of the Mortgage Loans pursuant to Section 11.02(a) above shall be treated as collections on the Mortgage Loans received during the Rapid Amortization Period; provided, however, that such proceeds will, based on amounts specified in writing by the Servicer to the Trustee, first be paid to the Credit Enhancer to reimburse the Credit Enhancer for previously unreimbursed Credit Enhancement Draw Amounts and other amounts owing under the Insurance Agreement; and provided, further, that the Investor Certificateholders, Fixed Allocation Percentage of such remaining proceeds shall be paid to Certificateholders in the following amounts and order of priority: (i) all accrued and unpaid interest on the Certificate Principal Balance through the Interest Period immediately preceding the Distribution Date on which such proceeds are distributed to the Certificateholders; and (ii) an amount of principal up to the Certificate Principal Balance. The Policy shall cover any shortfall in the event such proceeds are insufficient to make the distributions to Certificateholders pursuant to Section 11.02(b). On the day following the Distribution Date on which such proceeds are distributed to the Certificateholders the Trust shall terminate. ARTICLE XII Miscellaneous Provisions Section 12.01. Amendment. This Agreement may be amended from time to time by the Servicer, the Depositor and the Trustee, in each case without the consent of any of the Investor Certificateholders, but only with the consent of the Credit Enhancer (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 Depositor or the Servicer, (iv) to add any other provisions with respect to matters or questions arising under this Agreement or the 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 organization in order to maintain or improve any rating of the 72 79 Certificates (it being understood that, after obtaining the ratings in effect on the Closing Date, neither the Trustee, the Depositor nor the Servicer is obligated to obtain, maintain or improve any such rating), (vi) to add or amend any provisions of this Agreement to correct or cure any defective provision or ambiguity as a result of a transfer of the Transferor Interest pursuant to Section 6.05, or (vii) to comply with any requirement imposed by the Code or (viii) to add any other provisions with respect to matters or questions arising under this Agreement that are not inconsistent with the provisions of this Agreement; provided, however, that such action shall not, as evidenced by an Opinion of Counsel, materially and adversely affect the interests of any Investor Certificateholder or the Credit Enhancer; and provided, further, that the amendment shall not be deemed to adversely affect in any material respect the interests of the Investor Certificateholders and no opinion referred to in the preceding proviso shall be required to be delivered if the Person requesting the amendment obtains a letter from each Rating Agency stating that the amendment would not result in the downgrading or withdrawal of the respective ratings then assigned to the Certificates without regard to the Policy. Notwithstanding the foregoing, any amendment pursuant to clause (viii) above shall be permissible only upon receipt of a letter from each Rating Agency stating that the amendment would not result in the downgrading or withdrawal of the respective ratings then assigned to the Certificateholders without regard to the Policy. This Agreement also may be amended from time to time by the Servicer, the Seller, the Depositor and the Trustee, and the Servicer and the Credit Enhancer, may from time to time consent to the amendment of the Policy with the consent of the Holders of the Certificates evidencing Percentage Interests aggregating not less than 51%, and in the case of an amendment to this Agreement, with the consent of the Credit Enhancer 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 Investor Certificateholders; provided, however, that no such amendment shall (i) reduce in any manner the amount of, or delay the timing of, payments on the Investor Certificates or distributions or payments under the Policy which are required to be made on any Investor Certificate without the consent of the Holder of such Investor Certificate or (ii) reduce the aforesaid percentage required to consent to any such amendment, without the consent of the Holders of all Investor Certificates then outstanding or (iii) adversely effect in any material respect the interests of the Credit Enhancer. In the event that Treasury Regulations Sections 301-7701 et. seq. are amended to permit the Trust to qualify as other than an association taxable as a corporation (if the Trust is not otherwise treated as a security device) and the Trustee receives an Officer's Investor Certificate from the Servicer of such amendment, the Trust will make an election and Sections 7.07 and 11.02(a) shall not be given effect. Notwithstanding the foregoing, the Agreement may not be amended unless, in connection with such amendment, an Opinion of Counsel is furnished to the Trustee that such amendment will not (i) adversely affect the status of the Certificates as debt; (ii) result in the Trust being taxable at the entity level; or (iii) result in the Trust being classified as a taxable mortgage pool (as defined in Section 7701(i) of the Code). Following the execution and delivery of any such amendment hereto or to the Policy to which the Credit Enhancer was require to consent, either the holder of the Transferor Interest, if 73 80 the holder of the Transferor Interest requested the amendment, or the Servicer, if the Servicer requested the amendment, shall reimburse the Credit Enhancer for the reasonable out-of-pocket costs and expenses incurred by the Credit Enhancer in connection with such amendment. Prior to the execution of any such amendment, the party hereto requesting any such amendment 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 Credit Enhancer. It shall not be necessary for the consent of Certificateholders under this Section 12.01 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 Investor Certificateholders shall be subject to such reasonable requirements as the Trustee may prescribe. In executing any amendment permitted by this Section 12.01, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that such amendment is authorized or permitted hereby and that all conditions precedent to the execution and delivery of such amendment have been satisfied. The Trustee may, but shall not be obligated to, enter into any such amendment which affects the Trustee's own rights, duties or immunities under this Agreement or otherwise. Section 12.02. 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 accompanied by an Opinion of Counsel to the effect that such recordation materially and beneficially affects the interests of Certificateholders. The Certificateholders 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 Investor Certificateholders. For the purpose of facilitating the recordation of this Agreement as herein provided and for other purposes, this Agreement may be executed simultaneously in any number of counter-parts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. Section 12.03. Limitation on Rights of Investor 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 Investor Certificateholder shall have any right to vote (except as provided in Sections 8.01, 9.01, 9.02, 11.01 and 12.01) or in any manner otherwise control the operation and 74 81 management of the Trust, or the obligations of the parties hereto, nor shall any thing herein set forth, or contained in the terms of the Investor Certificates, be construed so as to constitute the Investor Certificateholders from time to time as partners 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 Investor 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 Certificates evidencing Percentage Interests 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 Investor Certificateholder with every other Investor Certificateholder and the Trustee, that no one or more Holders of Investor 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 Investor 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 Investor Certificateholders. For the protection and enforcement of the provisions of this Section 12.03, each and every Investor Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. By accepting its Certificate, each Certificateholder agrees that unless a Credit Enhancer Default exists, the Credit Enhancer shall have the right to exercise all rights of the Certificateholders under this Agreement without an further consent of the Certificateholders. Section 12.04. 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 12.05. Notices. 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 Depositor, 100 East Broad Street, Columbus, OH 43271-0138, Attention: Structured Finance, (b) in the case of the Servicer, Bank One, N.A., 100 East Broad Street, Columbus, OH 43271-0138, (c) in the case of the Trustee, at the Corporate Trust Office, (d) in the case of the Credit Enhancer, MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Insured Portfolio Management, Structured Finance, (e) in the case of Moody's, Residential Loan Monitoring Group, 4th Floor, 99 Church Street, New York, New York 10007, and (f) in the case of Standard & Poor's, 26 Broadway, New York, New York 10004, or, 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 75 82 permitted to be mailed to a Investor Certificateholder shall be given by first class mail, postage prepaid, at the address of such Holder as shown in the Investor 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 Investor 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 deliver such notice or document to any Rating Agency. Section 12.06. 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 Investor Certificates or the rights of the Holders thereof. Section 12.07. Assignment. Notwithstanding anything to the contrary contained herein, except as provided in Sections 6.05, 7.02 and 7.04, this Agreement may not be assigned by the Depositor or the Servicer without the prior written consent of the Credit Enhancer and Holders of the Certificates evidencing Percentage Interests aggregating not less than 66%. Section 12.08. Investor 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 Investor Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and that the Investor Certificates upon execution, authentication and delivery thereof by the Trustee pursuant to Section 2.08 or 6.02 are and shall be deemed full paid. Section 12.09. Third-Party Beneficiaries. This Agreement will inure to the benefit of and be binding upon the parties hereto, the Investor Certificateholders, the Investor Certificate Owners, the Credit Enhancer and their respective successors and permitted assigns. Except as otherwise provided in this Agreement, no other Person will have any right or obligation hereunder. Section 12.10. Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Section 12.11. 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. Section 12.12. Insurance Agreement. The Trustee is authorized and directed to execute and deliver the Insurance Agreement and to perform the obligations of the Trustee thereunder. 76 83 IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the Trustee have caused this Agreement to be duly executed by their respective officers all as of the day and year first above written. BANC ONE ABS CORPORATION, As Depositor By _______________________________ Name: Daniel A. Long, Jr. Title: Vice President BANK ONE, N.A., As Servicer By _______________________________ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management THE BANK OF NEW YORK As Trustee By _______________________________ Name: Franklin Austin Title: 77 84 State of NEW YORK ) ) ss.: County of NEW YORK ) On the 24th day of September, 1998 before me, a notary public in and for the State of New York, personally appeared Daniel A. Long, Jr., known to me who, being by me duly sworn, did depose and say that he resides at Banc One ABS Corporation, 100 East Broad Street, Columbus, Ohio 43271; that he is Vice President of Banc One ABS Corporation, an Ohio 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] 78 85 State of NEW YORK ) ) ss.: County of NEW YORK ) On the 24th day of September, 1998 before me, a notary public in and for the State of New York, personally appeared Daniel A. Long, Jr., known to me who, being by me duly sworn, did depose and say that he resides at Bank One, 100 East Broad Street, Columbus, Ohio 43271-0138; that he is the Assistant Vice President - Funds Management of Bank One, N.A., a national banking association, 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] 79 86 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the 24th day of September, 1998 before me, a notary public in and for the State of New York, personally appeared Daniel A. Long, Jr., known to me who, being by me duly sworn, did depose and say that he is the Assistant Vice President - Funds Management of Bank of New York, N.A., a national banking association, 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] 80 EX-10.1 4 MORTGAGE LOAN PURCHASE AGREEMENT 1 EXHIBIT 10.1 EXECUTION COPY MORTGAGE LOAN PURCHASE AGREEMENT AMONG BANK ONE, N.A. BANK ONE, ARIZONA, N.A. BANK ONE, COLORADO, N.A. BANK ONE, ILLINOIS, N.A. BANK ONE, INDIANA, N.A. BANK ONE, KENTUCKY, N.A. BANK ONE, UTAH, N.A. BANK ONE, WEST VIRGINIA, N.A. BANK ONE, WISCONSIN SELLERS AND BANC ONE ABS CORPORATION PURCHASER DATED AS OF SEPTEMBER 24, 1998 BANC ONE HELOC TRUST 1998-1 2 TABLE OF CONTENTS
PAGE ARTICLE I CERTAIN DEFINITIONS ...................................... 2 ARTICLE II CONVEYANCE OF THE MORTGAGE LOANS ......................... 2 Section 2.01. Conveyance of Mortgage Loans .................... 2 Section 2.02. Possession of Mortgage Files .................... 4 Section 2.03. Books and Records ............................... 4 Section 2.04. Delivery of Mortgage Loan Documents ............. 4 Section 2.05. Acceptance by Purchaser of the Mortgage Loans; Certain Substitutions; Certification by the Trustee ......................................... 5 Section 2.06. Acceptance by the Purchaser ..................... 6 Section 2.07. The Closing ..................................... 7 ARTICLE III REPRESENTATIONS AND WARRANTIES ........................... 7 Section 3.01. Representations and Warranties of the Sellers ... 7 Section 3.02. Representations and Warranties as to the Mortgage Loans .................................. 8 Section 3.03. Purchase and Substitution ....................... 11 ARTICLE IV CONDITIONS ............................................... 12 Section 4.01. Conditions to Obligation of the Purchaser ....... 12 Section 4.02. Conditions To Obligation of each Seller ......... 13 ARTICLE V THE SELLERS .............................................. 13 Section 5.01. [Reserved] ...................................... 13 Section 5.02. Enforceability; Merger or Consolidation of the Sellers ......................................... 13 Section 5.03. Mandatory Sale; Grant of Security Interest ...... 13 ARTICLE VI ADDITIONAL AGREEMENTS .................................... 14 Section 6.01. Conflicts With Pooling and Servicing Agreement ....................................... 14 Section 6.02. Protection of Title to Trust .................... 14 Section 6.03. Other Liens or Interests ........................ 14 Section 6.04. Purchase Events ................................. 14 Section 6.05. Indemnification ................................. 15 Section 6.06. Trust ........................................... 15 ARTICLE VII MISCELLANEOUS PROVISIONS ................................. 15 Section 7.01. Amendment ....................................... 15 Section 7.02. Waivers ......................................... 15 Section 7.03. Costs and Expenses .............................. 16
-i- 3 TABLE OF CONTENTS (CONTINUED)
PAGE Section 7.04. Survival ........................................ 16 Section 7.05. Confidential Information ........................ 16 Section 7.06. Severability Clause ............................. 16 Section 7.07. Headings and Cross-References ................... 16 Section 7.08. Recordation of Agreement ........................ 16 Section 7.09. Governing Law ................................... 16 Section 7.10. Notices ......................................... 17 Section 7.11. Counterparts .................................... 17 Section 7.12. The Credit Enhancer ............................. 17 EXHIBIT A [RESERVED] ............................................... 1 EXHIBIT B-1 MORTGAGE LOANS TRANSFERRED BY Bank One, N.A. ............. 1 EXHIBIT B-2 MORTGAGE LOANS TRANSFERRED BY Bank One, Arizona, N.A. .... 2 EXHIBIT B-3 MORTGAGE LOANS TRANSFERRED BY Bank One, Colorado, N.A. ... 3 EXHIBIT B-4 MORTGAGE LOANS TRANSFERRED BY Bank One, Illinois, N.A. ... 4 EXHIBIT B-5 MORTGAGE LOANS TRANSFERRED BY Bank One, Indiana, N.A. .... 5 EXHIBIT B-6 MORTGAGE LOANS TRANSFERRED BY Bank One, Kentucky, N.A. ... 6 EXHIBIT B-7 MORTGAGE LOANS TRANSFERRED BY Bank One, Utah, N.A. ....... 7 EXHIBIT B-8 MORTGAGE LOANS TRANSFERRED BY Bank One, West Virginia, N.A. ..................................................... 8 EXHIBIT B-9 MORTGAGE LOANS TRANSFERRED BY Bank One, Wisconsin ........ 9
-ii- 4 THIS MORTGAGE LOAN PURCHASE AGREEMENT is made as of September 24, 1998, by and among THE SELLERS LISTED ON THE SIGNATURE PAGE HERETO (the "Sellers"), and BANC ONE ABS CORPORATION, its successors and assigns (the "Purchaser"). WHEREAS, the Sellers and the Purchaser wish to set forth the terms pursuant to which the Mortgage Loans are to be sold by the Sellers to the Purchaser and purchased by the Purchaser from the Sellers; NOW, THEREFORE, in consideration of the foregoing, the other good and valuable consideration and the mutual terms and covenants contained herein, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS Section 1.01. Certain capitalized terms used in this Agreement are defined in and shall have the respective meanings assigned them in Article I to the Pooling and Servicing Agreement, dated as of August 31, 1998, among the Purchaser, as Depositor, Bank One, N.A., as Servicer and The Bank of New York, as Trustee (the "Trustee") (the "Pooling and Servicing Agreement"). All references herein to "the Agreement" or "this Agreement" are to this Mortgage Loan Purchase Agreement, and all references herein to Articles, Sections and subsections are to Articles, Sections or subsections of this Mortgage Loan Purchase Agreement unless otherwise specified. ARTICLE II CONVEYANCE OF THE MORTGAGE LOANS Section 2.01. Conveyance of Mortgage Loans (a) Immediately prior to consummation on the Closing Date of the transactions contemplated by the Pooling and Servicing Agreement, in consideration of the Purchaser's delivery of cash in the amount of $847,875,000 (which is net of underwriting commission), the Transferor Interest and other consideration, each Seller does hereby transfer, assign, set over and convey to the Purchaser without recourse, all of the right, title and interest of such Seller in and to each Mortgage Loan, including its Principal Balance (including all Additional Balances) set forth in the applicable Mortgage Loan Schedules attached hereto as Exhibits B-1, B-2, B-3, B-4, B-5, B-6, B-7, B-8 and B-9, together with the Mortgage Files relating thereto and all proceeds thereof received after the Cut-Off Date. (b) It is the express intent of the parties hereto that the conveyance of the Mortgage Loans by the Sellers to the Purchaser as provided in this Agreement be, and be construed as, a sale of all of the Sellers' right, title and interest in the Mortgage Loans by the Sellers to the Purchaser and to the Trustee, as its successor and assignee hereunder. Further, it is not the intention of the parties that such conveyance be deemed a pledge of the Mortgage Loans by the Sellers to the Purchaser and to the Trustee, as its successor and assignee hereunder, to secure a debt or other obligation of the Sellers; however, in the event that, notwithstanding the 2 5 intent of the parties, the Mortgage Loans are held to be property of the Sellers, or if for any reason this Agreement is held or deemed to create a security interest in the Mortgage Loans, then, (a) this Agreement also shall be deemed to be, and hereby is, a security agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code in effect in the applicable state; (b) the conveyance provided for in this Agreement shall be deemed to be, and hereby is, a grant by the Sellers to the Purchaser and to the Trustee as its successor and assignee hereunder of a security interest in and to all of the Sellers' right, title, and interest, whether now owned or hereafter acquired, in and to: (I) All accounts, contract rights, general intangibles, chattel paper, instruments, documents, money, deposit accounts, certificates of deposit, goods, letters of credit, advices of credit, certificated securities and uncertificated securities consisting of, arising from or relating to any of the property described in (A) through (D) below: (A) each Mortgage Loan, including (a) the Mortgage Note and the related Mortgage and (b) its Principal Balance and all Additional Balances and all collections in respect thereof received on or after the Cut-Off Date, identified on the Mortgage Loan Schedule as defined herein, including all Eligible Substitute Mortgage Loans, (B) property that secured a Mortgage Loan that is acquired by foreclosure or deed in lieu of foreclosure; (C) the Purchase Agreement, (D) any hazard insurance policies in respect of the Mortgage Loans; and (E) the amounts on deposit in the Spread Account; and (II) All proceeds of the collateral described in (I). (c) The possession by the Trustee or its designee of the Mortgage Notes, Assignments of Mortgages and such other goods, letters of credit, advices of credit, instruments, money, documents, chattel paper or certificated securities shall be deemed to be "possession by the secured party," or possession by a purchaser or a person designated by him or her, for purposes of perfecting the security interest pursuant to the Uniform Commercial Code (including, without limitation, Sections 9-305, 8-313 or 8-321 thereof) as in force in the relevant jurisdiction; and (d) notifications to persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed to be notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of the Trustee or its designee for the purpose of perfecting such security interest under applicable law. Subject to the provisions of the Pooling and Servicing Agreement permitting the Servicer to commingle amounts collected with respect to the Mortgage Loans with other general collections of the Servicer, the Sellers and the Trustee at the direction of the Purchaser to the extent consistent with this Agreement, shall take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Mortgage Loans and the proceeds thereof, such 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. In connection herewith, the Trustee shall have all of the rights and remedies of a secured party and creditor under the Uniform Commercial Code as in force in the relevant jurisdiction. 3 6 Section 2.02. Possession of Mortgage Files (a) Upon the delivery to each Seller of the consideration set forth in Section 2.01, the ownership of each Seller's Mortgage Notes, related Mortgages and the contents of the related Mortgage Files are vested in the Purchaser. (b) Pursuant to Section 2.04, each Seller has delivered or caused to be delivered each Mortgage File with respect to the Mortgage Loans transferred by it to the Purchaser. Section 2.03. Books and Records The transfer of each Mortgage Loan to the Purchaser shall be reflected on the related Seller's balance sheets and other financial statements as a sale of assets by such Seller. Each Seller shall be responsible for maintaining, and shall maintain, a complete set of books and records for each Mortgage Loan which shall be clearly marked to reflect the ownership of each Mortgage Loan by the Purchaser. Each Seller hereby confirms to the Trustee that it has caused the portions of the Electronic Ledgers relating to the Mortgage Loans to be clearly and unambiguously marked, and has made the appropriate entries in its general accounting records, to indicate that such Mortgage Loans have been transferred to or at the direction of the Purchaser. Section 2.04. Delivery of Mortgage Loan Documents Each Seller shall deliver or cause to be delivered within 90 days of the Closing Date to the Purchaser or its designee, in accordance with the instructions of the Purchaser, and pursuant to Section 2.01 of the Pooling and Servicing Agreement, each original Mortgage Note, endorsed at the direction of the Purchaser by the applicable Seller, on its face or by allonge attached thereto, without recourse, in blank or to the order of the Trustee in the following form: "Pay to the order of The Bank of New York, as trustee for the registered holders of Banc One HELOC Trust 1998-1, HELOC Asset-Backed Certificates, Series 1998-1, without recourse, representation or warranty, express or implied," and an original Assignment of Mortgage endorsed in blank prepared in recordable form; provided, however, that as to any Mortgage Loan, if (a) as evidenced by an Opinion of Counsel delivered to and in form and substance satisfactory to the Trustee and the Credit Enhancer, (x) an optical image or other representation of the related documents specified above are enforceable in the relevant jurisdictions to the same extent as the original of such document and (y) such optical image or other representation does not impair the ability of an owner of such Mortgage Loan to transfer its interest in such Mortgage Loan, and (b) the retention of such documents in such format will not result in a reduction in the then current rating of the Investor Certificates, without regard to the Policy, such optical image or other representation may be delivered to the Trustee or assignee in lieu of the physical documents specified above. Each Seller agrees not to notify the obligors on the Mortgage Loans of the transfer of the Mortgage Loans to the Purchaser, unless required by the terms of the Mortgage Loans or applicable law. 4 7 Section 2.05. Acceptance by Purchaser of the Mortgage Loans; Certain Substitutions; Certification by the Trustee (a) The Purchaser agrees to execute and deliver on the Closing Date for each Mortgage Loan an acknowledgment of receipt of the Mortgage Loans, in the form attached as Exhibit C hereto, and declares that it will hold the documents delivered to it pursuant to Section 2.04 and any amendments, replacements or supplements thereto, as well as any other assets transferred pursuant to the terms hereof. Pursuant to the Pooling and Servicing Agreement, any Custodial Agreement and this Agreement, the Trustee (or any Custodian on behalf of the Trustee) will, for the benefit of the Purchaser and the Credit Enhancer, review (or cause to be reviewed) each of the documents set forth in Section 2.04 within 90 days following delivery to ascertain that all required documents set forth in this Section 2.04 have been executed and received, and that such documents relate to the Mortgage Loans identified on the Mortgage Loan Schedule, and in so doing the Trustee may rely on the purported due execution and genuineness of any signature thereon. (b) If the Trustee (or any Custodian on behalf of the Trustee) during the process of reviewing the Mortgage Files finds any document constituting a part of a Mortgage File which is not executed, has not been received, is unrelated to the Mortgage Loan identified in the Mortgage Loan Schedule, or determines that such Mortgage File is otherwise defective in any material respect, the Trustee is required by the Pooling and Servicing Agreement to promptly give notice of the same to the Purchaser, the applicable Seller and the Credit Enhancer to correct or cure such defect. It is understood that the scope of the Trustee's review of the Mortgage Files is limited solely to confirming that the documents listed in Section 2.04 have been executed and received and relate to the Mortgage Files identified in the Mortgage Loan Schedule. The applicable Seller agrees to use its reasonable efforts to cause to be remedied any material defect in a document constituting part of a Mortgage File of which such Seller is so notified by the Purchaser, the Trustee or the Credit Enhancer. If, however, within 90 days after notice to it respecting such defect, the applicable Seller has not caused to be remedied the defect or if at any time any loss is suffered by the Trustee on behalf of the Certificateholders or the Credit Enhancer, in respect of any Mortgage Loan as a result of a defect in any document constituting a part of its Mortgage File, then on the next succeeding Business Day upon the deposit to the Collection Account of the Transfer Deposit Amount, if any, and upon satisfaction of the applicable conditions described herein, all right, title and interest of the Trust in and to such Mortgage Loan shall be deemed to be retransferred, reassigned and otherwise reconveyed, without recourse, representation or warranty, to the Seller on such Business Day and the Principal Balance of such Mortgage Loan shall be deducted from the Pool Balance; provided, however, that interest accrued on the Principal Balance of such Mortgage Loan to the end of the related Collection Period shall be the property of the Trust. If the Trustee determines pursuant to the Pooling and Servicing Agreement that the reduction of such Principal Balance from the Pool Balance in accordance with the preceding sentence would cause the Transferor Principal Balance to be less than the Minimum Transferor Interest (a "Transfer Deficiency") and delivers written notice of such deficiency to the applicable Seller, then within five Business Days after the Business Day of such retransfer the applicable Seller shall either (i) substitute an Eligible Substitute Mortgage Loan or (ii) deposit into the Collection Account an amount (the "Transfer Deposit Amount") in immediately available funds equal to the Transfer Deficiency or a combination of both (i) and (ii) above. Such reduction or substitution and the actual payment of any Transfer Deposit Amount, if any, shall be deemed to be payment in full for such Mortgage 5 8 Loan. It is understood and agreed that the obligation of a Seller to accept a transfer of a Defective Mortgage Loan and to either convey an Eligible Substitute Mortgage Loan or to make a deposit of any related Transfer Deposit Amount into the Collection Account shall constitute the sole remedy respecting such defect available to Certificateholders, the Trustee and the Credit Enhancer against such Seller. Each Seller, promptly following the transfer of a Defective Mortgage Loan from or the transfer of an Eligible Substitute Mortgage Loan pursuant to this Section 2.05(b), shall appropriately mark its Electronic Ledger and make appropriate entries in its general account records to reflect such retransfer. Notwithstanding any other provision of this Section 2.05(b), a retransfer of a Defective Mortgage Loan to a Seller pursuant to this Section 2.05(b) that would cause the Transferor Principal Balance to be less than the Minimum Transferor Interest shall not occur if such Seller either fails to convey an Eligible Substitute Mortgage Loan or to deposit into the Collection Account any related Transfer Deposit Amount required by this Section 2.05(b) with respect to the transfer of such Defective Mortgage Loan. (c) As to any Eligible Substitute Mortgage Loan or Loans, the Seller shall deliver to the Trustee with respect to such Eligible Substitute Mortgage Loan or Loans such documents and agreements as are required to be held by the Trustee in accordance with Section 2.04. For any Collection Period during which the Seller substitutes one or more Eligible Substitute Mortgage Loans, the Transfer Deposit Amount (as determined by the Servicer pursuant to the Pooling and Servicing Agreement) shall be deposited by the Seller in the Collection Account at the time of substitution. Any amounts received in respect of the Eligible Substitute Mortgage Loan or Loans during the Collection Period in which the circumstances giving rise to such substitution occur shall not be a part of the Trust Fund and shall not be deposited by the Seller in the Collection Account. All amounts received by the Servicer during the Collection Period in which the circumstances giving rise to such substitution occur in respect of any Defective Mortgage Loan so removed by the Trust Fund shall be deposited by the Servicer in the Collection Account. Upon such substitution, the Eligible Substitute Mortgage Loan or Loans shall be subject to the terms of this Agreement in all respects, and the Seller shall be deemed to have made with respect to such Eligible Substitute Mortgage Loan or Loans, as of the date of substitution, the covenants, representations and warranties set forth in Section 3.02. The procedures applied by the Seller in selecting each Eligible Substitute Mortgage Loan shall not be materially adverse to the interests of the Trustee, the Certificateholders and the Credit Enhancer. Section 2.06. Acceptance by the Purchaser The Purchaser acknowledges the assignment to it of the Mortgage Loans being transferred hereby by the related Sellers and the delivery of the Mortgage Files to it or upon its order and, concurrently with such delivery, has delivered to or upon the order of the related Sellers, in exchange for such Mortgage Loans and the related Mortgage Files, cash and other consideration as set forth in Section 2.01. 6 9 Section 2.07. The Closing The conveyance of the Mortgage Loans shall take place at the offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York 10103, on the Closing Date, immediately prior to the closing of the transactions contemplated by the Pooling and Servicing Agreement and the Underwriting Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.01. Representations and Warranties of the Sellers Each Seller hereby represents and warrants to the Purchaser as of the Closing Date: (a) Such Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization and has all licenses necessary to carry on its business as now being conducted and is licensed, qualified and in good standing in each State in which a Mortgaged Property is located if the laws of such state require licensing or qualification in order to conduct business of the type conducted by such Seller and perform its obligations as a Seller hereunder; such Seller has the power and authority to execute and deliver this Agreement and to perform in accordance herewith; the execution, delivery and performance of this Agreement (including all instruments of transfer to be delivered pursuant to this Agreement) by such Seller and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action; this Agreement is the valid, binding and enforceable obligation of such Seller; and all requisite action has been taken by such Seller to make this Agreement valid, binding and enforceable upon such Seller in accordance with its terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors rights generally or the application of equitable principles in any proceeding, whether at law or in equity; (b) All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency (other than any such actions, approvals, etc. under any state securities laws, real estate syndication or "Blue Sky" statutes, as to which such Seller makes no such representation or warranty), that are necessary in connection with the origination of the Mortgage Loans and the execution and delivery by such Seller of this Agreement, have been duly taken, given or obtained, as the case may be, are in full force and effect, are not subject to any pending proceedings or appeals (administrative, judicial or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and the other documents on the part of such Seller and the performance by such Seller of its obligations as a Seller under this Agreement; (c) The consummation of the transactions contemplated by this Agreement will not result in the breach of any terms or provisions of the bylaws of such Seller or result in the breach of any term or provision of, or conflict with or constitute a default under or result in 7 10 the acceleration of any obligation under, any material agreement, indenture or loan or credit agreement or other material instrument to which such Seller or its property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which such Seller or its property is subject; (d) There is no action, suit, proceeding or investigation pending or, to the best of such Seller's knowledge, threatened against such Seller which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of such Seller or in any material impairment of the right or ability of such Seller to carry on its business substantially as now conducted, or in any material liability on the part of such Seller or which would draw into question the validity of this Agreement or the Mortgage Loans or of any action taken or to be taken in connection with the obligations of such Seller contemplated herein, or which would be likely to impair materially the ability of the Seller to perform under the terms of this Agreement; (e) Such Seller is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default might have consequences that would materially and adversely affect the condition (financial or other) or operations of such Seller or its properties or might have consequences that would materially and adversely affect its performance hereunder; (f) The transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by such Seller pursuant to this Agreement are not subject to the bulk transfer laws or any similar statutory provisions in effect in any applicable jurisdiction; (g) Such Seller is solvent and such Seller will not be rendered insolvent as a result of the transfer of the Mortgage Loans to the Purchaser; and (h) The origination and collection practices used by such Seller with respect to each Mortgage Note and Mortgage have been in all material respects legal, proper, prudent and customary in the home equity line of credit loan origination and servicing business. Section 3.02. Representations and Warranties as to the Mortgage Loans Each Seller hereby represents and warrants to the Purchaser, with respect to each Mortgage Loan sold by it pursuant to this Agreement that: (a) As of the Closing Date with respect to the Mortgage Loans and as of the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, this Agreement constitutes a valid transfer and assignment to the Purchaser of all right, title and interest of such Seller in and to each related Mortgage Loan (including its Cut-Off Date Principal Balance), all monies due or to become due with respect thereto, and all proceeds of such Cut-Off Date Principal Balances with respect to the Mortgage Loans and such funds as are from time to time deposited in the Collection Account (excluding any investment earnings thereon) and all other property specified in Section 2.01 of this Agreement as being conveyed to the Purchaser by such Seller, and (upon payment for the Additional Balances), will constitute a valid transfer and assignment to the Trustee of all right, title and interest of the Seller in and to the Additional Balances, all monies due or to become due with respect thereto, and all proceeds of such 8 11 Additional Balances and all other property specified in Section 2.01 of this Agreement relating to the Additional Balances. (b) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan and as of the date any Additional Balance is created, the information set forth in the Mortgage Loan Schedule for such Mortgage Loans is true and correct in all material respects; (c) The applicable Cut-Off Date Principal Balance has not been assigned or pledged, and such Seller is the sole owner and holder of such Cut-Off Date Principal Balance free and clear of any and all liens, claims, encumbrances, participation interests, equities, pledges, charges or security interests of any nature, and has full right and authority, to sell, assign or transfer the same pursuant to this Agreement; (d) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, the related Mortgage Note and the Mortgage with respect to each Mortgage Loan have not been assigned or pledged, and such Seller is the sole owner and holder of the Mortgage Loan free and clear of any and all liens, claims, encumbrances, participation interests, equities, pledges, charges or security interests of any nature, and has full right and authority, under all governmental and regulatory bodies having jurisdiction over the ownership of the applicable Mortgage Loans, to sell, assign or transfer the same pursuant to this Agreement; (e) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, the related Mortgage is a valid and subsisting first or second lien, as set forth on the Mortgage Loan Schedule with respect to each related Mortgage Loan, on the property therein described, and as of the applicable Cut-off Date the related Mortgaged Property is free and clear of all encumbrances and liens having priority over the first, or second lien, as applicable, of such Mortgage except for liens for (i) real estate taxes and special assessments not yet delinquent; (ii) income taxes, (iii) any first or similar mortgage loan secured by such Mortgaged Property and specified on the Mortgage Loan Schedule; (iv) covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of recording that are acceptable to mortgage lending institutions generally; and (v) other matters to which like properties are commonly subject that do not materially interfere with the benefits of the security intended to be provided by such Mortgage; (f) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, there is no valid offset, defense or counterclaim of any obligor under any Credit Line Agreement or Mortgage that has been asserted or threatened; (g) To the best knowledge of such Seller, as of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, there are no delinquent recordings or other tax or fee or assessment liens against any related Mortgaged Property; (h) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, there is no 9 12 proceeding pending nor has the Seller received notice of such proceeding being threatened for the total or partial condemnation of the related Mortgaged Property, and to the best knowledge of the Seller, such property is free of material damage; (i) To the best knowledge of such Seller, as of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, there are no mechanics' or similar liens or claims which have been filed for work, labor or material affecting the related Mortgaged Property which are, or may be, liens prior or equal to the lien of the related Mortgage, except liens which are fully insured against by the title insurance policy; (j) No Minimum Monthly Payment is more than 29 days delinquent (measured on a contractual basis); (k) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, for each Mortgage Loan, the related Mortgage File contains each of the documents and instruments specified to be included therein; (l) To the best knowledge of such Seller, the related Mortgage at origination complied in all material respects with applicable state and federal laws, including, without limitation, usury, truth in lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws applicable to the Mortgage Loan; (m) To the best knowledge of such Seller, either a lender's title insurance policy or binder was issued on the date of origination of the Mortgage Loan and each such policy is valid and remains in full force and effect, or a title search or guaranty of title customary in the relevant jurisdiction was obtained with respect to a Mortgage Loan and to which no title insurance policy or binder was issued; (n) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, none of the Mortgaged Properties is a mobile home or a manufactured housing unit that is not considered or classified as part of the real estate under the laws of the jurisdiction in which it is located; (o) The Combined Loan-to-Value Ratio for each Mortgage Loan was not in excess of 100%; (p) No selection procedure reasonably believed by such Seller to be adverse to the interests of the Certificateholders or the Credit Enhancer was utilized in selecting the Mortgage Loans; (q) Such Seller has not transferred the Mortgage Loans to the Trust with any intent to hinder, delay or defraud any of its creditors; (r) The Minimum Monthly Payment with respect to any Mortgage Loan is not less than the interest accrued at the applicable Loan Rate on the daily Principal Balance during the interest period relating to the date on which such Minimum Monthly Payment is due; 10 13 (s) Within 30 days of the Closing Date with respect to the Mortgage Loans and, to the extent not already included in such filing with respect to the Mortgage Loans, the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, such Seller will file UCC-1 financing statements with respect to the Mortgage Loans; (t) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, each Credit Line Agreement and each Mortgage Loan is an enforceable obligation of the related Mortgagor, except as the enforceability thereof may be limited by the bankruptcy, insolvency or similar laws affecting creditors' rights generally; (u) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, such Seller has not received a notice of default of any senior mortgage loan related to a Mortgaged Property that has not been cured by any party other than the Servicer; (v) The definition of the applicable index in each Credit Line Agreement relating to each Mortgage Loan does not differ materially from the Index as set forth on Exhibit B; (w) As of the Closing Date with respect to the Mortgage Loans and the applicable Transfer Date with respect to any Eligible Substitute Mortgage Loan, each Mortgaged Property consists of a single parcel of real property with a one-to-four unit single family residence erected thereon, an individual condominium unit, planned unit development unit or townhouse; and (x) At the time of origination of each Mortgage Loan, the Seller caused hazard insurance to be obtained for such Mortgage Loan, naming the Servicer or the related subservicer as loss payee thereunder and providing extended coverage in an amount which is at least equal to the lesser of (i) the replacement value of the improvements securing such Mortgage Loan from time to time or (ii) the combined principal balance owing on such Mortgage Loan and any mortgage loan senior to such Mortgage Loan from time to time. With respect to the representations and warranties set forth in this Section 3.02 that are made to the best knowledge of a Seller, if it is discovered by such Seller, the Purchaser, the Servicer or a Responsible Officer of the Trustee that the substance of such representation and warranty is inaccurate and such inaccuracy materially and adversely affects the value of the related Mortgage Loan then, notwithstanding such Seller's lack of knowledge with respect to the substance of such representation and warranty being inaccurate at the time the representation or warranty was made, such inaccuracy shall be deemed a breach of the applicable representation or warranty and subject such Seller to the obligations set forth in Section 3.03. Section 3.03. Purchase and Substitution It is understood and agreed that the representations and warranties set forth in Sections 3.01 and 3.02 shall survive delivery of the Mortgage Loans to the Purchaser. It is understood and agreed that the Purchaser is making certain representations and warranties with respect to the Mortgage Loans in the Pooling and Servicing Agreement and that the Sellers have agreed to cure any breach of such representations and warranties or to repurchase or substitute 11 14 for any affected Mortgage Loan as set forth herein. Upon discovery by a Seller, the Purchaser, the Servicer or a Responsible Officer of the Trustee of (i) any breach of the representation and warranty set forth in Section 2.04(b)(vi) of the Pooling and Servicing Agreement or (ii) a breach of any of the representations and warranties in Sections 3.01 and 3.02 or the representations and warranties of the Purchaser with respect to the Mortgage Loans in Section 2.04 of the Pooling and Servicing Agreement that materially and adversely affects the interests of the Trust or the Investor Certificateholders or the Credit Enhancer in the related Mortgage Loan, the party discovering such breach shall give prompt written notice to the other parties and the Credit Enhancer. Within 90 days of the earlier of its discovery or its receipt of notice of any breach of a representation or warranty, the applicable Seller shall cure, such breach in all material respects, or shall, not later than the Business Day next preceding the Distribution Date in the month following the Collection Period in which any such cure period expired (or such later date that is acceptable to the Trustee and the Credit Enhancer as evidenced by their written consents), either (a) accept a transfer of such Mortgage Loan from the Trust or (b) substitute an Eligible Substitute Mortgage Loan in the same manner and subject to the same conditions as set forth in Section 2.05; provided, however, that the cure for any breach of a representation and warranty of the Purchaser in Section 2.04 of the Pooling and Servicing Agreement relating to the characteristics of the Mortgage Loans in the aggregate shall be a repurchase of or substitution for only the Mortgage Loans necessary to cause such characteristics to be in compliance with the related representation and warranty and provided, further, that each Seller shall contribute proportionally to the repurchase or substitution of such Mortgage Loans, allocated according to the proportion of Mortgage Loans contributed by each such Seller to the Trust. Upon accepting such transfer and making any required deposit into the Collection Account or substitution of an Eligible Substitute Mortgage Loan, as the case may be, each Seller shall be entitled to receive an instrument of assignment or transfer from the Trustee to the same extent as set forth in Section 2.05 with respect to the transfer of Mortgage Loans under that Section. It is understood and agreed that the obligations of any Seller to accept a transfer of a Mortgage Loan as to which a breach has occurred and is continuing and to make any required deposit in the Collection Account or to substitute an Eligible Substitute Mortgage Loan, as the case may be, shall constitute the sole remedy against such Seller respecting such breach available to Investor Certificateholders, the Trustee on behalf of Investor Certificateholders and the Credit Enhancer. Notwithstanding the foregoing, with regard to any breach of the representation and warranty set forth in Section 3.02(d), the sale and assignment of the affected Mortgage Loans to the Trust shall be deemed void and the applicable Seller shall pay to the Trust the sum of the amount of the related Principal Balances, plus unpaid accrued interest on each such Principal Balance at the applicable Loan Rate to the date of payment. ARTICLE IV CONDITIONS Section 4.01. Conditions to Obligation of the Purchaser The obligation of the Purchaser to purchase the Mortgage Loans is subject to the satisfaction of the following conditions: (a) Representations and Warranties True. The representations and warranties of the Sellers hereunder shall be true and correct on the Closing Date with the same effect as if 12 15 then made, and the Sellers shall have performed all obligations to be performed by them hereunder on or prior to the Closing Date. (b) Documents to be Delivered By the Sellers at the Closing. (i) The Mortgage Loan Schedule specifying the Mortgage Loans to be transferred hereunder, one copy to be attached to each counterpart of the Pooling and Servicing Agreement as the Mortgage Loan Schedule thereto; (ii) An Officer's Certificate with respect to each Seller, dated as of the Closing Date, with the resolutions of such Seller, authorizing the transactions contemplated by this Agreement attached thereto, together with copies of the charter, by-laws and a Certificate of Good Standing dated as of recent date (acceptable to the Purchaser and its counsel) of such Seller; (iii) An Opinion of Counsel to the Sellers dated as of the Closing Date in the form attached to the Underwriting Agreement and any Opinion of Counsel required to be delivered to any Rating Agency or the Credit Enhancer; (c) Other Documents. On the Closing Date, each Seller shall provide such other documents as the Purchaser may reasonably request. (d) Other Transactions. The transactions contemplated by the Pooling and Servicing Agreement shall be consummated on the Closing Date. Section 4.02. Conditions To Obligation of each Seller The obligation of the Sellers to transfer the Mortgage Loans to the Purchaser is subject to the satisfaction of the condition that at the Closing Date, the Purchaser shall deliver to each Seller the consideration set forth on Exhibit A hereto, as provided in Section 2.01. ARTICLE V THE SELLERS Section 5.01. [Reserved] Section 5.02. Enforceability; Merger or Consolidation of the Sellers (a) Each Seller (other than Bank One, Wisconsin, which is a Wisconsin state bank) will keep in full effect its respective existence, rights and franchises as a national bank (or state bank, in the case of Bank One, Wisconsin), and will obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the Pooling and Servicing Agreement, and any of the Mortgage Loans and to perform its duties under such agreements. (b) Any Person into which any Seller may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Seller shall be a party, or any Person succeeding to the business of any Seller, shall be the successor of any Seller hereunder, without the execution or filing of any paper or any further act on the part of any of the 13 16 parties hereto, anything herein to the contrary notwithstanding. Section 5.03. Mandatory Sale; Grant of Security Interest The sale on the Closing Date by each Seller of its Mortgage Loans is mandatory, it being specifically understood and agreed that each Mortgage Loan is unique and identifiable on the date hereof and that an award of money damages would be insufficient to compensate the Purchaser for the loss and damages incurred by the Purchaser (including damages to prospective purchasers of the Certificates) in the event of such Seller's failure to deliver the Mortgage Loans on or before the Closing Date. Each Seller hereby grants to the Purchaser and to the Trustee as its successor and assignee a lien on and continuing security interest in each Mortgage Loan and each document and instrument evidencing such Mortgage Loan to secure the performance by such Seller of its obligations hereunder. All rights and remedies of the Purchaser under this Agreement are distinct from, and cumulative with, any other rights or remedies under this Agreement or afforded by law or equity, and all such rights and remedies may be exercised concurrently, independently or successively. ARTICLE VI ADDITIONAL AGREEMENTS The Sellers agree with the Purchaser as follows: Section 6.01. Conflicts With Pooling and Servicing Agreement To the extent that any provision of Sections 6.02 through 6.04 of this Agreement conflicts with any provision of the Pooling and Servicing Agreement, the Pooling and Servicing Agreement shall govern. Section 6.02. Protection of Title to Trust (a) The Sellers shall from time to time execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable to: (i) maintain or preserve the transfer evidenced by this Agreement or carry out more effectively the purposes hereof; or (ii) preserve and defend the Purchaser's title to the Mortgage Loans and the rights of the Purchaser in such assets against the claims of all persons and parties, and the Sellers hereby designate the Purchaser its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument required by the Purchaser pursuant to this Section 6.02. Section 6.03. Other Liens or Interests Except for the conveyances hereunder and pursuant to this Agreement, the Sellers shall not sell, pledge, assign or transfer the Mortgage Loans to any other Person, or grant, create, incur, assume or suffer to exist any Lien on any interest therein, and the Sellers shall defend the 14 17 right, title and interest of the Purchaser in, to and under such Mortgage Loans against all claims of third parties claiming through or under the Sellers. Section 6.04. Purchase Events The Sellers acknowledge that the Purchaser has assigned all of its right, title and interest in, to and under this Agreement, including the Purchaser's right to cause the Sellers to purchase the Mortgage Loans from the Purchaser under certain circumstances, to the Trust pursuant to Section 2.01 of the Pooling and Servicing Agreement and has assigned to the Trustee its right, title and interest in this Agreement; provided, however, the neither the Trustee nor the Trust assumes the obligation under any Credit Line Agreement that provides for the funding of future advances to the Mortgagor thereunder, and neither the Trust nor the Trustee shall be obligated or permitted to fund any such future advances. The Sellers hereby covenant and agree with the Purchaser for the benefit of the Purchaser, the Trustee, the Certificateholders and the Credit Enhancer that the occurrence of a breach of any of the Sellers' representations and warranties contained in Section 3.02 hereof shall constitute events obligating the Seller, to the extent specified in Section 2.04 of the Pooling and Servicing Agreement, and without further notice from the Purchaser hereunder, to purchase any Mortgage Loan from the Trustee. It is understood and agreed that the obligation of any Seller to purchase any Mortgage Loan as to which a breach has occurred and is continuing shall, if such obligation is fulfilled, constitute the sole remedy against such Seller for such breach available to the Trustee, the Certificateholders or the Credit Enhancer. Section 6.05. Indemnification The Sellers shall indemnify the Purchaser for any liability as a result of the failure of an Mortgage Loan to be originated in compliance with all requirements of law. This indemnity obligation shall be in addition to any obligation that the Sellers may otherwise have. Section 6.06. Trust The Sellers acknowledge that the Purchaser shall, pursuant to the Pooling and Servicing Agreement, transfer the Mortgage Loans to the Trustee (for the benefit of the Certificateholders), and the Purchaser shall assign its rights hereunder to the Trustee (for the benefit of the Certificateholders) as set forth in the Pooling and Servicing Agreement. ARTICLE VII MISCELLANEOUS PROVISIONS Section 7.01. Amendment This Agreement may be amended from time to time (upon prior notice to each of the Rating Agencies and with the prior written consent of the Credit Enhancer) by a written amendment duly executed and delivered by the Sellers and the Purchaser; provided, however, that any such amendment that materially adversely affects the rights of the Certificateholders under the Pooling and Servicing Agreement must be consented to by a majority of the Certificateholders. 15 18 Section 7.02. Waivers No failure or delay on the part of the Purchaser in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. Section 7.03. Costs and Expenses The Sellers agree to pay all reasonable out-of-pocket costs and expenses of the Purchaser, including fees and expenses of counsel, in connection with the perfection as against third parties of the Purchaser's right, title and interest in, to and under the Mortgage Loans and the enforcement of any obligation of the Sellers hereunder. Section 7.04. Survival The representations, warranties and covenants of the Seller set forth in Sections 3.01 and 3.02 and Article V of this Agreement shall remain in full force and effect and shall survive the closing under Section 2.07 and the transfers contemplated by Sections 6.04 and 6.06. Section 7.05. Confidential Information The Purchaser agrees that it shall neither use nor disclose to any person the names and addresses of the Mortgagors, except in connection with the enforcement of the Purchaser's rights (i) hereunder, (ii) under the Mortgage Loans or (iii) as required by law. Section 7.06. Severability Clause Any part, provision, representation or warranty of this Agreement which is prohibited or which is held to be void or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Any part, provision, representation or warranty of this Agreement which is prohibited or unenforceable or is held to be void or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 7.07. Headings and Cross-References The various headings in this Agreement are included for convenience only and shall not affect the meaning or interpretation of any provision of this Agreement. Section 7.08. Recordation of Agreement To the extent permitted by applicable law, the 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 Sellers at the Sellers' expense on direction of the Purchaser accompanied by an Opinion of 16 19 Counsel to the effect that such recordation materially and beneficially affects the interests of the Purchaser. Section 7.09. Governing Law THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 7.10. Notices All demands, notices and communications under this Agreement shall be in writing, personally delivered or mailed by certified mail with return receipt requested, and shall be deemed to have been duly given upon receipt at the appropriate address set forth in the Pooling and Servicing Agreement. Section 7.11. Counterparts This Agreement may be executed in two or more counterparts and by different parties on separate counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. Section 7.12. The Credit Enhancer Any right conferred to the Credit Enhancer hereunder shall be suspended during any period in which the Credit Enhancer is in default in its payment obligations under the Policy. At such time as the Certificates are no longer outstanding under the Pooling and Servicing Agreement, and no amounts owed to the Credit Enhancer with respect to the Certificates remain unpaid, the Credit Enhancer's rights hereunder shall terminate. The Credit Enhancer is an intended third-party beneficiary of this Agreement. 17 20 IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date and year first above written. PURCHASER Banc One ABS Corporation By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Vice President SELLERS Bank One, N.A. By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management Bank One, Arizona, N.A. By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management Bank One, Colorado, N.A. By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management Bank One, Illinois, N.A. By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management [Signature Page to Mortgage Loan Purchase Agreement] 21 Bank One, Indiana, N.A. By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management Bank One, Kentucky, N.A. By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management Bank One, Utah, N.A. By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management Bank One, West Virginia, N.A. By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management Bank One, Wisconsin By: ------------------------------------------ Name: Daniel A. Long, Jr. Title: Assistant Vice President - Funds Management [Signature Page to Mortgage Loan Purchase Agreement] 22 EXHIBIT A [RESERVED] A-1 23 EXHIBIT B-1 MORTGAGE LOANS TRANSFERRED BY Bank One, N.A. B-1 24 EXHIBIT B-2 MORTGAGE LOANS TRANSFERRED BY Bank One, Arizona, N.A. B-2 25 EXHIBIT B-3 MORTGAGE LOANS TRANSFERRED BY Bank One, Colorado, N.A. B-3 26 EXHIBIT B-4 MORTGAGE LOANS TRANSFERRED BY Bank One, Illinois, N.A. B-4 27 EXHIBIT B-5 MORTGAGE LOANS TRANSFERRED BY Bank One, Indiana, N.A. B-5 28 EXHIBIT B-6 MORTGAGE LOANS TRANSFERRED BY Bank One, Kentucky, N.A. B-6 29 EXHIBIT B-7 MORTGAGE LOANS TRANSFERRED BY Bank One, Utah, N.A. B-7 30 EXHIBIT B-8 MORTGAGE LOANS TRANSFERRED BY Bank One, West Virginia, N.A. B-8 31 EXHIBIT B-9 MORTGAGE LOANS TRANSFERRED BY Bank One, Wisconsin B-9 32 EXHIBIT C ACKNOWLEDGEMENT OF TRUSTEE AS TO RECEIPT OF MORTGAGE LOANS THE BANK OF NEW YORK, as Trustee (the "Trustee") under the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of August 31, 1998, among Banc One ABS Corporation, as Depositor (the "Depositor"), Bank One, N.A. ("Bank One"), as Servicer, and the Trustee, hereby acknowledges receipt of the Mortgage Loans, and further declares that it will hold the documents delivered to it pursuant to Section 2.01 of the Pooling and Servicing Agreement and Section 2.04 of the Mortgage Loan Purchase Agreement, dated as of September 24, 1998 (the "Purchase Agreement"), among Bank One, Bank One, Arizona, N.A., Bank One, Colorado, N.A., Bank One, Illinois, N.A., Bank One, Indiana, N.A., Bank One, Kentucky, N.A., Bank One, Utah, N.A., Bank One, West Virginia, N.A. and Bank One, Wisconsin (each, a "Seller," and collectively, the "Sellers") and the Depositor, and any amendments, replacements or supplements thereto, as well as any other assets transferred pursuant to the terms of the Purchase Agreement. The Trustee hereby also acknowledges the grant of security interest in the Mortgage Loans by the Sellers to the Depositor and to the Trustee as its successor and assignee under the Purchase Agreement. THE BANK OF NEW YORK By: __________________________ Name: Title: Dated: B-10 -----END PRIVACY-ENHANCED MESSAGE-----