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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)
July 30, 1996
IMC Home Equity Loan Trust 1996-3
(Exact name of registrant as specified in its charter)
New York 333-4911 13-3902498
(State or Other Jurisdiction) (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
c/o The Chase Manhattan Bank, as Trustee
450 West 33rd Street, 15th Floor
New York, New York 10001
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (202) 946-8600
No Change
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Mortgage Loans
IMC Securities, Inc. registered issuances of up to $1,500,000,000 principal
amount of Home Equity Loan Asset Backed Certificates on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Act"), by a Registration Statement on Form S-3 (Registration File No. 333-4911)
(as amended, the "Registration Statement"). Pursuant to the Registration
Statement, IMC Home Equity Loan Trust 1996-3 (the "Registrant" or the "Trust")
issued $250,000,000 in aggregate principal amount of its Home Equity Loan
Pass-Through Certificates, Series 1996-3 (the "Certificates"), on July 30, 1996.
This Current Report on Form 8-K is being filed to satisfy an undertaking to file
copies of certain agreements executed in connection with the issuance of the
Certificates, the forms of which were filed as Exhibits to the Registration
Statement.
The Certificates were issued pursuant to a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") attached hereto as Exhibit 4.1, dated as
of July 1, 1996, among IMC Securities, Inc. (the "Depositor"), Industry Mortgage
Company, L.P., as seller and servicer (the "Servicer") and The Chase Manhattan
Bank, in its capacity as trustee (the "Trustee"). The Certificates consist of
the following classes: the Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7 Certificates (the "Class A Certificates"), and the
Class R Certificates (the "Class R Certificates" and, together with the Class A
Certificates the "Certificates"). Only the Class A Certificates were offered
pursuant to the Registration Statement. The Certificates evidence, in the
aggregate, 100% of the undivided beneficial ownership interests in the Trust.
The assets of the Trust initially include a pool of closed-end home equity
loans (the "Home Equity Loans") secured by mortgages or deeds of trust primarily
on one-to-four family residential properties. Interest distributions on the
Class A Certificates are based on the Certificate Principal Balance thereof and
the applicable Pass-Through Rate thereof. The Pass-Through Rates for the Class A
Certificates are as follows: Class A-1, 7.00%; Class A-2, 7.06%; Class A-3,
7.27%; Class A-4, 7.39%, Class A-5, 7.56%, Class A-6, 7.83% and Class A-7,
8.05%. The Class A Certificates have initial aggregate principal amounts as
follows: Class A-1, $84,132,000; Class A-2, $30,423,000; Class A-3, $39,920,000;
Class A-4, $9,636,000; Class A-5, $37,842,000; Class A-6, $19,855,000; and Class
A-7, $28,192,000.
As of the Closing Date, the Home Equity Loans possessed the characteristics
described in the Prospectus dated July 23, 1996 and the Prospectus Supplement
dated July 23, 1996 filed pursuant to Rule 424(b)(5) of the Act on July 26,
1996.
On July 30, 1996, the Trust acquired $64,470.28 of Subsequent Home Equity
Loans pursuant to the terms of the Pooling and Servicing Agreement and the
Subsequent Transfer Agreement attached hereto as Exhibit 10.1 among the
Depositor, the Servicer and the Trustee dated as of July 30, 1996. The
Subsequent Home Equity Loans possess the characteristics required by the
Prospectus dated July 23, 1996 and the Prospectus Supplement dated July 23, 1996
filed pursuant to Rule 424(b)(5) of the Securities Act of 1933 on July 26, 1996.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement dated as of July 23, 1996, between IMC
Securities, Inc. and Bear, Stearns & Co. Inc., as representative
of the several Underwriters.
4.1 Pooling and Servicing Agreement dated as of July 1, 1996, between
IMC Securities, Inc. as Depositor, Industry Mortgage Company L.P.
as Seller and Servicer and The Chase Manhattan Bank as Trustee.
10.1 Subsequent Transfer Agreement dated as of July 30, 1996 among IMC
Securities, Inc., Industry Mortgage Company and The Chase
Manhattan Bank.
99.1 List of Initial Home Equity Loans included in the pool as of the
Cut-Off Date but removed from the pool after the Closing Date and
list of Home Equity Loans added to the pool after the Closing
Date.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMC SECURITIES, INC., as Depositor
By: /s/ Thomas Middleton
-----------------------
Name: Thomas Middleton
Title: President and Chief Operating Officer
Dated: August 14, 1996
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EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
1.1 Underwriting Agreement dated as of July 23, 1996,
between IMC Securities, Inc. and Bear, Stearns & Co.
Inc., as representative of the several Underwriters.
4.1 Pooling and Servicing Agreement dated as of July 1,
1996, between IMC Securities, Inc. as Depositor,
Industry Mortgage Company L.P. as Seller and Servicer
and The Chase Manhattan Bank as Trustee.
10.1 List of Initial Home Equity Loans removed from the pool
as of the Cut-Off Date and list of Home Equity Loans
added to the pool after the Cut-Off Date.
99.1 List of Initial Home Equity Loans included in the pool
as of the Cut-Off Date but removed from the pool after
the Closing Date and list of Home Equity Loans added to
the pool after the Closing Date.
EXECUTION COPY
$250,000,000
IMC HOME EQUITY LOAN TRUST 1996-3
IMC Home Equity Loan Pass-Through Certificates,
Series 1996-3
UNDERWRITING AGREEMENT
July 23, 1996
BEAR, STEARNS & CO. INC.
As Representative of the Several Underwriters
245 Park Avenue
New York, New York 10167
Dear Sirs:
IMC Securities, Inc. (the "Depositor"), a Delaware corporation, has
authorized the issuance and sale of IMC Home Equity Loan Pass-Through
Certificates, Series 1996-3 consisting of (a) the Class A-1 Certificates, the
Class A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates,
the Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates (the "Offered Certificates") and (b) the Class R Certificates (the
"Class R Certificates," and collectively with the Offered Certificates, the
"Certificates"), evidencing interests in a pool of fixed rate home equity loans
(the "Home Equity Loans"). The Offered Certificates will represent undivided
ownership interests in the Home Equity Loans, which are secured by first and
second lien mortgages or deeds of trust primarily on one- to four-family
residential properties.
Only the Offered Certificates are being purchased by the Underwriters named
in Schedule A hereto (the "Underwriters"), and the Underwriters are purchasing,
severally, only the Offered Certificates set forth opposite their names in
Schedule A, except that the amounts purchased by the Underwriters may change in
accordance with Section 10 of this Agreement. Bear, Stearns & Co. Inc. is acting
as representative of the several Underwriters and in such capacity, is
hereinafter referred to as the "Representative."
The Certificates will be issued under a pooling and servicing agreement
(the "Pooling and Servicing Agreement"), dated as of July 1, 1996 among the
Depositor, Industry Mortgage Company, L.P. ("IMC"), as seller and as servicer
(in such capacity, the "Servicer" or the "Seller," as the case may be), and The
Chase Manhattan Bank, as trustee (the "Trustee"). The general partner of the
Seller and Servicer is Industry Mortgage Corporation (the "General Partner").
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The Certificates will evidence fractional undivided interests in the trust
(the "Trust"). The assets of the Trust will initially include, among other
things, a pool of fixed rate Home Equity Loans (the "Initial Home Equity Loans")
and such amounts as may be held by the Trustee in the Pre-Funding Account (the
"Pre-Funding Account"), the Capitalized Interest Account (the "Capitalized
Interest Account") and any other accounts held by the Trustee for the Trust. On
the Closing Date, $114,511.69 will be deposited in the name of the Trustee in
the Pre-Funding Account to be used to acquire Subsequent Home Equity Loans. It
is intended that additional Home Equity Loans satisfying the criteria specified
in the Pooling and Servicing Agreement (the "Subsequent Home Equity Loans") will
be purchased by the Trust for inclusion in the Trust from the Depositor from
time to time on or before July 31, 1996 from funds on deposit in the Pre-Funding
Account at the time of execution and delivery of each Subsequent Transfer
Agreement ("Subsequent Transfer Agreement"). Funds in the Capitalized Interest
Account will be applied by the Trustee to cover shortfalls in interest during
the Funding Period. The Offered Certificates will initially represent an
undivided ownership interest in the sum of (i) the Initial Home Equity Loans in
an amount of $249,885,488.31 as of the close of business on July 1, 1996 (the
"Cut-Off Date") and (ii) $114,511.69 on deposit in the Pre-Funding Account. The
Offered Certificates will also have the benefit of an insurance policy (the
"Insurance Policy") issued by Financial Security Assurance Inc., a monoline
insurance company incorporated in New York (the "Certificate Insurer"). The
Insurance Policy will be issued pursuant to the insurance agreement (the
"Insurance Agreement") among the Certificate Insurer, the Depositor and the
Trustee. A form of the Pooling and Servicing Agreement has been filed as an
exhibit to the Registration Statement (hereinafter defined).
The Certificates are more fully described in a Registration Statement which
the Depositor has furnished to the Underwriters. Capitalized terms used but not
defined herein shall have the meanings given to them in the Pooling and
Servicing Agreement.
Pursuant to Section 3.05 of the Pooling and Servicing Agreement and
concurrently with the execution thereof, IMC will transfer to the Depositor and
the Depositor will transfer to the Trust all of their right, title and interest
in and to the unpaid principal balances of the Initial Home Equity Loans as of
the Cut-Off Date and the collateral securing each Initial Home Equity Loan.
SECTION 1 Representations and Warranties of the Depositor. The Depositor
represents and warrants to, and agrees with the Underwriters that:
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A. A Registration Statement on Form S-3 (No. 333-4911) has (i) been
prepared by the Depositor in conformity with the requirements of the
Securities Act of 1933 (the "Securities Act") and the rules and regulations
(the "Rules and Regulations") of the United States Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act. Copies of such Registration Statement have been delivered
by the Depositor to the Underwriters. As used in this Agreement, "Effective
Time" means the date and the time as of which such Registration Statement,
or the most recent post-effective amendment thereto, if any, was declared
effective by the Commission; "Effective Date" means the date of the
Effective Time; "Registration Statement" means such registration statement,
at the Effective Time, including any documents incorporated by reference
therein at such time; and "Basic Prospectus" means such final prospectus
dated July 23, 1996; and "Prospectus Supplement" means the final prospectus
supplement relating to the Offered Certificates, to be filed with the
Commission pursuant to paragraph (2), (3) or (5) of Rule 424(b) of the
Rules and Regulations. Prospectus means the Basic Prospectus together with
the Prospectus Supplement. Reference made herein to the Prospectus shall be
deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the
date of the Prospectus and any reference to any amendment or supplement to
the Prospectus shall be deemed to refer to and include any document filed
under the Securities Exchange Act of 1934 (the "Exchange Act") after the
date of the Prospectus, and incorporated by reference in the Prospectus and
any reference to any amendment to the Registration Statement shall be
deemed to include any report of the Depositor filed with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act after the Effective
Time that is incorporated by reference in the Registration Statement. The
Commission has not issued any order preventing or suspending the use of the
Prospectus. There are no contracts or documents of the Depositor which are
required to be filed as exhibits to the Registration Statement pursuant to
the Securities Act or the Rules and Regulations which have not been so
filed or incorporated by reference therein on or prior to the Effective
Date of the Registration Statement other than such documents or materials,
if any, as any Underwriter delivers to the Depositor pursuant to Section
8(D) hereof for filing on Form 8-K. The conditions for use of Form S-3, as
set forth in the General Instructions thereto, have been satisfied.
B. The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus
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will, when they become effective or are filed with the Commission, as the
case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations. The Registration Statement, as of the
Effective Date thereof and of any amendment thereto, did not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. The Prospectus as of its date, and as amended or
supplemented as of the Closing Date, does not and will not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance upon
and in conformity with written information furnished to the Depositor in
writing by the Underwriters expressly for use therein. The only information
furnished by the Underwriters or on behalf of the Underwriters for use in
connection with the preparation of the Registration Statement or the
Prospectus is described in Section 8(I) hereof.
C. The documents incorporated by reference to the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become effective or are
filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that no representation is made
as to documents deemed to be incorporated by reference in the Prospectus as
the result of filing a Form 8-K at the request of the Underwriters except
to the extent such documents reflect information furnished by the Depositor
to the Underwriters for the purpose of preparing such documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the general
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affairs, management, financial condition, or results of operations of the
Depositor, otherwise than as set forth or contemplated in the Prospectus as
supplemented or amended as of the Closing Date.
E. The Depositor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is
in good standing as a foreign corporation in each jurisdiction in which its
ownership or lease of property or the conduct of its business requires such
qualification, and has all power and authority necessary to own or hold its
properties, to conduct the business in which it is engaged and to enter
into and perform its obligations under this Agreement, the Pooling and
Servicing Agreement and the Insurance Agreement or any Subsequent Transfer
Agreement and to cause the Certificates to be issued.
F. There are no actions, proceedings or investigations pending with respect
to which the Depositor has received service of process before or threatened
by any court, administrative agency or other tribunal to which the
Depositor is a party or of which any of its properties is the subject (a)
which if determined adversely to the Depositor would have a material
adverse effect on the business or financial condition of the Depositor, (b)
asserting the invalidity of this Agreement, the Pooling and Servicing
Agreement, the Insurance Agreement, the Certificates, or any Subsequent
Transfer Agreement, (c) seeking to prevent the issuance of the Certificates
or the consummation by the Depositor of any of the transactions
contemplated by the Pooling and Servicing Agreement, the Insurance
Agreement, this Agreement or any Subsequent Transfer Agreement, as the case
may be, or (d) which might materially and adversely affect the performance
by the Depositor of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement, this Agreement, and
the Insurance Agreement, the Certificates, or any Subsequent Transfer
Agreement.
G. This Agreement has been, and the Pooling and Servicing Agreement, each
Subsequent Transfer Agreement and the Insurance Agreement when executed and
delivered as contemplated hereby and thereby will have been, duly
authorized, executed and delivered by the Depositor, and this Agreement
constitutes, and the Pooling and Servicing Agreement and the Insurance
Agreement when executed and delivered as contemplated herein, will
constitute, legal, valid and binding instruments enforceable against the
Depositor in accordance with their respective terms, subject as to
enforceability to (x) applicable bankruptcy, reorganization, insolvency,
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moratorium or other similar laws affecting creditors' rights generally, (y)
general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law), and (z) with respect to rights of
indemnity under this Agreement and the Insurance Agreement, limitations of
public policy under applicable securities laws.
H. The execution, delivery and performance of this Agreement, the Pooling
and Servicing Agreement, any Subsequent Transfer Agreement and the
Insurance Agreement by the Depositor and the consummation of the
transactions contemplated hereby and thereby, and the issuance and delivery
of the Certificates do not and will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Depositor is a party, by which the
Depositor is bound or to which any of the properties or assets of the
Depositor or any of its subsidiaries is subject, which breach or violation
would have a material adverse effect on the business, operations or
financial condition of the Depositor, nor will such actions result in any
violation of the provisions of the articles of incorporation or by-laws of
the Depositor or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Depositor or
any of its properties or assets, which breach or violation would have a
material adverse effect on the business, operations or financial condition
of the Depositor.
I. The Depositor has no reason to believe that Coopers & Lybrand L.L.P. are
not independent public accountants with respect to the Depositor as
required by the Securities Act and the Rules and Regulations.
J. The direction by the Depositor to the Trustee to execute, authenticate,
issue and deliver the Certificates has been duly authorized by the
Depositor, and assuming the Trustee has been duly authorized to do so, when
executed, authenticated, issued and delivered by the Trustee in accordance
with the Pooling and Servicing Agreement, the Certificates will be validly
issued and outstanding and will be entitled to the benefits provided by the
Pooling and Servicing Agreement.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the
United States is required for the issuance of the Certificates and the sale
of the Offered Certificates to the Underwriters, or the consummation by the
Depositor of the other transactions contemplated by this Agreement, the
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Pooling and Servicing Agreement, any Subsequent Transfer Agreement and the
Insurance Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or blue sky laws in connection with the purchase and distribution of the
Offered Certificates by the Underwriters or as have been obtained.
L. The Depositor possesses all material licenses, certificates, authorities
or permits issued by the appropriate State, Federal or foreign regulatory
agencies or bodies necessary to conduct the business now conducted by it
and as described in the Prospectus, and the Depositor has not received
notice of any proceedings relating to the revocation or modification of any
such license, certificate, authority or permit which if decided adversely
to the Depositor would, singly or in the aggregate, materially and
adversely affect the conduct of its business, operations or financial
condition.
M. At the time of execution and delivery of the Pooling and Servicing
Agreement, the Depositor will: (i) have good title to the Initial Home
Equity Loans conveyed by the Seller, free and clear of any lien, mortgage,
pledge, charge, encumbrance, adverse claim or other security interest
(collectively, "Liens"); (ii) not have assigned to any person any of its
right or title in the Initial Home Equity Loans, in the Pooling and
Servicing Agreement or in the Certificates being issued pursuant thereto;
and (iii) have the power and authority to sell its interest in the Initial
Home Equity Loans to the Trustee and to sell the Offered Certificates to
the Underwriters. Upon execution and delivery of the Pooling and Servicing
Agreement by the Trustee, the Trustee will have acquired beneficial
ownership of all of the Depositor's right, title and interest in and to the
Home Equity Loans. Upon delivery to the Underwriters of the Offered
Certificates, the Underwriters will have good title to the Offered
Certificates, free of any Liens.
N. At the time of execution and delivery of any Subsequent Transfer
Agreement, the Depositor will: (i) have good title in the Subsequent Home
Equity Loans conveyed by the Seller, free and clear of any Liens; (ii) not
have assigned to any person any of its right or title in the Subsequent
Home Equity Loans, in the Pooling and Servicing Agreement or in the
Certificates being issued pursuant thereto; and (iii) have the power and
authority to sell the Subsequent Home Equity Loans to the Trustee. Upon
execution and delivery of the Subsequent Transfer Agreement by the Trustee,
the Trustee will have acquired beneficial ownership of all of the
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Depositor's right, title and interest in and to the Subsequent Home Equity
Loans.
O. As of the Cut-Off Date, each of the Initial Home Equity Loans will meet
the eligibility criteria described in the Prospectus and will conform to
the descriptions thereof contained in the Prospectus.
P. As of any Subsequent Transfer Date, each of the Subsequent Home Equity
Loans will meet the eligibility criteria described in the Prospectus and
will conform to the descriptions thereof contained in the Prospectus.
Q. Neither the Depositor nor the Trust created by the Pooling and Servicing
Agreement is an "investment company" within the meaning of such term under
the Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations of the Commission thereunder.
R. At the Closing Date, the Offered Certificates and the Pooling and
Servicing Agreement will conform in all material respects to the
descriptions thereof contained in the Prospectus.
S. At the Closing Date, the Offered Certificates shall have been rated in
the highest rating category by at least two nationally recognized rating
agencies.
T. Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of this Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement and the Certificates have been
paid or will be paid at or prior to the Closing Date.
U. At the Closing Date, each of the representations and warranties of the
Depositor set forth in the Pooling and Servicing Agreement and the
Insurance Agreement will be true and correct in all material respects.
Any certificate signed by an officer of the Depositor and delivered to the
Representative or counsel for the Representative in connection with an offering
of the Offered Certificates shall be deemed, and shall state that it is, a
representation and warranty as to the matters covered thereby to each person to
whom the representations and warranties in this Section 1 are made.
SECTION 2 Purchase and Sale. The commitment of the Underwriters to purchase
the Offered Certificates pursuant to this Agreement shall be deemed to have been
made on the basis of the representations and warranties herein contained and
shall be subject to the terms and conditions herein set forth. The Depositor
agrees to instruct the Trustee to issue the Offered Certificates and agrees to
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sell to the Underwriters, and the Underwriters agree (except as provided in
Sections 10 and 11 hereof) to purchase from the Depositor the aggregate initial
principal amounts or percentage interests of the Offered Certificates set forth
opposite their names on Schedule A, at the purchase price or prices set forth in
Schedule A. The Underwriters may offer the Offered Certificates to certain
dealers at such prices less a concession not in excess of the respective amounts
set forth in Schedule A. The Underwriters may allow and such dealers may reallow
a discount to certain dealers not in excess of the respective amounts set forth
in Schedule A.
SECTION 3 Delivery and Payment. Delivery of and payment for the Offered
Certificates to be purchased by the Underwriters shall be made at the offices of
Brown & Wood LLP, One World Trade Center, New York, New York 10048, or at such
other place as shall be agreed upon by the Representative and the Depositor at
10:00 A.M. New York City time on July 30, 1996 or at such other time or date as
shall be agreed upon in writing by the Representative and the Depositor (such
date being referred to as the "Closing Date"). Payment shall be made to the
Depositor by wire transfer of same day funds payable to the account of the
Depositor. Delivery of the Offered Certificates shall be made to the
Representative for the accounts of the Underwriters against payment of the
purchase price thereof. The Certificates shall be in such authorized
denominations and registered in such names as the Representative may request in
writing at least two business days prior to the Closing Date. The Offered
Certificates will be made available for examination by the Representative no
later than 2:00 P.M. New York City time on the first business day prior to the
Closing Date.
SECTION 4 Offering by the Underwriters. It is understood that, subject to
the terms and conditions hereof, the Underwriters propose to offer the Offered
Certificates for sale to the public as set forth in the Prospectus.
SECTION 5 Covenants of the Depositor and IMC. The Depositor and, to the
extent the provisions of Section I. below relate to IMC, IMC each agrees as
follows:
A. To prepare the Prospectus in a form approved by the Underwriters and to
file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second business day
following the availability of the Prospectus to the Underwriters to make no
further amendment or any supplement to the Registration Statement or to the
Prospectus prior to the Closing Date except as permitted herein; to advise
the Underwriters, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective prior to the Closing Date or any supplement to the Prospectus or
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any amended Prospectus has been filed prior to the Closing Date and to
furnish the Underwriters with copies thereof; to file promptly all reports
and any definitive proxy or information statements required to be filed by
the Depositor with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Prospectus and, for
so long as the delivery of a prospectus is required in connection with the
offering or sale of the Offered Certificates; to promptly advise the
Underwriters of its receipt of notice of the issuance by the Commission of
any stop order or of: (i) any order preventing or suspending the use of the
Prospectus; (ii) the suspension of the qualification of the Offered
Certificates for offering or sale in any jurisdiction; (iii) the initiation
of or threat of any proceeding for any such purpose; (iv) any request by
the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information. In the event of
the issuance of any stop order or of any order preventing or suspending the
use of the Prospectus or suspending any such qualification, the Depositor
promptly shall use its best efforts to obtain the withdrawal of such order
by the Commission.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the following
documents as the Underwriters shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case including exhibits);
(ii) the Prospectus and any amended or supplemented Prospectus; and (iii)
any document incorporated by reference in the Prospectus (including
exhibits thereto). If the delivery of a prospectus is required at any time
prior to the expiration of nine months after the Effective Time in
connection with the offering or sale of the Offered Certificates, and if at
such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during such
same period to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus in
order to comply with the Securities Act or the Exchange Act, the Depositor
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shall notify the Underwriters and, upon the Underwriters' request, shall
file such document and prepare and furnish without charge to the
Underwriters and to any dealer in securities as many copies as the
Underwriters may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which corrects such statement
or omission or effects such compliance, and in case the Underwriters are
required to deliver a Prospectus in connection with sales of any of the
Offered Certificates at any time nine months or more after the Effective
Time, upon the request of the Underwriters but at their expense, the
Depositor shall prepare and deliver to the Underwriters as many copies as
the Underwriters may reasonably request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Securities Act.
D. To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may,
in the judgment of the Depositor or the Underwriters, be required by the
Securities Act or requested by the Commission.
E. The Depositor will cause any Computational Materials (as defined below)
with respect to the Offered Certificates which are delivered by any
Underwriter to the Depositor to be filed with the Commission on a Current
Report on Form 8-K (the "Form 8-K -- Computational Materials") at or before
the time of filing of the Prospectus pursuant to Rule 424(b) under the 1933
Act; provided, however, that the Depositor shall have no obligation to file
any materials which, in the reasonable determination of the Depositor after
consultation with such Underwriter, (i) are not required to be filed
pursuant to the Kidder Letters (as defined below) or (ii) contain any
erroneous information or untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; it being understood, however, that
the Depositor shall have no obligation to review or pass upon the accuracy
or adequacy of, or to correct, any Computational Materials provided by any
Underwriter to the Depositor as aforesaid. For purposes hereof, as to each
Underwriter, the term "Computational Materials" shall mean those materials
delivered by an Underwriter to the Depositor within the meaning of the
no-action letter dated May 20, 1994 issued by the Division of Corporation
Finance of the Commission to Kidder, Peabody Acceptance Corporation I and
certain affiliates and the no-action letter dated May 27, 1994 issued by
the Division of Corporation Finance of the Commission to the Public
Securities Association (together, the "Kidder Letters") for which the
filing of such material is a condition of the relief granted in such
letters.
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F. To furnish the Underwriters and counsel for the Underwriters, prior to
filing with the Commission, and to obtain the consent of the Underwriters
for the filing of the following documents relating to the Certificates: (i)
amendment to the Registration Statement or supplement to the Prospectus, or
document incorporated by reference in the Prospectus, or (ii) Prospectus
pursuant to Rule 424 of the Rules and Regulations.
G. To make generally available to holders of the Offered Certificates as
soon as practicable, but in any event not later than 90 days after the
close of the period covered thereby, a statement of earnings of the Trust
(which need not be audited) complying with Section 11(a) of the Securities
Act and the Rules and Regulations (including, at the option of the
Depositor, Rule 158) and covering a period of at least twelve consecutive
months beginning not later than the first day of the first fiscal quarter
following the Closing Date.
H. To use its best efforts, in cooperation with the Underwriters, to
qualify the Offered Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States
or elsewhere as the Underwriters may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required for
the distribution of the Offered Certificates. The Depositor will file or
cause the filing of such statements and reports as may be required by the
laws of each jurisdiction in which the Offered Certificates have been so
qualified.
I. Unless the Underwriters shall otherwise have given their written
consent, no pass-through certificates backed by home equity loans or other
similar securities representing interest in or secured by other
mortgage-related assets originated or owned by the Depositor or IMC shall
be publicly offered, sold nor shall the Depositor or IMC enter into any
contractual arrangements that contemplate the public offering or sale of
such securities for a period of seven (7) business days following the
commencement of the offering of the Offered Certificates to the public.
J. So long as the Offered Certificates shall be outstanding the Depositor
shall cause the Trustee, pursuant to the Pooling and Servicing Agreement,
to deliver to the Underwriters as soon as such statements are furnished to
the Owners: (i) the annual statement as to compliance delivered to the
Trustee pursuant to Section 8.16 of the Pooling and Servicing Agreement;
(ii) the annual statement of a firm of independent public accountants
furnished to the Trustee pursuant to Section 8.17 of the Pooling and
Servicing Agreement; (iii) the monthly servicing report furnished to the
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Trustee pursuant to Section 7.08 of the Pooling and Servicing Agreement;
and (iv) the monthly reports furnished to the Certificateholders pursuant
to Section 7.09 of the Pooling and Servicing Agreement.
K. To apply the net proceeds from the sale of the Offered Certificates in
the manner set forth in the Prospectus.
SECTION 6 Conditions to the Underwriters' Obligations. The obligations of
the Underwriters to purchase the Offered Certificates pursuant to this Agreement
are subject to: (i) the accuracy on and as of the Closing Date of the
representations and warranties on the part of the Depositor and IMC herein
contained; (ii) the performance by the Depositor of all of its obligations
hereunder; and (iii) the following conditions as of the Closing Date:
A. The Underwriters shall have received confirmation of the effectiveness
of the Registration Statement. No stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been issued
and no proceeding for that purpose shall have been initiated or threatened
by the Commission. Any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus
shall have been complied with.
B. The Underwriters shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact or omits to state a fact which, in the opinion of Brown
and Wood LLP, counsel for the Underwriters, is material and is required to
be stated therein or is necessary to make the statements therein not
misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement, the Certificates, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be satisfactory in all respects to the Underwriters and their counsel, and
the Depositor shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon
such matters.
D. Arter & Hadden shall have furnished to the Underwriters their written
opinion, as counsel to the Depositor, addressed to the Underwriters and
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dated the Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
1. The conditions to the use by the Depositor of a registration
statement on Form S-3 under the Securities Act, as set forth in the
General Instructions to Form S-3, have been satisfied with respect to
the Registration Statement and the Prospectus.
2. The Registration Statement and any amendments thereto have become
effective under the 1933 Act; to the best of such counsel's knowledge,
no stop order suspending the effectiveness of the Registration
Statement has been issued and not withdrawn and no proceedings for
that purpose have been instituted or threatened and not terminated;
and the Registration Statement, the Prospectus and each amendment or
supplement thereto, as of their respective effective or issue dates
(other than the financial and statistical information contained
therein, as to which such counsel need express no opinion), complied
as to form in all material respects with the applicable requirements
of the 1933 Act and the rules and regulations thereunder.
3. To the best of such counsel's knowledge, there are no material
contracts, indentures or other documents of a character required to be
described or referred to in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto.
4. The statements set forth in the Basic Prospectus under the captions
"Description of The Certificates" and "Administration" and in the
Prospectus Supplement under the captions "Description of the Class A
Certificates" and "The Pooling and Servicing Agreement," to the extent
such statements purport to summarize certain provisions of the
Certificates or of the Pooling and Servicing Agreement, are fair and
accurate in all material respects.
5. The statements set forth in the Prospectus and the Prospectus
Supplement under the captions "ERISA Considerations" and "Federal
Income Tax Consequences" to the extent that they constitute matters of
federal law, provide a fair and accurate summary of such law or
conclusions.
6. The Pooling and Servicing Agreement conforms in all material
respects to the description thereof contained in the Prospectus and is
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not required to be qualified under the Trust Indenture Act of 1939, as
amended, and the Trust is not required to be registered under the
Investment Company Act of 1940, as amended.
7. Neither the Depositor nor the Trust is an "investment company" or
under the "control" of an "investment company" as such terms are
defined in the 1940 Act.
8. Assuming that (a) the Trustee causes the assets of the Trust Estate
(exclusive of the Pre-Funding Account and the Capitalized Interest
Account), as the Trustee has covenanted to do in the Pooling and
Servicing Agreement, to be treated as a "real estate mortgage
investment conduit" (the "REMIC"), as such term is defined in the
Internal Revenue Code of 1986, as amended (the "Code") and (b) the
parties to the Pooling and Servicing Agreement comply with the terms
thereof, the Offered Certificates will be treated as "regular
interests" in the REMIC and the Class R Certificate will constitute
the sole class of "residual interest" therein. The Trust is not
subject to tax upon its income or assets by any taxing authority of
the State of New York.
9. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending that would adversely affect the
status of the Trust Estate (exclusive of the Pre-Funding Account and
the Capitalized Interest Account) as a REMIC.
10. As a consequence of the qualification of the Trust Estate
(exclusive of the Pre-Funding Account and the Capitalized Interest
Account) as a REMIC, the Offered Certificates will be treated as
"qualifying real property loans" under Section 593(d) of the Code,
"regular. . . interest(s) in a REMIC" under Section 7701(a)(19)(C) of
the Code and "real estate assets" under Section 856(c) of the Code in
the same proportion that the assets in the Trust consist of qualifying
assets under such Sections. In addition, as a consequence of the
qualification of the Trust Estate (exclusive of the Pre-Funding
Account and the Capitalized Interest Account) as a REMIC, interest on
the Offered Certificates will be treated as "interest on obligations
secured by mortgages on real property" under Section 856(c) of the
Code to the extent that such Offered Certificates are treated as "real
estate assets" under Section 856(c) of the Code.
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11. The Certificates will, when issued, conform to the description
thereof contained in the Prospectus.
12. The Offered Certificates, when duly and validly executed,
authenticated and delivered in accordance with the Pooling and
Servicing Agreement and delivered to the Underwriters and paid for in
accordance with the Underwriting Agreement, will be entitled to the
benefits of the Pooling and Servicing Agreement.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the Closing Date, in
form and substance satisfactory to the Underwriters to the effect that no
facts have come to the attention of such counsel which lead them to believe
that: (a) the Registration Statement, at the time such Registration
Statement became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (except as to
financial or statistical data contained in the Registration Statement); (b)
the Prospectus, as of its date and as of the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading (except as to statements set forth in
the Prospectus Supplement under the Captions "Credit Enhancement" and "The
Certificate Insurer"); or (c) any document incorporated by reference in the
Prospectus or any further amendment or supplement to any such incorporated
document made by the Depositor prior to the Closing Date contained, as of
the time it became effective or was filed with the Commission, as the case
may be, an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
E. The Underwriters shall have received the favorable opinion, dated the
Closing Date, of Arter & Hadden, special counsel to the Depositor,
addressed to the Depositor and satisfactory to the Certificate Insurer,
Standard & Poor's Ratings Group, Moody's Investors Service, Inc. and the
Underwriters, with respect to certain matters relating to the transfer of
the Initial Home Equity Loans to the Depositor and from the Depositor to
the Trust, and such counsel shall have consented to the reliance on such
opinion by the Certificate Insurer, Standard & Poor's Ratings Group,
Moody's Investors Service, Inc. and the Underwriters as though such opinion
had been addressed to each such party.
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F. Arter & Hadden, special counsel for the General Partner and IMC, in the
latter's capacity as both Seller and Servicer under the Pooling and
Servicing Agreement, shall have furnished to the Underwriters their written
opinion, addressed to the Underwriters and the Depositor and dated the
Closing Date, in form and substance satisfactory to the Underwriters, to
the effect that:
1. IMC has been duly formed as a limited partnership and is validly
existing in good standing under the laws of the State of Delaware.
2. The General Partner has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware and has duly authorized all actions contemplated hereby to be
taken by it as the general partner of IMC.
3. IMC has full power and authority to serve in the capacity of seller
and servicer of the Home Equity Loans as contemplated in the Pooling
and Servicing Agreement and to transfer the Home Equity Loans to the
Depositor as contemplated in the Pooling and Servicing Agreement.
4. This Agreement, the Pooling and Servicing Agreement and the
Insurance Agreement have been duly authorized, executed and delivered
by IMC and, assuming the due authorization, execution and delivery of
such agreements by the other parties thereto, constitute the legal,
valid and binding agreements of IMC, enforceable against IMC in
accordance with their terms, subject as to enforceability to (x)
bankruptcy, insolvency, reorganization, moratorium, receivership or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (y) the qualification that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion, with respect to
such remedies, of the court before which any proceedings with respect
thereto may be brought.
5. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
having jurisdiction over IMC is required for the consummation by the
Servicer of the transactions contemplated by the Pooling and Servicing
Agreement and the Insurance Agreement, except such consents,
approvals, authorizations, registrations and qualifications as have
been obtained.
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6. Neither the transfer of the Initial Home Equity Loans by IMC to the
Depositor, nor the execution, delivery or performance by IMC of the
Pooling and Servicing Agreement or the Insurance Agreement and the
transactions contemplated thereby (A) conflict with or result in a
breach of, or constitute a default under, (i) any term or provision of
the formation documents of IMC, as applicable; (ii) any term or
provision of any material agreement, deed of trust, mortgage loan
agreement, contract, instrument or indenture, or other agreement to
which IMC is a party or is bound or to which any of the property or
assets of IMC or any of its subsidiaries is subject; (iii) to the best
of such firm's knowledge without independent investigation any order,
judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over IMC; or (iv) any law, rule or
regulations applicable to IMC; or (B) to the best of such firm's
knowledge without independent investigation, results in the creation
or imposition of any lien, charge or encumbrance upon the Trust Estate
or upon the Certificates.
7. The execution of the Pooling and Servicing Agreement is sufficient
to convey all of IMC's right, title and interest in the Initial Home
Equity Loans to the Depositor and following the consummation of the
transaction contemplated by Section 3.05 of the Pooling and Servicing
Agreement, the transfer of the Initial Home Equity Loans by IMC to the
Depositor is a sale thereof.
8. Each Subsequent Transfer Agreement at the time of its execution and
delivery will be sufficient to convey all of IMC's right, title and
interest in the Subsequent Home Equity Loans to the Depositor and
following the consummation of the transaction contemplated by each
Subsequent Transfer Agreement, the transfer of the Subsequent Home
Equity Loans by IMC to the Depositor will be a sale thereof.
9. There are, to the best of such counsel's knowledge without
independent investigation, no actions, proceedings or investigations
pending with respect to which IMC has received service of process or
threatened against IMC before any court, administrative agency or
other tribunal (a) asserting the validity of the Pooling and Servicing
Agreement, the Underwriting Agreement, the Insurance Agreement or the
Certificates, (b) seeking to prevent the consummation of any of the
transactions contemplated by the Pooling and Servicing Agreement or
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(c) which would materially and adversely affect the performance by IMC
of its obligations under, or the validity or enforceability of, the
Pooling and Servicing Agreement, the Underwriting Agreement, or the
Insurance Agreement.
G. Arter & Hadden, special counsel for the Depositor, shall have furnished
to the Underwriters his written opinion, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
1. The Depositor has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware
and is in good standing as a foreign corporation in each jurisdiction
in which its ownership or lease of property or the conduct of its
business so requires. The Depositor has all power and authority
necessary to own or hold its properties and to conduct the business in
which it is engaged and to enter into and perform its obligations
under this Agreement, the Pooling and Servicing Agreement, the
Indemnification Agreement and the Insurance Agreement, and to cause
the Certificates to be issued.
2. The Depositor has the requisite power and authority and legal right
to own the Class R Certificates.
3. The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Depositor is a
party or by which it or its properties may be bound, which default
might result in any material adverse changes in the financial
condition, earnings, affairs or business of the Depositor or which
might materially and adversely affect the properties or assets, taken
as a whole, of the Depositor.
4. This Agreement, the Pooling and Servicing Agreement, the
Indemnification Agreement and the Insurance Agreement and the Purchase
Agreement relating to the purchase of the Class R Certificates (the
"Purchase Agreement") have been duly authorized, and when duly
executed and delivered by the Depositor and, assuming the due
authorization, execution and delivery of such agreements by the other
parties thereto, such agreements constitute valid and binding
obligations, enforceable against the Depositor in accordance with
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their respective terms, subject as to enforceability to (x)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally, (y) general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (z)
with respect to rights of indemnity under this Agreement and the
Insurance Agreement, limitations of public policy under applicable
securities laws.
5. The execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement, the Insurance Agreement, the
Indemnification Agreement and each Subsequent Transfer Agreement by
the Depositor, the consummation of the transactions contemplated
hereby and thereby, and the issuance and delivery of the Certificates
do not and will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Depositor is a party or by which
the Depositor is bound or to which any of the property or assets of
the Depositor or any of its subsidiaries is subject, which breach or
violation would have a material adverse effect on the business,
operations or financial condition of the Depositor, nor will such
actions result in a violation of the provisions of the certificate of
incorporation or by-laws of the Depositor or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets,
which breach or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor.
6. The direction by the Depositor to the Trustee to execute, issue,
authenticate and deliver the Certificates has been duly authorized by
the Depositor and, assuming that the Trustee has been duly authorized
to do so, when executed, authenticated and delivered by the Trustee in
accordance with the Pooling and Servicing Agreement, the Certificates
will be validly issued and outstanding and will be entitled to the
benefits of the Pooling and Servicing Agreement.
7. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of
the United States is required for the issuance of the Certificates,
and the sale of the Offered Certificates to the Underwriters, or the
consummation by the Depositor of the other transactions contemplated
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by this Agreement, the Pooling and Servicing Agreement, the
Indemnification Agreement and the Insurance Agreement, except such
consents, approvals, authorizations, registrations or qualifications
as may be required under the 1933 Act or State securities or Blue Sky
laws in connection with the purchase and distribution of the Offered
Certificates by the Underwriters or as have been previously obtained.
8. There are not, to the best of our knowledge, after reasonable
independent investigation, any actions, proceedings or investigations
pending with respect to which the Depositor has received service of
process before or, threatened by any court, administrative agency or
other tribunal to which the Depositor is a party or of which any of
its properties is the subject: (a) which if determined adversely to
the Depositor would have a material adverse effect on the business,
results of operations or financial condition of the Depositor; (b)
asserting the invalidity of the Pooling and Servicing Agreement, the
Insurance Agreement, the Indemnification Agreement, this Agreement or
the Certificates; (c) seeking to prevent the issuance of the
Certificates or the consummation by the Depositor of any of the
transactions contemplated by the Pooling and Servicing Agreement, the
Insurance Agreement, the Indemnification Agreement or this Agreement,
as the case may be; or (d) which might materially and adversely affect
the performance by the Depositor of its obligations under, or the
validity or enforceability of, the Pooling and Servicing Agreement,
the Insurance Agreement, the Indemnification Agreement, the Guaranty,
this Agreement or the Certificates.
H. The Underwriters shall have received the favorable opinion of counsel to
the Trustee, dated the Closing Date, addressed to the Underwriters and in
form and scope satisfactory to counsel to the Underwriters, to the effect
that:
1. The Trustee is a banking corporation duly incorporated and validly
existing under the laws of the State of New York.
2. The Trustee has the full corporate trust power to execute, deliver
and perform its obligations under the Pooling and Servicing Agreement.
3. The execution and delivery by the Trustee of the Pooling and
Servicing Agreement and the performance by the Trustee of its
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obligations under the Pooling and Servicing Agreement have been duly
authorized by all necessary corporate action of the Trustee.
4. The Pooling and Servicing Agreement is a valid and legally binding
obligation of the Trustee enforceable against the Trustee.
5. The execution and delivery by the Trustee of the Pooling and
Servicing Agreement does not (a) violate the Organization Certificate
of the Trustee or the Bylaws of the Trustee, (b) to such counsel's
knowledge, violate any judgment, decree or order of any New York or
United States federal court or other New York or United States federal
governmental authority by which the Trustee is bound or (c) assuming
the non-existence of any judgment, decree or order of any court or
other governmental authority that would be violated by such execution
and delivery, violate any New York or United States federal statute,
rule or regulation or require any consent, approval or authorization
of any New York or United States federal court or other New York or
United States federal governmental authority.
6. The Certificates have been duly authenticated, executed and
delivered by the Trustee.
7. If the Trustee were acting as Servicer under the Pooling and
Servicing Agreement as of the date of such opinion, the Trustee would
have the full corporate trust power to perform the obligations of the
Servicer under the Pooling and Servicing Agreement; and
8. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or
affecting the Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if
decided adversely to the Trustee, would materially and adversely
affect the ability of the Trustee to carry out the transactions
contemplated in the Pooling and Servicing Agreement.
I. The Underwriters shall have received the favorable opinion or opinions,
dated the date of the Closing Date, of counsel for the Underwriters, with
respect to the issue and sale of the Offered Certificates, the Registration
Statement, this Agreement, the Prospectus and such other related matters as
the Underwriters may reasonably require.
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J. The Underwriters shall have received the favorable opinion dated the
Closing Date, from internal counsel to the Certificate Insurer in form and
scope satisfactory to counsel for the Underwriters, substantially to the
effect that:
1. The Certificate Insurer is a monoline insurance company duly
incorporated, validly existing, and in good standing under the laws of
the State of New York. The Certificate Insurer is validly licensed and
authorized to issue the Insurance Policy and perform its obligations
under the Insurance Agreement in accordance with the terms thereof,
under the laws of the State of New York.
2. The Certificate Insurer has the corporate power to execute and
deliver, and to take all action required of it under the Insurance
Agreement and the Insurance Policy.
3. The execution, delivery and performance by the Certificate Insurer
of the Insurance Policy and Insurance Agreement does not require the
consent or approval of, the giving of notice to, the prior
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 obtained of effected.
4. The Insurance Policy and Insurance Agreement have been duly
authorized, executed and delivered by the Certificate Insurer and
constitute the legal, valid and binding agreement of the Certificate
Insurer, enforceable against the Certificate Insurer in accordance
with its terms subject, as to enforcement, to (x) bankruptcy,
reorganization, insolvency, moratorium and other similar laws relating
to or affecting the enforcement of creditors' rights generally,
including, without limitation, laws relating to fraudulent transfers
or conveyances, preferential transfers and equitable subordination,
presently or from time to time in effect and general principles of
equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law), as such laws may be applied in any
such proceeding with respect to the Certificate Insurer and (y) the
qualification that the remedy of specific performance and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings with respect
thereto may be brought.
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5. To the extent the Insurance Policy constitutes a security within
the meaning of Section 2(1) of the Securities Act, it is a security
that is exempt from the registration requirements of the Act.
6. The information set forth under the caption, "The Certificate
Insurer" in the Prospectus Supplement, insofar as such information
constitutes a description of the Insurance Policy, accurately
summarizes the Insurance Policy.
K. The Depositor and IMC shall each have furnished to the Underwriters a
certificate, dated the Closing Date and signed by the Chairman of the
Board, the President or a Vice President of the Depositor and IMC,
respectively, stating as it relates to each such entity:
1. The representations and warranties made by such entity in this
Agreement and in the Pooling and Servicing Agreement are true and
correct as of the Closing Date; and such entity has complied with all
agreements contained herein which are to have been complied with on or
prior to the Closing Date.
2. The information contained in the Prospectus relating to such entity
and the Home Equity Loans is true and accurate in all material
respects and nothing has come to his or her attention that would lead
such officer to believe that the Registration Statement or the
Prospectus includes any untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein not
misleading.
3. There has been no amendment or other document filed affecting the
Certificate of Incorporation or bylaws of the Depositor since November
10, 1994 or the formation documents of IMC since October 19, 1990 and
no such amendment has been authorized. No event has occurred since
April 1, 1996 which has affected the good standing of such entities
under the laws of the State of Delaware.
4. There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of such entity from March 31, 1996.
In addition to the foregoing, the IMC certificate shall state that the
representations and warranties set forth in Sections 1 D, E, F, G, H, L, M,
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P and Q are made by IMC instead of the Depositor and are true as to IMC as
though such representations and warranties were fully set forth in such
certificate.
L. The Trustee shall have furnished to the Underwriters a certificate of
the Trustee, signed by one or more duly authorized officers of the Trustee,
dated the Closing Date, as to the due authorization, execution and delivery
of the Pooling and Servicing Agreement by the Trustee and the acceptance by
the Trustee of the trusts created thereby and the due execution,
authentication and delivery of the Certificates by the Trustee thereunder
and such other matters as the Representative shall reasonably request.
M. The Insurance Policy and the Insurance Agreement shall have been issued
by the Certificate Insurer and shall have been duly authenticated by an
authorized agent of the Certificate Insurer, if so required under
applicable state law or regulations.
N. The Offered Certificates shall have been rated "AAA" by Standard &
Poor's Ratings Group and "Aaa" by Moody's Investors Service, Inc.
O. The Depositor shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may reasonably
have requested not less than three full business days prior to the Closing
Date.
P. Prior to the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained,
and all proceedings taken by the Depositor in connection with the issuance
and sale of the Certificates as herein contemplated shall be satisfactory
in form and substance to the Underwriters and counsel for the Underwriters.
Q. Subsequent to the execution and delivery of this Agreement none of the
following shall have occurred: (i) trading in securities generally on the
New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or minimum prices shall
have been established on either of such exchanges or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction; (ii) a banking moratorium shall
have been declared by federal or state authorities; (iii) the United
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<PAGE>
States shall have become engaged in hostilities, there shall have been an
escalation of hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States; or
(iv) there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of international
conditions on the financial markets of the United States shall be such) as
to make it in each of the instances set forth in clauses (i), (ii), (iii)
and (iv) herein, in the reasonable judgment of the Underwriters,
impractical or inadvisable to proceed with the public offering or delivery
of the Certificates on the terms and in the manner contemplated in the
Prospectus.
R. The Underwriters shall have received from Coopers & Lybrand LLP,
certified public accountants, a letter dated the date of the Prospectus
Supplement and a letter dated the date hereof and satisfactory in form and
substance to the Underwriters and their counsel, to the effect that they
have performed certain specified procedures, all of which have been agreed
to by the Underwriters, as a result of which they determined that certain
information of an accounting, financial or statistical nature set forth in
the Prospectus Supplement on the cover page thereof and under the captions
"Summary of Terms -- The Home Equity Loans", "Risk Factors -- Nature of the
Collateral; Junior Liens", "Risk Factors -- Risk of Higher Default Rates
for Home Equity Loans with Balloon Payments", "The Seller and Servicer
--General" and "The Home Equity Loan Pool -- General," agrees with the
records of the Depositor excluding any questions of legal interpretation.
If any condition specified in this Section 6 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice to the Depositor at any time at or prior to the Closing
Date, and such termination shall be without liability of any party to any other
party except as provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to the Underwriters and their counsel.
SECTION 7 Payment of Expenses. The Depositor agrees to pay: (a) the costs
incident to the authorization, issuance, sale and delivery of the Certificates
and any taxes payable in connection therewith; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto; (c) the costs of distributing
the Registration Statement as originally filed and each amendment thereto and
26
<PAGE>
any post-effective amendments thereof (including, in each case, exhibits), the
Prospectus and any amendment or supplement to the Prospectus or any document
incorporated by reference therein, all as provided in this Agreement; (d) the
costs of reproducing and distributing this Agreement; (e) the fees and expenses
of qualifying the Certificates under the securities laws of the several
jurisdictions designated by the Underwriters as provided in Section 5(H) hereof
and of preparing, printing and distributing a Blue Sky Memorandum and a Legal
Investment Survey (including related fees and expenses of counsel to the
Representative); (f) any fees charged by securities rating services for rating
the Offered Certificates; (g) the costs of the accountant's letters referred to
in Section 6(R) hereof; and (h) all other costs and expenses incident to the
performance of the obligations of the Depositor (including costs and expenses of
your counsel); provided that, except as provided in this Section 7, the
Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Offered Certificates which
they may sell and the expenses of advertising any offering of the Offered
Certificates made by the Underwriters, and the Underwriters shall pay the cost
of any accountant's letters relating to any Computational Materials (as defined
in Section 5(E) hereof).
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section 6 or Section 11, the Depositor shall cause the
Underwriters to be reimbursed for all reasonable out-of-pocket expenses,
including fees and disbursements of Brown and Wood LLP, counsel for the
Underwriters.
SECTION 8 Indemnification and Contribution. A. The Depositor agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, but not limited to, any loss,
claim, damage, liability or action relating to purchases and sales of the
Offered Certificates), to which such Underwriter or any such controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
27
<PAGE>
circumstances under which they were made, not misleading and shall reimburse
such Underwriter and each such controlling person promptly upon demand for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Depositor shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in the Prospectus, or any
amendment thereof or supplement thereto, or the Registration Statement, or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information furnished to the Depositor by or on behalf of such
Underwriter specifically for inclusion therein. The foregoing indemnity
agreement is in addition to any liability which the Depositor may otherwise have
to any Underwriter or any controlling person of any of such Underwriter. The
only information furnished by the Underwriters or on behalf of the Underwriters
for use in connection with the preparation of the Registration Statement or the
Prospectus is described in Section 8(I) hereof.
B. Each Underwriter severally agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act against any and all loss,
claim, damage or liability, or any action in respect thereof, to which the
Depositor or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Depositor by or on behalf of such Underwriter
specifically for inclusion therein, and shall reimburse the Depositor and any
such director, officer or controlling person for any legal or other expenses
reasonably incurred by the Depositor or any director, officer or controlling
person in connection with investigating or defending or preparing
28
<PAGE>
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Depositor or any such
director, officer or controlling person. The only information furnished by the
Underwriters or on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement or the Prospectus is described in
Section 8(I) hereof.
C. Promptly after receipt by any indemnified party under this Section 8 of
notice of any claim or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, except to the extent provided in the
next following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
29
<PAGE>
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by the related
Underwriter, if the indemnified parties under this Section 8 consist of one or
more Underwriters or any of its or their controlling persons, or the Depositor,
if the indemnified parties under this Section 8 consist of the Depositor or any
of the Depositor's directors, officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8(A) and (B), shall use its best efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement.
D. Each Underwriter agrees to provide the Depositor no later than two
Business Days prior to the day on which the Prospectus Supplement is required to
be filed pursuant to Rule 424 with a copy of any Computational Materials (as
defined in Section 5(E) hereof) produced by such Underwriter for filing with the
Commission on Form 8-K.
E. Each Underwriter severally agrees, assuming all Seller Provided
Information is accurate and complete in all material respects, to indemnify and
hold harmless the Depositor, each of the Depositor's officers and directors and
each person who controls the Depositor within the meaning of Section 15 of the
30
<PAGE>
Securities Act against any and all losses, claims, damages or liabilities, joint
or several, to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of a
material fact contained in the Computational Materials provided by such
Underwriter and agrees to reimburse each such indemnified party for any legal or
other expenses reasonably incurred by him, her or it in connection with
investigating or defending or preparing to defend any such loss, claim, damage,
liability or action as such expenses are incurred. The obligations of an
Underwriter under this Section 8(E) shall be in addition to any liability which
such Underwriter may otherwise have.
The procedures set forth in Section 8(C) shall be equally applicable to
this Section 8(E).
F. If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(A), (B) or (E) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the related Underwriters on the
other from the offering of the related Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section 8(C), in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Depositor on
the one hand and the related Underwriter on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.
The relative benefits of an Underwriter and the Depositor shall be deemed
to be in such proportion as the total net proceeds from the offering (before
deducting expenses) received by the Depositor bear to the total underwriting
discounts and commissions received by the related Underwriter from time to time
in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Depositor or by such Underwriter, the intent of the
parties and their relative knowledge, access to information and
31
<PAGE>
opportunity to correct or prevent such statement or omission and other equitable
considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(F) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purposes) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8(F)
shall be deemed to include, for purposes of this Section 8(F), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
For purposes of this Section 8, in no case shall any Underwriter be
responsible for any amount in excess of (x) the amount received by such
Underwriter in connection with its resale of the Offered Certificates exceeds
(y) the amount paid by such Underwriter to the Depositor for the Offered
Certificates by such Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
G. For purposes of this Section 8, as to each Underwriter the term
"Computational Materials" means such portion, if any, of the information
delivered to the Depositor by such Underwriter pursuant to Section 8(D) for
filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into account
information incorporated therein by reference through a Form 8-K --
Computational Materials; and
(ii) does not constitute Seller-Provided Information.
"Seller-Provided Information" means any computer tape (or other information)
furnished to any Underwriter by or on behalf of the Seller and Servicer
concerning the assets comprising the Trust.
H. The Seller and Servicer agrees to indemnify each indemnified party
referred to in Section 8(A) hereof with respect to Seller Provided Information
to the same extent as the indemnity granted under such section. The procedures
set forth in Section 8(C) shall be equally applicable to this Section 8(H).
I. The Underwriters confirm that the information set forth in the last
paragraph on the cover page of the Prospectus Supplement and the Computational
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<PAGE>
Materials (other than to the extent such information is based on Seller Provided
Information) is correct, and the parties hereto acknowledge that such
information constitutes the only information furnished in writing by or on
behalf of any Underwriter for use in connection with the preparation of the
Registration Statement or the Prospectus.
SECTION 9 Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Depositor submitted pursuant hereto
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriters or controlling persons
thereof, or by or on behalf of the Depositor and shall survive delivery of any
Offered Certificates to the Underwriters.
SECTION 10 Default by One or More of the Underwriters. If one or more of
the Underwriters participating in the public offering of the Offered
Certificates shall fail at the Closing Date to purchase the Offered Certificates
which it is (or they are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon and upon the terms herein set forth. If, however, the Underwriters have not
completed such arrangements within such 24-hour period, then:
(i) if the aggregate principal amount of Defaulted Certificates does not
exceed 10% of the aggregate principal amount of the Offered Certificates to
be purchased pursuant to this Agreement, the non-defaulting Underwriters
named in this Agreement shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all such non-defaulting
Underwriters, or
(ii) if the aggregate principal amount of Defaulted Certificates exceeds
10% of the aggregate principal amount of the Offered Certificates to be
purchased pursuant to this Agreement, this Agreement shall terminate,
without any liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this Section
10, each of the Underwriters and the Depositor shall have the right to postpone
34
<PAGE>
the Closing Date for a period not exceeding five Business Days in order that any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
SECTION 11 Termination of Agreement. The Underwriters may terminate this
Agreement immediately upon notice to the Depositor, at any time at or prior to
the Closing Date if any of the events or conditions described in Section 6(P) of
this Agreement shall occur and be continuing. In the event of any such
termination, the covenant set forth in Section 5(G), the provisions of Section
7, the indemnity agreement set forth in Section 8, and the provisions of
Sections 9 and 15 shall remain in effect.
SECTION 12 Obligations of IMC. IMC agrees with the Underwriters, for the
sole and exclusive benefit of each such Underwriter and each person controlling
such Underwriter within the meaning of the Securities Act and not for the
benefit of any assignee thereof or any other person or persons dealing with such
Underwriter, in consideration of and as an inducement to their agreement to
purchase the Offered Certificates from the Depositor, to indemnify and hold
harmless each Underwriter against any failure by the Depositor to perform its
obligations to the Underwriters hereunder, including, without limitation, any
failure by the Depositor to honor any obligation to any Underwriter pursuant to
Section 8 hereof.
SECTION 13 Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to Bear, Stearns & Co. Inc., 245 Park Avenue, New
York, New York 10167 Attention: Asset Backed Securities Group (Fax:
212-272-7294); and
B. if to the Depositor, shall be delivered or sent by mail, telex or
facsimile transmission to care of IMC Securities, Inc., 3450 Buschwood Park
Drive, Tampa, Florida 33618 Attention: Thomas Middleton (Fax: (813)
935-0227).
SECTION 14 Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Depositor, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any of the Underwriters within the meaning of Section 15 of
the Securities Act, and for the benefit of directors of the Depositor, officers
of the Depositor who have signed the Registration Statement and any person
35
<PAGE>
controlling the Depositor within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section 14, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
SECTION 15 Survival. The respective indemnities, representations,
warranties and agreements of the Depositor and the Underwriters contained in
this Agreement, or made by or on behalf of them, respectively, pursuant to the
shall survive the delivery of and payment for the Certificates and shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any of them or any person controlling any of them.
SECTION 16 Definition of the Term "Business Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
SECTION 17 Governing Law; Submission to Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York without giving effect to the conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the United States
District Court for the Southern District of New York and any court in the State
of New York located in the City and County of New York, and appellate court from
any thereof, in any action, suit or proceeding brought against it or in
connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby agree that all claims in respect of any
such action or proceeding may be heard or determined in New York State court or,
to the extent permitted by law, in such federal court.
SECTION 18 Counterparts. This Agreement may be executed in counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
SECTION 19 Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
36
<PAGE>
If the foregoing correctly sets forth the agreement between the Depositor
and the Underwriters, please indicate your acceptance in the space provided for
the purpose below.
Very truly yours,
IMC SECURITIES, INC.
By:_______________________
Name:
Title:
INDUSTRY MORTGAGE COMPANY,
L.P.
Industry Mortgage Company,
its General Partner
By:________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as
of the date first above written:
BEAR, STEARNS & CO. INC.
Acting on its own behalf and as
Representative of the Several
Underwriters referred to in the
foregoing Agreement
By:____________________________
Name:
Title:
37
<PAGE>
SCHEDULE A
Class A-1 Certificates
Underwriters Principal Purchase
- ------------ --------- --------
Price
-----
Bear, Stearns & Co. Inc. $28,044,000 99.74830%
NatWest Capital Markets Limited $28,044,000 99.74830%
Nomura Securities International, Inc. $28,044,000 99.74830%
Total $84,132,000
Class A-2 Certificates
Underwriters Principal Purchase
- ------------ --------- --------
Price
-----
Bear, Stearns & Co. Inc. $10,141,000 99.71761%
NatWest Capital Markets Limited $10,141,000 99.71761%
Nomura Securities International, Inc. $10,141,000 99.71761%
Total $30,423,000
Class A-3 Certificates
Underwriters Principal Purchase
- ------------ --------- --------
Price
-----
Bear, Stearns & Co. Inc. $13,308,000 99.67499%
NatWest Capital Markets Limited $13,306,000 99.67499%
Nomura Securities International, Inc. $13,306,000 99.67499%
Total $39,920,000
<PAGE>
SCHEDULE A (cont'd)
Class A-4 Certificates
Underwriters Principal Purchase
- ------------ --------- --------
Price
-----
Bear, Stearns & Co. Inc. $3,212,000 99.66819%
NatWest Capital Markets Limited $3,212,000 99.66819%
Nomura Securities International, Inc. $3,212,000 99.66819%
Total $9,636,000
Class A-5 Certificates
Underwriters Principal Purchase
- ------------ --------- --------
Price
-----
Bear, Stearns & Co. Inc. $12,614,000 99.62430%
NatWest Capital Markets Limited $12,614,000 99.62430%
Nomura Securities International, Inc. $12,614,000 99.62430%
Total $37,842,000
Class A-6 Certificates
Underwriters Principal Purchase
- ------------ --------- --------
Price
-----
Bear, Stearns & Co. Inc. $ 6,619,000 99.55560%
NatWest Capital Markets Limited $ 6,618,000 99.55560%
Nomura Securities International, Inc. $ 6,618,000 99.55560%
Total $19,855,000
<PAGE>
SCHEDULE A (cont'd)
Class A-7 Certificates
Underwriters Principal Purchase
- ------------ --------- --------
Price
-----
Bear, Stearns & Co. Inc. $ 9,398,000 99.40340%
NatWest Capital Markets Limited $ 9,397,000 99.40340%
Nomura Securities International, Inc. $ 9,397,000 99.40340%
Total $28,192,000
Selling Reallowance
Class Concession Discount
A-1 0.150% 0.070%
A-2 0.165% 0.070%
A-3 0.180% 0.100%
A-4 0.195% 0.125%
A-5 0.210% 0.125%
A-6 0.240% 0.125%
A-7 0.330% 0.125%
POOLING AND SERVICING AGREEMENT
Relating to
IMC HOME EQUITY LOAN TRUST 1996-3
Among
IMC SECURITIES, INC.
as Depositor,
INDUSTRY MORTGAGE COMPANY, L.P.,
as Seller,
INDUSTRY MORTGAGE COMPANY, L.P.,
as Servicer
and
THE CHASE MANHATTAN BANK
as Trustee
Dated as of July 1, 1996
<PAGE>
CONTENTS
Page
CONVEYANCE................................................................. 1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION............................ 2
Section 1.01 Definitions.............................................. 2
Section 1.02 Use of Words and Phrases................................. 25
Section 1.03 Captions; Table of Contents.............................. 25
Section 1.04 Opinions................................................. 25
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST....................... 26
Section 2.01 Establishment of the Trust............................... 26
Section 2.02 Office................................................... 26
Section 2.03 Purposes and Powers...................................... 26
Section 2.04 Appointment of the Trustee; Declaration of Trust......... 26
Section 2.05 Expenses of the Trust.................................... 26
Section 2.06 Ownership of the Trust................................... 26
Section 2.07 Situs of the Trust....................................... 27
Section 2.08 Miscellaneous REMIC Provisions........................... 27
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS...................... 29
Section 3.01 Representations and Warranties of the Depositor......... 29
Section 3.02 Representations and Warranties of the Servicer........ 31
Section 3.03 Representations and Warranties of the Seller ............ 33
Section 3.04 Covenants of Seller to Take Certain Actions with
Respect to the Home Equity Loans in Certain Situations.... 35
Section 3.05 Conveyance of the Initial Home Equity Loans and
Qualified Replacement Mortgages........................... 42
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee.................... 46
Section 3.07 Conveyance of the Subsequent Home Equity Loans............ 47
Section 3.08 Custodian................................................. 49
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES............................ 50
Section 4.01 Issuance of Certificates.................................. 50
Section 4.02 Sale of Certificates...................................... 50
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS.......................... 51
Section 5.01 Terms..................................................... 51
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Section 5.02 Forms..................................................... 51
Section 5.03 Execution, Authentication and Delivery.................... 51
Section 5.04 Registration and Transfer of Certificates................. 52
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates......... 54
Section 5.06 Persons Deemed Owners..................................... 54
Section 5.07 Cancellation.............................................. 54
Section 5.08 Limitation on Transfer of Ownership Rights................ 55
Section 5.09 Assignment of Rights...................................... 56
ARTICLE VI
COVENANTS........................................ 57
Section 6.01 Distributions............................................. 57
Section 6.02 Money for Distributions to be Held in Trust; Withholding.. 57
Section 6.03 Protection of Trust Estate................................ 58
Section 6.04 Performance of Obligations................................ 59
Section 6.05 Negative Covenants........................................ 59
Section 6.06 No Other Powers........................................... 59
Section 6.07 Limitation of Suits....................................... 59
Section 6.08 Unconditional Rights of Owners to Receive Distributions... 60
Section 6.09 Rights and Remedies Cumulative............................ 60
Section 6.10 Delay or Omission Not Waiver.............................. 61
Section 6.11 Control by Owners......................................... 61
Section 6.12 Indemnification by the Seller............................. 61
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES........................... 62
Section 7.01 Collection of Money....................................... 62
Section 7.02 Establishment of Accounts................................. 62
Section 7.03 Flow of Funds............................................. 62
Section 7.04 Pre-Funding Account and Capitalized Interest Account...... 65
Section 7.05 Investment of Accounts.................................... 66
Section 7.06 Payment of Trust Expenses................................. 66
Section 7.07 Eligible Investments...................................... 67
Section 7.08 Accounting and Directions by Trustee...................... 68
Section 7.09 Reports by Trustee to Owners and Certificate Insurer...... 69
Section 7.10 Reports by Trustee. ..................................... 71
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS................................... 72
Section 8.01 Servicer and Sub-Servicers................................ 72
Section 8.02 Collection of Certain Home Equity Loan Payments........... 73
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers............................................. 73
Section 8.04 Successor Sub-Servicers................................... 74
Section 8.05 Liability of Servicer; Indemnification.................... 74
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners..................................... 74
Section 8.07 Assumption or Termination of Sub-Servicing Agreement
by Trustee................................................ 75
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Section 8.08 Principal and Interest Account............................ 75
Section 8.09 Delinquency Advances and Servicing Advances............... 77
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.... 77
Section 8.11 Maintenance of Insurance.................................. 78
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements................................................ 79
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout
of Home Equity Loans...................................... 79
Section 8.14 Trustee to Cooperate; Release of Files.................... 81
Section 8.15 Servicing Compensation.................................... 82
Section 8.16 Annual Statement as to Compliance......................... 82
Section 8.17 Annual Independent Certified Public Accountants' Reports.. 82
Section 8.18 Access to Certain Documentation and Information Regarding
the Home Equity Loans..................................... 82
Section 8.19 Assignment of Agreement................................... 83
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation
of Servicer............................................... 83
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
Insurance................................................. 86
Section 8.22 Additional Servicing Responsibilities for Second Mortgage
Loans..................................................... 87
ARTICLE IX
TERMINATION OF TRUST................................... 88
Section 9.01 Termination of Trust...................................... 88
Section 9.02 Termination Upon Option of Owners of Class R Certificates. 88
Section 9.03 Termination Upon Loss of REMIC Status..................... 89
Section 9.04 Disposition of Proceeds................................... 91
ARTICLE X
THE TRUSTEE....................................... 92
Section 10.01 Certain Duties and Responsibilities....................... 92
Section 10.02 Removal of Trustee for Cause.............................. 94
Section 10.03 Certain Rights of the Trustee............................. 95
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.. 96
Section 10.05 May Hold Certificates..................................... 96
Section 10.06 Money Held in Trust....................................... 96
Section 10.07 Compensation and Reimbursement............................ 97
Section 10.08 Corporate Trustee Required; Eligibility................... 97
Section 10.09 Resignation and Removal; Appointment of Successor......... 97
Section 10.10 Acceptance of Appointment by Successor Trustee............ 99
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee................................... 99
Section 10.12 Reporting; Withholding.................................... 99
Section 10.13 Liability of the Trustee..................................100
Section 10.14 Appointment of Co-Trustee or Separate Trustee.............100
ARTICLE XI
MISCELLANEOUS......................................102
Section 11.01 Compliance Certificates and Opinions......................102
Section 11.02 Form of Documents Delivered to the Trustee................102
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Section 11.03 Acts of Owners.............................................103
Section 11.04 Notices, etc. to Trustee...................................103
Section 11.05 Notices and Reports to Owners; Waiver of Notices...........104
Section 11.06 Rules by Trustee and Seller................................104
Section 11.07 Successors and Assigns.....................................104
Section 11.08 Severability...............................................104
Section 11.09 Benefits of Agreement......................................104
Section 11.10 Legal Holidays.............................................105
Section 11.11 Governing Law; Submission to Jurisdiction..................105
Section 11.12 Counterparts...............................................106
Section 11.13 Usury......................................................106
Section 11.14 Amendment..................................................106
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.........107
Section 11.16 REMIC Status...............................................107
Section 11.17 Additional Limitation on Action and Imposition of Tax......109
Section 11.18 Appointment of Tax Matters Person..........................110
Section 11.19 The Certificate Insurer....................................110
Section 11.20 Reserved...................................................110
Section 11.21 Third Party Rights.........................................110
Section 11.22 Notices....................................................110
Section 11.23 Rule 144A Information......................................112
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER.....................113
Section 12.01 Trust Estate and Accounts Held for Benefit of the
Certificate Insurer........................................113
Section 12.02 Claims Upon the Policy; Policy Payments Account............113
Section 12.03 Effect of Payments by the Certificate Insurer; Subrogation.114
Section 12.04 Notices to the Certificate Insurer.........................115
Section 12.05 Third-Party Beneficiary....................................115
Section 12.06 Rights to the Certificate Insurer To Exercise Rights of
Owners.....................................................115
SCHEDULE I SCHEDULE OF HOME EQUITY LOANS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT B RESERVED
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT E FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT F-1 FORM OF TRUSTEE'S RECEIPT
EXHIBIT F-2 FORM OF CUSTODIAN'S RECEIPT
EXHIBIT G FORM OF POOL CERTIFICATION
EXHIBIT H FORM OF DELIVERY ORDER
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EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J-1 FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
EXHIBIT J-2 FORM OF CERTIFICATE REGARDING TRANSFER (RULE 144A)
EXHIBIT K HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
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POOLING AND SERVICING AGREEMENT, relating to IMC HOME EQUITY LOAN TRUST
1996-3, dated as of July 1, 1996 by and among IMC SECURITIES, INC., a Delaware
corporation, in its capacity as Depositor (the "Depositor"), INDUSTRY MORTGAGE
COMPANY, L.P., a Delaware limited partnership in its capacities as the Seller
(in such capacity, the "Seller") and as the Servicer (in such capacity, the
"Servicer") and THE CHASE MANHATTAN BANK, a New York banking corporation, in its
capacity as the trustee (the "Trustee").
WHEREAS, the Seller wishes to establish a trust and provide for the
allocation and sale of the beneficial interests therein and the maintenance and
distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Home Equity Loans, which
constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed and
authenticated by the Trustee valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done;
WHEREAS, The Chase Manhattan Bank, is willing to serve in the capacity of
Trustee hereunder; and
WHEREAS, Financial Security Assurance Inc. (the "Certificate Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Depositor, the Seller, the Servicer, and the Trustee
hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on the
Class A Certificates and the Class R Certificates in accordance with their
terms, all of the sums distributable under this Agreement with respect to the
Certificates and the performance of the covenants contained in this Agreement,
the Seller hereby bargains, sells, conveys, assigns and transfers to the
Depositor and the Depositor hereby bargains, sells, conveys, assigns and
transfers to the Trustee, in trust, without recourse and for the exclusive
benefit of the Owners of the Certificates, all of the Seller's right, title and
interest in and to any and all benefits accruing to the Seller from (a) the
Initial Home Equity Loans (other than any principal and interest payments due
thereon on or prior to July 1, 1996 whether or not received) listed in Schedule
I to this Agreement which the Seller is causing to be delivered to the Depositor
and the Depositor is causing to be delivered to the Trustee herewith and the
Subsequent Home Equity Loans (other than any principal and interest payments due
thereon on or prior to the related Subsequent Cut-Off Date whether or not
received) listed in Schedule I to any Subsequent Transfer Agreement, which the
Seller will cause to be delivered to the Depositor and the Depositor will cause
to be delivered to the Trustee (and all substitutions for such Home Equity Loans
as provided by Sections 3.03, 3.04 and 3.06), together with the related Home
Equity Loan documents and the Seller's interest in any Property which secured a
Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account, the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided
herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer) and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts
<PAGE>
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing) to pay the Certificates as specified herein
((a)-(c) above shall be collectively referred to herein as the "Trust Estate").
In addition to the foregoing, the Seller shall cause the Certificate Insurer to
deliver the Insurance Policy to the Trustee for the benefit of the Owners of the
Class A Certificates.
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and the Trustee agrees to perform the
duties herein to the best of its ability to the end that the interests of the
Owners may be adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or 8.08
hereof.
"Accrual Period": The calendar month immediately preceding the month in
which the Payment Date occurs. All calculations of interest on the Certificates
will be made on the basis of a 360-day year consisting of twelve 30 day months.
"Addition Notice": With respect to the transfer of Subsequent Home Equity
Loans to the Trust pursuant to Section 3.07 hereof, notice given not less than
ten Business Days prior to the related Subsequent Transfer Date of the
Depositor's designation of Subsequent Home Equity Loans to be sold to the Trust
and the aggregate Loan Balance of such Subsequent Home Equity Loans.
"Adjusted Pass-Through Rate": As of any date of determination thereof, a
rate equal to the sum of (a) the Weighted Average Pass-Through Rate and (b) any
portion of the Premium Amount and the Trustee Fee (calculated as a percentage of
the outstanding principal amount of the Certificates) then accrued and
outstanding.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Agreement of Limited Partnership": The Third Amended and Restated
Agreement of Limited Partnership of the Seller, dated as of November 1, 1995, as
at any time amended or modified.
"Annual Loss Percentage (Rolling Six Month)": As of any date of
determination thereof, a fraction expressed as a percentage, the numerator of
which is the Squeeze Test Loss Percentage for such date and the denominator of
which is 6.
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"Annual Loss Percentage (Rolling Twelve Month)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses as of the last day of the calendar
month of each Remittance Period for the twelve immediately preceding Remittance
Periods and the denominator of which is the Maximum Collateral Amount.
"Appraised Value": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Home Equity Loan,
or, in the case of a Home Equity Loan which is a purchase money mortgage, the
sales price of the Property at such time of origination, if such sales price is
less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any officer assigned to the Corporate Trust
Division (or any successor thereto), including any Vice President, Assistant
Vice President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement.
"Available Funds": As defined in Section 7.02(b) thereof.
"Available Funds Shortfall": As defined in Section 7.03(b)(ii)(A).
"Backup Servicer": The Trustee shall initially serve as Backup Servicer
hereunder in the event of the termination of the Servicer, subject to the right
of the Trustee to assign such duties to a party acceptable to the Certificate
Insurer and the Owners of the majority of the Percentage Interests of the Class
R Certificates.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in The City of New York, Tampa, Florida or
the city in which the Corporate Trust Office is located, are authorized or
obligated by law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02(a) hereof and maintained by the
Trustee.
"Capitalized Interest Requirement": With respect to the August 1996 Payment
Date, the excess, if any, of (x) the interest due on the Class A Certificates on
such Payment Date plus the Premium Amount (such amount expressed as a per annum
percentage of the aggregate Loan Balance of the Home Equity Loans) over (y) the
sum of (i) one month's interest on the aggregate Loan Balances of the Home
Equity Loans as of the close of business on the last day of the immediately
preceding Remittance Period, calculated at the Weighted Average Pass-Through
Rate as of such Payment Date and (ii) any Pre-Funding Account Earnings to be
transferred to the Certificate Account on such Payment Date pursuant to Section
7.4(d).
"Carry-Forward Amount": With respect to any Class of the Class A
Certificates and any Payment Date, the sum of (x) the amount, if any, by which
(i) the Current Interest for such Class for the immediately preceding Payment
Date exceeded (ii) the amount of the actual distribution made to the Owners of
the Class A Certificates on such immediately preceding Payment Date pursuant to
Section 7.03(b)(iv)(B) hereof plus (y) 30 days' interest on such excess at the
Pass-Through Rate for the related Class of Class A Certificate.
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"Certificate": Any one of the Class A Certificates or the Class R
Certificates, each representing the interests and the rights described in this
Agreement.
"Certificate Account": The segregated certificate account established in
accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "The Chase Manhattan Bank as Trustee on behalf of the Owners of
the IMC Home Equity Loan Trust 1996-3, Home Equity Loan Pass-Through
Certificates."
"Certificate Insurance Policy": The Certificate Guaranty Insurance Policy
(number 50489-N) dated July 30, 1996 issued by the Certificate Insurer for the
benefit of the Owners of the Class A Certificates pursuant to which the
Certificate Insurer guarantees Insured Payments.
"Certificate Insurer": Financial Security Assurance Inc., a stock insurance
company organized and created under the laws of the State of New York and any
successor thereto, as issuer of the Certificate Insurance Policy.
"Certificate Insurer Default": The existence and continuance of any of the
following:
(a) the Certificate Insurer fails to make a payment required under the
Certificate Insurance Policy in accordance with its terms; or
(b)(i) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Certificate Insurer in an
involuntary case or proceeding under any applicable United States federal
or state bankruptcy, insolvency, rehabilitation, reorganization or other
similar law or (B) a decree or order adjudging the Certificate Insurer as
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganizing, rehabilitation, arrangement, adjustment or composition of or
in respect of the Certificate Insurer under any applicable United States
federal or state law, or appointing a custodian, receiver, liquidator,
rehabilitator, assignee, trustee, sequestrator or other similar official of
the Certificate Insurer or of any substantial part of its property, or
ordering the winding-up or liquidation of its affairs, and the continuance
of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(ii) the commencement by the Certificate Insurer of a voluntary case
or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated as bankrupt or insolvent, or the
consent of the Certificate Insurer to the entry of a decree or order for
relief in respect of the Certificate Insurer in an involuntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency case or proceeding against the Certificate Insurer, or the
filing by the Certificate Insurer to the filing of such petition or to the
appointment of or the taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the
Certificate Insurer or of any substantial part of its property, or the
failure of the Certificate Insurer to pay debts generally as they become
due, or the admission by the Certificate Insurer in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Certificate Insurer in furtherance of any such
action.
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"Certificate Principal Balance": As of the Startup Day as to each of the
following Classes of Class A Certificates, the Certificate Principal Balances
thereof, as follows:
Class A-1 Certificates - $84,132,000
Class A-2 Certificates - $30,423,000
Class A-3 Certificates - $39,920,000
Class A-4 Certificates - $ 9,636,000
Class A-5 Certificates - $37,842,000
Class A-6 Certificates - $19,855,000
Class A-7 Certificates - $28,192,000
The Class R Certificates do not have a Certificate Principal Balance.
"Class": Any Class of the Class A Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the Class
A-5 Certificates, the Class A-6 Certificates or the Class A-7 Certificates.
"Class A Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A
Certificates less the aggregate of all amounts actually distributed on account
of the Class A Distribution Amount pursuant to Section 7.03(b)(iv) hereof with
respect to principal thereon on all prior Payment Dates; provided, however, that
solely for purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A Certificate Principal Balance shall not be reduced by any
principal amount paid to the Owner thereof from Insured Payments.
"Class A Certificate Termination Date": With respect to the Class A-1
Certificates, the Class A-1 Certificate Termination Date, with respect to the
Class A-2 Certificates, the Class A-2 Certificate Termination Date, with respect
to the Class A-3 Certificates, the Class A-3 Certificate Termination Date, with
respect to the Class A-4 Certificates, the Class A-4 Certificate Termination
Date, with respect to the Class A-5 Certificates, the Class A-5 Certificate
Termination Date, with respect to the Class A-6 Certificates, the Class A-6
Certificate Termination Date and with respect to the Class A-7 Certificates, the
Class A-7 Certificate Termination Date.
"Class A Distribution Amount": The Class A-1 Distribution Amount, the Class
A-2 Distribution Amount, the Class A-3 Distribution Amount, the Class A-4
Distribution Amount, the Class A-5 Distribution Amount, the Class A-6
Distribution Amount and the Class A-7 Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-1 Certificate, substantially in the form annexed hereto as
Exhibit A-1 authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein and each evidencing an interest designated
as a "regular interest" in the REMIC for purposes of the REMIC Provisions.
"Class A-1 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-1
Certificates less the aggregate of all amounts actually distributed with respect
to the Class A-1 Distribution Amount pursuant to Section 7.03(b)(iv) hereof with
respect to principal thereon on all prior Payment Dates; provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-1 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
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"Class A-1 Certificate Termination Date": The Payment Date on which the
Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment Date, 30 days'
interest accrued on the Class A-1 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-1
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-1
Certificates as it relates to interest previously paid on the Class A-1
Certificates, plus the Carry Forward Amount, if any, with respect to the Class
A-1 Certificates.
"Class A-1 Distribution Amount": With respect to any Payment Date, the sum
of (x) the Class A-1 Current Interest and (y) the Principal Distribution Amount
payable to the Owners of the Class A-1 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date.
"Class A-1 Pass-Through Rate": 7.00% per annum.
"Class A-2 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-2 Certificate, substantially in the form annexed hereto as
Exhibit A-2 authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein and each evidencing an interest designated
as a "regular interest" in the REMIC for purposes of the REMIC provisions.
"Class A-2 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-2
Certificates less the aggregate of all amounts actually distributed with respect
to the Class A-2 Distribution Amount pursuant to Section 7.03(b)(iv) hereof with
respect to principal thereon on all prior Payment Dates; provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-2 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment Date, 30 days'
interest accrued on the Class A-2 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-2
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-2
Certificates as it relates to interest previously paid on the Class A-2
Certificates plus the Carry-Forward Amount, if any, with respect to the Class
A-2 Certificates.
"Class A-2 Distribution Amount": With respect to any Payment Date, the sum
of (x) Class A-2 Current Interest and (y) the Principal Distribution Amount
payable to the Owners of the Class A-2 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date.
"Class A-2 Pass-Through Rate": 7.06% per annum.
"Class A-3 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-3 Certificate, substantially in the form annexed hereto as
Exhibit A-3 authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein and each evidencing an interest designated
as a "regular interest" in the REMIC for purposes of the REMIC provisions.
"Class A-3 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-3
Certificates less the aggregate of all amounts
6
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actually distributed with respect to the Class A-3 Distribution Amount pursuant
to Section 7.03(b)(iv) hereof with respect to principal thereon on all prior
Payment Dates; provided, however, that solely for the purposes of determining
the Certificate Insurer's rights, as subrogee, the Class A-3 Certificate
Principal Balance shall not be reduced by any principal amounts paid to the
Owners thereof from Insured Payments.
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, 30 days'
interest accrued on the Class A-3 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-3
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-3
Certificates as it relates to interest previously paid on the Class A-3
Certificates plus the Carry-Forward Amount, if any, with respect to the Class
A-3 Certificates.
"Class A-3 Distribution Amount": With respect to any Payment Date, the sum
of (x) Class A-3 Current Interest and (y) the Principal Distribution Amount
payable to the Owners of the Class A-3 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date.
"Class A-3 Pass-Through Rate": 7.27% per annum.
"Class A-4 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-4 Certificate, substantially in the form annexed hereto as
Exhibit A-4 authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein and each evidencing an interest designated
as a "regular interest" in the REMIC for purposes of the REMIC provisions.
"Class A-4 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-4
Certificates less the aggregate of all amounts actually distributed with respect
to the Class A-4 Distribution Amount pursuant to Section 7.03(b)(iv) hereof with
respect to principal thereon on all prior Payment Dates; provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-4 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, 30 days'
interest accrued on the Class A-4 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-4
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-4
Certificates as it relates to interest previously paid on the Class A-4
Certificates plus the Carry-Forward Amount, if any, with respect to the Class
A-4 Certificates.
"Class A-4 Distribution Amount": With respect to any Payment Date, the sum
of (x) Class A-4 Current Interest and (y) the Principal Distribution Amount
payable to the Owners of the Class A-4 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date.
"Class A-4 Pass-Through Rate": 7.39% per annum.
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"Class A-5 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-5 Certificate, substantially in the form annexed hereto as
Exhibit A-5 authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein and each evidencing an interest designated
as a "regular interest" in the REMIC for purposes of the REMIC provisions.
"Class A-5 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-5
Certificates less the aggregate of all amounts actually distributed with respect
to the Class A-5 Distribution Amount pursuant to Section 7.03(b)(iv) hereof with
respect to principal thereon on all prior Payment Dates; provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-5 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment Date, 30 days'
interest accrued on the Class A-5 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-5
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-5
Certificates as it relates to interest previously paid on the Class A-5
Certificates plus the Carry-Forward Amount, if any, with respect to the Class
A-5 Certificates.
"Class A-5 Distribution Amount": With respect to any Payment Date, the sum
of (x) Class A-5 Current Interest and (y) the Principal Distribution Amount
payable to the Owners of the Class A-5 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date.
"Class A-5 Pass-Through Rate": 7.56% per annum.
"Class A-6 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-6 Certificate, substantially in the form annexed hereto as
Exhibit A-6 authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein and each evidencing an interest designated
as a "regular interest" in the REMIC for purposes of the REMIC provisions.
"Class A-6 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-6
Certificates less the aggregate of all amounts actually distributed with respect
to the Class A-6 Distribution Amount pursuant to Section 7.03(b)(iv) hereof with
respect to principal thereon on all prior Payment Dates; provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-6 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-6 Certificate Termination Date": The Payment Date on which the
Class A-6 Certificate Principal Balance is reduced to zero.
"Class A-6 Current Interest": With respect to any Payment Date, 30 days'
interest accrued on the Class A-6 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-6
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-6
Certificates as it relates to interest previously paid on the Class A-6
Certificates plus the Carry-Forward Amount, if any, with respect to the Class
A-6 Certificates.
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"Class A-6 Distribution Amount": With respect to any Payment Date, the sum
of (x) Class A-6 Current Interest and (y) the Principal Distribution Amount
payable to the Owners of the Class A-6 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date.
"Class A-6 Pass-Through Rate": 7.83% per annum.
"Class A-7 Certificate": Any one of the Certificates designated on the face
thereof as a Class A-7 Certificate, substantially in the form annexed hereto as
Exhibit A-7 authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein and each evidencing an interest designated
as a "regular interest" in the REMIC for purposes of the REMIC provisions.
"Class A-7 Certificate Principal Balance": As of any time of determination,
the Certificate Principal Balance as of the Startup Day of all Class A-7
Certificates less the aggregate of all amounts actually distributed with respect
to the Class A-7 Distribution Amount pursuant to Section 7.03(b)(iv) hereof with
respect to principal thereon on all prior Payment Dates; provided, however, that
solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-7 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-7 Certificate Termination Date": The Payment Date on which the
Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, 30 days'
interest accrued on the Class A-7 Certificate Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Class A-7
Pass-Through Rate plus the Preference Amount owed to the Owners of the Class A-7
Certificates as it relates to interest previously paid on the Class A-7
Certificates plus the Carry-Forward Amount, if any, with respect to the Class
A-7 Certificates.
"Class A-7 Distribution Amount": With respect to any Payment Date, the sum
of (x) Class A-7 Current Interest and (y) the Principal Distribution Amount
payable to the Owners of the Class A-7 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date.
"Class A-7 Pass-Through Rate": 8.05% per annum.
"Class R Certificate": Any one of the Certificates designated on the face
thereof as a Class R Certificate, substantially in the form annexed hereto as
Exhibit C, authenticated and delivered by the Trustee, representing the right to
distributions as set forth herein, and evidencing an interest designated as the
"residual interest" in the REMIC for the purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on which the
aggregate Loan Balances of the Home Equity Loans has declined to $25,000,000 or
less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Corporate Trust Office": The principal office of the Trustee at The Chase
Manhattan Bank, 450 W. 33rd Street, 15th Floor, New York, NY 10001, Attention:
Advanced Structured Products Group.
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"Co-Trustee": Chemical Bank New Jersey, N.A. or any successor thereto.
"Co-Trustee Agreement": The Co-Trustee Agreement dated as of July 1, 1996
between the Trustee and the Co-Trustee.
"Coupon Rate": The rate of interest borne by each Note.
"Cram Down Loss": With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Home Equity Loan, the
amount of such reduction. A "Cram Down Loss" shall be deemed to have occurred on
the date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof, the
aggregate of all Realized Losses since the Startup Day as a percentage of the
Maximum Collateral Amount.
"Cumulative Loss Test": The Cumulative Loss Test for each period indicated
below is satisfied if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below:
Cumulative Loss
Period Percentage
------ ----------
July 2, 1996 - July 1, 1998 1.00%
July 2, 1998 - July 1, 1999 1.50%
July 2, 1999 - July 1, 2000 1.75%
July 2, 2000 - and thereafter 2.00%
"Current Interest": With respect to any Payment Date, the sum of (a) the
Class A-1 Current Interest, (b) the Class A-2 Current Interest, (c) the Class
A-3 Current Interest, (d) the Class A-4 Current Interest, (e) the Class A-5
Current Interest, (f) the Class A-6 Current Interest and (g) the Class A-7
Current Interest.
"Custodial Agreement": The Custodial Agreement dated as of July 1, 1996
among the Custodian, the Trustee, the Depositor, the Seller and the Servicer.
"Custodian": The First National Bank of Boston, as Custodian on behalf of
the Trustee pursuant to the Custodial Agreement.
"Cut-Off Date": As of the close of business on July 1, 1996.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due thereon
is not made by the Mortgagor by the close of business on the related Due Date. A
Home Equity Loan is "30 days Delinquent" if such payment has not been received
by the close of business on the corresponding day of the month immediately
succeeding the month in which such payment was due, or, if there is no such
corresponding day (e.g., as when a 30-day month follows a 31-day month in which
a payment was due
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on the 31st day of such month) then on the last day of such immediately
succeeding month. Similarly for "60 days Delinquent," "90 days Delinquent" and
so on.
"Delivery Order": The delivery order in the form set forth as Exhibit H
hereto and delivered by the Depositor to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
"Depositor": IMC Securities, Inc., a Delaware corporation, or any successor
thereto.
"Depository": The Depository Trust Company, 7 Hanover Square, New York, New
York, 10004, and any successor Depository named herein.
"Designated Depository Institution": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Certificate
Insurer, acting in its fiduciary capacity, having combined capital and surplus
of at least $50,000,000; provided, however, that if the Principal and Interest
Account is not maintained with the Trustee, (i) such institution shall have a
long-term debt rating of at least "A" by Standard & Poor's and "A2" by Moody's
and (ii) the Servicer shall provide the Trustee and the Certificate Insurer with
a statement, which the Trustee will send to the Owners, identifying the location
and account information of the Principal and Interest Account upon a change in
the location of such account.
"Determination Date": With respect to each Payment Date, the fifth Business
Day next preceding such Payment Date.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or other
financial institution for which the Depository holds Class A Certificates from
time to time as a securities depository.
"Disqualified Organization": "Disqualified Organization" shall have the
meaning set forth from time to time in the definition thereof at Section
860E(e)(5) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Due Date": With respect to any Home Equity Loan, the date on which the
Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Note exclusive of any days of grace.
"Eligible Investments": Those investments so designated pursuant to Section
7.07 hereof.
"Excess Subordinated Amount": With respect to any Payment Date, the excess,
if any, of (x) the Subordinated Amount that would apply on such Payment Date
after taking into account the payment of the Class A Distribution Amount on such
Payment Date (except for any distributions of Subordination Reduction Amounts on
such Payment Date), over (y) the Specified Subordinated Amount for such Payment
Date; provided, however, that the Excess Subordinated Amount for the period
beginning with the Payment Date in August 1998 and ending on the Payment Date in
February 1999 shall be limited to the amount obtained using the following
formula:
(n-24)/6 X E.S.A.
Where "n" is equal to the number of Payment Dates that have occurred since the
Startup Day (i.e., in August 1998, n=25) and "E.S.A." is equal to the amount of
Excess Subordinated Amount that would otherwise be obtained for such Payment
Date without regard to the provisions of this proviso.
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"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to Section 3.06
hereof pertaining to a particular Home Equity Loan and any additional documents
required to be added to the File pursuant to this Agreement.
"Final Certification": As defined in Section 3.06(c) hereof.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Recovery Determination": With respect to any defaulted Home Equity
Loan or REO Property (other than a Home Equity Loan purchased by the Seller, the
Depositor or the Servicer), a determination made by the Servicer that all
Liquidation Proceeds which the Servicer, in its reasonable business judgment
expects to be finally recoverable in respect thereof have been so recovered or
that the Servicer believes in its reasonable business judgment the cost of
obtaining any additional recoveries therefrom would exceed the amount of such
recoveries. The Servicer shall maintain records of each Final Recovery
Determination.
"Final Scheduled Payment Date": As set out in Section 2.08(k) hereof.
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"FNMA": The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
"FNMA Guide": FNMA's Servicing Guide, as the same may be amended by FNMA
from time to time, and the Servicer shall elect to apply such amendments in
accordance with Section 8.01 hereof.
"Funding Period": The period commencing on the Startup Day and ending on
the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account (exclusive of any investment earnings) is less than
$100,000, (ii) the date on which the Servicer may be removed pursuant to Section
8.20(a) hereof and (iii) July 31, 1996.
"Highest Lawful Rate": As defined in Section 12.13 hereof.
"Home Equity Loans": Such home equity loans (including Initial Home Equity
Loans and Subsequent Home Equity Loans) transferred and assigned to the Trust
pursuant to Section 3.05(a) and 3.07(a) hereof, together with any Qualified
Replacement Mortgages substituted therefor in accordance with this Agreement, as
from time to time are held as a part of the Trust Estate, the Home Equity Loans
originally so held being identified in the Schedules of Home Equity Loans. The
term "Home Equity Loan" includes the terms "First Mortgage Loan" and "Second
Mortgage Loan". The term "Home Equity Loan" includes any Home Equity Loan which
is Delinquent, which relates to a foreclosure or which relates to a Property
which is REO Property prior to such Property's disposition by the Trust. Any
home
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equity loan which, although intended by the parties hereto to have been, and
which purportedly was, transferred and assigned to the Trust by the Depositor,
in fact was not transferred and assigned to the Trust for any reason whatsoever,
including, without limitation, the incorrectness of the statement set forth in
Section 3.04(b)(x) hereof with respect to such home equity loan, shall
nevertheless be considered a "Home Equity Loan" for all purposes of this
Agreement.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Initial Home Equity Loans": The Home Equity Loans to be conveyed to the
Trust by the Depositor on the Startup Day.
"Initial Specified Subordinated Amount": $6,000,000.
"Insurance Agreement": The Insurance and Indemnity Agreement dated as of
July 1, 1996, among the Depositor, the Seller, the Servicer and the Certificate
Insurer, as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary mortgage insurance
policy relating to a Home Equity Loan plus any amount remitted under Section
8.11 hereof.
"Insured Payment": As to any Payment Date, the sum of (i) any shortfall in
the amount required to pay the Subordination Deficit for such Payment Date from
a source other than the Certificate Insurance Policy, (ii) any shortfall in the
amount required to pay the Current Interest for such Payment Date from a source
other than the Certificate Insurance Policy and (iii) any shortfall in the
amount required to pay the Preference Amount from a source other than the
Certificate Insurance Policy.
"Interest Remittance Amount": As of any Monthly Remittance Date, the sum,
without duplication, of (i) all interest due during the related Remittance
Period with respect to the Home Equity Loans, (ii) all Compensating Interest
paid by the Servicer on such Monthly Remittance Date and (iii) the portion of
the Substitution Amount relating to interest on the Home Equity Loans.
"Late Payment Rate": With respect to any Payment Date, the Weighted Average
Pass-Through Rate for such Payment Date. The Late Payment Rate shall be computed
on the basis of a year of 360 days calculating the actual number of days
elapsed.
"Liquidated Loan": A Home Equity Loan as to which a Final Recovery
Determination has been made.
"Liquidation Proceeds": With respect to any Liquidated Loan, all amounts
(including the proceeds of any Insurance Policy) recovered by the Servicer in
connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any date of
determination, the actual outstanding principal balance thereof on the Cut-Off
Date with respect to the Initial Home Equity Loans or relevant Subsequent
Cut-Off Date with respect to the Subsequent Home Equity Loans, less any
principal payments relating to such Home Equity Loan included in previous
Monthly Remittance Amounts, provided, however, that the Loan Balance for any
Home Equity Loan that has become a Liquidated Loan shall be zero as of the first
day of the Remittance Period following the Remittance Period in which such Home
Equity Loan becomes a Liquidated Loan, and at all times thereafter.
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"Loan Purchase Price": With respect to any Home Equity Loan purchased from
the Trust on or prior to a Monthly Remittance Date pursuant to Section 3.03,
3.04, 3.06(b) or 8.10(b) hereof, an amount equal to the Loan Balance of such
Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus all accrued and unpaid interest on such Home Equity
Loan at the Coupon Rate to but not including the date of such purchase together
with (without duplication) the aggregate amounts of (i) all unreimbursed
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan, (ii) all Delinquency Advances which the Servicer has
theretofore failed to remit with respect to such Home Equity Loan and (iii) all
reimbursed Delinquency Advances to the extent that reimbursement is not made
from the Mortgagor or from Liquidation Proceeds from the respective Home Equity
Loan.
"Loan-to-Value Ratio": As of any particular date (i) with respect to any
First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage obtained
by dividing the Appraised Value as of the date of origination of such Second
Mortgage Loan into an amount equal to the sum of (a) the remaining principal
balance of the Senior Lien note relating to such First Mortgage Loan as of the
date of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Note relating to such Second Mortgage Loan.
"Maximum Collateral Amount": $250,000,000.
"Monthly Payment": With respect to any Home Equity Loan and any Remittance
Period, the payment of principal, if any, and interest due on the Due Date in
such Remittance Period pursuant to the related Note.
"Monthly Remittance Amount": As of any Monthly Remittance Date, the sum of
(i) the Interest Remittance Amount for such Monthly Remittance Date and (ii) the
Principal Remittance Amount for such Monthly Remittance Date.
"Monthly Remittance Date": The 18th day of each month, or if such day is
not a Business Day, on the next succeeding Business Day, commencing in August
1996.
"Moody's": Moody's Investors Service Inc. or any successor thereto.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgage Portfolio Performance Test": The Mortgage Portfolio Performance
Test is satisfied for any date of determination thereof if (x) the 60+
Delinquency Percentage (Rolling Six Month) is less than 13.5%, (y) the O/C Loss
Test is satisfied and (z) the Annual Loss Percentage (Rolling Twelve Month) for
the twelve month period immediately preceding the date of determination thereof
is not greater than or equal to 1.25%.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation Proceeds
net of expenses incurred by the Servicer (including unreimbursed Servicing
Advances) in connection with the liquidation of any defaulted Home Equity Loan
and unreimbursed Delinquency Advances relating to such Home
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Equity Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"Net Monthly Excess Cashflow": As defined in Section 7.03(b)(iii) hereof.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"O/C Loss Test": The O/C Loss Test for any period set out below is
satisfied if the Cumulative Loss Percentage during such period does not exceed
the percentage set out for such period below:
Cumulative Loss
Period Percentage
------ ----------
July 2, 1996 - July 1, 1997 0.75%
July 2, 1997 - July 1, 1998 1.25%
July 2, 1998 - July 1, 1999 1.75%
July 2, 1999 - July 1, 2000 2.00%
July 2, 2000 - and thereafter 2.50%
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Trustee.
"Operative Documents": Collectively, this Agreement, the Certificate
Insurance Policy, the Certificates and the Insurance Agreement.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all
Initial Home Equity Loans as of the Cut-Off Date, which is $249,885,488.31.
"Original Pre-Funded Amount": $114,511.69.
"Outstanding": With respect to all Certificates of a Class, as of any date
of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or delivered
to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final payment
of money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent in trust for the Owners of such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Trustee is presented that any such
Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or stolen for
which replacement Certificates have been issued as provided for in Section
5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned to
the Trustee.
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"Overfunded Interest Amount": With respect to each Subsequent Transfer
Date, the sum, if any of the difference between (i) interest accruing from the
Subsequent Cut-Off Date to July 31, 1996 on the aggregate Loan Balances of the
Subsequent Home Equity Loans acquired by the Trust on such Subsequent Transfer
Date, calculated at a rate equal to the sum of (a) the Weighted Average
Pass-Through Rate and (b) the rate at which the Premium Amount is determined and
(ii) interest accruing from the Subsequent Cut-Off Date to July 31, 1996 on the
aggregate Loan Balances of the Subsequent Home Equity Loans acquired by the
Trust on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date.
"Owner": The Person in whose name a Certificate is registered in the
Register, and the Certificate Insurer, to the extent described in Section 5.06
and Section 7.03(e) hereof, respectively.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or any
other Person that meets the eligibility standards for the Paying Agent specified
in Section 12.15 hereof and is authorized by the Trustee and the Depositor to
make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day. The first Payment Date will be August 26,
1996.
"Percentage Interest": With respect to a Class of Class A Certificate, a
fraction, expressed as a decimal, the numerator of which is the initial Class A
Certificate Principal Balance represented by such Class A Certificate and the
denominator of which is the aggregate initial Class A Certificate Principal
Balance represented by all the Class A Certificates of such Class. With respect
to the Class R Certificates, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such Certificate, all of
which shall total 100% with respect to the related Class.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preference Amount": With respect to the Class A Certificates, means any
amounts of Current Interest and principal included in previous distributions of
the Class A Distribution Amount to the Owners of the Class A Certificates which
are recovered from such Owners as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction and which
have not theretofore been repaid to such Owners and for which there has been
full compliance with the provisions of Section 13.02.
"Pre-Funded Amount": With respect to any Determination Date, the amount
remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in accordance
with Section 7.02(a) hereof and maintained by the Trustee.
"Pre-Funding Account Earnings": With respect to the August 26, 1996 Payment
Date, the actual investment earnings earned during the period from the Startup
Day through July 31, 1996 (inclusive) on the Pre-Funding Account during such
period as calculated by the Trustee pursuant to Section 3.07(d) hereof.
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"Premium Amount": The amount payable monthly to the Certificate Insurer on
each Payment Date in an amount equal to 0.15% per annum, on the Certificate
Principal Balance as of the related Determination Date.
"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment, Substitution Amounts, the
portion of the purchase price of any Home Equity Loan purchased from the Trust
pursuant to Section 3.03, 3.04, 3.06(b) or 8.10(b) hereof representing principal
and the proceeds of any Insurance Policy which are to be applied as a payment of
principal on the related Home Equity Loan shall be deemed to be Prepayments for
all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in connection
with a foreclosed Home Equity Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Distribution Amount": With respect to the Class A Certificates
for any Payment Date, the lesser of:
(a) the Total Available Funds plus any Insured Payment minus the
Current Interest for such Payment Date; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount with respect to principal owed to the
Owners of the related Class A Certificates that remains unpaid as of
such Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date thereof,
to the extent actually received by the Trustee during the related
Remittance Period and any Prepayments made by the Mortgagors and
actually received by the Trustee during the related Remittance Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance
is actually received by the Trustee during the related Remittance
Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of a
Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Trustee on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the Trustee,
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(F) the amount of any Subordination Deficit for such Payment
Date,
(G) the principal portion of the proceeds received by the Trustee
from any termination of the Trust (to the extent such proceeds related
to principal),
(H) with respect to the Payment Date immediately following the
last day of the Funding Period, all amounts remaining on deposit in
the Pre-Funding Account to the extent not used to purchase Subsequent
Home Equity Loans during such Funding Period, and
(I) the amount of any Subordination Increase Amount for such
Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Subordination Reduction Amount for such Payment
Date.
"Principal Remittance Amount": As of any Monthly Remittance Date, the sum,
without duplication, of (i) the principal actually collected by the Servicer
with respect to Home Equity Loans during the related Remittance Period, (ii) the
Loan Balance of each such Home Equity Loan that was purchased from the Trustee
on or prior to such Monthly Remittance Date, to the extent such Loan Balance was
actually deposited in the Principal and Interest Account, (iii) any Substitution
Amounts relating to principal delivered by the Seller in connection with a
substitution of a Home Equity Loan, to the extent such Substitution Amounts were
actually deposited in the Principal and Interest Account on or prior to such
Monthly Remittance Date, and (iv) the principal portion of all Net Liquidation
Proceeds actually collected by the Servicer with respect to such Home Equity
Loans during the related Remittance Period (to the extent such Net Liquidation
Proceeds related to principal).
"Prohibited Transaction": "Prohibited Transaction" shall have the meaning
set forth from time to time in the definition thereof at Section 860F(a)(2) of
the Code (or any successor statute thereto) and applicable to the Trust.
"Property": The underlying property securing a Home Equity Loan.
"Prospectus": The Depositor's Prospectus dated July 23, 1996 constituting
part of the Registration Statement.
"Prospectus Supplement": The IMC Home Equity Loan Trust 1996-3 Prospectus
Supplement dated July 23, 1996 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 and 3.06(b) hereof, which (i) has a
Coupon Rate at least equal to the Coupon Rate
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of the Home Equity Loan being replaced; provided, however, that if the Home
Equity Loan being replaced is an Underwater Loan, such Qualified Replacement
Mortgage will not have a Coupon Rate less than 8.72%, (ii) is of the same
property type or is a single family dwelling and the same occupancy status or is
a primary residence as the Home Equity Loan being replaced, (iii) shall mature
no later than August 1, 2026 (iv) has a Loan-to-Value Ratio as of the
Replacement Cut-Off Date no higher than the Loan-to-Value Ratio of the replaced
Home Equity Loan at such time, (v) shall be of the same or higher credit quality
classification (determined in accordance with the Seller's credit underwriting
guidelines set forth in the Seller's underwriting manual) as the Home Equity
Loan which such Qualified Replacement Mortgage replaces, (vi) shall be a First
Mortgage Loan if the Home Equity Loan which such Qualified Replacement Mortgage
replaces was a First Mortgage Loan, (vii) has a Loan Balance as of the related
Replacement Cut-Off Date equal to or less than the Loan Balance of the replaced
Home Equity Loan as of such Replacement Cut-Off Date, (viii) shall not provide
for a "balloon" payment if the related Home Equity Loan did not provide for a
"balloon" payment (and if such related Home Equity Loan provided for a "balloon"
payment, such Qualified Replacement Mortgage shall have an original maturity of
not less than the original maturity of such related Home Equity Loan), (ix)
shall be a fixed rate Home Equity Loan and (x) satisfies the criteria set forth
from time to time in the definition thereof at Section 860G(a)(4) of the Code
(or any successor statute thereto) and applicable to the Trust. In the event
that one or more home equity loans are proposed to be substituted for one or
more Home Equity Loans, the Certificate Insurer may allow the foregoing tests to
be met on a weighted average basis or other aggregate basis acceptable to the
Certificate Insurer, as evidenced by a written approval delivered to the Trustee
by the Certificate Insurer, except that the requirements of clauses (i), (iv),
(ix) and (x) hereof must be satisfied as to each Qualified Replacement Mortgage.
"Rating Agencies": Collectively, Moody's and Standard & Poor's or any
successors thereto.
"Realized Loss": As to any Liquidated Loan (or, in the case of a Cram Down
Loss a Home Equity Loan that is not a Liquidated Loan), the amount (not less
than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as of
the date of liquidation, (y) the amount of accrued but unpaid interest thereon
(to the extent that there are no outstanding advances for such interest by the
Servicer) and (z) the amount of any Cram Down Loss with respect thereto is in
excess of (B) the Net Liquidation Proceeds realized thereon applied in reduction
of such Loan Balance.
"Record Date": With respect to each Payment Date, the last day of the
calendar month immediately preceding the calendar month in which such Payment
Date occurs.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the Depositor
with the Securities and Exchange Commission (Registration Number 333-4911),
including all amendments thereto and including the Prospectus relating to the
Class A Certificates.
"Reimbursement Amount": As of any Payment Date, the sum of (x)(i) all
Insured Payments previously paid to the Trustee by the Certificate Insurer and
not previously repaid to the Certificate Insurer pursuant to Section 7.03(b)(ii)
hereof plus (ii) interest accrued on each such Insured Payment not previously
repaid calculated pursuant to the terms of the Insurance Agreement and (y)(i)
any amounts then due and owing to the Certificate Insurer under the Insurance
Agreement (including, without limitation,
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any unpaid Premium Amount relating to such Payment Date) plus (ii) interest on
such amounts at the Late Payment Rate. The Certificate Insurer shall notify the
Trustee, the Depositor and the Seller of the amount of any Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and revenue rulings promulgated thereunder, as the foregoing may be
in effect from time to time.
"Remittance Period": With respect to each Monthly Remittance Date, the
period commencing the second day of the calendar month immediately preceding
such Monthly Remittance Date and ending the first day of the calendar month in
which such Monthly Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the Trust
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository to
effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"Residual Net Monthly Excess Cashflow": With respect to any Payment Date,
the aggregate Net Monthly Excess Cashflow, if any, remaining after the making of
all applications, transfers and disbursements described in Sections 7.03(b)(i),
(ii) and (iii) and 7.03(b)(iv) hereof.
"Schedule of Home Equity Loans": The schedules of Home Equity Loans with
respect to the Initial Home Equity Loans listing each Initial Home Equity Loan
to be conveyed on the Startup Day and with respect to Subsequent Home Equity
Loans listing each Subsequent Home Equity Loan conveyed to the Trust as of each
Subsequent Transfer Date. Such Schedules of Home Equity Loans shall identify
each Home Equity Loan by the Servicer's loan number, borrower's name and address
(including the state and zip code) of the Property and shall set forth as to
each Home Equity Loan the lien status thereof, the Loan-to-Value Ratio and the
Loan Balance as of the Cut-Off Date, the Coupon Rate thereof, the original Loan
Balance thereof, the current scheduled monthly payment of principal and interest
and the maturity date of the related Note, the property type, occupancy status,
Appraised Value and the original term-to-maturity thereof and whether or not
such Home Equity Loan (including related Note) has been modified.
"Scheduled Principal Payment": As of any date of calculation, with respect
to a Home Equity Loan, the then stated scheduled monthly installment of
principal payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date), without taking into account any Prepayment
made on such Home Equity Loan during the then-current Remittance Period.
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"Second Mortgage Loan": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": Industry Mortgage Company, L.P., a Delaware limited partnership.
"Senior Lien": With respect to any Second Mortgage Loan, the home equity
loan relating to the corresponding Property having a first priority lien.
"Servicer": Industry Mortgage Company, L.P., a Delaware limited
partnership, and its permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential home equity loans.
"Servicer Loss Test": The Servicer Loss Test for any period set out below
is satisfied, if the Cumulative Loss Percentage for such period does not exceed
the percentage set out for such period below (provided, that for purposes of the
calculation of the Servicer Loss Test, Realized Losses attributable solely to
Cram Down Losses should be excluded from the calculation of Cumulative Loss
Percentage):
Cumulative Loss
Period Percentage
------ ----------
July 2, 1996 - July 1, 1997 1.00%
July 2, 1997 - July 1, 1998 1.50%
July 2, 1998 - July 1, 1999 2.25%
July 2, 1999 - July 1, 2000 3.00%
July 2, 2000 - and thereafter 3.75%
"Servicer Termination Event": As defined in Section 8.20(a) hereof.
"Servicer Termination Test": The Servicer Termination Test is satisfied for
any date of determination thereof, if (x) the 60+ Delinquency Percentage
(Rolling Six Month) is less than 15.75%, (y) the Servicer Loss Test is satisfied
and (z) the Annual Loss Percentage (Rolling Twelve Month) for the twelve month
period immediately preceding the date of determination thereof is not greater
than 1.75%.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount retained
by the Servicer as compensation for servicing and administration duties relating
to such Home Equity Loan pursuant to Section 8.15 and equal to one month's
interest at 0.50% per annum of the then outstanding principal balance of such
Home Equity Loan as of the first day of each Remittance Period payable on a
monthly basis[; provided, however, that with respect to any Underwater Loan, as
of any Payment Date (i) the sum of (x) the Weighted Average Pass-Through Rate
and (y) the annualized rate at which the Servicing Fee, Premium Amount and
Trustee Fee would otherwise be calculated exceeds (ii) the weighted average
Coupon Rate of the Underwater Loans for the related Remittance Period, then the
Servicing Fee for such Underwater Loans for such Payment Date shall be reduced
by an amount equal to the product of (a) one-twelfth of such excess (not to
exceed 25 basis points on a per annum basis) and (b) the aggregate Loan
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Balance of the Underwater Loans as of the opening of business of the first day
of such Remittance Period divided by the aggregate Loan Balance of the Home
Equity Loans]; provided, however, that if a successor Servicer is appointed
pursuant to Section 8.20 hereof, the Servicing Fee shall be the amount as agreed
upon by the Trustee, the Certificate Insurer, the successor Servicer and the
Owners of a majority of the Percentage Interests of the Class R Certificates,
such amount not to exceed 0.50% per annum.
"60-Day Delinquent Loan": With respect to any Determination Date, all REO
Properties and each Home Equity Loan, with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, two
months (calculated from Due Date with respect to such Home Equity Loan to Due
Date) or more past due (without giving effect to any grace period).
"60+ Delinquency Percentage (Rolling Six Month)": With respect to any
Determination Date, the average of the percentage equivalents of the fractions
determined for each of the six immediately preceding Remittance Periods the
numerator of each of which is equal to the aggregate Loan Balance of 60-Day
Delinquent Loans as of the end of such Remittance Period and the denominator of
which is the Loan Balance of all of the Home Equity Loans as of the end of such
Remittance Period.
"Specified Subordinated Amount": With respect to a Payment Date (x) prior
to the Stepdown Date, the amount which is equal to 2.4% of the Maximum
Collateral Amount and (y) after the Stepdown Date (i) if the Stepdown
Requirement is satisfied, the lesser of (A) the greater of (i) an amount equal
to 4.8% of the then outstanding aggregate Loan Balance of the Home Equity Loans
and (ii) 0.50% of the Maximum Collateral Amount or (B) the Initial Specified
Subordinated Amount or (ii) if the Stepdown Requirement is not satisfied, the
amount which is equal to 2.4% of the Maximum Collateral Amount; provided,
however, that if on any Payment Date, the Spread Squeeze Test is not satisfied
and the Spread Squeeze Rate is less than 3.00% the Specified Subordinated Amount
shall be increased by an amount equal to (x) three times (y) the excess of (i)
3.00% per annum over (ii) the Spread Squeeze Rate multiplied by (z) the then
outstanding aggregate Loan Balance of the Home Equity Loans; provided, further
however, that if on any Payment Date the Mortgage Portfolio Performance Test is
not satisfied, then the Specified Subordinated Amount will be unlimited during
the period that such Mortgage Portfolio Performance Test is not satisfied;
provided, further, however, that on the Payment Date in August, 1996, the
Certificate Insurer may in a written notice provided to the Trustee, the Seller,
the Depositor and the Owners increase the amounts provided for in this
definition to maintain the rating assigned to the Class A Certificates by the
Rating Agencies without regard to the Certificate Insurance Policy as of the
Startup Day.
"Spread Squeeze Rate": On any date of determination thereof is equal to the
excess of (x) the weighted average Coupon Rate of the Home Equity Loans over (y)
the sum of (i) the rates at which the Servicing Fee, Trustee Fee, Trustee
Reimbursable Expenses and Premium Amount are calculated and (ii) the Weighted
Average Pass-Through Rate.
"Spread Squeeze Test": The Spread Squeeze Test is satisfied for any date of
determination thereof if (x) the 60+ Delinquency Percentage (Rolling Six Month)
is less than 9.50% and (y) the Annual Loss Percentage (Rolling Six Month) for
the six-month period immediately preceding the date of determination thereof is
not greater than or equal to 1.75%.
"Squeeze Test Loss Percentage": As of any date of determination thereof,
twelve times the fraction resulting from dividing (x) the sum of the Realized
Losses reported in each of the six immediately preceding Remittance Periods by
(y) the sum of the Loan Balances as of the end of each of such immediately
preceding Remittance Periods.
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"Standard & Poor's": Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies or any successor thereto.
"Startup Day": July 30, 1996.
"Stepdown Date": The Determination Date occurring in August 1998.
"Stepdown Requirement": The Stepdown Requirement is satisfied on any date
of determination thereof if, as of such date of determination, (x) the 60+
Delinquency Percentage (Rolling Six Month) is less than 11.25%, (y) the
Cumulative Loss Test is satisfied and (z) the Annual Loss Percentage (Rolling
Twelve Month) for the twelve month period immediately preceding the date of
determination thereof is not greater than or equal to 0.75%.
"Subordinated Amount": As of any Payment Date, the excess, if any, of (x)
the sum of (i) the aggregate Loan Balances of the Home Equity Loans as of the
close of business on the last day of the immediately proceeding Remittance
Period and (ii) any amount on deposit in the Pre-Funding Account at such time
exclusive of any Pre-Funding Account Earnings over (y) the Certificate Principal
Balance of the Class A Certificates for such Payment Date (after taking into
account the payment of the Principal Distribution Amount thereon (except for any
Subordination Deficit and Subordination Increase Amount) on such Payment Date).
"Subordination Deficiency Amount": With respect to any Payment Date, the
excess, if any, of (i) the Specified Subordinated Amount applicable to such
Payment Date over (ii) the Subordinated Amount applicable to such and Payment
Date prior to taking into account the payment of any related Subordination
Increase Amounts on such Payment Date.
"Subordination Deficit": With respect to any Payment Date, the amount, if
any, by which (x) the Class A Certificate Principal Balances, after taking into
account the payment of the Class A Distribution Amount on such Payment Date
(except for any Subordination Deficit Subordination Increase Amount), exceeds
(y) the sum of (a) the aggregate Loan Balances of the Home Equity Loans as of
the close of business on the last day of the related Remittance Period and (b)
the amount, if any, on deposit in the Pre-Funding Account on such Payment Date
exclusive of any Pre-Funding Account Earnings.
"Subordination Increase Amount": With respect to any Payment Date, the
lesser of (i) the related Subordination Deficiency Amount as of such Payment
Date (after taking into account the payment of the Class A Distribution Amount
on such Payment Date (except for any Subordination Increase Amount)) and (ii)
the aggregate amount of Net Monthly Excess Cashflow allocated pursuant to
Section 7.03(b)(iii)(A) on such Payment Date.
"Subordination Reduction Amount": With respect to any Payment Date, an
amount equal to the lesser of (x) the Excess Subordinated Amount for such
Payment Date and (y) the Principal Remittance Amount for the related Remittance
Period.
"Subsequent Cut-Off Date": The beginning of business on the date specified
in a Subsequent Transfer Agreement with respect to those Subsequent Home Equity
Loans which are transferred and assigned to the Trust pursuant to the related
Subsequent Transfer Agreement.
"Subsequent Home Equity Loans": The Home Equity Loans sold to the Trust
pursuant to Section 3.07 hereof, which shall be listed on the Schedule of Home
Equity Loans attached to a Subsequent Transfer Agreement.
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"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement dated
as of a Subsequent Transfer Date executed by the Trustee, the Depositor and the
Seller substantially in the form of Exhibit D hereto, by which Subsequent Home
Equity Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": The date specified in each Subsequent Transfer
Agreement.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer and
any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tax Matters Certificate": The certificate issued to Chemical Bank, as Tax
Matters Person representing the Tax Matters Person Residual Interest.
"Tax Matters Person": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the Class R
Certificates which shall be issued to and held by Chemical Bank throughout the
term hereof unless another person shall accept an assignment of either such
interest and the designation of Tax Matters Person pursuant to Section 11.18
hereof.
"Termination Notice": As defined in Section 9.03(a) hereof.
"Total Available Funds": As defined in Section 7.02(b) hereof.
"Total Monthly Excess Cashflow": As defined in Section 7.03(b)(ii) hereof.
"Total Monthly Excess Spread": With respect to any Payment Date, the excess
of (i) the aggregate of all interest which is collected on the Home Equity Loans
during the related Remittance Period (net of the Servicing Fee, the Trustee Fee
and the Trustee Reimbursable Expenses) plus (x) any Delinquency Advances and (y)
Compensating Interest paid by the Servicer for such Remittance Period over (ii)
the sum of the Current Interest and the Premium Amount for such Payment Date.
"Trust": IMC Home Equity Loan Trust 1996-3, the trust created under this
Agreement.
"Trust Estate": As defined in the conveyance clause under this Agreement.
"Trustee": Chemical Bank, a New York banking corporation, the Corporate
Trust Department of which is located on the date of execution of this Agreement
at 450 W. 33rd Street, 15th Floor, New York, NY 10001, not in its individual
capacity but solely as Trustee under this Agreement, and any successor
hereunder.
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"Trustee Fee": The fee payable monthly to the Trustee on each Payment Date
in an amount equal to 0.0125% per annum, on the outstanding aggregate Loan
Balances of the Home Equity Loans as of the related Determination Date.
"Trustee Reimbursable Expenses": Any amounts payable (i) pursuant to
Sections 11.16(a)(v) and Section 11.16(g), and (ii) pursuant to the second
sentence of Section 10.07, provided that the aggregate amounts payable pursuant
to this clause (ii) shall not exceed $50,000.
"Underwater Loans": Any Home Equity Loan having a Coupon Rate as of the
Startup Day that is less than 8.72%.
"Underwriters": Bear, Stearns & Co. Inc., NatWest Capital Markets Limited
and Nomura Securities International, Inc.
"Weighted Average Pass-Through Rate": As to the Class A Certificates and
any Payment Date, the weighted average of the Class A-1 Pass-Through Rate, the
Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4
Pass-Through Rate, the Class A-5 Pass-Through Rate, the Class A-6 Pass-Through
Rate and the Class A-7 Pass-Through Rate, weighted by, respectively, the Class
A-1 Certificate Principal Balance, the Class A-2 Certificate Principal Balance,
the Class A-3 Certificate Principal Balance, the Class A-4 Certificate Principal
Balance, the Class A-5 Certificate Principal Balance, the Class A-6 Certificate
Principal Balance and the Class A-7 Certificate Principal Balance as of such
Payment Date prior to taking into account any distributions to be made on such
Payment Date.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore", "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.01 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents are
for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction. Any opinion
delivered hereunder shall be addressed to the Rating Agencies, the Certificate
Insurer and the Trustee.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws of
the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "IMC Home Equity Loan Trust 1996-3".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to The
Chase Manhattan Bank, 450 W. 33rd Street, 15th Floor, New York, NY 10001,
Attention: Advanced Structured Products Group, or at such other address as the
Trustee may designate by notice to the Depositor, the Seller, the Servicer, the
Owners and the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and only
such activities: (i) the issuance of the Certificates and the acquiring, owning
and holding of Home Equity Loans and the Trust Estate in connection therewith;
(ii) activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith, including the
investment of moneys in accordance with this Agreement; and (iii) such other
activities as may be required in connection with conservation of the Trust
Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of the Trust Estate (other than the Pre-Funding
Account and the Capitalized Interest Account) as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Seller and the Depositor hereby appoint the Trustee as trustee of the
Trust effective as of the Startup Day, to have all the rights, powers and duties
set forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
All expenses of the Trust, including (i) the fees of the Trustee (including
any portion of the Trustee Fee not paid pursuant to Section 7.03(b)(i) hereof)
and (ii) to the extent not paid pursuant to Section 10.07, any other expenses of
the Trustee that have been reviewed and approved by the Seller, which review
shall not be required in connection with the enforcement of a remedy by the
Trustee resulting from a default under this Agreement, shall be paid directly by
the Seller. Failure by the Seller to pay any such fees or other expenses shall
not relieve the Trustee of its obligations hereunder.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
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Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a trust
under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York (except that certain agents of
the Trustee may be located in the State of Texas). The Trust will not have any
employees and will not have any real or personal property (other than property
acquired pursuant to Section 8.13 hereof and Home Equity Loan Files and certain
other documents) located in any state other than in the State of New York.
Payments will be received by the Trust only in the State of New York and
payments from the Trust will be made only from the State of New York. The
Trust's only office will be at the office of the Trustee as set forth in Section
2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The Startup Day is hereby designated as the "startup day" of the REMIC
within the meaning of Section 860G(a)(9) of the Code.
(b) The Class A Certificates are hereby designated as "regular interests"
in the REMIC and the Class R Certificates are hereby designated as the "residual
interest" in the REMIC, as defined in Section 860G(a) of the Code.
(c) The Owner of the Tax Matters Person Residual Interest in the REMIC is
hereby designated as "tax matters person" as defined in the REMIC Provisions
with respect to the REMIC.
(d) The Trust and the REMIC shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
(e) The Trustee shall cause the Trust (other than the Pre-Funding Account
and the Capitalized Interest Account) to elect to be treated as a REMIC under
Section 860D of the Code. Any inconsistencies or ambiguities in this Agreement
or in the administration of the Trust shall be resolved in a manner that
preserves the validity of such election to be treated as a REMIC. The Trustee
shall report all expenses of the Trust Estate to the REMIC.
(f) The Trustee shall provide to the Internal Revenue Service and to the
person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to REMIC. Such information will be provided in
the manner described in Treasury Regulation Section 1.860E-2(a)(5), or any
successor regulation thereto.
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(g) For federal income tax purposes, the Final Scheduled Payment Date for
each Class of the Class A Certificates in the REMIC is hereby set to be the
Payment Date indicated below:
Final Scheduled
Class Payment Date
----- ------------
Class A-1 Certificates April 25, 2011
Class A-2 Certificates April 25, 2011
Class A-3 Certificates April 25, 2011
Class A-4 Certificates April 25, 2011
Class A-5 Certificates May 25, 2013
Class A-6 Certificates August 25, 2018
Class A-7 Certificates August 25, 2026
The Final Scheduled Payment Date for the Class R Certificates is August 25,
2026.
END OF ARTICLE II
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee, the
Seller, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and its
performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation, or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the Depositor
is a party, assuming due authorization, execution and delivery by the other
parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
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(f) No certificate of an officer, statement furnished in writing or report
delivered pursuant to the terms hereof by the Depositor contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which describe
the Depositor or matters or activities for which the Depositor is responsible in
accordance with the Operative Documents or which are attributable to the
Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the Home
Equity Loans or the ownership interests therein represented by the Certificates
that has not been set forth in the Registration Statement.
(h) Neither the Trustee nor the Depositor has any obligation to register
the Trust as an investment company under the Investment Company Act of 1940, as
amended.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state or federal securities laws, real estate syndication or
"Blue Sky" statutes, as to which the Depositor makes no such representation or
warranty), that are necessary or advisable in connection with the purchase and
sale of the Certificates and the execution and delivery by the Depositor of the
Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and the other
Operative Documents on the part of the Depositor and the performance by the
Depositor of its obligations under this Agreement and such of the other
Operative Documents to which it is a party.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Depositor.
(k) The Depositor is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is the Depositor aware of any pending
insolvency.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer, any Owner or the Trustee (each, for
purposes of this paragraph, a party) of a breach of any of the representations
and warranties set forth in this Section 3.01 which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the other parties.
As promptly as practicable, but in any event, within 60 days of its discovery or
its receipt of notice of breach, the Depositor shall cure such breach in all
material
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respects; provided, however, that if the Depositor can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended for an additional
90 days with the written approval of the Certificate Insurer.
Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a limited partnership duly formed and validly existing
under the laws of the State of Delaware, is, and each Sub-Servicer is, in
compliance with the laws of each state in which any Property is located to the
extent necessary to enable it to perform its obligations hereunder and is in
good standing in each jurisdiction in which the nature of its business, or the
properties owned or leased by it make such qualification necessary. The Servicer
and each Sub-Servicer has all requisite partnership or corporate, as the case
may be, power and authority to own and operate its properties, to carry out its
business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Servicer and its
performance and compliance with the terms of this Agreement have been duly
authorized by all necessary action on the part of the Servicer and will not
violate the Servicer's Agreement of Limited Partnership or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material contract, agreement or
other instrument to which the Servicer is a party or by which the Servicer is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Servicer or any of its properties.
(c) This Agreement and the Operative Documents to which the Servicer is a
party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which might have consequences that would materially and
adversely affect the condition (financial or otherwise) or operations of the
Servicer or its properties or might have consequences that would materially and
adversely affect its performance hereunder.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or that would materially and
adversely affect the condition (financial or otherwise) or operations of the
Servicer or its properties or might have consequences that would materially and
adversely affect its performance hereunder and the other Operative Documents to
which the Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or report
delivered pursuant to the terms hereof by the Servicer contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
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(g) The statements contained in the Registration Statement which describe
the Servicer or matters or activities for which the Servicer is responsible or
which are attributed to the Servicer therein are true and correct in all
material respects, and the Registration Statement does not contain any untrue
statement of a material fact with respect to the Servicer or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein with respect to the Servicer, in light of the circumstances
under which they were made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as that
term is used in Statement of Financial Accounting Standards No. 65 issued by the
Financial Accounting Standards Board. Neither the Servicer nor any affiliate
thereof will report on any financial statements any part of the Servicing Fee as
an adjustment to the sales price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(j) The collection practices used by the Servicer with respect to the Home
Equity Loans have been, in all material respects, legal, proper, prudent and
customary in the mortgage servicing business and in conformity with relevant
FNMA guidelines.
(k) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, any
Sub-Servicer, the Certificate Insurer, any Owner or the Trustee (each, for
purposes of this paragraph, a party) of a breach of any of the representations
and warranties set forth in this Section 3.02 which materially and adversely
affects the interests of the Owners or of the Certificate Insurer, the party
discovering such breach shall give prompt written notice to the other parties.
As promptly as practicable, but in any event, within 60 days of its discovery or
its receipt of notice of breach, the Servicer shall cure such breach in all
material respects and, upon the Servicer's continued failure to cure such
breach, may thereafter be removed by the Trustee with the written consent of the
Certificate Insurer pursuant to Section 8.20 hereof; provided, however, that if
the Servicer can establish to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, then the cure period may
be extended for an additional 90 days with the written approval of the
Certificate Insurer.
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Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Depositor, the
Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Seller is a limited partnership duly formed and validly existing
under the laws governing its creation and existence and is in good standing in
each jurisdiction in which the nature of its business, or the properties owned
or leased by it make such qualification necessary. The Seller has all requisite
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement by the Seller and its
performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Seller and will not violate the
Seller's Agreement of Limited Partnership or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
or result in a breach of, any material contract, agreement or other instrument
to which the Seller is a party or by which the Seller is bound or violate any
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Seller or any of its
properties.
(c) This Agreement and the other Operative Documents to which the Seller is
a party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Seller, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The 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 would materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which would materially and adversely affect its performance
hereunder and under the other Operative Documents to which the Seller is a
party.
(e) No litigation is pending with respect to which the Seller has received
service of process or, to the best of the Seller's knowledge, threatened against
the Seller which litigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Seller or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which the Seller is a
party.
(f) No certificate of an officer, statement furnished in writing or report
delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Prospectus Supplement which describe
the Seller or matters or activities for which the Seller is responsible in
accordance with the Operative Documents or which are attributable to the Seller
therein are true and correct in all material respects, and the Prospectus
Settlement does not contain any untrue statement of a material fact with respect
to the Seller required to be stated therein or necessary to make the statements
contained therein with respect to the Seller, in light of the circumstances
under which they were made, not misleading. The Prospectus Supplement does not
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contain any untrue statement of a material fact required to be stated therein or
omit to state any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Seller that materially adversely
affects or in the future may (so far as the Seller can now reasonably foresee)
materially adversely affect the Seller or the Home Equity Loans or the ownership
interests therein represented by the Certificates that has not been set forth in
the Prospectus Supplement.
(h) Upon the receipt of each Home Equity Loan (including the related Note)
and other items of the Trust Estate by the Trustee under this Agreement, the
Trust will have good title to such Home Equity Loan (including the related Note)
and such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others, except as set forth in Section 3.04
(b) (ix) (other than liens which will be simultaneously released).
(i) Neither the Seller nor any affiliate thereof will report on any
financial statement any part of the Servicing Fee as an adjustment to the sales
price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Seller of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Seller and the performance by the Seller of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
(k) The origination practices used by the Seller with respect to the Home
Equity Loans have been, in all material respects, legal, proper, prudent and
customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller.
(m) Neither the Trustee nor the Seller has any obligation to register the
Trust as an investment company under the Investment Company Act of 1940, as
amended.
(n) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is the Seller aware of any pending
insolvency.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Upon discovery by any of the Depositor, the Servicer, the Custodian, any
Sub-Servicer, any Owner, the Seller, the Certificate Insurer or the Trustee
(each, for purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 3.03 which materially
and adversely affects the interests of the Owners or the interests of the
Certificate Insurer, the party discovering such breach shall give prompt written
notice to the other parties. The Seller hereby
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covenants and agrees that within 60 days of its discovery or its receipt of
notice of breach, it shall cure such breach in all material respects or, with
respect to a breach of clause (h) above, the Seller may (or may cause an
affiliate of the Seller to) on or prior to the Monthly Remittance Date next
succeeding such discovery or receipt of notice (i) substitute in lieu of any
Home Equity Loan not in compliance with clause (h) a Qualified Replacement
Mortgage and, if the outstanding principal amount of such Qualified Replacement
Mortgage as of the applicable Replacement Cut-Off Date is less than the Loan
Balance of such Home Equity Loan as of such Replacement Cut-Off Date, deliver an
amount (a "Substitution Amount") equal to such difference together with the
aggregate amount of (A) all Delinquency Advances and Servicing Advances
theretofore made with respect to such Home Equity Loan and (B) all Delinquency
Advances which the Servicer has theretofore failed to remit with respect to such
Home Equity Loan to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan from the Trust at the Loan
Purchase Price, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Home Equity Loan which is
not in default or as to which no default is imminent, no repurchase or
substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made unless the
Seller obtains for the Trustee and the Certificate Insurer at the Seller's
expense an opinion of counsel experienced in federal income tax matters to the
effect that such a repurchase or substitution would not constitute a Prohibited
Transaction for the Trust or the REMIC therein or otherwise subject the Trust or
the REMIC therein to tax and would not jeopardize the status of the REMIC as a
REMIC (a "REMIC Opinion") addressed to the Trustee and the Certificate Insurer
and acceptable to the Certificate Insurer and the Trustee. The Seller shall also
deliver an Officer's Certificate to the Trustee and the Certificate Insurer
concurrently with the delivery of a Qualified Replacement Mortgage pursuant to
Sections 3.03, 3.04 and 3.06 stating that such Home Equity Loan meets the
requirements of the definition of a Qualified Replacement Mortgage and that all
other conditions to the substitution thereof have been satisfied. Any Home
Equity Loan as to which repurchase or substitution was delayed pursuant to this
Section shall be repurchased or substituted for (subject to compliance with
Section 3.03, 3.04 or 3.06, as the case may be) upon the earlier of (a) the
occurrence of a default or imminent default with respect to such Home Equity
Loan and (b) receipt by the Trustee and the Certificate Insurer of a REMIC
Opinion.
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to
the Home Equity Loans in Certain Situations.
(a) Upon the discovery by the Depositor, the Seller, the Servicer, the
Certificate Insurer, any Sub-Servicer, any Owner, the Custodian or the Trustee
that the representations and warranties set forth in clause (b) below were
untrue in any material respect as of the Startup Day (or in the case of the
Subsequent Home Equity Loans, as of the respective Subsequent Transfer Date)
with the result that the interests of the Owners or of the Certificate Insurer
are materially and adversely affected, the party discovering such breach shall
give prompt written notice to the other parties. Upon the earliest to occur of
the Seller's discovery, its receipt of notice of breach from any one of the
other parties or such time as a situation resulting from an existing statement
which is untrue materially and adversely affects the interests of the Owners or
of the Certificate Insurer, the Seller hereby covenants and warrants that it
shall promptly cure such breach in all material respects or subject to the last
two sentences of Section 3.03 it shall on the second Monthly Remittance Date
next succeeding such discovery, receipt of notice or such time (i) substitute in
lieu of each Home Equity Loan which has given rise to the requirement for action
by the Seller a Qualified Replacement Mortgage and deliver the Substitution
Amount to the Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Home Equity Loan from the Trust at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account; provided, however,
that if the Seller can establish to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial action, the period
of time in which the Seller must substitute a Qualified Replacement Mortgage or
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purchase such Home Equity Loan may be extended for an additional 30 days with
the written approval of the Certificate Insurer. It is understood and agreed
that the obligation of the Seller so to substitute or purchase any Home Equity
Loan as to which such a statement set forth below is untrue in any material
respect and has not been remedied shall constitute the sole remedy respecting a
discovery of any such statement which is untrue in any material respect in this
Section 3.04 available to the Owners, the Trustee and the Certificate Insurer.
(b) The Seller hereby represents, warrants and covenants to the Trustee,
the Depositor, the Servicer, the Certificate Insurer and the Owners that as of
the Startup Day (with respect to the Initial Home Equity Loans) and as of the
respective Subsequent Transfer Date (with respect to the Subsequent Home Equity
Loans):
(i) The information with respect to each Initial Home Equity Loan and
Subsequent Home Equity Loan set forth in the related Schedule of Home
Equity Loans is true and correct as of the Cut-Off Date (or in the case of
the Subsequent Home Equity Loans, on the related Subsequent Transfer Date);
(ii) All the original or certified documentation set forth in Section
3.05 (including all material documents related thereto) with respect to
each Initial Home Equity Loan has been or will be delivered to the Trustee
on the Startup Day (or in the case of the Subsequent Home Equity Loans, on
the related Subsequent Transfer Date) or as otherwise provided in Section
3.05;
(iii) Each Home Equity Loan being transferred to the Trust is a
Qualified Mortgage and is a Mortgage;
(iv) Each Property is improved by a single (one-to-four) family
residential dwelling (except for 294 Initial Home Equity Loans in the
amount of $16,623,840.66, that are condominiums, planned unit developments,
townhouses, manufactured housing, mixed use properties, multifamily
residential, or cooperative, provided that no more than 0.22% of the
Properties are secured by manufactured homes;
(v) As of the Cut-Off Date, no Initial Home Equity Loan has a
Loan-to-Value Ratio in excess of 85%, except for 177 Initial Home Equity
Loans in the amount of $14,775,172.81 that had a Loan-to-Value Ratio not
greater than 117%;
(vi) Each Home Equity Loan is being serviced by the Servicer in
accordance with the terms of this Agreement;
(vii) The Note related to each Initial Home Equity Loan bears a
current Coupon Rate of at least 7.600% per annum;
(viii) Each Note with respect to the Initial Home Equity Loans will
provide for a schedule of substantially level and equal Monthly Payments
which are sufficient to amortize fully the principal balance of such Note
on or before its maturity date, except for 1,774 Initial Home Equity Loans
in the amount of $133,438,921.36, representing 53.40% of the aggregate Loan
Balance of the Initial Home Equity Loans as of the Cut-Off Date which may
provide for a "balloon" payment due at the end of the 15th year (except for
20 Initial Home Equity Loans in the amount of $654,207.45 which provide for
"balloon" payments due within 60 months to 150 months);
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(ix) As of the Startup Day and any Subsequent Transfer Date, each
Mortgage is a valid and subsisting first or second lien of record (or is in
the process of being recorded) on the Property subject in the case of any
Second Mortgage Loan only to a Senior Lien on such Property and subject in
all cases to the exceptions to title set forth in the title insurance
policy or attorney's opinion of title, with respect to the related Home
Equity Loan, which exceptions are generally acceptable to banking
institutions in connection with their regular mortgage lending activities,
and such other exceptions to which similar properties are commonly subject
and which do not individually, or in the aggregate, materially and
adversely affect the benefits of the security intended to be provided by
such Mortgage;
(x) Immediately prior to the transfer and assignment of the Home
Equity Loans by the Seller to the Depositor and by the Depositor to the
Trust herein contemplated, the Seller and the Depositor, as the case may
be, held good and indefeasible title to, and was the sole owner of, each
Home Equity Loan (including the related Note) conveyed by the Seller
subject to no liens, charges, mortgages, encumbrances or rights of others
except as set forth in clause (ix) or other liens which will be released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Trustee will hold good and
indefeasible title to, and be the sole owner of, each Home Equity Loan
subject to no liens, charges, mortgages, encumbrances or rights of others
except as set forth in paragraph (ix) or other liens which will be released
simultaneously with such transfer and assignment;
(xi) As of the Cut-Off Date, no Initial Home Equity Loan is 30 days or
more Delinquent except that there are 243 Initial Home Equity Loans with an
outstanding aggregate Loan Balance of $15,475,437.17 that are 30 or more
days Delinquent but not more than 89 days Delinquent;
(xii) There is no delinquent tax or assessment lien on any Property,
and each Property is free of substantial damage and is in good repair;
(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation of the
related Mortgagor to pay the unpaid principal of or interest on such Note;
(xiv) There is no mechanics' lien or claim for work, labor or material
affecting any Property which is or may be a lien prior to, or equal with,
the lien of the related Mortgage except those which are insured against by
any title insurance policy referred to in paragraph (xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in all
material respects with applicable state and federal laws and regulations,
including, without limitation, the federal Truth-in-Lending Act (as amended
by the Riegle Community Development and Regulatory Improvement Act of 1994)
and other consumer protection laws, usury, equal credit opportunity,
disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) an attorney's
opinion of title has been obtained but no title policy has been obtained
(provided that no title policy has been obtained with respect to not more
than 2% of the Original Aggregate Loan Balance), or (b) a lender's title
insurance policy, issued in standard American Land Title Association form
by a title insurance company authorized to transact business in the state
in which the related Property is situated, in an amount at least equal to
the original balance of such Home Equity
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Loan together, in the case of a Second Mortgage Loan, with the
then-original principal amount of the mortgage note relating to the Senior
Lien, insuring the mortgagee's interest under the related Home Equity Loan
as the holder of a valid first or second mortgage lien of record on the
real property described in the related Mortgage, as the case may be,
subject only to exceptions of the character referred to in paragraph (ix)
above, was effective on the date of the origination of such Home Equity
Loan, and, as of the Startup Day, such policy is valid and thereafter such
policy shall continue in full force and effect;
(xvii) The improvements upon each Property are covered by a valid and
existing hazard insurance policy with a carrier generally acceptable to the
Servicer that provides for fire and extended coverage representing coverage
not less than the least of (A) the outstanding principal balance of the
related Home Equity Loan (together, in the case of a Second Mortgage Loan,
with the outstanding principal balance of the Senior Lien), (B) the minimum
amount required to compensate for damage or loss on a replacement cost
basis or (C) the full insurable value of the Property;
(xviii) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the
current guidelines of the Flood Insurance Administration is in effect with
respect to such Property with a carrier generally acceptable to the
Servicer in an amount representing coverage not less than the least of (A)
the outstanding principal balance of the related Home Equity Loan
(together, in the case of a Second Mortgage Loan, with the outstanding
principal balance of the Senior Lien), (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (C) the
maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973;
(xix) Each Mortgage and Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law),
and all parties to each Home Equity Loan had full legal capacity to execute
all documents relating to such Home Equity Loan and convey the estate
therein purported to be conveyed;
(xx) The Seller has caused and will cause to be performed any and all
acts required to be performed to preserve the rights and remedies of the
Trustee in any Insurance Policies applicable to any Home Equity Loans
delivered by the Seller including, without limitation, any necessary
notifications of insurers, assignments of policies or interests therein,
and establishments of co-insured, joint loss payee and mortgagee rights in
favor of the Trustee;
(xxi) As of the Startup Day, no more than 0.90% of the aggregate Loan
Balance of the Home Equity Loans will be secured by Properties located
within any single zip code area;
(xxii) Each original Mortgage was recorded or is in the process of
being recorded, and all subsequent assignments of the original Mortgage
have been delivered for recordation or have been recorded in the
appropriate jurisdictions wherein such recordation is necessary to perfect
the lien thereof as against creditors of or purchasers from the Seller (or,
subject to Section 3.05 hereof, are in the process of being recorded);
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(xxiii) The terms of each Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest
of the Owners and the Certificate Insurer and which has been delivered to
the Trustee. The substance of any such alteration or modification is
reflected on the related Schedule of Home Equity Loans;
(xxiv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to make
future advances thereunder. Any and all requirements as to completion of
any on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing or recording such Home Equity Loans were
paid;
(xxv) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(xxvi) No Home Equity Loan has a shared appreciation feature, or other
contingent interest feature;
(xxvii) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
(xxviii) Each Mortgage contains a provision for the acceleration of
the payment of the unpaid principal balance of the related Home Equity Loan
in the event the related Property is sold without the prior consent of the
mortgagee thereunder;
(xxix) Any advances made after the date of origination of a Home
Equity Loan but prior to the Cut-Off Date (or the relevant Subsequent
Cut-Off Date) have been consolidated with the outstanding principal amount
secured by the related Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term
reflected on the respective Schedule of Home Equity Loans. The consolidated
principal amount does not exceed the original principal amount of the
related Home Equity Loan. No Note permits or obligates the Servicer to make
future advances to the related Mortgagor at the option of the Mortgagor;
(xxx) There is no proceeding pending or threatened for the total or
partial condemnation of any Property, nor is such a proceeding currently
occurring, and each Property is undamaged by waste, fire, water, flood,
earthquake or earth movement;
(xxxi) All of the improvements which were included for the purposes of
determining the Appraised Value of any Property lie wholly within the
boundaries and building restriction lines of such Property, and no
improvements on adjoining properties encroach upon such Property, and are
stated in the title insurance policy and affirmatively insured;
(xxxii) No improvement located on or being part of any Property is in
violation of any applicable zoning law or regulation. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of each Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities and such Property is lawfully occupied
under the applicable law;
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(xxxiii) With respect to each Mortgage constituting a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Owners or the
Trust to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the related Mortgagor;
(xxxiv) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related Property of the benefits of the security,
including (A) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (B) otherwise by judicial foreclosure. There is no
homestead or other exemption other than any applicable Mortgagor redemption
rights available to the related Mortgagor which would materially interfere
with the right to sell the related Property at a trustee's sale or the
right to foreclose the related Mortgage;
(xxxv) There is no default, breach, violation or event of acceleration
existing under any Mortgage or the related Note and no event which, with
the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of
acceleration; and neither the Servicer nor the Seller has waived any
default, breach, violation or event of acceleration;
(xxxvi) No instrument of release or waiver has been executed in
connection with any Home Equity Loan, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if any,
and which has been delivered to the Trustee;
(xxxvii) The maturity date of each Home Equity Loan is at least twelve
months prior to the maturity date of the related first home equity loan if
such first home equity loan provides for a balloon payment;
(xxxviii) Each Home Equity Loan was underwritten in accordance with
the credit underwriting guidelines of the Seller as set forth in the
Seller's Policies and Procedures Manual, as in effect on the date hereof;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject property;
(xl) The Home Equity Loans were not selected for inclusion in the
Trust by the Seller on any basis intended to adversely affect the Trust;
(xli) No more than 8.62% of the aggregate Loan Balance of the Home
Equity Loans are secured by Properties that are non-owner occupied
Properties (i.e., investor-owned and vacation);
(xlii) The Seller has no actual knowledge that there exist any
hazardous substances, hazard wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or other
federal, state or local environmental legislation on any Property;
(xliii) The Seller was properly licensed or otherwise authorized, to
the extent required by applicable law, to originate or purchase each Home
Equity Loan; and the consummation
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of the transactions herein contemplated, including, without limitation, the
receipt of interest by the Owners and the ownership of the Home Equity
Loans by the Trustee as trustee of the Trust will not involve the violation
of such laws;
(xliv) With respect to each Property subject to a ground lease (i) the
current ground lessor has been identified and all ground rents which have
previously become due and owing have been paid; (ii) the ground lease term
extends, or is automatically renewable, for at least five years beyond the
maturity date of the related Home Equity Loan; (iii) the ground lease has
been duly executed and recorded; (iv) the amount of the ground rent and any
increases therein are clearly identified in the lease and are for
predetermined amounts at predetermined times; (v) the ground rent payment
is included in the borrower's monthly payment as an expense item in
determining the qualification of the borrower for such Home Equity Loan;
(vi) the Trust has the right to cure defaults on the ground lease; and
(vii) the terms and conditions of the leasehold do not prevent the free and
absolute marketability of the Property. As of the Cut-Off Date, the Loan
Balance of the Initial Home Equity Loans with related Properties subject to
ground leases does not exceed 1% of the Original Aggregate Loan Balance;
(xlv) As of the Startup Day, the Seller has not received a notice of
default of any First Mortgage Loan secured by any Property which has not
been cured by a party other than the Seller;
(xlvi) No Home Equity Loan is subject to a temporary rate reduction
pursuant to a buydown program;
(xlvii) No more than 24.05% of the aggregate Loan Balance of the Home
Equity Loans was originated under the Seller's non-income verification
program;
(xlviii) The Coupon Rate on each Home Equity Loan is calculated on the
basis of a year of 360 days with twelve 30-day months; and
(xlix) As of the Startup Day, each Subsequent Home Equity Loan to be
transferred to the Trust during the Funding Period has been originated or
purchased and identified by the Seller.
(c) In the event that any such repurchase pursuant to this Section results
in a prohibited transaction tax as specified in the REMIC Opinion delivered
pursuant to Section 3.03, the Trustee shall immediately notify the Seller in
writing thereof and the Seller will, within 10 days of receiving notice thereof
from the Trustee, deposit the amount due from the Trust with the Trustee for the
payment thereof, including any interest and penalties, in immediately available
funds. In the event that any Qualified Replacement Mortgage is delivered by the
Seller to the Trust pursuant to Section 3.03, Section 3.04 or Section 3.06
hereof, the Seller shall be obligated to take the actions described in Section
3.04(a) with respect to such Qualified Replacement Mortgage upon the discovery
by any of the Owners, the Seller, the Servicer, the Certificate Insurer, any
Sub-Servicer, the Custodian or the Trustee that the statements set forth in
subsection (b) above are untrue in any material respect on the date such
Qualified Replacement Mortgage is conveyed to the Trust such that the interests
of the Owners or the Certificate Insurer in the related Qualified Replacement
Mortgage are materially and adversely affected; provided, however, that for the
purposes of this subsection (c) the statements in subsection (b) above referring
to items "as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to
refer to such items as of the date such Qualified Replacement Mortgage is
conveyed to the Trust. Notwithstanding the fact that a representation contained
in subsection (b) above may be limited to the Seller's knowledge, such
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limitation shall not relieve the Seller of its repurchase obligation under this
Section and Section 3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgage) to the Trustee.
(e) The Trustee shall have no duty to conduct any affirmative investigation
other than as specifically set forth in this Agreement as to the occurrence of
any condition requiring the repurchase or substitution of any Home Equity Loan
pursuant to this Article III or the eligibility of any Home Equity Loan for the
purpose of this Agreement.
Section 3.05 Conveyance of the Initial Home Equity Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day the Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys to
the Depositor and the Depositor, concurrently with the execution and delivery
hereof, transfers, assigns, sets over and otherwise conveys without recourse, to
the Trustee (or Co-Trustee with respect to Home Equity Loans located in New
Jersey) for the benefit of the Owners and the Certificate Insurer, all of their
respective right, title and interest in and to the Initial Home Equity Loans
(other than payments of principal and interest due on the Home Equity Loans on
or before the Cut-Off Date). The transfer by the Depositor of the Initial Home
Equity Loans set forth on the Schedule of Home Equity Loans to the Trustee is
absolute and is intended by the Owners and all parties hereto to be treated as a
sale by the Depositor.
In the event that either such conveyance or a conveyance pursuant to
Section 3.07 and any Subsequent Transfer Agreement is deemed to be a loan, the
parties intend that the Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Trustee a security
interest in the Trust Estate, and that this Agreement shall constitute a
security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance from the
Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the States of Delaware and Florida, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Initial Home Equity Loans and the other property described above as
collateral and on or prior to the final Subsequent Transfer Date the Seller will
file in such offices a similar UCC-1 financing statement listing the Subsequent
Home Equity Loans so transferred as collateral. The characterization of the
Seller as a debtor and the Depositor as the secured party in such financing
statements is solely for protective purposes and shall in no way be construed as
being contrary to the intent of the parties that this transaction be treated as
a sale of the Seller's entire right, title and interest in the Trust Estate. In
connection with such filing, the Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Trustee's, the Owners' and the Certificate Insurer's interest in the Trust
Estate.
In connection with such sale, transfer, assignment, and conveyance from the
Depositor to the Trustee (or Co-Trustee with respect to Home Equity Loans
located in New Jersey), the Depositor has filed, in the appropriate office or
offices in the States of Delaware and Florida a UCC-1 financing statement
executed by the Depositor as debtor, naming the Trustee (or Co-Trustee with
respect to Home Equity Loans located in New Jersey) as secured party and listing
the Initial Home Equity Loans and the other property described above as
collateral and on or prior to the final Subsequent Transfer Date the
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Depositor will file in such offices a similar UCC-1 financing statement listing
the Subsequent Home Equity Loans so transferred as collateral. The
characterization of the Depositor as a debtor and the Trustee as the secured
party in such financing statements is solely for protective purposes and shall
in no way be construed as being contrary to the intent of the parties that this
transaction be treated as a sale of the Depositor's entire right, title and
interest in the Trust Estate. In connection with such filing, the Depositor
agrees that it shall cause to be filed all necessary continuation statements
thereof and to take or cause to be taken such actions and execute such documents
as are necessary to perfect and protect the Trustee's, the Owners' and the
Certificate Insurer's interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Initial Home
Equity Loans, or on each Subsequent Transfer Date with respect to the Subsequent
Home Equity Loan, the Seller agrees to:
(i) deliver without recourse to the Custodian, on behalf of the
Trustee, on the Startup Day with respect to each Initial Home Equity Loan
or on each Subsequent Transfer Date with respect to the Subsequent Home
Equity Loans, (A) the original Notes endorsed in blank or to the order of
the Trustee, (B) (I) the original title insurance commitment or a copy
thereof certified as a true copy by the closing agent or the Seller, and
when available, the original title insurance policy or a copy certified by
the issuer of the title insurance policy or (II) the attorney's opinion of
title, (C) originals or copies of all intervening assignments certified as
true copies by the closing agent or the Seller, showing a complete chain of
title from origination to the Trustee, if any, including warehousing
assignments, if recorded, (D) originals of all assumption and modification
agreements, if any and (E) either: (1) the original Mortgage, with evidence
of recording thereon (if such original Mortgage has been returned to the
Seller from the applicable recording office) or a copy of the Mortgage
certified as a true copy by the closing agent or the Seller, or (2) a copy
of the Mortgage certified by the public recording office in those instances
where the original recorded Mortgage has been lost;
(ii) cause, within 60 days following the Startup Day with respect to
the Initial Home Equity Loans or on each Subsequent Transfer Date with
respect to the Subsequent Home Equity Loans, assignments of the Mortgages
to "The Chase Manhattan Bank, as Trustee of IMC Home Equity Loan Trust
1996-3 under the Pooling and Servicing Agreement dated as of July 1, 1996"
(except that with respect to any Home Equity Loan with a Property located
in New Jersey "Chemical Bank New Jersey, N.A., as Co-Trustee of IMC Home
Equity Loan Trust 1996-3 under Pooling and Servicing Agreement dated as of
July 1, 1996") to be submitted for recording in the appropriate
jurisdictions; provided, however, that the Seller shall not be required to
prepare an assignment for any Mortgage described in subsection (b)(i)(E)(2)
above with respect to which the original recording information has not yet
been received from the recording office; provided, further, that the Seller
shall not be required to record an assignment of a Mortgage if the Seller
furnishes to the Trustee and the Certificate Insurer, on or before the
Startup Day, with respect to the Initial Home Equity Loans or on each
Subsequent Transfer Date with respect to the Subsequent Home Equity Loans,
at the Seller's expense, an opinion of counsel with respect to the relevant
jurisdiction that such recording is not necessary to perfect the Trustee's
interest in the related Home Equity Loans (in form and substance
satisfactory to the Certificate Insurer and the Rating Agencies);
(iii) deliver the title insurance policy or title searches, the
original Mortgages and such recorded assignments, together with originals
or duly certified copies of any and all prior assignments (other than
unrecorded warehouse assignments), to the Custodian, on behalf of the
Trustee, within 15 days of receipt thereof by the Seller (but in any event,
with respect to any Mortgage as to which original recording information has
been made available to the Seller, within
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one year after the Startup Day with respect to the Initial Home Equity
Loans or on each Subsequent Transfer Date with respect to the Subsequent
Home Equity Loans); and
(iv) furnish to the Trustee, the Certificate Insurer and the Rating
Agencies at the Seller's expense, an opinion of counsel with respect to the
sale and perfection of the Subsequent Home Equity Loans delivered to the
Trust in form and substance satisfactory to the Certificate Insurer.
Notwithstanding anything to the contrary contained in this Section 3.05, in
those instances where the public recording office retains the original Mortgage,
the assignment of a Mortgage or the intervening assignments of the Mortgage
after it has been recorded, the Depositor shall be deemed to have satisfied its
obligations hereunder upon delivery to the Custodian, on behalf of the Trustee
of a copy of such Mortgage, such assignment or assignments of Mortgage certified
by the public recording office to be a true copy of the recorded original
thereof.
Not later than ten days following the end of the 60-day period referred in
clause (ii) of the preceding paragraph, the Seller shall deliver to the
Custodian, on behalf of the Trustee a list of all Mortgages for which no
Mortgage assignment has yet been submitted for recording by the Seller, which
list shall state the reason why the Seller has not yet submitted such Mortgage
assignments for recording. With respect to any Mortgage assignment disclosed on
such list as not yet submitted for recording for a reason other than a lack of
original recording information, the Custodian, on behalf of the Trustee shall
make an immediate demand on the Seller to prepare such Mortgage assignments, and
shall inform the Certificate Insurer of the Seller's failure to prepare such
Mortgage assignments. Thereafter, the Custodian, on behalf of the Trustee shall
cooperate in executing any documents prepared by the Certificate Insurer and
submitted to the Custodian, on behalf of the Trustee in connection with this
provision. Following the expiration of the 60-day period referred to in clause
(ii) of the preceding paragraph, the Seller shall promptly prepare a Mortgage
assignment for any Mortgage for which original recording information is
subsequently received by the Seller, and shall promptly deliver a copy of such
Mortgage assignment to the Custodian, on behalf of the Trustee. The Seller
agrees that it will follow its normal servicing procedures and attempt to obtain
the original recording information necessary to complete a Mortgage assignment.
In the event that the Seller is unable to obtain such recording information with
respect to any Mortgage prior to the end of the 18th calendar month following
the Startup Day with respect to the Initial Home Equity Loans and the relevant
Subsequent Transfer Date with respect to Subsequent Home Equity Loans and has
not provided to the Custodian, on behalf of the Trustee a Mortgage assignment
with evidence of recording thereon relating to the assignment of such Mortgage
to the Trustee, the Custodian, on behalf of the Trustee shall notify the Seller
of the Seller's obligation to provide a completed assignment (with evidence of
recording thereon) on or before the end of the 20th calendar month following the
Startup Day with respect to the Initial Home Equity Loans and the relevant
Subsequent Transfer Date with respect to Subsequent Home Equity Loans. A copy of
such notice shall be sent by the Custodian, on behalf of the Trustee to the
Certificate Insurer. If no such completed assignment (with evidence of recording
thereon) is provided before the end of such 20th calendar month, the related
Home Equity Loan shall be deemed to have breached the representation contained
in clause (xxii) of Section 3.04(b) hereof; provided, however, that if as of the
end of such 20th calendar month the Seller demonstrates to the satisfaction of
the Certificate Insurer that it is exercising its best efforts to obtain such
completed assignment and, during each month thereafter until such completed
assignment is delivered to the Custodian, on behalf of the Trustee, the Seller
continues to demonstrate to the satisfaction of the Certificate Insurer that it
is exercising its best efforts to obtain such completed assignment, the related
Home Equity Loan will not be deemed to have breached such representation. The
requirement to deliver a completed assignment with evidence of recording thereon
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will be deemed satisfied upon delivery of a copy of the completed assignment
certified by the applicable public recording office.
Copies of all Mortgage assignments received by the Custodian, on behalf of
the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be accomplished
at the expense of the Seller.
(c) In the case of Initial Home Equity Loans which have been prepaid in
full on or after the Cut-Off Date and prior to the Startup Day, the Seller, in
lieu of the foregoing, will deliver within six (6) days after the Startup Day to
the Trustee a certification of an Authorized Officer in the form set forth in
Exhibit E.
(d) The Seller shall transfer, assign, set over and otherwise convey
without recourse, to the Trustee all right, title and interest of the Seller in
and to any Qualified Replacement Mortgage delivered to the Custodian, on behalf
of the Trustee on behalf of the Trust by the Seller pursuant to Section 3.03,
3.04 or 3.06 hereof and all its right, title and interest to principal and
interest due on such Qualified Replacement Mortgage after the applicable
Replacement Cut-Off Date; provided, however, that the Seller shall reserve and
retain all right, title and interest in and to payments of principal and
interest due on such Qualified Replacement Mortgage on or prior to the
applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage therefor, the Trustee will
transfer, assign, set over and otherwise convey without recourse or
representation, on the Seller's order, all of its right, title and interest in
and to such released Home Equity Loan and all the Trust's right, title and
interest to principal and interest due on such released Home Equity Loan after
the applicable Replacement Cut-Off Date; provided, however, that the Trust shall
reserve and retain all right, title and interest in and to payments of principal
and interest due on such released Home Equity Loan on or prior to the applicable
Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, the Seller agrees to
(i) deliver without recourse to the Custodian, on behalf of the Trustee on the
date of delivery of such Qualified Replacement Mortgage the original Note
relating thereto, endorsed in blank or to the order of the Trustee, (ii) cause
promptly to be recorded an assignment in the appropriate jurisdictions, (iii)
deliver the original Qualified Replacement Mortgage and such recorded
assignment, together with original or duly certified copies of any and all prior
assignments, to the Custodian, on behalf of the Trustee within 15 days of
receipt thereof by the Seller (but in any event within 120 days after the date
of conveyance of such Qualified Replacement Mortgage) and (iv) deliver the title
insurance policy, or where no such policy is required to be provided under
Section 3.05(b)(i)(B), the other evidence of title in same required in Section
3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage the Custodian, on behalf of
the Trustee shall deliver on the date of conveyance of such Qualified
Replacement Mortgage and on the order of the Seller (i) the original Note
relating thereto, endorsed without recourse or representation, to the Seller,
(ii) the original Mortgage so released and all assignments relating thereto and
(iii) such other documents as constituted the File with respect thereto.
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(h) If a Mortgage assignment is lost during the process of recording, or is
returned from the recorder's office unrecorded due to a defect therein, the
Seller shall prepare a substitute assignment or cure such defect, as the case
may be, and thereafter cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity
Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver and to cause the Custodian to
execute and deliver on the Startup Day an acknowledgment of receipt of the items
delivered by the Seller or the Depositor in the forms attached as Exhibit F-1
and Exhibit F-2 hereto, and declares through the Custodian that it will hold
such documents and any amendments, replacement or supplements thereto, as well
as any other assets included in the definition of Trust Estate and delivered to
the Custodian, on behalf of the Trustee, as Trustee in trust upon and subject to
the conditions set forth herein for the benefit of the Owners. The Trustee
agrees, for the benefit of the Owners, to cause the Custodian to review such
items within 45 days after the Startup Day (or, with respect to any document
delivered after the Startup Day, within 45 days of receipt and with respect to
any Subsequent Home Equity Loan or Qualified Replacement Mortgage, within 45
days after the assignment thereof) and to deliver to the Depositor, the Seller,
the Servicer and the Certificate Insurer a certification in the form attached
hereto as Exhibit G (a "Pool Certification") to the effect that, as to each Home
Equity Loan listed in the Schedule of Home Equity Loans (other than any Home
Equity Loan paid in full or any Home Equity Loan specifically identified in such
Pool Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it pursuant to Section 3.05(b)(i) of this Agreement
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Home Equity Loan and (iii)
based on its examination and only as to the foregoing documents, the information
set forth on the Schedule of Home Equity Loans accurately reflects the
information set forth in the File. The Trustee shall have no responsibility for
reviewing any File except as expressly provided in this subsection 3.06(a).
Without limiting the effect of the preceding sentence, in reviewing any File,
the Trustee shall have no responsibility for determining whether any document is
valid and binding, whether the text of any assignment is in proper form (except
to determine if the Trustee is the assignee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction or
whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded. The Trustee shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face, nor shall the Trustee be under any duty to determine independently whether
there are any intervening assignments or assumption or modification agreements
with respect to any Home Equity Loan.
(b) If the Custodian, on behalf of the Trustee during such 45-day period
finds any document constituting a part of a File which is not executed, has not
been received, or is unrelated to the Home Equity Loans identified in the
Schedule of Home Equity Loans, or that any Home Equity Loan does not conform to
the description thereof as set forth in the Schedule of Home Equity Loans, the
Custodian, on behalf of the Trustee shall promptly so notify the Depositor, the
Seller, the Owners and the Certificate Insurer. In performing any such review,
the Custodian, on behalf of the Trustee may conclusively rely on the Seller as
to the purported genuineness of any such document and any signature thereon. It
is understood that the scope of the review of the items delivered by the Seller
pursuant to Section 3.05(b)(i) is limited solely to confirming that the
documents listed in Section 3.05(b)(i) have been executed and received, relate
to the Files identified in the Schedule of Home Equity Loans and conform to the
description thereof in the Schedule of Home Equity Loans. The Seller agrees to
use reasonable efforts
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to remedy a material defect in a document constituting part of a File of which
it is so notified by the Custodian, on behalf of the Trustee. If, however,
within 90 days after such notice to it respecting such defect the Seller has not
remedied the defect and the defect materially and adversely affects the interest
in the related Home Equity Loan of the Owners or the Certificate Insurer, the
Seller will (or will cause an affiliate of the Seller to) on the next succeeding
Monthly Remittance Date (i) substitute in lieu of such Home Equity Loan a
Qualified Replacement Mortgage and deliver the Substitution Amount to the
Servicer for deposit in the Principal and Interest Account or (ii) purchase such
Home Equity Loan at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be delivered to the Servicer for deposit in the
Principal and Interest Account.
(c) In addition to the foregoing, the Custodian, on behalf of the Trustee
also agrees to make a review during the 12th month after the Startup Day
indicating the current status of the exceptions previously indicated on the Pool
Certification (the "Final Certification"). After delivery of the Final
Certification, the Custodian, on behalf of the Trustee and the Servicer shall
provide to the Certificate Insurer no less frequently than monthly updated
certifications indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 3.07 Conveyance of the Subsequent Home Equity Loans.
(a) Subject to the satisfaction of the conditions set forth in Section 3.05
and paragraph (b) below (based on the Custodian's review of such conditions) in
consideration of the Trustee's delivery on the relevant Subsequent Transfer
Dates to or upon the order of the Seller of all or a portion of the balance of
funds in the Pre-Funding Account, the Seller shall indirectly (through the
Depositor) on any Subsequent Transfer Date sell, transfer, assign, set over and
otherwise convey without recourse, to the Trustee, and the Trustee shall
purchase on behalf of the Trust all of the Seller's right, title and interest in
and to any and all benefits accruing to the Seller from the Subsequent Home
Equity Loans (other than any principal and interest due on or prior to the
relevant Subsequent Cut-Off Date) which the Seller (through the Depositor) is
causing to be delivered to the Custodian, on behalf of the Trustee herewith (and
all substitutions therefor as provided by Section 3.03, 3.04 and 3.06), together
with the related Subsequent Home Equity Loan documents and the Seller's interest
in any Property which secured a Subsequent Home Equity Loan but which has been
acquired by foreclosure or deed in lieu of foreclosure, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the foregoing and
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Subsequent Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing). Notwithstanding anything to the contrary
herein, there shall be no more than three Subsequent Transfer Dates during the
Funding Period.
The transfer by the Seller (through the Depositor) of the Subsequent Home
Equity Loans set forth on the Schedule of Home Equity Loans to the Trustee shall
be absolute and shall be intended by the Owners and all parties hereto to be
treated as a sale by the Seller. The amount released from the Pre-Funding
Account shall be one-hundred percent (100%) of the aggregate principal balances
of the Subsequent Home Equity Loans so transferred. Upon the transfer by the
Seller of the Subsequent Home Equity Loans hereunder, such Subsequent Home
Equity Loans (and all principal and interest due thereon subsequent to the
Subsequent Cut-Off Date) and all other rights and interests with respect to such
Subsequent Home Equity Loans transferred pursuant to a Subsequent Transfer
Agreement shall be deemed for all purposes hereunder to be part of the Trust
Estate.
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(b) The obligation of the Trustee to accept the transfer of the Subsequent
Home Equity Loans and the other property and rights related thereto described in
paragraph (a) above is subject to the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee and the Certificate
Insurer with an Addition Notice and shall have provided any information
reasonably requested by any of the foregoing with respect to the Subsequent
Home Equity Loans;
(ii) the Seller shall have delivered to the Trustee a duly executed
written Subsequent Transfer Agreement (including an acceptance by the
Trustee) in substantially the form of Exhibit D hereto, which shall include
a Schedule of Home Equity Loans, listing the Subsequent Home Equity Loans
and any other exhibits listed thereon;
(iii) the Seller shall have delivered to the Servicer for deposit in
the Principal and Interest Account all principal and interest due in
respect of such Subsequent Home Equity Loans after the related Subsequent
Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Seller nor the
Depositor was insolvent, nor will either of them be made insolvent by such
transfer, nor is either of them aware of any pending insolvency;
(v) the Funding Period shall not have ended; and
(vi) the Seller and the Depositor each shall have delivered to the
Trustee and the Certificate Insurer an Officer's Certificate confirming the
satisfaction of each condition precedent specified in this paragraph (b)
and in the related Subsequent Transfer Agreement and the Certificate
Insurer shall have consented to such transfer.
(c) The obligation of the Trust to purchase a Subsequent Home Equity Loan
on any Subsequent Transfer Date is subject to the following requirements any of
which may, at the Seller's request, be waived or modified by the Certificate
Insurer by a written waiver, (a copy of which waiver shall be delivered to
Standard & Poor's and Moody's): (i) such Subsequent Home Equity Loan will be a
fixed-rate Home Equity Loan; (ii) the original term to maturity of such
Subsequent Home Equity Loan may not exceed 30 years; (iii) such Subsequent Home
Equity Loan will have a Coupon Rate of not less than 8.72%; (iv) such Subsequent
Home Equity Loan is not secured by a Property that is a manufactured home; and
(v) following the purchase of such Subsequent Home Equity Loan by the Trust, the
Home Equity Loans (including the Subsequent Home Equity Loans) (a) will not be
30 days or more contractually Delinquent as of the Cut-Off Date or the related
Subsequent Cut-Off Date, (b) will have a weighted average combined Loan-to-Value
Ratio of not more than 85% and no such Subsequent Home Equity Loan which is a
Balloon Loan shall have an original term to maturity of less than 15 years; and
(c) will have no Subsequent Home Equity Loan with a Loan Balance in excess of
$450,000.
(d) In connection with each Subsequent Transfer Date and on the Payment
Date occurring in August 1996, the Trustee shall determine: (i) the amount and
correct dispositions of the Capitalized Interest Requirement, Overfunded
Interest Amount, Pre-Funding Account Earnings and the Pre-Funded Amount and (ii)
any other necessary matters in connection with the administration of the
Pre-Funding Account and of the Capitalized Interest Account. In the event that
any amounts are released as a result of an error in calculation to the Owners or
Depositor from the Pre-Funding Account or from the Capitalized Interest Account,
such Owners or the Depositor shall immediately repay such amounts to the
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Trustee or the Trustee shall have the right to withhold such amounts from future
distributions on such Certificates.
On the Payment Date in August 1996, if the Subsequent Home Equity Loans, in
the aggregate, do not comply in all material respects with the conditions
specified in Section 3.07(c) above, or there is a proposed change in the
Certificate Insurer credit risk exposure by the Rating Agencies, the Certificate
Insurer may increase the Specified Subordinated Amount by an amount necessary to
cause such rating, without regard to the Certificate Insurance Policy, to be
maintained at the level assigned on the Startup Day.
Section 3.08 Custodian.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, 3.07 and 8.14 and the related Pool Certification and Final
Certification shall be performed by the Custodian pursuant to the Custodial
Agreement. The fees and expenses of the Custodian will be paid by the Seller.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Seller of an
executed Delivery Order in the form set forth as Exhibit H hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 11 a.m. New York City time on the Startup Day, at the offices of Brown &
Wood, One World Trade Center, 58th Floor, New York, New York 10048 (or at such
other location acceptable to the Seller), the Seller will sell and convey the
Initial Home Equity Loans and the money, instruments and other property related
thereto to the Depositor and the Depositor will sell and convey the Initial Home
Equity Loans and the money, instruments and other property related thereto to
the Trustee, and the Trustee will deliver (i) to the Underwriters, the Class A
Certificates with an aggregate Percentage Interest in each Class equal to 100%
registered in the name of Cede & Co. or in such other names as the Underwriters
shall direct, against payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee, and (ii) to the respective
registered owners thereof, Class R Certificates with a Percentage Interest equal
to 99.999%, registered in the name of the initial purchasers thereof and a Class
R Certificate with a Percentage Interest equal to 0.001%, registered in the name
of the Tax Matters Person (all such events shall be referred to herein as the
"Closing").
Upon the Trustee's receipt of the entire net proceeds of the sale of the
Class A Certificates, the Seller shall instruct the Trustee to deposit (a) an
amount equal to the Original Pre-Funded Amount in the Pre-Funding Account and
(b) an amount equal to $1,050.31 in the Capitalized Interest Account contributed
out of such proceeds or otherwise. The Trustee shall then remit the entire
balance of such net proceeds in accordance with instructions delivered by the
Seller.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" thereof, no debt of
any Person is represented thereby, nor are the Certificates or the underlying
Notes guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and the terms of the related
Note and except for the rights of the Trustee on behalf of the Owners of the
Class A Certificate with respect to the Certificate Insurance Policy). The Class
A Certificates are payable solely from payments received on or with respect to
the Home Equity Loans (other than the Servicing Fees), moneys in the Principal
and Interest Account, except as otherwise provided herein, moneys in the
Pre-Funding Account and the Capitalized Interest Account, from earnings on
moneys and the proceeds of property held as a part of the Trust Estate and, with
respect to the Class A Certificates upon the occurrence of certain events, from
Insured Payments. Each Certificate entitles the Owner thereof to receive monthly
on each Payment Date, in order of priority of distributions with respect to such
Class of Certificates as set forth in Section 7.03, a specified portion of such
payments with respect to the Home Equity Loans, certain related Insured
Payments, pro rata in accordance with such Owner's Percentage Interest and
certain amounts payable from the Capitalized Interest Account and from the
Pre-Funding Account.
(b) Each Owner is required, and hereby agrees, to return to the Trustee,
any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates and the Class R Certificates shall
be in substantially the forms set forth in Exhibits A-1, A-2, A-3, A-4, A-5,
A-6, A-7 and C hereof, respectively.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed on behalf of the Trust, by the manual
signature of one of the Trustee's Authorized Officers. In addition, each
Certificate shall be authenticated by the manual signature of one of the
Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who were at any
time the proper officers of the Trustee shall, upon proper authentication by the
Trustee, bind the Trust, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the execution and delivery of such
Certificates or did not hold such offices at the date of authentication of such
Certificates.
The initial Certificates shall be dated as of the Startup Day and delivered
at the Closing to the parties specified in Section 4.02 hereof. Subsequently
issued Certificates will be dated as of the issuance of the Certificate.
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No Certificate shall be valid until executed and authenticated as set forth
above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Owners and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the Owners
of a majority of the aggregate Percentage Interests represented by the Class A
Certificates then Outstanding with the consent of the Certificate Insurer or if
there are no longer any Class A Certificates then outstanding, by such majority
of the Percentage Interests represented by the Class R Certificates, such Owners
shall give the Trustee, the Certificate Insurer and the Owners prompt written
notice of the appointment of such Registrar and of the location, and any change
in the location, of the Register. In connection with any such appointment the
reasonable fees of the Registrar shall be paid, as expenses of the Trust,
pursuant to Section 7.06 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender for
registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
principal amount or percentage interest of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
(d) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be valid evidence of the same ownership interests in the
Trust and entitled to the same benefits under this Agreement as the Certificates
surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Owner
thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
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(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the ownership of each
such Class A Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, no Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6 or Class A-7 Certificates shall be issued in denominations of
less than $1,000 and integral multiples thereof.
The Depositor and the Trustee are hereby authorized to execute and deliver
the Representation Letter with the Depository in the form provided to the
Trustee by the Depositor.
With respect to the Class A Certificates registered in the Register in the
name of Cede & Co., as nominee of the Depository, the Depositor, the Servicer,
the Seller and the Trustee shall have no responsibility or obligation to Direct
or Indirect Participants or beneficial owners for which the Depository holds
Class A Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Depositor, the Servicer, the Seller and the
Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Class A Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Class A Certificate as shown in the Register,
of any notice with respect to the Class A Certificates or (iii) the payment to
any Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Seller advises the Trustee
in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Seller or the Trustee is unable to locate a
qualified successor or (ii) the Seller at its sole option elects to terminate
the book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Seller may determine that the Class A Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Seller and at the Seller's expense, or such
depository's agent or designee but, if the Depositor does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names registered Owners of Class A Certificates
transferring Class A Certificates shall designate, in accordance with the
provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Class A Certificate is registered in the name of Cede & Co., as
nominee of the Depository, all
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distributions of principal or interest on such Class A Certificates and all
notices with respect to such Class A Certificates shall be made and given,
respectively, in the manner provided in the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless (provided, that with
respect to an Owner which is an institutional investor, a letter of indemnity
furnished by it shall be sufficient for this purpose), then, in the absence of
notice to the Trustee or the Registrar that such Certificate has been acquired
by a bona fide purchaser, the Seller shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the Registrar
or Trustee may require the payment from the transferor or transferee of the
related Certificate of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto; any other expenses in connection
with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in exchange for or in
lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in the Trust, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all other
Certificates of the same Class duly issued hereunder and such mutilated,
destroyed, lost or stolen Certificate shall not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
Prior to due presentment for registration of transfer of any Certificate,
the Certificate Insurer, the Trustee and any agent of the Trustee may treat the
Person in whose name any Certificate is registered as the Owner of such
Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice to
the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
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Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership of a Class
R Certificate (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificate nor authenticate and make
available any new Class R Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit I.
Each holder of a Class R Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
(b) No other sale or other transfer of record or beneficial ownership of a
Class R Certificate shall be made unless such transfer is exempt from the
registration requirements of the Securities Act, and any applicable state
securities laws or is made in accordance with said Act and laws. In the event
such a transfer is to be made within three years from the Startup Day, (i) in
the case of transfers for which an investment letter in the form of Exhibit J-1
is provided by the transferee, the Trustee or the Seller shall require a written
opinion of counsel acceptable to and in form and substance satisfactory to the
Seller, the Trustee and the Certificate Insurer in the event that such transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from said Act and laws or is being made pursuant to said Act
and laws, which opinion of counsel shall not be an expense of the Seller, the
Depositor, the Trustee, the Trust Estate or the Certificate Insurer; and (ii) in
the form of Exhibit J-1 or J-2, which investment letter shall not be an expense
of the Seller, the Depositor, the Trustee, the Trust Estate or the Certificate
Insurer. The Owner of a Class R Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Certificate Insurer,
the Depositor and the Seller against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
(c) No transfer of a Class R Certificate shall be made unless the Trustee
shall have received either: (i) a representation letter from the transferee of
such Class R Certificate, acceptable to and in form and substance satisfactory
to the Trustee (which may be combined with the investment letter required by
subsection (b) above), to the effect that such transferee is not an employee
benefit plan subject to Section 406 of ERISA nor a plan or other arrangement
subject to Section 406 of ERISA nor a plan or other arrangement subject to
Section 4975 of the Code (collectively, a "Plan"), nor is acting on behalf of
any Plan nor using the assets of any Plan to effect such transfer or (ii) in the
event that any Class R Certificate is purchased by a Plan, or by a person or
entity acting on behalf of any Plan or using the assets of any Plan to effect
such transfer (including the assets of any Plan held in an insurance company
separate or general account), an Opinion of Counsel, acceptable to and in form
and substance satisfactory to the Trustee, which Opinion of Counsel shall not be
at the expense of either the Trustee or the Trust, to the effect that the
purchase or holding of any Class R Certificates will not result in the assets of
the Trust being deemed to be "plan assets," will not cause the Trust to be
subject to the fiduciary requirements and prohibited transaction provisions of
ERISA and the Code, and will not subject the Trustee to any obligation or
liability in addition to those expressly undertaken under this Agreement.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate to or on behalf of any Plan without the delivery to the Trustee of
an Opinion of Counsel as described above shall be null and void and of no
effect.
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(d) No sale or other transfer of any Class A Certificate may be made to the
Depositor, the Seller, the Servicer or any of their respective Affiliates.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of its
right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) in the case of the Class A Certificates
registered in the name of the Depository, by wire transfer to the Depository or
(ii) by check or draft mailed on each Payment Date or (iii) if requested by any
Owner (other than the Depository) of (A) a Class A Certificate having an
original principal balance of not less than $1,000,000 or (B) a Class R
Certificate having a Percentage Interest of not less than 10% in writing not
later than one Business Day prior to the applicable Record Date (which request
does not have to be repeated unless it has been withdrawn), to such Owner by
wire transfer to an account within the United States designated no later than
five Business Days prior to the related Record Date, made on each Payment Date,
in each case to each Owner of record on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any Certificate
that are to be made from amounts withdrawn from the Certificate Account or from
Insured Payments shall be made by and on behalf of the Trustee or by a Paying
Agent, and no amounts so withdrawn from the Certificate Account for payments of
Certificates and no Insured Payment shall be paid over to the Trustee except as
provided in this Section.
(b) If the Seller has appointed a Paying Agent pursuant to Section 11.15
hereof, the Trustee will, on the Business Day immediately preceding each Payment
Date, deposit with such Paying Agents in immediately available funds an
aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the Certificate Account for the
Class to which such amounts are due) such sum to be held in trust for the
benefit of the Owners entitled thereto.
(c) The Seller may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Seller shall require the Paying Agent, including the Trustee on
behalf of the Trust to comply with all requirements of the Code and applicable
state and local law with respect to the withholding from any distributions made
by it to any Owner of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid to the Owners of the
Class R Certificates subject to the Certificate Insurer's right of subrogation;
and the Owner of such Class A Certificate shall thereafter, as an unsecured
general creditor, look only to the Owners of the Class R Certificates for
payment thereof (but only to the extent of the amounts so paid to the Owners of
the Class R Certificates) and all liability of the Trustee or such Paying Agent
with respect to such trust money shall thereupon cease; provided, however, that
the Trustee or such Paying Agent before being required to make any such
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payment, may at the expense of the Trust cause to be published once, in the
eastern edition of The Wall Street Journal, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not fewer
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Owners of the Class R Certificates. The
Trustee shall, at the direction of the Seller, also adopt and employ, at the
expense of the Seller, any other reasonable means of notification of such
payment (including but not limited to mailing notice of such payment to Owners
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Registrar, the Trustee or any Paying Agent,
at the last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) Subject to Sections 10.01(e) and 10.01(g), the Trustee will hold the
Trust Estate in trust for the benefit of the Owners and the Certificate Insurer
and, upon request of the Certificate Insurer or, with the consent of the
Certificate Insurer, at the request of the Seller, will from time to time
execute and deliver all such supplements and amendments hereto pursuant to
Section 11.14 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request from the
Depositor (with the consent of the Certificate Insurer) or the Certificate
Insurer, to:
(i) more effectively hold in trust all or any portion of the Trust
Estate;
(ii) perfect, publish notice of, or protect the validity of any grant
made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Trustee, and the ownership interests of the Owners represented
thereby, in such Trust Estate against the claims of all Persons and
parties.
To the extent not covered by the indemnity or other security contemplated
by 10.01(e) and 10.01(g), the Trustee shall be reimbursed for any costs or
expenses associated with this section pursuant to Section 7.03(b)(iv)(F) hereof.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer as such rights are set forth in this Agreement;
provided, however, that nothing in this Section shall require any action by the
Trustee unless the Trustee shall first (i) have been furnished indemnity
satisfactory to it and (ii) when required by this Agreement, have been requested
by the Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates; provided, further, however, that if
there is a dispute with respect to payments under the Certificate Insurance
Policy the Trustee's sole responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
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Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from any
of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing its
duties hereunder pursuant to Section 10.03(g); provided, that the Trustee shall
remain liable for the performance of any such duties notwithstanding any such
contractual arrangement.
Section 6.05 Negative Covenants.
The Trustee will not:
(i) sell, transfer, exchange or otherwise dispose of any of the Trust
Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the distributions
payable in respect of, the Certificates (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Owner by reason of the payment of any taxes levied or
assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty, on behalf of the Trust, any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement to be
impaired, or permit any Person to be released from any covenant or
obligation with respect to the Trust or to the Certificates under this
Agreement, except as may be expressly permitted hereby or (B) permit any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or burden
the Trust Estate or any part thereof or any interest therein or the
proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business activity
or transaction other than those activities permitted by Section 2.03 hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policy,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the Seller and the
Trustee of such Owner's intention to institute such proceeding;
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(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates then Outstanding or, if there
are no Class A Certificates then Outstanding, by a majority of the
Percentage Interests represented by the Class R Certificates, shall
have made written request to the Trustee to institute such proceeding
in its own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute such proceeding;
(5) as long as any Class A Certificates are Outstanding, the Certificate
Insurer consented in writing thereto (unless the Certificate Insurer
is the party against whom the proceeding is directed); and
(6) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Owners of a majority of
the Percentage Interests represented by the Class A Certificates or,
if there are no Class A Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class R
Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent requests
and indemnity from two or more groups of Owners, each representing less than a
majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement (unless the Certificate Insurer is the
party against whom the proceeding is directed and in such case the Servicer
shall determine what action if any shall be taken).
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee, the Certificate Insurer or to the Owners is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. Except as otherwise provided herein, the assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
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Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement shall impair
any such right or remedy or constitute a waiver of such right or remedy. Every
right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or to the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer, or by
the Owners, as the case may be.
Section 6.11 Control by Owners.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.03 and
Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory to
it; and
(3) the Trustee may take any other action deemed proper by the Trustee, as
the case may be, which is not inconsistent with such direction;
provided, however, that the Trustee need not take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
Section 6.12 Indemnification by the Seller.
The Seller agrees to indemnify and hold the Trustee, the Depositor, the
Certificate Insurer and each Owner harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Certificate Insurer and any
Owner sustain in any way related to the failure of Seller to perform its duties
in compliance with the terms of this Agreement. The Seller shall immediately
notify the Trustee, the Depositor, the Certificate Insurer and each Owner if a
claim is made by a third party that the Servicer has failed to perform its
obligations to service and administer the Home Equity Loans in compliance with
the terms of this Agreement, and the Seller shall assume (with the consent of
the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Depositor, the
Servicer, the Seller, the Trustee, the Certificate Insurer and/or Owner in
respect of such claim. The Trustee shall, in accordance with instructions
received from the Seller, reimburse the Seller only from amounts otherwise
distributable on the Class R Certificates for all amounts advanced by it
pursuant to the preceding sentence, except when a final nonappealable
adjudication determines that the claim relates directly to the failure of the
Seller to perform its duties in compliance with the terms of this Agreement. The
provisions of this Section 6.12 shall survive the termination of this Agreement
and the payment of the outstanding Certificates.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policy,
including (a) all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer and (b) Insured
Payments. The Trustee shall hold all such money and property received by it,
other than pursuant to or as contemplated by Section 6.02(e) hereof, as part of
the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts.
(a) The Seller shall cause to be established on the Startup Day, and the
Trustee shall maintain, at the Corporate Trust Office, the Certificate Account,
a Pre-Funding Account and a Capitalized Interest Account each to be held by the
Trustee in the name of the Trust on behalf of the Owners of the Certificates and
the Certificate Insurer, as their interests may appear. The Pre-Funding Account
and the Capitalized Interest Account are not assets of the REMIC.
(b) On each Determination Date the Trustee shall determine (subject to the
terms of Section 10.03(j) hereof, based solely on information provided to it by
the Servicer) with respect to the immediately following Payment Date, the
amounts that are expected to be on deposit in the Certificate Account (exclusive
of any deposits from the Pre-Funding Account and the Capitalized Interest
Account expected to be made and inclusive of any investment earnings on Eligible
Investments held in the Certificate Account) as of such date on such Payment
Date (disregarding the amounts of any Insured Payments) and equal to the sum of
(x) such amounts excluding the amount of any Total Monthly Excess Cashflow
included in such amounts plus (y) any amounts of related Total Monthly Excess
Cashflow to be applied on such Payment Date plus (z) any deposit to the
Certificate Account from the Pre-Funding Account and the Capitalized Interest
Account expected to be made. The amount described in clause (x) of the preceding
sentence with respect to each Payment Date is the "Available Funds" and the sum
of the amounts described in clauses (x), (y) and (z) of the preceding sentence
with respect to each Payment Date is the "Total Available Funds."
Section 7.03 Flow of Funds.
(a) The Trustee shall deposit in the Certificate Account without
duplication, upon receipt, any Insured Payments, the proceeds of any liquidation
of the assets of the Trust, all remittances made to the Trustee pursuant to
Section 8.08(d)(ii) with respect to Monthly Remittance Amount remitted by the
Servicer.
(b) Subject to any superseding provisions of clause (c) below during the
continuance of a Certificate Insurer Default, with respect to funds on deposit
in the Certificate Account, on each Payment Date, the Trustee shall make the
following allocations, disbursements and transfers from amounts deposited
therein pursuant to subsection (a) in the following order of priority, and each
such allocation, transfer and disbursement shall be treated as having occurred
only after all preceding allocations, transfers and disbursements have occurred:
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(i) first, on each Payment Date from amounts then on deposit in the
Certificate Account, (A) the Trustee Fee and the Trustee Reimbursable
Expenses shall be paid to the Trustee, and (B) provided that no
Certificate Insurer Default has occurred and is continuing the Premium
Amount for such Payment Date shall be paid to the Certificate Insurer;
(ii) second, on each Payment Date, the Trustee shall allocate an amount
equal to the sum of (x) the Total Monthly Excess Spread with respect
to such Payment Date plus (y) any Subordination Reduction Amount with
respect to such Payment Date (such sum being the "Total Monthly Excess
Cashflow" with respect to such Payment Date) in the following order of
priority:
(A) first, such Total Monthly Excess Cashflow shall be allocated to
the payment of the Principal Distribution Amount pursuant to
clause (b)(iv) below (excluding any related Subordination
Increase Amount) in an amount equal to the amount, if any, by
which (x) the Principal Distribution Amount (excluding any
related Subordination Increase Amount) exceeds (y) the Available
Funds (net of Trustee Fees, the Premium Amount, the Servicing
Fee, the Trustee Reimbursable Expenses and Current Interest) (the
amount of such difference being the "Available Funds Shortfall");
(B) second, any portion of the Total Monthly Excess Cashflow
remaining after the allocation described in clause (A) above
shall be disbursed to the Certificate Insurer in respect of
amounts owed on account of any Reimbursement Amount; and
(iii)third, the amount, if any, of the Total Monthly Excess Cashflow on a
Payment Date remaining after the allocations and payments described in
clause (ii) above (the "Net Monthly Excess Cashflow" for such Payment
Date) is required to be applied in the following order or priority:
(A) first, such Net Monthly Excess Cashflow shall be used to reduce
to zero, through the payment to the Owners of the related Class A
Certificates of a Subordination Increase Amount included in the
Principal Distribution Amount pursuant to clause (iv)(C) below,
any Subordination Deficiency Amount as of such Payment Date;
(B) second, any Net Monthly Excess Cashflow remaining after the
application described in clause (A) above shall be paid to the
Servicer to the extent of any unreimbursed Delinquency Advances
and unreimbursed Servicing Advances;
(iv) fourth, following the making by the Trustee of all allocations,
transfers and disbursements described above from amounts (including
any related Insured Payment) then on deposit in the Certificate
Account, the Trustee shall distribute:
(A) (I) to the Certificate Insurer the amounts described in clause
(ii)(B) above and (II) to the Servicer the amounts described in
clause (iii)(B) above;
(B) to the Owners of each of Class A Certificates, the related
Current Interest for each Class (including the proceeds of any
Insured Payments made by the
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Certificate Insurer) on a pro rata basis based on each such Class
A Certificate's Current Interest without priority among the Class
A Certificates;
(C) the Principal Distribution Amount shall be distributed as
follows: (i) first, to the Owners of the Class A-1 Certificates
until the Class A-1 Certificate Principal Balance is reduced to
zero; (ii) second, to the Owners of the Class A-2 Certificates
until the Class A-2 Certificate Principal Balance is reduced to
zero; (iii) third, to the Owners of the Class A-3 Certificates
until the Class A-3 Certificate Principal Balance is reduced to
zero; (iv) fourth, to the Owners of the Class A-4 Certificates
until the Class A-4 Certificate Principal Balance is reduced to
zero; (v) fifth, to the Owners of the Class A-5 Certificates
until the Class A-5 Certificate Principal Balance is reduced to
zero; (vi) sixth, to the Owners of the Class A-6 Certificates
until the Class A-6 Certificate Principal Balance is reduced to
zero; and (vii) seventh, to the Owners of the Class A-7
Certificates until the Class A-7 Certificate Principal Balance is
reduced to zero; and
(D) to the Trustee, for the reimbursement of expenses of the Trustee
not reimbursed pursuant to clause (b)(i) above which expenses
were incurred in connection with its duties and obligations
hereunder; and
(v) fifth, following the making by the Trustee of all allocations,
transfers and disbursements described above, the Trustee shall
distribute from the Certificate Account, to the Owners of the Class R
Certificates, the Residual Net Monthly Excess Cashflow, if any, for
such Payment Date.
(c) On any Payment Date during the continuance of any Certificate Insurer
Default, if there is a Subordination Deficit, then the Principal Distribution
Amount for such Payment Date shall be distributed pro rata to the Owners of any
Outstanding Class A Certificates on such Payment Date.
(d) Notwithstanding any of the foregoing provisions, the aggregate amounts
distributed on all Payment Dates to the Owners of the related Class A
Certificates on account of principal pursuant to clause (b)(iv)(C) shall not
exceed the original Certificate Principal Balance of the related Class A
Certificates.
(e) Upon receipt of Insured Payments from the Certificate Insurer on behalf
of Owners of the Class A Certificates, the Trustee shall deposit such Insured
Payments in the Certificate Account and shall distribute such Insured Payments,
or the proceeds thereof in accordance with Section 7.03(b), to the Owners of
such Certificates.
(f) The Trustee or Paying Agent shall (i) receive for each Owner of the
Class A Certificates any Insured Payment from the Certificate Insurer and (ii)
disburse the same to the Owners of the related Class A Certificates as set forth
in Section 7.03(b). Insured Payments disbursed by the Trustee or Paying Agent
from proceeds of the Certificate Insurance Policy shall not be considered
payment by the Trust, nor shall such payments discharge the obligation of the
Trust with respect to such Class A Certificates and the Certificate Insurer
shall be entitled to receive the Reimbursement Amount pursuant to Section
7.03(b)(ii)(B) hereof. Nothing contained in this paragraph shall be construed so
as to impose duties or obligations on the Trustee that are different from or in
addition to those expressly set forth in this Agreement.
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The rights of the Owners to receive distributions from the proceeds of the
Trust Estate, and all ownership interests of the Owners in such distributions,
shall be as set forth in this Agreement. In this regard, all rights of the
Owners of the Class R Certificates to receive distributions in respect of the
Class R Certificates, and all ownership interests of the Owners of the Class R
Certificates, in and to such distributions, shall be subject and subordinate to
the preferential rights of the holders of the Class A Certificates to receive
distributions thereon and the ownership interests of such Owners in such
distributions, as described herein. In accordance with the foregoing, the
ownership interests of the Owners of the Class R Certificates in amounts
deposited in the Accounts from time to time shall not vest unless and until such
amounts are distributed in respect of the Class R Certificates in accordance
with the terms of this Agreement. Notwithstanding anything contained in this
Agreement to the contrary, and the Owners of the Class R Certificate shall not
be required to refund any amount properly distributed on the Class R
Certificates pursuant to this Section 7.03.
Section 7.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Startup Day, the Trustee will deposit, on behalf of the Owners
of the Class A Certificates and the Certificate Insurer, in the Pre-Funding
Account the Original Pre-Funded Amount from the proceeds of the sale of the
Class A Certificates.
(b) On any Subsequent Transfer Date, the Seller shall instruct the Trustee
to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Home Equity Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Seller upon satisfaction of the conditions set forth in Sections 3.05 and 3.07
hereof with respect to such transfer. In no event shall the Seller be permitted
to instruct the Trustee to release from the Pre-Funding Account to the
Certificate Account with respect to Subsequent Home Equity Loans an amount in
excess of the Original Pre-Funded Amount.
(c) After giving effect to any reductions in the Pre-Funded Amount on or
before the August Monthly Remittance Date, the Trustee shall withdraw from the
Pre-Funding Account the amount (exclusive of any related Pre-Funding Account
Earnings still on deposit therein) remaining in the Pre-Funding Account and
deposit such amount to the Certificate Account on such Monthly Remittance Date;
(d) Reserved.
(e) Reserved.
(f) On each Subsequent Transfer Date the Trustee shall distribute the
Overfunded Interest Amount, if any (calculated by the Trustee on the day prior
to such Subsequent Transfer Date) to the Seller. The Capitalized Interest
Account shall be closed at the end of the Funding Period. All amounts, if any,
remaining in the Capitalized Interest Account on such day shall be transferred
to the Seller.
(g) Any amounts transferred to the Certificate Account from the Pre-Funding
Account on the August 1996 Determination Date shall be distributed to the Owners
of the Class A Certificates in accordance with Section 7.03(b)(iv)(C).
(h) The Pre-Funding Account and the Capitalized Interest Account shall not
be an asset of the REMIC.
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Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of any
Account held by the Trustee for the benefit of the Owners shall be invested and
reinvested by the Trustee in the name of the Trust, as directed in writing by
the Seller, in one or more Eligible Investments bearing interest or sold at a
discount. The bank serving as Trustee or any affiliate thereof may be the
obligor on any investment which otherwise qualifies as an Eligible Investment.
No investment in any Account shall mature later than the Business Day
immediately preceding the next Payment Date.
(b) If any amounts are needed for disbursement from any Account held by the
Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by the
Trustee, in accordance with the written instructions delivered to the Trustee on
the Startup Day, but only in one or more Eligible Investments bearing interest
or sold at a discount.
If the Seller shall have failed to give investment directions to the
Trustee then the Trustee shall invest in money market funds described in Section
7.07(k) to be redeemable without penalty no later than the Business Day
immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account held by the
Trustee shall be deposited in such Account immediately on receipt, and any loss
resulting from such investments shall be charged to such Account, as
appropriate, subject to the requirement of Section 8.08(b) that the Servicer
contribute funds in an amount equal to such loss in the case of the Principal
and Interest Account. For federal income tax purposes, the earnings on the
Capitalized Interest Account and Pre-Funding Account shall be treated as income
of the Seller.
Section 7.06 Payment of Trust Expenses.
(a) The Trustee shall make demand on the Seller to pay and the Seller shall
pay the amount of the expenses of the Trust referred to in Section 2.05 (other
than payments of premiums to the Certificate Insurer) (including Trustee's fees
and expenses not covered by Section 7.03(b)(i) and 7.03(b)(iv)(E)), and the
Seller shall promptly pay such expenses directly to the Persons to whom such
amounts are due.
(b) The Seller shall pay directly on the Startup Day the reasonable fees
and expenses of counsel to the Trustee.
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Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and unconditionally
guaranteed as to the timely payment of principal and interest by, the United
States or any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, FHLMC senior debt
obligations, and FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan Banks;
(e) FNMA mortgage-backed securities (other than stripped mortgage
securities which are valued greater than par on the portion of unpaid principal)
and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-1 by
Standard & Poor's and P-1 by Moody's;
(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by Standard &
Poor's) which has combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are insured by the FDIC and held up to the limits
insured by the FDIC;
(h) Repurchase agreements collateralized by securities described in (a),
(c), or (e) above with any registered broker/dealer subject to the Securities
Investors Protection Corporation's jurisdiction and subject to applicable limits
therein promulgated by Securities Investors Protection Corporation or any
commercial bank, if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed short-term or long-term obligation rated P-1 or Aa2, respectively,
or better by Moody's and A-1+ or AA, respectively, or better by Standard &
Poor's, provided:
a. A master repurchase agreement or specific written repurchase
agreement governs the transaction, and
b. The securities are held free and clear of any lien by the Trustee
or an independent third party acting solely as agent for the Trustee, and
such third party is (a) a Federal Reserve Bank, (b) a bank which is a
member of the FDIC and which has combined capital, surplus and undivided
profits of not less than $125 million, or (c) a bank approved in writing
for such purpose by the Certificate Insurer, and the Trustee shall have
received written confirmation from such third party that it holds such
securities, free and clear of any lien, as agent for the Trustee, and
c. A perfected first security interest under the Uniform Commercial
Code, or book entry procedures prescribed at 31 CFR 306.1 et seq. or 31 CFR
350.0 et seq., in such securities is created for the benefit of the
Trustee, and
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d. The repurchase agreement has a term of thirty days or less and the
Trustee will value the collateral securities no less frequently than weekly
and will liquidate the collateral securities if any deficiency in the
required collateral percentage is not restored within two business days of
such valuation, and
e. The fair market value of the collateral securities in relation to
the amount of the repurchase obligation, including principal and interest,
is equal to at least 106%.
(i) Commercial paper (having original maturities of not more than 270 days)
rated in the highest short-term rating categories of Standard & Poor's and
Moody's;
(j) Investments in no load money market funds rated AAAm or AAAm-G by
Standard & Poor's and Aaa by Moody's; and
(k) Any other investment permitted by each of the Rating Agencies and the
Certificate Insurer.
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
By 12:00 noon New York time, on the Business Day preceding each Payment
Date (or such earlier period as shall be agreed by the Seller and the Trustee),
the Trustee shall notify (subject to the terms of Section 10.03(j) hereof, based
solely on information provided to the Trustee by the Servicer and upon which the
Trustee may rely) the Seller, the Depositor, each Owner and the Certificate
Insurer, of the following information with respect to the next Payment Date
(which notification may be given by facsimile, or by telephone promptly
confirmed in writing):
(1) The aggregate amount on deposit in the Certificate Account as of
the related Determination Date;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes in the aggregate on the next Payment Date;
(3) The amount of any Subordination Increase Amount;
(4) The amount of any Insured Payment to be made by the Certificate
Insurer on such Payment Date;
(5) The application of the amounts described in clauses (1), (3) and
(4) above in respect of the distribution of the Class A Distribution Amount
on such Payment Date in accordance with Section 7.03 hereof;
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(6) The Class A Certificate Principal Balance, the aggregate amount of
the principal of each Class of the Class A Certificates to be paid on such
Payment Date and the remaining Certificate Principal Balance of each Class
of Class A Certificates following any such payment;
(7) The amount, if any, of any Realized Losses for the related
Remittance Period;
(8) The amount of any Subordination Reduction Amount;
(9) For the Payment Dates during the Funding Period, (A) the
Pre-Funded Amount previously used to purchase Subsequent Home Equity Loans,
(B) the Pre-Funded Amount distributed as Principal Distribution Amount, (C)
the Pre-Funding Account Earnings transferred to the Capitalized Interest
Account, (D) the amounts transferred from the Capitalized Interest Account
to the Certificate Account and the amount transferred to the Seller, if
any, and (E) the remaining Pre-Funded Amount; and
(10) The amount by which the Servicing Fee is reduced because of the
Underwater Loans.
Section 7.09 Reports by Trustee to Owners and Certificate Insurer.
(a) On the Business Day preceding each Payment Date the Trustee shall
transmit a report in writing to each Owner, the Certificate Insurer, Standard &
Poor's and Moody's:
(i) the amount of the distribution with respect to such Owners'
Certificates (based on a Certificate in the original principal amount of
$1,000);
(ii) the amount of such Owner's distributions allocable to principal,
separately identifying the aggregate amount of any prepayments in full or
Prepayments or other recoveries of principal included therein and any
Pre-Funded Amounts distributed as a prepayment (based on a Certificate in
the original principal amount of $1,000) and any related Subordination
Increase Amount;
(iii) the amount of such Owner's distributions allocable to interest
(based on a Certificate in the original principal amount of $1,000);
(iv) if the distribution (net of any Insured Payment) to the Owners of
any Class of the Class A Certificates on such Payment Date was less than
the related Class A Distribution Amount on such Payment Date, the related
Carry Forward Amount and the allocation thereof to the related Classes of
Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates on such Payment Date;
(vi) the principal amount of each Class of Class A Certificate (based
on a Certificate in the original principal amount of $1,000) which will be
Outstanding and the aggregate Loan Balance after giving effect to any
payment of principal on such Payment Date;
(vii) the Subordinated Amount and Subordination Deficit, if any,
remaining after giving effect to all distributions and transfers on such
Payment Date;
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(viii) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and the
regulations promulgated thereunder to assist the Owners in computing their
market discount;
(ix) the total of any Substitution Amounts and any Loan Purchase Price
amounts included in such distribution;
(x) the weighted average Coupon Rate of the Home Equity Loans;
(xi) such other information as the Certificate Insurer or any Owner
may reasonably request with respect to Delinquent Home Equity Loans; and
(xii) the largest home equity loan balance outstanding.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (ii), (ix) and (x) shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.08 hereof.
(b) In addition, on the Business Day preceding each Payment Date the
Trustee will distribute to each Owner, the Certificate Insurer, Standard &
Poor's and Moody's, together with the information described in Subsection (a)
preceding, the following information which is hereby required to be prepared by
the Servicer and furnished to the Trustee for such purpose on or prior to the
related Monthly Remittance Date:
(i) the number and aggregate principal balances of Home Equity Loans
(a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90 or more
days Delinquent, as of the close of business on the last Business Day of
the calendar month immediately preceding the Payment Date, (d) the numbers
and aggregate Loan Balances of all Home Equity Loans as of such Payment
Date and (e) the percentage that each of the amounts represented by clauses
(a), (b) and (c) represent as a percentage of the respective amounts in
clause (d);
(ii) the status and the number and dollar amounts of all Home Equity
Loans in foreclosure proceedings as of the close of business on the last
Business Day of the calendar month immediately preceding such Payment Date,
separately stating, for this purpose, all Home Equity Loans with respect to
which foreclosure proceedings were commenced in the immediately preceding
calendar month;
(iii) the number of Mortgagors and the Loan Balances of (a) the
related Mortgages involved in bankruptcy proceedings as of the close of
business on the last Business Day of the calendar month immediately
preceding such Payment Date and (b) Home Equity Loans that are "balloon"
loans;
(iv) the existence and status of any REO Properties, as of the close
of business of the last Business Day of the month immediately preceding the
Payment Date;
(v) the book value of any REO Property as of the close of business on
the last Business Day of the calendar month immediately preceding the
Payment Date;
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(vi) the Cumulative Loss Percentage, the amount of cumulative Realized
Losses, the current period Realized Losses, the Annual Loss Percentage
(Rolling Six Month) and the Annual Loss Percentage (Rolling Twelve Month);
and
(vii) the 60+ Delinquency Percentage and the amount of 60-Day
Delinquent Loans.
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, the Seller, the Certificate
Insurer and each Owner, with respect to the amount on deposit in the Certificate
Account and the identity of the investments included therein, as the Depositor,
the Seller, any Owner or the Certificate Insurer may from time to time
reasonably request. Without limiting the generality of the foregoing, the
Trustee shall, at the reasonable request of the Depositor, the Seller, any Owner
or the Certificate Insurer transmit promptly to the Depositor, the Seller, any
Owner and the Certificate Insurer copies of all accountings of receipts in
respect of the Home Equity Loans furnished to it by the Servicer and shall
notify the Seller and the Certificate Insurer if any Monthly Remittance Amount
has not been received by the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner with
respect to any written notices it may from time to time receive which provide an
Authorized Officer with actual knowledge that any of the statements set forth in
Section 3.04(b) hereof are inaccurate.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in Section
8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement, the terms of the respective Home Equity Loans,
and the servicing standards set forth in the FNMA Guide and shall have full
power and authority, acting alone, to do or cause to be done any and all things
in connection with such servicing and administration which it may deem necessary
or desirable but without regard to: (i) any relationship that the Servicer, any
Sub-Servicer or any Affiliate of the Servicer or any Sub-Servicer may have with
the related Mortgagor; (ii) the ownership of any Certificate by the Servicer or
any Affiliate of the Servicer; (iii) the Servicer's obligation to make
Delinquency Advances or Servicing Advances; or (iv) the Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction. It is the intent of the parties hereto
that the Servicer shall have all of the servicing obligations hereunder which a
lender would have under the FNMA Guide (as such provisions relate to second lien
mortgages); provided, however, that to the extent that such standards, such
obligations or the FNMA Guide are amended by FNMA after the date hereof and the
effect of such amendment would be to impose upon the Servicer any material
additional costs or other burdens relating to such servicing obligations, the
Servicer may, at its option, in accordance with the servicing standards set
forth herein, determine not to comply with such amendment.
Subject to Section 8.03 hereof, the Servicer may, and is hereby authorized
to, perform any of its servicing responsibilities with respect to all or certain
of the Home Equity Loans through a Sub-Servicer as it may from time to time
designate, but no such designation of a Sub-Servicer shall serve to release the
Servicer from any of its obligations under this Agreement. Such Sub-Servicer
shall have the rights and powers of the Servicer which have been delegated to
such Sub-Servicer with respect to such Home Equity Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to Sections
8.13 and 8.14, the Servicer in its own name or in the name of a Sub-Servicer may
be authorized and empowered pursuant to a power of attorney executed and
delivered by the Trustee to execute and deliver, and may be authorized and
empowered by the Trustee, to execute and deliver, on behalf of itself, the
Owners and the Trustee or any of them, (i) any and all instruments of
satisfaction or cancellation or of partial or full release or discharge and all
other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for home equity loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer, and provided further, however, that Section
8.13(a) and Section 8.14(a) shall each constitute a revocable power of attorney
from the Trustee to the Servicer to execute an instrument of satisfaction (or
assignment of mortgage without recourse) with respect to any Home Equity Loan
held by the Trustee hereunder paid in full or foreclosed (or with respect to
which payment in full has been escrowed). Revocation of the power of attorney
created by the final proviso of the preceding sentence shall take effect upon
(i) the receipt by the Servicer of written notice thereof from the Trustee, (ii)
a Servicer Termination Event or (iii) the termination of the Trust. The Trustee
shall execute
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any documentation furnished to it by the Servicer for recordation by the
Servicer in the appropriate jurisdictions, as shall be necessary to effectuate
the foregoing. Subject to Sections 8.13 and 8.14, the Trustee shall execute a
power of attorney to the Servicer or any Sub-Servicer and furnish them with any
other documents as the Servicer or such Sub-Servicer shall reasonably request to
enable the Servicer and such Sub-Servicer to carry out their respective
servicing and administrative duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the Trustee,
the details concerning the servicing of the Home Equity Loans on computer
generated tape, diskette or other machine readable format.
The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, to (i) assert a claim against the Trust
or (ii) assert jurisdiction over the Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Home Equity Loans, and shall, to the
extent such procedures shall be consistent with this Agreement and the terms and
provisions of any applicable Insurance Policy, follow collection procedures for
all Home Equity Loans at least as rigorous as those described in the FNMA Guide.
Consistent with the foregoing, the Servicer may in its discretion waive or
permit to be waived any late payment charge, prepayment charge, assumption fee
or any penalty interest in connection with the prepayment of a Home Equity Loan
or any other fee or charge which the Servicer would be entitled to retain
hereunder as servicing compensation. In the event the Servicer shall consent to
the deferment of the due dates for payments due on a Note, the Servicer shall
nonetheless make payment of any required Delinquency Advance with respect to the
payments so extended to the same extent as if such installment were due, owing
and Delinquent and had not been deferred, and shall be entitled to reimbursement
therefor in accordance with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers.
The Servicer may, with the consent of the Certificate Insurer, enter into
Sub-Servicing Agreements for any servicing and administration of Home Equity
Loans with any institution which is acceptable to the Certificate Insurer and
which, (x) is in compliance with the laws of each state necessary to enable it
to perform its obligations under such Sub-Servicing Agreement, (y) has
experience servicing home equity loans that are similar to the Home Equity Loans
and (z) has equity of not less than $5,000,000 (as determined in accordance with
generally accepted accounting principles). The Servicer shall give notice to the
Trustee, the Owners, the Certificate Insurer and the Rating Agencies of the
appointment of any Sub-Servicer (and shall receive the confirmation of the
Rating Agencies that such Sub-Servicer shall not result in a withdrawal or
downgrading by any Rating Agency of the rating or the shadow rating of the Class
A Certificates). For purposes of this Agreement, the Servicer shall be deemed to
have received payments on Home Equity Loans when any Sub-Servicer has received
such payments. Each Sub-Servicer shall be required to service the Home Equity
Loans in accordance with this Agreement and any such Sub-Servicing Agreement
shall be consistent with and not violate the provisions of this Agreement. Each
Sub-Servicing Agreement shall provide that the Trustee (if acting as successor
Servicer) or any other successor Servicer shall have the option to terminate
such agreement without
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payment of any fees if the original Servicer is terminated or resigns. The
Servicer shall deliver to the Trustee and the Certificate Insurer copies of all
Sub-Servicing Agreements, and any amendments or modifications thereof promptly
upon the Servicer's execution and delivery of such instrument.
Section 8.04 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and to
either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05 Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer (except Chemical Bank if it is required to succeed the
Servicer hereunder) agrees to indemnify and hold the Trustee, the Certificate
Insurer and each Owner harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee, the Depositor, the Certificate
Insurer and any Owner may sustain in any way related to the failure of the
Servicer to perform its duties and service the Home Equity Loans in compliance
with the terms of this Agreement. The Servicer shall immediately notify the
Trustee, the Depositor, the Certificate Insurer and each Owner if a claim is
made by a third party with respect to this Agreement, and the Servicer shall
assume (with the consent of the Trustee and the Certificate Insurer) the defense
of any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Servicer, the Trustee, the Depositor,
the Certificate Insurer and/or Owner in respect of such claim. The Trustee
shall, in accordance with instructions received from the Servicer, reimburse the
Servicer only from amounts otherwise distributable on the Class R Certificates
for all amounts advanced by it pursuant to the preceding sentence, except when a
final nonpayable adjudication determines that the claim relates directly to the
failure of the Servicer to perform its duties in compliance with the Agreement.
The provisions of this Section 8.05(b) shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or
the Owners.
Any Sub-Servicing Agreement and any other transactions or services relating
to the Home Equity Loans involving a Sub-Servicer shall be deemed to be between
the Sub-Servicer and the Servicer alone and the Trustee and the Owners shall not
be deemed parties thereto and shall have no claims, rights, obligations, duties
or liabilities with respect to any Sub-Servicer except as set forth in Section
8.07.
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Section 8.07 Assumption or Termination of Sub-Servicing Agreement by
Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously by
the Trustee without act or deed on part of the Trustee; provided, however, that
the Trustee (if acting as successor Servicer) or any other successor Servicer
may terminate the Sub-Servicer as provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at the
expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08 Principal and Interest Account.
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Principal and Interest Account to be held as a trust
account. Each Principal and Interest Account shall be identified on the records
of the Designated Depository Institution as follows: The Chase Manhattan Bank,
as Trustee on behalf of the Owners of the IMC Home Equity Loan Trust 1996-3 Home
Equity Loan Pass-Through Certificates. If the institution at any time holding
the Principal and Interest Account ceases to be eligible as a Designated
Depository Institution hereunder, then the Servicer shall immediately be
required to name a successor institution meeting the requirements for a
Designated Depository Institution hereunder. If the Servicer fails to name such
a successor institution, then the Principal and Interest Account shall
thenceforth be held as a trust account with a qualifying Designated Depository
Institution selected by the Trustee. The Servicer shall notify the Trustee, the
Certificate Insurer and the Owners if there is a change in the name, account
number or institution holding the Principal and Interest Account.
Subject to Subsection (c) below, the Servicer shall deposit all receipts
required pursuant to Subsection (c) below and related to the Home Equity Loans
to the Principal and Interest Account on a daily basis (but no later than the
first Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested or (ii) invested in Eligible Investments. Any investments of funds in
the Principal and Interest Account shall mature or be withdrawable at par on or
prior to the immediately succeeding Monthly Remittance Date. The Principal and
Interest Account shall be held in trust in the name of the Trust for the benefit
of the Owners. Any investment earnings on funds held in the Principal and
Interest Account shall be for the account of the Servicer and may only be
withdrawn from the Principal and Interest Account by the Servicer immediately
following the remittance of the Monthly Remittance Amount (and the Total Monthly
Excess Spread included therein) by the Servicer. Any investment losses on funds
held in the Principal and Interest Account shall be for the account of the
Servicer and promptly upon the realization of such loss shall be contributed by
the Servicer to the Principal and Interest Account. Any references herein to
amounts on deposit in the Principal and Interest Account shall refer to amounts
net of such investment earnings.
(c) The Servicer shall deposit to the Principal and Interest Account on the
Business Day after receipt all principal and interest collections on the Home
Equity Loans due after the Cut-Off Date, including any Prepayments and Net
Liquidation Proceeds, other recoveries or amounts related to the
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Home Equity Loans received by the Servicer and any income from REO Properties,
but net of (i) Net Liquidation Proceeds to the extent such Net Liquidation
Proceeds exceed the sum of (I) the Loan Balance of the related Home Equity Loan
immediately prior to liquidation, plus (II) accrued and unpaid interest on such
Home Equity Loan (net of the related Servicing Fee) to the date of such
liquidation and (III) any Realized Losses incurred during the related Remittance
Period, (ii) principal and interest due (and Prepayments collected) on the Home
Equity Loans on or prior to the Cut-Off Date or related Subsequent Cut-Off Date,
as the case may be, (iii) reimbursements for Delinquency Advances and (iv)
reimbursements for amounts deposited in the Principal and Interest Account
representing payments of principal and/or interest on a Note by a Mortgagor
which are subsequently returned by a depository institution as unpaid (all such
net amount herein referred to as "Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from the
Principal and Interest Account only in the following priority and for the
following purposes:
(A) on each Monthly Remittance Date, to pay itself the Servicing Fee;
(B) to withdraw investment earnings on amounts on deposit in the Principal
and Interest Account;
(C) to withdraw amounts that have been deposited to the Principal and
Interest Account in error;
(D) to reimburse itself pursuant to Section 8.09(a) for unrecovered
Delinquency Advances and to retain any excess Compensating Interest
received by it pursuant to Section 8.10(a) hereof; and
(E) to clear and terminate the Principal and Interest Account following
the termination of the Trust pursuant to Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication, the Daily Collections
allocable to a Remittance Period not later than the related Monthly Remittance
Date and Loan Purchase Prices and Substitution Amounts two Business Days
following the related purchase or substitution, and (b) on each Monthly
Remittance Date, deliver to the Trustee and the Certificate Insurer, a monthly
servicing report containing (without limitation) the following information:
principal and interest collected in respect of the Home Equity Loans, scheduled
principal and interest that was due on the Home Equity Loans, relevant
information with respect to Liquidated Loans, if any, summary and detailed
delinquency reports, Liquidation Proceeds and other similar information
concerning the servicing of the Home Equity Loans. In addition, the Servicer
shall inform the Trustee and the Certificate Insurer on each Monthly Remittance
Date of the amounts of any Loan Purchase Prices or Substitution Amounts so
remitted during the related Remittance Period, and of the Loan Balance of the
Home Equity Loan having the largest Loan Balance as of such date.
(iii) The Servicer shall provide to the Trustee the information described
in Section 8.08(d)(ii)(b) and in Section 7.09(b) to enable the Trustee to
perform its reporting requirements under Section 7.09.
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Section 8.09 Delinquency Advances and Servicing Advances.
(a) On each Monthly Remittance Date, the Servicer shall be required to
remit to the Trustee for deposit to the Certificate Account out of the
Servicer's own funds any Delinquent payment of interest with respect to each
Delinquent Home Equity Loan, which payment was not received on or prior to the
related Remittance Date and was not theretofore advanced by the Servicer. Such
amounts of the Servicer's own funds so deposited are "Delinquency Advances".
The Servicer shall be permitted to reimburse itself on any Business Day for
any Delinquency Advances paid from the Servicer's own funds, from collections on
any Home Equity Loans that are not required to be distributed on the Payment
Date occurring during the month in which such reimbursement is made or as
provided in Section 7.03(b)(iii)(B).
Notwithstanding the foregoing, in the event that the Servicer determines in
its reasonable business judgment in accordance with the servicing standards set
out herein that any proposed Delinquency Advance would not be recoverable, the
Servicer shall not be required to make Delinquency Advances with respect to such
Home Equity Loan. To the extent that the Servicer previously has made
Delinquency Advances with respect to a Home Equity Loan that the Servicer
subsequently determines will be nonrecoverable, the Servicer shall be entitled
to reimbursement for such aggregate unreimbursed Delinquency Advances as
provided in the prior paragraph. The Servicer shall give written notice of such
determination as to why such amount would not be recoverable to the Trustee and
the Certificate Insurer; the Trustee shall promptly furnish a copy of such
notice to the Owners of the Class R Certificates; provided, further, that the
Servicer shall be entitled to recover any unreimbursed Delinquency Advances from
Liquidation Proceeds for the related Home Equity Loan.
(b) The Servicer will pay all "out-of-pocket" costs and expenses incurred
in the performance of its servicing obligations, including, but not limited to,
(i) Preservation Expenses, (ii) the cost of any enforcement or judicial
proceedings, including foreclosures, (iii) the cost of the management and
liquidation of REO Property and (iv) advances required by Section 8.13(a),
except to the extent that such amounts are determined by the Servicer in its
reasonable business judgment not to be recoverable. Such costs will constitute
"Servicing Advances". The Servicer may recover a Servicing Advance (x) from the
Mortgagors to the extent permitted by the Home Equity Loans or, if not
theretofore recovered from the Mortgagor on whose behalf such Servicing Advance
was made, from Liquidation Proceeds realized upon the liquidation of the related
Home Equity Loan and (y) as provided in Section 7.03(b)(iii)(B). The Servicer
shall be entitled to recover the Servicing Advances from the aforesaid
Liquidation Proceeds prior to the payment of the Liquidation Proceeds to any
other party to this Agreement. Except as provided in the previous sentence, in
no case may the Servicer recover Servicing Advances from the principal and
interest payments on any other Home Equity Loan except as provided in Section
7.03(b)(iii)(B).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If a prepayment in full of a Home Equity Loan or a Prepayment of at
least six times a Mortgagor's Monthly Payment occurs during any calendar month,
any difference between (x) the interest collected from the Mortgagor in
connection with such payoff, and (y) the full month's interest at the Coupon
Rate that would be due on the related Due Date for such Home Equity Loan
("Compensating Interest") (but not in excess of the aggregate Servicing Fee for
the related Remittance Period) shall be deposited by the Servicer to the
Principal and Interest Account (or if such difference is an excess, the Servicer
shall retain such excess) on the next succeeding Monthly Remittance Date and
shall be included
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in the Monthly Remittance Amount to be made available to the Trustee on such
Monthly Remittance Date.
(b) Subject to the clause (c) below, the Servicer has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which becomes Delinquent, in whole or in part, as to at least three
consecutive monthly installments or any Home Equity Loan as to which enforcement
proceedings have been brought by the Servicer pursuant to Section 8.13;
provided, however, that the Servicer may not purchase any such Home Equity Loan
unless the Servicer has delivered to the Trustee at the Servicer's expense, an
opinion of counsel acceptable to the Certificate Insurer and the Trustee to the
effect that such a purchase would not constitute a Prohibited Transaction for
the Trust or otherwise subject the Trust to tax and would not jeopardize the
status of the Trust Estate (other than the Pre-Funding Account and the
Capitalized Interest Account) as a REMIC. Any such Home Equity Loan so purchased
shall be purchased by the Servicer on a Monthly Remittance Date at a purchase
price equal to the Loan Purchase Price thereof, which purchase price shall be
deposited in the Principal and Interest Account.
(c) If a Home Equity Loan to be repurchased by the Servicer pursuant to
clause (b) above, is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans, the Servicer may repurchase such Home Equity Loans
without having first notified the Certificate Insurer of such repurchase. In all
other cases, the Servicer must notify the Certificate Insurer, in writing, of
its intent to repurchase a Home Equity Loan and the Servicer may not repurchase
such Home Equity Loan without the written consent of the Certificate Insurer;
provided, that the Certificate Insurer shall be deemed to have consented to such
repurchase unless it notifies the Servicer, in writing, of its objection to such
repurchase within 5 days after its receipt of the notice of proposed repurchase.
(d) The Net Liquidation Proceeds from the disposition of any REO Property
shall be deposited in the Principal and Interest Account and remitted to the
Trustee as part of the Daily Collections remitted by the Servicer to the
Trustee.
Section 8.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to each Home
Equity Loan a hazard insurance policy with a carrier generally acceptable to the
Servicer that provides for fire and extended coverage, and which provides for a
recovery by the Trust of insurance proceeds relating to such Home Equity Loan in
an amount not less than the least of (i) the outstanding principal balance of
the Home Equity Loan (plus the related senior lien loan, if any), (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises. The Servicer shall
maintain the insurance policies required hereunder in the name of the mortgagee,
its successors and assigns, as loss payee. The policies shall require the
insurer to provide the mortgagee with 30 days' notice prior to any cancellation
or as otherwise required by law. The Servicer may also maintain a blanket hazard
insurance policy or policies if the insurer or insurers of such policies are
rated investment grade by Moody's and Standard & Poor's.
(b) If the Home Equity Loan at the time of origination (or if required by
federal law, at any time thereafter) relates to a Property in an area identified
in the Federal Register by the Federal Emergency Management Agency as having
special flood hazards, the Servicer will cause to be maintained with respect
thereto a flood insurance policy in a form meeting the requirements of the then
current guidelines of the Federal Insurance Administration with a carrier
generally acceptable to the Servicer in an amount representing coverage, and
which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of
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the Home Equity Loan (plus the related senior lien loan, if any), (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis and (iii) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973. The Servicer shall indemnify the Trust
out of the Servicer's own funds for any loss to the Trust resulting from the
Servicer's failure to advance premiums for such insurance required by this
Section when so permitted by the terms of the Mortgage as to which such loss
relates.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.
When a Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall, to the extent it has knowledge of such conveyance or prospective
conveyance, exercise its rights to accelerate the maturity of the related Home
Equity Loan under any "due-on-sale" clause contained in the related Mortgage or
Note; provided, however, that the Servicer shall not exercise any such right if
the "due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law. An opinion of counsel, provided at the expense
of the Servicer, to the foregoing effect shall conclusively establish the
reasonableness of such belief. In such event, the Servicer shall enter into an
assumption and modification agreement with the person to whom such property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Note and, unless prohibited by applicable law or the Mortgage
Documents, the Mortgagor remains liable thereon. If the foregoing is not
permitted under applicable law, the Servicer is authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor is released from liability and such person is substituted as
Mortgagor and becomes liable under the Note; provided, however, that to the
extent any such substitution of liability agreement would be delivered by the
Servicer outside of its usual procedures for home equity loans held in its own
portfolio the Servicer shall, prior to executing and delivering such agreement,
obtain the prior written consent of the Certificate Insurer. The Home Equity
Loan, as assumed, shall conform in all material respects to the requirements,
representations and warranties of this Agreement. The Servicer shall notify the
Trustee that any such assumption or substitution agreement has been completed by
forwarding to the Trustee the original copy of such assumption or substitution
agreement (indicating the File to which it relates) which copy shall be added by
the Trustee to the related File and which shall, for all purposes, be considered
a part of such File to the same extent as all other documents and instruments
constituting a part thereof. The Servicer shall be responsible for recording any
such assumption or substitution agreements. In connection with any such
assumption or substitution agreement, no material term of the Home Equity Loan
(including, without limitation, the required monthly payment on the related Home
Equity Loan, the stated maturity, the outstanding principal amount or the Coupon
Rate) shall be changed nor shall any required monthly payments of principal or
interest be deferred or forgiven. Any fee collected by the Servicer or the
Sub-Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout of Home
Equity Loans.
(a) The Servicer shall foreclose upon or otherwise comparably effect the
ownership in the name of the Trustee on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the
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Servicer has not purchased pursuant to Section 8.10(b). In connection with such
foreclosure or other conversion, the Servicer shall exercise such of the rights
and powers vested in it hereunder, and use the same degree of care and skill in
their exercise or use, as prudent mortgage lenders would exercise or use under
the circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FNMA Guide, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property within 23 months of its acquisition by the Trust, at
such price as the Servicer deems necessary to comply with this covenant unless
the Servicer obtains for the Certificate Insurer and the Trustee, an opinion of
counsel (the expense of which opinion shall be a Servicing Advance) experienced
in federal income tax matters acceptable to the Certificate Insurer and the
Trustee, addressed to the Certificate Insurer, the Trustee and the Servicer, to
the effect that the holding by the Trust of such REO Property for any greater
period will not result in the imposition of taxes on "Prohibited Transactions"
of the Trust or the REMIC therein as defined in Section 860F of the Code or
cause the REMIC therein to fail to qualify as a REMIC under the REMIC Provisions
at any time that any Certificates are outstanding. Notwithstanding the
generality of the foregoing provisions, the Servicer shall manage, conserve,
protect and operate each REO Property for the Owners solely for the purpose of
its prompt disposition and sale in a manner which does not cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by the REMIC therein of
any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is
subject to taxation under the REMIC Provisions. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Owners, rent the same, or any part thereof, as the Servicer deems to be in the
best interest of the Owners for the period prior to the sale of such REO
Property. The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on a Property in determining whether to foreclose
upon or otherwise comparably convert the ownership of such Property. The
Servicer shall not take any such action with respect to any Property known by
the Servicer to contain such wastes or substances or to be within one mile of
the site of such wastes or substances, without the prior written consent of the
Certificate Insurer.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan and in accordance with the procedures set forth in the FNMA Guide,
when it has recovered, whether through trustee's sale, foreclosure sale or
otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan".
(c) The Servicer shall not agree to any modification, waiver or amendment
of any provision of any Home Equity Loan unless, in the Servicer's good faith
judgment, such modification, waiver or amendment would minimize the loss that
might otherwise be experienced with respect to such Home Equity Loan and only in
the event of a payment default with respect to such Home Equity Loan or in the
event that a payment default with respect to such Home Equity Loan is reasonably
foreseeable by the Servicer; provided, however, that no such modification,
waiver or amendment shall extend the maturity date of such Home Equity Loan
beyond the Remittance Period related to the Final Scheduled Payment Date of the
Class A-7 Certificates. Notwithstanding anything set out in this Section 8.13(c)
or elsewhere in this Agreement to the contrary, the Servicer shall be permitted
to modify, waive or amend any provision of a Home Equity Loan if required by
statute or a court of competent jurisdiction to do so.
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(d) The Servicer shall provide written notice to the Trustee and the
Certificate Insurer prior to the execution of any modification, waiver or
amendment of any provision of any Home Equity Loan; provided that if the
Certificate Insurer does not object in writing to the modification, waiver or
amendment specified in such notice within 5 Business Days after its receipt
thereof, the Servicer may effectuate such modification, waiver or amendment and
shall deliver to the Custodian, on behalf of the Trustee for deposit in the
related File, an original counterpart of the agreement relating to such
modification, waiver or amendment, promptly following the execution thereof.
(e) In the event that foreclosure proceedings are to be instituted with
respect to any Home Equity Loan that was more than 59 days Delinquent on the
Closing Date, the Seller, at its election, shall either (i) obtain an opinion of
counsel at the Seller's own expense addressed to the Trustee and the Certificate
Insurer to the effect that the related Property is good foreclosure property for
the REMIC within the meaning of Section 860G(a)(8) of the Code or (ii)
repurchase of the Home Equity Loan at an amount equal to the net value that the
Certificate Insurer (with consultation of the Servicer) believes the REMIC would
have realized through foreclosure.
Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Custodian, on behalf of the Trustee the FNMA "Request for Release of Documents"
(FNMA Form 2009). Upon receipt of such Request for Release of Documents, the
Custodian, on behalf of the Trustee shall promptly release the related File, in
trust, in its reasonable discretion to (i) the Servicer, (ii) an escrow agent or
(iii) any employee, agent or attorney of the Trustee. Upon any such payment in
full, or the receipt of such notification that such funds have been placed in
escrow, the Servicer is authorized to give, as attorney-in-fact for the Trustee
and the mortgagee under the Mortgage which secured the Note, an instrument of
satisfaction (or assignment of Mortgage without recourse) regarding the Property
relating to such Mortgage, which instrument of satisfaction or assignment, as
the case may be, shall be delivered to the Person or Persons entitled thereto
against receipt therefor of payment in full, it being understood and agreed that
no expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the Principal and
Interest Account or to the Trustee. In lieu of executing any such satisfaction
or assignment, as the case may be, the Servicer may prepare and submit to the
Custodian, on behalf of the Trustee, a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto) in form for
execution by the Trustee with all requisite information completed by the
Servicer; in such event, the Custodian, on behalf of the Trustee shall execute
and acknowledge such satisfaction or assignment, as the case may be, and deliver
the same with the related File, as aforesaid.
(b) The Servicer shall have the right (upon receiving the consent of the
Certificate Insurer) to accept applications of Mortgagors for consent to (i)
partial releases of Mortgages, (ii) alterations and (iii) removal, demolition or
division of properties subject to Mortgages. No application for approval shall
be considered by the Servicer unless: (x) the provisions of the related Note and
Mortgage have been complied with; (y) the Loan-to-Value Ratio and debt-to-income
ratio after any release does not exceed the Loan-to-Value Ratio and
debt-to-income ratio of such Note on the Cut-Off Date and any increase in the
Loan-to-Value Ratio shall not exceed 5% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be taken in respect
of
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a particular Home Equity Loan and certifying that the criteria set forth in the
immediately preceding sentence have been satisfied, the Trustee shall execute
and deliver to the Servicer the consent or partial release so requested by the
Servicer. A proposed form of consent or partial release, as the case may be,
shall accompany any Officer's Certificate delivered by the Servicer pursuant to
this paragraph. The Servicer shall notify the Certificate Insurer and the Rating
Agencies if an application is approved under clause (y) above without approval
in writing by the Certificate Insurer.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the related Servicing Fee with respect to each
Home Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 8.20 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Trustee, the successor
Servicer and the majority of the Percentage Interests of the Class R
Certificates.
The right to receive the Servicing Fee may not be transferred in whole or
in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies, on or before April
30 of each year, commencing in 1997, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer during
such preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
On or before April 30 of each year, commencing in 1997, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Seller, which in no event shall exceed $1,000 per annum), shall cause to be
delivered to the Trustee, the Certificate Insurer, the Depositor, and the Rating
Agencies a letter or letters of a firm of independent, nationally recognized
certified public accountants reasonably acceptable to the Certificate Insurer
stating that such firm has examined the Servicer's overall servicing operations
in accordance with the requirements of the Uniform Single Audit Procedure for
Mortgage Bankers, and stating such firm's conclusions relating thereto.
Section 8.18 Access to Certain Documentation and Information Regarding the
Home Equity Loans.
The Servicer shall provide to the Trustee, the Certificate Insurer, the
Office of Thrift Supervision (the "OTS"), the FDIC and the supervisory agents
and examiners of each of the FDIC and the OTS (which, in the case of supervisory
agents and examiners, may be required by applicable state and federal
regulations) access to the documentation regarding the Home Equity Loans, such
access being afforded
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without charge but only upon reasonable request and during normal business hours
at the offices of the Servicer designated by it.
Section 8.19 Assignment of Agreement.
Other than with respect to entering into Sub-Servicing Agreements pursuant
to Section 8.03 hereof, the Servicer may not assign its obligations under this
Agreement, in whole or in part, unless it shall have first obtained the written
consent of the Trustee and the Certificate Insurer, which such consent shall not
be unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 8.20(g) hereof for a successor
servicer.
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation of
Servicer.
(a) The Certificate Insurer or the Trustee (or, except in the case of item
(vi) below, the Owners, with the consent of the Certificate Insurer pursuant to
Section 6.11 hereof) may remove the Servicer upon the occurrence of any of the
following events (each a "Servicer Termination Event"):
(i) The Servicer shall (I) apply for or consent to the appointment of
a receiver, trustee, liquidator or custodian or similar entity with respect
to itself or its property, (II) admit in writing its inability to pay its
debts generally as they become due, (III) make a general assignment for the
benefit of creditors, (IV) be adjudicated a bankrupt or insolvent, (V)
commence a voluntary case under the federal bankruptcy laws of the United
States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or
seeking to take advantage of any insolvency law or file an answer admitting
the material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate action for
the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the Servicer,
a proceeding shall be instituted in any court of competent jurisdiction,
under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking in respect of the Servicer an order for relief or an
adjudication in bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a readjustment of
debts, the appointment of a trustee, receiver, liquidator or custodian or
similar entity with respect to the Servicer or of all or any substantial
part of its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being contested by
the Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B) continue
undismissed or pending and unstayed for any period of seventy-five (75)
consecutive days; or
(iii) The Servicer shall fail to perform any one or more of its
obligations hereunder and shall continue in default thereof for a period of
thirty (30) days (one (1) Business Day in the case of a delay in making a
payment required of the Servicer under this Agreement) after the earlier of
(a) actual knowledge of an officer of the Servicer or (b) receipt of notice
from the Trustee or the Certificate Insurer of said failure; provided,
however, that if the Servicer can demonstrate to the reasonable
satisfaction of the Certificate Insurer that it is diligently pursuing
remedial action, then the cure period may be extended with the written
approval of the Certificate Insurer; or
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(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.02 which materially
and adversely affects the interests of the Owners or the Certificate
Insurer for a period of sixty (60) days after the earlier of the Servicer's
discovery or receipt of notice thereof; provided, however, that if the
Servicer can demonstrate to the reasonable satisfaction of the Certificate
Insurer that it is diligently pursuing remedial action, then the cure
period may be extended with the written approval of the Certificate
Insurer; or
(v) The merger, consolidation or other combination of the Servicer
with or into any other entity, unless (1) the Servicer or an Affiliate of
the Servicer is the surviving entity of such combination or (2) the
surviving entity (A) is servicing at least $300,000,000 of home equity
loans that are similar to the Home Equity Loans and (B) has equity of not
less than $10,000,000 (as determined in accordance with generally
acceptable account principles); or
(vi) The failure of the Servicer (except the Trustee in its capacity
as successor Servicer) to satisfy the Servicer Termination Test.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer shall
act as servicer under this Agreement, subject to the right of removal set forth
in subsection (a) hereof, for an initial period commencing on the date on which
such Servicer Termination Event occurred and ending on the last day of the
calendar quarter in which such Servicer Termination Event occurred, which period
shall be extended for a succeeding quarterly period on September 30, December
31, March 31 and June 30 of each year as provided below (each such quarterly
period for which the Servicer shall be designated to act as servicer hereunder,
a "Term of Service"); provided that nothing in this Section 8.20(b) shall
prohibit the Certificate Insurer or the Trustee from removing the Servicer
pursuant to Section 8.20(a). Notwithstanding the foregoing, the Certificate
Insurer may, in its sole discretion, extend the period for which the Servicer is
to act as such for a period in excess of one quarter (provided such extension
shall be an additional one or more quarters), but any such extension shall be
revocable at any time by the Certificate Insurer upon written notice delivered
to the Trustee and the Servicer at least fifteen days prior to the expiration of
the related quarterly period.
(c) The Certificate Insurer agrees to use its best efforts to inform the
Trustee of any materially adverse information regarding the Servicer's servicing
activities that comes to the attention of the Certificate Insurer from time to
time.
(d) The Servicer shall not resign from the obligations and duties hereby
imposed on it, except upon determination that its duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel
acceptable to the Trustee at the expense of the Servicer to such effect which
shall be delivered to the Trustee and the Certificate Insurer.
(e) No removal or resignation of the Servicer shall become effective until
the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its own
expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the
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Home Equity Loans, including all tax bills, assessment notices, insurance
premium notices and all other documents as well as all original documents then
in the Servicer's possession.
(g) Any collections then being held by the Servicer prior to its removal
and any collections received by the Servicer after removal or resignation shall
be endorsed by it to the Trustee and remitted directly and immediately to the
Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, the Trustee may (A)
solicit bids for a successor servicer as described below or (B) shall appoint
the Backup Servicer as Servicer. If the Trustee elects to solicit bids for a
successor Servicer, the Trustee agrees to act as Backup Servicer during the
solicitation process. The Trustee shall, if it is unable to obtain a qualifying
bid and is prevented by law from acting as Servicer, appoint, or petition a
court of competent jurisdiction to appoint, any housing and home finance
institution, bank or mortgage servicing institution which has been designated as
an approved seller-servicer by FNMA or FHLMC for first and second home equity
loans and having equity of not less than $5,000,000 (or such lower level as may
be acceptable to the Certificate Insurer), as determined in accordance with
generally accepted accounting principles and acceptable to the Certificate
Insurer as the successor to the Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder. The compensation of any successor Servicer (other than the Trustee in
its capacity as successor Servicer) so appointed shall be the amount agreed to
between the successor Servicer, the Certificate Insurer and the majority of the
Percentage Interests of the Class R Certificates, (up to a maximum of 0.50% per
annum on each Home Equity Loan) together with the other servicing compensation
in the form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15; provided, however, that if the Trustee becomes the
successor Servicer it shall receive as its compensation the same compensation
paid to the Servicer immediately prior to the Servicer's removal or resignation;
provided, further, however, that if the Trustee acts as successor Servicer then
the Seller agrees to pay to the Trustee at such time that the Trustee becomes
such successor Servicer a set-up fee of twenty-five dollars ($25.00) for each
Home Equity Loan then included in the Trust Estate. The amount payable in excess
of twenty-five dollars ($25.00) per Home Equity Loan, if any, shall be payable
to the successor Servicer and reimbursable pursuant to Section 7.03(b)(iv)(E)
hereof. The Trustee shall be obligated to serve as successor Servicer whether or
not the fee described in this section is paid by the Seller, but shall in any
event be entitled to receive, and to enforce payment of, such fee from the
Seller.
(i) In the event the Trustee elects to solicit bids as provided above, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to servicing compensation in accordance
with clause (g) above, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price they will pay to obtain
servicing. The Trustee shall deduct from any sum received by the Trustee from
the successor to the Servicer in respect of such sale, transfer and assignment
all costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder. After such
deductions, the remainder of such sum less any amounts due the Trustee or the
Trust from the Servicer shall be paid by the Trustee to the Servicer at the time
of such sale, transfer and assignment to the Servicer's successor.
(j) The Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
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effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's functions hereunder and shall promptly also
transfer to the Trustee or such successor Servicer, as applicable, all amounts
which then have been or should have been deposited in the Principal and Interest
Account by the Servicer or which are thereafter received with respect to the
Home Equity Loans. Neither the Trustee nor any other successor Servicer shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer. If the Servicer resigns or is replaced hereunder, the Seller
agrees to reimburse the Trust, the Owners and the Certificate Insurer for the
costs and expenses associated with the transfer of servicing to the replacement
Servicer, but subject to a maximum reimbursement to all such parties in the
amount of twenty-five dollars ($25.00) for each Home Equity Loan then included
in the Trust Estate. The amount payable in excess of twenty-five dollars
($25.00) per Home Equity Loan, if any, shall be payable to the successor
Servicer and reimbursable pursuant to Section 7.03(b)(iv)(E) hereof.
(k) The Trustee or any other successor Servicer, upon assuming the duties
of Servicer hereunder, shall immediately (i) record all assignments of Home
Equity Loans not previously recorded in the name of the Trustee pursuant to
Section 3.05(b)(ii) as a result of an opinion of counsel and (ii) make all
Delinquency Advances and Compensating Interest payments and deposit them to the
Principal and Interest Account which the Servicer has theretofore failed to
remit with respect to the Home Equity Loans; provided, however, that if the
Trustee is acting as successor Servicer, the Trustee shall only be required to
make Delinquency Advances (including the Delinquency Advances described in this
clause (j)) if, in the Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the Home Equity Loans.
(l) The Servicer which is being removed or is resigning shall give notice
to the Mortgagors, to Moody's and to Standard & Poor's of the transfer of the
servicing to the successor.
(m) The Trustee shall give notice to the Certificate Insurer, the Owners,
the Trustee, the Seller, Moody's and Standard & Poor's of the occurrence of any
event described in paragraphs (a) above of which the Trustee is aware.
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
Insurance.
(a) At any reasonable time and from time to time upon reasonable notice,
the Trustee, the Certificate Insurer, any Owner of a Class R Certificate, or any
agents thereof may inspect the Servicer's servicing operations and discuss the
servicing operations of the Servicer during the Servicer's normal business hours
with any of its officers or directors; provided, however, that the costs and
expenses incurred by the Servicer or its agents or representatives in connection
with any such examinations or discussions shall be paid by the Servicer.
(b) The Servicer (including the Trustee if it shall become the Servicer
hereunder) agrees to maintain errors and omissions coverage and a fidelity bond,
each at least to the extent required by Section 305 of Part I of FNMA Guide or
any successor provision thereof; provided, however, that in any event that the
fidelity bond or the errors and omissions coverage is no longer in effect, the
Trustee shall promptly give such notice to the Certificate Insurer and the
Owners.
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Section 8.22 Additional Servicing Responsibilities for Second Mortgage
Loans.
The Servicer must notify any superior lienholder in writing of the
existence of the Second Mortgage Loan and request notification of any action (as
described below) to be taken against the Mortgagor or the Mortgaged Property by
the superior lienholder.
If the Servicer is notified that any superior lienholder has accelerated
or intends to accelerate the obligations under a First Mortgage Loan, or has
declared or intends to declare a default under the mortgage or the promissory
note secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall take, on behalf of the
Trust, whatever actions are necessary to protect the interests of the Owners and
the Certificate Insurer, and/or to preserve the security of the related Home
Equity Loan, subject to the application of the REMIC Provisions. The Servicer
shall advance the necessary funds to cure the default or reinstate the lien
securing a First Mortgage Loan, if such advance is in the best interests of the
Certificate Insurer and the Owners; provided, however, that no such additional
advance need be made if such advance would be nonrecoverable. The Servicer shall
thereafter take such action as is necessary to recover the amount so advanced.
Any expenses incurred by the Servicer pursuant to this Section 8.22 shall be
Servicing Advances.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this Agreement
will terminate upon the payment to the Owners of all Certificates from amounts
other than those available under the Certificate Insurance Policy of all amounts
held by the Trustee and required to be paid to such Owners pursuant to this
Agreement upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate, (b) the disposition of all property acquired in respect of any
Home Equity Loan remaining in the Trust Estate and (c) at any time when a
Qualified Liquidation within the Trust is effected as described in Section 9.02.
To effect a termination of this Agreement pursuant to clause (c) above, the
Owners of all Certificates then Outstanding shall provide to the Trustee, at
their expense, an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer either
shall sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation. In no event, however, will the Trust created by this
Agreement continue beyond the expiration of twenty-one (21) years from the death
of the last survivor of the descendants of Joseph P. Kennedy, the late
Ambassador of the United States to the United Kingdom, living on the date
hereof. The Trustee shall give written notice of termination of the Agreement to
each Owner in the manner set forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R Certificates.
(a) On any Monthly Remittance Date after the Clean-Up Call Date, the
Owners of a majority of the Percentage Interests represented by the Class R
Certificates then outstanding may determine to purchase, in whole only, and may
cause the purchase from the Trust of all (but not fewer than all) Home Equity
Loans and all property theretofore acquired in respect of any Home Equity Loan
by foreclosure, deed in lieu of foreclosure, or otherwise then remaining in the
Trust Estate (i) on terms agreed upon between the Certificate Insurer and such
Owners of the Class R Certificates, or (ii) in the absence of such an agreement,
at a price equal to (x) in the case of Home Equity Loans 100% of the aggregate
Loan Balances of the related Home Equity Loans and (y) in the case of REO
Properties, the appraised value of such properties (such appraisal to be
conducted by an appraiser mutually agreed upon by the Servicer and the Trustee)
as of the day of purchase minus amounts remitted from the Principal and Interest
Account to the Certificate Account representing collections of principal on the
Home Equity Loans during the current Remittance Period, plus one month's
interest on such amount computed at the Adjusted Pass-Through Rate, plus all
accrued and unpaid Servicing Fees plus the aggregate amount of any unreimbursed
Delinquency Advances and Servicing Advances and Delinquency Advances which the
Servicer has theretofore failed to remit; provided, that in any case such price
shall not be less than the then outstanding Class A Certificate Principal
Balance. In connection with such purchase, the Servicer shall remit to the
Trustee all amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(b) In the event that the Owners of the Class R Certificates purchase all
Home Equity Loans and each REO Property remaining in the Trust Estate pursuant
to Section 9.02(a), the Trust Estate shall be terminated in accordance with the
following additional requirements:
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(i) The Trustee shall specify the first day in the 90-day liquidation
period in a statement attached to the Trust Estate's final Tax Return
pursuant to Treasury regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of the Code and
any regulations thereunder,
(ii) During such 90-day liquidation period, and at or prior to the
time of making the final payment on the Certificates, the Trustee shall
sell all of the assets of the Trust Estate to the Owner for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the owners of the Class R Certificates all
cash on hand in the Trust Estate (other than cash retained to meet
claims), and the Trust Estate shall terminate at that time.
(c) By their acceptance of the Certificates, the Owners thereof hereby
agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final Tax
Return, which shall be binding upon all successor Owners.
(d) In connection with any such purchase, such Owners of the Class R
Certificates shall provide to the Trustee and the Certificate Insurer an opinion
of counsel at the expense of such Owners experienced in federal income tax
matters acceptable to the Certificate Insurer and the Trustee to the effect that
such purchase and liquidation constitutes a Qualified Liquidation of the REMIC.
(e) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R Certificates or the
Certificate Insurer, as the case may be, or otherwise upon their order, in a
manner similar to that described in Section 8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or by
a court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that the REMIC does not and will no longer qualify as a REMIC
pursuant to Section 860D of the Code (the "Final Determination"), at any time on
or after the date which is 30 calendar days following such Final Determination
(i) the Certificate Insurer or the Owners of a majority in Percentage Interests
represented by the Class A Certificates then Outstanding with the consent of the
Certificate Insurer may direct the Trustee on behalf of the Trust to adopt a
plan of complete liquidation, as contemplated by Section 860F(a)(4) of the Code
and (ii) the Certificate Insurer may notify the Trustee of the Certificate
Insurer's determination to purchase from the Trust all (but not fewer than all)
Home Equity Loans and all property theretofore acquired by foreclosure, deed in
lieu of foreclosure, or otherwise in respect of any Home Equity Loan then
remaining in the Trust Estate at a price equal to the sum of (x) the greater of
(i) 100% of the aggregate Loan Balances of the Home Equity Loans as of the day
of purchase minus amounts remitted from the Principal and Interest Account
representing collections of principal on the Home Equity Loans during the
current Remittance Period, and (ii) the fair market value of such Home Equity
Loans (disregarding accrued interest), (y) one month's interest on such amount
computed at the Adjusted Pass-Through Rate and (z) the aggregate amount of any
unreimbursed Delinquency Advances and Servicing Advances and any Delinquency
Advances which the Servicer has theretofore failed to remit.
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Upon receipt of such direction from the Certificate Insurer, the Trustee
shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the aggregate Loan Balances of all
Home Equity Loans as of the date of such purchase, plus (a) one month's interest
on such amount at the Adjusted Pass-Through Rate, (b) the aggregate amount of
any unreimbursed Delinquency Advances and Servicing Advances and (c) any
Delinquency Advances which the Servicer has theretofore failed to remit. If,
during the Purchase Option Period, the Owners of the Class R Certificates have
not exercised the option described in the immediately preceding paragraph, then
upon the expiration of the Purchase Option Period (i) in the event that the
Certificate Insurer or the Owners of the Class A Certificates with the consent
of the Certificate Insurer have given the Trustee the direction described in
clause (a)(i) above, the Servicer shall sell the Home Equity Loans and
distribute the proceeds of the liquidation of the Trust Estate, each in
accordance with the plan of complete liquidation, such that, if so directed, the
liquidation of the Trust Estate, the distribution of the proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 60th day, or such later day as the Certificate Insurer or the Owners of
the Class A Certificates with the consent of the Certificate Insurer shall
permit or direct in writing, after the expiration of the Purchase Option Period
and (ii) in the event that the Certificate Insurer has given the Trustee notice
of the Certificate Insurer's determination to purchase the Trust Estate
described in clause (a)(ii) preceding the Certificate Insurer shall, within 60
days, purchase all (but not fewer than all) Home Equity Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure or otherwise in
respect of any Home Equity Loan then remaining in the Trust Estate. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an opinion of counsel
experienced in federal income tax matters, acceptable to the Certificate Insurer
and selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer, to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the aggregate Loan Balances of all
Home Equity Loans as of the date of such purchase, plus (a) one month's interest
on such amount computed at the Adjusted Pass-Through Rate, (b) the aggregate
amount of unreimbursed Delinquency Advances and (c) any Delinquency Advances
which the Servicer has theretofore failed to remit. In connection with such
purchase, the Servicer shall remit to the Trustee all amounts then on deposit in
the Principal and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
The foregoing opinion shall be deemed satisfactory unless the Certificate
Insurer gives the Owners of a majority of the Percentage Interest of the Class R
Certificates notice that such opinion is not satisfactory within thirty days
after receipt of such opinion.
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Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account; provided, however, that any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
from the Servicer's own funds shall be paid by the Trustee to the Servicer from
the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B) the
banking institution that is the Trustee shall serve as the Trustee at all times
under this Agreement, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions or any other
resolutions, statements, reports, documents, orders or other instruments
furnished pursuant to and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions or any other resolutions,
statements, reports, documents, orders or other instruments which by any
provision hereof are specifically required to be furnished to the Trustee, shall
be under a duty to examine the same to determine whether or not they conform to
the requirements of this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by the
Servicer, the Certificate Insurer, the Seller or the Depositor hereunder. If any
such instrument is found not to conform in any material respect to the
requirements of this Agreement, the Trustee shall notify the Owners of the
Certificates of such instrument in the event that the Trustee, after so
requesting, does not receive a satisfactorily corrected instrument.
(b) Notwithstanding the appointment of the Servicer hereunder, the Trustee
is hereby empowered to perform the duties of the Servicer it being expressly
understood, however, that the foregoing describes a power and not an obligation
of the Trustee, and that all parties hereto agree that, prior to any termination
of the Servicer, the Servicer and, thereafter, the Trustee or any other
successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicer, and pending the appointment of any other Person as successor
Servicer have the power and duty during its performance as Successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section 8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
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(ii) the Trustee shall not be personally liable for any error of judgment
made in good faith by an Authorized Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the
direction of the Certificate Insurer or of the Owners of a majority
in Percentage Interest of the Certificates of the affected Class or
Classes and the Certificate Insurer relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement relating to such Certificates;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default unless an Authorized Officer
of the Trustee shall have received written notice thereof. In the
absence of receipt of such notice, the Trustee may conclusively
assume that there is no default; and
(v) Subject to the other provisions of this Agreement and without
limiting the generality of this Section 10.01, the Trustee shall
have no duty (A) to see to any recording, filing, or depositing of
this Agreement or any agreement referred to herein or any financing
statement or continuation statement evidencing a security interest,
or to see to the maintenance of any such recording or filing or
depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance or (C) to see to the payment or
discharge of any tax, assessment, or other governmental charge or
any lien or encumbrance of any kind owing with respect to, assessed
or levied against, any part of the Trust Estate from funds available
in the Certificate Account.
(d) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
(e) No provision of this Agreement shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it. None of the provisions contained in this Agreement shall in any
event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in this
Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or to
take any remedial proceeding under this Agreement, or to take any steps in the
execution of the trusts hereby created or in the enforcement of any rights and
powers hereunder until it shall be indemnified to its satisfaction against any
and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
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Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon the
occurrence of any of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners entitled hereto
on any Payment Date any amounts available for distribution that it has
received in accordance with the terms hereof; (provided, however, that any
such failure which is due to circumstances beyond the control of the
Trustee shall not be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith shall prove to be incorrect in any material respect as of the time
when the same shall have been made, and such failure or breach shall
continue or not be cured for a period of 30 days after there shall have
been given, by registered or certified mail, to the Trustee by the Seller,
the Certificate Insurer, or by the Owners of at least 25% of the aggregate
Percentage Interests in the Trust Estate represented by the Class A
Certificates then Outstanding, or, if there are no Class A Certificates
then Outstanding, by such Percentage Interests represented by the Class R
Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Trustee,
and such decree or order shall have remained in force undischarged or
unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing.
The Depositor shall give to the Certificate Insurer, Moody's and Standard &
Poor's notice of the occurrence of any such event of which the Depositor is
aware.
(b) If any event described in Paragraph (a) occurs and is continuing, then
and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or if there are no Class A Certificates
then outstanding by such majority of the Percentage Interests represented by the
Class R Certificates, may, whether or not the Trustee resigns pursuant to
Section 10.09(b) hereof, immediately, concurrently with the giving of notice
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to the Trustee, and without delaying the 30 days required for notice therein,
appoint a successor Trustee pursuant to the terms of Section 10.09 hereof.
(c) The Servicer shall not be liable for any costs relating to the removal
of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee (acting as Trustee or Tax Matters Person) may request and
may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Depositor, the Seller, the Certificate
Insurer, or the Owners of any Class of Certificates mentioned herein shall be
sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officer's Certificate;
(d) the Trustee may consult with counsel, and the advice of such counsel
(selected in good faith by the Trustee) shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement at the request or direction of any of
the Owners pursuant to this Agreement, unless such Owners shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, unless requested in writing to do so by the Owners; 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 taking any such action;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodian;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
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(i) the right of the Trustee to perform any discretionary act enumerated in
this Agreement shall not be construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required to
furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate (either in writing or orally with
prompt written or telecopy confirmations), that such information or calculations
is or are incorrect, or (ii) unless there is a manifest error in any such
information; and
(k) the Trustee shall not be required to give any bond or surety in respect
of the execution of the Trust Estate created hereby or the powers granted
hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the Certificates,
except the execution and authentication of the Certificates, shall be taken as
the statements of the Seller, and the Trustee assumes no responsibility for
their correctness (other than with respect to such execution and
authentication). The Trustee makes no representation as to the validity or
sufficiency of this Agreement, of the Certificates, or any Home Equity Loan or
document related thereto other than as to validity and sufficiency of its
authentication of the Certificates. The Trustee shall not be accountable for the
use or application by the Seller 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, the Seller or the Servicer in respect of the Home Equity Loans or
deposited into or withdrawn from the Principal and Interest Account or the
Certificate Account by the Depositor, the Servicer or the Seller, and shall have
no responsibility for filing any financing or continuation statement in any
public office at any time or otherwise to perfect or maintain the perfection of
any security interest or lien or to prepare or file any tax returns or
Securities and Exchange Commission filings for the Trust or to record this
Agreement. The Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default unless an Authorized Officer of the Trustee
shall have received written notice thereof or an Authorized Officer has actual
knowledge thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the Trust,
in its individual or any other capacity, may become an Owner or pledgee of
Certificates and may otherwise deal with the Trust with the same rights it would
have if it were not Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other trust funds except to the extent required herein or required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
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Section 10.07 Compensation and Reimbursement.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 6.12, Section 7.03(b)(i), Section
7.06 and Section 10.13 hereof. Except as otherwise provided in this Agreement,
the Trustee and any director, officer, employee or agent of the Trustee shall be
indemnified by the Trust and held harmless against any loss, liability, or
"unanticipated out-of-pocket" expense incurred or paid to third parties (which
expenses shall not include salaries paid to employees, or allocable overhead, of
the Trustee) in connection with the acceptance or administration of its trusts
hereunder or the Certificates, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. All such amounts described in the preceding
sentence shall be payable as provided in (A) Section 7.03(b)(i) with respect to
the first $50,000 of such amounts and (B) Section 7.03(b)(iv)(D) with respect to
the remainder of such amounts, subject in the case of clause (B), to Sections
10.01(e) and 10.01(g). The Trustee and any director, officer, employee or agent
of the Trustee shall be indemnified by the Seller and held harmless against any
loss, liability or reasonable expenses incurred by the Trustee in performing its
duties as Tax Matters Person for the REMIC under this Agreement, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance of its duties as Tax Matters Person for the
REMIC. The provisions of this Section 10.07 shall survive the termination of
this Agreement.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and the Owners of a majority of
the Percentage Interests of the Class A Certificates and having a deposit rating
of at least A- from Standard & Poor's and A2 by Moody's. If such Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
or association shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall, upon the request of the Seller with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld) or of the
Certificate Insurer, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may resign
at any time by giving written notice of resignation to the Depositor and by
mailing notice of resignation by first-class mail, postage prepaid, to the
Certificate Insurer and the Owners at their addresses appearing on the Register.
A copy of such notice shall be sent by the resigning Trustee to the Rating
Agencies. Upon receiving notice of resignation, the Depositor shall promptly
appoint a successor trustee or trustees acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Seller, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor trustee or
trustees. If no successor trustee shall have been
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appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Owner may, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and appropriate, appoint a successor
trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may remove the
Trustee and appoint a successor trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by the
Class A Certificates with the consent of the Certificate Insurer, or, if there
are no Class A Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class R Certificates, may at any time remove the
Trustee and appoint a successor trustee acceptable to the Certificate Insurer by
delivering to the Trustee to be removed, to the successor trustee so appointed,
to the Depositor, to the Servicer and to the Certificate Insurer, copies of the
record of the act taken by the Owners, as provided for in Section 12.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the terms
of this Agreement, or becomes ineligible pursuant to Section 10.08 to serve as
Trustee, the Certificate Insurer may remove the Trustee and appoint a successor
trustee by written instrument, in triplicate, signed by the Certificate Insurer
duly authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of the Trustee for any cause, the
Seller shall promptly appoint a successor trustee acceptable to the Certificate
Insurer and the Owner of the majority of Percentage Interests of the Class A
Certificates then Outstanding. If within one year after such resignation,
removal or incapability or the occurrence of such vacancy, a successor trustee
shall be appointed by act of the Certificate Insurer or the Owners of a majority
of the Percentage Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer, the successor trustee
so appointed shall forthwith upon its acceptance of such appointment become the
successor trustee and supersede the successor trustee appointed by the
Depositor. If no successor trustee shall have been so appointed by the Depositor
or the Owners and shall have accepted appointment in the manner hereinafter
provided, any Owner may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(g) The Seller shall give notice of any removal of the Trustee by mailing
notice of such event by first-class mail, postage prepaid, to the Certificate
Insurer, to the Rating Agencies and to the Owners as their names and addresses
appear in the Register. Each notice shall include the name of the successor
Trustee and the address of its corporate trust office.
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Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge and
deliver to the Depositor on behalf of the Trust and to its predecessor Trustee
an instrument accepting such appointment hereunder and stating its eligibility
to serve as Trustee hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts, duties and obligations of its predecessor hereunder; but, on
request of the Depositor or the successor Trustee, such predecessor Trustee
shall, upon payment of its charges then unpaid, execute and deliver an
instrument transferring to such successor trustee all of the rights, powers and
trusts of the Trustee so ceasing to act, and shall duly assign, transfer and
deliver to such successor trustee all property and money held by such Trustee so
ceasing to act hereunder. Upon request of any such successor trustee, the
Depositor on behalf of the Trust shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor trustee all such
rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Depositor shall mail notice thereof by first-class mail, postage
prepaid, to the Owners at their last addresses appearing upon the Register. The
Depositor shall send a copy of such notice to the Rating Agencies. If the
Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to Business
of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and except
as otherwise specifically set forth in (a) preceding, the Trustee shall timely
file all reports prepared by the Seller and required to be filed by the Trust
with any federal, state or local governmental authority having jurisdiction over
the Trust, including other reports that must be filed with the Owners, such as
the
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Internal Revenue Service's Form 1066 and Schedule Q and the form required under
Section 6050K of the Code, if applicable to REMICs. Furthermore, the Trustee
shall report to Owners, if required, with respect to the allocation of expenses
pursuant to Section 212 of the Code in accordance with the specific instructions
to the Trustee by the Seller with respect to such allocation of expenses. The
Trustee shall, upon request of the Seller, collect any forms or reports from the
Owners determined by the Seller to be required under applicable federal, state
and local tax laws.
(c) Except as otherwise provided, the Trustee shall have the responsibility
for preparation and execution of those returns, forms, reports and other
documents referred to in this Section.
(d) The Seller covenants and agrees that it shall provide to the Trustee
any information necessary to enable the Trustee to meet its obligations under
subsections (a), (b) and (c) above.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to the
Certificate Account, the Depositor, the Seller, the Servicer or any Owner for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Trustee, its directors, officers, employees
or agents or any such Person against any liability which would otherwise be
imposed by reason of negligent action, negligent failure to act or willful
misconduct in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. Subject to the foregoing sentence, the Trustee
shall not be liable for losses on investments of amounts in the Certificate
Account (except for any losses on obligations on which the bank serving as
Trustee is the obligor). In addition, the Depositor, the Seller and Servicer
covenant and agree to indemnify the Trustee and the Servicer (if the Servicer is
also the Trustee) from, and hold it harmless against, any and all losses,
liabilities, damages, claims or expenses (including legal fees and expenses) of
whatsoever kind arising out of or in connection with the performance of its
duties hereunder other than those resulting from the negligence or bad faith of
the Trustee, and the Seller shall pay all amounts not otherwise paid or
reimbursed pursuant to Sections 2.05, 6.12 and 7.06 hereof. The Trustee and any
director, officer, employee or agent of the Trustee may rely and shall be
protected in acting or refraining from acting in good faith on any certificate,
notice or other document of any kind prima facie properly executed and submitted
by the Authorized Officer of any Person respecting any matters arising
hereunder. The provisions of this Section 10.13 shall survive the termination of
this Agreement and the payment of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate or Property may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
and reasonably acceptable to the Certificate Insurer to act as Co-Trustee or
Co-Trustees, jointly with the Trustee, of all or any part of the Trust Estate or
separate Trustee or separate Trustees of any part of the Trust Estate, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Owners, such title to the Trust Estate, or any part thereof, and, subject to the
other provisions of this Section 10.14, such powers, duties, obligations, rights
and trusts as the Servicer and the Trustee may consider necessary or desirable.
If the Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in the case any event indicated in
Section 8.20(a) shall have occurred and be continuing, the
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Trustee subject to reasonable approval of the Certificate Insurer alone shall
have the power to make such appointment. No Co-Trustee or separate Trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 10.08 and no notice to Owner of the appointment of any
Co-Trustee or separate Trustee shall be required under Section 10.09.
Every separate Trustee and Co-Trustee shall, to the extent permitted, be
appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate Trustee or Co-Trustee jointly
(it being understood that such separate Trustee or Co-Trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
Estate or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate Trustee or Co-Trustee, but solely at
the direction of the Trustee;
(ii) No Co-Trustee hereunder shall be held personally liable by reason
of any act or omission of any other Co-Trustee hereunder; and
(iii) The Servicer, and the Certificate Insurer and the Trustee acting
jointly may at any time accept the resignation of or remove any separate
Trustee or Co-Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate Trustees and Co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or Co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and Co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate Trustee or Co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or Co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
The parties hereto acknowledge that the Co-Trustee will act as co-trustee
hereunder pursuant to the Co-Trustee Agreement and shall be entitled to the same
rights and subject to the same standards as the Trustee with respect to all
rights and immunities of the Trustee, including with respect to indemnification
and the obligations and duties of the Servicer to the Trustee pursuant to
Sections 2.05, 8.05, 10.07 and 11.16(a). The Trustee shall pay the Co-Trustee
any compensation to which the Co-Trustee may be entitled from its own funds.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, the Seller, the Certificate Insurer
or the Owners, as the case may be, shall furnish to the Trustee a certificate
stating that all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by counsel, unless such Authorized Officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any opinion of counsel may be based, insofar as it
relates to factual matter upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, the Seller or the
Servicer, stating that the information with respect to such factual matters is
in the possession of the Depositor, the Seller or the Servicer, unless such
Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Trustee, stating that the
information with respect to such matters is in the possession of the Trustee,
unless such counsel knows, or in the exercise
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of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any opinion of
counsel may be based on the written opinion of other counsel, in which event
such opinion of counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Trustee may reasonably rely upon the opinion of such
other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the Owners
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Owners in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Owner of any Certificate shall bind the Owner of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Trust in reliance thereon, whether or not notation
of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver or
act of the Owners or other documents provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with the Trustee by any Owner, the
Certificate Insurer, the Depositor, the Seller shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to or with and
received by the Trustee at its Corporate Trust Office as set forth in Section
2.02 hereof.
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Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigned or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Owners shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Owners when such notice is required to be given pursuant
to any provision of this Agreement, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice.
Where this Agreement provides for notice to any rating agency that rated
any Certificates, failure to give such notice shall not affect any other rights
or obligations created hereunder.
Section 11.06 Rules by Trustee and Seller.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto shall
bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
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Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or such
other date for the payment of any distribution to any Owner or the mailing of
such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many states
and outside the United States and the desire to establish with certainty that
this Agreement will be governed by and construed and interpreted in accordance
with the law of a state having a well-developed body of commercial and financial
law relevant to transactions of the type contemplated herein, this Agreement and
each Certificate shall be construed in accordance with and governed by the laws
of the State of New York applicable to agreements made and to be performed
therein, without giving effect to the conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of the
United States District Court for the Southern District of New York and any court
in the State of New York located in the City and County of New York, and any
appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Each of the Depositor, Seller and Servicer hereby irrevocably appoints
and designates the Trustee as its true and lawful attorney and duly authorized
agent for acceptance of service of legal process with respect to any action,
suit or proceeding set forth in paragraph (b) hereof. Each of the Seller and
Servicer agrees that service of such process upon the Trustee shall constitute
personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the right of
the Depositor, the Seller, the Servicer or the Certificate Insurer or
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Home Equity Loans against any Mortgagor in the courts of any jurisdiction.
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Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the terms
of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller and the Servicer, may at any
time and from time to time, with the prior approval of the Certificate Insurer
but without the giving of notice to or the receipt of the consent of the Owners,
amend this Agreement, and the Trustee shall consent to the amendment for the
purposes of (i) if accompanied by an approving opinion of counsel which shall
not be at the expense of the Trustee experienced in federal income tax matters,
removing the restriction against the transfer of a Class R Certificate to a
Disqualified Organization (as such term is defined in the Code), (ii) complying
with the requirements of the Code including any amendments necessary to maintain
REMIC status of the Trust Estate (other than the Pre-Funding Account and the
Capitalized Interest Account), (iii) curing any ambiguity, (iv) correcting or
supplementing any provisions of this Agreement which are inconsistent with any
other provisions of this Agreement or (v) for any other purpose, provided that
in the case of clause (v), (A) the Seller delivers an opinion of counsel
acceptable to the Trustee which shall not be at the expense of the Trustee that
such amendment will not adversely effect in any material respect the interest of
the Owners and (B) such amendment will not result in a withdrawal or reduction
of the rating of the Class A Certificates without regard to the Certificate
Insurance Policy. Notwithstanding anything to the contrary, no such amendment
shall (a) change in any manner the amount of, or delay the timing of, payments
which are required to be distributed to any Owner without the consent of the
Owner of such Certificate, (b) change the percentages of Percentage Interest
which are required to consent to any such amendments, without the consent of the
Owners of all Certificates of the Class or Classes affected then outstanding or
(c) which affects in any manner the terms or provisions of the Certificate
Insurance Policy.
(b) The Certificate Insurer and the Rating Agencies shall be provided by
the Seller with copies of any amendments to this Agreement, together with copies
of any opinions or other documents or instruments executed in connection
therewith.
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(c) Notwithstanding any contrary provisions of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel (provided by the Person requesting such
amendment) to the effect that such amendment will not result in the imposition
of any tax on the Trust pursuant to the REMIC Provisions or cause the REMIC to
fail to qualify as a REMIC at any time that any of the Certificates are
outstanding.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Seller may, subject to
the eligibility requirements for the Trustee set forth in Section 10.08 hereof,
including, without limitation, the written consent of the Certificate Insurer,
appoint one or more other Paying Agents or successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners of
Certificates of each Class for which it is acting as Paying Agent on each
Payment Date among such Owners in the proportion specified by the Trustee;
and
(b) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Owners entitled
thereto until such sums shall be paid to such Owners or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying Agent,
the Trustee shall notify the Certificate Insurer and the Owners by mailing
notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Trust Estate (other than the
Pre-Funding Account and the Capitalized Interest Account) shall constitute, and
that the affairs of the Trust Estate (other than the Pre-Funding Account and the
Capitalized Interest Account) shall be conducted so as to qualify it as a REMIC
in accordance with the REMIC Provisions. In furtherance of such intention,
Chemical Bank or such other person designated pursuant to Section 11.18 hereof
shall act as agent for the Trust and as Tax Matters Person for the Trust and
that in such capacity it shall: (i) prepare or cause to be prepared and
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filed, at its own expense, in a timely manner, annual tax returns and any other
tax return required to be filed by the REMIC using a calendar year as the
taxable year for the REMIC (ii) in the related first such tax return, make (or
cause to be made) an election satisfying the requirements of the REMIC
Provisions, on behalf of the REMIC for it to be treated as a REMIC; (iii) at the
Tax Matters Person's expense, prepare and forward, or cause to be prepared and
forwarded, to the Owners all information, reports or tax returns required with
respect to the REMIC including Schedule Q to Form 1066, as, when and in the form
required to be provided to the Owners, and to the Internal Revenue Service and
any other relevant governmental taxing authority in accordance with the REMIC
Provisions and any other applicable federal, state or local laws, including
without limitation information reports relating to "original issue discount" as
defined in the Code based upon the prepayment assumption and calculated by using
the "Issue Price" (within the meaning of Section 1273 of the Code) of the
Certificates of the related Class; provided that the tax return filed on
Schedule Q to Form 1066 shall be prepared and forwarded to the Owners of the
Class R Certificates no later than 50 days after the end of the period to which
such tax return related; (iv) not take any action or omit to take any action
that would cause the termination of the REMIC status of the REMIC, except as
provided under this Agreement; (v) represent, the Trust or the REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to a
taxable year of the Trust, or the REMIC, enter into settlement agreements with
any governmental taxing agency, extend any statute of limitations relating to
any tax item of the Trust, or the REMIC, and otherwise act on behalf of the
Trust, or the REMIC in relation to any tax matter involving the Trust, or the
REMIC (the legal expenses and costs of any such action described in this
subsection (v) and any liability resulting therefrom shall constitute expenses
of the Trust and the Trustee shall be entitled to reimbursement therefor as
provided in Section 7.03(b)(i) unless such legal expenses and costs are incurred
by reason of the Trustee's willful misfeasance, bad faith or negligence); (vi)
comply with all statutory or regulatory requirements with regard to its conduct
of activities pursuant to the foregoing clauses of this Section 11.16,
including, without limitation, providing all notices and other information to
the Internal Revenue Service Owners of Class R Certificates required of a "tax
matters person" pursuant to subtitle F of the Code and the Treasury Regulations
thereunder; (vii) make available information necessary for the computation of
any tax imposed (A) on transferor of residual interests to certain Disqualified
Organizations or (B) on pass-through entities, any interest in which is held by
a Disqualified Organization; and (viii) acquire and hold the Tax Matters Person
Residual Interest. The obligations of the Trustee or such other designated Tax
Matters Person pursuant to this Section 11.16 shall survive the termination or
discharge of this Agreement.
In addition to the foregoing, the Tax Matters Person shall prepare and
forward, or cause to be prepared and forwarded, to the Seller as long as it is
an Owner of a Class R Certificate each year, beginning in December 1996, on or
before the twenty-seventh day (or if such day is not a business day, on the next
succeeding business day) of the month of (1) March (beginning in 1997), with
respect to the period January 1 to March 31, (2) May, with respect to the period
April 1 to May 31, (3) August, with respect to the period June 1 to August 31
and (4) December, with respect to the period September 1 to December 31, an
estimate of such Owner's allocable portion of taxable income or net loss, excess
inclusions and investment expenses for the related period to the extent such
amounts are required to be furnished on Schedule Q to Form 1066. Such estimates
shall be made to the extent of and based upon information provided to the Tax
Matters Person by the Servicer (which information may consist of actual
information related to payments received on the Home Equity Loans, except that
the estimate with respect to any month for which actual information is not
available may be based on the payment history for prior months and an assumption
of prepayments of the Home Equity Loans as provided by the Servicer). The legal
expenses and costs of any action or proceeding resulting from or relating to the
estimates provided by the Tax Matters Person pursuant to this Section 11.16(a)
and any liability resulting therefrom shall constitute expenses of the Servicer
and the Trustee shall be entitled to reimbursement therefor from the
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Servicer unless such legal expenses, costs or liability are incurred by reason
of the Trustee willful misfeasance, bad faith or gross negligence.
(b) The Seller, the Depositor, the Trustee and the Servicer covenant and
agree for the benefit of the Owners and the Certificate Insurer (i) to take no
action which would result in the termination of REMIC status for the REMIC, (ii)
not to engage in any "prohibited transaction", as such term is defined in
Section 860F(a)(2) of the Code, (iii) not to engage in any other action which
may result in the imposition on the Trust of any other taxes under the Code and
(iv) to cause the Servicer not to take or engage in any such action, to the
extent the Seller is aware of any such proposed action by the Servicer.
(c) The REMIC shall, for federal income tax purposes, maintain books on a
calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, the Seller nor the Trustee shall enter into any
arrangement by which the Trustee will receive a fee or other compensation for
services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or the
Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an opinion of counsel experienced
in federal income tax matters acceptable to the Certificate Insurer to the
effect that such transaction does not result in a tax imposed on the Trustee or
cause a termination of REMIC status for the REMIC; provided, however, that such
transaction is otherwise permitted under this Agreement.
(g) In the event that any tax is imposed on "prohibited transactions" of
the Trust created hereunder as defined in Section 860F(a)(2) of the Code, on
"net income from foreclosure property" of the Trust as defined in Section
860G(c) of the Code, on any contributions to the Trust after the Startup Date
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Trustee if such tax arises out of or results from the
willful misfeasance, bad faith or negligence in performance by the Trustee of
any of its obligations under Article X, (ii) to the Servicer if such tax arises
out of or results from a breach by the Servicer of any of its obligations under
Article VIII or otherwise (iii) against amounts on deposit in the Certificate
Account and shall be paid by withdrawal therefrom.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer at the expense
of the party seeking to take such action but in no event at the expense of the
Trust to the effect that such transaction does not result in a tax imposed on
the Trust or the REMIC or cause a termination of REMIC status for the REMIC, (i)
sell any assets in the Trust Estate, (ii) accept any contribution of assets
after the Startup Day (other than Subsequent Home Equity Loans) (iii) allow the
Servicer to foreclose upon any Home Equity Loan if such foreclosure would result
in a tax on the Trust or the REMIC or cause termination of the REMIC status for
the REMIC or (iv) agree to any modification of this Agreement. To the extent
that sufficient amounts cannot be so retained to pay or provide for the payment
of such tax, the Trustee is hereby authorized to and shall segregate, into a
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separate non-interest bearing account, the net income from any such Prohibited
Transactions of the REMIC and use such income, to the extent necessary, to pay
such tax; provided that, to the extent that any such income is paid to the
Internal Revenue Service, the Trustee shall retain an equal amount from future
amounts otherwise distributable to the Owners of Class R Certificates and shall
distribute such retained amounts to the Owners of Class A Certificates to the
extent they are fully reimbursed and then to the Owners of the Class R
Certificates. If any tax, including interest penalties or assessments,
additional amounts or additions to tax, is imposed on the Trust, such tax shall
be charged against amounts otherwise distributable to the owners of the Class R
Certificates on a pro rata basis. The Trustee is hereby authorized to and shall
retain from amounts otherwise distributable to the Owners of the Class R
Certificates sufficient funds to pay or provide for the payment of, and to
actually pay, such tax as is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for REMIC for all purposes of the
Code and such Tax Matters Person will perform, or cause to be performed, such
duties and take, or cause to be taken, such actions as are required to be
performed or taken by the Tax Matters Person under the Code. The Tax Matters
Person for the REMIC shall be the Trustee as long as it owns a Class R
Certificate. If the Trustee does not own a Class R Certificate, the Tax Matters
Person may be any other entity that owns a Class R Certificate and accepts a
designation hereunder as Tax Matters person by delivering an affidavit in the
form of Exhibit I.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be suspended
and shall run to the benefit of the Owners during any period in which there
exists a Certificate Insurer Default; provided, that the right of the
Certificate Insurer to receive the Premium Amount shall not be suspended if such
Certificate Insurer Default was a default other than a default under clause (a)
of the definition thereof. At such time as the Class A Certificates are no
longer Outstanding hereunder and the Certificate Insurer has received all
Reimbursement Amounts, the Certificate Insurer's rights hereunder shall
terminate.
Section 11.20 Reserved.
Section 11.21 Third Party Rights.
The Trustee, the Seller, the Depositor and the Owners agree that the
Certificate Insurer shall be deemed a third-party beneficiary of this Agreement
as if it were a party hereto.
Section 11.22 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
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The Trustee: The Chase Manhattan Bank
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Advanced Structured Products Group
(212) 946-8600
(212) 946-3240 - Fax
The Depositor: IMC Securities, Inc.
3450 Bushwood Park Drive
Tampa, FL 33618
(813) 932-2211
(813) 932-8257 - Fax
The Seller: Industry Mortgage Company, L.P.
3450 Bushwood Park Drive
Tampa, FL 33618
(813) 932-2211
(813) 932-8257 - Fax
The Servicer: Industry Mortgage Company, L.P.
3450 Bushwood Drive
Tampa, FL 33618
(813) 932-2211
(813) 932-8257 - Fax
The Certificate
Insurer: Financial Security Assurance
350 Park Avenue
New York, New York 10022
Attention: Surveillance Department
Tel: (212) 826-0100
Fax: (212) 339-3518
(212) 339-3529
The Underwriters Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Attention: Asset-Backed Securities
Tel: (212) 272-2000
Fax: (212) 272-7294
[Nomura Securities International, Inc.
Two World Financial Center
Building B, 21st Floor
New York, New York 10281-1198
Attention: Residential Mortgage-Backed Group
Tel: (212) 667-1000
Fax: (212) 667-1391]
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Moody's: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: The Residential Mortgage
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-0355
Standard & Poor's: Standard & Poor's Ratings Services,
a division of the McGraw-Hill Companies
26 Broadway
15th Floor
New York, New York 10004
Attention: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 208-8365
Section 11.23 Rule 144A Information. For so long as any of the Class R
Certificates are "restricted securities" within the meaning of Rule 144A under
the Securities Act, the Servicer agrees to provide to any Owner of the Class R
Certificate and to any prospective purchaser of Class R Certificates designated
by such an Owner, upon the request of such Owner or prospective purchaser, the
information specified below which is intended to satisfy the condition set forth
in Rule 144A(d)(4) under the Securities Act; provided that this Section 11.23
shall require, as to the Trustee or the Servicer, only that the Servicer provide
publicly available information regarding it or the Trustee in response to any
such request; and provided further that the Servicer shall be obligated to
provide only such basic, material information concerning the structure of the
Class R Certificates and distributions thereon, the nature, performance and
servicing of the Home Equity Loans supporting the Certificates, and any credit
enhancement mechanism, if any, associated with the Certificates. Any recipient
of information provided pursuant to this Section 11.23 shall agree that such
information shall not be disclosed or used for any purpose other than the
evaluation of the Class R Certificates by the prospective purchaser. The Trustee
shall have no responsibility for the sufficiency under Rule 144A of any
information so provided by the Servicer to any Owner or prospective purchaser of
Class R Certificates.
END OF ARTICLE XI
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ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01 Trust Estate and Accounts Held for Benefit of the Certificate
Insurer.
The Trustee shall hold the Trust Estate for the benefit of the related
Owners and the Certificate Insurer and all references in this Agreement and in
the Certificates to the benefit of Owners of the Certificates shall be deemed to
include the Certificate Insurer. The Trustee shall cooperate in all reasonable
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Properties, and shall maintain the
Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Certificate Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Owners shall be deemed to include the
Certificate Insurer. Unless a Certificate Insurer Default exists, the Servicer
shall not terminate any Sub-Servicing Agreements without cause without the prior
consent of the Certificate Insurer.
Section 12.02 Claims Upon the Policy; Policy Payments Account.
(a) If on the Determination Date, the funds then on deposit in the
Certificate Account, are insufficient to pay the Insured Payments on such
Payment Date, the Trustee shall give notice to the Certificate Insurer by
telephone or telecopy of the amount of such deficiency, confirmed in writing in
the form set forth as Exhibit A to the Endorsement of the Certificate Insurance
Policy, to the Certificate Insurer and the Fiscal Agent (as defined in the
Certificate Insurance Policy), if any, at or before 9:00 a.m., New York City
time, on the second Business Day prior to such Payment Date.
(b) The Trustee shall establish a separate special purpose trust account
for the benefit of the Owners of the Class A Certificates and the Certificate
Insurer referred to herein as the "Policy Payments Account" over which the Trust
shall have exclusive control and sole right of withdrawal. The Trustee shall
deposit any amount paid under the Certificate Insurance Policy in the Policy
Payments Account and distribute such amount only for purposes of payment to the
Owners of the Class A Certificates of the Insured Payments 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. Amounts paid under the
Certificate Insurance Policy shall be transferred to the Certificate Account in
accordance with the next succeeding paragraph and disbursed by the Trustee to
Owners of the Class A Certificates in accordance with Section 7.03. 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 Insured Payments with other
funds available to make such payment. However, the amount of any payment of
principal of or interest on the related Class A Certificates to be paid from
funds transferred from the Policy Payments Account shall be noted as provided in
paragraph (c) below in the Register and in the statement to be furnished to
Owners of the Class A Certificates pursuant to Section 7.08. Funds held in the
Policy Payments Account shall not be invested by the Trustee.
On any Payment Date with respect to which a claim has been made under the
Insurance Policy, the amount of funds received by the Trustee as a result of any
claim under the Insurance Policy, to the extent required to make the Insured
Payment on such Payment Date shall be withdrawn from the Policy Payments Account
and deposited in the Certificate Account and applied by the Trustee, together
with the other funds to be withdrawn from the Certificate Account, directly to
the payment in full of the
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Insured Payment due on the related Class of Class A Certificates. Funds received
by the Trustee as a result of any claim under the Insurance Policy shall be
deposited by the Trustee in the Policy Payments Account and used solely for
payment to the Owners of the Class A Certificates 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 Payment Date shall be remitted to the Certificate Insurer, pursuant
to the instructions of the Certificate Insurer, 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 Class A Certificate from moneys
received under the Certificate Insurance Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer and Fiscal
Agent of any proceeding or the institution of any action, of which an Authorized
Officer of the Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to the
Class A Certificates. Each Owner of a Class A Certificate by its purchase of
such Certificate, the Servicer and the Trustee hereby agree that, the
Certificate Insurer (so long as no Certificate Insurer Default exists) may at
any time during the continuation of any proceeding relating to a Preference
Claim direct all matters relating to such Preference Claim, including without
limitation, (i) the direction of any appeal of any order relating to such
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, the Certificate Insurer shall be subrogated to the rights of the
Servicer, the Trustee and Owner of Class A Certificate in the conduct of any
such Preference Claim, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
Section 12.03 Effect of Payments by the Certificate Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect
to principal of or interest on any of the Class A Certificates which is made
with moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of such Certificates from the Trust and shall
not result in the payment of or the provision for the payment of the principal
of or interest on such Certificates within the meaning of Section 7.03. The
Depositor, the Servicer and the Trustee acknowledge, and each Owner by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Depositor, the Servicer, the Trustee
or the Registrar (a) to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on any Class A
Certificates to the Owners of such Certificates, the Certificate Insurer will be
fully subrogated to the rights of such Holders to receive such principal and
interest from the Trust and (b) the Certificate Insurer shall be paid such
principal and interest but only from the sources and in the manner provided
herein for the payment of such principal and interest.
The Trustee, the Seller, the Depositor and the Servicer shall cooperate in
all respects with any reasonable request by the Certificate Insurer for action
to preserve or enforce the Certificate Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the Owners
as otherwise set forth therein.
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Section 12.04 Notices to the Certificate Insurer.
All notices, statements, reports, certificates or opinions required by this
Agreement to be sent to any other party hereto or to any of the Owners shall
also be sent to the Certificate Insurer.
Section 12.05 Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 12.06 Rights to the Certificate Insurer To Exercise Rights of
Owners.
By accepting its Certificate, each Owner of a Class A Certificate agrees
that unless a Certificate Insurer Default exists, the Certificate Insurer shall
have the right to exercise all rights of the Owners of the Class A Certificates
as specified under this Agreement without any further consent of the Owners of
the Class A Certificates.
END OF ARTICLE XII
115
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers
thereunto duly authorized, all as of the day and year first above written.
IMC SECURITIES, INC.
as Depositor
By: _________________________________
Title: ______________________________
INDUSTRY MORTGAGE COMPANY, L.P., as Seller
By: Industry Mortgage Corporation,
as General Partner
By: _________________________________
Title: ______________________________
INDUSTRY MORTGAGE COMPANY, L.P., as Servicer
By: Industry Mortgage Corporation,
as General Partner
By: _________________________________
Title: ______________________________
THE CHASE MANHATTAN BANK
as Trustee
By: _________________________________
Title: ______________________________
<PAGE>
STATE OF FLORIDA )
: ss.:
COUNTY OF HILLSBOROUGH )
On the ___ day of _____________, 1996, before me personally came
__________________ and ____________ to me known, who, being by me duly sworn,
did each depose and say that he/she resides at ________________,
_____________________________ and __________________, ________________________;
that he/she is a ____________________ and of IMC Securities, Inc., a Delaware
corporation; and that he signed his name thereto by order of the respective
Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
_______________________
Notary Public
<PAGE>
STATE OF FLORIDA )
: ss.:
COUNTY OF HILLSBOROUGH )
On the ___ day of _____________, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________, _____________________________; that
he/she is a ____________________ of Industry Mortgage Corporation, a Delaware
corporation, the general partner of Industry Mortgage Company, L.P., a Delaware
limited partnership; and that he signed his name thereto by order of the
respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
_______________________
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ___ day of _______________, 1996, before me personally came
______________, to me known, who, being by me duly sworn did depose and say that
he/she resides at ____________________; that he/she is a
________________________ of The Chase Manhattan Bank, the New York banking
corporation described in and that executed the above instrument as Trustee; and
that he/she signed his/her name thereto by order of the Board of Directors of
said New York banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
_______________________
Notary Public
<PAGE>
SCHEDULE I
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate Trust
Office and by the Servicer.
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Home Equity Loans and certain other
property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1996-3") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-1-
CUSIP
$ July __, 1996
- --------------------- ---------------- ---------------------
Original Class A-1 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------------------
Registered Owner
A-1-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans (other than any
principal and interest due thereon on or prior to July 1, 1996 whether or not
received) listed in Schedule I to the Pooling and Servicing Agreement and
Schedule I to any Subsequent Transfer Agreement which the Seller is causing to
be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer) and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-1
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-1 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to August 26, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO AUGUST 26, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
A-1-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1996-3, Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of July 1, 1996 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1996-3 Home Equity Loan Pass-Through
Certificates, Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates and the Class A-7 Certificates shall be together
referred to as the "Class A Certificates" and the Class A Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing August 26, 1996, the Owners of the Class A-1 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-1 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-1 Certificates. The Percentage Interest of each
Class A-1 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-1 Certificate on the Startup Day by the aggregate Class A-1
Certificate Principal Balance on the Startup Day.
"Class A-1 Distribution Amount" means with respect to any Payment Date the
sum of (x) the Class A-1 Current Interest and (y) the Principal Distribution
Amount payable to the Owners of the Class A-1 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date:
"Class A-1 Current Interest" means with respect to any Payment Date, 30
days' interest accrued on the Class A-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-1 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-1 Certificates as it relates to interest previously paid on the Class
A-1 Certificates, plus the Carry Forward Amount, if any, with respect to the
Class A-1 Certificates.
"Principal Distribution Amount" means with respect to the Class A
Certificates for any Payment Date, the lesser of:
A-1-3
<PAGE>
(a) the Total Available Funds plus any Insured Payment minus the Current
Interest for such Payment Date; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount with respect to principal owed to the
Owners of the related Class A Certificates that remains unpaid as of
such Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date
thereof, to the extent actually received by the Trustee during the
related Remittance Period and any Prepayments made by the Mortgagors
and actually received by the Trustee during the related Remittance
Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance
is actually received by the Trustee during the related Remittance
Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of
a Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Trustee on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the Trustee,
(F) the amount of any Subordination Deficit for such Payment
Date,
(G) the principal portion of the proceeds received by the
Trustee from any termination of the Trust (to the extent such
proceeds related to principal),
(H) with respect to the Payment Date immediately following the
last day of the Funding Period, all amounts remaining on deposit in
the Pre-Funding Account to the extent not used to purchase Subsequent
Home Equity Loans during the Funding Period, and
(I) the amount of any Subordination Increase Amount for such
Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Subordination Reduction Amount for such Payment
Date.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners. "Insured
Payments" means as to any Payment Date, the sum of (i) any shortfall in the
amount required to pay the Subordination Deficit for such Payment Date from a
source other than the Certificate Insurance Policy, (ii) any shortfall in the
amount required to pay the Current Interest for such
A-1-4
<PAGE>
Payment Date from a source other than the Certificate Insurance Policy and (iii)
any shortfall in the amount required to pay the related Preference Amount from a
source other than the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policy,
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-1
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-1 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-1 Certificates and shall receive all future distributions of the Class
A-1 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of (i) the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan
A-1-5
<PAGE>
in the Trust Estate or (b) the disposition of all property acquired in respect
of any Home Equity Loan remaining in the Trust Estate or (c) at any time when a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to clause
(c) above, the Owners of all Certificates then Outstanding shall provide the
Trustee an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date and (ii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
A-1-6
<PAGE>
The Class A-1 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are exchangeable for new
Class A-1 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-1-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as
Trustee
By: ______________________________
Title: ___________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ________________________________
Title: _____________________________
A-1-8
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Home Equity Loans and certain other
property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1996-3") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-2-
CUSIP
$ July __, 1996
- --------------------- ---------------- ---------------------
Original Class A-2 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------------------
Registered Owner
A-2-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans (other than any
principal and interest due thereon on or prior to July 1, 1996 whether or not
received) listed in Schedule I to the Pooling and Servicing Agreement and
Schedule I to any Subsequent Transfer Agreement which the Seller is causing to
be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer) and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-2
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-2 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to August 26, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO AUGUST 26, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-2-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1996-3, Home Equity Loan Pass-Through
Certificates, Class A-2 (the "Class A-2 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of July 1, 1996 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1996-3 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates and the Class A-7 Certificates shall be together
referred to as the "Class A Certificates" and the Class A Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing August 26, 1996, the Owners of the Class A-2 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-2 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-2 Certificates. The Percentage Interest of each
Class A-2 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-2 Certificate on the Startup Day by the aggregate Class A-2
Certificate Principal Balance on the Startup Day.
"Class A-2 Distribution Amount" means with respect to any Payment Date the
sum of (x) the Class A-2 Current Interest and (y) the Principal Distribution
Amount payable to the Owners of the Class A-2 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date:
"Class A-2 Current Interest" means with respect to any Payment Date, 30
days' interest accrued on the Class A-2 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-2 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-2 Certificates as it relates to interest previously paid on the Class
A-2 Certificates, plus the Carry Forward Amount, if any, with respect to the
Class A-2 Certificates.
"Principal Distribution Amount" means with respect to the Class A
Certificates for any Payment Date, the lesser of:
A-2-3
<PAGE>
(a) the Total Available Funds plus any Insured Payment minus the Current
Interest for such Payment Date; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount with respect to principal owed to the
Owners of the related Class A Certificates that remains unpaid as of
such Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date
thereof, to the extent actually received by the Trustee during the
related Remittance Period and any Prepayments made by the Mortgagors
and actually received by the Trustee during the related Remittance
Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance
is actually received by the Trustee during the related Remittance
Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of
a Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Trustee on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the Trustee,
(F) the amount of any Subordination Deficit for such Payment
Date,
(G) the principal portion of the proceeds received by the
Trustee from any termination of the Trust (to the extent such
proceeds related to principal),
(H) with respect to the Payment Date immediately following the
last day of the Funding Period, all amounts remaining on deposit in
the Pre-Funding Account to the extent not used to purchase Subsequent
Home Equity Loans during the Funding Period, and
(I) the amount of any Subordination Increase Amount for such
Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Subordination Reduction Amount for such Payment
Date.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners. "Insured
Payments" means as to any Payment Date, the sum of (i) any shortfall in the
amount required to pay the Subordination Deficit for such Payment Date from a
source other than the Certificate Insurance Policy, (ii) any shortfall in the
amount required to pay the Current Interest for such
A-2-4
<PAGE>
Payment Date from a source other than the Certificate Insurance Policy and (iii)
any shortfall in the amount required to pay the related Preference Amount from a
source other than the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policy
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-2
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-2 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-2 Certificates and shall receive all future distributions of the Class
A-2 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of (i) the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan
A-2-5
<PAGE>
in the Trust Estate or (b) the disposition of all property acquired in respect
of any Home Equity Loan remaining in the Trust Estate or (c) at any time when a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to clause
(c) above, the Owners of all Certificates then Outstanding shall provide the
Trustee an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date and (ii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
A-2-6
<PAGE>
The Class A-2 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Certificates are exchangeable for new
Class A-2 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-2-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as
Trustee
By: ______________________________
Title: ___________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ________________________________
Title: _____________________________
A-2-8
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Home Equity Loans and certain other
property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1996-3") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-3-
CUSIP
$ July __, 1996
- --------------------- ---------------- ---------------------
Original Class A-3 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------------------
Registered Owner
A-3-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans (other than any
principal and interest due thereon on or prior to July 1, 1996 whether or not
received) listed in Schedule I to the Pooling and Servicing Agreement and
Schedule I to any Subsequent Transfer Agreement which the Seller is causing to
be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer) and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-3
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-3 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to August 26, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO AUGUST 26, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
A-3-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1996-3, Home Equity Loan Pass-Through
Certificates, Class A-3 (the "Class A-3 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of July 1, 1996 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1996-3 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class
A-2 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates and the Class A-7 Certificates shall be together
referred to as the "Class A Certificates" and the Class A Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing August 26, 1996, the Owners of the Class A-3 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-3 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-3 Certificates. The Percentage Interest of each
Class A-3 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-3 Certificate on the Startup Day by the aggregate Class A-3
Certificate Principal Balance on the Startup Day.
"Class A-3 Distribution Amount" means with respect to any Payment Date the
sum of (x) the Class A-3 Current Interest and (y) the Principal Distribution
Amount payable to the Owners of the Class A-3 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date:
"Class A-3 Current Interest" means with respect to any Payment Date, 30
days' interest accrued on the Class A-3 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-3 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-3 Certificates as it relates to interest previously paid on the Class
A-3 Certificates, plus the Carry Forward Amount, if any, with respect to the
Class A-3 Certificates.
"Principal Distribution Amount" means with respect to the Class A
Certificates for any Payment Date, the lesser of:
A-3-3
<PAGE>
(a) the Total Available Funds plus any Insured Payment minus the Current
Interest for such Payment Date; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount with respect to principal owed to the
Owners of the related Class A Certificates that remains unpaid as of
such Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date
thereof, to the extent actually received by the Trustee during the
related Remittance Period and any Prepayments made by the Mortgagors
and actually received by the Trustee during the related Remittance
Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance
is actually received by the Trustee during the related Remittance
Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of
a Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Trustee on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the Trustee,
(F) the amount of any Subordination Deficit for such Payment
Date,
(G) the principal portion of the proceeds received by the
Trustee from any termination of the Trust (to the extent such
proceeds related to principal),
(H) with respect to the Payment Date immediately following the
last day of the Funding Period, all amounts remaining on deposit in
the Pre-Funding Account to the extent not used to purchase Subsequent
Home Equity Loans during the Funding Period, and
(I) the amount of any Subordination Increase Amount for such
Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Subordination Reduction Amount for such
Payment Date.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners. "Insured
Payments" means as to any Payment Date, the sum of (i) any shortfall in the
amount required to pay the Subordination Deficit for such Payment Date from a
source other than the Certificate Insurance Policy, (ii) any shortfall in the
amount required to pay the Current Interest for such
A-3-4
<PAGE>
Payment Date from a source other than the Certificate Insurance Policy and (iii)
any shortfall in the amount required to pay the related Preference Amount from a
source other than the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policy
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-3
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-3 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-3 Certificates and shall receive all future distributions of the Class
A-3 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of (i) the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Home Equity Loan
A-3-5
<PAGE>
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
and the Trustee to the effect that each such liquidation constitutes a Qualified
Liquidation, and the Servicer shall either sell the Home Equity Loans and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, or
the Servicer shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates to the effect that each such
liquidation constitutes a Qualified Liquidation, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date and (ii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing
A-3-6
<PAGE>
Agreement and subject to certain limitations therein set forth, Class A-3
Certificates are exchangeable for new Class A-3 Certificates of authorized
denominations evidencing the same aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-3-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as
Trustee
By: ______________________________
Title: ___________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ________________________________
Title: _____________________________
A-3-8
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Home Equity Loans and certain other
property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1996-3") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-4-
CUSIP
$ July __, 1996
- --------------------- ---------------- ---------------------
Original Class A-4 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------------------
Registered Owner
A-4-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans (other than any
principal and interest due thereon on or prior to July 1, 1996 whether or not
received) listed in Schedule I to the Pooling and Servicing Agreement and
Schedule I to any Subsequent Transfer Agreement which the Seller is causing to
be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer) and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-4
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-4 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to August 26, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO AUGUST 26, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-4-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1996-3, Home Equity Loan Pass-Through
Certificates, Class A-4 (the "Class A-4 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of July 1, 1996 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities, Inc.
in its capacity as Depositor (the "Depositor") and The Chase Manhattan Bank, a
New York banking corporation, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as IMC Home
Equity Loan Trust 1996-3 Home Equity Loan Pass-Through Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-5 (the "Class A-5 Certificates"),
Class A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7
Certificates") and Class R (Residual Interest) (the "Class R Certificates"). The
Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates,
the Class A-4 Certificates, the Class A-5 Certificates, the Class A-6
Certificates and the Class A-7 Certificates shall be together referred to as the
"Class A Certificates" and the Class A Certificates and the Class R Certificates
are together referred to herein as the "Certificates." Terms capitalized herein
and not otherwise defined herein shall have the respective meanings set forth in
the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing August 26, 1996, the Owners of the Class A-4 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-4 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-4 Certificates. The Percentage Interest of each
Class A-4 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-4 Certificate on the Startup Day by the aggregate Class A-4
Certificate Principal Balance on the Startup Day.
"Class A-4 Distribution Amount" means with respect to any Payment Date the
sum of (x) the Class A-4 Current Interest and (y) the Principal Distribution
Amount payable to the Owners of the Class A-4 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date:
"Class A-4 Current Interest" means with respect to any Payment Date, 30
days' interest accrued on the Class A-4 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-4 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-4 Certificates as it relates to interest previously paid on the Class
A-4 Certificates, plus the Carry Forward Amount, if any, with respect to the
Class A-4 Certificates.
"Principal Distribution Amount" means with respect to the Class A
Certificates for any Payment Date, the lesser of:
A-4-3
<PAGE>
(a) the Total Available Funds plus any Insured Payment minus the Current
Interest for such Payment Date; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount with respect to principal owed to the
Owners of the related Class A Certificates that remains unpaid as of
such Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date
thereof, to the extent actually received by the Trustee during the
related Remittance Period and any Prepayments made by the Mortgagors
and actually received by the Trustee during the related Remittance
Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance
is actually received by the Trustee during the related Remittance
Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of
a Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Trustee on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the Trustee,
(F) the amount of any Subordination Deficit for such Payment
Date,
(G) the principal portion of the proceeds received by the
Trustee from any termination of the Trust (to the extent such
proceeds related to principal),
(H) with respect to the Payment Date immediately following the
last day of the Funding Period, all amounts remaining on deposit in
the Pre-Funding Account to the extent not used to purchase Subsequent
Home Equity Loans during the Funding Period, and
(I) the amount of any Subordination Increase Amount for such
Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Subordination Reduction Amount for such Payment
Date.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners. "Insured
Payments" means as to any Payment Date, the sum of (i) any shortfall in the
amount required to pay the Subordination Deficit for such Payment Date from a
source other than the Certificate Insurance Policy, (ii) any shortfall in the
amount required to pay the Current Interest for such
A-4-4
<PAGE>
Payment Date from a source other than the Certificate Insurance Policy and (iii)
any shortfall in the amount required to pay the related Preference Amount from a
source other than the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policy
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-4
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-4 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-4 Certificates and shall receive all future distributions of the Class
A-4 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of (i) the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan
A-4-5
<PAGE>
in the Trust Estate or (b) the disposition of all property acquired in respect
of any Home Equity Loan remaining in the Trust Estate or (c) at any time when a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to clause
(c) above, the Owners of all Certificates then Outstanding shall provide the
Trustee an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date and (ii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
A-4-6
<PAGE>
The Class A-4 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-4 Certificates are exchangeable for new
Class A-4 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-4-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as
Trustee
By: ______________________________
Title: ___________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ________________________________
Title: _____________________________
A-4-8
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Home Equity Loans and certain other
property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1996-3") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-5-
CUSIP
$ July __, 1996
- --------------------- ---------------- ---------------------
Original Class A-5 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------------------
Registered Owner
A-5-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans (other than any
principal and interest due thereon on or prior to July 1, 1996 whether or not
received) listed in Schedule I to the Pooling and Servicing Agreement and
Schedule I to any Subsequent Transfer Agreement which the Seller is causing to
be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer) and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-5
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-5 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to August 26, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO AUGUST 26, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-5-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1996-3, Home Equity Loan Pass-Through
Certificates, Class A-5 (the "Class A-5 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of July 1, 1996 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1996-3 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class
A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the
"Class A-4 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5, the Class A-6
Certificates and the Class A-7 Certificates shall be together referred to as the
"Class A Certificates" and the Class A Certificates and the Class R Certificates
are together referred to are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing August 26, 1996, the Owners of the Class A-5 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-5 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-5 Certificates. The Percentage Interest of each
Class A-5 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-5 Certificate on the Startup Day by the aggregate Class A-5
Certificate Principal Balance on the Startup Day.
"Class A-5 Distribution Amount" means with respect to any Payment Date the
sum of (x) the Class A-5 Current Interest and (y) the Principal Distribution
Amount payable to the Owners of the Class A-5 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date:
"Class A-5 Current Interest" means with respect to any Payment Date, 30
days' interest accrued on the Class A-5 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-5 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-5 Certificates as it relates to interest previously paid on the Class
A-5 Certificates, plus the Carry Forward Amount, if any, with respect to the
Class A-5 Certificates.
"Principal Distribution Amount" means with respect to the Class A
Certificates for any Payment Date, the lesser of:
A-5-3
<PAGE>
(a) the Total Available Funds plus any Insured Payment minus the Current
Interest for such Payment Date; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount with respect to principal owed to the
Owners of the related Class A Certificates that remains unpaid as of
such Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date
thereof, to the extent actually received by the Trustee during the
related Remittance Period and any Prepayments made by the Mortgagors
and actually received by the Trustee during the related Remittance
Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance
is actually received by the Trustee during the related Remittance
Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of
a Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Trustee on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the Trustee,
(F) the amount of any Subordination Deficit for such Payment
Date,
(G) the principal portion of the proceeds received by the
Trustee from any termination of the Trust (to the extent such
proceeds related to principal),
(H) with respect to the Payment Date immediately following the
last day of the Funding Period, all amounts remaining on deposit in
the Pre-Funding Account to the extent not used to purchase Subsequent
Home Equity Loans during the Funding Period, and
(I) the amount of any Subordination Increase Amount for such
Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Subordination Reduction Amount for such Payment
Date.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners. "Insured
Payments" means as to any Payment Date, the sum of (i) any shortfall in the
amount required to pay the Subordination Deficit for such Payment Date from a
source other than the Certificate Insurance Policy, (ii) any shortfall in the
amount required to pay the Current Interest for such
A-5-4
<PAGE>
Payment Date from a source other than the Certificate Insurance Policy and (iii)
any shortfall in the amount required to pay the related Preference Amount from a
source other than the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policy
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-5
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-5 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-5 Certificates and shall receive all future distributions of the Class
A-5 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of (i) the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Home Equity Loan
A-5-5
<PAGE>
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
and the Trustee to the effect that each such liquidation constitutes a Qualified
Liquidation, and the Servicer shall either sell the Home Equity Loans and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, or
the Servicer shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates to the effect that each such
liquidation constitutes a Qualified Liquidation, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date and (ii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendment. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing
A-5-6
<PAGE>
Agreement and subject to certain limitations therein set forth, Class A-5
Certificates are exchangeable for new Class A-5 Certificates of authorized
denominations evidencing the same aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-5-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as
Trustee
By: ______________________________
Title: ___________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ________________________________
Title: _____________________________
A-5-8
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Home Equity Loans and certain other
property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1996-3") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-6-
CUSIP
$ July __, 1996
- --------------------- ---------------- ---------------------
Original Class A-6 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------------------
Registered Owner
A-6-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans (other than any
principal and interest due thereon on or prior to July 1, 1996 whether or not
received) listed in Schedule I to the Pooling and Servicing Agreement and
Schedule I to any Subsequent Transfer Agreement which the Seller is causing to
be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer) and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-6
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-6 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to August 26, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO AUGUST 26, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-6-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1996-3, Home Equity Loan Pass-Through
Certificates, Class A-6 (the "Class A-6 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of July 1, 1996 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1996-3 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class
A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the
"Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-7
(the "Class A-7 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates and the Class A-7 Certificates shall be together
referred to as the "Class A Certificates" and the Class A Certificates and the
Class R Certificates are together referred to are together referred to herein as
the "Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing August 26, 1996, the Owners of the Class A-6 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-6 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-6 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-6 Certificates. The Percentage Interest of each
Class A-6 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-6 Certificate on the Startup Day by the aggregate Class A-6
Certificate Principal Balance on the Startup Day.
"Class A-6 Distribution Amount" means with respect to any Payment Date the
sum of (x) the Class A-6 Current Interest and (y) the Principal Distribution
Amount payable to the Owners of the Class A-6 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date:
"Class A-6 Current Interest" means with respect to any Payment Date, 30
days' interest accrued on the Class A-6 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-6 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-6 Certificates as it relates to interest previously paid on the Class
A-6 Certificates, plus the Carry Forward Amount, if any, with respect to the
Class A-6 Certificates.
"Principal Distribution Amount" means with respect to the Class A
Certificates for any Payment Date, the lesser of:
A-6-3
<PAGE>
(a) the Total Available Funds plus any Insured Payment minus the Current
Interest for such Payment Date; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount with respect to principal owed to the
Owners of the related Class A Certificates that remains unpaid as of
such Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date
thereof, to the extent actually received by the Trustee during the
related Remittance Period and any Prepayments made by the Mortgagors
and actually received by the Trustee during the related Remittance
Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance
is actually received by the Trustee during the related Remittance
Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of
a Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Trustee on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the Trustee,
(F) the amount of any Subordination Deficit for such Payment
Date,
(G) the principal portion of the proceeds received by the
Trustee from any termination of the Trust (to the extent such
proceeds related to principal),
(H) with respect to the Payment Date immediately following the
last day of the Funding Period, all amounts remaining on deposit in
the Pre-Funding Account to the extent not used to purchase Subsequent
Home Equity Loans during the Funding Period, and
(I) the amount of any Subordination Increase Amount for such
Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Subordination Reduction Amount for such Payment
Date.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners. "Insured
Payments" means as to any Payment Date, the sum of (i) any shortfall in the
amount required to pay the Subordination Deficit for such Payment Date from a
source other than the Certificate Insurance Policy, (ii) any shortfall in the
amount required to pay the Current Interest for such
A-6-4
<PAGE>
Payment Date from a source other than the Certificate Insurance Policy and (iii)
any shortfall in the amount required to pay the related Preference Amount from a
source other than the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policy
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-6
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-6 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-6 Certificates and shall receive all future distributions of the Class
A-6 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of (i) the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan
A-6-5
<PAGE>
in the Trust Estate or (b) the disposition of all property acquired in respect
of any Home Equity Loan remaining in the Trust Estate or (c) at any time when a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to clause
(c) above, the Owners of all Certificates then Outstanding shall provide the
Trustee an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date and (ii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendment. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
A-6-6
<PAGE>
The Class A-6 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are exchangeable for new
Class A-6 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-6-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as
Trustee
By: ______________________________
Title: ___________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ________________________________
Title: _____________________________
A-6-8
<PAGE>
EXHIBIT A-7
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1996-3
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-7
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Home Equity Loans and certain other
property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1996-3") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-7-
CUSIP
$ July __, 1996
- --------------------- ---------------- ---------------------
Original Class A-7 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
----------------------------
Registered Owner
A-7-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans (other than any
principal and interest due thereon on or prior to July 1, 1996 whether or not
received) listed in Schedule I to the Pooling and Servicing Agreement and
Schedule I to any Subsequent Transfer Agreement which the Seller is causing to
be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer) and (c) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (c) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment Date,
as hereinafter described, which will fully amortize such original Class A-7
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-7 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to August 26, 1996 (the first Payment Date) be less than the
original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is required
to send this Certificate to the Trustee. The Pooling and Servicing Agreement (as
defined below) provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS. THEREFORE,
THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON ANY DATE
SUBSEQUENT TO AUGUST 26, 1996 (THE FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL
CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
A-7-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1996-3, Home Equity Loan Pass-Through
Certificates, Class A-7 (the "Class A-7 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of July 1, 1996 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1996-3 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class
A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the
"Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6
(the "Class A-6 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates and the Class A-7 Certificates shall be together
referred to as the "Class A Certificates" and the Class A Certificates and the
Class R Certificates are together referred to are together referred to herein as
the "Certificates." Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing August 26, 1996, the Owners of the Class A-7 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-7 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-7 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-7 Certificates. The Percentage Interest of each
Class A-7 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-7 Certificate on the Startup Day by the aggregate Class A-7
Certificate Principal Balance on the Startup Day.
"Class A-7 Distribution Amount" means with respect to any Payment Date the
sum of (x) the Class A-7 Current Interest and (y) the Principal Distribution
Amount payable to the Owners of the Class A-7 Certificates pursuant to Section
7.03(b)(iv)(C) for such Payment Date:
"Class A-7 Current Interest" means with respect to any Payment Date, 30
days' interest accrued on the Class A-7 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-7 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-7 Certificates as it relates to interest previously paid on the Class
A-7 Certificates, plus the Carry Forward Amount, if any, with respect to the
Class A-7 Certificates.
"Principal Distribution Amount" means with respect to the Class A
Certificates for any Payment Date, the lesser of:
A-7-3
<PAGE>
(a) the Total Available Funds plus any Insured Payment minus the Current
Interest for such Payment Date; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount with respect to principal owed to the
Owners of the related Class A Certificates that remains unpaid as of
such Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date
thereof, to the extent actually received by the Trustee during the
related Remittance Period and any Prepayments made by the Mortgagors
and actually received by the Trustee during the related Remittance
Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance
is actually received by the Trustee during the related Remittance
Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of
a Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Trustee on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer during the related Remittance Period (to the extent such Net
Liquidation Proceeds relate to principal) to the extent such Net
Liquidation Proceeds are actually received by the Trustee,
(F) the amount of any Subordination Deficit for such Payment
Date,
(G) the principal portion of the proceeds received by the
Trustee from any termination of the Trust (to the extent such
proceeds related to principal),
(H) with respect to the Payment Date immediately following the
last day of the Funding Period, all amounts remaining on deposit in
the Pre-Funding Account to the extent not used to purchase Subsequent
Home Equity Loans during the Funding Period, and
(I) the amount of any Subordination Increase Amount for such
Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Subordination Reduction Amount for such Payment
Date.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners. "Insured
Payments" means as to any Payment Date, the sum of (i) any shortfall in the
amount required to pay the Subordination Deficit for such Payment Date from a
source other than the Certificate Insurance Policy, (ii) any shortfall in the
amount required to pay the Current Interest for such
A-7-4
<PAGE>
Payment Date from a source other than the Certificate Insurance Policy and (iii)
any shortfall in the amount required to pay the related Preference Amount from a
source other than the Certificate Insurance Policy.
Upon receipt of amounts under the Certificate Insurance Policy on behalf
of the Owners of the Class A Certificates, the Trustee shall distribute in
accordance with the Pooling and Servicing Agreement such amounts (directly or
through a Paying Agent) to the Owners of the appropriate Class of the Class A
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policy
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-7
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-7 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-7 Certificates and shall receive all future distributions of the Class
A-7 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of (i) the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan
A-7-5
<PAGE>
in the Trust Estate or (b) the disposition of all property acquired in respect
of any Home Equity Loan remaining in the Trust Estate or (c) at any time when a
Qualified Liquidation of the Trust Estate is effected as described below. To
effect a termination of the Pooling and Servicing Agreement pursuant to clause
(c) above, the Owners of all Certificates then Outstanding shall provide the
Trustee an opinion of counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date and (ii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendment. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
A-7-6
<PAGE>
The Class A-7 Certificates are issuable only as registered Certificates in
minimum denominations of $1,000,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-7 Certificates are exchangeable for new
Class A-7 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-7-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as
Trustee
By: ______________________________
Title: ___________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ________________________________
Title: _____________________________
A-7-8
<PAGE>
EXHIBIT B
RESERVED
B-1
<PAGE>
EXHIBIT C
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM
OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM
THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A
SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
C-1
<PAGE>
THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
C-2
<PAGE>
IMC HOME EQUITY LOAN TRUST 1996-3
Home Equity Loan PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Originated or Purchased
and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional residual ownership interest in the Trust Estate as defined below.)
No: R -__ July __, 1996
-------------------
Date
Percentage Interest ______%
________________
Registered Owner
The registered Owner named above is the registered Owner of a fractional
interest in (a) the Initial Home Equity Loans (other than any principal and
interest due thereon on or prior to July 1, 1996 whether or not received) listed
in Schedule I to the Pooling and Servicing Agreement and Schedule I to any
Subsequent Transfer Agreement which the Seller is causing to be delivered to the
Depositor and the Depositor is causing to be delivered to the Trustee and the
Subsequent Home Equity Loans (other than any principal and interest payments due
thereon or prior to the related Subsequent Cut-Off Date whether or not received)
listed in Schedule I to any Subsequent Transfer Agreement, which the Seller will
cause to be delivered to the Depositor and the Depositor will cause to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a)-(c) above shall be collectively referred to herein as the "Trust
Estate").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
C-3
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1996-3, Home Equity Loan Pass-Through
Certificates, Class R (the "Class R Certificates") and issued under and subject
to the terms, provisions and conditions of that certain Pooling and Servicing
Agreement dated as of July 1, 1996 (the "Pooling and Servicing Agreement") by
and among Industry Mortgage Company, L.P., in its capacity as the Seller (the
"Seller") and as the Servicer (the "Servicer"), IMC Securities, Inc. in its
capacity as Depositor, (the "Depositor") and The Chase Manhattan Bank, a New
York banking corporation, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as IMC Home
Equity Loan Trust 1996-3 Home Equity Loan Pass-Through Certificates, Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6 and Class A-7
(collectively, the "Class A Certificates"). The Class A Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Payment Date")
commencing August 26, 1996, each Owner of a Class R Certificate as of the close
of business on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (by wire transfer or otherwise) to the account of an
Owner at a domestic bank or other entity having appropriate facilities therefor,
if such Owner has so notified the Trustee, or by check mailed to the address of
the person entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually pay
distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Home Equity Loans insured or guaranteed by
IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for
C-4
<PAGE>
the enforcement of any such distribution, and such right shall not be impaired
without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier of (i) the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policy of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate or (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
and the Trustee to the effect that each such liquidation constitutes a Qualified
Liquidation, and the Servicer shall either sell the Home Equity Loans and the
Trustee shall distribute the proceeds of the liquidation of the Trust Estate, or
the Servicer shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates to the effect that each such
liquidation constitutes a Qualified Liquidation, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date and (ii) under certain
circumstances relating to the qualification of the REMIC as a REMIC under the
Code the Home Equity Loans may be sold, thereby effecting the early retirement
of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then outstanding with the
prior written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
C-5
<PAGE>
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment Date
to the Owner of this Certificate, as more fully described in the Pooling and
Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary,
except as may otherwise be specifically provided in the Pooling and Servicing
Agreement with respect to the Certificate Insurer.
C-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as
Trustee
By: ______________________________
Title: ___________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ________________________________
Title: _____________________________
C-7
<PAGE>
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
IMC Securities, Inc. (the "Depositor"), as Depositor, Industry Mortgage
Company, L.P. (the "Seller"), as Seller, and IMC Home Equity Loan Trust 1996-3,
as Purchaser, pursuant to the Pooling and Servicing Agreement dated as of July
1, 1996 among the Depositor, the Seller, as Seller and Servicer, and The Chase
Manhattan Bank, as Trustee (the "Pooling and Servicing Agreement"), hereby
confirm their understanding with respect to the sale by the Seller and the
purchase by the Depositor and the sale by the Depositor and the purchase by the
Purchaser of those Home Equity Loans (the "Subsequent Home Equity Loans") listed
on the attached Schedule of Home Equity Loans.
Conveyance of Subsequent Home Equity Loans. As of _____________, 1996 (the
"Subsequent Cut-Off Date"), the Seller does hereby irrevocably transfer, assign,
setover and otherwise convey to the Depositor and the Depositor does hereby
irrevocably transfer, assign, set over and otherwise convey to the Purchaser,
without recourse (except as otherwise explicitly provided for herein) all right,
title and interest in and to any and all benefits accruing from the Subsequent
Home Equity Loans (other than any principal and interest payments received
thereon on or prior to the Subsequent Cut-Off Date) which are delivered to the
Trustee herewith (and all substitutions therefor as provided by Sections 3.03,
3.04 and 3.06 of the Pooling and Servicing Agreement), together with the related
Subsequent Home Equity Loan documents and the interest in any Property which
secured a Subsequent Home Equity Loan but which has been acquired by foreclosure
or deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; and proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the
Subsequent Home Equity Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing). The Depositor shall deliver the original Mortgage or
mortgage assignment with evidence of recording thereon (except as otherwise
provided by the Pooling and Servicing Agreement) and other required
documentation in accordance with the terms set forth in Sections 3.05 and 3.07
of the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Depositor.
Additional terms of the sale are attached hereto as Attachment A.
The Depositor hereby affirms the representations and warranties set forth
in the Pooling and Servicing Agreement that relate to the Depositor and the
Subsequent Home Equity Loans as of the date hereof. The Depositor hereby
delivers notice and confirms that each of the conditions set forth in Section
3.07(b) to the Pooling and Servicing Agreement are satisfied as of the date
hereof.
All terms and conditions of the Pooling and Servicing Agreement are hereby
ratified, confirmed and incorporated herein, provided that in the event of any
conflict the provisions of this Subsequent Transfer Agreement shall control over
the conflicting provisions of the Pooling and Servicing Agreement.
D-1
<PAGE>
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
IMC SECURITIES, INC.
as Depositor
By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
INDUSTRY MORTGAGE COMPANY, L.P.
as Seller
By: ______________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Trustee for IMC Home Equity Loan Trust 1996-3
By: ______________________________
Name:
Title:
Dated:
D-2
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, _______________ of Industry Mortgage
Company, L.P. ("IMC"), hereby certify that between the "Cut-Off Date" (as
defined in the Pooling and Servicing Agreement dated as of July 1, 1996 among
IMC Securities, Inc., as Depositor, IMC as Seller and Servicer, and The Chase
Manhattan Bank, as Trustee) and the "Startup Day," the following schedule of
"Home Equity Loans" (each as defined in the Pooling and Servicing Agreement)
have been prepaid in full.
Account Original Current Date Paid
Number Name Amount Balance Off
------ ---- ------ ------- ---------
Dated: July __, 1996
By: _______________________________
Title: ____________________________
E-1
<PAGE>
EXHIBIT F-1
TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
The Chase Manhattan Bank, in its capacity as Trustee (the "Trustee") under
that certain Pooling and Servicing Agreement dated as of July 1, 1996 ( the
"Pooling and Servicing Agreement") among IMC Securities, Inc., as Depositor,
Industry Mortgage Company, L.P., a Delaware limited partnership, as seller and
servicer ("IMC"), and The Chase Manhattan Bank, as Trustee (the "Trustee"),
hereby acknowledges receipt of an aggregate cash amount of approximately
$__________ into the Pre-Funding Account and an aggregate cash amount of
approximately $__________ into the Capitalized Interest Account pursuant to
Section 7.04 of the Pooling and Servicing Agreement.
The Trustee hereby additionally acknowledges that it shall cause the
Custodian (as defined in the Pooling and Servicing Agreement) to review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK, as Trustee
By: _______________________________
Name: _____________________________
Title: ____________________________
Dated: July __, 1996
F-1-1
<PAGE>
EXHIBIT F-2
CUSTODIAN'S ACKNOWLEDGEMENT OF RECEIPT
The First National Bank of Boston, in its capacity as custodian (the
"Custodian) under the Custodial Agreement dated as of July 1, 1996 among the
Custodian and The Chase Manhattan Bank, in its capacity as Trustee (the
"Trustee") under that certain Pooling and Servicing Agreement dated as of July
1, 1996 ( the "Pooling and Servicing Agreement") among IMC Securities, Inc., as
Depositor, Industry Mortgage Company, L.P., a Delaware limited partnership, as
seller and servicer ("IMC"), and The Chase Manhattan Bank, as Trustee (the
"Trustee"), hereby acknowledges receipt (subject to review as required by
Section 3.06(a) of the Pooling and Servicing Agreement) of the items delivered
to it by IMC with respect to the Initial Home Equity Loans pursuant to Section
3.05(b)(i) of the Pooling and Servicing Agreement.
The Schedules of Initial Home Equity Loans is attached to this Receipt.
The Custodian hereby additionally acknowledges that it shall review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement and
shall otherwise comply with Section 3.06(b) of the Pooling and Servicing
Agreement as required thereby.
THE FIRST NATIONAL BANK OF BOSTON,
as custodian
By: _______________________________
Name: _____________________________
Title: ____________________________
Dated: July __, 1996
F-2-1
<PAGE>
EXHIBIT G
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of The First National
Bank of Boston, in its capacity as Custodian (the "Custodian") under the
Custodial Agreement dated July 1, 1996 between the Custodian and The Chase
Manhattan Bank, a New York banking corporation, acting in its capacity as
trustee (the "Trustee") of a certain pool of mortgage loans (the "Pool")
heretofore conveyed in trust to the Trustee, pursuant to that certain Pooling
and Servicing Agreement dated as of July 1, 1996 (the "Pooling and Servicing
Agreement") among IMC Securities, Inc., as Depositor, Industry Mortgage Company,
L.P., as Seller (the "Seller") and Servicer, and The Chase Manhattan Bank, as
Trustee; and
WHEREAS, the Custodian is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Mortgage Files relating to the
Pool within a specified period following the Startup Day and to notify the
Seller promptly of any defects with respect to the Pool, and the Seller is
required to remedy such defects or take certain other action, all as set forth
in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement requires
the Custodian to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined that
all required documents (or certified copies of documents listed in Section 3.05
of the Pooling and Servicing Agreement) have been executed or received, and that
such documents relate to the Home Equity Loans identified in the Schedule of
Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Custodian makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
THE FIRST NATIONAL BANK OF BOSTON, as
Custodian
By: __________________________________
Title: _______________________________
Dated: July __, 1996
G-1
<PAGE>
EXHIBIT H
FORM OF DELIVERY ORDER
DELIVERY ORDER
The Chase Manhattan Bank, as Trustee
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Structured Finance Services
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated as
of July 1, 1996 (the "Pooling and Servicing Agreement") among IMC Securities,
Inc., as Depositor, Industry Mortgage Company, L.P., a Delaware Corporation
("IMC"), as Seller and Servicer, and The Chase Manhattan Bank, a New York
banking corporation, as Trustee (the "Trustee"), IMC HEREBY CERTIFIES that all
conditions precedent to the issuance of the IMC Home Equity Loan Trust 1996-3,
Home Equity Loan Pass-Through Certificate, Class A and Class R (the
"Certificates"), HAVE BEEN SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE
AND DELIVER said Certificates, and to RELEASE said Certificates to the owners
thereof, or otherwise upon their order. Instructions regarding the registration
of the Certificates are attached hereto.
Very truly yours,
IMC SECURITIES, INC.
By: __________________________________
Title: _______________________________
By: __________________________________
Title: _______________________________
Dated: July __, 1996
H-1
<PAGE>
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the "Investor"), a
[savings institution] [corporation] duly organized and existing under the laws
of [the State of ] [the United States], on behalf of which he makes this
affidavit.
2. That (i) the Investor is not a "disqualified organization" and will not
be a "disqualified organization" as of [date of transfer] (For this purpose, a
"disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [Title of
Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this day of , .
[NAME OF INVESTOR]
By: __________________________________
[Name of Officer]
[Title of Officer]
I-1
<PAGE>
[Corporate Seal]
Attest:
______________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to be the same person who executed the foregoing instrument and to be the
[Title of Officer] of the Investor, and acknowledged to me that he executed the
same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this day of , .
NOTARY PUBLIC
COUNTY OF _______________
STATE OF ________________
My commission expires the day of , .
I-2
<PAGE>
EXHIBIT J-1
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
The Chase Manhattan Bank, as Trustee
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Advanced Structured Products Services
Re: IMC Home Equity Loan Trust 1996-3
Home Equity Loan Pass-Through Certificates
("Certificates")
Gentlemen:
In connection with our purchase on the date hereof of the above-referenced
Certificates from ______________________ ("Seller"), [PURCHASER] (the
"Purchaser") hereby certifies that:
1. The Purchaser is acquiring the Certificates for [investment purposes
only for]1 the Purchaser's own account and not with a view to or for sale or
transfer in connection with any distribution thereof in any manner which would
violate Section 5 of the Securities Act of 1933, as amended (the "Act"),
provided that the disposition of its property shall at all times be and remain
within its control;
2. The Purchaser understands that the Certificates have not been and will
not be registered under the Act and may not be resold or transferred unless they
are (a) registered pursuant to the Act or (b) sold or transferred in
transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing
Agreement dated as of July 1, 1996 (the "Pooling and Servicing Agreement")
pursuant to which the Certificates are being sold, and such other documents and
information concerning the Certificates and the home equity loans in which the
Certificates represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates and that it is able to bear the
economic risks of such an investment;
5. [The Purchaser is not an "employee benefit plan," within the meaning of
Section 3(3) of the Employment Retirement Income Security Act of 1974, as
amended ("ERISA") that is subject to the provisions of Title I of ERISA or a
"plan" described in Section 4975(e)(1) of the Internal Revenue Code of 1986] OR
[The source of funds to be used by the Purchaser to purchase the Certificates is
a general account and either (i) no part of such assets constitutes assets of an
"employee benefit plan," within the meaning of Section 3(3) of the Employment
Retirement Income Security Act of 1974, as amended ("ERISA") that is subject to
the provisions of Title I of ERISA or a "plan" described in Section 4975(e)(l)
- --------
1 Not required if the Purchaser is a broker/dealer.
J-1
<PAGE>
of the Internal Revenue Code of 1986, or (ii) to the extent that such assets
constitute assets of an "employee benefits plan" within the meaning of Section
3(3) of ERISA, or a "plan" within the meaning of Section 4975(e)(1) of the Code,
it acknowledges that in the discharge of its duty as a plan fiduciary in
connection with the purchase of the Certificates it has concluded that such
purchase will not constitute a violation of Section 404(a) of ERISA];
6. If the Purchaser sells any of the Certificates at its option, it will
(i) obtain from any investor that purchases any Certificate from it a letter
substantially in the form of Exhibit J-1 or J-2 to the Pooling and Servicing
Agreement and (ii) to the extent required by the Pooling and Servicing
Agreement, cause an opinion of counsel to be delivered, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws; and
7. The Purchaser certifies that for purposes of the Certificate Register,
its address, including telecopier number and telephone number, is as follows:
telecopier:
telephone:
8. The purchase of the Certificates by the Purchaser does not violate the
provisions of the first sentence of Section 5.08(d) of the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, the Purchaser has caused this letter to be executed by
its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By: _________________________________
Name: _______________________________
Title: ______________________________
J-2
<PAGE>
EXHIBIT J-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
The Chase Manhattan Bank
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Advanced Structured Products Services
Re: IMC Home Equity Loan Trust 1996-3
Home Equity Loan Pass-Through Certificates,
Class __-___ ("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the above-referenced
Certificates from _______________ ("Seller") hereby certify that:
1. We are acquiring the Certificates for our own account for investment
and not with a view to or for sale or transfer in connection with any
distribution thereof in any manner which would violate the Securities Act of
1933, as amended (the "Act"), provided that the disposition of our property
shall at all times be and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement dated as
of July 1, 1996 (the "Pooling and Servicing Agreement") pursuant to which the
Certificates are being sold, and such other documents and information concerning
the Certificates and the home equity loans in which the Certificates represent
interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic risks
of such an investment;
5. If we sell any of the Certificates at our option, we will either (i)
obtain from any institutional investor that purchases any Certificate from us a
certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1, 2 through 4 and this paragraph 5 or
(ii) deliver an opinion of counsel to such institutional investor, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws;
J-3
<PAGE>
6. We are acquiring the Certificates for our own account and the source of
funds to be used by us to purchase the Certificates is a general account and
either (i) no part of such assets constitutes assets of an "employee benefit
plan," within the meaning of Section 3(3) of the Employment Retirement Income
Security Act of 1974, as amended ("ERISA") that is subject to the provisions of
Title I of ERISA or a "plan" described in Section 4975(e)(l) of the Internal
Revenue Code of 1986, or (ii) to the extent that such assets constitute assets
of an "employee benefits plan" within the meaning of Section 3(3) of ERISA, or a
"plan" within the meaning of Section 4975(e)(1) of the Code, we acknowledge that
in the discharge of our duty as a plan fiduciary in connection with the purchase
of the Certificates we have concluded that such purchase will not constitute a
violation of Section 404(a) of ERISA;
7. We certify that for purposes of the Certificate Register, our address,
including telecopier number and telephone number, is as follows:
______________________________________________
______________________________________________
______________________________________________
telecopier: __________________________________
telephone: ___________________________________
8. If we sell any of the Certificates, will obtain from any purchaser from
us the same representations contained in the foregoing paragraph 6 and this
paragraph 7; and
9. Our purchase of the Certificates does not violate the provisions of the
first sentence of Section 5.08(d) of the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, we have signed this certificate as of the date first
written above.
By: _________________________________
Name: _______________________________
Title: ______________________________
J-4
<PAGE>
EXHIBIT K TO THE POOLING AND SERVICING AGREEMENT
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
Loan Number Borrower Name Original Loan Amount Exception
- ----------- ------------- -------------------- ---------
K-1
SUBSEQUENT TRANSFER AGREEMENT
IMC Securities, Inc. (the "Depositor"), Industry Mortgage Company, L.P.
(the "Seller"), and IMC Home Equity Loan Trust 1996-3 (the "Purchaser") pursuant
to the Pooling and Servicing Agreement dated as of July 1, 1996 among the
Depositor, the Seller, as Seller and Servicer and The Chase Manhattan Bank, as
Trustee (the "Pooling and Servicing Agreement"), hereby confirm their
understanding with respect to the sale by the Seller and the purchase by the
Depositor and the sale by the Depositor and the purchase by the Purchaser of
those Home Equity Loans (the "Subsequent Home Equity Loans") listed on the
attached Schedule of Home Equity Loans.
Conveyance of Subsequent Home Equity Loans. As of July 30, 1996 (the
"Subsequent Transfer Date"), the Seller does hereby irrevocably transfer,
assign, setover and otherwise convey to the Depositor and the Depositor does
hereby irrevocably transfer, assign, set over and otherwise convey to the
Purchaser, without recourse (except as otherwise explicitly provided for herein)
all right, title and interest in and to any and all benefits accruing from the
Subsequent Home Equity Loans (other than any principal received and interest
payments due thereon on or prior to July 1, 1996 whether or not received) (such
date, the "Subsequent Cut-Off Date") which are delivered to the Custodian on
behalf of the Trustee herewith (and all substitutions therefor as provided by
Sections 3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together
with the related Subsequent Home Equity Loan documents and the interest in any
Property which secured a Subsequent Home Equity Loan but which has been acquired
by foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; and
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Subsequent Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing). The Seller shall deliver the original
Mortgage or mortgage assignment with evidence of recording thereon (except as
otherwise provided by the Pooling and Servicing Agreement) and other required
documentation in accordance with the terms set forth in Sections 3.05 and 3.07
of the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller.
The Seller hereby affirms the representations and warranties set forth in
the Pooling and Servicing Agreement that relate to the Seller and the Subsequent
Home Equity Loans as of the date hereof. The Seller hereby delivers notice and
confirms that each of the conditions set forth in Section 3.07(b) and 3.07(c) to
the Pooling and Servicing Agreement are satisfied as of the date hereof.
Pursuant to Section 3.07(a) of the Pooling and Servicing Agreement, the
Seller hereby instructs the Trustee to release one-hundred percent of the
aggregate principal balances of the Subsequent Home Equity Loans so transferred
from the Pre-Funding Account, $64,470.28 pursuant to this Subsequent Transfer
Agreement.
All terms and conditions of the Pooling and Servicing Agreement are hereby
ratified, confirmed and incorporated herein, provided that in the event of any
conflict the provisions of this Subsequent Transfer Agreement shall control over
the conflicting provisions of the Pooling and Servicing Agreement.
<PAGE>
Terms capitalized herein and not defined herein shall have their respective
meanings as set forth in the Pooling and Servicing Agreement.
IMC SECURITIES, INC.
as Depositor
By: __________________________________
Name:
Title:
INDUSTRY MORTGAGE COMPANY, L.P.
as Seller
By: Industry Mortgage Corporation, its
general partner
By: __________________________________
Name:
Title:
IMC HOME EQUITY LOAN TRUST 1996-3,
by The Chase Manhattan Bank, as Trustee
By: __________________________________
Name:
Title:
Dated: July 30, 1996
2
[LOGO of IMC]
The IMC Family of Companies
IMC Mortgage Company
Industry Mortgage Company, L.P.
IMC Corporation of America
Equitystars
Description: Dropped From IMC's 96-3 Securitization
<TABLE>
<CAPTION>
IMC PORTFOLIO LIST
Service Sys Origination Borrrower Investor Prop Interest Occy Pmt Amort
Loan Numb Loan Numb Last Name / Count Numb State Program Type Rate Code Term Term
--------- --------- ----------------- ---- ----- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
617635PFB FB6030710 BAZE FIXADD MD B201 SF 11.600 1 180 360
612451SFC FC6010154 BOATENG FIXADD MD A100 TH 11.500 1 120 120
619468PTC TC6050170 BUTTS FIXADD OH D400 SF 17.990 1 180 360
619189PTC TC6040319 CLARK NOMURA FL C301 SF 12.200 1 360 360
616749PTC TC6040086 FARMER FIXADD IN A90 2F 11.125 2 360 360
619855PTC TC6050467 LEE FIXADD MI C301 SF 10.250 1 360 360
619140PTC TC6050035 PIERCE FIXADD OH B85 SF 13.600 1 180 360
617650PFC FC6055057 PRZYBYLOWSKI FIXADD NJ D420 NIQ SF 12.750 1 240 240
617568PFC FC6055016 SILIPO FIXADD MO B201 SF 12.000 1 360 360
619378PTC TC6040362 WEAKLEY NOMURA IL B1003 STA SF 12.200 1 360 360
618673STC TC6040959 WOLFSON FIXADD CT APART NIQ SF 10.750 1 120 360
618350PTC TC6040613 WORKMAN FIXADD IN B201 SF 12.990 1 240 240
------ -------------
Grand Total/WT Avgs: 12 12.559 255 337
Calc Check (s/b 100%): 100.00%
<CAPTION>
07/01/96
Service Sys 1st Pmt Scheduled Maturity Lien
Loan Numb Loan Amount Date Payment Balance CLTV Date Pos
--------- ----------- ---- ------- ------- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C>
617635PFB 88,000.00 10-Jun-96 878.18 87,972.49 80.000 10-May-11 1
612451SFC 15,000.00 22-Dec-95 210.90 14,516.30 80.405 22-Nov-05 2
619468PTC 48,000.00 30-May-96 723.01 47,993.13 43.636 30-Apr-11 1
619189PTC 58,500.00 01-Mar-96 610.76 58,401.47 75.000 01-Feb-26 1
616749PTC 50,400.00 01-Feb-96 484.74 50,292.59 90.000 01-Jan-26 1
619855PTC 74,250.00 01-May-96 665.36 74,121.94 75.000 01-Apr-26 1
619140PTC 140,250.00 29-May-96 1,617.48 140,193.72 85.000 29-Apr-11 1
617650PFC 52,000.00 29-May-96 599.99 51,904.52 34.667 29-Apr-16 1
617568PFC 32,800.00 01-Jan-96 337.38 32,732.34 58.363 01-Dec-25 1
619378PTC 45,500.00 01-Feb-96 475.04 45,423.34 70.000 01-Jan-26 1
618673STC 20,000.00 08-May-96 186.70 19,984.87 75.402 08-Apr-06 2
618350PTC 44,000.00 20-Mar-96 515.18 43,841.93 80.000 20-Feb-16 1
------------ ---------------------
Grand Total/WT Avgs: 668,700.00 7,304.72 667,378.64
</TABLE>
Calc Check (s/b 100%):
<PAGE>
[LOGO of IMC]
The IMC Family of Companies
IMC Mortgage Company
Industry Mortgage Company, L.P.
IMC Corporation of America
Equitystars
Description: Substituted to IMC's 96-3 Securitization
<TABLE>
<CAPTION>
IMC PORTFOLIO LIST
Service Sys Origination Borrrower Investor Prop Interest Occy Pmt Amort
Loan Numb Loan Numb Last Name / Count Numb State Program Type Rate Code Term Term
--------- --------- ----------------- ---- ----- ------- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
621375PFC FC6065171 ALFORD FIXADD MD A120 NIQ SF 12.490 1 360 360
623228PTC TC6070512 ALY FIXADD FL B1003 STA SF 13.600 1 240 240
623196PTC TC6070479 BENTLEY FIXADD WI B85 SF 13.990 1 180 360
623057PFC FC6075042 CULLEN FIXADD VA B201 SF 11.990 1 180 360
621256PFC FC6050291 HAMMOND FIXADD MI B201 SF 11.250 1 360 360
621193PTC TC6060640 HENRY FIXADD TN A100 SF 12.500 1 120 120
622220PFC FC6030889 HOLZHAUSER FIXADD NJ D400 SF 14.790 1 240 240
621211PTC TC6060659 NEIGHBARGER FIXADD OH A100 SF 13.990 1 240 240
621477PFC FC6065115 PARKER FIXADD DC A101 SF 12.990 1 360 360
621528PTC TC6060974 ROBINSON FIXADD IN A100 SF 10.950 1 180 360
621968PTC TC6070011 SCOTT FIXADD MI C301 SF 13.400 1 360 360
621824PTC TC6060581 SELVAGE FIXADD OH A90 SF 11.375 2 360 360
622891PTC TC6070361 WEST, JR FIXADD NC B85 SF 13.990 1 180 360
------- ------------
Grand Total/WT Avgs: 13 12.685 269 336
Calc Check (s/b 100%): 100.00%
<CAPTION>
08/01/96
Service Sys 1st Pmt Scheduled Maturity Lien
Loan Numb Loan Amount Date Payment Balance CLTV Date Pos
--------- ----------- ---- ------- ------- ---- ---- ---
<C> <C> <C> <C> <C> <C> <C> <C>
621375PFC 30,000.00 30-May-96 319.94 29,975.68 56.604 30-Jul-96 1
623228PTC 20,000.00 17-Aug-96 242.92 20,000.00 23.529 17-Aug-96 1
623196PTC 38,250.00 05-Aug-96 452.91 38,250.00 85.000 05-Aug-96 1
623057PFC 84,000.00 20-Jul-96 863.39 83,975.91 80.000 20-Jul-96 1
621256PFC 72,000.00 01-Aug-96 699.31 71,975.69 75.000 01-Sep-96 1
621193PTC 12,000.00 10-Jun-96 175.66 11,949.34 26.667 10-Aug-96 1
622220PFC 29,300.00 03-Jul-96 381.29 29,279.83 23.629 03-Aug-96 1
621211PTC 28,000.00 17-Jul-96 347.99 27,978.44 80.000 17-Aug-96 1
621477PFC 33,000.00 17-Jul-96 364.79 32,992.44 60.000 17-Jul-96 1
621528PTC 19,500.00 18-Jul-96 184.97 19,492.94 65.000 18-Aug-96 1
621968PTC 45,000.00 01-Aug-96 511.90 44,990.48 75.000 01-Sep-96 1
621824PTC 49,500.00 01-Jul-96 485.48 49,467.32 90.000 01-Aug-96 1
622891PTC 45,900.00 03-Aug-96 543.50 45,900.00 85.000 03-Aug-96 1
---------- -----------------------
Grand Total/WT Avgs: 506,450.00 5,574.05 506,228.07 70.631
</TABLE>
Calc Check (s/b 100%):
D= Dropped From IMC's 96-3 Securitization
R= Replaced
