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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)
October 25, 1996
IMC Home Equity Loan Trust 1996-4
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(Exact name of registrant as specified in its charter)
New York 333-4911 13-3915137
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(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
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (202) 946-8600
No Change
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(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 1996-4 (the "Registrant" or the "Trust")
issued $310,000,000 in aggregate principal amount of its Home Equity Loan
Pass-Through Certificates, Series 1996-4 (the "Certificates"), on October 25,
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 October 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 Certificates (the "Class A Certificates"), Class S
Certificates (the "Class S Certificates") and the Class R Certificates (the
"Class R Certificates" and, together with the Class A Certificates and the Class
S 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, 6.59%; Class A-2, 6.58%; Class A-3,
6.81%; Class A-4, 7.11%, Class A-5, 7.41% and Class A-6, 7.61%. The Class A
Certificates have initial aggregate principal amounts as follows: Class A-1,
$117,802,000; Class A-2, $40,131,000; Class A-3, $58,472,000; Class A-4,
$51,439,000; Class A-5, $16,445,000; and Class A-6, $25,711,000.
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 October 18, 1996 filed pursuant to Rule 424(b)(5) of the Act on October
25, 1996.
On October 25, 1996, the Trust acquired $88,538.00 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 October 25, 1996. The
Subsequent Home Equity Loans possess the characteristics required by the
Prospectus dated July 23, 1996 and the Prospectus Supplement dated October 18,
1996 filed pursuant to Rule 424(b)(5) of the Securities Act of 1933 on October
25, 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 October 18, 1996, between IMC
Securities, Inc. and Bear, Stearns & Co. Inc., as representative of
theseveral Underwriters.
4.1 Pooling and Servicing Agreement dated as of October 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 October 25, 1996 among IMC
Securities, Inc., Industry Mortgage Company, L.P. and IMC Home
Equity Loan Trust 1996-4.
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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
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Name: Thomas Middleton
Title: President and Chief Operating Officer
Dated: November 4, 1996
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EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Underwriting Agreement dated as of October 18, 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 October 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 October 25,
1996 among IMC Securities, Inc., Industry Mortgage
Company, L.P. and IMC Home Equity Loan Trust 1996-4.
EXECUTION COPY
$310,000,000
IMC HOME EQUITY LOAN TRUST 1996-4
IMC Home Equity Loan Pass-Through Certificates,
Series 1996-4
UNDERWRITING AGREEMENT
October 18, 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 1996-4 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 and the Class A-6 Certificates (the "Offered
Certificates"), (b) the Class S Certificates (the "Class S Certificates") and
(c) the Class R Certificates (the "Class R Certificates," and collectively with
the Class S Certificates and 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 October 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
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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"). 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, $89,516.02 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 October 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 $309,910,483.98 as of the close of business on
October 1, 1996 (the "Cut-Off Date") and (ii) $89,516.02 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
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Registration Statement or the Prospectus 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
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adverse change in the general affairs, management, financial condition, or
results of operations of the Depositor, otherwise than as set forth or
contemplated in the Prospectus as supplemented or amended as of the
Closing Date.
E. The Depositor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of 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
moratorium or other similar laws
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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 Pooling and Servicing
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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
Depositor's right, title and interest in and to the Subsequent Home Equity
Loans.
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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 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
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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
Stroock & Stroock & Lavan, Seven Hanover Square, New York, New York 10004, 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 October 25, 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 any amended Prospectus has been filed prior to the Closing
Date and to furnish the Underwriters with copies thereof; to file
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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
shall notify the Underwriters and, upon the Underwriters' request, shall
file such document and
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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
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Servicing Agreement; (iii) the monthly servicing report furnished to the
Trustee pursuant to Section 7.08 of the Pooling and Servicing Agreement;
and (iv) the monthly reports furnished to the Certificateholders pursuant
to Section 7.09 of the Pooling and Servicing Agreement.
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 Stroock & Stroock & Lavan, 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
dated the
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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.
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6. The Pooling and Servicing Agreement conforms in all material
respects to the description thereof contained in the Prospectus and
is not required to be qualified under the Trust Indenture Act of
1939, as amended, and the Trust is not required to be registered
under the Investment Company Act of 1940, as amended.
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 each of the Base REMIC and
the Upper-Tier REMIC), 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 Upper-Tier REMIC, the Base REMIC Regular
Interests will be treated as "regular interests" in the Base REMIC,
the Class R Certificate will constitute the sole class of "residual
interest" in the Upper-Tier REMIC and the Base REMIC Residual Class
will constitute the sole class of "residual interest" in the Base
REMIC. 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 Upper-Tier REMIC or the Base REMIC (exclusive of
the Pre-Funding Account and the Capitalized Interest
Account) as a REMIC.
10. As a consequence of the qualification of each of the Upper-Tier
REMIC and the Base REMIC 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 each of the Upper-Tier
REMIC and the Base REMIC 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
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the Code to the extent that such Offered Certificates are treated as
"real estate assets" under Section 856(c) of the Code.
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
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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.
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
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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.
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
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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 (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 S Certificates and 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,
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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 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.
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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
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.
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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
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
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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.
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 or 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
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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.
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 October 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 September 30, 1996.
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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, 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
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<PAGE>
jurisdiction; (ii) a banking moratorium shall have been declared by
federal or state authorities; (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation of hostilities
involving the United States or there shall have been a declaration of a
national emergency or war by the United States; or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the
financial markets of the United States shall be such) as to make it in
each of the instances set forth in clauses (i), (ii), (iii) and (iv)
herein, in the reasonable judgment of the Underwriters, impractical or
inadvisable to proceed with the public offering or delivery of the
Certificates on the terms and in the manner contemplated in the
Prospectus.
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
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of distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in each
case, exhibits), the Prospectus and any amendment or supplement to the
Prospectus or any document incorporated by reference therein, all as provided in
this Agreement; (d) the costs of reproducing and distributing this Agreement;
(e) the fees and expenses of 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 Stroock & Stroock & Lavan, 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
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<PAGE>
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and shall reimburse
such Underwriter and each such controlling person promptly upon demand for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with 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
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Depositor or any director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Depositor or any such director, officer or controlling
person. 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
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<PAGE>
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, 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
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the Depositor's officers and directors and each person who controls the
Depositor within the meaning of Section 15 of the Securities Act against any and
all losses, claims, damages or liabilities, 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
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alleged omission to state a material fact relates to information supplied by the
Depositor or by such Underwriter, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission and other equitable considerations.
The Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 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).
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<PAGE>
I. The Underwriters confirm that the information set forth in the last
paragraph on the cover page of the Prospectus Supplement and the Computational
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.
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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
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
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<PAGE>
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 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.
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<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: George Nicholas
Title: Chairman, Chief Executive
Officer and Assistant
Secretary
INDUSTRY MORTGAGE COMPANY, L.P.
Industry Mortgage Company,
its General Partner
By:_______________________________
Name: George Nicholas
Title: Chairman, Chief Executive
Officer and Assistant
Secretary
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:
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<PAGE>
SCHEDULE A
Class A-1 Certificates
Underwriters Principal Purchase Price
- ------------ --------- --------------
Bear, Stearns & Co. Inc. $39,268,000 99.82635%
Nomura Securities International, Inc. $39,267,000 99.82635%
Greenwich Capital Markets, Inc. $39,267,000 99.82635%
Total $117,802,000
Class A-2 Certificates
Underwriters Principal Purchase Price
- ------------ --------- --------------
Bear, Stearns & Co. Inc. $13,377,000 99.73975%
Nomura Securities International, Inc. $13,377,000 99.73975%
Greenwich Capital Markets, Inc. $13,377,000 99.73975%
Total $40,131,000
Class A-3 Certificates
Underwriters Principal Purchase Price
- ------------ --------- --------------
Bear, Stearns & Co. Inc. $19,492,000 99.69868%
Nomura Securities International, Inc. $19,490,000 99.69868%
Greenwich Capital Markets, Inc. $19,490,000 99.69868%
Total $58,472,000
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SCHEDULE A (cont'd)
Class A-4 Certificates
Underwriters Principal Purchase Price
- ------------ --------- --------------
Bear, Stearns & Co. Inc. $17,147,000 99.53103%
Nomura Securities International, Inc. $17,146,000 99.53103%
Greenwich Capital Markets, Inc. $17,146,000 99.53103%
Total $51,439,000
Class A-5 Certificates
Underwriters Principal Purchase Price
- ------------ --------- --------------
Bear, Stearns & Co. Inc. $5,483,000 99.48827%
Nomura Securities International, Inc. $5,481,000 99.48827%
Greenwich Capital Markets, Inc. $5,481,000 99.48827%
Total $16,445,000
Class A-6 Certificates
Underwriters Principal Purchase Price
- ------------ --------- --------------
Bear, Stearns & Co. Inc. $ 8,571,000 99.42729%
Nomura Securities International, Inc. $ 8,570,000 99.42729%
Greenwich Capital Markets, Inc. $ 8,570,000 99.42729%
Total $25,711,000
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SCHEDULE A [cont'd)
Selling Reallowance
Class Concession Discount
- ----- ---------- --------
A-1 0.102% 0.075%
A-2 0.150% 0.100%
A-3 0.180% 0.150
A-4 0.270% 0.200%
A-5 0.300% 0.225%
A-6 0.330% 0.275%
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POOLING AND SERVICING AGREEMENT
Relating to
IMC HOME EQUITY LOAN TRUST 1996-4
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 October 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.............................. 31
Section 1.03 Captions; Table of Contents........................... 31
Section 1.04 Opinions.............................................. 31
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST............. 32
Section 2.01 Establishment of the Trust............................ 32
Section 2.02 Office................................................ 32
Section 2.03 Purposes and Powers................................... 32
Section 2.04 Appointment of the Trustee; Declaration of Trust...... 32
Section 2.05 Expenses of the Trust................................. 32
Section 2.06 Ownership of the Trust................................ 33
Section 2.07 Situs of the Trust.................................... 33
Section 2.08 Miscellaneous REMIC Provisions........................ 33
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS............. 35
Section 3.01 Representations and Warranties of the Depositor....... 35
Section 3.02 Representations and Warranties of the Servicer........ 37
Section 3.03 Representations and Warranties of the Seller.......... 39
Section 3.04 Covenants of Seller to Take Certain Actions with
Respect to the Home Equity Loans in Certain
Situations............................................ 41
Section 3.05 Conveyance of the Initial Home Equity Loans and
Qualified Replacement Mortgages....................... 48
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee................ 52
Section 3.07 Conveyance of the Subsequent Home Equity Loans........ 53
Section 3.08 Custodian............................................. 55
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES.................. 56
Section 4.01 Issuance of Certificates.............................. 56
Section 4.02 Sale of Certificates.................................. 56
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS................ 57
Section 5.01 Terms................................................. 57
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Section 5.02 Forms................................................. 57
Section 5.03 Execution, Authentication and Delivery................ 57
Section 5.04 Registration and Transfer of Certificates............. 58
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates..... 60
Section 5.06 Persons Deemed Owners................................. 60
Section 5.07 Cancellation.......................................... 61
Section 5.08 Limitation on Transfer of Ownership Rights............ 61
Section 5.09 Assignment of Rights.................................. 62
ARTICLE VI
COVENANTS.............................................. 63
Section 6.01 Distributions......................................... 63
Section 6.02 Money for Distributions to be Held in Trust;
Withholding........................................... 63
Section 6.03 Protection of Trust Estate............................ 64
Section 6.04 Performance of Obligations............................ 65
Section 6.05 Negative Covenants.................................... 65
Section 6.06 No Other Powers....................................... 65
Section 6.07 Limitation of Suits................................... 66
Section 6.08 Unconditional Rights of Owners to Receive
Distributions......................................... 66
Section 6.09 Rights and Remedies Cumulative........................ 67
Section 6.10 Delay or Omission Not Waiver.......................... 67
Section 6.11 Control by Owners..................................... 67
Section 6.12 Indemnification by the Seller......................... 67
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES................. 69
Section 7.01 Collection of Money................................... 69
Section 7.02 Establishment of Accounts............................. 69
Section 7.03 Flow of Funds......................................... 69
Section 7.04 Pre-Funding Account and Capitalized Interest
Account............................................... 72
Section 7.05 Investment of Accounts................................ 73
Section 7.06 Payment of Trust Expenses............................. 74
Section 7.07 Eligible Investments.................................. 74
Section 7.08 Accounting and Directions by Trustee.................. 76
Section 7.09 Reports by Trustee to Owners and Certificate Insurer.. 76
Section 7.10 Reports by Trustee. ................................. 78
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS........................... 80
Section 8.01 Servicer and Sub-Servicers............................ 80
Section 8.02 Collection of Certain Home Equity Loan Payments....... 81
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers......................................... 81
Section 8.04 Successor Sub-Servicers............................... 82
Section 8.05 Liability of Servicer; Indemnification................ 82
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners................................. 82
Section 8.07 Assumption or Termination of Sub-Servicing Agreement
by Trustee............................................ 83
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Section 8.08 Principal and Interest Account........................ 83
Section 8.09 Delinquency Advances and Servicing Advances........... 85
Section 8.10 Compensating Interest; Repurchase of Home Equity
Loans................................................. 85
Section 8.11 Maintenance of Insurance.............................. 86
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements............................................ 87
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout
of Home Equity Loans.................................. 87
Section 8.14 Trustee to Cooperate; Release of Files................ 89
Section 8.15 Servicing Compensation................................ 90
Section 8.16 Annual Statement as to Compliance..................... 90
Section 8.17 Annual Independent Certified Public Accountants'
Reports............................................... 90
Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans....................... 91
Section 8.19 Assignment of Agreement............................... 91
Section 8.20 Removal of Servicer; Retention of Servicer;
Resignation of Servicer............................... 91
Section 8.21 Inspections by Certificate Insurer; Errors and
Omissions Insurance................................... 95
Section 8.22 Additional Servicing Responsibilities for Second
Mortgage Loans........................................ 95
ARTICLE IX
TERMINATION OF TRUST...................................... 96
Section 9.01 Termination of Trust.................................. 96
Section 9.02 Termination Upon Option of Owners of Class R
Certificates.......................................... 96
Section 9.03 Termination Upon Loss of REMIC Status................. 97
Section 9.04 Disposition of Proceeds............................... 99
ARTICLE X
THE TRUSTEE..............................100
Section 10.01 Certain Duties and Responsibilities................... 100
Section 10.02 Removal of Trustee for Cause.......................... 102
Section 10.03 Certain Rights of the Trustee......................... 103
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates.......................................... 104
Section 10.05 May Hold Certificates................................. 104
Section 10.06 Money Held in Trust................................... 105
Section 10.07 Compensation and Reimbursement........................ 105
Section 10.08 Corporate Trustee Required; Eligibility............... 105
Section 10.09 Resignation and Removal; Appointment of Successor..... 106
Section 10.10 Acceptance of Appointment by Successor Trustee........ 107
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee............................... 107
Section 10.12 Reporting; Withholding................................ 108
Section 10.13 Liability of the Trustee.............................. 108
Section 10.14 Appointment of Co-Trustee or Separate Trustee......... 109
ARTICLE XI
MISCELLANEOUS........................................... 111
Section 11.01 Compliance Certificates and Opinions.................. 111
Section 11.02 Form of Documents Delivered to the Trustee............ 111
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Section 11.03 Acts of Owners........................................ 112
Section 11.04 Notices, etc. to Trustee.............................. 112
Section 11.05 Notices and Reports to Owners; Waiver of Notices...... 113
Section 11.06 Rules by Trustee...................................... 113
Section 11.07 Successors and Assigns................................ 113
Section 11.08 Severability.......................................... 113
Section 11.09 Benefits of Agreement................................. 113
Section 11.10 Legal Holidays........................................ 114
Section 11.11 Governing Law; Submission to Jurisdiction............. 114
Section 11.12 Counterparts.......................................... 115
Section 11.13 Usury................................................. 115
Section 11.14 Amendment............................................. 115
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.... 116
Section 11.16 REMIC Status.......................................... 116
Section 11.17 Additional Limitation on Action and Imposition of Tax. 118
Section 11.18 Appointment of Tax Matters Person..................... 119
Section 11.19 The Certificate Insurer............................... 119
Section 11.20 Reserved.............................................. 119
Section 11.21 Third Party Rights.................................... 119
Section 11.22 Notices............................................... 120
Section 11.23 Rule 144A Information................................. 121
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER.......... 122
Section 12.01 Trust Estate and Accounts Held for Benefit of the
Certificate Insurer................................... 122
Section 12.02 Claims Upon the Policy; Policy Payments Account....... 122
Section 12.03 Effect of Payments by the Certificate Insurer;
Subrogation........................................... 123
Section 12.04 Notices to the Certificate Insurer.................... 124
Section 12.05 Third-Party Beneficiary............................... 124
Section 12.06 Rights to the Certificate Insurer To Exercise Rights
of Owners............................................. 124
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 B FORM OF CLASS S CERTIFICATE
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
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
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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
1996-4, dated as of October 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, the Class S 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 October 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 Upper-Tier
Distribution 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
<PAGE>
(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 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 and the Class S 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
five 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, (b) the
Class S Pass-Through Rate and (c) 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.
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"Annual Loss Percentage (Rolling Six Month)": As of any date of
determination thereof, twelve times the fraction expressed as a percentage
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.
"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.
"Base REMIC": The Trust Estate (other than the Upper-Tier Distribution
Account (which is an asset of the Upper-Tier REMIC), the Pre-Funding Account and
the Capitalized Interest Account).
"Base REMIC Interest 1": The interest of that name established pursuant to
Section 2.08(a) hereof.
"Base REMIC Interest 2": The interest of that name established pursuant to
Section 2.08(a) hereof.
"Base REMIC Interest 3": The interest of that name established pursuant to
Section 2.08(a) hereof.
"Base REMIC Interest 4": The interest of that name established pursuant to
Section 2.08(a) hereof.
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"Base REMIC Interest 5": The interest of that name established pursuant to
Section 2.08(a) hereof.
"Base REMIC Interest 6": The interest of that name established pursuant to
Section 2.08(a) hereof.
"Base REMIC Interest 1 Termination Date": The Payment Date on which the
Lower-Tier Balance of Base REMIC Interest 1 is reduced to zero through the
distribution made in respect of Base REMIC Interest 1 on such Payment Date.
"Base REMIC Interest 2 Termination Date": The Payment Date on which the
Lower-Tier Balance of Base REMIC Interest 2 is reduced to zero through the
distribution made in respect of Base REMIC Interest 2 on such Payment Date.
"Base REMIC Interest 3 Termination Date": The Payment Date on which the
Lower-Tier Balance of Base REMIC Interest 3 is reduced to zero through the
distribution made in respect of Base REMIC Interest 3 on such Payment Date.
"Base REMIC Interest 4 Termination Date": The Payment Date on which the
Lower-Tier Balance of Base REMIC Interest 4 is reduced to zero through the
distribution made in respect of Base REMIC Interest 4 on such Payment Date.
"Base REMIC Interest 5 Termination Date": The Payment Date on which the
Lower-Tier Balance of Base REMIC Interest 5 is reduced to zero through the
distribution made in respect of Base REMIC Interest 5 on such Payment Date.
"Base REMIC Interest 6 Termination Date": The Payment Date on which the
Lower-Tier Balance of Base REMIC Interest 6 is reduced to zero through the
distribution made in respect of Base REMIC Interest 6 on such Payment Date.
"Base REMIC Residual Class": With respect to the Base REMIC, the interest
therein designated as the "residual interest" for the purposes of the REMIC
Provisions. The Base REMIC Residual Class shall be uncertificated, and shall be
issuable only in Percentage Interests of 99.999% to the Seller and 0.001% to The
Chase Manhattan Bank, as Tax Matters Person. Such interests shall be
non-transferrable, except that The Chase Manhattan Bank may assign such interest
to another person who accepts such assignment and the designation as Tax Matters
Person pursuant to Section 12.18 hereof.
"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": $0.
"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
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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.
"Certificate": Any one of the Class A Certificates, the Class S
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 1996-4, Home Equity Loan Pass-Through
Certificates."
"Certificate Insurance Policy": The Certificate Guaranty Insurance Policy
(number 50518-N) dated October 25, 1996 issued by the Certificate Insurer for
the benefit of the Owners of the Class A Certificates and the Class S
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.
5
<PAGE>
"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 - $117,802,000
Class A-2 Certificates - $40,131,000
Class A-3 Certificates - $58,472,000
Class A-4 Certificates - $51,439,000
Class A-5 Certificates - $16,445,000
Class A-6 Certificates - $25,711,000
The Class S Certificates and the Class R Certificates do not have a
Certificate Principal Balance.
"Class": Any Class of the Class A Certificates, the Class S 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 or the Class A-6 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 and with respect to the Class A-6 Certificates, the Class A-6
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 and the Class A-6
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 Upper-Tier 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.
6
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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)(D) for such Payment Date.
"Class A-1 Pass-Through Rate": 6.59% 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 Upper-Tier 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)(D) for such Payment Date.
"Class A-2 Pass-Through Rate": 6.58% 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 Upper-Tier REMIC for purposes of the
REMIC provisions.
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"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 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)(D) for such Payment Date.
"Class A-3 Pass-Through Rate": 6.81% 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 Upper-Tier 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)(D) for such Payment Date.
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"Class A-4 Pass-Through Rate": 7.11% per annum.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5 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 Upper-Tier 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)(D) for such Payment Date.
"Class A-5 Pass-Through Rate": 7.41% 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 Upper-Tier 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
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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.
"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)(D) for such Payment Date.
"Class A-6 Pass-Through Rate": 7.61% 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 Upper-Tier REMIC for the purposes of the REMIC
Provisions.
"Class S Carry Forward Amount": With respect to any Payment Date, the sum
of (i) the Upper-Tier S-1 Carry Forward Amount, the Upper-Tier S-2 Carry Forward
Amount, the Upper-Tier S-3 Carry Forward Amount, the Upper-Tier S-4 Carry
Forward Amount, the Upper-Tier S-5 Carry Forward Amount and the Upper-Tier S-6
Carry Forward Amount and (ii) 30 days' interest on such amount at the related
Class S-1, Class S-2, Class S-3, Class S-4, Class S-5 or Class S-6 Pass-Through
Rate, as the case may be.
"Class S Certificate": Any one of the Certificates designated on the face
thereof as a Class S Certificate, substantially in the form annexed hereto as
Exhibit B, authenticated and delivered by the Trustee representing the right to
distributions as set forth herein. The Class S Certificates are not themselves
an interest in a REMIC, but they represent the sum of the specified portions of
the Upper-Tier S Certificates for purposes of the REMIC Provisions.
"Class S Distribution Amount": With respect to each Payment Date, the sum
of (a) the interest accrued during the related Accrual Period (i) at the
Upper-Tier S-1 Pass-Through Rate on the Class A-1 Certificate Principal Balance,
(ii) at the Upper-Tier S-2 Pass-Through Rate on the Class A-2 Certificate
Principal Balance, (iii) at the Upper-Tier S-3 Pass-Through Rate on the Class
A-3 Certificate Principal Balance, (iv) at the Upper-Tier S-4 Pass-Through Rate
on the Class A-4 Certificate Principal Balance and (v) at the Upper-Tier S-5
Pass-Through Rate on the Class A-5 Certificate Principal Balance and (vi) at the
Upper-Tier S-6 Pass-Through Rate on the Class A-6 Certificate Principal Balance,
(b) the Preference Amount, if any, for the Class S Certificates and (c) the
Class S Carry Forward Amount, if any.
"Class S Pass-Through Rate": With respect to any Payment Date, the
weighted average of the Upper-Tier S-1 Pass-Through Rate, the Upper-Tier S-2
Pass-Through Rate, the Upper-Tier S-3 Pass-Through Rate, the Upper-Tier S-4
Pass-Through Rate, the Upper-Tier S-5 Pass-Through Rate, the Upper-Tier S-6
Pass-Through Rate (weighted by the related Lower-Tier Balance).
"Clean-Up Call Date": The first Monthly Remittance Date on which the
aggregate Loan Balances of the Home Equity Loans has declined to $31,000,000 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.
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"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.
"Co-Trustee": The Chase Manhattan Bank, N.A. or any successor thereto.
"Co-Trustee Agreement": The Co-Trustee Agreement dated as of October 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
------ ----------
October 2, 1996 - October 1, 1998 1.00%
October 2, 1998 - October 1, 1999 1.50%
October 2, 1999 - October 1, 2000 1.75%
October 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 (y) the Class S
Distribution Amount for such Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of October 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 October 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
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Delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month) then on the last day of such immediately succeeding month.
Similarly for "60 days Delinquent," "90 days Delinquent" and so on.
"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 November 1998 and ending on the
Payment Date in April 1999 shall be limited to the amount obtained using the
following formula:
n-24
---- X E.S.A.
6
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Where "n" is equal to the number of Payment Dates that have occurred since the
Startup Day (i.e., in November 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.
"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) October 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
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with this Agreement, as from time to time are held as a part of the Trust
Estate, the Home Equity Loans originally so held being identified in the
Schedules of Home Equity Loans. The term "Home Equity Loan" includes the terms
"First Mortgage Loan" and "Second Mortgage Loan". The term "Home Equity Loan"
includes any Home Equity Loan which is Delinquent, which relates to a
foreclosure or which relates to a Property which is REO Property prior to such
Property's disposition by the Trust. Any home equity loan which, although
intended by the parties hereto to have been, and which purportedly was,
transferred and assigned to the Trust by the Depositor, in fact was not
transferred and assigned to the Trust for any reason whatsoever, including,
without limitation, the incorrectness of the statement set forth in Section
3.04(b)(x) hereof with respect to such home equity loan, shall nevertheless be
considered a "Home Equity Loan" for all purposes of this Agreement.
"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": $8,060,000.
"Insurance Agreement": The Insurance and Indemnity Agreement dated as of
October 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 sum of (i) the
Weighted Average Pass-Through Rate and (b) the Class S 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.
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"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
excluding payments of principal due on or prior to the Cut-Off Date or
Subsequent Cut-Off Date, as the case may be, whether or not received, less any
principal payments relating to such Home Equity Loan included in previous
Monthly Remittance Amounts, provided, however, that the Loan Balance for any
Home Equity Loan that has become a Liquidated Loan shall be zero as of the first
day of the Remittance Period following the Remittance Period in which such Home
Equity Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan 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.
"Lower Tier A-1 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Base REMIC Interest
1 immediately prior to such Payment Date during the related Accrual Period at
the Net Coupon Rate plus 3.30%.
"Lower Tier A-2 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Base REMIC Interest
2 immediately prior to such Payment Date during the related Accrual Period at
the Net Coupon Rate plus 3.30%.
"Lower Tier A-3 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Base REMIC Interest
3 immediately prior to such Payment Date during the related Accrual Period at
the Net Coupon Rate plus 3.30%.
"Lower Tier A-4 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Base REMIC Interest
4 immediately prior to such Payment Date during the related Accrual Period at
the Net Coupon Rate plus 3.30%.
"Lower Tier A-5 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Base REMIC Interest
5 immediately prior to such Payment Date during the related Accrual Period at
the Net Coupon Rate plus 3.30%.
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"Lower Tier A-6 Monthly Interest": With respect to any Payment Date, the
amount of interest accrued on the Lower-Tier Balance of the Base REMIC Interest
6 immediately prior to such Payment Date during the related Accrual Period at
the Net Coupon Rate plus 3.30%.
"Lower-Tier Balance": As to each Class of Base REMIC Interests and any
Payment Date, the Lower-Tier Balance as set forth in Section 2.08(a) minus all
amounts distributed as principal of such Class on previous Payments Dates
pursuant to Section 7.03(b)(iv)(A).
"Lower-Tier Distribution Amount": With respect to any Payment Date, the
sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2 Monthly Interest,
the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4 Monthly Interest, the
Lower-Tier A-5 Monthly Interest, the Lower-Tier A-6 Monthly Interest and the
Principal Distribution Amount, which sum is allocated as follows: as a
distribution on the Base REMIC Interest 1 until the Base REMIC Interest 1
Termination Date, the Class A-1 Distribution Amount; as a distribution on the
Base REMIC Interest 2 until the Base REMIC Interest 2 Termination Date, the
Class A-2 Distribution Amount; as a distribution on the Base REMIC Interest 3
until the Base REMIC Interest 3 Termination Date, the Class A-3 Distribution
Amount; as a distribution on the Base REMIC Interest 4 until the Base REMIC
Interest 4 Termination Date, the Class A-4 Distribution Amount; as a
distribution of the Base REMIC Interest 5 until the Base REMIC Interest 5
Termination Date, the Class A-5 Distribution Amount; and, as a distribution on
the Base REMIC Interest 6 Termination Date, the Class A-6 Distribution Amount;
provided that Insured Payments shall be deemed to be paid in respect of the Base
REMIC Interests to the extent such Insured Payments relate to the related Class
A Certificates.
"Maximum Collateral Amount": $310,000,000.
"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 November
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.
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"Net Coupon Rate": With respect to any Payment Date, the excess, if any,
of (a) the weighted average Coupon Rate for all Home Equity Loans (weighted by
Loan Balance) as of the first day of the related Remittance Period (or as of the
Cut-Off Date with respect to the initial Payment Date for all Home Equity Loans)
over (b) the sum of (i) the Servicing Fee, (ii) the Trustee Fee, (iii) the
Trustee Reimbursable Expenses, (iv) the Premium Amount (in each case, expressed
as a percentage of the aggregate Loan Balance as of the first day of the related
Remittance Period), and (v) 3.30%.
"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 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
------ ----------
October 2, 1996 - October 1, 1997 0.75%
October 2, 1997 - October 1, 1998 1.25%
October 2, 1998 - October 1, 1999 1.75%
October 2, 1999 - October 1, 2000 2.00%
October 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 $309,910,483.98.
"Original Pre-Funded Amount": $89,516.02.
"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;
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(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.
"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 October 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, (b) the Class S Pass-Through Rate and (c) the rate at which
the Premium Amount is determined and (ii) interest accruing from the Subsequent
Cut-Off Date to October 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 November 25,
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 S Certificates and 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.
"Policy Payments Account": The policy payments account maintained by the
Trustee pursuant to Section 8.08(a) hereof.
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"Preference Amount": With respect to the Class A Certificates and the
Class S 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 and in previous distributions of the Class S
Distribution Amount to the Owners of the Class S 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 November 25, 1996
Payment Date, the actual investment earnings earned during the period from the
Startup Day through October 31, 1996 (inclusive) on the Pre-Funding Account
during such period as calculated by the Trustee pursuant to Section 3.07(d)
hereof.
"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:
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(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 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
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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 1996-4 Prospectus
Supplement dated October 18, 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 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 8.27%, (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 November 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.
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"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, 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.
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"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.
"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.
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"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
------ ----------
October 2, 1996 - October 1, 1997 1.00%
October 2, 1997 - October 1, 1998 1.50%
October 2, 1998 - October 1, 1999 2.25%
October 2, 1999 - October 1, 2000 3.00%
October 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 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
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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 2.60% 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 5.20% 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 2.60% 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 November, 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, (ii) the Class S
Pass-Through Rate and (iii) 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%.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies or any successor thereto.
"Startup Day": October 25, 1996.
"Stepdown Date": The Determination Date occurring in November 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
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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 Balance, after taking into
account the payment of the Class A Distribution Amount on such Payment Date
(except for any Subordination Deficit and 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.
"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.
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"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 and the Base REMIC Residual Class each of which shall be issued to
and held by The Chase Manhattan 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 1996-4, the trust created under this
Agreement.
"Trust Estate": As defined in the conveyance clause under this Agreement.
"Trustee": The Chase Manhattan 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.
"Trustee Fee": The fee payable monthly to the Trustee on each Payment Date
in an amount equal to 0.01% 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 8.27%.
"Underwriters": Bear, Stearns & Co. Inc., Greenwich Capital Markets, Inc.
and Nomura Securities International, Inc.
"Upper-Tier Distribution Account": The Upper-Tier Distribution Account
established pursuant to Section 7.02 hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08 hereof
with respect to the Certificates. The assets of the Upper-Tier REMIC shall
include the Upper-Tier Distribution Account and the right to receive the
distributions deposited therein with respect to each Lower-Tier Interest.
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"Upper-Tier S Certificates": Any one of the Upper-Tier S-1 Certificates,
Upper-Tier S-2 Certificates, Upper-Tier S-3 Certificates, Upper-Tier S-4
Certificates, Upper-Tier S-5 Certificates or Upper-Tier S-6 Certificates.
"Upper-Tier S-1 Carry Forward Amount": With respect to any Payment Date
the sum of the amount, if any, by which (x) the Upper-Tier S-1 Distribution
Amount with respect to the Upper-Tier S-1 Certificates as of the immediately
preceding Payment Date exceeded (y) the amount of the actual distribution made
in respect of the Upper-Tier S-1 Certificates on such immediately preceding
Payment Date.
"Upper-Tier S-1 Certificate": An interest in the Upper-Tier REMIC which
(x) represents the right to receive the Upper-Tier S-1 Distribution Amount and
(y) is designated as a "regular interest" in the Upper-Tier REMIC for purposes
of the REMIC Provisions. The Upper-Tier S-1 Certificates are nontransferable and
uncertificated.
"Upper-Tier S-1 Current Interest": With respect to any Payment Date, the
aggregate amount of interest accrued on the Class A-1 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the Upper-Tier S-1 Pass-Through Rate plus the Preference Amount owed in
respect of the Upper Tier S-1 Certificates as it relates to interest previously
paid to the Upper-Tier S-1 Certificates.
"Upper-Tier S-1 Pass-Through Rate": With respect to any Payment Date, the
difference between (a) the Net Coupon Rate for such Payment Date and (b) 6.59%.
"Upper-Tier S-1 Distribution Amount:" With respect to any Payment Date the
sum of (i) the Upper-Tier S-1 Current Interest and (ii) the Upper-Tier S-1 Carry
Forward Amount.
"Upper-Tier S-2 Carry Forward Amount": With respect to any Payment Date
the sum of the amount, if any, by which (x) the Upper-Tier S-2 Distribution
Amount with respect to the Upper-Tier S-2 Certificates as of the immediately
preceding Payment Date exceeded (y) the amount of the actual distribution made
in respect of the Upper-Tier S-2 Certificates on such immediately preceding
Payment Date.
"Upper Tier S-2 Certificate": An interest in the Upper-Tier REMIC which
(x) represents the right to receive the Upper-Tier S-2 Distribution Amount and
(y) is designated as a "regular interest" in the Upper-Tier REMIC for purposes
of the REMIC Provisions. The Upper-Tier S-2 Certificates are nontransferable and
uncertificated.
"Upper-Tier S-2 Current Interest": With respect to any Payment Date, the
aggregate amount of interest accrued on the Class A-2 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the Upper-Tier S-2 Pass-Through Rate plus the Preference Amount owed in
respect of the Upper Tier S-2 Certificates as it relates to interest previously
paid to the Upper-Tier S-2 Certificates.
"Upper Tier S-2 Distribution Amount:" With respect to any Payment Date the
sum of (i) the Upper-Tier S-2 Current Interest and (ii) the Upper-Tier S-2 Carry
Forward Amount.
"Upper-Tier S-2 Pass-Through Rate": With respect to any Payment Date, the
difference between (a) the Net Coupon Rate for such Payment Date and (b) 6.58%.
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"Upper-Tier S-3 Carry Forward Amount": With respect to any Payment Date
the sum of the amount, if any, by which (x) the Upper-Tier S-3 Distribution
Amount with respect to the Upper-Tier S-3 Certificates as of the immediately
preceding Payment Date exceeded (y) the amount of the actual distribution made
in respect of the Upper-Tier S-3 Certificates on such immediately preceding
Payment Date.
"Upper Tier S-3 Certificate": An interest in the Upper-Tier REMIC which
(x) represents the right to receive the Upper-Tier S-3 Distribution Amount and
(y) is designated as a "regular interest" in the Upper-Tier REMIC for purposes
of the REMIC Provisions. The Upper-Tier S-3 Certificates are nontransferable and
uncertificated.
"Upper-Tier S-3 Current Interest": With respect to any Payment Date, the
aggregate amount of interest accrued on the Class A-3 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the Upper-Tier S-3 Pass-Through Rate plus the Preference Amount owed in
respect of the Upper Tier S-3 Certificates as it relates to interest previously
paid to the Upper-Tier S-3 Certificates.
"Upper Tier S-3 Distribution Amount:" With respect to any Payment Date the
sum of (i) the Upper-Tier S-3 Current Interest and (ii) the Upper-Tier S-3 Carry
Forward Amount.
"Upper-Tier S-3 Pass-Through Rate": With respect to any Payment Date, the
difference between (a) the Net Coupon Rate for such Payment Date and (b) 6.81%.
"Upper-Tier S-4 Carry Forward Amount": With respect to any Payment Date
the sum of the amount, if any, by which (x) the Upper-Tier S-4 Distribution
Amount with respect to the Upper-Tier S-4 Certificates as of the immediately
preceding Payment Date exceeded (y) the amount of the actual distribution made
in respect of the Upper-Tier S-4 Certificates on such immediately preceding
Payment Date.
"Upper Tier S-4 Certificate": An interest in the Upper-Tier REMIC which
(x) represents the right to receive the Upper-Tier S-4 Distribution Amount and
(y) is designated as a "regular interest" in the Upper-Tier REMIC for purposes
of the REMIC Provisions. The Upper-Tier S-4 Certificates are nontransferable and
uncertificated.
"Upper-Tier S-4 Current Interest": With respect to any Payment Date, the
aggregate amount of interest accrued on the Class A-4 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the Upper-Tier S-4 Pass-Through Rate plus the Preference Amount owed in
respect of the Upper Tier S-4 Certificates as it relates to interest previously
paid to the Upper-Tier S-4 Certificates.
"Upper Tier S-4 Distribution Amount:" With respect to any Payment Date the
sum of (i) the Upper-Tier S-4 Current Interest and (ii) the Upper-Tier S-4 Carry
Forward Amount.
"Upper-Tier S-4 Pass-Through Rate": With respect to any Payment Date, the
difference between (a) the Net Coupon Rate for such Payment Date and (b) 7.11%.
"Upper-Tier S-5 Carry Forward Amount": With respect to any Payment Date
the sum of the amount, if any, by which (x) the Upper-Tier S-5 Distribution
Amount with respect to the Upper-Tier S-5 Certificates as of the immediately
preceding Payment Date exceeded (y) the amount of the actual
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distribution made in respect of the Upper-Tier S-5 Certificates on such
immediately preceding Payment Date.
"Upper Tier S-5 Certificate": An interest in the Upper-Tier REMIC which
(x) represents the right to receive the Upper-Tier S-5 Distribution Amount and
(y) is designated as a "regular interest" in the Upper-Tier REMIC for purposes
of the REMIC Provisions. The Upper-Tier S-5 Certificates are nontransferable and
uncertificated.
"Upper-Tier S-5 Current Interest": With respect to any Payment Date, the
aggregate amount of interest accrued on the Class A-5 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the Upper-Tier S-5 Pass-Through Rate plus the Preference Amount owed in
respect of the Upper Tier S-5 Certificates as it relates to interest previously
paid to the Upper-Tier S-5 Certificates.
"Upper Tier S-5 Distribution Amount:" With respect to any Payment Date the
sum of (i) the Upper-Tier S-5 Current Interest and (ii) the Upper-Tier S-5 Carry
Forward Amount.
"Upper-Tier S-5 Pass-Through Rate": With respect to any Payment Date, the
difference between (a) the Net Coupon Rate for such Payment Date and (b) 7.41%.
"Upper-Tier S-6 Carry Forward Amount": With respect to any Payment Date
the sum of the amount, if any, by which (x) the Upper-Tier S-6 Distribution
Amount with respect to the Upper-Tier S-6 Certificates as of the immediately
preceding Payment Date exceeded (y) the amount of the actual distribution made
in respect of the Upper-Tier S-6 Certificates on such immediately preceding
Payment Date.
"Upper Tier S-6 Certificate": An interest in the Upper-Tier REMIC which
(x) represents the right to receive the Upper-Tier S-6 Distribution Amount and
(y) is designated as a "regular interest" in the Upper-Tier REMIC for purposes
of the REMIC Provisions. The Upper-Tier S-6 Certificates are nontransferable and
uncertificated.
"Upper-Tier S-6 Current Interest": With respect to any Payment Date, the
aggregate amount of interest accrued on the Class A-6 Certificate Principal
Balance during the related Accrual Period immediately prior to such Payment Date
at the Upper-Tier S-6 Pass-Through Rate plus the Preference Amount owed in
respect of the Upper Tier S-6 Certificates as it relates to interest previously
paid to the Upper-Tier S-6 Certificates.
"Upper Tier S-6 Distribution Amount:" With respect to any Payment Date the
sum of (i) the Upper-Tier S-6 Current Interest and (ii) the Upper-Tier S-6 Carry
Forward Amount.
"Upper-Tier S-6 Pass-Through Rate": With respect to any Payment Date, the
difference between (a) the Net Coupon Rate for such Payment Date and (b) 7.61%.
"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 and the Class A-6
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 and the Class A-6 Certificate
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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 1996-4".
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 either the Upper-Tier REMIC or the Base REMIC 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 and the Seller and the Depositor hereby appoint the Co-Trustee
as trustee for the Home Equity Loans located in New Jersey, 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.
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Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created and
administered in, and all Accounts maintained by the Trustee on behalf of the
Trust will be located in, the State of New York (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 beneficial ownership interest in the Base REMIC shall be evidenced
by the interests having the following characteristics and terms as follows:
Final Scheduled
Class Designation Lower Tier Balance Payment Date
----------------- ------------------ ---------------
Base REMIC Interest 1 $117,802,000 July 25, 2011
Base REMIC Interest 2 $40,131,000 July 25, 2011
Base REMIC Interest 3 $58,472,000 July 25, 2011
Base REMIC Interest 4 $51,439,000 August 25, 2014
Base REMIC Interest 5 $16,445,000 March 25, 2019
Base REMIC Interest 6 $25,711,000 December 25, 2026
Base REMIC Residual Class (1) (2)
____________
(1) The Base REMIC Residual Class is not issued with a Lower-Tier Balance.
(2) The Base REMIC Residual Class has no Final Scheduled Payment Date.
(b) The Base REMIC Interest 1, the Base REMIC Interest 2, the Base REMIC
Interest 3, the Base REMIC Interest 4, the Base REMIC Interest 5, the Base REMIC
Interest 6, the Base REMIC Residual Class and the Upper-Tier S Certificates
shall be issued as non-certificated interests. The Class R Certificates shall be
issued from the Upper-Tier REMIC in fully registered certificated form.
(c) The Depositor hereby designates Base REMIC Interest 1, Base REMIC
Interest 2, the Base REMIC Interest 3, the Base REMIC Interest 4, the Base REMIC
Interest 5 and the Base REMIC Interest 6 as "regular interests" and the Base
REMIC Residual Class as the single class of "residual interests" in the Base
REMIC for purposes of the REMIC Provisions.
(d) The Depositor hereby designates the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Upper-Tier S-1, Upper-Tier S-2, Upper-Tier S-3,
Upper-Tier S-4, Upper-Tier S-5 and
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Upper-Tier S-6 Certificates as "regular interests," and the Class R Certificates
as the single class of "residual interests" in the Upper-Tier REMIC for purposes
of the REMIC Provisions. The Class S Certificates are not themselves an interest
in either the Upper-Tier REMIC or the Base REMIC, but they represent the sum of
the specified portions of interest from the Upper-Tier S Certificates. The
Depositor hereby designates the Base REMIC Interest 1, the Base REMIC Interest
2, the Base REMIC Interest 3, the Base REMIC Interest 4, the Base REMIC Interest
5, the Base REMIC Interest 6 and the Upper-Tier Distribution Account as the only
assets of the Upper-Tier REMIC.
(e) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Base REMIC within the meaning of Section 860G(a)(9) of
the Code.
(f) The Owner of the Tax Matters Person Residual Interest in the
Upper-Tier REMIC and the Base REMIC is hereby designated as "tax matters person"
as defined in the REMIC Provisions with respect to each REMIC.
(g) The Trust and each REMIC therein shall, for federal income tax
purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC and the Base REMIC each
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
elections to be treated as a REMIC. The Trustee shall report all expenses of the
Trust Estate to the Base REMIC.
(i) For all federal tax law purposes, amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
the Upper-Tier REMIC and amounts distributed on the Base REMIC Residual Class,
if any, shall be treated as distributions by the Base REMIC.
(j) 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 both the Upper-Tier REMIC and the Base REMIC.
Such information will be provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto.
(k) For federal income tax purposes, the Final Scheduled Payment Date for
each Class of the Class A Certificates in the Upper-Tier REMIC is hereby set to
be the Payment Date indicated below:
Final Scheduled
Class Payment Date
----- ------------
Class A-1 Certificates July 25, 2011
Class A-2 Certificates July 25, 2011
Class A-3 Certificates July 25, 2011
Class A-4 Certificates August 25, 2014
Class A-5 Certificates March 25, 2019
Class A-6 Certificates December 25, 2026
____________
(l) The Final Scheduled Payment Date for the Class S Certificates is
December 25, 2026 and for the Class R Certificates is December 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, the
Custodian, 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
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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 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.
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(f) No certificate of an officer, statement furnished in writing or report
delivered pursuant to the terms hereof by the Servicer contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which describe
the Servicer or matters or activities for which the Servicer is responsible 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, the
Custodian, 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
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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 3.03 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.
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(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
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.
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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 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 second 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 any REMIC therein or
otherwise subject the Trust or any REMIC therein to tax and would not jeopardize
the status of the Upper-Tier REMIC or the Base 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
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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
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 159 Initial Home Equity Loans in the
amount of $8,673,994.65, that are condominiums, planned unit developments,
townhouses, manufactured housing, mixed use properties, multifamily
residential, or cooperative, provided that no more than 0.32% of the
Properties are secured by manufactured homes, each of which is considered
to be real property under the applicable local law;
(v) As of the Cut-Off Date, no Initial Home Equity Loan has a
Loan-to-Value Ratio in excess of 85%, except for 218 Home Equity Loans in
the amount of $18,680,590.10 that had a Loan-to-Value Ratio not greater
than 100%;
(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 8.0% per annum;
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(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 2,291 Initial Home Equity Loans
in the amount of $172,287,365.72, representing 55.59% 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 37 Initial Home Equity Loans in the amount of $2,609,751.03
which provide for "balloon" payments due within 36 months to 360 months);
(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 166 Initial Home Equity Loans
with an outstanding aggregate Loan Balance of $9,189,487.80 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
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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 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;
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(xxi) As of the Startup Day, no more than 12.46% 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);
(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;
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(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;
(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;
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(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 7.11% 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 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 1.77% 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.
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(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
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
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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 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
1996-4 under the Pooling and Servicing Agreement dated as of October 1,
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1996" (except that with respect to any Home Equity Loan with a Property
located in New Jersey "The Chase Manhattan Bank, N.A., as Co-Trustee of
IMC Home Equity Loan Trust 1996-4 under Pooling and Servicing Agreement
dated as of October 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 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
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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
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.
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(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.
(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
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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 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
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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.
(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.
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(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 8.27%; (iv) such Subsequent
Home Equity Loan is not secured by a Property that is a manufactured home; (v)
will not be 30 days or more contractually Delinquent as of the Subsequent
Cut-Off Date; and (vi) following the purchase of such Subsequent Home Equity
Loan by the Trust, the Home Equity Loans (including the Subsequent Home Equity
Loans) (a) 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 (b) 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, if applicable,
on the Payment Date occurring in November 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 Trustee or the Trustee shall have the right to
withhold such amounts from future distributions on such Certificates.
On the Payment Date in November 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
Stroock & Stroock & Lavan, 7 Hanover Square, New York, New York 10004 (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, (ii) to the initial
purchasers thereof, Class S Certificates with a cumulative Percentage Interest
equal to 100% and (iii) 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 the Capitalized Interest Requirement 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 Certificates and the Class S Certificates with respect to the
Certificate Insurance Policy). The Class A Certificates and the Class S
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 and the Class S 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 S 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, B
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.
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The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The 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.
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(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the 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 or Class A-6 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
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depository's agent or designee but, if the Seller 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 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.
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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.
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 S Certificate or 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 S
Certificate or 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 S Certificate or a Class R Certificate shall be
made unless the Trustee shall have received either: (i) a representation letter
from the transferee of such Class S or 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 S or 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
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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 S or 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.
(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 S
Certificate or 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 and Class S
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 or Class S
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
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respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent before being required to make any such payment, may
at the expense of the Trust cause to be published once, in the eastern edition
of The Wall Street Journal, notice that such money remains unclaimed and that,
after a date specified therein, which shall be not fewer than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be paid to the Owners of the Class 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 Depositor, will from time to time
execute and deliver all such supplements and amendments hereto pursuant to
Section 11.14 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request from the
Depositor (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.
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(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing its
duties hereunder pursuant to Section 10.03(g); 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.
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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;
(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 or Class S 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.
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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.
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,
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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 Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office, the Certificate
Account, an Upper-Tier Distribution 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 Upper-Tier REMIC or the Base 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) and shall be paid from the Upper-Tier Distribution
Account as part of the Principal Distribution Amount pursuant
to clause (iv)(D) below (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 paid from the Upper-Tier Distribution Account
pursuant to clause (iv)(A) below 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, which
shall be paid from the Upper-Tier Distribution Account
pursuant to clause (iv)(D) 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 from the Upper-Tier Distribution Account pursuant to
clause (iv)(A) below 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) the Lower-Tier Distribution Amount (including the proceeds of
any Insured Payments made by the Certificate Insurer) as a
distribution on the related Base
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REMIC Interests to the Upper-Tier Distribution Account and
from the Upper-Tier Distribution Account, (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) from the Upper-Tier Distribution Account 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 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) from the Upper-Tier Distribution Account to each Owner of the
Class S Certificates, the Class S Distribution Amount for such
Payment Date on a pro rata basis without any priority among
such Class S Certificates;
(D) from the Upper-Tier Distribution Account 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; and (vi) sixth, to the Owners of the Class
A-6 Certificates until the Class A-6 Certificate Principal
Balance is reduced to zero; and
(E) from both the Certificate Account and the Upper-Tier
Distribution Account (as necessary) 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 both the Certificate Account and the Upper-Tier
Distribution Account, to the Owners of the Class R Certificates, the
Residual Net Monthly Excess Cashflow, if any, for such Payment Date
and the Owners of the Base REMIC Residual Class, any amount
remaining, if any, in the Base REMIC.
(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)(D) shall not
exceed the original Certificate Principal Balance of the related Class A
Certificates.
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(e) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A Certificates and the Class S Certificates, the
Trustee shall deposit such Insured Payments in the Policy Payments Account. On
each Payment Date, pursuant to Section 12.02(b) hereof, such amounts will be
transferred from the Policy Payment Account to the Certificate Account and the
Trustee 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 and the Class S Certificates any Insured Payment from the
Certificate Insurer and (ii) disburse the same to the Owners of the related
Class A Certificates and the Class S 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 Class S 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.
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 Base
REMIC Residual Class to receive distributions, if any, on the Base REMIC
Residual Class, in and to such distributions, shall be subject and subordinate
to the preferential rights of the holders of the interests in the Base REMIC
held by the Upper-Tier REMIC and the Class A Certificates and the Class S
Certificates in the Upper-Tier REMIC, as applicable, 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, (i) in the Pre-Funding
Account the Original Pre-Funded Amount and (ii) in the Capitalized Interest
Account, the Capitalized Interest Requirement, each 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.
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(c) After giving effect to any reductions in the Pre-Funded Amount on or
before the Monthly Remittance Date in November 1996, 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) On each Subsequent Transfer Date, the Trustee shall transfer from the
Capitalized Interest Account to the Certificate Account, the Capitalized
Interest Requirement.
(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 November 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 either REMIC.
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.
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(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.
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
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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
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.
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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 Class S Distribution Amount;
(4) The amount of any Subordination Increase Amount;
(5) The amount of any Insured Payment to be made by the Certificate
Insurer on such Payment Date;
(6) The application of the amounts described in clauses (1), (3),
(4) and (5) above in respect of the distribution of the Class A
Distribution Amount and the Class S Distribution Amount on such Payment
Date in accordance with Section 7.03 hereof;
(7) 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;
(8) The amount, if any, of any Realized Losses for the related
Remittance Period;
(9) The amount of any Subordination Reduction Amount;
(10) 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
(11) 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:
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(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 or the Class S Certificates on
such Payment Date was less than the related Class A Distribution Amount or
Class S Distribution Amount as the case may be on such Payment Date, the
related Carry Forward Amount or Class S Carry-Forward Amount and the
allocation thereof to the related Classes of Class A Certificates or the
Class S Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates or the Class S
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;
(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.
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(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;
(vi) the Cumulative Loss Percentage, the amount of cumulative
Realized Losses, the current period Realized Losses, the Annual Loss
Percentage (Rolling Six Month), the Annual Loss Percentage (Rolling Twelve
Month) and the Spread Squeeze Rate; 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.
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(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
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Trustee, (ii) a Servicer Termination Event or (iii) the termination of the
Trust. The Trustee shall execute any documentation furnished to it by the
Servicer for recordation by the Servicer in the appropriate jurisdictions, as
shall be necessary to effectuate the foregoing. Subject to Sections 8.13 and
8.14, the Trustee shall execute 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
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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 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 The Chase Manhattan 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 1996-4 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,
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including any Prepayments and Net Liquidation Proceeds, other recoveries or
amounts related to the Home Equity Loans received by the Servicer and any income
from REO Properties, 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
(all or any portion of such amount to be replaced on future Monthly Remittance
Dates to the extent required for distribution) 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
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Servicer shall retain such excess) on the next succeeding Monthly Remittance
Date and shall be included 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 or prior to 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
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an amount representing coverage, and which provides for a recovery by the Trust
of insurance proceeds relating to such Home Equity Loan of not less than the
least of (i) the outstanding principal balance of the Home Equity Loan (plus the
related senior lien loan, if any), (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973. The Servicer shall indemnify the Trust out of the Servicer's own funds for
any loss to the Trust resulting from the Servicer's failure to 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 or to the Custodian on the Trustee's behalf the
original copy of such assumption or substitution agreement (indicating the File
to which it relates) which copy shall be added by the Trustee or by the
Custodian on the Trustee's behalf 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.
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(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 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 any REMIC therein as defined in Section 860F of the Code or
cause the Upper-Tier REMIC or the Base 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 Upper-Tier REMIC or the Base REMIC of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or
any "net income from foreclosure property" which is subject to taxation under
the REMIC Provisions. Pursuant to its efforts to sell such REO Property, the
Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such REO Property in the same manner and to such extent as
is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the Owners, rent
the same, or any part thereof, as the Servicer deems to be in the best interest
of the Owners for the period prior to the sale of such REO Property. The
Servicer shall take into account the existence of any hazardous substances,
hazardous wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act of 1976, or other federal, state or local environmental
legislation, on a Property in determining whether to foreclose upon or otherwise
comparably convert the ownership of such Property. The Servicer shall not take
any such action with respect to any Property known by the Servicer to contain
such wastes or substances 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
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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-6 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.
(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) The Servicer has no intent to foreclose on any Mortgage based on the
delinquency characteristics as of the Startup Day; provided, that the foregoing
does not prevent the Servicer from initiating foreclosure proceedings on any
date hereafter if the facts and circumstances of such Mortgage including
delinquency characteristics in the Servicer's discretion so warrant such action.
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
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Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be taken in respect
of a particular Home Equity Loan and certifying that the criteria set forth in
the immediately preceding sentence have been satisfied, the Trustee shall
execute and deliver to the Servicer the consent or partial release so requested
by the Servicer. A proposed form of consent or partial release, as the case may
be, shall accompany any Officer's Certificate delivered by the Servicer pursuant
to this paragraph. The Servicer shall notify the Certificate Insurer and the
Rating Agencies if an application is approved under clause (y) above without
approval in writing by the Certificate Insurer.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the 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.
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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 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
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(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
(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 December 31, March 31,
June 30 and September 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
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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 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 Servicer 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 Servicer, but shall in any
event be entitled to receive, and to enforce payment of, such fee from the
Servicer.
(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
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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
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
Servicer 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 (k)) 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.
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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.
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 Base REMIC'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
Upper-Tier REMIC and the Base 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 either the Upper-Tier REMIC or the Base 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.
Notwithstanding the foregoing, if a Servicer Termination Event of which a
responsible officer of the Trustee shall have actual knowledge has occurred and
has not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(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.
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(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;
(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.
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(g) The Trustee shall be under no obligation to institute any suit, or to
take any remedial proceeding under this Agreement, or to take any steps in the
execution of the trusts hereby created or in the enforcement of any rights and
powers hereunder until it shall be indemnified to its satisfaction against any
and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon the
occurrence of any of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(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.
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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 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;
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(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;
(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 Depositor, 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 Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor, 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
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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 Depositor and except to the extent
of income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement.
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)(E) 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 Upper-Tier REMIC and the Base 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 Upper-Tier REMIC and the Base 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.
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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 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
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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.
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.
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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 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.
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Section 10.14 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Estate or Property may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
and reasonably acceptable to the Certificate Insurer to act as Co-Trustee or
Co-Trustees, jointly with the Trustee, of all or any part of the Trust Estate or
separate Trustee or separate Trustees of any part of the Trust Estate, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Owners, such title to the Trust Estate, or any part thereof, and, subject to the
other provisions of this Section 10.14, such powers, duties, obligations, rights
and trusts as the Servicer and the Trustee may consider necessary or desirable.
If the Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in the case any event indicated in
Section 8.20(a) shall have occurred and be continuing, the Trustee subject to
reasonable approval of the Certificate Insurer alone shall have the power to
make such appointment. No Co-Trustee or separate Trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
10.08 and no notice to 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.
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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
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respect to such matters is in the possession of the Trustee, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous. Any
opinion of counsel may be based on the written opinion of other counsel, in
which event such opinion of counsel shall be accompanied by a copy of such other
counsel's opinion and shall include a statement to the effect that such counsel
believes that such counsel and the Trustee may reasonably rely upon the opinion
of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the Owners
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Owners in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to 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.
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 either the Upper-Tier REMIC or the Base REMIC (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 either the
Upper-Tier REMIC or the Base 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 Depositor 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 Base REMIC and the Upper-Tier REMIC
shall constitute, and that the affairs of the Base REMIC and the Upper-Tier
REMIC shall be conducted so as to qualify each as a REMIC in accordance with the
REMIC Provisions. In furtherance of such intention, The Chase Manhattan Bank or
such other person designated pursuant to Section 11.18 hereof shall act
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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 filed, at its own
expense, in a timely manner, annual tax returns and any other tax return
required to be filed by the Base REMIC and the Upper-Tier REMIC using a calendar
year as the taxable year for the Base REMIC and the Upper-Tier 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 Base REMIC
and the Upper-Tier REMIC, for each 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 Base REMIC and the Upper-Tier 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 and to the Owners of the
Base REMIC Residual Class 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 Base REMIC or
the Upper-Tier REMIC, except as provided under this Agreement; (v) represent,
the Trust, the Base REMIC or the Upper-Tier 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, the Base REMIC or the Upper-Tier REMIC, enter into settlement
agreements with any governmental taxing agency, extend any statute of
limitations relating to any tax item of the Trust, the Base REMIC or the
Upper-Tier REMIC, and otherwise act on behalf of the Trust, the Base REMIC or
the Upper-Tier REMIC in relation to any tax matter involving the Trust, the Base
REMIC or the Upper-Tier 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 and Owners of
Class R Certificates required of a "tax matters person" pursuant to subtitle F
of the Code and the Treasury Regulations thereunder and the Owners of the Base
REMIC Residual Class; (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 and the Base Residual Class 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
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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 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 Upper-Tier
REMIC or the Base 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 Upper-Tier REMIC or the Base 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 Upper-Tier REMIC or the Base 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.
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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 any REMIC or cause a termination of REMIC status for the Upper-Tier REMIC or
the Base 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 any REMIC or cause termination
of the REMIC status for the Upper-Tier REMIC or the Base 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 separate non-interest bearing
account, the net income from any such Prohibited Transactions of the Upper-Tier
REMIC or the Base 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 each of the Base REMIC and the
Upper-Tier 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 Base REMIC and the Upper-Tier
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 and the
Class S 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.
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Section 11.22 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: 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 Buschwood Park Drive
Tampa, FL 33618
(813) 932-2211
(813) 932-8257 - Fax
The Seller: Industry Mortgage Company, L.P.
3450 Buschwood Park Drive
Tampa, FL 33618
(813) 932-2211
(813) 932-8257 - Fax
The Servicer: Industry Mortgage Company, L.P.
3450 Buschwood 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
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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
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Attention: Asset-Backed Finance
Tel: (203) 625-2700
Fax: (203) 629-3650
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 S
Certificates or 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 S or Class R Certificate and to any prospective purchaser
of Class S or 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 S or 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 S or 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 S or 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 Class
S 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
and the Class S 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 and the Class S 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 or
the Class S 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 and the Class S 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
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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 Insured Payment due on the
related Class of Class A Certificates and the Class S 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 and the Class S
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 and
Class S 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 and the Class S Certificates. Each Owner of a Class A
Certificate or Class S 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 or Class S 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 or Class
S 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 or the Class S 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.
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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.
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
and Class S 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 and Class S Certificates as specified under
this Agreement without any further consent of the Owners of the Class A
Certificates and Class S Certificates.
END OF ARTICLE XII
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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 October, 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 October, 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 October, 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.
SUBSEQUENT TRANSFER AGREEMENT
IMC Securities, Inc. (the "Depositor"), Industry Mortgage Company, L.P.
(the "Seller"), and IMC Home Equity Loan Trust 1996-4 (the "Purchaser") pursuant
to the Pooling and Servicing Agreement dated as of October 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 October 25, 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 October 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 1996-4,
by The Chase Manhattan Bank, as Trustee
By: ____________________________________
Name:
Title:
Dated: October 25, 1996
