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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)
March 20, 1997
IMC Home Equity Loan Trust 1997-2
(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)
<PAGE>
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 1997-2 (the "Registrant" or
the "Trust") issued $400,000,000 in aggregate principal amount of its Home
Equity Loan Pass-Through Certificates, Series 1997-2 (the "Certificates"), on
March 20, 1997. 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 March 1, 1997, among IMC Securities, Inc. (the "Depositor"),
Industry Mortgage Company, L.P., as seller and servicer (the "Servicer") and The
Chase Manhattan Bank, in its capacity as trustee (the "Trustee"). The
Certificates consist of the following classes: the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8 Certificates (the
"Class A Certificates") and the Class R Certificates (the "Class R Certificates"
and, together with the Class A Certificates, the "Certificates"). Only the Class
A Certificates were offered pursuant to the Registration Statement. The
Certificates evidence, in the aggregate, 100% of the undivided beneficial
ownership interests in the Trust.
The assets of the Trust initially include a pool of closed-end home
equity loans (the "Home Equity Loans") secured by mortgages or deeds of trust
primarily on one-to-four family residential properties. Interest distributions
on the Class A Certificates are based on the Certificate Principal Balance
thereof and the applicable Pass-Through Rate thereof. The Pass- Through Rates
for the Class A Certificates are as follows: Class A-1, 6.63%; Class A-2, 6.70%;
Class A-3, 6.94%; Class A-4, 7.25%, Class A-5, 7.48%, Class A-6, 7.67%, Class
A-7, 7.23% and Class A-8 which has an adjustable Pass-Through Rate. The Class A
Certificates have initial aggregate principal amounts as follows: Class A-1,
$126,643,000; Class A-2, $35,021,000; Class A-3, $63,371,000; Class A-4,
$42,030,000; Class A-5, $13,437,000; Class A-6, $22,498,000; Class A-7,
$27,000,000; and Class A-8, $70,000,000.
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 March 13, 1997 filed pursuant to Rule 424(b)(5) of
the Act on March 18, 1997.
On March 20, 1997, the Trust acquired $135,786.19 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 March 20, 1997. The
Subsequent Home Equity Loans possess the characteristics required by the
Prospectus dated July 23, 1996 and the Prospectus Supplement dated March 13,
1997 filed pursuant to Rule 424(b)(5) of the Securities Act of 1933 on March 18,
1997.
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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 March 13 1997,
among IMC Securities, Inc., Industry Mortgage
Company, L.P., Bear, Stearns & Co. Inc., acting on
its own behalf and as representative of PaineWebber
Incorporated and Nomura Securities International,
Inc., acting on its own behalf.
4.1 Pooling and Servicing Agreement dated as of March 1,
1997, among 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 March 20,
1997 among IMC Securities, Inc., Industry Mortgage
Company, L.P. and IMC Home Equity Loan Trust 1997-2.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMC SECURITIES, INC., as Depositor
By: /s/ Thomas Middleton
___________________________________________
Name: Thomas Middleton
Title: President and Chief Operating Officer
Dated: April 1, 1997
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EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Underwriting Agreement dated as of March 13, 1997,
among IMC Securities, Inc., Industry Mortgage Company,
L.P., Bear, Stearns & Co. Inc., acting on its own behalf
and as representative of PaineWebber Incorporated and
Nomura Securities International, Inc., acting on its own
behalf.
4.1 Pooling and Servicing Agreement dated as of March 1,
1997, among 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 March 20,
1997 among IMC Securities, Inc., Industry Mortgage
Company, L.P. and IMC Home Equity Loan Trust 1997-2.
EXECUTION COPY
$400,000,000
IMC HOME EQUITY LOAN TRUST 1997-2
IMC Home Equity Loan Pass-Through Certificates,
Series 1997-2
UNDERWRITING AGREEMENT
March 13, 1997
BEAR, STEARNS & CO. INC.
On behalf of itself and
PaineWebber Incorporated
245 Park Avenue
New York, New York 10167
NOMURA SECURITIES INTERNATIONAL, INC.
Two World Financial Center
Building B, 21st Floor
New York, New York 10281-1198
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 1997-2 consisting of (a) the Class A-1 Certificates, the
Class A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates,
the Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates (collectively, the "Fixed Rate Certificates"), (b) the Class A-8
Certificates (collectively, with the Fixed Rate Certificates the "Offered
Certificates") and (c) the Class R Certificates (the "Class R Certificates," and
collectively with the Offered Certificates, the "Certificates"), evidencing
interests in one of two pools of fixed rate and adjustable rate home equity
loans (the "Home Equity Loans"). The Fixed Rate Certificates will represent
undivided ownership interests in Home Equity Loans which are secured by first
and second lien mortgages or deeds of trust primarily on one-to-four-family
residential properties. The Class A-8 Certificates will represent undivided
ownership interests in Home Equity Loans which are secured solely by first 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.
("Bear Stearns") is acting for itself and as representative of PaineWebber
Incorporated, and Nomura Securities International, Inc. ("Nomura") is acting on
behalf of itself. Each of Bear Stearns and Nomura, acting in their
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respective capacities as 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 March 1, 1997 among the
Depositor, Industry Mortgage Company, L.P. ("IMC"), as seller and as servicer
(in such capacity, the "Servicer" or the "Seller," as the case may be), and The
Chase Manhattan Bank, as trustee (the "Trustee"). The general partner of the
Seller and Servicer is Industry Mortgage Corporation (the "General Partner").
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 and a pool of adjustable rate Home Equity
Loans (collectively, 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, $147,650.27
will be deposited in the name of the Trustee in the Pre-Funding Account of which
$132,868.83 may be used to acquire fixed rate Subsequent Home Equity Loans (as
defined below) and $14,781.44 may be used to acquire adjustable rate 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
applicable Home Equity Loan Group from the Depositor from time to time on or
before March 31, 1997 from funds allocated to such Home Equity Loan Group and 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 $399,852,349.73 as of the close of business on
March 1, 1997 (the "Cut-Off Date") and (ii) $147,650.27 on deposit in the
Pre-Funding Account. Each Class of Offered Certificates will also have the
benefit of one of two insurance policies (each, an "Insurance Policy") issued by
MBIA Insurance Corporation, a monoline insurance company (the "Certificate
Insurer"). Each Insurance Policy will be issued pursuant to the insurance
agreement (the "Insurance Agreement") among the Certificate Insurer, the
Depositor and the Trustee. A form of the Pooling and Servicing Agreement has
been filed as an exhibit to the Registration Statement (hereinafter defined).
The Certificates are more fully described in a Registration Statement
which the Depositor has furnished to the Underwriters. Capitalized terms used
but not defined herein shall have the meanings given to them in the Pooling and
Servicing Agreement.
Pursuant to Section 3.05 of the Pooling and Servicing Agreement and
concurrently with the execution thereof, IMC will transfer to the Depositor and
the Depositor will transfer to the Trust all of their right, title and interest
in and to the unpaid principal balances of the Initial Home Equity Loans as of
the Cut-Off Date and the collateral securing each Initial Home Equity Loan.
SECTION 1 Representations and Warranties of the Depositor. The
Depositor represents and warrants to, and agrees with the Underwriters that:
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A. A Registration Statement on Form S-3 (No. 333-4911) has (i) been
prepared by the Depositor in conformity with the requirements of the
Securities Act of 1933 (the "Securities Act") and the rules and
regulations (the "Rules and Regulations") of the United States
Securities and Exchange Commission (the "Commission") thereunder, (ii)
been filed with the Commission under the Securities Act and (iii)
become effective under the Securities Act. Copies of such Registration
Statement have been delivered by the Depositor to the Underwriters. As
used in this Agreement, "Effective Time" means the date and the time as
of which such Registration Statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Registration
Statement" means such registration statement, at the Effective Time,
including any documents incorporated by reference therein at such time;
and "Basic Prospectus" means such final prospectus dated July 23, 1996;
and "Prospectus Supplement" means the final prospectus supplement
relating to the Offered Certificates, to be filed with the Commission
pursuant to paragraph (2), (3) or (5) of Rule 424(b) of the Rules and
Regulations. "Prospectus" means the Basic Prospectus together with the
Prospectus Supplement. Reference made herein to the Prospectus shall be
deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act, as of
the date of the Prospectus and any reference to any amendment or
supplement to the Prospectus shall be deemed to refer to and include
any document filed under the Securities Exchange Act of 1934 (the
"Exchange Act") after the date of the Prospectus, and incorporated by
reference in the Prospectus and any reference to any amendment to the
Registration Statement shall be deemed to include any report of the
Depositor filed with the Commission pursuant to Section 13(a) or 15(d)
of the Exchange Act after the Effective Time that is incorporated by
reference in the Registration Statement. The Commission has not issued
any order preventing or suspending the use of the Prospectus. There are
no contracts or documents of the Depositor which are required to be
filed as exhibits to the Registration Statement pursuant to the
Securities Act or the Rules and Regulations which have not been so
filed or incorporated by reference therein on or prior to the Effective
Date of the Registration Statement other than such documents or
materials, if any, as any Underwriter delivers to the Depositor
pursuant to Section 8(D) hereof for filing on Form 8-K. The conditions
for use of Form S-3, as set forth in the General Instructions thereto,
have been satisfied.
B. The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus 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
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make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that no representation
or warranty is made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Depositor in
writing by the Underwriters expressly for use therein. The only
information furnished by the Underwriters or on behalf of the
Underwriters for use in connection with the preparation of the
Registration Statement or the Prospectus is described in Section 8(I)
hereof.
C. The documents incorporated by reference to the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus, when such documents
become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided that no representation is made as to documents
deemed to be incorporated by reference in the Prospectus as the result
of filing a Form 8-K at the request of the Underwriters except to the
extent such documents reflect information furnished by the Depositor to
the Underwriters for the purpose of preparing such documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the
general 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, the
Indemnification 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
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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 Indemnification
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, the Indemnification 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, the Insurance
Agreement, the Indemnification Agreement, the Certificates, or any
Subsequent Transfer Agreement.
G. This Agreement has been, and the Pooling and Servicing Agreement,
the Indemnification 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, the Indemnification 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 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, the Indemnification 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, the
Indemnification 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
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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 Agreement, any Subsequent
Transfer Agreement, the Indemnification 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
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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.
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
an Underwriter or counsel for the Underwriters 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 each Underwriter, and each Underwriter agrees (except as
provided in Sections 10 and 11 hereof)severally and not jointly to purchase from
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the Depositor the aggregate initial principal amounts or percentage interests of
the respective Class or Classes of 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 LLP, 180 Maiden Lane, New York, New York 10038, 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 March 20, 1997, 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 applicable
Representative for the accounts of the applicable Underwriters against payment
of the purchase price thereof. The Certificates shall be in such authorized
denominations and registered in such names as the applicable 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
Representatives 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 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
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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 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
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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.
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
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representing interest in or secured by other mortgage-related assets
originated or owned by the Depositor or IMC shall be publicly offered,
sold nor shall the Depositor or IMC enter into any contractual
arrangements that contemplate the public offering or sale of such
securities for a period of seven (7) business days following the
commencement of the offering of the Offered Certificates to the public.
J. So long as the Offered Certificates shall be outstanding the
Depositor shall cause the Trustee, pursuant to the Pooling and
Servicing Agreement, to deliver to the Underwriters as soon as such
statements are furnished to the Owners: (i) the annual statement as to
compliance delivered to the Trustee pursuant to Section 8.16 of the
Pooling and Servicing Agreement; (ii) the annual statement of a firm of
independent public accountants furnished to the Trustee pursuant to
Section 8.17 of the Pooling and Servicing Agreement; (iii) the monthly
servicing report furnished to the 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 LLP, counsel for the
Underwriters, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and
Servicing Agreement, the Insurance Agreement, the Indemnification
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
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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 Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
1. The conditions to the use by the Depositor of a
registration statement on Form S-3 under the Securities Act,
as set forth in the General Instructions to Form S-3, have
been satisfied with respect to the Registration Statement and
the Prospectus.
2. The Registration Statement and any amendments thereto have
become effective under the 1933 Act; to the best of such
counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued
and not withdrawn and no proceedings for that purpose have
been instituted or threatened and not terminated; and the
Registration Statement, the Prospectus and each amendment or
supplement thereto, as of their respective effective or issue
dates (other than the financial and statistical information
contained therein, as to which such counsel need express no
opinion), complied as to form in all material respects with
the applicable requirements of the 1933 Act and the rules and
regulations thereunder.
3. To the best of such counsel's knowledge, there are no
material contracts, indentures or other documents of a
character required to be described or referred to in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement other than those
described or referred to therein or filed or incorporated by
reference as exhibits thereto.
4. The statements set forth in the Basic Prospectus under the
captions "Description of The Certificates" and
"Administration" and in the Prospectus Supplement under the
captions "Description of the Class A Certificates" and "The
Pooling and Servicing Agreement," to the extent such
statements purport to summarize certain provisions of the
Certificates or of the Pooling and Servicing Agreement, are
fair and accurate in all material respects.
5. The statements set forth in the Prospectus and the
Prospectus Supplement under the captions "ERISA
Considerations" and "Federal Income Tax Consequences" to the
extent that they constitute matters of federal law, provide a
fair and accurate summary of such law or conclusions.
6. The Pooling and Servicing Agreement conforms in all
material respects to the description thereof contained in the
Prospectus and is 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.
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7. Neither the Depositor nor the Trust is an "investment
company" or under the "control" of an "investment company" as
such terms are defined in the 1940 Act.
8. Assuming that (a) the Trustee causes the Trust (other than
the Non-REMIC Accounts), as the Trustee has covenanted to do
in the Pooling and Servicing Agreement, to be treated as a
"real estate mortgage investment conduit" (the "REMIC"), as
such term is defined in the Internal Revenue Code of 1986, as
amended (the "Code") and (b) the parties to the Pooling and
Servicing Agreement comply with the terms thereof, the Offered
Certificates will be treated as "regular interests" in the
REMIC and the Class R Certificates will constitute the sole
class of "residual interest" in the 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 Trust (other than the
Non-REMIC Accounts) as a REMIC.
10. As a consequence of the qualification of the Trust (other
than the Non- REMIC Accounts) as a REMIC, the Offered
Certificates will be treated as "qualifying real property
loans" under Section 593(d) of the Code, "regular. . .
interest(s) in a REMIC" under Section 7701(a)(19)(C) of the
Code and "real estate assets" under Section 856(c) of the Code
in the same proportion that the assets in the Trust consist of
qualifying assets under such Sections. In addition, as a
consequence of the qualification of the Trust (other than the
Non-REMIC Accounts) as a REMIC, interest on the Offered
Certificates will be treated as "interest on obligations
secured by mortgages on real property" under Section 856(c) of
the Code to the extent that such Offered Certificates are
treated as "real estate assets" under Section 856(c) of the
Code.
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
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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 caption "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 Services, Moody's Investors Service, Inc. and
the Underwriters, with respect to certain matters relating to the
transfer of the Initial Home Equity Loans to the Depositor and from the
Depositor to the Trust, and such counsel shall have consented to the
reliance on such opinion by the Certificate Insurer, Standard & Poor's
Ratings Services, 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, the
Indemnification 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
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thereto, constitute the legal, valid and binding agreements of
IMC, enforceable against IMC in accordance with their terms,
subject as to enforceability to (x) bankruptcy, insolvency,
reorganization, moratorium, receivership or other similar laws
now or hereafter in effect relating to creditors' rights
generally and (y) the qualification that the remedy of
specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to
the discretion, with respect to such remedies, of the court
before which any proceedings with respect thereto may be
brought.
5. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or
body having jurisdiction over IMC is required for the
consummation by the Servicer of the transactions contemplated
by the Pooling and Servicing Agreement, the Indemnification
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, the
Indemnification 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.
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9. There are, to the best of such counsel's knowledge without
independent investigation, no actions, proceedings or
investigations pending with respect to which IMC has received
service of process or threatened against IMC before any court,
administrative agency or other tribunal (a) asserting the
validity of the Pooling and Servicing Agreement, the
Underwriting Agreement, the Indemnification 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
Indemnification Agreement, the Underwriting Agreement, or the
Insurance Agreement.
G. Arter & Hadden, special counsel for the Depositor, shall have
furnished to the Underwriters their written opinion, addressed to the
Underwriters and dated the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
1. The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of
the State of Delaware and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its business so requires.
The Depositor has all power and authority necessary to own or
hold its properties and to conduct the business in which it is
engaged and to enter into and perform its obligations under
this Agreement, the Pooling and Servicing Agreement, the
Indemnification Agreement and the Insurance Agreement, and to
cause the Certificates to be issued.
2. The Depositor has the requisite power and authority and
legal right to own the Class R Certificates.
3. The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Depositor is a party or by which it or its properties may be
bound, which default might result in any material adverse
changes in the financial condition, earnings, affairs or
business of the Depositor or which might materially and
adversely affect the properties or assets, taken as a whole,
of the Depositor.
4. This Agreement, the Pooling and Servicing Agreement, the
Indemnification Agreement and the Insurance Agreement and the
Purchase Agreement relating to the purchase of the Class R
Certificates (the "Purchase Agreement") have been duly
authorized, and when duly executed and delivered by the
Depositor and, assuming the due authorization, execution and
delivery of such agreements by the other parties thereto, such
agreements constitute valid and binding obligations,
enforceable against the Depositor in
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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, the
Indemnification Agreement and the Insurance Agreement,
limitations of public policy under applicable securities laws.
5. The execution, delivery and performance of this Agreement,
the Pooling and Servicing Agreement, the Insurance Agreement,
the Indemnification Agreement and each Subsequent Transfer
Agreement by the Depositor, the consummation of the
transactions contemplated hereby and thereby, and the issuance
and delivery of the Certificates do not and will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Depositor is a party or by which the
Depositor is bound or to which any of the property or assets
of the Depositor or any of its subsidiaries is subject, which
breach or violation would have a material adverse effect on
the business, operations or financial condition of the
Depositor, nor will such actions result in a violation of the
provisions of the certificate of incorporation or by-laws of
the Depositor or any statute or any order, rule or regulation
of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or
assets, which breach or violation would have a material
adverse effect on the business, operations or financial
condition of the Depositor.
6. The direction by the Depositor to the Trustee to execute,
issue, authenticate and deliver the Certificates has been duly
authorized by the Depositor and, assuming that the Trustee has
been duly authorized to do so, when executed, authenticated
and delivered by the Trustee in accordance with the Pooling
and Servicing Agreement, the Certificates will be validly
issued and outstanding and will be entitled to the benefits of
the Pooling and Servicing Agreement.
7. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or
body of the United States is required for the issuance of the
Certificates, and the sale of the Offered Certificates to the
Underwriters, or the consummation by the Depositor of the
other transactions contemplated 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 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 such counsel's knowledge,
after
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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, this Agreement or the Certificates.
H. The Underwriters shall have received the favorable opinion of
counsel to the Trustee, dated the Closing Date, addressed to the
Underwriters and in form and scope satisfactory to counsel to the
Underwriters, to the effect that:
1. The Trustee is a banking corporation duly incorporated and
validly existing under the laws of the State of New York.
2. The Trustee has the full corporate trust power to execute,
deliver and perform its obligations under the Pooling and
Servicing Agreement.
3. The execution and delivery by the Trustee of the Pooling
and Servicing Agreement and the performance by the Trustee of
its 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.
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6. The Certificates have been duly authenticated, executed and
delivered by the Trustee.
7. If the Trustee were acting as Servicer under the Pooling
and Servicing Agreement as of the date of such opinion, the
Trustee would have the full corporate trust power to perform
the obligations of the Servicer under the Pooling and
Servicing Agreement; and
8. To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened
against or affecting the Trustee before or by any court,
arbitrator, administrative agency or other governmental
authority which, if decided adversely to the Trustee, would
materially and adversely affect the ability of the Trustee to
carry out the transactions contemplated in the Pooling and
Servicing Agreement.
I. The Underwriters shall have received the favorable opinion or
opinions, dated the date of the Closing Date, of counsel for the
Underwriters, with respect to the issue and sale of the Offered
Certificates, the Registration Statement, this Agreement, the
Prospectus and such other related matters as the Underwriters may
reasonably require.
J. The Underwriters shall have received the favorable opinion dated the
Closing Date, from Kutak Rock, 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 each Insurance Policy.
3. The execution, delivery and performance by the Certificate
Insurer of each Insurance Policy, the Indemnification
Agreement 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. Each Insurance Policy, the Indemnification Agreement and
Insurance Agreement have been duly authorized, executed and
delivered by the Certificate Insurer and constitute the legal,
valid and binding agreement of the
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Certificate Insurer, enforceable against the Certificate
Insurer in accordance with its terms subject, as to
enforcement, to (x) bankruptcy, reorganization, insolvency,
moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights generally, including, without
limitation, laws relating to fraudulent transfers or
conveyances, preferential transfers and equitable
subordination, presently or from time to time in effect and
general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at
law), as such laws may be applied in any such proceeding with
respect to the Certificate Insurer and (y) the qualification
that the remedy of specific performance and other forms of
equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceedings with
respect thereto may be brought.
5. To the extent each 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 each Insurance
Policy, accurately summarizes such 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 March 1, 1997 which
has affected the good standing of such entities under the laws
of the State of Delaware.
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<PAGE>
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 December 31, 1996.
In addition to the foregoing, the IMC certificate shall state that the
representations and warranties set forth in Sections 1 D, E, F, G, H,
L, M, 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. Each 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 Services and "Aaa" by Moody's Investors Service, Inc.
O. The Depositor shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may
reasonably have requested not less than three full business days prior
to the Closing Date.
P. Prior to the Closing Date, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and
sale of the Certificates as herein contemplated and related proceedings
or in order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the
conditions, herein contained, and all proceedings taken by the
Depositor in connection with the issuance and sale of the Certificates
as herein contemplated shall be satisfactory in form and substance to
the Underwriters and counsel for the Underwriters.
Q. Subsequent to the execution and delivery of this Agreement none of
the following shall have occurred: (i) trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or minimum prices
shall have been established on either of such exchanges or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction; (ii) a banking moratorium
shall have been declared by federal or state authorities; (iii) the
United States shall have become engaged in hostilities, there shall
have been an escalation of
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<PAGE>
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 C The Home Equity
Loans", "Risk Factors C Nature of the Collateral; Junior Liens", "Risk
Factors C Risk of Higher Default Rates for Home Equity Loans with
Balloon Payments", "The Seller and Servicer C General" and "The Home
Equity Loan Pool C General," agrees with the records of the Depositor
excluding any questions of legal interpretation.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Depositor at any time at or prior to the
closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to the Underwriters and their counsel.
SECTION 7 Payment of Expenses. The Depositor agrees to pay: (a) the
costs incident to the authorization, issuance, sale and delivery of the
Certificates and any taxes payable in connection therewith; (b) the costs
incident to the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and 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 Underwriters); (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
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<PAGE>
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 LLP, counsel for
the Underwriters.
SECTION 8 Indemnification and Contribution. A. The Depositor agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, but not limited to, any loss,
claim, damage, liability or action relating to purchases and sales of the
Offered Certificates), to which such Underwriter or any such controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
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
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Securities Act against any and all loss, claim, damage or liability, or any
action in respect thereof, to which the Depositor or any such director, officer
or controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereof or
supplement thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus, or any amendment thereof or
supplement thereto, or (iv) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Depositor by or
on behalf of such Underwriter specifically for inclusion therein, and shall
reimburse the Depositor and any such director, officer or controlling person for
any legal or other expenses reasonably incurred by the Depositor or any
director, officer or controlling person in connection with investigating or
defending or preparing 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
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<PAGE>
shall be at the expense of such indemnified party unless: (i) the employment
thereof has been specifically authorized by the indemnifying party in writing;
(ii) such indemnified party shall have been advised by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to employ
separate counsel; or (iii) the indemnifying party has failed to assume the
defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to one local counsel per jurisdiction)
at any time for all such indemnified parties, which firm shall be designated in
writing by the related Underwriter, if the indemnified parties under this
Section 8 consist of one or more Underwriters or any of its or their controlling
persons, or the Depositor, if the indemnified parties under this Section 8
consist of the Depositor or any of the Depositor's directors, officers or
controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8(A) and (B), shall use its best efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement.
D. Each Underwriter agrees to provide the Depositor no later than two
Business Days prior to the day on which the Prospectus Supplement is required to
be filed pursuant to Rule 424 with a copy of any Computational Materials (as
defined in Section 5(E) hereof) produced by such Underwriter for filing with the
Commission on Form 8-K.
E. Each Underwriter severally agrees, assuming all Seller Provided
Information is accurate and complete in all material respects, to indemnify and
hold harmless the Depositor, each of the Depositor's officers and directors and
each person who controls the Depositor within the meaning of Section 15 of the
Securities Act against any and all losses, claims, damages or liabilities, joint
or several, to which they may become subject under the
25
<PAGE>
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement of a material fact contained in the Computational Materials
provided by such Underwriter and agrees to reimburse each such indemnified party
for any legal or other expenses reasonably incurred by him, her or it in
connection with investigating or defending or preparing to defend any such loss,
claim, damage, liability or action as such expenses are incurred. The
obligations of an Underwriter under this Section 8(E) shall be in addition to
any liability which such Underwriter may otherwise have.
The procedures set forth in Section 8(C) shall be equally applicable to
this Section 8(E).
F. If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(A), (B) or (E) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Depositor on the one hand and the related Underwriters on the
other from the offering of the related Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or if
the indemnified party failed to give the notice required under Section 8(C), in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Depositor on
the one hand and the related Underwriter on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations.
The relative benefits of an Underwriter and the Depositor shall be
deemed to be in such proportion as the total net proceeds from the offering
(before deducting expenses) received by the Depositor bear to the total
underwriting discounts and commissions received by the related Underwriter from
time to time in negotiated sales of the related Offered Certificates.
The relative fault of an Underwriter and the Depositor shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Depositor or by such Underwriter, the intent of
the parties and their relative knowledge, access to information and 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)
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shall be deemed to include, for purposes of this Section 8(F), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
For purposes of this Section 8, in no case shall any Underwriter be
responsible for any amount in excess of (x) the amount received by such
Underwriter in connection with its resale of the Offered Certificates exceeds
(y) the amount paid by such Underwriter to the Depositor for the Offered
Certificates by such underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
G. For purposes of this Section 8, as to each Underwriter the term
"Computational Materials" means such portion, if any, of the information
delivered to the Depositor by such Underwriter pursuant to Section 8(D) for
filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into account
information incorporated therein by reference through a Form 8-K --
Computational Materials; and
(ii) does not constitute Seller-Provided Information.
"Seller-Provided Information" means any computer tape (or other information)
furnished to any Underwriter by or on behalf of the Seller and Servicer
concerning the assets comprising the Trust.
H. The Seller and Servicer agrees to indemnify each indemnified party
referred to in Section 8(A) hereof with respect to Seller Provided Information
to the same extent as the indemnity granted under such section. The procedures
set forth in Section 8(C) shall be equally applicable to this Section 8(H).
I. Each Underwriter confirms that the information regarding such
Underwriter set forth in the last paragraph on the cover page of the Prospectus
Supplement, the information regarding such Underwriter set forth under the
caption "Underwriting" in the Prospectus Supplement and the Computational
Materials (other than to the extent such information is based on Seller Provided
Information) furnished by such Underwriter 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.
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<PAGE>
SECTION 10 Default by One or More of the Underwriters. If one or more
of the Underwriters participating in the public offering of the Offered
Certificates shall fail at the Closing Date to purchase the Offered Certificates
which it is (or they are) obligated to purchase hereunder (the "Defaulted
Certificates"), then the non-defaulting Underwriters shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon and upon the terms herein set forth. If, however, the Underwriters have not
completed such arrangements within such 24-hour period, then:
(i) if the aggregate principal amount of Defaulted Certificates does
not exceed 10% of the aggregate principal amount of the Offered
Certificates to be purchased pursuant to this Agreement, the
non-defaulting Underwriters named in this Agreement shall be obligated
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all such non-defaulting Underwriters, or
(ii) if the aggregate principal amount of Defaulted Certificates
exceeds 10% of the aggregate principal amount of the Offered
Certificates to be purchased pursuant to this Agreement, this Agreement
shall terminate, without any liability on the part of any
non-defaulting Underwriters.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from the liability with respect to any default of such
Underwriter under this Agreement.
In the event of a default by any Underwriter as set forth in this
Section 10, each of the Underwriters and the Depositor shall have the right to
postpone 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.
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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 Nomura Securities International, Inc., Two World
Financial Center, Bldg. B, 21st Floor, New York, New York 10281-1198
Attention: Fixed Income Structured Finance Group (Fax: 212-667-1391);
and
B. if to the Depositor, shall be delivered or sent by mail, telex or
facsimile transmission to care of IMC Securities, Inc., 3450 Buschwood
Park Drive, Tampa, Florida 33618 Attention: Thomas Middleton (Fax:
(813) 935-0227).
SECTION 14 Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters and
the Depositor, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any of the Underwriters within the meaning of Section 15 of
the Securities Act, and for the benefit of directors of the Depositor, officers
of the Depositor who have signed the Registration Statement and any person
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
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<PAGE>
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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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: /s/ Laurie Wockenfuss
______________________
Name: Laurie Wockenfuss
Title: Vice President
INDUSTRY MORTGAGE COMPANY,
L.P. Industry Mortgage
Company, its General
Partner
By: /s/ Laurie Wockenfuss
______________________
Name: Laurie Wockenfuss
Title: Vice President
CONFIRMED AND ACCEPTED, as
of the date first above written:
BEAR, STEARNS & CO. INC.
Acting on its own behalf and as
Representative of PaineWebber
Incorporated
By: /s/ Patricia Jehle
___________________________
Name: Patricia Jehle
Title: Senior Managing Director, ABS
NOMURA SECURITIES INTERNATIONAL, INC.
By: /s/ Helaine Fisher Hebble
___________________________
Name: Helaine Fisher Hebble
Title: Vice President
31
<PAGE>
SCHEDULE A
Class A-1 Certificates
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Bear, Stearns & Co. Inc. $63,322,000 99.84852%
PaineWebber Incorporated $63,321,000 99.84852%
Total $126,643,000
Class A-2 Certificates
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Bear, Stearns & Co. Inc. $17,511,000 99.74517%%
PaineWebber Incorporated $17,510,000 99.74517%
Total $35,021,000
Class A-3 Certificates
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Bear, Stearns & Co. Inc. $31,686,000 99.69828%
PaineWebber Incorporated $31,685,000 99.69828%
Total $63,371,000
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SCHEDULE A (cont'd)
Class A-4 Certificates
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Bear, Stearns & Co. Inc. $21,015,000 99.50847%
PaineWebber Incorporated $21,015,000 99.50847%
Total $42,030,000
Class A-5 Certificates
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Bear, Stearns & Co. Inc. $6,719,000 99.42692%
PaineWebber Incorporated $6,718,000 99.42692%
Total $13,437,000
Class A-6 Certificates
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Bear, Stearns & Co. Inc. $11,249,000 99.35995%
PaineWebber Incorporated $11,249,000 99.35995%
Total $22,498,000
33
<PAGE>
SCHEDULE A (cont'd)
Class A-7 Certificates
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Bear, Stearns & Co. Inc. $13,500,000 99.53214%
PaineWebber Incorporated $13,500,000 99.53214%
Total $27,000,000
Class A-8 Certificates
Underwriters Principal Purchase Price
- - ------------ --------- --------------
Nomura Securities International, Inc. $70,000,000 99.70%
Total $70,000,000
34
<PAGE>
SCHEDULE A (cont'd)
Selling Reallowance
Class Concession Discount
- - ----- ---------- --------
A-1 0.090% 0.075%
A-2 0.150% 0.100%
A-3 0.180% 0.125%
A-4 0.270% 0.150%
A-5 0.330% 0.200%
A-6 0.360% 0.250%
A-7 0.270% 0.200%
A-8 0.180% 0.060%
35
EXHIBIT 4.1
POOLING AND SERVICING AGREEMENT
Relating to
IMC HOME EQUITY LOAN TRUST 1997-2
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 March 1, 1997
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
Page
<S> <C>
CONVEYANCE........................................................................................ 1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
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
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
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.......................................... 42
Section 3.05 Conveyance of the Initial Home Equity Loans and Qualified Replacement
Mortgages................................................................... 49
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans;
Certification by Trustee.................................................... 53
Section 3.07 Conveyance of the Subsequent Home Equity Loans.............................. 54
Section 3.08 Custodian................................................................... 57
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates.................................................... 58
Section 4.02 Sale of Certificates........................................................ 58
i
<PAGE>
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms....................................................................... 59
Section 5.02 Forms....................................................................... 59
Section 5.03 Execution, Authentication and Delivery...................................... 59
Section 5.04 Registration and Transfer of Certificates................................... 60
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates........................... 62
Section 5.06 Persons Deemed Owners....................................................... 62
Section 5.07 Cancellation................................................................ 62
Section 5.08 Limitation on Transfer of Ownership Rights.................................. 63
Section 5.09 Assignment of Rights........................................................ 64
ARTICLE VI
COVENANTS
Section 6.01 Distributions............................................................... 65
Section 6.02 Money for Distributions to be Held in Trust; Withholding.................... 65
Section 6.03 Protection of Trust Estate.................................................. 66
Section 6.04 Performance of Obligations.................................................. 67
Section 6.05 Negative Covenants.......................................................... 67
Section 6.06 No Other Powers............................................................. 67
Section 6.07 Limitation of Suits......................................................... 67
Section 6.08 Unconditional Rights of Owners to Receive Distributions..................... 68
Section 6.09 Rights and Remedies Cumulative.............................................. 69
Section 6.10 Delay or Omission Not Waiver................................................ 69
Section 6.11 Control by Owners........................................................... 69
Section 6.12 Indemnification by the Seller............................................... 69
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money......................................................... 71
Section 7.02 Establishment of Accounts................................................... 71
Section 7.03 Flow of Funds............................................................... 72
Section 7.04 Pre-Funding Account and Capitalized Interest Account........................ 75
Section 7.05 Investment of Accounts...................................................... 76
Section 7.06 Payment of Trust Expenses................................................... 77
Section 7.07 Eligible Investments........................................................ 77
Section 7.08 Accounting and Directions by Trustee........................................ 78
Section 7.09 Reports by Trustee to Owners and Certificate Insurer........................ 79
Section 7.10 Reports by Trustee. ....................................................... 81
ii
<PAGE>
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.................................................. 82
Section 8.02 Collection of Certain Home Equity Loan Payments............................. 83
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers................. 83
Section 8.04 Successor Sub-Servicers..................................................... 84
Section 8.05 Liability of Servicer; Indemnification...................................... 84
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or the Owners
........................................................................... 84
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee............. 84
Section 8.08 Principal and Interest Account.............................................. 85
Section 8.09 Delinquency Advances and Servicing Advances................................. 86
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans...................... 87
Section 8.11 Maintenance of Insurance.................................................... 88
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements................. 89
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout of Home Equity
Loans....................................................................... 89
Section 8.14 Trustee to Cooperate; Release of Files...................................... 91
Section 8.15 Servicing Compensation...................................................... 92
Section 8.16 Annual Statement as to Compliance........................................... 92
Section 8.17 Annual Independent Certified Public Accountants' Reports.................... 92
Section 8.18 Access to Certain Documentation and Information Regarding the Home
Equity Loans................................................................ 92
Section 8.19 Assignment of Agreement..................................................... 93
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation of Servicer......... 93
Section 8.21 Inspections by Certificate Insurer; Errors and Omissions Insurance.......... 96
Section 8.22 Additional Servicing Responsibilities for Second Mortgage Loans............. 97
Section 8.23 Group II Home Equity Loans.................................................. 97
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust........................................................ 98
Section 9.02 Termination Upon Option of Owners of Class R Certificates................... 98
Section 9.03 Termination Upon Loss of REMIC Status....................................... 99
Section 9.04 Disposition of Proceeds.....................................................101
ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.........................................102
Section 10.02 Removal of Trustee for Cause................................................104
Section 10.03 Certain Rights of the Trustee...............................................105
Section 10.04 Not Responsible for Recitals or Issuance of Certificates....................106
Section 10.05 May Hold Certificates.......................................................106
iii
<PAGE>
Section 10.06 Money Held in Trust.........................................................107
Section 10.07 Compensation and Reimbursement..............................................107
Section 10.08 Corporate Trustee Required; Eligibility.....................................107
Section 10.09 Resignation and Removal; Appointment of Successor...........................107
Section 10.10 Acceptance of Appointment by Successor Trustee..............................109
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the
Trustee.....................................................................109
Section 10.12 Reporting; Withholding......................................................109
Section 10.13 Liability of the Trustee....................................................110
Section 10.14 Appointment of Co-Trustee or Separate Trustee...............................110
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions........................................112
Section 11.02 Form of Documents Delivered to the Trustee..................................112
Section 11.03 Acts of Owners..............................................................113
Section 11.04 Notices, etc. to Trustee....................................................113
Section 11.05 Notices and Reports to Owners; Waiver of Notices............................113
Section 11.06 Rules by Trustee............................................................114
Section 11.07 Successors and Assigns......................................................114
Section 11.08 Severability................................................................114
Section 11.09 Benefits of Agreement.......................................................114
Section 11.10 Legal Holidays..............................................................114
Section 11.11 Governing Law; Submission to Jurisdiction...................................115
Section 11.12 Counterparts................................................................115
Section 11.13 Usury.......................................................................116
Section 11.14 Amendment...................................................................116
Section 11.15 Paying Agent; Appointment and Acceptance of Duties..........................117
Section 11.16 REMIC Status................................................................117
Section 11.17 Additional Limitation on Action and Imposition of Tax.......................119
Section 11.18 Appointment of Tax Matters Person...........................................120
Section 11.19 The Certificate Insurer.....................................................120
Section 11.20 Reserved....................................................................120
Section 11.21 Third Party Rights..........................................................120
Section 11.22 Notices.....................................................................120
Section 11.23 Rule 144A Information.......................................................122
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01 Trust Estate and Accounts Held for Benefit of the Certificate Insurer.......123
Section 12.02 Claims Upon the Policy; Policy Payments Account.............................123
Section 12.03 Effect of Payments by the Certificate Insurer; Subrogation..................124
Section 12.04 Notices to the Certificate Insurer..........................................124
Section 12.05 Third-Party Beneficiary.....................................................125
Section 12.06 Rights to the Certificate Insurer To Exercise Rights of Owners..............125
iv
<PAGE>
SCHEDULE I-A SCHEDULE OF GROUP I HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF GROUP II HOME EQUITY LOANS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT A-8 FORM OF CLASS A-8 CERTIFICATE
EXHIBIT B RESERVED
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT E FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT F-1 FORM OF TRUSTEE'S RECEIPT
EXHIBIT F-2 FORM OF CUSTODIAN'S RECEIPT
EXHIBIT G FORM OF POOL CERTIFICATION
EXHIBIT H FORM OF DELIVERY ORDER
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J-1 FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
EXHIBIT J-2 FORM OF CERTIFICATE REGARDING TRANSFER (RULE 144A)
EXHIBIT K HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
</TABLE>
<PAGE>
POOLING AND SERVICING AGREEMENT, relating to IMC HOME EQUITY LOAN TRUST
1997-2, dated as of March 1, 1997 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 two subtrusts 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, MBIA Insurance Corporation (the "Certificate Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Seller, the Servicer, and the
Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on
the Class A Certificates and the Class R Certificates in accordance with their
terms, all of the sums distributable under this Agreement with respect to the
Certificates and the performance of the covenants contained in this Agreement,
the Seller hereby bargains, sells, conveys, assigns and transfers to the
Depositor and the Depositor hereby bargains, sells, conveys, assigns and
transfers to the Trustee, in trust, without recourse and for the exclusive
benefit of the Owners of the Certificates, all of the Seller's right, title and
interest in and to any and all benefits accruing to the Seller from (a) the
Initial Home Equity Loans (other than any principal and interest payments due
thereon on or prior to March 1, 1997 whether or not received) listed in
Schedules I-A and I-B 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-A and I-B 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, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account, the
Capitalized Interest Account together with investment earnings on such amounts
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided herein), whether in the form of cash, instruments, securities
or other properties (including any Eligible Investments held by the Servicer)
and (c) proceeds of all the foregoing (including, but not by way of limitation,
all proceeds of any mortgage insurance, hazard insurance and title insurance
policy relating to the Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights
<PAGE>
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
Certificate Insurance Policies to the Trustee for the benefit of the Owners of
the Class A Certificates.
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and the Trustee agrees to perform the
duties herein to the best of its ability to the end that the interests of the
Owners may be adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof. -------
"Accrual Period": With respect to the Class A Certificates (other than
the Class A-8 Certificates) and any Payment Date, the calendar month immediately
preceding the month in which the Payment Date occurs. A "calendar month" shall
be deemed to be 30 days. With respect to the Class A-8 Certificates and any
Payment Date, the period commencing on the immediately preceding Payment Date
(or the Startup Day in the case of the first Payment Date) to and including the
day prior to the current Payment Date. All calculations of interest on the Class
A Certificates (other than the Class A-8 Certificates) will be made on the basis
of a 360-day year assumed to consist of twelve 30-day months. Calculations of
interest on the Class A-8 Certificates will be made on the basis of the actual
number of days elapsed in the related Accrual Period and a year of 360 days.
"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 and (b)
any portion of the Premium Amount and the Trustee Fee (calculated as a
percentage of the outstanding principal amount of the Certificates) then accrued
and outstanding.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
2
<PAGE>
"Agreement of Limited Partnership": The Third Amended and Restated
Agreement of Limited Partnership of the Seller, dated as of November 1, 1995, as
at any time amended or modified.
"Annual Loss Percentage (Rolling 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": Group I Available Funds or Group II Available Funds,
as the case may be.
"Backup Servicer": The Trustee shall initially serve as Backup Servicer
hereunder in the event of the termination of the Servicer, subject to the right
of the Trustee to assign such duties to a party acceptable to the Certificate
Insurer and the Owners of the majority of the Percentage Interests of the Class
R Certificates.
"Business Day": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in The City of New York, Tampa, Florida, the
city in which the Corporate Trust Office is located or the city in which the
Certificate Insurer 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.
"Carry-Forward Amount": With respect to any Class of the Class A
Certificates and any Payment Date, the sum of (x) the amount, if any, by which
(i) the Current Interest for such Class for the immediately preceding Payment
Date exceeded (ii) the amount of the actual distribution made to the Owners of
such Class of 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 Certificates.
"Certificate": Any one of the Class A Certificates or the Class R
Certificates, each representing the interests and the rights described in this
Agreement.
"Certificate Account": The segregated certificate account established
in accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "The Chase Manhattan Bank as
3
<PAGE>
Trustee on behalf of the Owners of the IMC Home Equity Loan Trust 1997-2, Home
Equity Loan Pass-Through Certificates."
"Certificate Insurance Policies": The Group I Certificate Insurance
Policy and the Group II Certificate Insurance Policy.
"Certificate Insurer": MBIA Insurance Corporation, a New York insurance
company and any successor thereto, as issuer of the Certificate Insurance
Policies.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required
under either of the Certificate Insurance Policies 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 75 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.
"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 - $126,643,000
Class A-2 Certificates - $35,021,000
Class A-3 Certificates - $63,371,000
Class A-4 Certificates - $42,030,000
Class A-5 Certificates - $13,437,000
Class A-6 Certificates - $22,498,000
Class A-7 Certificates - $27,000,000
Class A-8 Certificates - $70,000,000
The Class R Certificates do not have a Certificate Principal Balance.
4
<PAGE>
"Civil Relief Interest Shortfalls": With respect to any Remittance
Period, for any Home Equity Loans as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Remittance
Period as a result of the Soldiers' and Sailers' Civil Relief Act of 1940, as
amended, the amount, if any, by which (i) interest collectible on such Home
Equity Loans during the most recently ended Remittance Period is less than (ii)
the sum of (a) one month's interest on the Loan Balance of such Home Equity
Loans at the rate equal to the weighted average Pass-Through Rate of the Fixed
Rate Certificates with respect to Group I or the Class A-8 Pass-Through Rate
with respect to Group II, plus (b) the related Servicing Fee, the related
Trustee Fee, the related Premium Amount and any portion of the Trustee
Reimbursable Expenses allocable to the related Group for such Home Equity Loans
for such Remittance Period.
"Class": Any Class of the Class A Certificates or the Class R
Certificates.
"Class A Certificate": Any one of the Fixed Rate Certificates or the
Class A-8 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 related Principal Distribution Amount pursuant to Section
7.03(b)(iv) hereof with respect to principal thereon on all prior Payment Dates;
provided, however, that solely for purposes of determining the Certificate
Insurer's rights, as subrogee, the Class A Certificate Principal Balance shall
not be reduced by any principal amount paid to the Owner thereof from Insured
Payments.
"Class A Certificate Termination Date": With respect to the Class A-1
Certificates, the Class A-1 Certificate Termination Date, with respect to the
Class A-2 Certificates, the Class A-2 Certificate Termination Date, with respect
to the Class A-3 Certificates, the Class A-3 Certificate Termination Date, with
respect to the Class A-4 Certificates, the Class A-4 Certificate Termination
Date, with respect to the Class A-5 Certificates, the Class A-5 Certificate
Termination Date, with respect to the Class A-6 Certificates, the Class A-6
Certificate Termination Date, with respect to the Class A-7 Certificates, the
Class A-7 Certificate Termination Date and with respect to the Class A-8
Certificates, the Class A-8 Certificate Termination Date.
"Class A Distribution Amount": The Class A-1 Distribution Amount, the
Class A-2 Distribution Amount, the Class A-3 Distribution Amount, the Class A-4
Distribution Amount, the Class A-5 Distribution Amount, the Class A-6
Distribution Amount, the Class A-7 Distribution Amount and the Class A-8
Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder 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 Group I
Insured Payments.
5
<PAGE>
"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, an
amount equal to 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; provided, however, such amount will be reduced by
the Class A-1 Certificates' pro rata share of any Civil Relief Interest
Shortfalls relating to Home Equity Loans in Group I.
"Class A-1 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-1 Current Interest and (y) the Group I Principal
Distribution Amount payable to the Owners of the Class A-1 Certificates pursuant
to Section 7.03(b)(iv)(C)(II)(i) for such Payment Date.
"Class A-1 Pass-Through Rate": 6.63% per annum.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder 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 Group I
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, an
amount equal to 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; provided, however, such amount will be reduced by
the Class A-2 Certificates' pro rata share of any Civil Relief Interest
Shortfalls relating to Home Equity Loans in Group I.
"Class A-2 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-2 Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-2 Certificates pursuant to Section
7.03(b)(iv)(C)(II)(ii) for such Payment Date.
"Class A-2 Pass-Through Rate": 6.70% 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
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the Trustee, representing the right to distributions as set forth herein and
each evidencing an interest designated as a "regular interest" in the REMIC
created hereunder for purposes of the REMIC provisions.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less the aggregate of all amounts 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 Group I
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, an
amount equal to 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; provided, however, such amount will be reduced by
the Class A-3 Certificates' pro rata share of any Civil Relief Interest
Shortfalls relating to Home Equity Loans in Group I.
"Class A-3 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-3 Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-3 Certificates pursuant to Section
7.03(b)(iv)(C)(II)(iii) for such Payment Date.
"Class A-3 Pass-Through Rate": 6.94% per annum.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder 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 Group I
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, an
amount equal to 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; provided,
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however, such amount will be reduced by the Class A-4 Certificates' pro rata
share of any Civil Relief Interest Shortfalls relating to Home Equity Loans in
Group I.
"Class A-4 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-4 Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-4 Certificates pursuant to Section
7.03(b)(iv)(C)(II)(iv) for such Payment Date.
"Class A-4 Pass-Through Rate": 7.25% 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 REMIC created hereunder 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 Group I
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, an
amount equal to 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; provided, however, such amount will be reduced by
the Class A-5 Certificates' pro rata share of any Civil Relief Interest
Shortfalls relating to Home Equity Loans in Group I.
"Class A-5 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-5 Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-5 Certificates pursuant to Section
7.03(b)(iv)(C)(II)(v) for such Payment Date.
"Class A-5 Pass-Through Rate": 7.48% per annum.
"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder 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
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Principal Balance shall not be reduced by any principal amounts paid to the
Owners thereof from Group I 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, an
amount equal to 30 days' interest accrued on the Class A-6 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-6 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-6 Certificates as it relates to interest previously paid on the
Class A-6 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-6 Certificates; provided, however, such amount will be reduced by
the Class A-6 Certificates' pro rata share of any Civil Relief Interest
Shortfalls relating to Home Equity Loans in Group I.
"Class A-6 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-6 Current Interest and (y) the Group I Principal Distribution
Amount payable to the Owners of the Class A-6 Certificates pursuant to Section
7.03(b)(iv)(C)(II)(vi) for such Payment Date.
"Class A-6 Pass-Through Rate": 7.67% per annum.
"Class A-7 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"Class A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-7 Distribution Amount pursuant to Section
7.03(b)(iv) hereof with respect to principal thereon on all prior Payment Dates;
provided, however, that solely for the purposes of determining the Certificate
Insurer's rights, as subrogee, the Class A-7 Certificate Principal Balance shall
not be reduced by any principal amounts paid to the Owners thereof from Group I
Insured Payments.
"Class A-7 Certificate Termination Date": The Payment Date on which the
Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-7 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-7 Pass-Through Rate plus the Preference Amount owed to the Owners
of the Class A-7 Certificates as it relates to interest previously paid on the
Class A-7 Certificates plus the Carry-Forward Amount, if any, with respect to
the Class A-7 Certificates; provided, however, such amount will be reduced by
the Class A-7 Certificates' pro rata share of any Civil Relief Interest
Shortfalls relating to Home Equity Loans in Group I.
"Class A-7 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-7 Current Interest, (y) the Class A-7 Lockout Distribution
Amount payable to the owners of the Class A-7 Certificate pursuant to Section
7.03(b)(iv)(c)(I) and (z) the Group I Principal Distribution Amount payable to
the Owners of the Class A-7 Certificates pursuant to Section 7.03(b)(iv)(C)(II)
(vii) for such Payment Date; provided, however, that the Class A-7 Distribution
Amount shall in no event be greater than the
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sum of the Class A-7 Current Interest and the Group I Principal Distribution
Amount for such Payment Date.
"Class A-7 Lockout Distribution Amount": For any Payment Date, the
product of (i) the applicable Class A-7 Lockout Percentage for such Payment Date
and (ii) the Class A-7 Lockout Pro Rata Distribution Amount for such Payment
Date; provided, that the Class A-7 Lockout Distribution Amount shall not exceed
the Class A-7 Certificate Principal Balance.
"Class A-7 Lockout Percentage": For each Payment Date, the percentage
set forth below:
Class A-7
Payment Dates Lockout Percentage
------------- ------------------
April 1997 - March 2000 0%
April 2000 - March 2002 45%
April 2002 - March 2003 80%
April 2003 - March 2004 100%
April 2004 and thereafter 140%
"Class A-7 Lockout Pro Rata Distribution Amount": For any Payment Date,
an amount equal to the product of (x) a fraction, the numerator of which is the
Class A-7 Certificate Principal Balance immediately prior to such Payment Date
and the denominator of which is the aggregate Certificate Principal Balance of
the Fixed Rate Certificates immediately prior to such Payment Date and (y) the
Group I Principal Distribution Amount for such Payment Date.
"Class A-7 Pass-Through Rate": 7.23% per annum.
"Class A-8 Available Funds Cap Rate": On any Payment Date on or prior
to the Payment Date in September 1997, the weighted average of the Coupon Rates
of the Home Equity Loans in Group II less 0.66% per annum and on any Payment
Date thereafter, the weighted average of the Coupon Rates of the Home Equity
Loans in Group II less 1.16% per annum.
"Class A-8 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-8 Certificate, substantially in the form annexed
hereto as Exhibit A-8 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"Class A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-8 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-8 Certificate Principal Balance shall
not be reduced by any principal amounts paid to the Owners thereof from Group II
Insured Payments.
"Class A-8 Certificate Termination Date": The Payment Date on which the
Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment Date, an
amount equal to the amount of interest accrued on the Class A-8 Certificate
Principal Balance immediately prior to such Payment Date during the related
Accrual Period at the Class A-8 Pass-Through Rate plus the Preference Amount
owed
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to the Owners of the Class A-8 Certificates as it relates to interest
previously paid on the Class A-8 Certificates plus the Carry-Forward Amount, if
any, with respect to the Class A-8 Certificates; provided, however, such amount
will be reduced by the amount of any Civil Relief Interest Shortfalls relating
to Home Equity Loans in Group II.
"Class A-8 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-8 Current Interest and (y) the Group II Principal
Distribution Amount payable to the Owners of the Class A-8 Certificates pursuant
to Section 7.03(b)(iv)(D) for such Payment Date.
"Class A-8 Pass-Through Rate": For any Payment Date, in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 0.22% per annum and (ii) the Class A-8 Available Funds Cap Rate
for such Payment Date and for any month following the month in which the CleanUp
Call Date occurs, the lesser of (i) LIBOR plus 0.44% per annum and (ii) the
Class A-8 Available Funds Cap Rate for such Payment Date.
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit C, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as
the "residual interest" in the REMIC created hereunder for the purposes of the
REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on which the
aggregate Loan Balances of the Home Equity Loans has declined to $40,000,000 or
less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Corporate Trust Office": The principal office of the Trustee at The
Chase Manhattan Bank, 450 W. 33rd Street, 15th Floor, New York, NY 10001,
Attention: Advanced Structured Products Group or the principal office of any
successor Trustee hereunder.
"Coupon Rate": The rate of interest borne by each Note from time to
time.
"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.
"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, (g) the Class A-7
Current Interest and (h) the Class A-8 Current Interest for such Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of March 1,
1997 among the Custodian, the Trustee, the Depositor, the Seller and the
Servicer.
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"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 March 1, 1997.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related Due
Date. A Home Equity Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due 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": The 15th day of each month, or if such day is not
a Business Day, on the preceding Business Day, commencing in April 1997.
"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.
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"Excess Subordinated Amount": With respect to either Home Equity Loan
Group and Payment Date, the excess, if any, of (x) the Subordinated Amount that
would apply to such Home Equity Loan Group on such Payment Date after taking
into account the payment of the related Principal Distribution Amount on such
Payment Date (except for any distributions of related Subordination Reduction
Amounts on such Payment Date), over (y) the related Specified Subordinated
Amount for such Payment Date.
"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
3.05(b) 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(a) hereof.
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"Fixed Rate Certificates": Any one of the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates or Class A-7 Certificates.
"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": With respect to each Group, 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) allocable to such Group is less than $100,000, (ii) the date on which
the Servicer may be removed pursuant to Section 8.20(a) hereof and (iii) March
31, 1997.
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"Group I": The pool of Home Equity Loans identified in the related
Schedule of Home Equity Loans as having been assigned to Group I in Schedule I-A
hereto, including any Qualified Replacement Mortgage delivered in replacement
thereof.
"Group I Available Funds": As defined in Section 7.02(b) hereof.
"Group I Available Funds Shortfall": As defined in Section
7.03(b)(ii)(A).
"Group I Capitalized Interest Requirement": With respect to the April
1997 Payment Date, the excess, if any, of (x) the sum of (a) the interest due on
the Fixed Rate Certificates on such Payment Date plus (b) the Premium Amount
allocable to Group I over (y) the sum of (i) one month's interest on the
aggregate Loan Balance of the Home Equity Loans in Group I as of the close of
business on the last day of the immediately preceding Remittance Period,
calculated at the weighted average of the Pass-Through Rates of the Fixed Rate
Certificates as of such Payment Date and (ii) any Group I Pre-Funding Account
Earnings to be transferred to the Certificate Account on such Payment Date, if
any.
"Group I Certificate Insurance Policy": The Certificate Guaranty
Insurance Policy (number 23409) dated March 20, 1997 issued by the Certificate
Insurer for the benefit of the Owners of the Fixed Rate Certificates pursuant to
which the Certificate Insurer guarantees Group I Insured Payments.
"Group I Insured Payment": As defined in the Group I Certificate
Insurance Policy.
"Group I 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 in Group I, (ii) all
Compensating Interest paid by the Servicer on such Monthly Remittance Date with
respect to Group I and (iii) the portion of the Substitution Amount relating to
interest on the Home Equity Loans in Group I.
"Group I Maximum Collateral Amount": $330,000,000.
"Group I Monthly Remittance Amount": As of any Monthly Remittance Date,
the sum of (i) the Group I Interest Remittance Amount for such Monthly
Remittance Date and (ii) the Group I Principal Remittance Amount for such
Monthly Remittance Date.
"Group I Pre-Funding Account Earnings": With respect to the April 1997
Payment Date, the actual investment earnings earned during the period from the
Startup Day through March 31, 1997 (inclusive) on that portion of the
Pre-Funding Account allocated to Group I during such period as calculated by the
Trustee pursuant to Section 3.07(e) hereof.
"Group I Principal Distribution Amount": With respect to the Fixed Rate
Certificates for any Payment Date, the lesser of:
(a) the Group I Total Available Funds plus any Insured Payment with
respect to the Fixed Rate Certificates minus the Current Interest, Premium
Amount, Trustee Fee and Trustee Reimbursable Expenses allocable to Group I for
such Payment Date with respect to the Fixed Rate Certificates; and
(b) the excess, if any, of (i) the sum of (without duplication):
(A) the Preference Amount with respect to principal owed to
the Owners of the related Fixed Rate Certificates that remains
unpaid as of such Payment Date,
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(B) the principal portion of all scheduled monthly
payments on the Home Equity Loans in Group I 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 in
Group I 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 in Group I (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 with respect to the Home Equity Loans in Group
I 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 with
respect to Group I for such Payment Date,
(G) the principal portion of the proceeds received by
the Trustee with respect to Group I from any termination of
the Trust (to the extent such proceeds related to principal),
(H) with respect to the April 1997 Payment Date, all
amounts remaining on deposit in the Pre-Funding Account
allocated to Group I to the extent not used to purchase
Subsequent Home Equity Loans for inclusion in Group I during
such Funding Period, and
(I) the amount of any Subordination Increase Amount
with respect to Group I 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 with
respect to Group I for such Payment Date.
"Group I 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 in Group I during the related
Remittance Period, (ii) the Loan Balance of each such Home Equity Loan in Group
I 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
in Group I, to the extent such Substitution Amounts were actually deposited in
the Principal and Interest Account on or prior to such Monthly Remittance Date,
(iv) the principal portion of all Net
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Liquidation Proceeds actually collected by the Servicer with respect to such
Home Equity Loans in Group I during the related Remittance Period (to the extent
such Net Liquidation Proceeds related to principal) and (v) the amount of
investment losses required to be deposited pursuant to Sections 7.05(e) and
8.08(b).
"Group I Servicing Fee": With respect to any Home Equity Loan in Group
I, 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 Group I Underwater Loan, as of any Payment Date (i) the sum of
(x) the weighted average Pass-Through Rate of the Fixed Rate Certificates and
(y) the annualized rate at which the Servicing Fee, Premium Amount and Trustee
Fee related to Group I would otherwise be calculated exceeds (ii) the weighted
average Coupon Rate of the Group I Underwater Loans for the related Remittance
Period, then the Group I Servicing Fee 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
Group I 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
in Group I; provided, however, that if a successor Servicer is appointed
pursuant to Section 8.20 hereof, the Group I 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.
"Group I Specified Subordinated Amount": As defined in the Insurance
Agreement.
"Group I 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
in Group I 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 relating to Group I at such time exclusive of any Group I Pre-Funding
Account Earnings over (y) the Certificate Principal Balance of the Fixed Rate
Certificates for such Payment Date (after taking into account the payment of the
Group I Principal Distribution Amount thereon (except for any Subordination
Reduction Amount relating to Group I and Subordination Increase Amount relating
to Group I) on such Payment Date).
"Group I Total Available Funds": As defined in Section 7.02(b) hereof.
"Group I Total Monthly Excess Spread": With respect to Group I and any
Payment Date, the excess of (i) the aggregate of all interest which is collected
on the Home Equity Loans in Group I during the related Remittance Period (net of
the Servicing Fee, the Trustee Fee and the Trustee Reimbursable Expenses with
respect to Group I) plus (x) any Delinquency Advances and (y) Compensating
Interest paid by the Servicer with respect to Group I for such Remittance Period
over (ii) the sum of the Current Interest on the Fixed Rate Certificates and the
Premium Amount relating to Group I for such Payment Date.
"Group I Underwater Loans": Any Home Equity Loan in Group I having a
Coupon Rate as of the Startup Day that is less than 8.33%.
"Group II": The pool of Home Equity Loans identified in the related
Schedule of Home Equity Loans as having been assigned to Group II in Schedule
I-B hereto, including any Qualified Replacement Mortgage delivered in
replacement thereof.
"Group II Available Funds": As defined in Section 7.02(c) hereof.
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"Group II Available Funds Shortfall": As defined in Section
7.03(b)(ii)(A).
"Group II Capitalized Interest Requirement": With respect to the April
1997 Payment Date, the excess, if any, of (x) the sum of (a) the interest due on
the Class A-8 Certificates on such Payment Date plus (b) the Premium Amount
allocable to Group II and (y) the sum of (i) one month's interest on the
aggregate Loan Balance of the Home Equity Loans in Group II as of the close of
business on the last day of the immediately preceding Remittance Period,
calculated at the Class A-8 Pass-Through Rate as of such Payment Date and (ii)
any Group II Pre-Funding Account Earnings to be transferred to the Certificate
Account on such Payment Date, if any.
"Group II Certificate Insurance Policy": The Certificate Guaranty
Insurance Policy (number 23410) dated March 20, 1997 issued by the Certificate
Insurer for the benefit of the Owners of the Class A-8 Certificates pursuant to
which the Certificate Insurer guarantees Group II Insured Payments.
"Group II Insured Payment": As defined in the Group II Certificate
Insurance Policy.
"Group II 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 in Group II, (ii) all
Compensating Interest paid by the Servicer on such Monthly Remittance Date with
respect to Group II and (iii) the portion of the Substitution Amount relating to
interest on the Home Equity Loans in Group II.
"Group II Maximum Collateral Amount": $70,000,000.
"Group II Monthly Remittance Amount": As of any Monthly Remittance
Date, the sum of (i) the Group II Interest Remittance Amount for such Monthly
Remittance Date and (ii) the Group II Principal Remittance Amount for such
Monthly Remittance Date.
"Group II Pre-Funding Account Earnings": With respect to the April 1997
Payment Date, the actual investment earnings earned during the period from the
Startup Day through March 31, 1997 (inclusive) on that portion of the
Pre-Funding Account allocated to Group II during such period as calculated by
the Trustee pursuant to Section 3.07(e) hereof.
"Group II Principal Distribution Amount": With respect to the Class A-8
Certificates for any Payment Date, the lesser of:
(a) the Group II Total Available Funds plus any Insured Payment with
respect to the Class A-8 Certificates minus the Class A-8 Current Interest and
the Premium Amount, Trustee Fee and any Trustee Reimbursable Expenses allocable
to Group II for such Payment Date; and
(b) the excess, if any, of (i) the sum of (without duplication):
(A) the Preference Amount with respect to principal
owed to the Owners of the Class A-8 Certificates that remains
unpaid as of such Payment Date,
(B) the principal portion of all scheduled monthly
payments on the Home Equity Loans in Group II 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,
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(C) the Loan Balance of each Home Equity Loan in
Group II 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 in Group II (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 with respect to the Home Equity Loans in Group
II 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 with
respect to Group II for such Payment Date,
(G) the principal portion of the proceeds received by
the Trustee with respect to Group II from any termination of
the Trust (to the extent such proceeds related to principal),
(H) with respect to the April 1997 Payment Date, all
amounts remaining on deposit in the Pre-Funding Account
allocated to Group II to the extent not used to purchase
Subsequent Home Equity Loans for inclusion in Group II during
such Funding Period, and
(I) the amount of any Subordination Increase Amount
with respect to Group II 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 with
respect to Group II for such Payment Date.
"Group II 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 in Group II during the related
Remittance Period, (ii) the Loan Balance of each such Home Equity Loan in Group
II 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
in Group II, to the extent such Substitution Amounts were actually deposited in
the Principal and Interest Account on or prior to such Monthly Remittance Date,
(iv) the principal portion of all Net Liquidation Proceeds actually collected by
the Servicer with respect to such Home Equity Loans in Group II during the
related Remittance Period (to the extent such Net Liquidation Proceeds related
to principal) and (v) the amount of investment losses to be deposited pursuant
to Sections 7.05(e) and 8.08(b).
"Group II Servicing Fee": With respect to any Home Equity Loan in Group
II, an amount retained by the Servicer as compensation for servicing and
administration duties relating to such Home
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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 if a successor Servicer is appointed pursuant to Section 8.20
hereof, the Group II Servicing Fee shall be such 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.
"Group II Specified Subordinated Amount": As defined in the Insurance
Agreement.
"Group II 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
in Group II 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 relating to Group II at such time exclusive of any Group II Pre-Funding
Account Earnings over (y) the Certificate Principal Balance of the Class A-8
Certificates for such Payment Date (after taking into account the payment of the
Group II Principal Distribution Amount thereon (except for any Subordination
Reduction Amount relating to Group II or Subordination Increase Amount relating
to Group II) on such Payment Date).
"Group II Total Available Funds": As defined in Section 7.02(c) hereof.
"Group II Total Monthly Excess Spread": With respect to Group II and
any Payment Date, the excess of (i) the aggregate of all interest which is
collected on the Home Equity Loans in Group II during the related Remittance
Period (net of the Servicing Fee, the Trustee Fee and the Trustee Reimbursable
Expenses with respect to Group II) plus (x) any Delinquency Advances and (y)
Compensating Interest paid by the Servicer with respect to Group II for such
Remittance Period over (ii) the sum of the Class A-8 Current Interest and the
Premium Amount relating to Group II for such Payment Date.
"Highest Lawful Rate": As defined in Section 11.13 hereof.
"Home Equity Loan Group" or "Group": Group I or Group II, as the case
may be. References herein to the related Class of Class A Certificates, when
used with respect to a Home Equity Loan Group, shall mean (A) in the case of
Group I, the Fixed Rate Certificates and (B) in the case of Group II, the Class
A-8 Certificates.
"Home Equity Loans": Such home equity loans (including Initial Home
Equity Loans and Subsequent Home Equity Loans) transferred and assigned to the
Trust pursuant to Section 3.05(a) and 3.07(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan". The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any home 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.
"Indemnification Agreement": The Indemnification Agreement dated as of
March 13, 1997 among the Certificate Insurer, the Depositor, the Seller and the
Underwriters.
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"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.
"Insurance Agreement": The Insurance Agreement dated as of March 1,
1997, among the Depositor, the Seller, the Servicer, the Trustee 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": The Group I Insured Payment or Group II Insured
Payment.
"Interest Remittance Amount": The sum of the Group I Interest
Remittance Amount and the Group II Interest Remittance Amount.
"Late Payment Rate": For any Monthly Remittance Date, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"LIBOR": With respect to any Accrual Period for the Class A-8
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.
"LIBOR Determination Date": With respect to any Accrual Period for the
Class A-8 Certificates, the second London Business Day preceding the
commencement of such Accrual Period.
"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.
"London Business Day": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"Maximum Collateral Amount": $400,000,000.
"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": The sum of the Group I Monthly Remittance
Amount and the Group II Monthly Remittance Amount.
"Monthly Remittance Date": The 18th day of each month, or if such day
is not a Business Day, on the preceding Business Day, commencing in April 1997.
"Monthly Reporting Date": The 15th day of each month, or if such day is
not a Business Day, on the preceding Business Day, commencing in April 1997.
"Moody's": Moody's Investors Service Inc. or any successor thereto.
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"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of 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.
"90-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, three
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).
"90+ 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 90-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.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"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 Policies, the Certificates, the Indemnification Agreement 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 $399,803,625.38.
"Original Aggregate Pre-Funded Amount": The amount deposited in the
Pre-Funding Account on the Startup Day from the proceeds of the sale of the
Certificates, which amount is equal to $147,650.27.
"Original Group I Pre-Funded Amount": $181,593.18.
"Original Group II Pre-Funded Amount": $14,781.44.
"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 (x) with respect to the Fixed Rate Certificates the
difference between (i) interest accruing from the Subsequent Cut-Off Date to
March 31, 1997 on the aggregate Loan Balances of the Subsequent Home Equity
Loans in Group I 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 of the Fixed Rate Certificates and (b) the rate at which the Premium Amount
is determined and (ii) interest accruing from the Subsequent Cut-Off Date to
March 31, 1997 on the aggregate Loan Balances of the Subsequent Home Equity
Loans in Group I acquired by the Trust on such Subsequent Transfer Date,
calculated at the rate at which Pre-Funded Amounts are invested as of such
Subsequent Transfer Date and (y) with respect to the Class A-8 Certificates, the
difference between (i) interest accruing from the Subsequent Cut-Off Date to
March 31, 1997 on the aggregate Loan Balances of the Subsequent Home Equity
Loans in Group II acquired by the Trust on such Subsequent Transfer Date,
calculated at a rate equal to the sum of (a) the Class A-8 Pass-Through Rate and
(b) the rate at which the Premium Amount is determined and (ii) interest
accruing from the Subsequent Cut-Off Date to March 31, 1997 on the aggregate
Loan Balances of the Subsequent Home Equity Loans in Group II acquired by the
Trust on such Subsequent Transfer Date, calculated at the rate of which
Pre-Funded Amounts 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 Sections 5.06
and 12.06 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 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 20th 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 April 21,
1997.
"Percentage Interest": With respect to a Class of Class A Certificates,
a fraction, expressed as a decimal, the numerator of which is the initial Class
A Certificate Principal Balance represented by such Class A Certificate and the
denominator of which is the aggregate initial Class A Certificate Principal
Balance represented by all the Class A Certificates of such Class. With respect
to the Class R Certificates, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such Certificate, all of
which shall total 100% with respect to the related Class.
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"Person": Any individual, corporation, limited partnership,
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 12.02(b) hereof.
"Preference Amount": With respect to the Class A Certificates means any
amounts of Current Interest and principal included in previous distributions of
the Class A Distribution Amount to the Owners of the Class A Certificates which
are recoverable and sought to be recovered as a voidable preference by a trustee
in bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.) as
amended from time to time in accordance with a final, nonappealable order of a
court having competent jurisdiction.
"Preference Claim": As defined in Section 12.02(d) hereafter.
"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": The Group I Pre-Funding Account
Earnings or the Group II Pre- Funding Account Earnings as the case may be.
"Premium Amount": As defined in the Insurance Agreement.
"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 Distribution Amount": The Group I Principal Distribution
Amount or the Group II Principal Distribution Amount.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": The Group I Principal Remittance Amount
or the Group II Principal Remittance Amount.
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"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 1997-2
Prospectus Supplement dated March 13, 1997 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 a
Group I Underwater Loan, such Qualified Replacement Mortgage will not have a
Coupon Rate less than 8.33%, (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 March 1, 2027
(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 if the Home Equity Loan being replaced is in Group I or an
adjustable rate Home Equity Loan if the Home Equity Loan being replaced is in
Group II, (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 and (xi) if such Home Equity Loan being
replaced is in Group II, shall adjust based on the same index, have no lower
margin, have the same interval between adjustment dates and have a maximum
Coupon Rate no lower than, and a minimum Coupon Rate no higher than the Home
Equity Loan being replaced. 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.
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"Rating Agencies": Collectively, Moody's and Standard & Poor's or any
successors thereto.
"Realized Loss": As to any Liquidated Loan (or, in the case of a Cram
Down Loss a Home Equity Loan that is not a Liquidated Loan), the amount (not
less than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as
of the date of liquidation, (y) the amount of accrued but unpaid interest
thereon (to the extent that there are no outstanding advances for such interest
by the Servicer) and (z) the amount of any Cram Down Loss with respect thereto
is in excess of (B) the Net Liquidation Proceeds realized thereon applied in
reduction of such Loan Balance.
"Record Date": With respect to the Fixed Rate Certificates and each
Payment Date, the last day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs and with respect to the Class
A-8 Certificates, the day immediately preceding such Payment Date.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank
of Tokyo and National Westminster Bank PLC, provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with the Seller or any affiliate thereof, (iii) whose quotations
appear on Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Trustee.
"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 at the Late Payment Rate 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 or
an earlier 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 Estate": The segregated pool of assets referred to as the Trust
Estate (other than the Pre- Funding Account and the Capitalized Interest
Account) constituting the REMIC created hereunder.
"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
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Code, and related provisions, and regulations and revenue rulings promulgated
thereunder, as the foregoing may be in effect from time to time.
"Remittance Period": With respect to each Monthly Remittance Date, the
period commencing the second day of the calendar month immediately preceding
such Monthly Remittance Date and ending the first day of the calendar month in
which such Monthly Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"Residual Net Monthly Excess Cashflow": With respect to any Payment
Date, the aggregate Net Monthly Excess Cashflow, if any, remaining after the
making of all applications, transfers and disbursements described in Sections
7.03(b)(i), (ii), (iii) and (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.
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"Servicer": Industry Mortgage Company, L.P., a Delaware limited
partnership, and its permitted successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential home equity loans.
"Servicer Loss Test": The Servicer Loss Test for any period set out
below is satisfied, if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below (provided, that for purposes
of the calculation of the Servicer Loss Test, Realized Losses attributable
solely to Cram Down Losses should be excluded from the calculation of Cumulative
Loss Percentage):
Cumulative Loss
Period Percentage
------ ---------------
March 2, 1997 - March 1, 1998 1.00%
March 2, 1998 - March 1, 1999 1.50%
March 2, 1999 - March 1, 2000 2.25%
March 2, 2000 - March 1, 2001 3.00%
March 2, 2001 - 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 90+ Delinquency Percentage
(Rolling Six Month) is less than 14.00%, (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": The Group I Servicing Fee or the Group II Servicing
Fee, as the context may require.
"Specified Subordinated Amount": The Group I Specified Subordinated
Amount or the Group II Specified Subordinated Amount.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies or any successor thereto.
"Startup Day": March 20, 1997.
"Subordinated Amount": The Group I Subordinated Amount or the Group II
Subordinated Amount, as the case may be.
"Subordination Deficiency Amount": With respect to either Home Equity
Loan Group and Payment Date, the excess, if any, of (i) the Specified
Subordinated Amount applicable to such Home Equity Loan Group and Payment Date
over (ii) the Subordinated Amount applicable to such Home Equity Loan Group and
Payment Date prior to taking into account the payment of any related
Subordination Increase Amounts on such Payment Date.
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"Subordination Deficit": With respect to either Home Equity Loan Group
and Payment Date, the amount, if any, by which (x) the related Class A
Certificate Principal Balance with respect to such Group, after taking into
account the payment of the related Class A Distribution Amount with respect to
such Group on such Payment Date (without regard to any Insured Payment to be
made on such Payment Date and except for any Subordination Deficit with respect
to such Group), exceeds (y) the sum of (a) the aggregate Loan Balances of the
Home Equity Loans in such Home Equity Loan Group 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 with respect to such Group on such Payment
Date exclusive of any Pre-Funding Account Earnings with respect to such Group.
"Subordination Increase Amount": With respect to any Home Equity Loan
Group and Payment Date, the lesser of (i) the related Subordination Deficiency
Amount as of such Payment Date (after taking into account the payment of the
related Class A Distribution Amount on such Payment Date (except for any
Subordination Increase Amount with respect to such Group)) and (ii) the
aggregate amount of Net Monthly Excess Cashflow allocated to such Home Equity
Loan Group pursuant to Section 7.03(b)(iii)(A) or (B) on such Payment Date.
"Subordination Reduction Amount": With respect to any Home Equity Loan
Group and Payment Date, an amount equal to the lesser of (x) the Excess
Subordinated Amount for such Home Equity Loan Group and Payment Date and (y) the
Principal Remittance Amount with respect to such Group 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.
"Tax Matters Person": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates which shall be issued to and held by The Chase Manhattan
Bank throughout the term hereof unless another
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person shall accept an assignment of either such interest and the designation of
Tax Matters Person pursuant to Section 11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Total Available Funds": The Group I Total Available Funds and the
Group II Total Available Funds.
"Total Monthly Excess Cashflow": As defined in Section 7.03(b)(ii)
hereof.
"Total Monthly Excess Spread": The Group I Total Monthly Excess Spread
and the Group II Total Monthly Excess Spread.
"Trust": IMC Home Equity Loan Trust 1997-2, 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 pursuant to
Section 11.16(a)(v) and Section 11.16(g) and pursuant to the second sentence of
Section 10.07, provided that the aggregate amounts payable as Trustee
Reimbursable Expenses shall not exceed $50,000.
"Underwriters": Bear, Stearns & Co. Inc., PaineWebber Incorporated and
Nomura Securities International, Inc.
"Weighted Average Pass-Through Rate": As to the Class A Certificates
and any Payment Date, the weighted average of the Class A-1 Pass-Through Rate,
the Class A-2 Pass-Through Rate, the Class A-3 Pass- Through Rate, the Class A-4
Pass-Through Rate, the Class A-5 Pass-Through Rate and the Class A-6 Pass-
Through Rate, the Class A-7 Pass-Through Rate and the Class A-8 Pass-Through
Rate, weighted by, respectively, the Class A-1 Certificate Principal Balance,
the Class A-2 Certificate Principal Balance, the Class A-3 Certificate Principal
Balance, the Class A-4 Certificate Principal Balance, the Class A-5 Certificate
Principal Balance, the Class A-6 Certificate Principal Balance, the Class A-7
Certificate Principal Balance and the Class A-8 Certificate Principal Balance as
of such Payment Date prior to taking into account any distributions to be made
on such Payment Date.
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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 1997-2" and which shall contain
two subtrusts.
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
The Chase Manhattan Bank, 450 W. 33rd Street, 15th Floor, New York, NY 10001,
Attention: Advanced Structured Products Group, or at such other address as the
Trustee may designate by notice to the Depositor, the Seller, the Servicer, the
Owners and the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of the REMIC Estate as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Seller and the Depositor hereby appoint the Trustee as trustee of
the Trust effective as of the Startup Day, to have all the rights, powers and
duties set forth herein. The Trustee hereby acknowledges and accepts such
appointment, represents and warrants its eligibility as of the Startup Day to
serve as Trustee pursuant to Section 10.08 hereof and declares that it will hold
the Trust Estate in trust upon and subject to the conditions set forth herein
for the benefit of the Owners and the Certificate Insurer, as their interests
may appear.
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 REMIC created hereunder
shall be evidenced by the interests having the following characteristics and
terms as follows, including for federal income tax purposes the months in which
the Final Scheduled Payment Dates occur:
Initial Certificate Final Scheduled
Class Designation Principal Balance Payment Date
----------------- ----------------- ------------
Class A-1 $126,643,000 November 20, 2011
Class A-2 $ 35,021,000 November 20, 2011
Class A-3 $ 63,371,000 November 20, 2011
Class A-4 $ 42,030,000 June 20, 2016
Class A-5 $ 13,437,000 March 20, 2021
Class A-6 $ 22,498,000 May 20, 2027
Class A-7 $ 27,000,000 May 20, 2027
Class A-8 $ 70,000,000 May 20, 2027
R (i) May 20, 2027
- - --------------------
(i) Class R does not have a Certificate Principal Balance.
(b) The Depositor hereby designates the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8 Certificates as
"regular interests," and the Class R Certificates as the single class of
"residual interests" in the REMIC created hereunder for purposes of the REMIC
Provisions.
(c) The Startup Day is hereby designated as the "startup day" of the
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
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(d) The Owner of the Tax Matters Person Residual Interest in the REMIC
created hereunder is hereby designated as "tax matters person" as defined in the
REMIC Provisions with respect to the REMIC.
(e) The Trust and the REMIC created hereunder shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(f) The Trustee shall cause the REMIC created hereunder to elect to be
treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such election to be treated
as a REMIC. The Trustee shall report all expenses of the Trust Estate to the
REMIC created hereunder.
(g) 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 REMIC created hereunder.
(h) 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 the REMIC created hereunder. Such information
will be provided in the manner described in Treasury Regulation Section
1.860E-2(a)(5), or any successor regulation thereto.
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 and the other
Operative Documents to which it is a party 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 has received fair consideration and reasonably
equivalent value in exchange for the sale of its interest in the Home Equity
Loans.
(l) The Depositor did not sell any interest in any Home Equity Loan
with an intent to hinder, delay or defraud any of its creditors.
(m) 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.
(n) On the Startup Day, the Trustee will have good title on behalf of
the Trust to each Initial Home Equity Loan and such other items comprising the
Trust Estate free and clear of any lien.
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(o) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(p) The Depositor is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Depositor or legal
documents associated with the transaction contemplated by this Agreement.
(q) To the best knowledge of the Depositor, there has been no material
adverse change in any information submitted by the Depositor in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing).
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
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 have all requisite partnership or corporate, as the case
may be, power and authority to own and operate its or their properties, to carry
out its or their business as presently conducted and as proposed to be conducted
and to enter into and discharge its or their obligations under this Agreement
and the other Operative Documents to which the Servicer is a party.
(b) The execution and delivery of this Agreement and any other
Operative Document to which it is a party by the Servicer and its performance
and compliance with the terms hereof and thereof 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.
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(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 or under the other Operative
Documents to which the Servicer is a party.
(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 any other Operative Document
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 the validity or the
enforceability of the Home Equity Loans or its performance hereunder and the
other Operative Documents to which the Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(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.
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(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.
(l) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(m) The Servicer is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Servicer or legal
documents associated with the transaction contemplated by this Agreement.
(n) To the best knowledge of the Servicer, there has been no material
adverse change in any information submitted by the Servicer in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing).
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 Certificate Insurer or by the
Trustee with the written consent of the Certificate Insurer pursuant to Section
8.20 hereof; provided, however, that if the Servicer can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended for an additional
90 days with the written approval of the Certificate Insurer.
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 and the other
Operative Documents to which it is a party 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
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to which the Seller is a party or by which the Seller is bound or violate any
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Seller or any of its
properties.
(c) This Agreement and the other Operative Documents to which the
Seller is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Seller, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which would materially and adversely affect its performance
hereunder and under the other Operative Documents to which the Seller is a
party.
(e) No litigation is pending with respect to which the Seller has
received service of process or, to the best of the Seller's knowledge,
threatened against the Seller which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Seller or its properties
or might have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Seller is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement 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
Registration Statement 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 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 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 Registration Statement.
(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.
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(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.
(o) The Seller received fair consideration and reasonably equivalent
value in exchange for the sale of the interests in the Home Equity Loans.
(p) The Seller did not sell any interest in any Home Equity Loan with
any intent to hinder, delay or defraud any of its creditors.
(q) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(r) The Seller is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Seller or legal
documents associated with the transaction contemplated by this Agreement.
(s) To the best knowledge of the Seller, there has been no material
adverse change in any information submitted by the Seller in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing).
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
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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 the REMIC created hereunder or otherwise
subject the Trust or the REMIC created hereunder to tax and would not jeopardize
the status of the REMIC created hereunder as a REMIC (a "REMIC Opinion")
addressed to the Trustee and the Certificate Insurer and acceptable to the
Certificate Insurer and the Trustee. The Seller shall also deliver an Officer's
Certificate to the Trustee and the Certificate Insurer concurrently with the
delivery of a Qualified Replacement Mortgage pursuant to Sections 3.03, 3.04 and
3.06 stating that such Home Equity Loan meets the requirements of the definition
of a Qualified Replacement Mortgage and that all other conditions to the
substitution thereof have been satisfied. Any Home Equity Loan as to which
repurchase or substitution was delayed pursuant to this Section shall be
repurchased or substituted for (subject to compliance with Section 3.03, 3.04 or
3.06, as the case may be) upon the earlier of (a) the occurrence of a default or
imminent default with respect to such Home Equity Loan and (b) receipt by the
Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of Seller to Take Certain Actions with
Respect to the Home Equity Loans in Certain
Situations.
(a) Upon the discovery by the Depositor, the Seller, the Servicer, the
Certificate Insurer, any Sub-Servicer, any Owner, the Custodian or the Trustee
that the representations and warranties set forth in clause (b) below were
untrue in any material respect as of the Startup Day (or in the case of the
Subsequent Home Equity Loans, as of the respective Subsequent Transfer Date)
with the result that the interests of the Owners or of the Certificate Insurer
are materially and adversely affected, the party discovering such breach shall
give prompt written notice to the other parties. Upon the earliest to occur of
the Seller's discovery, its receipt of notice of breach from any one of the
other parties or such time as a situation resulting from an existing statement
which is untrue materially and adversely affects the interests of the Owners or
of the Certificate Insurer, the Seller hereby covenants and warrants that it
shall promptly cure such breach in all material respects or subject to the last
three sentences of Section 3.03 it shall on or before 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,
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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 and the Trustee.
(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, as of 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 122 and 14 Initial Home
Equity Loans in Group I and Group II, respectively, in the amount of
$6,387,309.31 and $1,054,828.62, respectively), that are
condominiums, planned unit developments, townhouses, manufactured
housing, mixed use properties, multifamily residential, or
cooperative, provided that no more than 1.94% and 1.51%,
respectively, 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 259 Home Equity
Loans in the amount of $23,773,276.85 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 in
Group I bears a current Coupon Rate of at least 7.22% per annum and
the Note related to each Initial Home Equity Loan in Group II bears
a current Coupon Rate of at least 9.74%;
(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
2,654 and
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2 Initial Home Equity Loans in Group I and Group II, respectively,
in the amount of $197,397,498.57 and $147,929.28, respectively,
representing 59.84% and 0.21%, respectively, of the aggregate Loan
Balance of the Initial Home Equity Loans in Group I and Group II,
respectively, as of the Cut-Off Date which may provide for a
"balloon" payment due at the end of the 15th year (except for 26
Initial Home Equity Loans in Group I in the amount of $1,334,531.38
which provide for "balloon" payments due within 15 months to 150
months;
(ix) As of the Startup Day (with respect to the Initial Home
Equity Loans) and any Subsequent Transfer Date (with respect to the
Subsequent Home Equity Loans), 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 213 and 8 Initial Home
Equity Loans in Group I and Group II, respectively, with an
outstanding aggregate Loan Balance of $12,695,912.92 and $563,320.93
in Group I and Group II, respectively, that are 30 or more days
Delinquent but not more than 59 days Delinquent and there are 11
Initial Home Equity Loans in Group I with an outstanding aggregate
Loan Balance of $812,104.03 that are 60 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;
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(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act (as amended by the Riegle Community Development
and Regulatory Improvement Act of 1994) and other consumer
protection laws, usury, equal credit opportunity, disclosure and
recording laws;
(xvi) With respect to each Home Equity Loan either (a) an
attorney's opinion of title has been obtained but no title policy
has been obtained (provided that no title policy has been obtained
with respect to not more than 2% of the Original Aggregate Loan
Balance), or (b) a lender's title insurance policy, issued in
standard American Land Title Association form by a title insurance
company authorized to transact business in the state in which the
related Property is situated, in an amount at least equal to the
original balance of such Home Equity 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 are the legal, valid and binding
obligation of the maker thereof and are enforceable in accordance
with their 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
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necessary notifications of insurers, assignments of policies or
interests therein, and establishments of co-insured, joint loss
payee and mortgagee rights in favor of the Trustee;
(xxi) As of the Startup Day, no more than 0.26% 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); each Mortgage and assignment of
Mortgage is in recordable form and is acceptable for recording under
the laws of the jurisdiction in which the property securing such
Mortgage is located;
(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 with respect to the
Initial Home Equity Loans (or the relevant Subsequent Cut-Off Date
with respect to the Subsequent Home Equity Loans) 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;
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(xxx) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, water, flood, earthquake or earth movement;
(xxxi) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie
wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon
such Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxii) No improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property and,
with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Property is lawfully occupied under the
applicable law;
(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 and such Manual conforms in all material respects to the
description thereof set forth in the Prospectus Supplement;
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(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject
property;
(xl) The Home Equity Loans were not selected for inclusion in
the Trust by the Seller on any basis intended to adversely affect
the Trust;
(xli) No more than 6.82% and 4.17% of the aggregate Loan
Balance of the Initial Home Equity Loans in Group I and Group II,
respectively, 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 1.51% 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;
(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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(l) Neither the operation of any of the terms of each Note and
each Mortgage nor the exercise of any right thereunder will render
either the Note or the Mortgage unenforceable, in whole or in part,
nor subject it to any right of rescission, set-off, counterclaim or
defense, including, without limitation, the defense of usury;
(li) Any adjustment to the Coupon Rate on a Home Equity Loan
in Group II has been legal, proper and in accordance with the terms
of the related Note; and
(lii) No Home Equity Loan in Group II is subject to negative
amortization.
(liii) As of the Cut-Off Date (or the Subsequent Cut-Off Date
with respect to the Subsequent Home Equity Loans), the FTC holder
regulation provided in 16 C.F.R. Part 433 applies to none of the
Home Equity Loans.
(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 or the Custodian.
(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 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
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on the Home Equity Loans on or before the Cut-Off Date). The transfer by the
Seller and 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 Seller and the
Depositor.
In the event that either such conveyance or a conveyance pursuant to
Section 3.07 and any Subsequent Transfer Agreement is deemed to be a loan, the
parties intend that the Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Trustee a security
interest in the Trust Estate, and that this Agreement shall constitute a
security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the States of Delaware and Florida, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Initial Home Equity Loans and the other property described above as
collateral and on or prior to the final Subsequent Transfer Date the Seller will
file in such offices a similar UCC-1 financing statement listing the Subsequent
Home Equity Loans so transferred as collateral. The characterization of the
Seller as a debtor and the Depositor as the secured party in such financing
statements is solely for protective purposes and shall in no way be construed as
being contrary to the intent of the parties that this transaction be treated as
a sale of the Seller's entire right, title and interest in the Trust Estate. In
connection with such filing, the Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Depositor's interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance from
the Depositor to the Trustee, the Depositor has filed, in the appropriate office
or offices in the States of Delaware and Florida a UCC-1 financing statement
executed by the Depositor as debtor, naming the Trustee 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
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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 1997-2 under the Pooling and Servicing Agreement
dated as of March 1, 1997" 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 until such information is received; 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); provided further, however, notwithstanding
the delivery of any legal opinions, each assignment of Mortgage shall
be recorded upon the earliest to occur of: (i) reasonable direction by
the Certificate Insurer or (ii) the occurrence of a Servicer
Termination Event;
(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
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make an immediate demand on the Seller to prepare such Mortgage assignments, and
shall inform the Certificate Insurer, in writing, of the Seller's failure to
prepare such Mortgage assignments. Thereafter, the Custodian, on behalf of the
Trustee shall cooperate in executing any documents prepared by the Certificate
Insurer and submitted to the Custodian, on behalf of the Trustee in connection
with this provision. Following the expiration of the 60-day period referred to
in clause (ii) of the preceding paragraph, the Seller shall promptly prepare a
Mortgage assignment for any Mortgage for which original recording information is
subsequently received by the Seller, and shall promptly deliver a copy of such
Mortgage assignment to the Custodian, on behalf of the Trustee. The Seller
agrees that it will follow its normal servicing procedures and attempt to obtain
the original recording information necessary to complete a Mortgage assignment.
In the event that the Seller is unable to obtain such recording information with
respect to any Mortgage prior to the end of the 18th calendar month following
the Startup Day with respect to the Initial Home Equity Loans and the relevant
Subsequent Transfer Date with respect to Subsequent Home Equity Loans and has
not provided to the Custodian, on behalf of the Trustee a Mortgage assignment
with evidence of recording thereon relating to the assignment of such Mortgage
to the Trustee, the Custodian, on behalf of the Trustee shall notify the Seller
of the Seller's obligation to provide a completed assignment (with evidence of
recording thereon) on or before the end of the 20th calendar month following the
Startup Day with respect to the Initial Home Equity Loans and the relevant
Subsequent Transfer Date with respect to Subsequent Home Equity Loans. A copy of
such notice shall be sent by the Custodian, on behalf of the Trustee to the
Certificate Insurer. If no such completed assignment (with evidence of recording
thereon) is provided before the end of such 20th calendar month, the related
Home Equity Loan shall be deemed to have breached the representation contained
in clause (xxii) of Section 3.04(b) hereof; provided, however, that if as of the
end of such 20th calendar month the Seller demonstrates to the satisfaction of
the Certificate Insurer that it is exercising its best efforts to obtain such
completed assignment and, during each month thereafter until such completed
assignment is delivered to the Custodian, on behalf of the Trustee, the Seller
continues to demonstrate to the satisfaction of the Certificate Insurer that it
is exercising its best efforts to obtain such completed assignment, the related
Home Equity Loan will not be deemed to have breached such representation. The
requirement to deliver a completed assignment with evidence of recording thereon
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.
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(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the Seller's order, all of its right, title and interest in
and to such released Home Equity Loan and all the Trust's right, title and
interest to principal and interest due on such released Home Equity Loan after
the applicable Replacement Cut-Off Date; provided, however, that the Trust shall
reserve and retain all right, title and interest in and to payments of principal
and interest due on such released Home Equity Loan on or prior to the applicable
Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, the Seller agrees to
(i) deliver without recourse to the Custodian, on behalf of the Trustee on the
date of delivery of such Qualified Replacement Mortgage the original Note
relating thereto, endorsed in blank or to the order of the Trustee, (ii) cause
promptly to be recorded an assignment in the appropriate jurisdictions, (iii)
deliver the original Qualified Replacement Mortgage and such recorded
assignment, together with original or duly certified copies of any and all prior
assignments, to the Custodian, on behalf of the Trustee within 15 days of
receipt thereof by the Seller (but in any event within 120 days after the date
of conveyance of such Qualified Replacement Mortgage) and (iv) deliver the title
insurance policy, or where no such policy is required to be provided under
Section 3.05(b)(i)(B), the other evidence of title in same required in Section
3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Custodian, on behalf
of the Trustee shall deliver on the date of conveyance of such Qualified
Replacement Mortgage and on the order of the Seller (i) the original Note
relating thereto, endorsed without recourse or representation, to the Seller,
(ii) the original Mortgage so released and all assignments relating thereto and
(iii) such other documents as constituted the File with respect thereto.
(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
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Home Equity Loan and (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Schedule of Home Equity Loans
accurately reflects the information set forth in the File. The Trustee shall
have no responsibility for reviewing any File except as expressly provided in
this subsection 3.06(a). Without limiting the effect of the preceding sentence,
in reviewing any File, the Trustee shall have no responsibility for determining
whether any document is valid and binding, whether the text of any assignment is
in proper form (except to determine if the Trustee is the assignee), whether any
document has been recorded in accordance with the requirements of any applicable
jurisdiction or whether a blanket assignment is permitted in any applicable
jurisdiction, but shall only be required to determine whether a document has
been executed, that it appears to be what it purports to be, and, where
applicable, that it purports to be recorded. The Trustee shall be under no duty
or obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face, nor shall the Trustee be under any duty to
determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Home Equity Loan.
(b) If the Custodian, on behalf of the Trustee during such 45-day
period finds any document constituting a part of a File which is not executed,
has not been received, or is unrelated to the Home Equity Loans identified in
the Schedule of Home Equity Loans, or that any Home Equity Loan does not conform
to the description thereof as set forth in the Schedule of Home Equity Loans,
the Custodian, on behalf of the Trustee shall promptly so notify the Depositor,
the Seller, the Owners and the Certificate Insurer. In performing any such
review, the Custodian, on behalf of the Trustee may conclusively rely on the
Seller as to the purported genuineness of any such document and any signature
thereon. It is understood that the scope of the review of the items delivered by
the Seller pursuant to Section 3.05(b)(i) is limited solely to confirming that
the documents listed in Section 3.05(b)(i) have been executed and received,
relate to the Files identified in the Schedule of Home Equity Loans and conform
to the description thereof in the Schedule of Home Equity Loans. The Seller
agrees to use reasonable efforts 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 paragraphs (b), (c) and (d) 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)
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on any Subsequent Transfer Date sell, transfer, assign, set over and otherwise
convey without recourse, to the Trustee, and the Trustee shall purchase on
behalf of the Trust all of the Seller's right, title and interest in and to any
and all benefits accruing to the Seller from the Subsequent Home Equity Loans
(other than any principal and interest due on or prior to the relevant
Subsequent Cut-Off Date) which the Seller (through the Depositor) is causing to
be delivered to the Custodian, on behalf of the Trustee herewith (and all
substitutions therefor as provided by Section 3.03, 3.04 and 3.06), together
with the related Subsequent Home Equity Loan documents and the Seller's interest
in any Property which secured a Subsequent Home Equity Loan but which has been
acquired by foreclosure or deed in lieu of foreclosure, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the foregoing and
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Subsequent Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing). Notwithstanding anything to the contrary
herein, there shall be no more than three Subsequent Transfer Dates during the
Funding Period.
The transfer by the Seller (through the Depositor) of the Subsequent
Home Equity Loans set forth on the related 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. Any Subsequent Home Equity Loan
transferred shall be included in one and only one of either Group I or Group II.
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
indicate whether such Subsequent Home Equity Loan is to be assigned to
Group I or Group II and 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;
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(v) the Funding Period with respect to the related Group shall not have
ended;
(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; and
(vii) the Seller shall have delivered to the Trustee and the Certificate
Insurer opinions of counsel with respect to the transfer of the Subsequent
Home Equity Loans substantially in the form of the opinions of counsel
delivered to the Trustee and the Certificate Insurer on the Startup Day
with respect to the Initial Home Equity Loans (bankruptcy, corporate and
tax).
(c) The obligation of the Trust to purchase a Subsequent Home Equity
Loan for addition to Group I 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 the Trustee, 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 8.33%; (iv) such Subsequent Home Equity Loan is not secured by a
Property that is a manufactured home; (v) such Subsequent Home Equity Loan 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 $300,000.
(d) The obligation of the Trust to purchase a Subsequent Home Equity
Loan for addition to Group II 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 the Trustee, Standard & Poor's and Moody's): (i) such
Subsequent Home Equity Loan will be an adjustable-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 9.0%; (iv) such Subsequent Home Equity Loan is not secured by a
Property that is a manufactured home; (v) such Subsequent Home Equity Loan will
be in a first lien position; (vi) such Subsequent Home Equity Loan will not be
30 days or more contractually Delinquent as of the Subsequent Cut-Off Date; and
(vii) following the purchase of such Subsequent Home Equity Loan by the Trust,
the Home Equity Loans (including the Subsequent Home Equity Loans) in Group II;
(a) will have a weighted average Coupon Rate of at least 9.74%; (b) will have a
weighted average combined Loan-to-Value Ratio of not more than 70%, (c) will not
have any Balloon Loans; and (e) will have no Subsequent Home Equity Loan with a
Loan Balance in excess of $250,000.
(e) In connection with each Subsequent Transfer Date and, if
applicable, on the Payment Date occurring in April 1997, the Trustee shall
determine: (i) the amount and correct dispositions of the Capitalized Interest
Requirement, Overfunded Interest Amount, Pre-Funding Account Earnings and the
Pre-Funded Amount and (ii) any other necessary matters in connection with the
administration of the Pre- Funding Account and of the Capitalized Interest
Account. In the event that any amounts are released as a result of an error in
calculation to the Owners or Depositor from the Pre-Funding Account or from the
Capitalized Interest Account, such Owners or the Depositor shall immediately
repay such amounts to the
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Trustee or the Trustee shall have the right to withhold such amounts from future
distributions on such Certificates.
On the Payment Date in April 1997, if the Subsequent Home Equity Loans,
in the aggregate, do not comply in all material respects with the conditions
specified in Sections 3.07(c) and (d) above, or there is a proposed change in
the Certificate Insurer credit risk exposure by the Rating Agencies, the
Certificate Insurer may increase the related Specified Subordinated Amount by an
amount necessary to cause such rating, without regard to the related 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 LLP, 180 Maiden Lane, New York, New York 10038-4982
(or at such other location acceptable to the Seller), the Seller will sell and
convey the Initial Home Equity Loans and the money, instruments and other
property related thereto to the Depositor and the Depositor will sell and convey
the Initial Home Equity Loans and the money, instruments and other property
related thereto to the Trustee, and the Trustee will deliver (i) to the
Underwriters, the Class A Certificates with an aggregate Percentage Interest in
each Class equal to 100% registered in the name of Cede & Co. or in such other
names as the Underwriters shall direct, against payment of the purchase price
thereof by wire transfer of immediately available funds to the Trustee and (ii)
to the respective registered owners thereof, Class R Certificates with a
Percentage Interest equal to 99.999%, registered in the name of the initial
purchasers thereof and a Class R Certificate with a Percentage Interest equal to
0.001%, registered in the name of the Tax Matters Person (all such events shall
be referred to herein as the "Closing").
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Class A Certificates, the Seller shall instruct the Trustee to deposit an
amount equal to the Original Aggregate Pre-Funded Amount in the Pre-Funding
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 with respect to the Certificate Insurance Policies). The
Class A Certificates are payable solely from payments received on or with
respect to the Home Equity Loans (net of the Servicing Fees, Trustee Fees,
Premium Amounts and Trustee Reimbursable Expenses), 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, upon the occurrence
of certain events, from Insured Payments. Each Certificate entitles the Owner
thereof to receive monthly on each Payment Date, in order of priority of
distributions with respect to such Class of Certificates as set forth in Section
7.03, a specified portion of such payments with respect to the Home Equity
Loans, certain related Insured Payments, pro rata in accordance with such
Owner's Percentage Interest and certain amounts payable from the Capitalized
Interest Account and from the Pre-Funding Account.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee, any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed cancelled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class A-8 Certificates and the
Class R Certificates shall be in substantially the forms set forth in Exhibits
A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8 and C hereof, respectively.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed on behalf of the Trust, by the
manual signature of one of the Trustee's Authorized Officers. In addition, each
Certificate shall be authenticated by the manual signature of one of the
Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Trustee shall, upon proper authentication by
the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
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No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Owners and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates then Outstanding with the consent of the Certificate
Insurer or if there are no longer any Class A Certificates then outstanding, by
such majority of the Percentage Interests represented by the Class R
Certificates, such Owners shall give the Trustee, the Certificate Insurer and
the Owners prompt written notice of the appointment of such Registrar and of the
location, and any change in the location, of the Register. In connection with
any such appointment the reasonable fees of the Registrar shall be paid, as
expenses of the Trust, pursuant to Section 7.06 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
principal amount or percentage interest of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
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(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the ownership of each
such Class A Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, no Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7 or Class A-8 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, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Seller, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Class A Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class A Certificate as shown in the Register, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Seller advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Seller or the Trustee is unable to locate a
qualified successor or (ii) the Seller at its sole option elects to terminate
the book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Seller may determine that the Class A Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Seller and at the Seller's expense, or such
depository's agent or designee but, if the 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.
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(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.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
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Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificate nor authenticate and make
available any new Class R Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit I.
Each holder of a Class R Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
(b) No other sale or other transfer of record or beneficial ownership
of a Class R Certificate shall be made unless such transfer is exempt from the
registration requirements of the Securities Act, and any applicable state
securities laws or is made in accordance with said Act and laws. In the event
such a transfer is to be made within three years from the Startup Day, (i) in
the case of transfers for which an investment letter in the form of Exhibit J-1
is provided by the transferee, the Trustee or the Seller shall require a written
opinion of counsel acceptable to and in form and substance satisfactory to the
Seller, the Trustee and the Certificate Insurer in the event that such transfer
may be made pursuant to an exemption, describing the applicable exemption and
the basis therefor, from said Act and laws or is being made pursuant to said Act
and laws, which opinion of counsel shall not be an expense of the Seller, the
Depositor, the Trustee, the Trust Estate or the Certificate Insurer; and (ii) in
the form of Exhibit J-1 or J-2, which investment letter shall not be an expense
of the Seller, the Depositor, the Trustee, the Trust Estate or the Certificate
Insurer. The Owner of a Class R Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Certificate Insurer,
the Depositor and the Seller against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
(c) No transfer of a Class R Certificate shall be made unless the
Trustee shall have received either: (i) a representation letter from the
transferee of such Class R Certificate, acceptable to and in form and substance
satisfactory to the Trustee (which may be combined with the investment letter
required by subsection (b) above), to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 406 of ERISA nor a plan or other arrangement
subject to Section 4975 of the Code (collectively, a "Plan"), nor is acting on
behalf of any Plan nor using the assets of any Plan to effect such transfer or
(ii) in the event that any Class R Certificate is purchased by a Plan, or by a
person or entity acting on behalf of any Plan or using the assets of any Plan to
effect such transfer (including the assets of any Plan held in an insurance
company separate or general account), an opinion of counsel, acceptable to and
in form and substance satisfactory to the Trustee, which opinion of counsel
shall not be at the expense of either the Trustee or the Trust, to the effect
that the purchase or holding of any Class R Certificates will not result in the
assets of the Trust being deemed to be "plan assets," will not cause the Trust
to be subject to the fiduciary requirements and prohibited transaction
provisions of ERISA and the Code, and will not subject the Trustee to any
obligation or liability in addition to those expressly undertaken under this
Agreement. Notwithstanding anything else to the contrary herein, any purported
transfer of a Certificate to or on behalf of any Plan without the delivery to
the Trustee of an opinion of counsel as described above shall be null and void
and of no effect.
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(d) No sale or other transfer of any Class A Certificate may be made to
the Depositor, the Seller, the Servicer or any of their respective Affiliates.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) in the case of the Class A Certificates
registered in the name of the Depository, by wire transfer to the Depository or
(ii) by check or draft mailed on each Payment Date or (iii) if requested by any
Owner (other than the Depository) of (A) a Class A Certificate having an
original principal balance of not less than $1,000,000 or (B) a Class R
Certificate having a Percentage Interest of not less than 10% in writing not
later than one Business Day prior to the applicable Record Date (which request
does not have to be repeated unless it has been withdrawn), to such Owner by
wire transfer to an account within the United States designated no later than
five Business Days prior to the related Record Date, made on each Payment Date,
in each case to each Owner of record on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust;
Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee
or by a Paying Agent, and no amounts so withdrawn from the Certificate Account
for payments of Certificates and no Insured Payment shall be paid over to the
Trustee except as provided in this Section.
(b) If the Seller has appointed a Paying Agent pursuant to Section
11.15 hereof, the Trustee will, on the Business Day immediately preceding each
Payment Date, deposit with such Paying Agent in immediately available funds an
aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the Certificate Account for the
Class to which such amounts are due) such sum to be held in trust for the
benefit of the Owners entitled thereto.
(c) The Seller may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Seller shall require the Paying Agent, including the Trustee on
behalf of the Trust to comply with all requirements of the Code and applicable
state and local law with respect to the withholding from any distributions made
by it to any Owner of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid first to the Certificate
Insurer on account of any Reimbursement Amount and second to the Owners of the
Class R Certificates; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates and not to the Certificate Insurer for payment thereof (but
only to the extent of the amounts so paid to the Owners of the Class R
Certificates) and all liability of the Trustee or such Paying Agent with respect
to such trust money shall thereupon cease; provided, however, that the Trustee
or such
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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 Certificate Insurer on account of any Reimbursement Amount or 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
Policies the Trustee's first 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 Policies,
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 are Outstanding, the
Certificate Insurer has 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 (and which does not require Certificate Insurer
consent or direction pursuant to the terms of this Agreement);
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 Policies,
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, a Pre-Funding Account and a Capitalized Interest Account each to be
held by the Trustee in the name of the Trust for the benefit of the Owners of
the Certificates and the Certificate Insurer, as their interests may appear. The
Pre-Funding Account and the Capitalized Interest Account are not assets of the
REMIC Estate.
(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 with respect to Group I (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 from Group I included in such amounts plus (y) any
amounts of related Total Monthly Excess Cashflow from either Group to be applied
on such Payment Date plus (z) any deposit to the Certificate Account relating to
Group I 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 "Group I 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 "Group I Total Available
Funds."
(c) 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 with respect to Group II (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 from Group II included in such amounts plus (y) any
amounts of related Total Monthly Excess Cashflow from either Group to be applied
on such Payment Date plus (z) any deposit to the Certificate Account relating to
Group II from the Pre-Funding Account and the Capitalized Interest Account
expected to be made. The amounts described in clause (x) of the preceding
sentence with respect to each Payment Date are the "Group II 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 "Group II Total
Available Funds."
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Section 7.03 Flow of Funds.
(a)(i) The Trustee shall deposit in the Certificate Account without
duplication, (i) upon receipt, any Group I Insured Payments, the proceeds of any
liquidation of the assets of the Trust insofar as such assets relate to Group I,
all remittances made to the Trustee pursuant to Section 8.08(d)(ii) with respect
to Group I and the Group I Monthly Remittance Amount remitted by the Servicer,
(ii) on the April 1997 Payment Date, the Group I Capitalized Interest
Requirement to be transferred on such Payment Date from the Capitalized Interest
Account, pursuant to Section 7.04(e) hereof and (iii) on the April 1997 Payment
Date, the portion of the amount, if any, to be transferred on such Payment Date
from the Pre-Funding Account pursuant to Section 7.04(c) hereof.
(ii) The Trustee shall deposit in the Certificate Account
without duplication, (i) upon receipt, any Group II Insured Payments,
the proceeds of any liquidation of the assets of the Trust insofar as
such assets relate to Group II, all remittances made to the Trustee
pursuant to Section 8.08(d)(ii) with respect to Group II and the Group
II Monthly Remittance Amount remitted by the Servicer, (ii) on the
April 1997 Payment Date, the Group II Capitalized Interest Requirement
to be transferred on such Payment Date from the Capitalized Interest
Account, pursuant to Section 7.04(e) hereof and (iii) on the April 1997
Payment Date, the portion of the amount, if any, to be transferred on
such Payment Date from the Pre-Funding Account pursuant to Section
7.04(c) hereof.
(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 for each Home Equity Loan
Group 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:
(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 Home Equity Loan Group and Payment Date
plus (y) any Subordination Reduction Amount with respect to
such Home Equity Loan Group and Payment Date (such sum being
the "Total Monthly Excess Cashflow" with respect to such Home
Equity Loan Group and Payment Date) in the following order of
priority:
(A) first, such Total Monthly Excess Cashflow with
respect to each Group shall be allocated to the
payment of the related 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 related
Principal Distribution Amount (excluding any related
Subordination Increase Amount) exceeds (y) the
Available Funds with respect to such Group (net of
the related Trustee Fees, the related Premium Amount,
the related Trustee Reimbursable Expenses and related
Current Interest) and shall be paid as part of the
Principal Distribution Amount pursuant to clause
(iv)(C) and (D) below (the amount of
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such difference being the "Group I Available Funds
Shortfall" with respect to Group I and the "Group II
Available Funds Shortfall" with respect to Group II);
(B) second, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the application described in clause
(A) above shall be allocated against any Available
Funds Shortfall with respect to the other Home Equity
Loan Group;
(C) third, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocations described in clauses
(A) and (B) above shall be paid to the Certificate
Insurer in respect of amounts owed on account of any
Reimbursement Amount with respect to the related Home
Equity Loan Group; and
(D) fourth, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the allocations described in clauses
(A), (B) and (C) above shall be paid to the
Certificate Insurer in respect of any Reimbursement
Amount with respect to the other Home Equity Loan
Group;
(iii) third, the amount, if any, of the Total Monthly
Excess Cashflow with respect to a Home Equity Loan
Group on a Payment Date remaining after the
allocations and payments described in clause (ii)
above (the "Net Monthly Excess Cashflow" for such
Home Equity Loan Group and 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 related
Principal Distribution Amount, which shall be paid
pursuant to clause (iv)(C) or (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 used to reduce to zero, through the payment
to the Owners of the Class A Certificates related to
the other Home Equity Loan Group of a Subordination
Increase Amount included in the other Principal
Distribution Amount pursuant to clause (iv)(E) below,
any Subordination Deficiency Amount, with respect to
such other Home Equity Loan Group as of such Payment
Date; and
(C) third, any Net Monthly Excess Cashflow remaining
after the application described in clauses (A) and
(B) above shall be paid to the Servicer 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 with respect to the related
Home Equity Loan Group, the Trustee shall distribute:
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(A) (I) to the Certificate Insurer the amounts described
in clause (ii)(C) and (D) above and (II) to the
Servicer the amounts described in clause (iii)(C)
above;
(B) to the Owners of each Class of related 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) the Group I Principal Distribution Amount shall be
distributed as follows: (I) to the Owners of the
Class A-7 Certificates an amount equal to the Class
A-7 Lockout Distribution Amount and (II) the
remainder as follows: (i) first, to the Owners of the
Class A-1 Certificates until the Class A-1
Certificate Principal Balance is reduced to zero;
(ii) second, to the Owners of the Class A-2
Certificates until the Class A-2 Certificate
Principal Balance is reduced to zero; (iii) third, to
the Owners of the Class A-3 Certificates until the
Class A-3 Certificate Principal Balance is reduced to
zero; (iv) fourth, to the Owners of the Class A-4
Certificates until the Class A-4 Certificate
Principal Balance is reduced to zero; (v) fifth, to
the Owners of the Class A-5 Certificates until the
Class A-5 Certificate Principal Balance is reduced to
zero; (vi) sixth, to the Owners of the Class A-6
Certificates until the Class A-6 Certificate
Principal Balance is reduced to zero; and (vii)
seventh, to the Owners of the Class A-7 Certificates
until the Class A-7 Certificate Termination Date;
(D) the Group II Principal Distribution Amount shall be
distributed to the Owners of the Class A-8
Certificates until the Class A-8 Certificate
Principal Balance is reduced to zero;
(E) to the Owners of the Class or Classes of Class A
Certificates related to the other Home Equity Loan
Group any amounts specified in clauses (ii)(B) and
(iii)(B) above (such amount with respect to the
Owners of the Fixed Rate Certificates shall be
distributed sequentially);
(F) 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 to the Owners of the Class R Certificates, the
Residual Net Monthly Excess Cashflow, if any, for such Payment
Date.
(c) On any Payment Date during the continuance of any Certificate
Insurer Default, if there is a Subordination Deficit, then the related Principal
Distribution Amount for such Payment Date shall be distributed pro rata to the
Owners of any related Outstanding Class A Certificates on such Payment Date.
(d) Notwithstanding any of the foregoing provisions, the aggregate
amounts distributed on all Payment Dates to the Owners of the related Class A
Certificates on account of principal pursuant to clause (b)(iv)(C) and (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, 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 any Insured Payment from the Certificate Insurer and (ii)
disburse the same to the Owners of the related Class A Certificates as set forth
in Section 7.03(b). Insured Payments disbursed by the Trustee or Paying Agent
from proceeds of the related Certificate Insurance Policy shall not be
considered payment by the Trust, nor shall such payments discharge the
obligation of the Trust with respect to such Class A Certificates and the
Certificate Insurer shall be entitled to receive the Reimbursement Amount
pursuant to Section 7.03(b)(ii)(C) and (D) 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 shall be subject and subordinate to the
preferential rights of the holders of the Class A Certificates to receive
distributions thereon and the ownership interests of such Owners in such
distributions, as described herein. In accordance with the foregoing, the
ownership interests of the Owners of the Class R Certificates in amounts
deposited in the Accounts from time to time shall not vest unless and until such
amounts are distributed in respect of the Class R Certificates in accordance
with the terms of this Agreement. Notwithstanding anything contained in this
Agreement to the contrary, and the Owners of the Class R Certificate shall not
be required to refund any amount properly distributed on the Class R
Certificates pursuant to this Section 7.03.
Section 7.04 Pre-Funding Account and Capitalized Interest
Account.
(a) On the Startup Day, the Trustee will deposit, on behalf of the
Owners of the Class A Certificates and the Certificate Insurer, (i) in the
Pre-Funding Account the Original Group I Pre-Funded Amount from the proceeds of
the sale of the Fixed Rate Certificates and (ii) the Original Group II
Pre-Funded Amount from the proceeds of the sale of the Class A-8 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 connection with such funds transfer,
the Depositor shall additionally inform the Trustee and the Certificate Insurer
whether such Subsequent Home Equity Loans are being transferred to Group I or
Group II. 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 to be transferred to Group I an amount in excess of
the Original Group I Pre-Funded Amount or to release from the Pre-Funding
Account to the Certificate Account with respect to Subsequent Home Equity Loans
to be transferred to Group II an amount in excess of the Original Group II
Pre-Funded Amount.
(c) After giving effect to any reductions in the Pre-Funded Amount with
respect to a Group on or before the Monthly Remittance Date in April 1997, the
Trustee shall withdraw from the Pre-Funding Account the amount (exclusive of any
related Pre-Funding Account Earnings still on deposit
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therein) remaining in the Pre-Funding Account with respect to such Group 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 the first Payment 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 April 1997 Determination Date shall be distributed to
the Owners of the Class A Certificates in accordance with Section 7.03(b)(iv)(C)
and (D).
(h) The Pre-Funding Account and the Capitalized Interest Account shall
not be an asset of the REMIC Estate.
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 for the benefit of the
Owners, 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(j) to be redeemable without penalty no later than the Business Day
immediately preceding the next Payment Date.
(e) All income or other gain from investments in any Account held by
the Trustee shall be deposited in such Account immediately on receipt, and any
loss resulting from such investments shall be charged to such Account, as
appropriate, subject to the requirement of Section 8.08(b) that the Servicer
contribute funds in an amount equal to such loss in the case of the Principal
and Interest Account. For
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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)(F)), 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 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:
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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.
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):
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(1) The aggregate amount on deposit in the Certificate Account
as of the related Determination Date;
(2) The Class A Distribution Amount, with respect to each
Class individually, and all Classes in the aggregate on the next
Payment Date;
(3) The amount of any Subordination Increase Amount for each
Group;
(4) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(5) The application of the amounts described in clauses (1),
(3) and (4) above in respect of the distribution of the Class A
Distribution Amount on such Payment Date in accordance with Section
7.03 hereof;
(6) The Class A Certificate Principal Balance, the aggregate
amount of the principal of each Class of the Class A Certificates to be
paid on such Payment Date and the remaining Certificate Principal
Balance of each Class of Class A Certificates following any such
payment;
(7) The amount, if any, of any Realized Losses for each Group
for the related Remittance Period;
(8) The amount of any Subordination Reduction Amount for each
Group;
(9) For the first Payment Dates, (A) the Pre-Funded Amount
previously used to purchase Subsequent Home Equity Loans, (B) the
Pre-Funded Amount distributed as either a Group I Principal
Distribution Amount or a Group II Principal Distribution Amount, (C)
the Group I and Group II Pre-Funding Account Earnings transferred to
the Capitalized Interest Account and (D) the amounts transferred from
the Capitalized Interest Account to the Certificate Account and the
amount transferred to the Seller, if any; and
(10) The amount by which the Servicing Fee is reduced because
of the Underwater Loans.
Section 7.09 Reports by Trustee to Owners and Certificate
Insurer.
(a) On the Business Day preceding each Payment Date the Trustee shall
transmit a report in writing to each Owner, the Certificate Insurer, Standard &
Poor's and Moody's:
(i)the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments in full or other Prepayments or other recoveries of
principal included therein with respect to Group I and Group II 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);
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(iv) if the distribution (net of any Insured Payment) to the
Owners of any Class of the Class A Certificates on such Payment Date
was less than the related Class A Distribution Amount on such Payment
Date, the related Carry Forward Amount and the allocation thereof to
the related Classes of Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates on such Payment Date;
(vi) the principal amount of each Class of Class A Certificate
(based on a Certificate in the original principal amount of $1,000)
which will be Outstanding and the aggregate Loan Balance of each Group
after giving effect to any payment of principal on such Payment Date;
(vii) the Subordinated Amount and Subordination Deficit for
each Group, 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 with respect to
each Group;
(x) the weighted average Coupon Rate of the Home Equity Loans
in each Group;
(xi) such other information as the Certificate Insurer or any
Owner may reasonably request with respect to Delinquent Home Equity
Loans;
(xii) the weighted average gross margin of the Home Equity
Loan in Group II;
(xiii) the largest home equity loan balance outstanding in
each Group;
(xiv) for Payment Dates during the Funding Period, the
remaining Pre-Funded Amount for each Group; and
(xv) the Class A-8 Pass-Through Rate.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (ii), (ix) and (x) shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.08 hereof.
(b) In addition, on the Business Day preceding each Payment Date the
Trustee will distribute to each Owner, the Certificate Insurer, Standard &
Poor's and Moody's, together with the information described in Subsection (a)
preceding, the following information with respect to each Home Equity Loan Group
and for both Groups in the aggregate 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 Reporting Date:
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(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, and the
Annual Loss Percentage (Rolling Twelve Month); and
(vii) the 90+ Delinquency Percentage and the amount
of 90-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 (including the amount therein relating to each Group) and
the identity of the investments included therein, as the Depositor, the Seller,
any Owner or the Certificate Insurer may from time to time reasonably request.
Without limiting the generality of the foregoing, the Trustee shall, at the
reasonable request of the Depositor, the Seller, any Owner or the Certificate
Insurer transmit promptly to the Depositor, the Seller, any Owner and the
Certificate Insurer copies of all accountings of receipts in respect of the Home
Equity Loans furnished to it by the Servicer and shall notify the Seller and the
Certificate Insurer if any Monthly Remittance Amount has not been received by
the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement, the terms of the respective Home Equity Loans,
and the servicing standards set forth in the FNMA Guide and shall have full
power and authority, acting alone, to do or cause to be done any and all things
in connection with such servicing and administration which it may deem necessary
or desirable but without regard to: (i) any relationship that the Servicer, any
Sub-Servicer or any Affiliate of the Servicer or any Sub-Servicer may have with
the related Mortgagor; (ii) the ownership of any Certificate by the Servicer or
any Affiliate of the Servicer; (iii) the Servicer's obligation to make
Delinquency Advances or Servicing Advances; or (iv) the Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction. It is the intent of the parties hereto
that the Servicer shall have all of the servicing obligations hereunder which a
lender would have under the FNMA Guide (as such provisions relate to second lien
mortgages); provided, however, that to the extent that such standards, such
obligations or the FNMA Guide are amended by FNMA after the date hereof and the
effect of such amendment would be to impose upon the Servicer any material
additional costs or other burdens relating to such servicing obligations, the
Servicer may, at its option, in accordance with the servicing standards set
forth herein, determine not to comply with such amendment.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have the rights and powers of the Servicer which have been
delegated to such Sub-Servicer with respect to such Home Equity Loans under this
Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Trustee to execute and deliver, and may be
authorized and empowered by the Trustee, to execute and deliver, on behalf of
itself, the Owners and the Trustee or any of them, (i) any and all instruments
of satisfaction or cancellation or of partial or full release or discharge and
all other comparable instruments with respect to the Home Equity Loans and with
respect to the Properties, (ii) to institute foreclosure proceedings or obtain a
deed in lieu of foreclosure so as to effect ownership of any Property in the
name of the Servicer on behalf of the Trustee, and (iii) to hold title to any
Property upon such foreclosure or deed in lieu of foreclosure on behalf of the
Trustee; provided, however, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for home equity loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Certificate Insurer, and provided further, however, that Section
8.13(a) and Section 8.14(a) shall each constitute a revocable power of attorney
from the Trustee to the Servicer to execute an instrument of satisfaction (or
assignment of mortgage without recourse) with respect to any Home Equity Loan
held by the Trustee hereunder paid in full or foreclosed (or with respect to
which payment in full has been escrowed). Revocation of the power of attorney
created by the final proviso of the preceding sentence shall take effect upon
(i) the receipt by the Servicer of written notice thereof from the Trustee, (ii)
a Servicer Termination Event or (iii) the termination of the Trust. The Trustee
shall execute
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any documentation furnished to it by the Servicer for recordation by the
Servicer in the appropriate jurisdictions, as shall be necessary to effectuate
the foregoing. Subject to Sections 8.13 and 8.14, the Trustee shall execute a
power of attorney to the Servicer or any Sub-Servicer and furnish them with any
other documents as the Servicer or such Sub-Servicer shall reasonably request to
enable the Servicer and such Sub-Servicer to carry out their respective
servicing and administrative duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the
Trustee, the details concerning the servicing of the Home Equity Loans on
computer generated tape, diskette or other machine readable format.
The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, to (i) assert a claim against the Trust
or (ii) assert jurisdiction over the Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described in
the FNMA Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Note, the Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and Delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
The Servicer may, with the prior written consent of the Certificate
Insurer, enter into Sub-Servicing Agreements for any servicing and
administration of Home Equity Loans with any institution which is acceptable to
the Certificate Insurer and which, (x) is in compliance with the laws of each
state necessary to enable it to perform its obligations under such Sub-Servicing
Agreement, (y) has experience servicing home equity loans that are similar to
the Home Equity Loans and (z) has equity of not less than $5,000,000 (as
determined in accordance with generally accepted accounting principles). The
Servicer shall give notice to the Trustee, the Owners, the Certificate Insurer
and the Rating Agencies of the appointment of any Sub-Servicer (and shall
receive the confirmation of the Rating Agencies that such Sub-Servicer shall not
result in a withdrawal or downgrading by any Rating Agency of the rating or the
shadow rating of the Class A Certificates). For purposes of this Agreement, the
Servicer shall be deemed to have received payments on Home Equity Loans when any
Sub-Servicer has received such payments. Each Sub-Servicer shall be required to
service the Home Equity Loans in accordance with this Agreement and any such
Sub-Servicing Agreement shall be consistent with and not violate the provisions
of this Agreement. Each Sub-Servicing Agreement shall provide that the Trustee
(if acting as successor Servicer) or any other successor Servicer shall have the
option to terminate such agreement
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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.
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
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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 1997-2 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 up to the amount insured by the FDIC or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trust for the benefit of the Owners. Any investment
earnings on funds held in the Principal and Interest Account shall be for the
account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Total Monthly Excess Spread included therein)
by the Servicer. Any investment losses on funds held in the Principal and
Interest Account shall be for the account of the Servicer and promptly upon the
realization of such loss shall be contributed by the Servicer to the Principal
and Interest Account. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings.
(c) The Servicer shall deposit to the Principal and Interest Account on
the Business Day after receipt all principal and interest collections on the
Home Equity Loans due after the Cut-Off Date, including any Prepayments and Net
Liquidation Proceeds, other recoveries or amounts related to the 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
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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, with respect to each Home Equity Loan Group,
only in the following priority and for the following purposes:
(A) on each Monthly Remittance Date, to pay itself the related
Servicing Fees;
(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 for any excess interest
collected from a Mortgagor; 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
Reporting Date, deliver to the Trustee and the Certificate Insurer, a monthly
servicing report, with respect to each Home Equity Loan Group, 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 Reporting Date, with respect to each Home Equity Loan Group, 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.
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".
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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)(C).
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, (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 and (v) expenses incurred
pursuant to Section 8.22. 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)(C). 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)(C).
Section 8.10 Compensating Interest; Repurchase of Home
Equity Loans.
(a) If a Prepayment in full of a Home Equity Loan or a Prepayment of at
least six times a Mortgagor's Monthly Payment occurs during any calendar month,
any difference between (x) the interest collected from the Mortgagor in
connection with such payoff, and (y) the full month's interest at the Coupon
Rate that would be due on the related Due Date for such Home Equity Loan
("Compensating Interest") (but not in excess of the aggregate Servicing Fee for
the related Remittance Period) shall be deposited by the Servicer to the
Principal and Interest Account (or if such difference is an excess, the Servicer
shall retain such excess) on the next succeeding Monthly Remittance Date and
shall be included 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
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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 REMIC 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 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.
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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.
(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
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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 in good faith deems necessary to comply
with this covenant unless the Servicer obtains for the Certificate Insurer and
the Trustee, an opinion of counsel (the expense of which opinion shall be a
Servicing Advance) experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee, addressed to the Certificate Insurer, the
Trustee and the Servicer, to the effect that the holding by the Trust of such
REO Property for any greater period will not result in the imposition of taxes
on "Prohibited Transactions" of the Trust or the REMIC Estate as defined in
Section 860F of the Code or cause the REMIC Estate to fail to qualify as a REMIC
under the REMIC Provisions at any time that any Certificates are outstanding.
Notwithstanding the generality of the foregoing provisions, the Servicer shall
manage, conserve, protect and operate each REO Property for the Owners solely
for the purpose of its prompt disposition and sale in a manner which does not
cause such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by the REMIC
created hereunder 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" and the Servicer shall promptly submit a Liquidation Report
(as defined in the Insurance Agreement) to the Certificate Insurer.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a payment default with respect to such Home Equity Loan
or in the event that a payment default with respect to such Home Equity Loan is
reasonably foreseeable by the Servicer; provided, however, that no such
modification, waiver or amendment shall extend the maturity date of such Home
Equity Loan beyond the Remittance Period related to the Final Scheduled Payment
Date of the latest Class of Class A Certificates remaining in the Trust.
Notwithstanding anything set out in this Section 8.13(c) or elsewhere in this
Agreement to the contrary, the Servicer shall be permitted to modify, waive or
amend any provision of a Home Equity Loan if required by statute or a court of
competent jurisdiction to do so.
(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;
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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 prior written
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, or Subsequent Cut-Off Date, as applicable and any increase in the
Loan-to-Value Ratio shall not exceed 5% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be taken in respect
of 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.
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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
Certificate Insurer, 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 1998, 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.
The Servicer shall deliver to the Trustee, the Certificate Insurer and
the Rating Agencies, promptly after having obtained knowledge thereof but in no
event later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event which with the giving of notice or the lapse
of time would become a Servicer Termination Event.
Section 8.17 Annual Independent Certified Public Accountants'
Reports.
On or before April 30 of each year, commencing in 1998, the Servicer,
at its own expense (or if the Trustee is then acting as Servicer, at the expense
of the Seller, which in no event shall exceed $1,000 per annum), shall cause to
be delivered to the Trustee, the Certificate Insurer, the Depositor, and the
Rating Agencies a letter or letters of a firm of independent, nationally
recognized certified public accountants reasonably acceptable to the Certificate
Insurer stating that such firm has examined the Servicer's overall servicing
operations in accordance with the requirements of the Uniform Single Audit
Procedure for Mortgage Bankers, and stating such firm's conclusions relating
thereto.
Section 8.18 Access to Certain Documentation and Information
Regarding the Home Equity Loans.
The Servicer shall provide to the Trustee, the Certificate Insurer, the
Office of Thrift Supervision (the "OTS"), the FDIC and the supervisory agents
and examiners of each of the FDIC and the OTS (which, in the case of supervisory
agents and examiners, may be required by applicable state and federal
regulations) access to the documentation regarding the Home Equity Loans, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it.
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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(h) hereof for a
successor servicer.
Section 8.20 Removal of Servicer; Retention of Servicer;
Resignation of Servicer.
(a) The Certificate Insurer or the Trustee (with the prior written
consent of the Certificate Insurer) (or, except in the case of item (vi) below,
the Owners, with the consent of the Certificate Insurer pursuant to Section 6.11
hereof) may remove the Servicer upon the occurrence of any of the following
events (each a "Servicer Termination Event"):
(i) The Servicer shall (I) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate action
for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent
of the Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator or custodian or similar entity with
respect to the Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by the
Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of
seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or
more of its obligations hereunder and shall continue in default thereof
for a period of thirty (30) days (one (1) Business Day in the case of a
delay in making a payment required of the Servicer under this
Agreement) after the earlier of (a) actual knowledge of an officer of
the Servicer or (b) receipt of notice from the Trustee or the
Certificate Insurer of said failure; provided, however, that if the
Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial action,
then the cure period may be extended with the written approval of the
Certificate Insurer; or
(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
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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, (B) has equity of not less than $10,000,000 (as determined in
accordance with generally acceptable account principles), (C) is
consented to by the Certificate Insurer (such consent not to be
unreasonably withheld) and (D) agrees to assume the Servicer's
obligations thereunder; 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 by an opinion of counsel
acceptable to the Trustee and the Certificate Insurer at the expense of the
Servicer to such effect which shall be delivered to the Trustee and the
Certificate Insurer.
(e) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the
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Home Equity Loans, including all tax bills, assessment notices, insurance
premium notices and all other documents as well as all original documents then
in the Servicer's possession.
(g) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, the Trustee may (A)
solicit bids for a successor servicer as described below or (B) shall appoint
the Backup Servicer as Servicer. If the Trustee elects to solicit bids for a
successor Servicer, the Trustee agrees to act as Backup Servicer during the
solicitation process and shall assume all duties of the Servicer (except as
otherwise provided in this Agreement). 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)(F) 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 (h) above, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price it 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.
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(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)(F) 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.
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
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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.
Section 8.23 Group II Home Equity Loans.
The Servicer shall enforce each Home Equity Loan in Group II in
accordance with its terms and shall timely calculate, record, report and apply
all interest rate adjustments in accordance with the related Note. The
Servicer's records shall, at all times, reflect the then Coupon Rate and monthly
payment and the Servicer shall timely notify the Mortgagor of any changes to the
Coupon Rate or the Mortgagor's monthly payment. If the Servicer fails to make
either a timely or accurate adjustment to the Coupon Rate or monthly payment or
to notify the Mortgagor of such adjustments, upon the Servicer's discovery of
such error and such continued failure, the Servicer shall pay from its own funds
any shortage. If the Servicer's continued failure after notice thereof to make a
scheduled change affects the Trust's rights to make future adjustments under the
terms of such Group II Home Equity Loan, the Servicer shall repurchase such
Group II Home Equity Loan in accordance with the provisions hereof. Any amounts
paid by the Servicer pursuant to this Section shall not be an advance and shall
not be reimbursable from the proceeds of any Group II Home Equity Loan.
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 Policies 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 of both Home Equity Loan Groups 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 plus all amounts owed to the
Certificate Insurer pursuant to the Insurance Agreement; provided, that in any
case such price shall not be less than the then outstanding Class A Certificate
Principal Balance plus all amounts owed to the Certificate Insurer pursuant to
the Insurance Agreement. 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.
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(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:
(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return of
the REMIC created hereunder 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 Owners of the
Class R Certificates for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Owners of the Class R Certificates all
cash on hand in the Trust Estate (other than cash retained to meet
claims), and the Trust Estate shall terminate at that time.
(c) By their acceptance of the Certificates, the Owners thereof hereby
agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final Tax
Return, which shall be binding upon all successor Owners.
(d) In connection with any such purchase, such Owners of the Class R
Certificates shall provide to the Trustee and the Certificate Insurer an opinion
of counsel at the expense of such Owners experienced in federal income tax
matters acceptable to the Certificate Insurer and the Trustee to the effect that
such purchase and liquidation constitutes a Qualified Liquidation of the REMIC
Estate.
(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.
(f) If the Owners of the Class R Certificates decline to exercise the
option to purchase the Home Equity Loans and REO Properties remaining in the
Trust Estate pursuant to Section 9.02(a), then, provided that Industry Mortgage
Company, L.P. is not then the Servicer, the Certificate Insurer may do so
subject to terms set out in Section 9.02.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that the REMIC created hereunder 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
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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.
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, (c) all amounts
owed to the Certificate Insurer pursuant to the Insurance Agreement and (d) 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, (c) all amounts owed to the
Certificate Insurer pursuant to the Insurance Agreement and (d) any Delinquency
Advances which the Servicer has theretofore failed to remit. In connection with
such
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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.
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 (unless the Servicer shall have resigned or been
terminated and a successor Servicer shall not have been appointed pursuant to
the terms of this Agreement), 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 or an Authorized Officer shall have actual
knowledge 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.
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.
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(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;
(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;
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(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 or the Certificate Insurer (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 with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
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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
7.03(b)(iv)(F), 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 such amounts that are Trustee Reimbursable Expenses and (B) Section
7.03(b)(iv)(F) with respect to the remainder of such amounts, subject in the
case of clause (B), to Sections 10.01(e) and 10.01(g). The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by the
Seller and held harmless against any loss, liability or reasonable expenses
incurred by the Trustee in performing its duties as Tax Matters Person for the
REMIC created under this Agreement, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of its duties as Tax Matters Person for the REMIC created hereunder.
The provisions of this Section 10.07 shall survive the termination of this
Agreement.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and the Owners of a majority of
the Percentage Interests of the Class A Certificates and having a deposit rating
of at least A- from Standard & Poor's and A2 by Moody's. If such Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
or association shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall, upon the request of the Seller with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld) or of the
Certificate Insurer, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
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(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
11.03 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 Owners of the majority of Percentage Interests of
the Class A Certificates then Outstanding. If within one year after such
resignation, removal or incapability or the occurrence of such vacancy, a
successor Trustee shall be appointed by act of the Certificate Insurer or the
Owners of a majority of the Percentage Interests represented by the Class A
Certificates then Outstanding with the consent of the Certificate Insurer, the
successor Trustee so appointed shall forthwith upon its acceptance of such
appointment become the successor Trustee and supersede the successor Trustee
appointed by the Depositor. If no successor Trustee shall have been so appointed
by the Depositor or the Owners and shall have accepted appointment in the manner
hereinafter provided, any Owner may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint a successor Trustee.
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(g) The Servicer 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.
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.
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(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.
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 and the Certificate Insurer,
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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 and the Certificate Insurer.
Any separate Trustee or Co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or Co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
END OF ARTICLE X
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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
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of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any opinion of
counsel may also be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer of the
Trustee, stating that the information with respect to such matters is in the
possession of the Trustee, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with 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.
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)
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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.
Section 11.10 Legal Holidays.
In any case where the date of 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 (with the exception of any Monthly Remittance Date or any Monthly
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Reporting Date) 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
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. In any case where
the date of any Monthly Remittance Date or any Monthly Reporting Date shall not
be a Business Day, then payment or mailing need not be made on such date, but
must be made on the preceding 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 written approval of the Certificate
Insurer but without the giving of notice to or the receipt of the consent of the
Owners, amend this Agreement, and the Trustee shall consent to the amendment for
the purposes of (i) if accompanied by an approving opinion of counsel which
shall not be at the expense of the Trustee experienced in federal income tax
matters, removing the restriction against the transfer of a Class R Certificate
to a Disqualified Organization (as such term is defined in the Code), (ii)
complying with the requirements of the Code including any amendments necessary
to maintain REMIC status of the REMIC Estate (other than the Pre-Funding Account
and the Capitalized Interest Account), (iii) curing any ambiguity, (iv)
correcting or supplementing any provisions of this Agreement which are
inconsistent with any other provisions of this Agreement or (v) for any other
purpose, provided that in the case of clause (v), such amendment shall not
adversely affect in any material respect any Owner. Any such amendment shall be
deemed not to adversely affect in any material respect any Owner if there is
delivered to the Trustee written notification from each Rating Agency that such
amendment will not cause such Rating Agency to reduce its then current rating
assigned to the Class A Certificates without regard to the related 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 related
Certificate Insurance Policy.
(b) The Certificate Insurer and the Rating Agencies shall be provided
by the Seller with copies of any amendments to this Agreement, together with
copies of any opinions or other documents or instruments executed in connection
therewith.
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(c) Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an opinion of counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust pursuant to the REMIC Provisions or cause the
REMIC created hereunder 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 REMIC Estate shall constitute,
and that the affairs of the REMIC Estate shall be conducted so as to qualify it
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 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 REMIC created
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hereunder using a calendar year as the taxable year for such REMIC; (ii) in the
related first such tax return, make (or cause to be made) an election satisfying
the requirements of the REMIC Provisions, on behalf of the REMIC created
hereunder, for it to be treated as a REMIC; (iii) at the Tax Matters Person's
expense, prepare and forward, or cause to be prepared and forwarded, to the
Owners all information, reports or tax returns required with respect to the
REMIC created hereunder, including Schedule Q to Form 1066, as, when and in the
form required to be provided to the Owners, and to the Internal Revenue Service
and any other relevant governmental taxing authority in accordance with the
REMIC Provisions and any other applicable federal, state or local laws,
including without limitation information reports relating to "original issue
discount" as defined in the Code based upon the prepayment assumption and
calculated by using the "Issue Price" (within the meaning of Section 1273 of the
Code) of the Certificates of the related Class; provided that the tax return
filed on Schedule Q to Form 1066 shall be prepared and forwarded to the Owners
of the Class R Certificates no later than 50 days after the end of the period to
which such tax return related; (iv) not take any action or omit to take any
action that would cause the termination of the REMIC status of the REMIC created
hereunder, except as provided under this Agreement; (v) represent, the Trust or
the REMIC created hereunder in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to a taxable year of the Trust or the
REMIC created hereunder, enter into settlement agreements with any governmental
taxing agency, extend any statute of limitations relating to any tax item of the
Trust or the REMIC created hereunder, and otherwise act on behalf of the Trust
or the REMIC created hereunder in relation to any tax matter involving the Trust
or the REMIC created hereunder (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; (vii) make available
information necessary for the computation of any tax imposed (A) on transferor
of residual interests to certain Disqualified Organizations or (B) on
pass-through entities, any interest in which is held by a Disqualified
Organization; and (viii) acquire and hold the Tax Matters Person Residual
Interest. The obligations of the Trustee or such other designated Tax Matters
Person pursuant to this Section 11.16 shall survive the termination or discharge
of this Agreement.
In addition to the foregoing, the Tax Matters Person shall prepare and
forward, or cause to be prepared and forwarded, to the Seller as long as it is
an Owner of a Class R Certificate each year, beginning in December 1997, on or
before the twenty-seventh day (or if such day is not a business day, on the next
succeeding business day) of the month of (1) March (beginning in 1997), with
respect to the period January 1 to March 31, (2) May, with respect to the period
April 1 to May 31, (3) August, with respect to the period June 1 to August 31
and (4) December, with respect to the period September 1 to December 31, an
estimate of such Owner's allocable portion of taxable income or net loss, excess
inclusions and investment expenses for the related period to the extent such
amounts are required to be furnished on Schedule Q to Form 1066. Such estimates
shall be made to the extent of and based upon information provided to the Tax
Matters Person by the Servicer (which information may consist of actual
information related to payments received on the Home Equity Loans, except that
the estimate with respect to any month for which actual information is not
available may be based on the payment history for prior months and an assumption
of prepayments of the Home Equity Loans as provided by the Servicer). The legal
expenses and costs of any action or proceeding resulting from or relating to the
estimates provided by the Tax Matters Person pursuant to this Section 11.16(a)
and any liability resulting therefrom shall constitute expenses of the Servicer
and the Trustee shall be entitled to reimbursement therefor from the
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Servicer unless such legal expenses, costs or liability are incurred by reason
of the Trustee willful misfeasance, bad faith or gross negligence.
(b) The Seller, the Depositor, the Trustee and the Servicer covenant
and agree for the benefit of the Owners and the Certificate Insurer (i) to take
no action which would result in the termination of REMIC status for the REMIC
created hereunder, (ii) not to engage in any "prohibited transaction", as such
term is defined in Section 860F(a)(2) of the Code, (iii) not to engage in any
other action which may result in the imposition on the Trust of any other taxes
under the Code and (iv) to cause the Servicer not to take or engage in any such
action, to the extent the Seller is aware of any such proposed action by the
Servicer.
(c) The REMIC created hereunder 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) None of the Depositor, the Seller or the Trustee shall enter into
any arrangement by which the Trustee will receive a fee or other compensation
for services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
the Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an opinion of counsel experienced
in federal income tax matters acceptable to the Certificate Insurer to the
effect that such transaction does not result in a tax imposed on the Trustee or
cause a termination of REMIC status for the REMIC created hereunder; 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 in the manner provided in Article VII.
Section 11.17 Additional Limitation on Action and Imposition
of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer at the expense
of the party seeking to take such action but in no event at the expense of the
Trust to the effect that such transaction does not result in a tax imposed on
the Trust or the REMIC created hereunder or cause a termination of REMIC status
for the REMIC created hereunder, (i) sell any assets in the Trust Estate, (ii)
accept any contribution of assets after the Startup Day (other than Subsequent
Home Equity Loans), (iii) allow the Servicer to foreclose upon any Home Equity
Loan if such foreclosure would result in a tax on the Trust or the REMIC created
hereunder or cause termination of the REMIC status for the REMIC created
hereunder or (iv) agree to any modification of this Agreement.
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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 REMIC created hereunder 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 the REMIC created hereunder
for all purposes of the Code and such Tax Matters Person will perform, or cause
to be performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Tax Matters Person for the REMIC created hereunder shall be the Trustee as long
as it owns a Class R Certificate. If the Trustee does not own a Class R
Certificate, the Tax Matters Person may be any other entity that owns a Class R
Certificate and accepts a designation hereunder as Tax Matters person by
delivering an affidavit in the form of Exhibit I.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during any period in which
there exists a Certificate Insurer Default; provided, that the right of the
Certificate Insurer to receive the Premium Amount shall not be suspended if such
Certificate Insurer Default was a default other than a default under clause (a)
of the definition thereof. At such time as the Class A Certificates are no
longer Outstanding hereunder and the Certificate Insurer has received all
Reimbursement Amounts, the Certificate Insurer's rights hereunder shall
terminate.
Section 11.20 Reserved.
Section 11.21 Third Party Rights.
The Trustee, the Seller, the Depositor and the Owners agree that the
Certificate Insurer shall be deemed a third-party beneficiary of this Agreement
as if it were a party hereto.
Section 11.22 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
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The Trustee: The Chase Manhattan Bank
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Advanced Structured Products
Group
(212) 946-8600
(212) 946-3240 - Fax
The Depositor: IMC Securities, Inc.
3450 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: MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management -
Structured Finance (IPM-SF) (IMC Home
Equity Loan Pass-Through Certificates,
Series 1997-2)
Tel: (914) 765-3799
Fax: (914) 273-4545
The Underwriters Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Attention: Asset-Backed Securities
Tel: (212) 272-2000
Fax: (212) 272-7294
Nomura Securities International, Inc.
Two World Financial Center
Building B, 21st Floor
New York, New York 10281-1198
Attention: Fixed Income Structured
Finance Group
Tel: (212) 667-2266
Fax: (212) 667-1391
121
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PaineWebber Incorporated
1285 Avenue of the Americas
11th Floor
New York, New York 10019
Attention: ____________________
Tel: (212) 713-8601
Fax: (212) 713-7999
Moody's: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: The Residential Mortgage
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-0355
Standard & Poor's: Standard & Poor's Ratings Services, a
division of the McGraw-Hill Companies
26 Broadway
15th Floor
New York, New York 10004
Attention: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 208-8365
Section 11.23 Rule 144A Information. For so long as any of the Class R
Certificates are "restricted securities" within the meaning of Rule 144A under
the Securities Act, the Servicer agrees to provide to any Owner of the Class R
Certificate and to any prospective purchaser of Class R Certificates designated
by such an Owner, upon the request of such Owner or prospective purchaser, the
information specified below which is intended to satisfy the condition set forth
in Rule 144A(d)(4) under the Securities Act; provided that this Section 11.23
shall require, as to the Trustee or the Servicer, only that the Servicer provide
publicly available information regarding it or the Trustee in response to any
such request; and provided further that the Servicer shall be obligated to
provide only such basic, material information concerning the structure of the
Class R Certificates and distributions thereon, the nature, performance and
servicing of the Home Equity Loans supporting the Certificates, and any credit
enhancement mechanism, if any, associated with the Certificates. Any recipient
of information provided pursuant to this Section 11.23 shall agree that such
information shall not be disclosed or used for any purpose other than the
evaluation of the Class R Certificates by the prospective purchaser. The Trustee
shall have no responsibility for the sufficiency under Rule 144A of any
information so provided by the Servicer to any Owner or prospective purchaser of
Class R Certificates.
END OF ARTICLE XI
122
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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) In the event that an Insured Payment becomes due pursuant
to the terms of a Certificate Insurance Policy, the Trustee shall submit a
Notice (in the form attached to such Certificate Insurance Policy) in accordance
with the terms of such Certificate Insurance Policy.
(b) The Trustee shall establish a separate special purpose
trust account for the benefit of the Owners of the Class A Certificates and the
Certificate Insurer referred to herein as the "Policy Payments Account" over
which the Trust shall have exclusive control and sole right of withdrawal. The
Trustee shall deposit any amount paid under a Certificate Insurance Policy in
the Policy Payments Account and distribute such amount only for purposes of
payment to the Owners of the related Class A Certificates of the Insured
Payments for which a claim was made and such amount may not be applied to
satisfy any costs, expenses or liabilities of the Servicer, the Seller, the
Depositor, the Custodian, the Trustee or the Trust. Amounts paid under the
related 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 related Class A Certificates in accordance with Section
7.03. It shall not be necessary for such payments to be made by checks or wire
transfers separate from the checks or wire transfers used to pay the Insured
Payments with other funds available to make such payment. However, the amount of
any payment of principal of or interest on the related Class A Certificates to
be paid from funds transferred from the Policy Payments Account shall be noted
as provided in paragraph (c) below in the Register and in the statement to be
furnished to Owners of the Class A Certificates pursuant to Section 7.08. Funds
held in the Policy Payments Account shall not be invested by the Trustee.
On any Payment Date with respect to which a claim has been
made under the Certificate Insurance Policy, the amount of funds received by the
Trustee as a result of any claim under the Certificate Insurance Policy, to the
extent required to make the Insured Payment on such Payment Date shall be
withdrawn from the Policy Payments Account and deposited in the Certificate
Account and applied by the Trustee, together with the other funds to be
withdrawn from the Certificate Account, directly to the payment in full of the
Insured Payment due on the related Class of Class A Certificates. Funds received
by the Trustee as a result of any claim under the Certificate Insurance Policies
shall be deposited by the Trustee in the Policy Payments Account and used solely
for payment to the Owners of
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the Class A Certificates may not be applied to satisfy any costs, expenses or
liabilities of the Servicer, the Seller, the Depositor, the Custodian, the
Trustee or the Trust. Any funds remaining in the Policy Payments Account on the
first Business Day following a Payment Date shall be remitted to the Certificate
Insurer, pursuant to the instructions of the Certificate Insurer, by the end of
such Business Day.
(c) The Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Class A Certificate
from moneys received under the Certificate Insurance Policies. 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 (as defined in the Certificate Insurance Policies) of any
proceeding or the institution of any action, of which an Authorized Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Class A
Certificates. Each Owner of a Class A Certificate by its purchase of such
Certificate, the Servicer and the Trustee hereby agree that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a Preference Claim direct
all matters relating to such Preference Claim, including without limitation, (i)
the direction of any appeal of any order relating to such Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the Servicer, the Trustee and Owner
of Class A Certificate in the conduct of any such Preference Claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Preference
Claim.
Section 12.03 Effect of Payments by the Certificate Insurer;
Subrogation.
Anything herein to the contrary notwithstanding, any payment
with respect to principal of or interest on any of the Class A Certificates
which is made with moneys received pursuant to the terms of either of the
Certificate Insurance Policies shall not be considered payment of such
Certificates from the Trust and shall not result in the payment of or the
provision for the payment of the principal of or interest on such Certificates
within the meaning of Section 7.03. The Depositor, the Servicer and the Trustee
acknowledge, and each Owner by its acceptance of a Certificate agrees, that
without the need for any further action on the part of the Certificate Insurer,
the Depositor, the Servicer, the Trustee or the Registrar (a) to the extent the
Certificate Insurer makes payments, directly or indirectly, on account of
principal of or interest on any Class A Certificates to the Owners of such
Certificates, the Certificate Insurer will be fully subrogated to the rights of
such Holders to receive such principal and interest from the Trust and (b) the
Certificate Insurer shall be paid such principal and interest but only from the
sources and in the manner provided herein for the payment of such principal and
interest.
The Trustee, the Seller, the Depositor and the Servicer shall
cooperate in all respects with any reasonable request by the Certificate Insurer
for action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Owners as otherwise set forth therein.
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.
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Section 12.05 Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of
this Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 12.06 Rights to the Certificate Insurer To Exercise
Rights of Owners.
By accepting its Certificate, each Owner of a Class A
Certificate agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of the Owners of
the Class A Certificates as specified under this Agreement without any further
consent of the Owners of the Class A Certificates.
END OF ARTICLE XII
125
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
IMC SECURITIES, INC.
as Depositor
By: /s/ George Nicholas
------------------------------
Title: Chief Executive Officer
---------------------------
INDUSTRY MORTGAGE COMPANY, L.P., as Seller
By: Industry Mortgage Corporation,
as General Partner
By: /s/ George Nicholas
-----------------------------
Title: Chief Executive Officer
----------------------------
INDUSTRY MORTGAGE COMPANY, L.P., as Servicer
By: Industry Mortgage Corporation,
as General Partner
By: /s/ George Nicholas
-----------------------------
Title: Chief Executive Officer
---------------------------
THE CHASE MANHATTAN BANK
as Trustee
By: /s/ Eileen Rooney
-----------------------------
Title: Trust Officer
---------------------------
<PAGE>
STATE OF FLORIDA )
: ss.:
COUNTY OF HILLSBOROUGH )
On the 20th day of March, 1997, before me personally came George
Nicholas to me known, who, being by me duly sworn, did each depose and say that
he resides at 5003 Paloma Drive, Tampa, FL 33624; that he is CEO 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
/s/ Jennifer L. Ellis
-------------------------
Notary Public
<PAGE>
STATE OF FLORIDA )
: ss.:
COUNTY OF HILLSBOROUGH )
On the 20th day of March, 1997, before me personally came George
Nicholas, to me known, who, being by me duly sworn, did depose and say that he
resides at 5003 Paloma Drive, Tampa, FL 33624; that he is CEO 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
/s/ Jennifer L. Ellis
--------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 20th day of March, 1997, before me personally came Eileen
Rooney, to me known, who, being by me duly sworn did depose and say that he/she
resides at Hoboken, New Jersey; that he/she is a Trust Officer 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
/s/ James A. Nash
-------------------------
Notary Public
<PAGE>
SCHEDULE I-A
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
<PAGE>
SCHEDULE I-B
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1997-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Group I Home Equity Loans and certain
other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1997-2") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-1-
---------------
CUSIP
$ March __, 1997
- - ----------------------- ----------------- ----------------
Original Class A-1 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
---------------------
Registered Owner
A-1-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group I (other
than any principal and interest due thereon on or prior to March 1, 1997 whether
or not received) listed in Schedule I-A to the Pooling and Servicing Agreement
which the Seller is causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee and the Subsequent Home Equity Loans
in Group I (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-A to any Subsequent Transfer Agreement which the Seller will cause to
be delivered to the Depositor and the Depositor will cause to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts allocable to Group I as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-1 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-1
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 21, 1997 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 21, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-1-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1997-2, Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 1997 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1997-2 Home Equity Loan Pass-Through
Certificates, Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates"), Class A-8 (the "Class A-8 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates and the Class A-8 Certificates shall be together referred
to as the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 20th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing April 21, 1997, the Owners of the Class A-1 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-1 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-1 Certificates. The Percentage Interest of each
Class A-1 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-1 Certificate on the Startup Day by the aggregate Class A-1
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policies to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the Insurance
Agreement.
Upon receipt of amounts under the Certificate Insurance Policies on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement
A-1-3
<PAGE>
such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of
their affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policies,
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-1
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-1 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-1 Certificates and shall receive all future distributions of the Class
A-1 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee, at their expense, an
opinion of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the
A-1-4
<PAGE>
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date. Under certain circumstances, the
Certificate Insurer may also exercise such purchase rights if the owners of the
Class R Certificates do not do so. In addition, under certain circumstances
relating to the qualification of the REMIC as a REMIC under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-1 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are exchangeable
A-1-5
<PAGE>
for new Class A-1 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-1-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as
Trustee
By: __________________________
Title: _________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: _________________________
Title: _________________________
A-1-7
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1997-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Group I Home Equity Loans and certain
other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1997-2") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-2-
---------------
CUSIP
$ March __, 1997
- - ----------------------- ----------------- ----------------
Original Class A-2 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
---------------------
Registered Owner
A-2-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group I (other
than any principal and interest due thereon on or prior to March 1, 1997 whether
or not received) listed in Schedule I-A to the Pooling and Servicing Agreement
which the Seller is causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee and the Subsequent Home Equity Loans
in Group I (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-A to any Subsequent Transfer Agreement which the Seller will cause to
be delivered to the Depositor and the Depositor will cause to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts allocable to Group I as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-2 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-2
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 21, 1997 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 21, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-2-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1997-2, Home Equity Loan Pass-Through
Certificates, Class A-2 (the "Class A-2 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 1997 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1997-2 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates"), Class A-8 (the "Class A-8 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates and the Class A-8 Certificates shall be together referred
to as the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 20th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing April 21, 1997, the Owners of the Class A-2 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-2 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-2 Certificates. The Percentage Interest of each
Class A-2 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-2 Certificate on the Startup Day by the aggregate Class A-2
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policies to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the Insurance
Agreement.
Upon receipt of amounts under the Certificate Insurance Policies on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement
A-2-3
<PAGE>
such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of
their affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policies
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-2
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-2 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-2 Certificates and shall receive all future distributions of the Class
A-2 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee, at their expense, an
opinion of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the
A-2-4
<PAGE>
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date. Under certain circumstances, the
Certificate Insurer may also exercise such purchase rights if the owners of the
Class R Certificates do not do so. In addition, under certain circumstances
relating to the qualification of the REMIC as a REMIC under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Certificates are exchangeable
A-2-5
<PAGE>
for new Class A-2 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-2-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By: __________________________
Title:__________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ___________________________
Title:___________________________
A-2-7
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1997-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Group I Home Equity Loans and certain
other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1997-2") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-3-
---------------
CUSIP
$ March __, 1997
- - ----------------------- ----------------- ----------------
Original Class A-3 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
---------------------
Registered Owner
A-3-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group I (other
than any principal and interest due thereon on or prior to March 1, 1997 whether
or not received) listed in Schedule I-A to the Pooling and Servicing Agreement
which the Seller is causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee and the Subsequent Home Equity Loans
in Group I (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-A to any Subsequent Transfer Agreement which the Seller will cause to
be delivered to the Depositor and the Depositor will cause to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts allocable to Group I as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-3 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-3
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 21, 1997 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 21, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-3-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1997-2, Home Equity Loan Pass-Through
Certificates, Class A-3 (the "Class A-3 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 1997 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1997-2 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class
A-2 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates"), Class A-8 (the "Class A-8 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates and the Class A-8 Certificates shall be together referred
to as the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 20th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing April 21, 1997, the Owners of the Class A-3 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-3 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-3 Certificates. The Percentage Interest of each
Class A-3 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-3 Certificate on the Startup Day by the aggregate Class A-3
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policies to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the Insurance
Agreement.
Upon receipt of amounts under the Certificate Insurance Policies on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement
A-3-3
<PAGE>
such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of
their affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policies
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-3
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-3 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-3 Certificates and shall receive all future distributions of the Class
A-3 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee, at their expense, an
opinion of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the
A-3-4
<PAGE>
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date. Under certain circumstances, the
Certificate Insurer may also exercise such purchase rights if the Owners of the
Class R Certificates do not do so. In addition, under certain circumstances
relating to the qualification of the REMIC as a REMIC under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-3 Certificates are exchangeable
A-3-5
<PAGE>
for new Class A-3 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-3-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By: _______________________________
Title:_______________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title:_____________________________
A-3-7
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1997-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Group I Home Equity Loans and certain
other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1997-2") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-4-
---------------
CUSIP
$ March __, 1997
- - ----------------------- ----------------- ----------------
Original Class A-4 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
---------------------
Registered Owner
A-4-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group I (other
than any principal and interest due thereon on or prior to March 1, 1997 whether
or not received) listed in Schedule I-A to the Pooling and Servicing Agreement
which the Seller is causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee and the Subsequent Home Equity Loans
in Group I (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-A to any Subsequent Transfer Agreement which the Seller will cause to
be delivered to the Depositor and the Depositor will cause to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts allocable to Group I as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-4 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-4
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 21, 1997 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 21, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-4-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1997-2, Home Equity Loan Pass-Through
Certificates, Class A-4 (the "Class A-4 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 1997 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities, Inc.
in its capacity as Depositor (the "Depositor") and The Chase Manhattan Bank, a
New York banking corporation, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as IMC Home
Equity Loan Trust 1997-2 Home Equity Loan Pass-Through Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-5 (the "Class A-5 Certificates"),
Class A-6 (the "Class A-6 Certificates"), Class A-7 (the "Class A-7
Certificates"), Class A-8 (the "Class A-8 Certificates") and Class R (Residual
Interest) (the "Class R Certificates"). The Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates, the
Class A-5 Certificates, the Class A-6 Certificates, the Class A-7 Certificates
and the Class A-8 Certificates shall be together referred to as the "Class A
Certificates" and the Class A Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
On the 20th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing April 21, 1997, the Owners of the Class A-4 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-4 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-4 Certificates. The Percentage Interest of each
Class A-4 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-4 Certificate on the Startup Day by the aggregate Class A-4
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policies to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the Insurance
Agreement.
Upon receipt of amounts under the Certificate Insurance Policies on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement
A-4-3
<PAGE>
such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of
their affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policies
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-4
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-4 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-4 Certificates and shall receive all future distributions of the Class
A-4 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee, at their expense, an
opinion of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the
A-4-4
<PAGE>
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date. Under certain circumstances, the
Certificate Insurer may also exercise such purchase rights if the Owners of the
Class R Certificates do not do so. In addition, under certain circumstances
relating to the qualification of the REMIC as a REMIC under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-4 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-4 Certificates are exchangeable
A-4-5
<PAGE>
for new Class A-4 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-4-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title: ____________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: ______________________________
Title:______________________________
A-4-7
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1997-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Group I Home Equity Loans and certain
other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1997-2") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-5-
---------------
CUSIP
$ March __, 1997
- - ----------------------- ----------------- ----------------
Original Class A-5 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
---------------------
Registered Owner
A-5-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group I (other
than any principal and interest due thereon on or prior to March 1, 1997 whether
or not received) listed in Schedule I-A to the Pooling and Servicing Agreement
which the Seller is causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee and the Subsequent Home Equity Loans
in Group I (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-A to any Subsequent Transfer Agreement which the Seller will cause to
be delivered to the Depositor and the Depositor will cause to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts allocable to Group I as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-5 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-5
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 21, 1997 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 21, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-5-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1997-2, Home Equity Loan Pass-Through
Certificates, Class A-5 (the "Class A-5 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 1997 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1997-2 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class
A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the
"Class A-4 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates"), Class A-8 (the "Class A-8 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates and the Class A-8 Certificates shall be together referred
to as the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 20th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing April 21, 1997, the Owners of the Class A-5 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-5 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-5 Certificates. The Percentage Interest of each
Class A-5 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-5 Certificate on the Startup Day by the aggregate Class A-5
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policies to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the Insurance
Agreement.
Upon receipt of amounts under the Certificate Insurance Policies on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement
A-5-3
<PAGE>
such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of
their affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policies
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-5
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-5 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-5 Certificates and shall receive all future distributions of the Class
A-5 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee, at their expense, an
opinion of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the
A-5-4
<PAGE>
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date. Under certain circumstances, the
Certificate Insurer may also exercise such purchase rights if the Owners of the
Class R Certificates do not do so. In addition, under certain circumstances
relating to the qualification of the REMIC as a REMIC under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendment. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-5 Certificates are exchangeable
A-5-5
<PAGE>
for new Class A-5 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-5-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title:______________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title: ____________________________
A-5-7
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1997-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Group I Home Equity Loans and certain
other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1997-2") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-6-
---------------
CUSIP
$ March __, 1997
- - ----------------------- ----------------- ----------------
Original Class A-6 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
---------------------
Registered Owner
A-6-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group I (other
than any principal and interest due thereon on or prior to March 1, 1997 whether
or not received) listed in Schedule I-A to the Pooling and Servicing Agreement
which the Seller is causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee and the Subsequent Home Equity Loans
in Group I (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-A to any Subsequent Transfer Agreement which the Seller will cause to
be delivered to the Depositor and the Depositor will cause to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts allocable to Group I as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-6 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-6
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 21, 1997 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 21, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-6-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1997-2, Home Equity Loan Pass-Through
Certificates, Class A-6 (the "Class A-6 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 1997 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1997-2 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class
A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the
"Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-7
(the "Class A-7 Certificates"), Class A-8 (the "Class A-8 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates and the Class A-8 Certificates shall be together referred
to as the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 20th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing April 21, 1997, the Owners of the Class A-6 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-6 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-6 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-6 Certificates. The Percentage Interest of each
Class A-6 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-6 Certificate on the Startup Day by the aggregate Class A-6
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policies to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the Insurance
Agreement.
Upon receipt of amounts under the Certificate Insurance Policies on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement
A-6-3
<PAGE>
such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of
their affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policies
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-6
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-6 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-6 Certificates and shall receive all future distributions of the Class
A-6 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee, at their expense, an
opinion of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the
A-6-4
<PAGE>
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date. Under certain circumstances, the
Certificate Insurer may also exercise such purchase rights if the Owners of the
Class R Certificates do not do so. In addition, under certain circumstances
relating to the qualification of the REMIC as a REMIC under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendment. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-6 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are exchangeable
A-6-5
<PAGE>
for new Class A-6 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-6-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title:______________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title: ____________________________
A-6-7
<PAGE>
EXHIBIT A-7
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1997-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-7
(_____% Pass-Through Rate)
Representing Certain Interests in a Pool of Group I Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Group I Home Equity Loans and certain
other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1997-2") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-7-
---------------
CUSIP
$ March __, 1997
- - ----------------------- ----------------- ----------------
Original Class A-7 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
---------------------
Registered Owner
A-7-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group I (other
than any principal and interest due thereon on or prior to March 1, 1997 whether
or not received) listed in Schedule I-A to the Pooling and Servicing Agreement
which the Seller is causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee and the Subsequent Home Equity Loans
in Group I (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-A to any Subsequent Transfer Agreement which the Seller will cause to
be delivered to the Depositor and the Depositor will cause to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts allocable to Group I as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-7 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-7
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 21, 1997 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 21, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-7-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1997-2, Home Equity Loan Pass-Through
Certificates, Class A-7 (the "Class A-7 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 1997 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1997-2 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class
A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the
"Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6
(the "Class A-6 Certificates"), Class A-8 (the "Class A-8 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates and the Class A-8 Certificates shall be together referred
to as the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 20th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing April 21, 1997, the Owners of the Class A-7 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-7 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-7 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-7 Certificates. The Percentage Interest of each
Class A-7 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-7 Certificate on the Startup Day by the aggregate Class A-7
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policies to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the Insurance
Agreement.
Upon receipt of amounts under the Certificate Insurance Policies on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement
A-7-3
<PAGE>
such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of
their affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policies
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-7
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-7 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-7 Certificates and shall receive all future distributions of the Class
A-7 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee, at their expense, an
opinion of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the
A-7-4
<PAGE>
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date. Under certain circumstances, the
Certificate Insurer may also exercise such purchase rights if the Owners of the
Class R Certificates do not do so. In addition, under certain circumstances
relating to the qualification of the REMIC as a REMIC under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendment. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-7 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-7 Certificates are exchangeable
A-7-5
<PAGE>
for new Class A-7 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-7-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title:______________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title: ____________________________
A-7-7
<PAGE>
EXHIBIT A-8
FORM OF CLASS A-8 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
IMC HOME EQUITY LOAN TRUST 1997-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-8
(Variable Pass-Through Rate)
Representing Certain Interests in a Pool of Group II Home Equity
Loans Originated or Purchased and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional ownership interest in the Group II Home Equity Loans and certain
other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("IMC Home Equity Loan Trust 1997-2") or its agent for registration of transfer,
exchange, or payment and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
No: A-8-
---------------
CUSIP
$ March __, 1997
- - ----------------------- ----------------- ----------------
Original Class A-8 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
---------------------
Registered Owner
A-8-1
<PAGE>
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in Group II (other
than any principal and interest due thereon on or prior to March 1, 1997 whether
or not received) listed in Schedule I-B to the Pooling and Servicing Agreement
which the Seller is causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee and the Subsequent Home Equity Loans
in Group II (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-B to any Subsequent Transfer Agreement which the Seller will cause to
be delivered to the Depositor and the Depositor will cause to be delivered to
the Trustee (and all substitutions therefor as provided by Section 3.03, 3.04
and 3.06 of the Pooling and Servicing Agreement), together with the related Home
Equity Loan documents and the Depositor's interest in any Property which secured
a Home Equity Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts allocable to Group II as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (c) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-8 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-8
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to April 21, 1997 (the first Payment
Date) be less than the original Certificate Principal Balance set forth above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 21, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
A-8-2
<PAGE>
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1997-2, Home Equity Loan Pass-Through
Certificates, Class A-8 (the "Class A-8 Certificates") and issued under and
subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of March 1, 1997 (the "Pooling and Servicing
Agreement") by and among Industry Mortgage Company, L.P., in its capacity as the
Seller (the "Seller") and as the Servicer (the "Servicer"), IMC Securities,
Inc., in its capacity as Depositor (the "Depositor") and The Chase Manhattan
Bank, a New York banking corporation, in its capacity as the Trustee (the
"Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as IMC Home Equity Loan Trust 1997-2 Home Equity Loan Pass-Through
Certificates, Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class
A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the
"Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6
(the "Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates and the Class A-8 Certificates shall be together referred
to as the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 20th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing April 21, 1997, the Owners of the Class A-8 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-8 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-8 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-8 Certificates. The Percentage Interest of each
Class A-8 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-8 Certificate on the Startup Day by the aggregate Class A-8
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policies to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners provided
that timely notice has been given to the Certificate Insurer by the Trustee.
"Insured Payments" shall have the meaning as provided therefor in the Insurance
Agreement.
Upon receipt of amounts under the Certificate Insurance Policies on
behalf of the Owners of the Class A Certificates, the Trustee shall distribute
in accordance with the Pooling and Servicing Agreement
A-8-3
<PAGE>
such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of
their affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans and amounts on
deposit in the Certificate Account and the Principal and Interest Account
(except as otherwise provided in the Pooling and Servicing Agreement) and
payments received by the Trustee pursuant to the Certificate Insurance Policies
all as more specifically set forth hereinabove and in the Pooling and Servicing
Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-8
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-8 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-8 Certificates and shall receive all future distributions of the Class
A-8 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee, at their expense, an
opinion of counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the
A-8-4
<PAGE>
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date. Under certain circumstances, the
Certificate Insurer may also exercise such purchase rights if the Owners of the
Class R Certificates do not do so. In addition, under certain circumstances
relating to the qualification of the REMIC as a REMIC under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-8 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-8 Certificates are exchangeable
A-8-5
<PAGE>
for new Class A-8 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-8-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title:______________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title: ____________________________
A-8-7
<PAGE>
EXHIBIT C
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE
WITHOUT REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET
FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R
CERTIFICATE MAY BE MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION
860E(e)(5) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH
TERM INCLUDES THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE
INSTRUMENTALITIES), ANY COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY OR
PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION
(OTHER THAN A FARMER'S COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME TAX
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME. NO
TRANSFER OF THIS CLASS R CERTIFICATE WILL BE REGISTERED BY THE CERTIFICATE
REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DISQUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS R CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY
GIVE RISE TO A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN
AGENT ACTING FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R
CERTIFICATE AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY
TAXABLE YEAR GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE
PRODUCT OF (A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF
THIS CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
C-1
<PAGE>
IMC HOME EQUITY LOAN TRUST 1997-2
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Originated or Purchased
and Serviced by
INDUSTRY MORTGAGE COMPANY, L.P.
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by IMC
Securities, Inc. or Industry Mortgage Company, L.P. This Certificate represents
a fractional residual ownership interest in the Trust Estate as defined below.)
No: R -__ March __, 1997
___________________
Date
Percentage Interest______%
_________________
Registered Owner
The registered Owner named above is the registered Owner of a fractional
interest in (a) the Initial Home Equity Loans (other than any principal and
interest due thereon on or prior to March 1, 1997 whether or not received)
listed in Schedule I-A and Schedule I-B to the Pooling and Servicing Agreement
which the Seller is causing to be delivered to the Depositor and the Depositor
is causing to be delivered to the Trustee and the Subsequent Home Equity Loans
(other than principal and interest payments due thereon on or prior to the
related Subsequent Cut-Off Date whether or not received) listed in Schedule I-A
and Schedule I-B to any Subsequent Transfer Agreement which the Seller will
cause to be delivered to the Depositor and the Depositor will cause to be
delivered to the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together with the
related Home Equity Loan documents and the Seller's interest in any Property
which secured a Home Equity Loan but which has been acquired by foreclosure or
deed in lieu of foreclosure, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (b) such amounts as may
be held by the Trustee in the Certificate Account, the Pre-Funding Account and
the Capitalized Interest Account, together with investment earnings on such
amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings thereon
(except as otherwise provided in the Pooling and Servicing Agreement), whether
in the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer) and (c) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Home
Equity Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a)-(c) above shall be collectively referred to herein as the "Trust
Estate").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
C-2
<PAGE>
This Certificate is one of a Class of duly-authorized Certificates
designated as IMC Home Equity Loan Trust 1997-2, Home Equity Loan Pass-Through
Certificates, Class R (the "Class R Certificates") and issued under and subject
to the terms, provisions and conditions of that certain Pooling and Servicing
Agreement dated as of March 1, 1997 (the "Pooling and Servicing Agreement") by
and among Industry Mortgage Company, L.P., in its capacity as the Seller (the
"Seller") and as the Servicer (the "Servicer"), IMC Securities, Inc. in its
capacity as Depositor, (the "Depositor") and The Chase Manhattan Bank, a New
York banking corporation, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as IMC Home
Equity Loan Trust 1997-2 Home Equity Loan Pass-Through Certificates, Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7 and Class A-8
(collectively, the "Class A Certificates"). The Class A Certificates and the
Class R Certificates are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 20th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing April 21, 1997, each Owner of a Class R Certificate as of the close
of business on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (by wire transfer or otherwise) to the account of an
Owner at a domestic bank or other entity having appropriate facilities therefor,
if such Owner has so notified the Trustee, or by check mailed to the address of
the person entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of, or
an interest in, nor are the underlying Home Equity Loans insured or guaranteed
by IMC Securities, Inc. or Industry Mortgage Company, L.P. or any of their
affiliates. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Home Equity Loans, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent
C-3
<PAGE>
provided in the Pooling and Servicing Agreement with respect to such Certificate
or to institute suit for the enforcement of any such distribution, and such
right shall not be impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee, 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 shall either sell the Home
Equity Loans and the Trustee shall distribute the proceeds of the liquidation of
the Trust Estate, or the Servicer shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates to the
effect that each such liquidation constitutes a Qualified Liquidation, each in
accordance with such plan, so that the liquidation or distribution of the Trust
Estate, the distribution of any proceeds of the liquidation and the termination
of the Pooling and Servicing Agreement occur no later than the close of the 90th
day after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Owners of the Class R Certificates may at their option, purchase from the Trust
all remaining Home Equity Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date after the Clean Up Call Date. Under certain circumstances, the
Certificate Insurer may also exercise such purchase rights if the Owners of the
Class R Certificates do not do so. In addition, under certain circumstances
relating to the qualification of the REMIC as a REMIC under the Code, the Home
Equity Loans may be sold, thereby effecting the early retirement of the
Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then outstanding with the
prior written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
C-4
<PAGE>
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
C-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title:______________________________
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________
Title: ____________________________
C-6
<PAGE>
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
IMC Securities, Inc. (the "Depositor"), as Depositor, Industry Mortgage
Company, L.P. (the "Seller"), as Seller, and IMC Home Equity Loan Trust 1997-2,
as Purchaser, pursuant to the Pooling and Servicing Agreement dated as of March
1, 1997 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 March __, 1997 (the
"Subsequent Cut-Off Date"), the Seller does hereby irrevocably transfer, assign,
setover and otherwise convey to the Depositor and the Depositor does hereby
irrevocably transfer, assign, set over and otherwise convey to the Purchaser,
without recourse (except as otherwise explicitly provided for herein) all right,
title and interest in and to any and all benefits accruing from the Subsequent
Home Equity Loans (other than any principal and interest payments received
thereon on or prior to the Subsequent Cut-Off Date) which are delivered to the
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 Depositor shall
deliver the original Mortgage or mortgage assignment with evidence of recording
thereon (except as otherwise provided by the Pooling and Servicing Agreement)
and other required documentation in accordance with the terms set forth in
Sections 3.05 and 3.07 of the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Depositor.
Additional terms of the sale, if any, are attached hereto as Attachment
A.
The Depositor hereby affirms the representations and warranties set
forth in the Pooling and Servicing Agreement that relate to the Depositor and
the Subsequent Home Equity Loans as of the date hereof. The Depositor hereby
delivers notice and confirms that each of the conditions set forth in Sections
3.07(b), 3.07(c) and 3.07(d) to the Pooling and Servicing Agreement are
satisfied as of the date hereof.
All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified, confirmed and incorporated herein, provided that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Pooling and Servicing Agreement.
D-1
<PAGE>
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
IMC SECURITIES, INC.
as Depositor
By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
INDUSTRY MORTGAGE COMPANY, L.P.
as Seller
By:____________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee
for IMC Home Equity Loan Trust 1997-2
By:____________________________
Name:
Title:
Dated:
D-2
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, _______________ of Industry Mortgage
Company, L.P. ("IMC"), hereby certify that between the "Cut-Off Date" (as
defined in the Pooling and Servicing Agreement dated as of March 1, 1997 among
IMC Securities, Inc., as Depositor, IMC as Seller and Servicer, and The Chase
Manhattan Bank, as Trustee) and the "Startup Day," the following schedule of
"Home Equity Loans" (each as defined in the Pooling and Servicing Agreement)
have been prepaid in full.
Account Original Current Date Paid
Number Name Amount Balance Off
------ ---- ------ ------- ---
Dated: March __, 1997
By: _______________________
Title: _____________________
E-1
<PAGE>
EXHIBIT F-1
TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
The Chase Manhattan Bank, in its capacity as Trustee (the "Trustee")
under that certain Pooling and Servicing Agreement dated as of March 1, 1997 (
the "Pooling and Servicing Agreement") among IMC Securities, Inc., as Depositor,
Industry Mortgage Company, L.P., a Delaware limited partnership, as seller and
servicer ("IMC"), and The Chase Manhattan Bank, as Trustee (the "Trustee"),
hereby acknowledges receipt of an aggregate cash amount of approximately
$__________ into the Pre-Funding Account and an aggregate cash amount of
approximately $__________ into the Capitalized Interest Account pursuant to
Section 7.04 of the Pooling and Servicing Agreement.
The Trustee hereby additionally acknowledges that it shall cause the
Custodian (as defined in the Pooling and Servicing Agreement) to review such
items as required by Section 3.06(a) of the Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK, as Trustee
By: ____________________________
Name: ____________________________
Title:____________________________
Dated: March __, 1997
F-1-1
<PAGE>
EXHIBIT F-2
CUSTODIAN'S ACKNOWLEDGEMENT OF RECEIPT
The First National Bank of Boston, in its capacity as custodian (the
"Custodian) under the Custodial Agreement dated as of March 1, 1997 among the
Custodian and The Chase Manhattan Bank, in its capacity as Trustee (the
"Trustee") under that certain Pooling and Servicing Agreement dated as of March
1, 1997 ( the "Pooling and Servicing Agreement") among IMC Securities, Inc., as
Depositor, Industry Mortgage Company, L.P., a Delaware limited partnership, as
seller and servicer ("IMC"), and The Chase Manhattan Bank, as Trustee (the
"Trustee"), hereby acknowledges receipt (subject to review as required by
Section 3.06(a) of the Pooling and Servicing Agreement) of the items delivered
to it by IMC with respect to the Initial Home Equity Loans pursuant to Section
3.05(b)(i) of the Pooling and Servicing Agreement.
The Schedules of Initial Home Equity Loans is attached to this Receipt.
The Custodian hereby additionally acknowledges that it shall review
such items as required by Section 3.06(a) of the Pooling and Servicing Agreement
and shall otherwise comply with Section 3.06(b) and 3.06(c) of the Pooling and
Servicing Agreement as required thereby.
THE FIRST NATIONAL BANK OF BOSTON,
as custodian
By: _______________________
Name: _______________________
Title:_______________________
Dated: March __, 1997
F-2-1
<PAGE>
EXHIBIT G
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of The First National
Bank of Boston, in its capacity as Custodian (the "Custodian") under the
Custodial Agreement dated March 1, 1997 between the Custodian and The Chase
Manhattan Bank, a New York banking corporation, acting in its capacity as
trustee (the "Trustee") of a certain pool of mortgage loans (the "Pool")
heretofore conveyed in trust to the Trustee, pursuant to that certain Pooling
and Servicing Agreement dated as of March 1, 1997 (the "Pooling and Servicing
Agreement") among IMC Securities, Inc., as Depositor, Industry Mortgage Company,
L.P., as Seller (the "Seller") and Servicer, and The Chase Manhattan Bank, as
Trustee; and
WHEREAS, the Custodian is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Mortgage Files relating to the
Pool within a specified period following the Startup Day and to notify the
Seller promptly of any defects with respect to the Pool, and the Seller is
required to remedy such defects or take certain other action, all as set forth
in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement
requires the Custodian to deliver this Pool Certification upon the satisfaction
of certain conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined
that all required documents (or certified copies of documents listed in Section
3.05 of the Pooling and Servicing Agreement) have been executed or received, and
that such documents relate to the Home Equity Loans identified in the Schedule
of Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Custodian makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
THE FIRST NATIONAL BANK OF BOSTON, as
Custodian
By: ________________________
Title: _____________________
Dated: March __, 1997
G-1
<PAGE>
EXHIBIT H
FORM OF DELIVERY ORDER
DELIVERY ORDER
The Chase Manhattan Bank, as Trustee
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Structured Finance Services
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated
as of March 1, 1997 (the "Pooling and Servicing Agreement") among IMC
Securities, Inc., as Depositor, Industry Mortgage Company, L.P., a Delaware
Corporation ("IMC"), as Seller and Servicer, and The Chase Manhattan Bank, a New
York banking corporation, as Trustee (the "Trustee"), IMC HEREBY CERTIFIES that
all conditions precedent to the issuance of the IMC Home Equity Loan Trust
1997-2, Home Equity Loan Pass-Through Certificate, Class A and Class R (the
"Certificates"), HAVE BEEN SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE
AND DELIVER said Certificates, and to RELEASE said Certificates to the owners
thereof, or otherwise upon their order. Instructions regarding the registration
of the Certificates are attached hereto.
Very truly yours,
IMC SECURITIES, INC.
By: _________________________
Title: ______________________
By: _________________________
Title: ______________________
Dated: March __, 1997
H-1
<PAGE>
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _______________________ ] [the United States],
on behalf of which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will
not be a "disqualified organization" as of [date of transfer] (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this______ day of __________, _________.
NAME OF INVESTOR]
By:________________________
Name of Officer]
Title of Officer]
I-1
<PAGE>
[Corporate Seal]
Attest:
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known
or proved to be the same person who executed the foregoing instrument and to be
the [Title of Officer] of the Investor, and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ________ day of ____________,
____.
____________________
NOTARY PUBLIC
COUNTY OF___________
STATE OF____________
My commission expires the _________ day of _________________, _____.
I-2
<PAGE>
EXHIBIT J-1
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
The Chase Manhattan Bank, as Trustee
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Advanced Structured Products Services
Re: IMC Home Equity Loan Trust 1997-2
Home Equity Loan Pass-Through Certificates
("Certificates")
___________________
Gentlemen:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ______________________ ("Seller"),
[PURCHASER] (the "Purchaser") hereby certifies that:
1. The Purchaser is acquiring the Certificates for [investment purposes
only for]1 the Purchaser's own account and not with a view to or for sale or
transfer in connection with any distribution thereof in any manner which would
violate Section 5 of the Securities Act of 1933, as amended (the "Act"),
provided that the disposition of its property shall at all times be and remain
within its control;
2. The Purchaser understands that the Certificates have not been and
will not be registered under the Act and may not be resold or transferred unless
they are (a) registered pursuant to the Act o r (b) sold or transferred in
transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing
Agreement dated as o f March 1, 1997 (the "Pooling and Servicing Agreement")
pursuant to which the Certificates are being sold, and such other documents and
information concerning the Certificates and the home equity loans in which the
Certificates represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates and that it is able to bear the
economic risks of such an investment;
5. [The Purchaser is not an "employee benefit plan," within the meaning
of Section 3(3) of the Employment Retirement Income Security Act of 1974, as
amended ("ERISA") that is subject to the provisions of Title I of ERISA or a
"plan" described in Section 4975(e)(1) of the Internal Revenue Code of 1986] OR
[The source of funds to be used by the Purchaser to purchase the Certificates is
a general account and either (i) no part of such assets constitutes assets of an
"employee benefit plan," within the meaning of Section 3(3) of the Employment
Retirement Income Security Act of 1974, as
- - --------
1 Not required if the Purchaser is a broker/dealer.
J-1
<PAGE>
amended ("ERISA") that is subject to the provisions of Title I of ERISA or a
"plan" described in Section 4975(e)(l) of the Internal Revenue Code of 1986, or
(ii) to the extent that such assets constitute assets of an "employee benefits
plan" within the meaning of Section 3(3) of ERISA, or a "plan" within the
meaning of Section 4975(e)(1) of the Code, it acknowledges that in the discharge
of its duty as a plan fiduciary in connection with the purchase of the
Certificates it has concluded that such purchase will n ot constitute a
violation of Section 404(a) of ERISA];
6. If the Purchaser sells any of the Certificates at its option, it
will (i) obtain from any investor that purchases any Certificate from it a
letter substantially in the form of Exhibit J-1 or J-2 to the Pooling and
Servicing Agreement and (ii) to the extent required by the Pooling and Servicing
Agreement, cause an opinion of counsel to be delivered, addressed and
satisfactory to the Seller and t he Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws; and
7. The Purchaser certifies that for purposes of the Certificate
Register, its address, including telecopier number and telephone number, is as
follows:
telecopier:
telephone:
8. The purchase of the Certificates by the Purchaser does not violate
the provisions of th e first sentence of Section 5.08(d) of the Pooling and
Servicing Agreement.
IN WITNESS WHEREOF, the Purchaser has caused this letter to be executed
by its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By: __________________________
Name:__________________________
Title:_________________________
J-2
<PAGE>
EXHIBIT J-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
The Chase Manhattan Bank
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Advanced Structured Products Services
Re: IMC Home Equity Loan Trust 1997-2
Home Equity Loan Pass-Through Certificates,
Class __-___ ("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the
above-referenced Certificates from _______________ ("Seller") hereby certify
that:
1. We are acquiring the Certificates for our own account for investment
and not with a view to or for sale or transfer in connection with any
distribution thereof in any manner which would violate the Securities Act of
1933, as amended (the "Act"), provided that the disposition of our property
shall at all times be and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement dated
as of March 1, 1997 (the "Pooling and Servicing Agreement") pursuant to which
the Certificates are being sold, and such other documents and information
concerning the Certificates and the home equity loans in which the Certificates
represent interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic risks
of such an investment;
5. If we sell any of the Certificates at our option, we will either (i)
obtain from any institutional investor that purchases any Certificate from us a
certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1, 2 through 4 and t his paragraph 5 or
(ii) deliver an opinion of counsel to such institutional investor, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws;
J-3
<PAGE>
6. We are acquiring the Certificates for our own account and the source
of funds to be used by us to purchase the Certificates is a general account and
either (i) no part of such assets constitutes assets of an "employee benefit
plan," within the meaning of Section 3(3) of the Employment Retirement Income
Security Act of 1974, as amended ("ERISA") that is subject to the provisions of
Title I of ERISA or a "plan" described in Section 4975(e)(l) of the Internal
Revenue Code of 1986, or (ii) to the extent that such assets constitute assets
of an "employee benefits plan" within the meaning of Section 3(3) of ERISA, or a
"plan" within the meaning of Section 4975(e)(1) of the Code, we acknowledge that
in the discharge of our duty as a plan fiduciary in connection with the purchase
of the Certificates we have concluded that such purchase will not constitute a
violation of Section 404(a) of ERISA;
7. We certify that for purposes of the Certificate Register, our
address, including telecopier number and telephone number, is as follows:
________________________________________
________________________________________
________________________________________
telecopier:_____________________________
telephone: _____________________________
8. If we sell any of the Certificates, will obtain from any purchaser
from us the same representations contained in the foregoing paragraph 6 and this
paragraph 7; and
9. Our purchase of the Certificates does not violate the provisions of
the first sentence of Section 5.08(d) of the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, we have signed this certificate as of the date
first written above.
By: ___________________________
Name:___________________________
Title:__________________________
J-4
<PAGE>
EXHIBIT K TO THE POOLING AND SERVICING AGREEMENT
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
Loan Number Borrower Name Original Loan Amount Exception
- - ----------- ------------- -------------------- ---------
K-1
SUBSEQUENT TRANSFER AGREEMENT
IMC Securities, Inc. (the "Depositor"), Industry Mortgage Company, L.P.
(the "Seller"), and IMC Home Equity Loan Trust 1997-2 (the "Purchaser") pursuant
to the Pooling and Servicing Agreement dated as of March 1, 1997 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 March 20, 1997 (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 March 1, 1997 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),
3.07(c) and 3.07(d) 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, $135,786.19 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: /s/ Laurie S. Wockenfuss
-----------------------------------------
Name: Laurie S. Wockenfuss
Title: Vice President and Secretary
INDUSTRY MORTGAGE COMPANY, L.P.
as Seller
By: Industry Mortgage Corporation, its
general partner
By: /s/ Laurie S. Wockenfuss
----------------------------------------
Name: Laurie S. Wockenfuss
Title: Vice President and Secretary
IMC HOME EQUITY LOAN TRUST 1997-2,
by The Chase Manhattan Bank, as Trustee
By: /s/ Eileen Rooney
----------------------------------------
Name: Eileen Rooney
Title: Trust Officer
Dated: March 20, 1997
<PAGE>
SCHEDULE OF HOME EQUITY LOANS
Group I
Origination Maturity Loan Loan
Name Loan Number Date Amount Balance
- - ---- ----------- ---- ------ -------
Simioni TC6120551 11/1/2010 $40,000 $ 39,556.64
O'Brien TC6170450 10/1/2026 47,800 47,713.19
Schenfort TC6120531 10/1/2026 48,600 48,516.36
-----------
TOTAL $135,786.19
===========
