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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 11, 1998
IMC Home Equity Loan Trust 1998-1
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(Exact name of registrant as specified in its charter)
Delaware 333-31197-04 Being Applied For
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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 (212) 946-8600
No Change
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(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets
Description of the Certificates and the Home Equity Loans
IMC Securities, Inc. registered issuances of up to $3,000,000,000 principal
amount of Home Equity Loan Asset Backed Certificates and Notes 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 333-31197) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, IMC Home Equity Loan Trust 1998-1 (the "Registrant" or
the "Trust") issued $1,000,000,000 in aggregate principal amount of its Home
Equity Loan Pass-Through Certificates, Series 1998-1 (the "Certificates"), on
March 11, 1998 (the "Closing Date"). 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, 1998, among IMC Securities, Inc. (the "Depositor"), IMC Mortgage
Company, 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, and Class A-7IO (the "Class A Certificates"), Class M-1 and Class M-2
(the "Mezzanine Certificates"), Class B (the "Class B Certificates" and
collectively with the Class A Certificates and the Mezzanine Certificates, the
"Offered Certificates") and Class R Certificates (the "Class R Certificates"
and, together with the Offered Certificates, the "Certificates"). Only the
Offered 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 mortgage or deeds of trust primarily
on one-to four family residential properties. Interest distributions on the
Offered Certificates are based on the Certificate Principal Balance thereof and
the applicable Pass-Through Rate thereof. The Pass-Through Rates for the Offered
Certificates are as follows: Class A-1, a variable rate as determined in the
Pooling and Servicing Agreement; Class A-2, 6.31%; Class A-3, 6.41%; Class A-4,
6.60%; Class A-5, 6.95%; Class A-6, 6.52%; Class A-7IO, 8.25%; Class M-1, 7.03%;
Class M-2, 7.38%; and, Class B, 7.87%. The Offered Certificates have the initial
aggregate principal amounts as follows: Class A-1, $334,270,000; Class A-2,
$137,610,000; Class A-3, $151,170,000; Class A-4, $101,640,000; Class A-5,
$70,310,000; Class A-6, $70,000,000; Class A-7IO, $70,000,000 (notional
principal amount); Class M-1, $47,500,000; Class M-2, $45,000,000; and, Class B,
$42,500,000.
As of the Closing Date, the Home Equity Loans possessed the characteristics
described in the Prospectus dated August 18, 1997 and the Prospectus Supplement
dated February 27, 1998 filed pursuant to Rule 424(b)(5) of the Act on March 10,
1998.
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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 February 27, 1998, among
IMC Securities, Inc., IMC Mortgage Company and Bear, Stearns
& Co. Inc., acting on its own behalf and as representative
of PaineWebber Incorporated, Deutsche Morgan Grenfell Inc.
and J.P. Morgan Securities, Inc.
4.1 Pooling and Servicing Agreement dated as of March 1, 1998,
among IMC Securities, Inc. as Depositor, IMC Mortgage
Company, as Seller and Servicer and The Chase Manhattan
Bank, as Trustee.
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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 HOME EQUITY LOAN TRUST 1998-1
By: IMC SECURITIES, INC., as Depositor
By: /s/ Thomas Middleton
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Name: Thomas Middleton
Title: President and Chief Operating Officer
March 23, 1998
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EXHIBIT INDEX
Exhibit No. Description Page No.
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1.1 Underwriting Agreement dated as of
February 27, 1998, among IMC Securities,
Inc., IMC Mortgage Company and Bear,
Stearns & Co. Inc., acting on its own
behalf and as representative of
PaineWebber Incorporated, Deutsche
Morgan Grenfell Inc. and J.P. Morgan
Securities Inc.
4.1 Pooling and Servicing Agreement dated as
of March 1, 1998, among IMC Securities,
Inc. as Depositor, IMC Mortgage
Company, as Seller and Servicer and The
Chase Manhattan Bank, as Trustee.
Exhibit 1.1
EXECUTION COPY
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$1,000,000,000
IMC HOME EQUITY LOAN TRUST 1998-1
IMC Home Equity Loan Pass-Through Certificates,
Series 1998-1
UNDERWRITING AGREEMENT
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February 27, 1998
BEAR, STEARNS & CO. INC.
As representative of the several underwriters
245 Park Avenue
New York, New York 10167
Dear Sirs:
IMC Securities, Inc. (the "Depositor"), a Delaware corporation, has
authorized the issuance and sale of IMC Home Equity Loan Pass-Through
Certificates, Series 1998-1 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, the Class A-7I0
Certificates (collectively, the "Class A Certificates"), (b) the Class M-1
Certificates and the Class M-2 Certificates (collectively, the "Mezzanine
Certificates"), (c) the Class B Certificates (collectively with the Mezzanine
Certificates, the "Subordinate Certificates") and (d) a residual class of
Certificates with respect to each REMIC held by the Trust. Only the Class A
Certificates, the Mezzanine Certificates and the Class B Certificates
(collectively, the "Offered Certificates") are offered hereby.
The Certificates represent an undivided ownership interest in a pool of
fixed rate home equity loans (the "Home Equity Loans") held by IMC Home Equity
Loan Trust 1998-1 (the "Trust"). The Certificates will represent undivided
ownership interests in the Home Equity Loans, which are secured by first and
second lien mortgages or deeds of trust primarily on one- to four-family
residential properties.
Only the Offered Certificates are being purchased by the Underwriters
named in Schedule A hereto (the "Underwriters"), and the Underwriters are
purchasing, severally, only the Offered Certificates set forth opposite their
names in Schedule A, except that the amounts purchased by the Underwriters may
change in accordance with Section 10 of this Agreement. Bear, Stearns & Co. Inc.
(the "Representative") is acting for itself and as representative of the other
Underwriters.
The Certificates will be issued under a pooling and servicing agreement
(the "Pooling
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and Servicing Agreement"), dated as of March 1, 1998 among the Depositor, IMC
Mortgage Company ("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 Offered Certificates will evidence fractional
undivided interests in the trust (the "Trust"). The Trust assets (not all of
which will be included in the REMIC elections), will initially include among
other things, a pool of fixed rate Home Equity Loans (the "Initial Home Equity
Loans"), and such amounts as may be held by the Trustee in the Pre-Funding
Account (the "Pre-Funding Account"), the Capitalized Interest Account (the
"Capitalized Interest Account") and any other accounts held by the Trustee for
the Trust. On the Closing Date, $249,717,645.27 will be deposited in the name of
the Trustee in the Pre-Funding Account. It is intended that additional Home
Equity Loans satisfying the criteria specified in the Pooling and Servicing
Agreement (the "Subsequent Home Equity Loans") will be purchased by the Trust
for inclusion in the Trust from the Depositor from time to time on or before
April 30, 1998 from funds on deposit in the Pre-Funding Account. Funds in the
Capitalized Interest Account will be applied by the Trustee to cover shortfalls
in interest during the Funding Period (as described herein under "Pre-Funding
Account") on the Offered Certificates attributable to the provisions allowing
for purchase of Subsequent Home Equity Loans after the Cut-Off date. The Offered
Certificates will initially represent an undivided ownership interest in the sum
of (i) the Initial Home Equity Loans in an amount of $750,282,354.73 as of the
close of business on March 1, 1998 (the "Cut-Off Date") and (ii) $249,717,645.27
on deposit in the Pre-Funding Account. 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 its 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:
A. A Registration Statement on Form S-3 (No. 333-31197) 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
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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 August 18, 1997; 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 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
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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 or
any Subsequent Transfer Agreement and to cause the Certificates to be
issued.
F. There are no actions, proceedings or investigations pending
with respect to which the Depositor has received service of process
before or threatened by any court, administrative agency or other
tribunal to which the Depositor is a party or of which any of its
properties is the subject (a) which if determined adversely to the
Depositor would have a material adverse effect on the business or
financial condition of the Depositor, (b) asserting the invalidity of
this Agreement, the Pooling and Servicing Agreement, the
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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, 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 Certificates or any Subsequent Transfer
Agreement.
G. This Agreement has been, and the Pooling and Servicing
Agreement and each Subsequent Transfer 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 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 limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of this Agreement,
the Pooling and Servicing Agreement and any Subsequent Transfer
Agreement by the Depositor and the consummation of the transactions
contemplated hereby and thereby, and the issuance and delivery of the
Certificates do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Depositor is a party, by which the
Depositor is bound or to which any of the properties or assets of the
Depositor or any of its subsidiaries is subject, which breach or
violation would have a material adverse effect on the business,
operations or financial condition of the Depositor, nor will such
actions result in any violation of the provisions of the articles of
incorporation or by-laws of the Depositor or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets,
which breach or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor.
I. The Depositor has no reason to believe that Coopers & Lybrand
L.L.P. are not independent public accountants with respect to the
Depositor as required by the Securities Act and the Rules and
Regulations.
J. The direction by the Depositor to the Trustee to execute,
authenticate, issue and deliver the Certificates has been duly
authorized by the Depositor, and assuming the
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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 and any Subsequent
Transfer 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
acquire beneficial ownership of all of the Depositor's right, title and
interest in and to the Home Equity Loans. Upon delivery to the
Underwriters of the Offered Certificates, the Underwriters will have
good title to the Offered Certificates, free of any Liens.
N. At the time of execution and delivery of any Subsequent
Transfer Agreement, the Depositor will: (i) have good title in the
Subsequent Home Equity Loans conveyed by the Seller, free and clear of
any Liens; (ii) not have assigned to any person any of its right or
title in the Subsequent Home Equity Loans, in the Pooling and Servicing
Agreement or in the Certificates being issued pursuant thereto; and
(iii) have the power and authority to sell the Subsequent Home Equity
Loans to the Trustee. Upon
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execution and delivery of the Subsequent Transfer Agreement by the
Trustee, the Trustee will acquire 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 respective rating categories by the nationally recognized
rating agencies, as described in the Prospectus Supplement under
"Ratings".
T. Any taxes, fees and other governmental charges in connection
with the execution, delivery and issuance of this Agreement, the Pooling
and Servicing 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 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
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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 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 11, 1998, or at such other time or
date as shall be agreed upon in writing by the Representative and the Depositor
(such date being referred to as the "Closing Date"). Payment shall be made to
the Depositor by wire transfer of same day funds payable to the account of the
Depositor. Delivery of the Offered Certificates shall be made to the
Representative for the accounts of the applicable Underwriters against payment
of the purchase price thereof. The Certificates shall be in such authorized
denominations and registered in such names as the Representative may request in
writing at least two business days prior to the Closing Date. The Offered
Certificates will be made available for examination by the Representative no
later than 2:00 P.M. New York City time on the first business day prior to the
Closing Date.
SECTION 4 Offering by the Underwriters. It is understood that, subject
to the terms and conditions hereof, the Underwriters propose to offer the
Offered Certificates for sale to the public as set forth in the Prospectus.
SECTION 5 Covenants of the Depositor and IMC. The Depositor and, to the
extent the provisions of Section I. below relate to IMC, IMC each agrees as
follows:
A. To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than the Commission's close of business on
the second business day following the availability of the Prospectus to
the Underwriters to make no further amendment or any supplement to the
Registration Statement or to the Prospectus prior to the Closing Date
except as permitted herein; to advise the Underwriters, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective prior to the
Closing Date or any supplement to the Prospectus or any amended
Prospectus has been filed prior to the Closing Date and to furnish the
Underwriters with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the
Depositor with the Commission pursuant to
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Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and, for so long as the delivery of a prospectus
is required in connection with the offering or sale of the Offered
Certificates; to promptly advise the Underwriters of its receipt of
notice of the issuance by the Commission of any stop order or of: (i)
any order preventing or suspending the use of the Prospectus; (ii) the
suspension of the qualification of the Offered Certificates for offering
or sale in any jurisdiction; (iii) the initiation of or threat of any
proceeding for any such purpose; (iv) any request by the Commission for
the amending or supplementing of the Registration Statement or the
Prospectus or for additional information. In the event of the issuance
of any stop order or of any order preventing or suspending the use of
the Prospectus or suspending any such qualification, the Depositor
promptly shall use its best efforts to obtain the withdrawal of such
order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for
the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and of each amendment thereto
filed with the Commission, including all consents and exhibits filed
therewith.
C. To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with
the Commission and each amendment thereto (in each case including
exhibits); (ii) the Prospectus and any amended or supplemented
Prospectus; and (iii) any document incorporated by reference in the
Prospectus (including exhibits thereto). If the delivery of a prospectus
is required at any time prior to the expiration of nine months after the
Effective Time in connection with the offering or sale of the Offered
Certificates, and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Securities
Act or the Exchange Act, the Depositor shall notify the Underwriters
and, upon the Underwriters' request, shall file such document and
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
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reasonably request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Securities Act.
D. To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Depositor or the
Underwriters, be required by the Securities Act or requested by the
Commission.
E. The Depositor will cause any Computational Materials (as
defined below) with respect to the Offered Certificates which are
delivered by any Underwriter to the Depositor to be filed with the
Commission on a Current Report on Form 8-K (the "Form 8-K --
Computational Materials") at or before the time of filing of the
Prospectus pursuant to Rule 424(b) under the 1933 Act; provided,
however, that the Depositor shall have no obligation to file any
materials which, in the reasonable determination of the Depositor after
consultation with such Underwriter, (i) are not required to be filed
pursuant to the Kidder Letters (as defined below) or (ii) contain any
erroneous information or untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; it being understood, however,
that the Depositor shall have no obligation to review or pass upon the
accuracy or adequacy of, or to correct, any Computational Materials
provided by any Underwriter to the Depositor as aforesaid. For purposes
hereof, as to each Underwriter, the term "Computational Materials" shall
mean those materials delivered by an Underwriter to the Depositor within
the meaning of the no-action letter dated May 20, 1994 issued by the
Division of Corporation Finance of the Commission to Kidder, Peabody
Acceptance Corporation I and certain affiliates and the no-action
letters dated May 27, 1994 and February 17, 1995, each issued by the
Division of Corporation Finance of the Commission to the Public
Securities Association (all three of such letters, 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
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Closing Date.
H. To use its best efforts, in cooperation with the
Underwriters, to qualify the Offered Certificates for offering and sale
under the applicable securities laws of such states and other
jurisdictions of the United States or elsewhere as the Underwriters may
designate, and maintain or cause to be maintained such qualifications in
effect for as long as may be required for the distribution of the
Offered Certificates. The Depositor will file or cause the filing of
such statements and reports as may be required by the laws of each
jurisdiction in which the Offered Certificates have been so qualified.
I. Unless the Underwriters shall otherwise have given their
written consent, no pass-through certificates backed by home equity
loans or other similar securities representing interest in or secured by
other mortgage-related assets originated or owned by the Depositor or
IMC shall be publicly offered, sold nor shall the Depositor or IMC enter
into any contractual arrangements that contemplate the public offering
or sale of such securities for a period of seven (7) business days
following the commencement of the offering of the Offered Certificates
to the public.
J. So long as the Offered Certificates shall be outstanding the
Depositor shall cause the Trustee, pursuant to the Pooling and Servicing
Agreement, to deliver to the Underwriters as soon as such statements are
furnished to the Owners: (i) the annual statement as to compliance
delivered to the Trustee pursuant to Section 8.16 of the Pooling and
Servicing Agreement; (ii) the annual statement of a firm of independent
public accountants furnished to the Trustee pursuant to Section 8.17 of
the Pooling and Servicing Agreement; (iii) the monthly servicing report
furnished to the 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
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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 Certificates, the Registration Statement and
the Prospectus, and all other legal matters relating to this Agreement
and the transactions contemplated hereby shall be satisfactory in all
respects to the Underwriters and their counsel, and the Depositor shall
have furnished to such counsel all documents and information that they
may reasonably request to enable them to pass upon such matters.
D. Arter & Hadden shall have furnished to the Underwriters their
written opinion, as counsel to the Depositor, addressed to the
Underwriters and dated the 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 Securities 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 Securities Act and the Rules and
Regulations.
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
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or incorporated by reference as exhibits thereto.
4. The statements set forth in the Basic Prospectus
under the captions "Description of The Securities" and "The
Pooling and Servicing Agreement" and in the Prospectus
Supplement under the captions "Description of the Offered
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.
7. Neither the Depositor nor the Trust is an "investment
company" or under the "control" of an "investment company" as
such terms are defined in the 1940 Act.
8. Assuming that (a) the Trustee causes each of the
Upper-Tier REMIC and the Lower-Tier REMIC (other than the
Non-REMIC Accounts, as defined in the Prospectus Supplement), as
the Trustee has covenanted to do in the Pooling and Servicing
Agreement, to be treated as a "real estate mortgage investment
conduit" (the "REMIC"), as such term is defined in the Internal
Revenue Code of 1986, as amended (the "Code") and (b) the
parties to the Pooling and Servicing Agreement comply with the
terms thereof, the Offered Certificates will be treated as
"regular interests" in the Upper-Tier REMIC and the Class R
Certificates will constitute the sole class of "residual
interest" in the Upper-Tier 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 either the Upper-Tier REMIC or
the Lower-Tier REMIC (other than the Non-REMIC Accounts) as a
REMIC.
10. As a consequence of the qualification of each of the
Upper-Tier REMIC and the Lower-Tier REMIC (other than the
Non-REMIC Accounts) as a
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REMIC, the Offered Certificates will be treated as "regular. . .
interest(s) in a REMIC" under Section 7701(a)(19)(C) of the Code
and "real estate assets" under Section 856(c) of the Code in the
same proportion that the assets in the Trust consist of
qualifying assets under such Sections. In addition, as a
consequence of the qualification of each of the Upper-Tier REMIC
and the Lower-Tier REMIC (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 Offered Certificates will, when issued, conform
to the descriptions thereof contained in the Prospectus.
12. The Offered Certificates, when duly and validly
executed, authenticated and delivered in accordance with the
Pooling and Servicing Agreement and delivered to the
Underwriters and paid for in accordance with the Underwriting
Agreement, will be entitled to the benefits of the Pooling and
Servicing Agreement.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the closing Date, in
form and substance satisfactory to the Underwriters to the effect that
no facts have come to the attention of such counsel which lead them to
believe that: (a) the Registration Statement, at the time such
Registration Statement became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (except as to financial or statistical data contained in the
Registration Statement); (b) the Prospectus, as of its date and as of
the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; 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 Fitch,
Moody's, Standard & Poor's and the Underwriters, with respect
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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 Fitch,
Moody's, Standard & Poor's and the Underwriters as though such opinion
had been addressed to each such party.
F. Mitchell W. Legler, P.A., special counsel to IMC, in IMC's
capacity as both Seller and Servicer under the Pooling and Servicing
Agreement, and/or Arter & Hadden shall have furnished to the
Underwriters their written opinion or opinions, 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 organized and is validly existing
as a corporation in good standing under the laws of the State of
Florida and has duly authorized all actions contemplated hereby.
2. 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.
3. This Agreement and the Pooling and Servicing
Agreement have been duly authorized, executed and delivered by
IMC and, assuming the due authorization, execution and delivery
of such agreements by the other parties thereto, constitute the
legal, valid and binding agreements of IMC, enforceable against
IMC in accordance with their terms, subject as to enforceability
to (x) bankruptcy, insolvency, reorganization, moratorium,
receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (y) the
qualification that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion, with respect to such
remedies, of the court before which any proceedings with respect
thereto may be brought.
4. 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, except such consents, approvals, authorizations,
registrations and qualifications as have been obtained.
5. 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 and
the transactions contemplated thereby (A) conflict with or
result in a breach of, or constitute a default under, (i) any
term or
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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.
6. 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.
7. 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.
8. 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 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 or the Underwriting Agreement.
Such opinion may rely on the opinion of Florida counsel
as to matters governed by Florida law to the extent such Florida
opinion is satisfactory, in form and substance, to the
Underwriters.
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,
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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 and the Pooling and Servicing 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
and the Purchase Agreement relating to the purchase of the Class
R Certificates (the "Purchase Agreement") have been duly
authorized, and when duly executed and delivered by the
Depositor and, assuming the due authorization, execution and
delivery of such agreements by the other parties thereto, such
agreements constitute valid and binding obligations, enforceable
against the Depositor in accordance with 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, limitations
of public policy under applicable securities laws.
5. The execution, delivery and performance of this
Agreement, the Pooling and Servicing 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
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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 and the Pooling and Servicing 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 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, 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 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
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Servicing 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.
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
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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 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 June 19, 1990 and no such amendment has been
authorized. No event has occurred since September 15, 1997 which
has affected the good standing of the Depositor under the laws
of the State of Delaware or since September 18, 1997 which has
affected the good standing of IMC under the laws of the state of
Florida.
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 June 30,
1997.
In addition to the foregoing, the IMC certificate shall state
that the representations and
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warranties set forth in Sections 1 D, E, F, G, H, L, M, P and Q of this
Agreement 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.
K. 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.
L. Each Class of the Offered Certificates shall have been rated
in the respective rating categories and by the nationally recognized
statistical rating organizations described in the Prospectus Supplement
under "Ratings."
M. 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.
N. 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.
O. 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 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
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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.
P. The Underwriters shall have received from Coopers & Lybrand
L.L.P., certified public accountants, a letter dated the date of the
Prospectus Supplement and a letter dated the date hereof and
satisfactory in form and substance to the Underwriters and their
counsel, to the effect that they have performed certain specified
procedures, all of which have been agreed to by the Underwriters, as a
result of which they determined that certain information of an
accounting, financial or statistical nature set forth in the Prospectus
Supplement on the cover page thereof and under the captions "Summary of
Terms - The Home Equity Loans", "Risk Factors - Nature of the
Collateral; Junior Liens", "Risk Factors - Risk of Higher Default Rates
for Home Equity Loans with Balloon Payments", "The Seller and Servicer -
General", "The Seller and Servicer Delinquency, Loan Loss and
Foreclosure Information" and "The Home Equity Loan Pool - General,"
agrees with the records of the Depositor excluding any questions of
legal interpretation.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Depositor at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to the Underwriters and their counsel.
SECTION 7 Payment of Expenses. The Depositor agrees to pay: (a) the
costs incident to the authorization, issuance, sale and delivery of the
Certificates and any taxes payable in connection therewith; (b) the costs
incident to the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and 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(P) hereof; and (h) all other costs and expenses incident to the
performance of the obligations of the Depositor (including costs and expenses of
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<PAGE>
your counsel); provided that, except as provided in this Section 7, the
Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Offered Certificates which
they may sell and the expenses of advertising any offering of the Offered
Certificates made by the Underwriters, and the Underwriters shall pay the cost
of any accountant's letters relating to any Computational Materials (as defined
in Section 5(E) hereof).
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 6 or Section 11, the Depositor shall cause the
Underwriters to be reimbursed for all reasonable out-of-pocket expenses,
including fees and disbursements of Stroock & Stroock & Lavan 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.
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<PAGE>
B. Each Underwriter severally agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the Securities Act against any and all loss,
claim, damage or liability, or any action in respect thereof, to which the
Depositor or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Depositor by or on behalf of such Underwriter
specifically for inclusion therein, and shall reimburse the Depositor and any
such director, officer or controlling person for any legal or other expenses
reasonably incurred by the Depositor or any director, officer or controlling
person in connection with investigating or defending or preparing 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
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<PAGE>
paragraph, the indemnifying party shall not be liable to the indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
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.
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<PAGE>
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 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 Underwriter 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 the Depositor and an Underwriter 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 as set forth on the cover page of the
Prospectus Supplement received by such Underwriter.
The relative fault of an Underwriter and the Depositor shall be
determined by reference
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<PAGE>
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)
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 the amount of the underwriting discounts
and commissions received by such Underwriter in connection with its purchase of
the Offered Certificates. 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
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<PAGE>
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.
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.
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<PAGE>
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 provisions of Section 7, the indemnity agreement set forth in
Section 8, and the provisions of Sections 9 and 15 shall remain in effect.
SECTION 12 Obligations of IMC. IMC agrees with the Underwriters, for the
sole and exclusive benefit of each such Underwriter and each person controlling
such Underwriter within the meaning of the Securities Act and not for the
benefit of any assignee thereof or any other person or persons dealing with such
Underwriter, in consideration of and as an inducement to their agreement to
purchase the Offered Certificates from the Depositor, to indemnify and hold
harmless each Underwriter against any failure by the Depositor to perform its
obligations to the Underwriters hereunder, including, without limitation, any
failure by the Depositor to honor any obligation to any Underwriter pursuant to
Section 8 hereof.
SECTION 13 Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
A. if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Bear, Stearns & Co. Inc., 245 Park
Avenue, New York, New York 10167 Attention: Asset Backed Securities
Group (Fax: 212-272-7294); and
B. if to the Depositor, shall be delivered or sent by mail,
telex or facsimile transmission to care of IMC Securities, Inc., 5901
East Fowler Avenue, Tampa, Florida 33617-2362 Attention: Thomas
Middleton (Fax: (813) 984-2593).
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
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<PAGE>
on behalf of them, respectively, pursuant to the shall survive the delivery of
and payment for the Certificates and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.
SECTION 16 Definition of the Term "Business Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
SECTION 17 Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to the conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the United
States District Court for the Southern District of New York and any court in the
State of New York located in the city and County of New York, and appellate
court from any thereof, in any action, suit or proceeding brought against it or
in connection with this Agreement or any of the related documents or the
transactions contemplated hereunder or for recognition or enforcement of any
judgment, and the parties hereto hereby agree that all claims in respect of any
such action or proceeding may be heard or determined in New York State court or,
to the extent permitted by law, in such federal court.
SECTION 18 Counterparts. This Agreement may be executed in counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
SECTION 19 Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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<PAGE>
If the foregoing correctly sets forth the agreement between the
Depositor and the Underwriters, please indicate your acceptance in the space
provided for the purpose below.
Very truly yours,
IMC SECURITIES, INC.
By: /s/ Laurie Williams
-----------------------
Name: Laurie Williams
Title: Vice President
IMC MORTGAGE COMPANY
By: /s/ Laurie Williams
-----------------------
Name: Laurie Williams
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 the several Underwriters
By: /s/ Matthew Perkins
---------------------------
Name: Matthew Perkins
Title: Managing Director
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<PAGE>
SCHEDULE A
Class A-1 Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear, Stearns & Co. Inc. $100,281,000
PaineWebber Incorporated 100,281,000
Deutsche Morgan Grenfell Inc. 66,854,000
J. P. Morgan Securities Inc. 66,854,000
------------
Total $334,270,000
Class A-2 Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear, Stearns & Co. Inc. $41,183,000
PaineWebber Incorporated 41,283,000
Deutsche Morgan Grenfell Inc. 27,522,000
J. P. Morgan Securities Inc. 27,522,000
-----------
Total $137,610,000
-32-
<PAGE>
Class A-3 Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear ,Stearns & Co. Inc. $ 45,351,000
PaineWebber Incorporated 45,351,000
Deutsche Morgan Grenfell Inc. 30,234,000
J. P. Morgan Securities Inc. 30,234,000
------------
Total $151,170,000
Class A-4 Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear, Stearns & Co. Inc. $30,492,000
PaineWebber Incorporated 30,492,000
Deutsche Morgan Grenfell Inc. 20,328,000
J. P. Morgan Securities Inc. 20,328,000
------------
Total $101,640,000
Class A-5 Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear ,Stearns & Co. Inc. $21,093,000
PaineWebber Incorporated 21,093,000
Deutsche Morgan Grenfell Inc. 14,062,000
J. P. Morgan Securities Inc. 14,062,000
-----------
Total $70,310,000
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<PAGE>
Class A-6 Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear, Stearns & Co. Inc. $21,000,000
PaineWebber Incorporated 21,000,000
Deutsche Morgan Grenfell Inc. 14,000,000
J. P. Morgan Securities Inc. 14,000,000
-----------
Total $70,000,000
Class A-7I0 Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear, Stearns & Co. Inc. 100.00%
Total 100.00%
Class M-1 Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear, Stearns & Co. Inc. $14,250,000
PaineWebber Incorporated 14,250,000
Deutsche Morgan Grenfell Inc. 9,500,000
J. P. Morgan Securities Inc. 9,500,000
-----------
Total $47,500,000
Class M-2 Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear, Stearns & Co. Inc. $13,500,000
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<PAGE>
PaineWebber Incorporated 13,500,000
Deutsche Morgan Grenfell Inc. 9,000,000
J. P. Morgan Securities Inc. 9,000,000
-----------
Total $45,000,000
-35-
<PAGE>
Class B Certificates
Underwriters Principal Amount
- - ------------ ----------------
Bear, Stearns & Co. Inc. $12,750,000
PaineWebber Incorporated 12,750,000
Deutsche Morgan Grenfell Inc. 8,500,000
J. P. Morgan Securities Inc. 8,500,000
-----------
Total $42,500,000
Selling Reallowance
Class Concession Discount
----- ---------- --------
A-1 0.0750% 0.050%
A-2 0.1000% 0.070%
A-3 0.1250% 0.085%
A-4 0.1500% 0.100%
A-5 0.2000% 0.150%
A-6 0.1750% 0.125%
A-7I0 0.0500% 0.035%
M-1 0.2500% 0.175%
M-2 0.3750% 0.275%
B 0.5000% 0.350%
-36-
Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Relating to
IMC HOME EQUITY LOAN TRUST 1998-1
Among
IMC SECURITIES, INC.
as Depositor,
IMC MORTGAGE COMPANY,
as Seller,
IMC MORTGAGE COMPANY,
as Servicer
and
THE CHASE MANHATTAN BANK
as Trustee
Dated as of March 1, 1998
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
CONVEYANCE...............................................................................................1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION..............................................................2
Section 1.01 Definitions.......................................................................2
Section 1.02 Use of Words and Phrases.........................................................31
Section 1.03 Captions; Table of Contents......................................................31
Section 1.04 Opinions.........................................................................31
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST....................................................32
Section 2.01 Establishment of the Trust.......................................................32
Section 2.02 Office...........................................................................32
Section 2.03 Purposes and Powers..............................................................32
Section 2.04 Appointment of the Trustee; Declaration of Trust.................................32
Section 2.05 Expenses of the Trust............................................................32
Section 2.06 Ownership of the Trust...........................................................32
Section 2.07 Situs of the Trust...............................................................33
Section 2.08 Miscellaneous REMIC Provisions...................................................33
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF SELLER TO CONVEY HOME EQUITY LOANS.................................................35
Section 3.01 Representations and Warranties of the Depositor..................................35
Section 3.02 Representations and Warranties of the Servicer...................................37
Section 3.03 Representations and Warranties of the Seller.....................................39
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to the
Home Equity Loans in Certain Situations..........................................42
Section 3.05 Conveyance of the Initial Home Equity Loans and Qualified
Replacement Mortgages............................................................48
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity
Loans; Certification by Trustee..................................................52
Section 3.07 Conveyance of the Subsequent Home Equity Loans...................................53
Section 3.08 Custodian........................................................................55
Section 3.09 Books and Records................................................................55
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES..............................................................56
Section 4.01 Issuance of Certificates.........................................................56
Section 4.02 Sale of Certificates.............................................................56
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS.........................................................57
Section 5.01 Terms............................................................................57
Section 5.02 Forms............................................................................57
Section 5.03 Execution, Authentication and Delivery...........................................57
Section 5.04 Registration and Transfer of Certificates........................................58
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates................................60
Section 5.06 Persons Deemed Owners............................................................60
Section 5.07 Cancellation.....................................................................60
Section 5.08 Limitation on Transfer of Ownership Rights.......................................60
Section 5.09 Assignment of Rights.............................................................62
ARTICLE VI
COVENANTS......................................................................................63
Section 6.01 Distributions....................................................................63
Section 6.02 Money for Distributions to be Held in Trust; Withholding.........................63
Section 6.03 Protection of Trust Estate.......................................................64
Section 6.04 Performance of Obligations.......................................................64
Section 6.05 Negative Covenants...............................................................65
Section 6.06 No Other Powers..................................................................65
Section 6.07 Limitation of Suits..............................................................65
Section 6.08 Unconditional Rights of Owners to Receive Distributions..........................66
Section 6.09 Rights and Remedies Cumulative...................................................66
Section 6.10 Delay or Omission Not Waiver.....................................................66
Section 6.11 Control by Owners................................................................66
Section 6.12 Indemnification by the Seller....................................................67
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES...........................................................68
Section 7.01 Collection of Money..............................................................68
Section 7.02 Establishment of Accounts........................................................68
Section 7.03 Flow of Funds....................................................................68
Section 7.04 Pre-Funding Account and Capitalized Interest Account.............................72
Section 7.05 Investment of Accounts...........................................................73
Section 7.06 Payment of Trust Expenses........................................................73
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Section 7.07 Eligible Investments.............................................................74
Section 7.08 Accounting and Directions by Trustee.............................................75
Section 7.09 Reports by Trustee to Owners.....................................................76
Section 7.10 Reports by Trustee...............................................................78
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS...........................................................................79
Section 8.01 Servicer and Sub-Servicers.......................................................79
Section 8.02 Collection of Certain Home Equity Loan Payments..................................80
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers......................80
Section 8.04 Successor Sub-Servicers..........................................................81
Section 8.05 Liability of Servicer; Indemnification...........................................81
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Owners............................................................81
Section 8.07 Assumption or Termination of Sub-Servicing Agreement
by Trustee.......................................................................81
Section 8.08 Principal and Interest Account...................................................82
Section 8.09 Delinquency Advances and Servicing Advances......................................83
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans...........................84
Section 8.11 Maintenance of Insurance.........................................................85
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements......................85
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout
of Home Equity Loans.............................................................86
Section 8.14 Trustee to Cooperate; Release of Files...........................................87
Section 8.15 Servicing Compensation...........................................................88
Section 8.16 Annual Statement as to Compliance................................................88
Section 8.17 Annual Independent Certified Public Accountants' Reports.........................88
Section 8.18 Access to Certain Documentation and Information Regarding
the Home Equity Loans............................................................89
Section 8.19 Assignment of Agreement..........................................................89
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation
of Servicer......................................................................89
Section 8.21 Inspections; Errors and Omissions Insurance......................................92
Section 8.22 Additional Servicing Responsibilities for Second Mortgage
Loans............................................................................92
ARTICLE IX
TERMINATION OF TRUST...........................................................................94
Section 9.01 Termination of Trust.............................................................94
Section 9.02 Termination Upon Option of Owners of Class R Certificates........................94
Section 9.03 Termination Upon Loss of REMIC Status............................................95
Section 9.04 Disposition of Proceeds..........................................................96
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ARTICLE X
THE TRUSTEE....................................................................................97
Section 10.01 Certain Duties and Responsibilities..............................................97
Section 10.02 Removal of Trustee for Cause.....................................................99
Section 10.03 Certain Rights of the Trustee...................................................100
Section 10.04 Not Responsible for Recitals or Issuance of Certificates........................101
Section 10.05 May Hold Certificates...........................................................101
Section 10.06 Money Held in Trust.............................................................101
Section 10.07 Compensation and Reimbursement..................................................102
Section 10.08 Corporate Trustee Required; Eligibility.........................................102
Section 10.09 Resignation and Removal; Appointment of Successor...............................102
Section 10.10 Acceptance of Appointment by Successor Trustee..................................103
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.........................................................104
Section 10.12 Reporting; Withholding..........................................................104
Section 10.13 Liability of the Trustee........................................................105
Section 10.14 Appointment of Co-Trustee or Separate Trustee...................................105
ARTICLE XI
MISCELLANEOUS.................................................................................107
Section 11.01 Compliance Certificates and Opinions............................................107
Section 11.02 Form of Documents Delivered to the Trustee......................................107
Section 11.03 Acts of Owners..................................................................108
Section 11.04 Notices, etc. to Trustee........................................................108
Section 11.05 Notices and Reports to Owners; Waiver of Notices................................108
Section 11.06 Rules by Trustee................................................................109
Section 11.07 Successors and Assigns..........................................................109
Section 11.08 Severability....................................................................109
Section 11.09 Benefits of Agreement...........................................................109
Section 11.10 Legal Holidays..................................................................109
Section 11.11 Governing Law; Submission to Jurisdiction.......................................110
Section 11.12 Counterparts....................................................................110
Section 11.13 Usury...........................................................................110
Section 11.14 Amendment.......................................................................111
Section 11.15 Paying Agent; Appointment and Acceptance of Duties..............................111
Section 11.16 REMIC Status....................................................................112
Section 11.17 Additional Limitation on Action and Imposition of Tax...........................114
Section 11.18 Appointment of Tax Matters Person...............................................115
Section 11.19 [Reserved]......................................................................115
Section 11.20 Notices.........................................................................115
Section 11.21 Rule 144A Information...........................................................117
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SCHEDULE I SCHEDULE OF HOME EQUITY LOANS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7IO CERTIFICATE
EXHIBIT B-1 FORM OF CLASS M-1 CERTIFICATE
EXHIBIT B-2 FORM OF CLASS M-2 CERTIFICATE
EXHIBIT B-3 FORM OF CLASS B CERTIFICATE
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT E FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT F-1 FORM OF TRUSTEE'S RECEIPT
EXHIBIT F-2 FORM OF CUSTODIAN'S RECEIPT
EXHIBIT G FORM OF POOL CERTIFICATION
EXHIBIT H FORM OF DELIVERY ORDER
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER
CERTIFICATE
EXHIBIT J-1 FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
EXHIBIT J-2 FORM OF CERTIFICATE REGARDING TRANSFER
(RULE 144A)
EXHIBIT K HOME EQUITY LOANS WITH DOCUMENT
EXCEPTIONS
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POOLING AND SERVICING AGREEMENT, relating to IMC HOME EQUITY LOAN TRUST
1998-1, dated as of March 1, 1998 by and among IMC SECURITIES, INC., a Delaware
corporation, in its capacity as Depositor (the "Depositor"), IMC Mortgage
Company, a Florida corporation 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 the Trust and provide for the
allocation and sale of the beneficial interests therein and the maintenance and
distribution of the Trust Estate;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the Trust Estate;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Trustee valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done; and
WHEREAS, The Chase Manhattan Bank, is willing to serve in the capacity
of Trustee hereunder.
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 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, 1998 whether or not received) listed in Schedule I to this Agreement which
the Seller is causing to be delivered to the Depositor and the Depositor is
causing to be delivered to the Trustee herewith and the Subsequent Home Equity
Loans (other than any principal and interest payments due thereon on or prior to
the related Subsequent Cut-Off Date whether or not received) listed in Schedule
I to any Subsequent Transfer Agreement, which the Seller will cause to be
delivered to the Depositor and the Depositor will cause to be delivered to the
Trustee (and all substitutions for such Home Equity Loans as provided by
Sections 3.03, 3.04 and 3.06), together with the related Home Equity Loan
documents and the Seller's interest in any Property, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the foregoing; (b)
such amounts as may be held by the Trustee in the Certificate Account, the
Upper-Tier Distribution Account, the Pre-Funding Account 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 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 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").
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.
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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-1 Certificates) and any Payment Date, the calendar month immediately
preceding the month in which such Payment Date occurs. A "calendar month" shall
be deemed to be 30 days. All calculations of interest on such Certificates will
be made on the basis of a 360-day year assumed to consist of twelve 30-day
months. With respect to the Class A-1 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-1 Certificates
will be made on the basis of the actual number of days elapsed in the related
Accrual Period and in 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.
"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.
"Aggregate Certificate Principal Balance": As of any date of
determination thereof, the sum of the then outstanding Certificate Principal
Balance of the Class A Certificates, the Mezzanine Certificates and the Class B
Certificates.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Applied Realized Loss Amount": As of any Payment Date, the excess of
(x) the Aggregate Certificate Principal Balance on such Payment Date, after
taking into account the distribution of the Principal Distribution Amount on
such Payment Date but prior to the application of the Applied Realized Loss
Amount, if any, on such Payment Date over (y) the aggregate outstanding Loan
Balance of the Home Equity Loans as of the last day of the related Remittance
Period.
"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.
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"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.
"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 Owners of the
majority of the Percentage Interests of the Offered 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 or the
city in which the Corporate Trust Office is located are authorized or obligated
by law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02 hereof and maintained by the
Trustee.
"Capitalized Interest Requirement": With respect to the Payment Dates
in April and May 1998, the excess, if any, of (x) the sum of the interest
accruing at a rate equal to the sum of (i) the Weighted Average Pass-Through
Rate and (ii) the Class A-7IO Current Interest expressed as a per annum rate on
the Aggregate Certificate Principal Balance (1) on the aggregate Loan Balances
of the Subsequent Home Equity Loans transferred to the Trust on each Subsequent
Transfer Date during the month preceding the related Payment Date for the period
from the first day of the related Remittance Period to the Subsequent Cut-Off
Date (provided, however, if the related Subsequent Cut-Off Date begins on or
prior to such Remittance Period, the related Loan Balances will be zero), plus
(2) on the Pre-Funded Amount outstanding as of the end of the Remittance Period
for a period equal to the Remittance Period over (y) any Pre-Funding Account
Earnings to be distributed to the Certificate Account on the related Payment
Date pursuant to Section 7.04(d).
"Certificate": Any one of the Class A Certificates, the Mezzanine
Certificates, the Class B Certificates or the Class R Certificates, each
representing the interests and the rights described in this Agreement.
"Certificate Account": The segregated certificate account established
in accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "The Chase Manhattan Bank as Trustee on behalf of the Owners of
the IMC Home Equity Loan Trust 1998-1, Home Equity Loan Pass-Through
Certificates."
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"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal Balances
thereof, as follows:
Class A-1 Certificates - $334,270,000
Class A-2 Certificates - $137,610,000
Class A-3 Certificates - $151,170,000
Class A-4 Certificates - $101,640,000
Class A-5 Certificates - $ 70,310,000
Class A-6 Certificates - $ 70,000,000
Class M-1 Certificates - $ 47,500,000
Class M-2 Certificates - $ 45,000,000
Class B Certificates - $ 42,500,000
The Class A-7IO Certificates and the Class R Certificates do not have a
Certificate Principal Balance.
"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 Sailors' 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, plus (b) the
Servicing Fee, the Trustee Fee and any portion of the Trustee Reimbursable
Expenses for such Remittance Period.
"Class": Any Class of the Offered Certificates or the Class R
Certificates.
"Class A Certificate": Any one of the Class A-1 Certificate, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates or Class A-7IO Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Classes of Class A Certificates less the aggregate of all amounts actually
distributed on such Class A Certificates with respect to the Class A Principal
Distribution Amount pursuant to Section 7.03(c) hereof on all prior Payment
Dates, and increased by any Preference Amount previously distributed to the
Owners of the Class A Certificates with respect to principal.
"Class A Distribution Amount": The Class A-1 Distribution Amount, the
Class A-2 Distribution Amount, the Class A-3 Distribution Amount, the Class A-4
Distribution Amount, the Class A-5 Distribution Amount, the Class A-6
Distribution Amount and the Class A-7IO Current Interest.
"Class A Principal Distribution Amount": As of any Payment Date (a)
prior to the Stepdown Date or with respect to which a Trigger Event is in
effect, 100% of the Principal Distribution Amount and (b) on or after the
Stepdown Date and as long as a Trigger Event is not in effect, the excess of (x)
the aggregate Class A Certificate Principal Balance immediately prior to such
Payment Date over (y) the lesser of (A) the product of 68.70% and (ii) the
outstanding Loan Balance of the Home Equity Loans as of the last day of the
related Remittance Period and (B) the outstanding aggregate Loan Balance of the
Home Equity Loans as of the last day of the related Remittance Period minus
$5,000,000.
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"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC 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
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(c) hereof on all prior Payment Dates, and increased by any
Preference Amount previously distributed to the Owners of the Class A-1
Certificates with respect to principal.
"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 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; provided, however, such amount will be reduced by the Class
A-1 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-1 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-1 Current Interest, (y) the Class A-1 Interest Carry
Forward Amount, and (z) the Class A Principal Distribution Amount payable to the
Owners of the Class A-1 Certificates pursuant to Section 7.03(c) hereof for such
Payment Date.
"Class A-1 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-1
Pass-Through Rate.
"Class A-1 Pass-Through Rate": For any Payment Date, the rate equal to
the lesser of (x) LIBOR plus 0.11% per annum and (y) the weighted average of the
Coupon Rates on the Home Equity Loans, less 0.50375% per annum.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC 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
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(c) hereof on all prior Payment Dates, and increased by any
Preference Amount previously distributed to the Owners of the Class A-2
Certificates with respect to principal.
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
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"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; provided, however, such amount will be reduced by the
Class A-2 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-2 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-2 Current Interest, (y) the Class A-2 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-2 Certificates pursuant to Section 7.03(c) hereof for such
Payment Date.
"Class A-2 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-2 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-2 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-2 Certificates on such immediately preceding
Payment Date and (y) interest on such amount during the immediately preceding
Accrual Period at the Class A-2 Pass-Through Rate.
"Class A-2 Pass-Through Rate": 6.31% per annum.
"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC 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
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(c) hereof on all prior Payment Dates, and increased by any
Preference Amount previously distributed to the Owners of the Class A-3
Certificates with respect to principal.
"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; provided, however, such amount will be reduced by the
Class A-3 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-3 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-3 Current Interest, (y) the Class A-3 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-3 Certificates pursuant to Section 7.03(c) hereof for such
Payment Date.
"Class A-3 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-3 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-3 Interest Carry Forward Amount from all previous Payment
6
<PAGE>
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class A-3 Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class A-3
Pass-Through Rate.
"Class A-3 Pass-Through Rate": 6.41% per annum.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC 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
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(c) hereof on all prior Payment Dates, and increased by any
Preference Amount previously distributed to the Owners of the Class A-4
Certificates with respect to principal.
"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; provided, however, such amount will be reduced by the
Class A-4 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-4 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-4 Current Interest, (y) the Class A-4 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-4 Certificates pursuant to Section 7.03(c) hereof for such
Payment Date.
"Class A-4 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-4 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-4 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-4 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-4
Pass-Through Rate.
"Class A-4 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.60% per annum and (y) the weighted average Coupon Rate of the Home Equity
Loans less the sum of (A) 0.50% per annum, (B) the Trustee Fee and (C) for
Payment Dates during the Interest Only Period, the Class A-7IO Allocation Rate.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
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<PAGE>
"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
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(c) hereof on all prior Payment Dates, and increased by any
Preference Amount previously distributed to the Owners of the Class A-5
Certificates with respect to principal.
"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; provided, however, such amount will be reduced by the
Class A-5 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class A-5 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-5 Current Interest, (y) the Class A-5 Interest Carry Forward
Amount and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-5 Certificates pursuant to Section 7.03(c) hereof for such
Payment Date.
"Class A-5 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-5 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-5 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-5 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-5
Pass-Through Rate.
"Class A-5 Pass-Through Rate": On any Payment Date, the lesser of (x)
if such Payment Date is on or prior to the Clean-Up Call Date, 6.95% per annum
and if such Payment Date is after the Clean-Up Call Date, 7.45% per annum, and
(y) the weighted average Coupon Rate of the Home Equity Loans less the sum of
(A) 0.50% per annum, (B) the Trustee Fee and (C) for Payment Dates during the
Interest Only Period, the Class A-7IO Allocation Rate.
"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC 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
thereon with respect to the Class A Principal Distribution Amount pursuant to
Section 7.03(c) hereof on all prior Payment Dates, and increased by any
Preference Amount previously distributed to the Owners of the Class A-6
Certificates with respect to principal.
"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
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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; provided, however,
such amount will be reduced by the Class A-6 Certificates' pro rata share of any
Civil Relief Interest Shortfalls.
"Class A-6 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-6 Current Interest, (y) the Class A-6 Interest Carry Forward
Amount, and (z) the Class A Principal Distribution Amount payable to the Owners
of the Class A-6 Certificates pursuant to Section 7.03(c) for such Payment Date;
[provided, however, that the Class A-6 Distribution Amount shall in no event be
greater than the sum of the Class A-6 Current Interest and the Class A Principal
Distribution Amount for such Payment Date.]
"Class A-6 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-6 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-6 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-6 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-6
Pass-Through Rate.
"Class A-6 Lockout Distribution Amount": For any Payment Date, the
product of (i) the applicable Class A-6 Lockout Percentage for such Payment Date
and (ii) the Class A-6 Lockout Pro Rata Distribution Amount for such Payment
Date; provided, that the Class A-6 Lockout Distribution Amount shall not exceed
the Class A-6 Certificate Principal Balance.
"Class A-6 Lockout Percentage": For each Payment Date, the percentage
set forth below:
Class A-6
Payment Dates Lockout Percentage
------------- ------------------
April 1998 - March 2001 0%
April 2001 - March 2003 45%
April 2003 - March 2004 80%
April 2004 - March 2005 100%
April 2005 and thereafter 300%
"Class A-6 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-6 Certificate Principal Balance immediately prior to such Payment Date
and the denominator of which is the aggregate Certificate Principal Balance of
the Class A Certificates immediately prior to such Payment Date and (y) the
Class A Principal Distribution Amount for such Payment Date.
"Class A-6 Pass-Through Rate": On any Payment Date, the lesser of (x)
if such Payment Date is on or prior to the Clean-Up Call Date, 6.52% per annum,
and if such Payment Date is after the Clean-Up Call Date, 7.02% per annum and
(y) the weighted average Coupon Rate of the Home Equity Loans less the sum of
(A) 0.50% per annum, (B) the Trustee Fee and (C) for Payment Dates during the
Interest Only Period, the Class A-7IO Interest Allocation Rate.
"Class A-7IO Certificate": Any one of the Certificates designated on
the face thereof as a Class A-7IO 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 Upper-Tier REMIC created hereunder for
purposes of the REMIC provisions.
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<PAGE>
"Class A-7IO Certificate Termination Date": The Payment Date in
September 2000.
"Class A-7IO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-7IO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class A-7IO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-7IO Certificates as it relates to interest previously paid on the
Class A-7IO Certificates; provided, however, such amount will be reduced by the
Class A-7IO Certificates' pro rata share of any Civil Relief Interest
Shortfalls.
"Class A-7IO Interest Allocation Rate": For any Payment Date during the
Interest Only Period, (A) the product of (x) 8.25% and (y) the Class A-7IO
Notional Principal Amount divided by (B) the Loan Balance of the Home Equity
Loans.
"Class A-7IO Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class A-7IO Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-7IO Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution made to Owners
of the Class A-7IO Certificates on such immediately preceding Payment Date and
(y) 30 days' interest on such amount at the Class A-7IO Pass-Through Rate.
"Class A-7IO Notional Principal Amount": For Payment Dates during the
Interest Only Period, the Lower-Tier Balance of the Lower-Tier Interest A-6 and
thereafter, zero.
"Class A-7IO Pass-Through Rate": 8.25% per annum.
"Class B Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such Payment
Date, but prior to the application of the Class B Applied Realized Loss Amount,
if any, on such Payment Date) and (y) the Applied Realized Loss Amount as of
such Payment Date.
"Class B Certificate": Any one of the Certificates designated on the
face thereof as a Class B Certificate, substantially in the form annexed hereto
as Exhibit B-3, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class B Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B Certificates less the sum of (x) any amounts of the Class B Principal
Distribution Amount actually distributed to the Owners of the Class B
Certificates pursuant to Section 7.03(c) hereof on all prior Payment Dates and
(y) the aggregate, cumulative amount of the Class B Applied Realized Loss
Amounts on all prior Payment Dates, and increased by any Preference Amount
previously distributed to the Owners of the Class B Certificates with respect to
principal.
"Class B Certificate Termination Date": The Payment Date on which the
Class B Certificate Principal Balance is reduced to zero.
"Class B Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class B Certificates as it relates to interest previously paid on the Class B
Certificates; provided, however, such amount will be reduced by the Class B
Certificates' pro rata share of any Civil Relief Interest Shortfalls.
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<PAGE>
"Class B Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B Current Interest, (x) the Class B Principal Distribution
Amount, if any, (y) the Class B Interest Carry Forward Amount, if any, and (z)
the Class B Realized Loss Amortization Amount, if any.
"Class B Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class B
Current Interest as of the immediately preceding Payment Date and (B) any unpaid
Class B Interest Carry Forward Amount from all previous Payment Dates exceeds
(ii) the amount of the actual distribution with respect to interest made to the
Owners of the Class B Certificates on such immediately preceding Payment Date
and (y) 30 days' interest on such amount at the Class B Pass-Through Rate.
"Class B Pass-Through Rate": On any Payment Date, the lesser of (x) if
such Payment Date is on or prior to the Clean-Up Call Date, 7.87% per annum, and
if such Payment Date is after the Clean-Up Call Date, 8.37% per annum and (y)
the weighted average Coupon Rate of the Home Equity Loans less the sum of (A)
0.50% per annum, (B) the Trustee Fee and (C) for Payment Dates during the
Interest Only Period, the Class A-7IO Interest Allocation Rate.
"Class B Principal Distribution Amount": As of any Payment Date on or
after the Stepdown Date and as long as a Trigger Event is not in effect on such
Payment Date, the excess of (x) the Aggregate Certificate Principal Balance
(after taking into account the payment of the Class A Principal Distribution
Amount, the Class M-1 Principal Distribution Amount and the Class M-2 Principal
Distribution Amount on such Payment Date) over (y) the lesser of (A) the product
of (i) 95.70% and (ii) the outstanding aggregate Loan Balance of the Home Equity
Loans as of the last day of the related Remittance Period and (B) the aggregate
outstanding Loan Balance of the Home Equity Loans as of the last day of the
related Remittance Period minus $5,000,000.
"Class B Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the related Unpaid Realized Loss Amount as of such Payment
Date and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the
sum of the Extra Principal Distribution Amount, the Class M-1 Realized Loss
Amortization Amount, the Class M-2 Realized Loss Amortization Amount, the Class
M-1 Interest Carry Forward Amount, the Class M-2 Interest Carry Forward Amount
and the Class B Interest Carry Forward Amount in each case for such Payment
Date.
"Class M-1 Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-1 Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such Payment
Date, but prior to the application of the Class M-1 Applied Realized Loss
Amount, if any, on such Payment Date) and (y) the excess of (i) the Applied
Realized Loss Amount as of such Payment Date over (ii) the sum of the Class M-2
Applied Realized Loss Amount and the Class B Applied Realized Loss Amount, in
each case as of such Payment Date.
"Class M-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class M-1 Certificate, substantially in the form annexed
hereto as Exhibit B-1, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1 Certificates less the sum of (x) any amounts of the Class M-1
Principal Distribution Amount actually distributed to the Owners of the Class
M-1 Certificates pursuant to Section 7.03(c) hereof on all prior Payment Dates
and (y) the aggregate, cumulative amount of Class M-1 Applied Realized Loss
Amounts on all prior Payment Dates, and increased by any
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<PAGE>
Preference Amount previously distributed to the Owners of the Class M-1
Certificates with respect to principal.
"Class M-1 Certificate Termination Date": The Payment Date on which the
Class M-1 Certificate Principal Balance is reduced to zero.
"Class M-1 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class M-1 Certificates as it relates to interest previously paid on the Class
M-1 Certificates; provided, however, such amount will be reduced by the Class
M-1 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class M-1 Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-1 Current Interest, (x) the Class M-1 Principal
Distribution Amount, if any, (y) the Class M-1 Interest Carry Forward Amount, if
any and (z) the Class M-1 Realized Loss Amortization Amount, if any.
"Class M-1 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-1
Pass-Through Rate.
"Class M-1 Pass-Through Rate": On any Payment Date, the lesser of (x)
if such Payment Date is on or prior to the Clean-Up Call Date, 7.03% per annum
and if such Payment Date is after the Clean-Up Call Date, 7.53% per annum, and
(y) the weighted average Coupon Rate of the Home Equity Loans less the sum of
(A) 0.50% per annum, (B) the Trustee Fee and (C) for Payment Dates during the
Interest Only Period, the Class A-7IO Interest Allocation Rate.
"Class M-1 Principal Distribution Amount": As of any Payment Date on or
after the Stepdown Date and as long as a Trigger Event is not in effect on such
date, the excess of (x) the sum of (i) the aggregate Class A Certificate
Principal Balance (after taking into account the payment of the Class A
Principal Distribution Amount on such Payment Date) and (ii) the Class M-1
Certificate Principal Balance immediately prior to such Payment Date over (y)
the lesser of (A) the product of (i) 78.20% and (ii) the outstanding Loan
Balance of the Home Equity Loans as of the last day of the related Remittance
Period and (B) the aggregate outstanding Loan Balance of the Home Equity Loans
as of the last day of the related Remittance Period minus $5,000,000.
"Class M-1 Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the related Unpaid Realized Loss Amount as of such Payment
Date and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the
sum of the Extra Principal Distribution Amount and the Class M-1 Interest Carry
Forward Amount, in each case for such Payment Date.
"Class M-2 Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-2 Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such Payment
Date, but prior to the application of the Class M-2 Applied Realized Loss
Amount, if any, on such Payment Date) and (y) the excess of (i) the Applied
Realized Loss Amount as of such Payment Date over (ii) the Class B Applied
Realized Loss Amount as of such Payment Date.
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<PAGE>
"Class M-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class M-2 Certificate, substantially in the form annexed
hereto as Exhibit B-2, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2 Certificates less the sum of (x) any amounts of the Class M-2
Principal Distribution Amount actually distributed and to the Owners of the
Class M-2 Certificates, pursuant to Section 7.03(c) hereof on all prior Payment
Dates and (y) the aggregate, cumulative amount of Class M-2 Applied Realized
Loss Amounts on all prior Payment Dates, and increased by any Preference Amount
previously distributed to the Owners of the Class M-2 Certificates with respect
to principal.
"Class M-2 Certificate Termination Date": The Payment Date on which the
Class M-2 Certificate Principal Balance is reduced to zero.
"Class M-2 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class M-2 Certificates as it relates to interest previously paid on the Class
M-2 Certificates; provided, however, such amount will be reduced by the Class
M-2 Certificates' pro rata share of any Civil Relief Interest Shortfalls.
"Class M-2 Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-2 Current Interest, (x) the Class M-2 Principal
Distribution Amount, if any, (y) the Class M-2 Interest Carry Forward Amount, if
any, and (z) the Class M-2 Realized Loss Amortization Amount, if any.
"Class M-2 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-2 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-2 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-2 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-2
Pass-Through Rate.
"Class M-2 Pass-Through Rate": On any Payment Date, the lesser of (x)
if such Payment Date is on or prior to the Clean-Up Call Date, 7.38% per annum,
and (y) and if such Payment Date is after the Clean-Up Call Date, 7.88% per
annum the weighted average Coupon Rate of the Home Equity Loans less the sum of
(A) 0.50% per annum, (B) the Trustee Fee and (C) for Payment Dates during the
Interest Only Period, the Class A-7IO Interest Allocation Rate.
"Class M-2 Principal Distribution Amount": As of any Payment Date on or
after the Stepdown Date and as long as a Trigger Event is not in effect on such
Payment Date, the excess of (x) the sum of (i) the aggregate Class A Certificate
Principal Balance (after taking into account the payment of the Class A
Principal Distribution Amount on such Payment Date), (ii) the Class M-1
Certificate Principal Balance (after taking into account the payment of the
Class M-1 Principal Distribution Amount on such Payment Date) and (iii) the
Class M-2 Certificate Principal Balance immediately prior to such Payment Date
over (y) the lesser of (A) the product of (i) 87.20% and (ii) the outstanding
Loan Balance of the Home Equity Loans as of the last day of the related
Remittance Period and (B) the aggregate outstanding Loan Balance of the Home
Equity Loans as of the last day of the related Remittance Period minus
$5,000,000.
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"Class M-2 Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the related Unpaid Realized Loss Amount as of such Payment
Date and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the
sum of the Extra Principal Distribution Amount, the Class M-1 Realized Loss
Amortization Amount, the Class M-1 Interest Carry Forward Amount and the Class
M-2 Interest Carry Forward Amount, in each case 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 Upper-Tier REMIC created hereunder for the
purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on which the
aggregate Loan Balance of the Home Equity Loans has declined to $100,000,000 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: Structured Finance Services 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 Cumulative Realized Losses as a percentage of the Maximum Collateral Amount;
provided that Realized Losses resulting solely from Cram Down Losses shall not
be included in the definition of Cumulative Realized Losses for purposes of
calculating the Cumulative Loss Percentage.
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Home Equity Loans.
"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-7IO
Current Interest, (h) the Class M-1 Current Interest, (i) the Class M-2 Current
Interest and (j) the Class B Current Interest for such Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of March 1,
1998 among the Custodian, the Trustee, the Depositor, the Seller and the
Servicer.
"Custodian": The BankBoston, N.A., as Custodian on behalf of the
Trustee pursuant to the Custodial Agreement.
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"Cut-Off Date": As of the close of business on March 1, 1998.
"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 Trustee,
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 Fitch and "A2" by Moody's, (ii) a short-term debt
rating of at least "A-1" by Standard & Poor's and (iii) the Servicer shall
provide the Trustee 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 1998.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"Disqualified Organization": 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.
"Extra Principal Distribution Amount": As of any Payment Date, the
lesser of (x) the Monthly Excess Interest Amount for such Payment Date and (y)
the Overcollateralization Deficiency for such Payment Date.
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"Fannie Mae": Fannie Mae, a federally chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"Fannie Mae Guide": Fannie Mae's Servicing Guide, as the same may be
amended by Fannie Mae from time to time, and the Servicer shall elect to apply
such amendments in accordance with Section 8.01 hereof.
"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(k) hereof.
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"Fitch": Fitch IBCA, Inc. or any successor thereto.
"Funding Period": The period commencing on the Startup Day and ending
on the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account (exclusive of any investment earnings) is less than
$100,000, (ii) the date on which the Servicer may be removed pursuant to Section
8.20(a) hereof and (iii) April 30, 1998.
"Highest Lawful Rate": As defined in Section 11.13 hereof.
"Home Equity Loans": Such home equity loans (including Initial Home
Equity Loans and Subsequent Home Equity Loans) transferred and assigned to the
Trust pursuant to Section 3.05(a) and 3.07(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan". The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which
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is REO Property prior to such Property's disposition by the Trust. Any home
equity loan which, although intended by the parties hereto to have been, and
which purportedly was, transferred and assigned to the Trust by the Depositor,
in fact was not transferred and assigned to the Trust for any reason whatsoever,
including, without limitation, the incorrectness of the statement set forth in
Section 3.04(b)(x) hereof with respect to such home equity loan, shall
nevertheless be considered a "Home Equity Loan" for all purposes of this
Agreement.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in an Offered Certificate.
"Initial Home Equity Loans": The Home Equity Loans to be conveyed to
the Trust by the Depositor on the Startup Day.
"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.
"Interest Amount Available": As of any Payment Date, the Interest
Remittance Amount less the Trustee Fee and Trustee Reimbursable Expenses.
"Interest Only Period": The period from the Startup Day through and
including September, 2000.
"Interest Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) all interest due during the related Remittance
Period with respect to the Home Equity Loans, (ii) all Compensating Interest
paid by the Servicer on such Monthly Remittance Date, (iii) the portion of the
Substitution Amount relating to interest on the Home Equity Loans, (iv) the
portion of any Loan Purchase Price relating to interest on any Home Equity Loan
repurchased during the related Remittance Period, (v) any amounts required to be
transferred from the Capitalized Interest Account to the Certificate Account
pursuant to Section 7.04(e) hereof on the related Payment Date, and (vi) the
portion of Net Liquidation Proceeds relating to interest.
"LIBOR": With respect to any Accrual Period for the Class A-1
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the London interbank 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-1 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.
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"Liquidation Proceeds": With respect to any Liquidated Loan, all
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the actual outstanding principal balance thereof on the
Cut-Off Date with respect to the Initial Home Equity Loans or relevant
Subsequent Cut-Off Date with respect to the Subsequent Home Equity Loans
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.
"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
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"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-3 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-4 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-4 Pass-Through Rate.
"Lower-Tier A-4 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-5 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-6 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier B-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest B-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier B-1 Pass-Through Rate.
"Lower-Tier B-1 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier Balance": As to each Class of Lower-Tier Interests and any
Payment Date, the Initial Lower-Tier Balance as set forth in Section 2.08(a)
minus all amounts distributed as principal of such Class on previous Payments
Dates pursuant to Section 7.03(c).
"Lower-Tier Distribution Amount": With respect to any Payment Date, the
sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2 Monthly Interest,
the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4 Monthly Interest, the
Lower-Tier A-5 Monthly Interest, the Lower-Tier A-6 Monthly Interest, the
Lower-Tier B-1 Monthly Interest, the Lower-Tier M-1 Monthly Interest, the
Lower-Tier M-2 Monthly Interest, the Class A Principal Distribution Amount, the
Class M-1 Principal Distribution Amount, the Class M-2 Principal Distribution
Amount and the Class B Principal Distribution Amount. All amounts calculated
pursuant hereto with respect to principal shall be exclusive of any Extra
Principal Distribution Amounts. Such Class A Principal Distribution Amount is
allocated as follows: (a) to the Lower-Tier Interest A-6 an amount equal to the
Class A-6 Lockout Distribution Amount and (b) as a distribution on the
Lower-Tier Interest A-1 until the Lower-Tier Interest A-1 Termination Date, the
Class A-1 Distribution Amount; as a distribution on the Lower-Tier Interest A-2
until the Lower-Tier Interest A-2 Termination Date, the
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Class A-2 Distribution Amount; as a distribution on the Lower-Tier Interest A-3
until the Lower-Tier Interest A-3 Termination Date, the Class A-3 Distribution
Amount; as a distribution on the Lower-Tier Interest A-4 until the Lower-Tier
Interest A-4 Termination Date, the Class A-4 Distribution Amount; as a
distribution on the Lower-Tier Interest A-5 until the Lower-Tier Interest A-5
Termination Date, the Class A-5 Distribution Amount; and as a distribution on
the Lower-Tier Interest A-6 until the Lower-Tier Interest A-6 Termination Date,
the Class A-6 Distribution Amount.
"Lower-Tier Interest A-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-4": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest B-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-1 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-1 on such Payment Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-2 on such Payment Date.
"Lower-Tier Interest A-3 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-3 on such Payment Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-4 on such Payment Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-5 on such Payment Date.
"Lower-Tier Interest A-6 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-6 on such Payment Date.
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"Lower-Tier Interest B-1 Termination Date ": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest B-1 is reduced to zero through the
distribution made in respect of Lower-Tier Interest B-1 on such Payment Date.
"Lower-Tier Interest M-1 Termination Date ": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-1 is reduced to zero through the
distribution made in respect of Lower-Tier Interest M-1 on such Payment Date.
"Lower-Tier Interest M-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-2 is reduced to zero through the
distribution made in respect of Lower-Tier Interest M-2 on such Payment Date.
"Lower-Tier M-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-1 Pass-Through Rate.
"Lower-Tier M-1 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier M-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-2 Pass-Through Rate.
"Lower-Tier M-2 Pass-Through Rate": For any Payment Date, the Net
Weighted Average Coupon Rate.
"Lower-Tier Pass-Through Rate": As to each of the respective
Lower-Tier Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in
Section 2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the
Trust Estate, other than the Upper-Tier Distribution Account which is an asset
of the Upper-Tier REMIC.
"Lower-Tier REMIC Residual Class": With respect to the Lower-Tier
REMIC, the interest therein designated as the "residual interest" therein for
purposes of the REMIC Provisions. The Lower-Tier REMIC Residual Class shall be
uncertificated, and shall be issuable only in Percentage Interests of 99.999% to
IMC Mortgage Company and 0.001% to The Chase Manhattan Bank, as Tax Matters
Person. Such interests shall be non-transferrable, except that The Chase
Manhattan Bank may assign such interest to another person who accepts such
assignment and the designation as Tax Matters Person pursuant to Section 11.18
hereof. The Lower-Tier REMIC Residual Class is entitled only to any amounts at
any time held in the Certificate Account and not required to be paid to the
Upper-Tier REMIC, which is expected to be zero at all times during the term of
this Agreement.
"Maximum Collateral Amount": $1,000,000,000.
"Mezzanine Certificates": Collectively, the Class M-1 Certificates and
the Class M-2 Certificates.
"Monthly Excess Cashflow Amount": For any Payment Date, the sum of (x)
the Monthly Excess Interest Amount and (y) the Overcollateralization Release
Amount for such Payment Date.
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"Monthly Excess Interest Amount": With respect to any Payment Date, the
excess, if any, of (i) the Interest Amount Available for the related Remittance
Period, over (ii) the Current Interest on such Payment Date.
"Monthly Payment": With respect to any Home Equity Loan and any
Remittance Period, the payment of principal, if any, and interest due on the Due
Date in such Remittance Period pursuant to the related Note.
"Monthly Remittance Amount": As of any Monthly Remittance Date, the sum
of (i) the Interest Remittance Amount for such Monthly Remittance Date and (ii)
the Principal Remittance Amount for such Monthly Remittance Date.
"Monthly Remittance Date": The 18th day of each month, or if such day
is not a Business Day, on the preceding Business Day, commencing in April 1998.
"Monthly Reporting Date": The Determination Date.
"Moody's": Moody's Investors Service Inc. or any successor thereto.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"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 Weighted Average Coupon Rate": With respect to any Payment Date,
the weighted average of the Coupon Rates of the Home Equity Loans (weighted by
the Loan Balances of the Home Equity Loans), less the sum of (A) 0.50% per annum
and (B) the Trustee Fee and Trustee Reimbursable Expenses.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Offered Certificates": Collectively, the Class A Certificates, the
Mezzanine Certificates and the Class B Certificates.
"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 Underwriting
Agreement and the Certificates.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all
Initial Home Equity Loans as of the Cut-Off Date, which is $750,282,354.73.
"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 $249,717,645.27.
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"Original Capitalized Interest Amount": $2,033,448.41.
"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 canceled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Overcollateralization Amount": As of any Payment Date, the excess, if
any, of (x) the sum of (i) the aggregate Loan Balances of the Home Equity Loans
as of the close of business on the last day of the related Remittance Period and
(ii) any amount on deposit in the Pre-Funding Account at such time exclusive of
Pre-Funding Account Earnings over (y) the Aggregate Certificate Principal
Balance (after taking into account all distributions of principal on such
Payment Date).
"Overcollateralization Deficiency": As of any Payment Date, the excess, if
any, of (x) the Targeted Overcollateralization Amount for such Payment Date over
(y) the Overcollateralization Amount for such Payment Date, calculated for this
purpose after taking into account the reduction on such Payment Date of the
Aggregate Certificate Principal Balance resulting from the distribution of the
Principal Remittance Amount (but not the Extra Principal Distribution Amount) on
such Payment Date, but prior to taking into account any Applied Realized Loss
Amount on such Payment Date.
"Overcollateralization Release Amount": As of any Payment Date, the lesser
of (x) the Principal Remittance Amount for such Payment Date and (y) the excess
of (i) the Overcollateralization Amount for such Payment Date, assuming that
100% of the Principal Remittance Amount is applied on such Payment Date to the
payment of principal on the Offered Certificates and (ii) the Targeted
Overcollateralization Amount for such Payment Date, provided that if a
Subordinated Trigger Event is in effect, the Overcollateralization Release
Amount shall be zero.
"Overfunded Interest Amount": With respect to each Subsequent Transfer
Date, the difference, if any, between (i) interest accruing from the related
Subsequent Cut-Off Date to April 30, 1998 on the aggregate Loan Balances of the
Subsequent Home Equity Loans acquired by the Trust on such Subsequent Transfer
Date, calculated at a rate equal to the sum of the (1) Weighted Average
Pass-Through Rate and (2) the Class A-7IO Current Interest expressed as a per
annum rate on the Aggregate Certificate Principal Balance over (ii) interest
accruing from the Subsequent Cut-Off Date to April 30, 1998 on the aggregate
Loan Balance of the Subsequent Home Equity Loans 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.
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"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.06 hereof.
"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 20,
1998.
"Percentage Interest": With respect to a Certificate of any Class of
Offered Certificates (other than the Class A-7IO Certificates), a fraction,
expressed as a decimal, the numerator of which is the initial Certificate
Principal Balance represented by such Certificate and the denominator of which
is the aggregate initial Certificate Principal Balance represented by all the
Certificates of such Class. With respect to a Certificate of the Class A-7IO
Certificates a fraction, expressed as a percentage, the numerator of which is
the initial Class A-7IO Notional Principal Amount represented by such Class
A-7IO Certificate and the denominator of which is the aggregate initial Class
A-7IO Notional Principal Amount represented by all of the Class A-7IO
Certificates. With respect to the Class R Certificates, the portion of the Class
evidenced thereby, expressed as a percentage, as stated on the face of such
Certificate, all of which shall total 100% with respect to the related Class.
"Person": Any individual, corporation, limited partnership,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preference Amount": With respect to the Offered Certificates means any
amounts of Current Interest and principal included in previous distributions to
the Owners of such 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.
"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 hereof and maintained by the Trustee.
"Pre-Funding Account Earnings": With respect to the April 1998 Payment
Date, the actual investment earnings earned during the period from the Startup
Day through April 20, 1998 (inclusive) on the portion of the Pre-Funded Amount
remaining during such period as calculated by the Trustee pursuant to Section
3.07(d) hereof; and with respect to the May 1998 Payment Date, the actual
investment earnings earned during the period from April 20, 1998 through May 20,
1998 (inclusive) on the portion of the Pre-Funded Amount, remaining during such
period as calculated by the Trustee pursuant to Section 3.07(d) hereof.
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"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment, Substitution Amounts, the
portion of the purchase price of any Home Equity Loan purchased from the Trust
pursuant to Section 3.03, 3.04, 3.06(b) or 8.10(b) hereof representing principal
and the proceeds of any Insurance Policy which are to be applied as a payment of
principal on the related Home Equity Loan shall be deemed to be Prepayments for
all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof.
"Principal Distribution Amount": As of any Payment Date, the sum of (i)
the Principal Remittance Amount (minus, for Payment Dates occurring on and after
the Stepdown Date the Overcollateralization Release Amount, if any) and (ii) the
Extra Principal Distribution Amount, if any.
"Principal Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) the principal actually collected by the
Servicer with respect to Home Equity Loans during the related Remittance Period,
(ii) the Loan Balance of each such Home Equity Loan that was purchased from the
Trustee on or prior to such Monthly Remittance Date, to the extent such Loan
Balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by the Seller in connection
with a substitution of a Home Equity Loan, to the extent such Substitution
Amounts were actually deposited in the Principal and Interest Account on or
prior to such Monthly Remittance Date, (iv) the principal portion of all Net
Liquidation Proceeds actually collected by the Servicer with respect to such
Home Equity Loans during the related Remittance Period (to the extent such Net
Liquidation Proceeds related to principal), (v) any amounts required to be
transferred from the Pre-Funding Account to the Certificate Account pursuant to
Section 7.04(c) and (v) the amount of investment losses required to be deposited
pursuant to Sections 7.05(e) and 8.08(b).
"Prohibited Transaction": 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 August 18, 1997
constituting part of the Registration Statement.
"Prospectus Supplement": The IMC Home Equity Loan Trust 1998-1
Prospectus Supplement dated February 27, 1998 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.
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<PAGE>
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 and 3.06(b) hereof, which (i) has a
Coupon Rate at least equal to the Coupon Rate of the Home Equity Loan being
replaced; provided, however, that if the Home Equity Loan being replaced is an
Underwater Loan, such Qualified Replacement Mortgage will not have a Coupon Rate
less than 8.375%, (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 May 31, 2028, (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) and (ix) satisfies the
criteria set forth from time to time in the definition thereof at Section
860G(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust. In the event that one or more home equity loans are proposed to be
substituted for one or more Home Equity Loans, the foregoing tests may be met on
a weighted average basis or other aggregate basis acceptable to the Trustee,
except that the requirements of clauses (i), (iv) and (ix) hereof must be
satisfied as to each Qualified Replacement Mortgage.
"Rating Agencies": Collectively, Moody's, Standard & Poor's and Fitch
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 Offered Certificates (other than the
Class A-1 Certificates) and any 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-1 Certificates and any Payment Date, the day
immediately preceding such Payment Date.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC 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 and (iii) 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.
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<PAGE>
"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
333-31197), including all amendments thereto and including the Prospectus
relating to the Offered Certificates.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": With respect to each Monthly Remittance Date, the
period commencing the second day of the calendar month immediately preceding
such Monthly Remittance Date and ending the first day of the calendar month in
which such Monthly Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Offered Certificates
registered in the Register under the nominee name of the Depository.
"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, whether or not such Home Equity Loan (including related Note) has been
modified and a code as to whether the loan is a date of payment loan.
"Scheduled Principal Payment": As of any date of calculation, with
respect to a Home Equity Loan, the then stated scheduled monthly installment of
principal payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date), without taking into account any Prepayment
made on such Home Equity Loan during the then-current Remittance Period.
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<PAGE>
"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": IMC Mortgage Company, a Florida corporation.
"Senior Enhancement Percentage": For any Payment Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Certificate Principal
Balance of the Subordinate Certificates and (ii) the Overcollateralization
Amount, in each case after taking into account the distribution of the Principal
Distribution Amount on such Payment Date by (y) the Loan Balance of the Home
Equity Loans as of the last day of the related Remittance Period.
"Senior Lien": With respect to any Second Mortgage Loan, the home
equity loan relating to the corresponding Property having a first priority lien.
"Senior Specified Enhancement Percentage": 31.30%.
"Servicer": IMC Mortgage Company, a Florida corporation, 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 Termination Event": As defined in Section 8.20(a) hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 8.15 and equal to one
month's interest at 0.50% per annum of the then outstanding principal balance of
such Home Equity Loan as of the first day of each Remittance Period payable on a
monthly basis; provided, however, that if a successor Servicer is appointed
pursuant to Section 8.20 hereof, the Servicing Fee shall be the amount as agreed
upon by the Trustee, the successor Servicer and the Owners of a majority of the
Percentage Interests of the Class R Certificates, such amount not to exceed
0.50% per annum.
"60+ Day Delinquent Loan": With respect to any Determination Date, all
REO Properties and each Home Equity Loan, with respect to which any portion of a
Monthly Payment is, as of the last day of the prior calendar month, two months
or more past due (without giving effect to any grace period).
"Standard & Poor's": Standard & Poor's Rating Services, a division of
the McGraw-Hill Companies.
"Startup Day": March 11, 1998.
"Stepdown Date": The earlier to occur of (i) the later to occur of (x)
the Payment Date in April 2001 and (y) the first Payment Date on which the
Senior Enhancement Percentage (after taking into account distributions of
principal on such Payment Date) is equal to or greater than the Senior Specified
Enhancement Percentage and (ii) the date on which the aggregate Class A
Certificate Principal Balance has been reduced to zero.
"Subordinate Certificates": Collectively, the Mezzanine Certificates
and Class B Certificates.
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<PAGE>
"Subordinated Trigger Event": A Subordinated Trigger Event has occurred
with respect to a Payment Date if both of the following tests are failed on such
Payment Date:
A Cumulative Loss Test is failed with respect to a Payment Date if the
Cumulative Loss Percentage equals or exceeds the percentage set out for the
corresponding Payment Date below:
Payment Dates Cumulative Loss Percentage
------------- --------------------------
April 2001 - March 2002 2.50%
April 2002 - March 2003 3.20%
April 2003 - March 2004 3.60%
April 2004 - March 2005 3.80%
April 2005 and thereafter 4.10%
A Delinquency Test is failed with respect to a Payment Date if the
product of (x) the Senior Enhancement Percentage and (y) 50% is equal to or less
than the amount of 60+ Day Delinquent Loans, expressed as a percentage of the
aggregate outstanding Loan Balance of the Home Equity Loans.
"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.
"Targeted Overcollateralized Amount": As of any Payment Date (x) prior
to the Stepdown Date, $21,500,000 and (y) on or after the Stepdown Date, the
greater of (i) 4.30% of the aggregate outstanding Loan Balance of the Home
Equity Loans as of the last day of the related Remittance Period and (ii)
$5,000,000.
"Tax Matters Person": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code.
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<PAGE>
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates and the Lower-Tier REMIC Residual Class, each of which
shall be issued to and held by The Chase Manhattan Bank throughout the term
hereof unless another person shall accept an assignment of either such interest
and the designation of Tax Matters Person pursuant to Section 11.18 hereof.
"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 Date 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) the Trustee Fee (calculated as a percentage of the outstanding principal
amount of the Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03(a) hereof.
"Trigger Event": A Trigger Event has occurred with respect to a Payment
Date if the percentage obtained by dividing (x) the amount of 60+ Day Delinquent
Loans by (y) the aggregate outstanding Loan Balance of the Home Equity Loans as
of the last day of the immediately preceding Remittance Period exceeds one-half
of the Senior Enhancement Percentage as of the last day of the immediately
preceding Remittance Period.
"Trust": IMC Home Equity Loan Trust 1998-1, 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 0.00375% 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.
"Underwater Loans": Any Home Equity Loan having a Coupon Rate as of the
Startup Day that is less than 8.37375%.
"Underwriters": Bear, Stearns & Co. Inc., PaineWebber Incorporated,
Deutsche Morgan Grenfell Inc. and J.P. Morgan Securities Inc.
"Unpaid Realized Loss Amount": For any Class of the Subordinate
Certificates and as to any Payment Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Payment Dates over (y) the aggregate, cumulative amount of
related Realized Loss Amortization Amounts with respect to such Class for all
prior Payment Dates.
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"Upper-Tier Distribution Account": The Upper-Tier Distribution Account
established pursuant to Section 7.02 hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08
hereof with respect to the Certificates. The assets of the Upper-Tier REMIC
shall include the Upper-Tier Distribution Account and the right to receive the
distributions deposited therein with respect to each Lower-Tier Interest.
"Weighted Average Pass-Through Rate": As to the Offered Certificates
and any Payment Date, the weighted average of the Class A-1 Pass-Through Rate,
the Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4
Pass-Through Rate, the Class A-5 Pass-Through Rate, the Class A-6 Pass-Through
Rate, the Class M-1 Pass-Through Rate, the Class M-2 Pass-Through Rate and the
Class B 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 M-1 Certificate Principal Balance, the Class M-2 Certificate
Principal Balance and the Class B Certificate Principal Balance as of such
Payment Date prior to taking into account any distributions to be made on such
Payment Date.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction. Any opinion
delivered hereunder shall be addressed to the Rating Agencies and the Trustee.
END OF ARTICLE I
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<PAGE>
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 1998-1".
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 and
the Owners.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of either the Lower-Tier REMIC's or the Upper-Tier
REMIC's status 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, 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.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
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<PAGE>
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 interests in the Lower-Tier REMIC shall be
evidenced by the interests having the characteristics and terms as follows:
<TABLE>
<CAPTION>
Initial Lower- Lower-Tier Final Scheduled
Class Designation Tier Balance Pass-Through Rate Payment Dates
----------------- ------------ ----------------- -------------
<S> <C> <C> <C>
Lower-Tier Interest A-1 $334,270,000 (1) December 20, 2012
Lower-Tier Interest A-2 $137,610,000 (1) December 20, 2012
Lower-Tier Interest A-3 $151,170,000 (1) April 20, 2018
Lower-Tier Interest A-4 $101,640,000 (1) March 20, 2025
Lower-Tier Interest A-5 $70,310,000 (1) June 20, 2029
Lower-Tier Interest A-6 $70,000,000 (1) June 20, 2029
Lower-Tier Interest M-1 $47,500,000 (1) June 20, 2029
Lower-Tier Interest M-2 $45,000,000 (1) June 20, 2029
Lower-Tier Interest B-1 $42,500,000 (1) June 20, 2029
Lower-Tier REMIC (2) (2) June 20, 2029
Residual Class
</TABLE>
- - ----------
(1) On any Payment Date, the Net Weighted Average Coupon Rate.
(2) The Lower-Tier REMIC Residual Class is not issued with a Lower-Tier Balance
or a Lower-Tier Pass-Through Rate.
(B) The Lower-Tier Interests A-1, A-2, A-3, A-4, A-5, A-6, M-1, M-2 and
B-1 shall be issued as non-certificated interests. The Lower-Tier REMIC Residual
Class shall be issued from the Lower-Tier REMIC as a non-certificated interest.
(C) The Depositor hereby designates Lower-Tier Interest A-1, Lower-Tier
Interest A-2, Lower-Tier Interest A-3, Lower-Tier Interest A-4, Lower-Tier
Interest A-5, Lower-Tier Interest A-6, Lower-Tier Interest M-1, Lower-Tier
Interest M-2, and Lower-Tier Interest B-1 as "regular interests" and the
Lower-Tier REMIC Residual Class as the single class of "residual interests" in
the Lower-Tier REMIC for purposes of the REMIC Provisions.
(D) The Depositor hereby designates the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7IO, Class M-1, Class M-2, and
Class B as "regular interests," and the Class R Certificates as the single class
of "residual interests" in the Upper-Tier REMIC for purposes of the REMIC
Provisions. The Depositor hereby designates the Lower-Tier Interest A-1, the
Lower-Tier Interest A-2, the Lower-Tier Interest A-3, the Lower-Tier Interest
A-4, the Lower-Tier Interest A-5, the Lower-Tier Interest
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<PAGE>
A-6, the Lower-Tier Interest A-7, the Lower-Tier Interest A-8, Lower-Tier
Interest A-9, Lower-Tier Interest A-10, Lower-Tier Interest M-1, Lower-Tier
Interest M-2, Lower-Tier Interest B-1, and the Upper-Tier Distribution Account
as the only assets of the Upper-Tier REMIC.
(E) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(F) The Owner of the Tax Matters Person Residual Interest in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(G) The Trust and each REMIC included therein shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(H) The Trustee shall cause the Upper-Tier REMIC and the Lower-Tier
REMIC each to elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such election
to be treated as a REMIC. The Trustee shall report all expenses of the Trust
Estate to the Lower-Tier REMIC.
(I) For all Federal tax law purposes amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
the Upper-Tier REMIC and amounts, if any, distributed on the Lower-Tier REMIC
Residual Class shall be treated as distributions by the Lower-Tier REMIC. It is
expected that there shall not be any distributions to the Lower-Tier REMIC
Residual Class.
(J) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to both the Lower-Tier REMIC and the Upper-Tier
REMIC. Such information will be provided in the manner described in Treasury
Regulation Section 1.860E-2(a)(5), or any successor regulation thereto.
(K) For federal income tax purposes, the Final Scheduled Payment Date
for each Class of the Offered Certificates is hereby set to be the Payment Date
indicated below:
Final Scheduled
Class Payment Date
----- ------------
Class A-1 Certificates December 20, 2012
Class A-2 Certificates December 20, 2012
Class A-3 Certificates April 20, 2018
Class A-4 Certificates March 20, 2025
Class A-5 Certificates June 20, 2029
Class A-6 Certificates June 20, 2029
Class A-7IO Certificates September 20, 2000
Class M-1 Certificates June 20, 2029
Class M-2 Certificates June 20, 2029
Class B Certificates June 20, 2029
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 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 sale 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.
(o) No material adverse change affecting any security for the Offered
Certificates has occurred prior to delivery of and payment for the Offered
Certificates.
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(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.
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, 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 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.
Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the
Depositor, the Trustee and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly organized and validly
existing and in good standing under the laws of the State of Florida,
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 Articles 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 the breach of,
any material contract, agreement or other instrument to which the
Servicer is a party or by which the Servicer is bound or violate any
statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Servicer
or any of its properties.
(c) This Agreement and the Operative Documents to which the
Servicer is a party, assuming due authorization, execution and delivery
by the other parties hereto and thereto, each constitutes a valid,
legal and binding obligation of the Servicer, enforceable against it in
accordance with the terms hereof and thereof, except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which might have
consequences that would materially and adversely affect the condition
(financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and
adversely affect its performance hereunder or under the other Operative
Documents to which the Servicer is a party.
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(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.
(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 Fannie Mae 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
Offered Certificates has occurred prior to delivery of and payment for
the Offered 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.
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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, 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 the party discovering such breach shall give
prompt written notice to the other parties. As promptly as practicable, but in
any event, within 60 days of its discovery or its receipt of notice of breach,
the Servicer shall cure such breach in all material respects and, upon the
Servicer's continued failure to cure such breach, may thereafter be removed by
the Trustee (or the Trustee acting upon the request of the Owners of a majority
of the Percentage Interests of the Offered Certificates then Outstanding)
pursuant to Section 8.20 hereof.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Depositor,
the Trustee and the Owners that as of the Startup Day:
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and is in good standing 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 Articles 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
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
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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.
(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.
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(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
Offered Certificates has occurred prior to delivery of and payment for
the Offered 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.
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 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, the party discovering such breach shall give prompt
written notice to the other parties. The Seller hereby covenants and agrees that
within 60 days of its discovery or its receipt of notice of breach, it shall
cure such breach in all material respects or, with respect to a breach of clause
(h) above, the Seller may (or may cause an affiliate of the Seller to) on or
prior to the second Monthly Remittance Date next succeeding such discovery or
receipt of notice (i) substitute in lieu of any Home Equity Loan not in
compliance with clause (h) a Qualified Replacement Mortgage and, if the
outstanding principal amount of such Qualified Replacement Mortgage as of the
applicable Replacement Cut-Off Date is less than the Loan Balance of such Home
Equity Loan as of such Replacement Cut-Off Date, deliver an amount (a
"Substitution Amount") equal to such difference together with the aggregate
amount of (A) all Delinquency Advances and Servicing Advances theretofore made
with respect to such Home Equity Loan and (B) all Delinquency Advances which the
Servicer has theretofore failed to remit with respect to such Home Equity Loan
to the Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Home Equity Loan from the Trust at the Loan Purchase Price, which
purchase price shall be delivered to the Servicer for deposit in the Principal
and Interest Account. Notwithstanding any provision of this Agreement to the
contrary, with respect to any Home Equity Loan which is not in default or as to
which no default is imminent, no repurchase or substitution pursuant to Section
3.03, 3.04 or 3.06 shall be made unless the Seller obtains for the Trustee at
the Seller's expense an opinion of counsel experienced in federal income tax
matters to the effect that such a repurchase or substitution would not
constitute a Prohibited Transaction for the Trust or any REMIC therein or
otherwise subject the Trust or any REMIC therein to tax and would not jeopardize
the status of either the Lower-Tier REMIC or the Upper-Tier REMIC as a REMIC (a
"REMIC Opinion") addressed to and acceptable to the Trustee. The Seller shall
also deliver an Officer's Certificate to the Trustee 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
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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 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, 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 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, 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. 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 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 344 Initial Home Equity Loans
in the amount of $17,830,781.59), that are condominiums, planned unit
developments, townhouses, manufactured housing, mixed use properties,
multifamily residential, or cooperative, provided that no more than
0.41%, 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 90%, except for 966
Home Equity Loans in the amount of $29,785,455.10 that had a
Loan-to-Value Ratio not greater than 100%;
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(vi) Each Home Equity Loan is being serviced by the Servicer
in accordance with the terms of this Agreement;
(vii) The Note related to each Initial Home Equity Loan bears
a current Coupon Rate of at least 6.50% per annum.
(viii) Each Note with respect to the Initial Home Equity Loans
will provide for a schedule of substantially level and equal Monthly
Payments which are sufficient to amortize fully the principal balance
of such Note on or before its maturity date, except for 4,274 Initial
Home Equity Loans, in the amount of $285,662,936.20, representing
38.07% of the aggregate Loan Balance of the Initial Home Equity Loans,
as of the Cut-Off Date which may provide for a "balloon" payment due at
the end of the 15th year (except for 34 Initial Home Equity Loans in
the amount of $2,246,005.99 which provide for "balloon" payments due
within 60 months to 240 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 beginning of business on the Cut-Off Date, no
Initial Home Equity Loan is 30 days or more Delinquent except that
there are 556 Initial Home Equity Loans with an outstanding aggregate
Loan Balance of $33,154,156.49 that are 30 or more days Delinquent but
not more than 59 days Delinquent and there are 94 Initial Home Equity
Loans with an outstanding aggregate Loan Balance of $5,264,548.73 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;
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(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Note or Mortgage, including the obligation of the
related Mortgagor to pay the unpaid principal of or interest on such
Note;
(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph
(xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act (as amended by the Riegle Community Development
and Regulatory Improvement Act of 1994) and other consumer protection
laws, usury, equal credit opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) an
attorney's opinion of title has been obtained but no lender's title
insurance policy has been obtained, 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 (provided that an attorney's opinion
of title without a lender's title insurance policy has been obtained
with respect to no more than 2% of the original Aggregate Loan
Balance);
(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
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considered in a proceeding or action in equity or at law), and all
parties to each Home Equity Loan had full legal capacity to execute all
documents relating to such Home Equity Loan and convey the estate
therein purported to be conveyed;
(xx) The Seller has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and
remedies of the Trustee in any Insurance Policies applicable to any
Home Equity Loans delivered by the Seller including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured, joint
loss payee and mortgagee rights in favor of the Trustee;
(xxi) As of the Startup Day, no more than 0.40% 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 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 Transfer 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
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amount, as consolidated, bears a single interest rate and single
repayment term reflected on the respective Schedule of Home Equity
Loans. The consolidated principal amount does not exceed the original
principal amount of the related Home Equity Loan. No Note permits or
obligates the Servicer to make future advances to the related Mortgagor
at the option of the Mortgagor;
(xxx) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a proceeding
currently occurring, and each Property is undamaged by waste, fire,
water, flood, earthquake or earth movement;
(xxxi) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such
Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxii) No improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property and, with
respect to the use and occupancy of the same, including but not limited
to certificates of occupancy and fire underwriting certificates, have
been made or obtained from the appropriate authorities and such
Property is lawfully occupied under the applicable law;
(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) Other than the respect to the Delinquencies noted in
item (xi) hereof, 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 Custodian;
(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;
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(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;
(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 6.68% of the aggregate Loan Balance of the
Initial Home Equity Loans are secured by Properties that are non-owner
occupied Properties (i.e., investor-owned and vacation);
(xlii) The Seller has no actual knowledge that there exist any
hazardous substances, hazard wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or
other federal, state or local environmental legislation on any
Property;
(xliii) The Seller was properly licensed or otherwise
authorized, to the extent required by applicable law, to originate or
purchase each Home Equity Loan; and the consummation of the
transactions herein contemplated, including, without limitation, the
receipt of interest by the Owners and the ownership of the Home Equity
Loans by the Trustee as trustee of the Trust will not involve the
violation of such laws;
(xliv) With respect to each Property subject to a ground lease
(i) the current ground lessor has been identified and all ground rents
which have previously become due and owing have been paid; (ii) the
ground lease term extends, or is automatically renewable, for at least
five years beyond the maturity date of the related Home Equity Loan;
(iii) the ground lease has been duly executed and recorded; (iv) the
amount of the ground rent and any increases therein are clearly
identified in the lease and are for predetermined amounts at
predetermined times; (v) the ground rent payment is included in the
borrower's monthly payment as an expense item in determining the
qualification of the borrower for such Home Equity Loan; (vi) the Trust
has the right to cure defaults on the ground lease; and (vii) the terms
and conditions of the leasehold do not prevent the free and absolute
marketability of the Property. As of the Cut-Off Date, the Loan Balance
of the Initial Home Equity Loans with related Properties subject to
ground leases does not exceed 1% of the Original Aggregate Loan
Balance;
(xlv) As of the Startup Day, the Seller has not received a
notice of default of any First Mortgage Loan secured by any Property
which has not been cured by a party other than the Seller;
(xlvi) No Home Equity Loan is subject to a temporary rate
reduction pursuant to a buydown program;
(xlvii) No more than 1.12% 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;
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(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;
(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) 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, 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 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, all of their respective right, title
and interest in and to the Initial Home Equity Loans (other than payments of
principal and interest due on the Home Equity Loans on or before the Cut-Off
Date). The transfer by the Seller to the Depositor, and the transfer by the
Depositor to the Trust, of the Initial Home Equity Loans set forth on the
Schedule of Home Equity Loans is absolute and is intended by the Owners and all
parties hereto to be treated as a sale by the Seller to the Depositor and a sale
by the Depositor to the Trust.
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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 the sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the State of 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, the Subsequent Home Equity Loans and the other property
described above 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, the Subsequent Home Equity Loans and the
other property described above as collateral. The characterization of the
Depositor as the 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 and the Owners' 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 (or in the case of
not more than 0.05% of the aggregate Loan Balance of the Initial Home
Equity Loans, a lost note affidavit executed by an Authorized Officer
of the Seller) endorsed in blank or to the order of the Trustee, (B)
(I) the original title insurance commitment or a copy thereof certified
as a true copy by the closing agent or the Seller, and when available,
the original title insurance policy or a copy certified by the issuer
of the title insurance policy or (II) the attorney's opinion of title,
(C) originals or copies of all intervening assignments certified as
true copies by the closing agent or the Seller, showing a complete
chain of title from origination to the Trustee, if any, including
warehousing assignments, if recorded, (D) originals of all assumption
and modification agreements, if any and (E) either: (1) the original
Mortgage, with evidence of recording thereon (if such original Mortgage
has been returned to the Seller from the applicable recording office)
or a copy of the Mortgage certified as a true copy by the closing agent
or the Seller, or (2) a copy of the Mortgage certified by the public
recording office in those instances where the original recorded
Mortgage has been lost or retained by the recording office;
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(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 1998-1 under the Pooling and Servicing Agreement
dated as of March 1, 1998" 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 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 Rating Agencies); provided further,
however, notwithstanding the delivery of any legal opinions, each
assignment of Mortgage shall be recorded upon 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 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.
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 Seller and the Depositor shall be
deemed to have satisfied their obligations hereunder upon delivery to the
Custodian, on behalf of the Trustee of a copy of such Mortgage, such assignment
or assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (ii) of the preceding paragraph, the Seller shall deliver to the
Custodian, on behalf of the Trustee a list of all Mortgages for which no
Mortgage assignment has yet been submitted for recording by the Seller, which
list shall state the reason why the Seller has not yet submitted such Mortgage
assignments for recording. With respect to any Mortgage assignment disclosed on
such list as not yet submitted for recording for a reason other than a lack of
original recording information, the Custodian, on behalf of the Trustee shall
make an immediate demand on the Seller to prepare such Mortgage assignments.
Thereafter, the Custodian, on behalf of the Trustee shall cooperate in executing
any documents 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
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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 Rating
Agencies. 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 reasonable satisfaction
of the Rating Agencies 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 reasonable satisfaction of the Rating Agencies
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 or by
the closing agent or the Seller.
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 Depositor, and the Depositor shall transfer, assign,
set over and otherwise convey without recourse to the Trustee all right, title
and interest of the Seller in and to any Qualified Replacement Mortgage
delivered to the Custodian, on behalf of the Trustee on behalf of the Trust by
the Seller pursuant to Section 3.03, 3.04 or 3.06 hereof and all its right,
title and interest to principal and interest due on such Qualified Replacement
Mortgage after the applicable Replacement Cut-Off Date; provided, however, that
the Seller shall reserve and retain all right, title and interest in and to
payments of principal and interest due on such Qualified Replacement Mortgage on
or prior to the applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the Seller's order, all of its right, title and interest in
and to such released Home Equity Loan and all the Trust's right, title and
interest to principal and interest due on such released Home Equity Loan after
the applicable Replacement Cut-Off Date; provided, however, that the Trust shall
reserve and retain all right, title and interest in and to payments of principal
and interest due on such released Home Equity Loan on or prior to the applicable
Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, the Seller agrees to
(i) deliver without recourse to the Custodian, on behalf of the Trustee on the
date of delivery of such Qualified Replacement Mortgage the original Note
relating
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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 and the Servicer a certification in the form attached hereto as
Exhibit G (a "Pool Certification") to the effect that, as to each Home Equity
Loan listed in the Schedule of Home Equity Loans (other than any Home Equity
Loan paid in full or any Home Equity Loan specifically identified in such Pool
Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it pursuant to Section 3.05(b)(i) of this Agreement
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Home Equity Loan and (iii)
based on its examination and only as to the foregoing documents, the information
set forth on the Schedule of Home Equity Loans accurately reflects the
information set forth in the File. Neither the Custodian on behalf of the
Trustee, nor the Trustee shall have any 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 Custodian or 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. Neither the Custodian on behalf of the Trustee, nor the Trustee
shall be under any 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
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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 and the Owners. 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, 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
monitor no less frequently than monthly updated certification 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 Depositor of all or a
portion of the balance of funds in the Pre-Funding Account, the Seller shall
indirectly (through the Depositor) on any Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey without recourse, to the
Trustee, and the Trustee shall purchase on behalf of the Trust all of the
Seller's right, title and interest in and to any and all benefits accruing to
the Seller from the Subsequent Home Equity Loans (other than any principal and
interest due on or prior to the relevant Subsequent Cut-Off Date) which the
Seller 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.
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The transfer of the Subsequent Home Equity Loans set forth on the
related Schedule of Home Equity Loans by the Seller to the Depositor and by the
Depositor to the Trustee shall be absolute and shall be intended by the Owners
and all parties hereto to be treated as a sale by the Seller. The amount
released from the Pre-Funding Account shall be one-hundred percent (100%) of the
aggregate principal balances of the Subsequent Home Equity Loans so transferred.
Upon the transfer by the Depositor 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 and Depositor shall have provided the Trustee
and the Rating Agencies 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 and Depositor shall have delivered to the
Trustee a duly executed written Subsequent Transfer Agreement
(including an acceptance by the Trustee) in substantially the form of
Exhibit D hereto, which shall include a Schedule of Home Equity Loans,
listing the Subsequent Home Equity Loans and any other exhibits listed
thereon;
(iii) the Seller and Depositor shall have delivered to the
Servicer for deposit in the Principal and Interest Account all
principal and interest due in respect of such Subsequent Home Equity
Loans after the related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the Seller
nor the Depositor was insolvent, nor will either of them be made
insolvent by such transfer, nor is either of them aware of any pending
insolvency;
(v) the Funding Period shall not have ended; and
(vi) the Seller and the Depositor each shall have delivered to
the Trustee and the Rating Agencies an Officer's Certificate confirming
the satisfaction of each condition precedent specified in this
paragraph (b) and in the related Subsequent Transfer Agreement.
(c) The obligation of the Trust to purchase a Subsequent Home Equity
Loan on any Subsequent Transfer Date is subject to the following requirements:
(i) the ratings on the Offered Certificates shall not have been downgraded by
any Rating Agency; (ii) such Subsequent Home Equity Loan will not be 30 days or
more contractually Delinquent as of the Subsequent Cut-Off Date (except that
Subsequent Home Equity Loans representing not more than 2.00% of the aggregate
Loan Balance of the Subsequent Home Equity Loans may not be more than 60 days
Delinquent as of the related Subsequent Cut-Off Date); (iii) such Subsequent
Home Equity Loan will be a fixed-rate Home Equity Loan; (iv) the original term
to maturity of such Subsequent Home Equity Loan may not exceed 30 years; (v)
such Subsequent Home Equity Loan will have a Coupon Rate of not less than
8.375%; 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 Coupon Rate of at least 11.10%; (b) will have a
weighted average combined Loan-to-Value Ratio of not more than 76.50%; (c) will
not have Balloon Loans representing more than 40.00% by aggregate principal
balance; (d) will have no more than 11.50% Home Equity Loans which are second
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liens; (e) will have at least 91% Home Equity Loans which are owner occupied;
(f) will have no Home Equity Loan that is a first lien with an original Loan
Balance in excess of $227,150; and (g) will have no Home Equity Loan that is a
second lien with an original Loan Balance in excess of $113,575 and a combined
original principal balance of the first and second liens, in excess of $227,150.
(d) In connection with each Subsequent Transfer Date or on the Payment
Date occurring in April and May 1998, as applicable, the Trustee shall
determine: (i) the amount and correct dispositions of the Capitalized Interest
Requirement, Overfunded Interest Amount, Pre-Funding Account Earnings and the
Pre-Funded Amount and (ii) any other necessary matters in connection with the
administration of the Pre-Funding Account and of the Capitalized Interest
Account. In the event that any amounts are released as a result of an error in
calculation to the Owners or Depositor from the Pre-Funding Account or from the
Capitalized Interest Account, such Owners or the Depositor shall immediately
repay such amounts to the Trustee or the Trustee shall have the right to
withhold such amounts from future distributions on such Certificates.
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.
Section 3.09 Books and Records.
The sale of each Home Equity Loan shall be reflected in the Depositor's
balance sheets and other financial statements as a sale of assets by the
Depositor under generally accepted accounting principles.
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 Offered 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 Depositor's receipt of the entire net proceeds of the sale of
the Offered Certificates, the Depositor shall instruct the Trustee to deposit an
amount equal to the Original Aggregate Pre-Funded Amount in the Pre-Funding
Account and an amount equal to the Original Capitalized Interest Amount in the
Capitalized Interest Account contributed out of such proceeds or otherwise. The
Trustee shall then remit the entire balance of such net proceeds in accordance
with instructions delivered by the Depositor.
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). The Offered Certificates are payable solely from payments received on or
with respect to the Home Equity Loans (net of the Servicing Fees, Trustee Fees
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. 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, 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-7IO Certificates, the Class M-1 Certificates, the
Class M-2 Certificates, the Class B 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, B-1, B-2, B-3 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.
No Certificate shall be valid until executed and authenticated as set
forth above.
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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 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
Offered Certificates then Outstanding or if there are no longer any Offered
Certificates then outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates, such Owners shall give the Trustee 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.
(g) It is intended that the Offered Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Offered
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Certificate of such Class. Upon initial issuance, the ownership of each such
Offered 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 Offered Certificates (other than the Class A-7IO
Certificates) shall be issued in denominations of less than $25,000 and integral
multiples of $1,000 in excess thereof. On the Startup Day, the Class A-7IO
Certificates shall be issued in denominations of no less than $25,000 (based on
the Class A-7IO Notional Principal Amount thereof) and integral multiples of
$1,000 in excess 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 Offered Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Seller and the Trustee shall have no responsibility or obligation
to Direct or Indirect Participants or beneficial owners for which the Depository
holds Offered Certificates from time to time as a Depository. Without limiting
the immediately preceding sentence, the Depositor, the Servicer, the Seller and
the Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Offered Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Owner of a Offered Certificate as shown in the Register,
of any notice with respect to the Offered Certificates or (iii) the payment to
any Direct or Indirect Participant or any other Person, other than a registered
Owner of a Offered Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Offered
Certificates. No Person other than a registered Owner of a Offered Certificate
as shown in the Register shall receive a certificate evidencing such Offered
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
Offered 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
Offered 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, or (iii) following an Event of
Default, the Owners of a majority of the Percentage Interests of the Offered
Certificates elect to discontinue the book-entry system as not in their best
interests, the Offered 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
Offered 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 Offered Certificates may be registered in whatever name or
names registered Owners of Offered Certificates transferring Offered
Certificates shall designate, in accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Offered Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions
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of principal or interest on such Offered Certificates and all notices with
respect to such Offered 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 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 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 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 canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate or assignment of an interest in the Lower-Tier REMIC
Residual Class (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
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Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate or assignment of an
interest in the Lower-Tier REMIC Residual Class (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 or Lower-Tier REMIC Residual Class.
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). The Lower-Tier REMIC Residual Class is not
transferable except that the Owner of the Tax Matters Person Residual Interest
in the Lower-Tier REMIC may assign its interest to another Person who accepts
such assignment and the designation as Tax Matters Person pursuant to Section
11.18 hereof.
(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 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 or the
Trust Estate; 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 or the
Trust Estate. The Owner of a Class R Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, 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 Mezzanine Certificate, Class B Certificate or
Class R Certificate shall be made unless the Trustee shall have received a
representation letter from the transferee of such Mezzanine Certificate, Class B
Certificate or Class R Certificate, acceptable to and in form and substance
satisfactory to the Trustee (which may be combined with the investment letter
required by subsection (b) above), to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA nor a plan or other
arrangement subject to Section 406 of ERISA nor a plan or other arrangement
subject to Section 4975 of the Code (collectively, a "Plan"), nor is acting on
behalf of any Plan nor using the assets of any Plan to effect such transfer. In
the event that any Mezzanine Certificate, Class B Certificate or Class R
Certificate is purchased by a Plan, or by a person or entity acting on behalf of
any Plan or using the assets of any Plan to effect such transfer (including the
assets of any Plan held in an insurance company separate or general account),
any representations necessary to invoke exemptive relief shall be deemed to be
made to the Trustee by the transferee's acceptance of the Mezzanine
Certificates, Class B Certificates or Class R Certificates. If the necessary
representations are not met, the Trustee must receive 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 Mezzanine Certificate,
Class B Certificate or Class R Certificates will not result in the assets of the
Trust being deemed to be "plan assets," will not cause the Trust to be subject
to the fiduciary requirements and prohibited transaction provisions of ERISA and
the Code, and will not subject the Trustee to any obligation or liability in
addition to those expressly undertaken under this Agreement. Notwithstanding
anything else to the contrary herein, any purported transfer of a Certificate to
or on behalf of any Plan not qualified for exemptive relief without
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the delivery to the Trustee of an opinion of counsel as described above shall be
null and void and of no effect.
(d) No sale or other transfer of any Offered 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 Offered 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) an Offered Certificate (other than the
Class A-7IO Certificates) having an original principal balance of not less than
$1,000,000 (B) a Class A-7IO Certificate having an original Notional Principal
Amount of not less than $1,000,000 or (C) 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 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 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 Offered 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 Owners of
the Class R Certificates; and the Owner of such Offered Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates for payment thereof (but only to the extent of the amounts
so paid to the Owners of the Class R Certificates) and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or such Paying Agent before being
required to make any such payment, may at the expense of the Trust cause to be
published once, in the
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eastern edition of The Wall Street Journal, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not fewer
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be paid to the Owners of the Class R Certificates. The
Trustee shall, at the direction of the Seller, also adopt and employ, at the
expense of the Seller, any other reasonable means of notification of such
payment (including but not limited to mailing notice of such payment to Owners
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Registrar, the Trustee or any Paying Agent,
at the last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) Subject to Sections 10.01(e) and 10.01(g), the Trustee will hold
the Trust Estate in trust for the benefit of the Owners and, 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, 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, or the Owners, by
action, suit or proceeding at law or equity; 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 Owners of a majority of
the Percentage Interests represented by the Offered Certificates then
Outstanding or, if there are no longer any Offered Certificates then
outstanding, by such majority of the Percentage Interests represented by the
Class R Certificates.
(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.
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The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g); provided, that the Trustee
shall remain liable for the performance of any such duties notwithstanding any
such contractual arrangement.
Section 6.05 Negative Covenants.
The Trustee will not:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty, on behalf of the Trust, any
indebtedness of any Person except pursuant to this Agreement;
(iv) dissolve or liquidate the Trust in whole or in part,
except pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement
to be impaired, or permit any Person to be released from any covenant
or obligation with respect to the Trust or to the Certificates under
this Agreement, except as may be expressly permitted hereby or (B)
permit any lien, charge, adverse claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon
or burden the Trust Estate or any part thereof or any interest therein
or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement, or 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 Offered Certificates then Outstanding or,
if there are no Offered 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;
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(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) 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
Offered Certificates or, if there are no Offered 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, Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provision of this Agreement.
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee 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 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 or to the Owners may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee, or by the
Owners, as the case may be.
Section 6.11 Control by Owners.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding or if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding may direct the time,
method
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and place of conducting any proceeding for any remedy available to the Trustee
with respect to the Certificates or exercising any trust or power conferred on
the Trustee with respect to the Certificates or the Trust Estate, including, but
not limited to, those powers set forth in Section 6.03 and Section 8.20 hereof,
provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction; provided, however, that the Trustee need not
take any action which it determines might involve it in
liability or may be unjustly prejudicial to the Owners not so
directing.
Section 6.12 Indemnification by the Seller.
The Seller agrees to indemnify and hold the Trustee, the Depositor 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 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 and
each Owner if a claim is made by a third party that the Servicer has failed to
perform its obligations to service and administer the Home Equity Loans in
compliance with the terms of this Agreement, and the Seller shall assume (with
the consent of the Trustee) the defense of any such claim and pay all expenses
in connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Depositor, the Servicer, the Seller, the Trustee 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, including 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. 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.
The Depositor shall cause to be established on the Startup Day, and the
Trustee shall maintain, at the Corporate Trust Office, the Certificate Account,
the Upper-Tier Distribution Account, a Pre-Funding Account and a Capitalized
Interest Account each to be held by the Trustee in the name of the Trust for the
benefit of the Owners of the Certificates. The Pre-Funding Account and the
Capitalized Interest Account are not assets of either of the REMICs.
Section 7.03 Flow of Funds.
(a) (i) The Trustee shall deposit in the Certificate Account, without
duplication, upon receipt, the proceeds of any liquidation of the assets of the
Trust, all remittances made to the Trustee pursuant to Section 8.08(d)(ii) and
the Monthly Remittance Amount.
(ii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Distribution Amount from the Certificate Account to the
Upper-Tier Distribution Account.
(iii) On each Payment Date, the Trustee shall transfer to the
Trustee, the Trustee Fee and any Trustee Reimbursable Expenses from the
Certificate Account.
(b) With respect to funds on deposit in the Upper-Tier Distribution
Account, on each Payment Date, the Trustee shall disburse the Interest
Remittance Amount transferred thereto pursuant to subsection (a) in the
following order of priority, and each such disbursement shall be treated as
having occurred only after all preceding allocations, transfers and
disbursements have occurred:
(i) (Reserved.)
(ii) First, to the Owners of the Class A Certificates
(including the Class A-7IO Certificates), the related
Current Interest plus the related Interest Carry
Forward Amount with respect to each such Class of
Class A Certificates without any priority among such
Class A Certificates; provided, that if the Interest
Amount Available is not sufficient to make a full
distribution of interest with respect to all Classes
of the Class A Certificates, the Interest Amount
Available will be distributed among the outstanding
Classes of Class A Certificates pro rata based on the
aggregate amount of interest due on each such Class,
and the amount of the shortfall will be carried
forward as the Class A Interest Carry Forward Amount;
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(iii) Second, to the extent of the Interest Amount Available then
remaining, to the Owners of the Class M-1 Certificates, the
Class M-1 Current Interest;
(iv) Third, to the extent of the Interest Amount Available then
remaining, to the Owners of the Class M-2 Certificates, the
Class M-2 Current Interest;
(v) Fourth, to the extent of the Interest Amount Available then
remaining, to the Owners of the Class B Certificates, the Class
B Current Interest; and
(vi) Fifth, the Monthly Excess Interest Amount shall be applied or
distributed as provided in subsection (d) of this Section 7.03.
(c) With respect to the Upper-Tier Distribution Account, on each Payment
Date, the Trustee shall make the following disbursements from amounts relating
to principal transferred thereto, in the following order of priority and each
such disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) On each Payment Date (a) before the Stepdown Date or
(b) with respect to which a Trigger Event is in
effect, Owners of the Class A Certificates (other
than the Class A-7IO Certificates) will be entitled
to receive payment of 100% of the Principal
Distribution Amount as follows: (I) to the Owners of
the Class A-6 Certificates, the Class A-6 Lockout
Distribution Amount and (II) first, to the Owners of
the Class A-1 Certificates until the Class A-1
Certificate Principal Balance is reduced to zero;
second, to the Owners of the Class A-2 Certificates,
until the Class A-2 Certificate Principal Balance is
reduced to zero; third, to the Owners of the
Class A-3 Certificates, until the Class A-3
Certificate Principal Balance is reduced to zero;
fourth, to the Owners of the Class A-4 Certificates,
until the Class A-4 Certificate Principal Balance is
reduced to zero; fifth, to the Owners of the Class
A-5 Certificates, until the Class A-5 Certificate
Principal Balance is reduced to zero; and sixth, to
the Owners of the Class A-6 Certificates (without
regard to the Class A-6 Lockout Distribution Amount)
until the Class A-6 Certificate Principal Balance is
reduced to zero. Notwithstanding the foregoing, on
any Payment Date on which the sum of the Certificate
Principal Balance of the Subordinate Certificates and
the Overcollateralization Amount is zero, any amounts
of principal payable to the Owners of the Class A
Certificates on such Payment Date shall be
distributed pro rata in accordance with the
respective Certificate Principal Balances.
(ii) On each Payment Date (a) on or after the Stepdown
Date and (b) as long as a Trigger Event is not in
effect, the Owners of the Offered Certificates (other
than the Class A-7IO Certificates) will be entitled
to receive payments of principal, in the order of
priority, in the amounts set forth below and to the
extent of the Principal Distribution Amount as
follows:
(A) First, the lesser of (x) the Principal Distribution
Amount and (y) the Class A Principal Distribution
Amount shall be distributed (I) to the Owners of the
Class A-6 Certificates, in an amount equal to the
Class A-6 Lockout Distribution Amount and (II) first,
to the Owners of the Class A-1 Certificates until the
Class A-1 Certificate Principal Balance is reduced to
zero; second, to the Owners of the Class A-2
Certificates, until the
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Class A-2 Certificate Principal Balance is reduced to
zero; third, to the Owners of the Class A-3
Certificates, until the Class A-3 Certificate
Principal Balance is reduced to zero; fourth, to the
Owners of the Class A-4 Certificates, until the Class
A-4 Certificate Principal Balance is reduced to zero;
fifth, to the Owners of the Class A-5 Certificates,
until the Class A-5 Certificate Principal Balance is
reduced to zero; and sixth, to the Owners of the
Class A-6 Certificates (without regard to the Class
A-6 Lockout Distribution Amount) until the Class A-6
Certificate Principal Balance is reduced to zero.
Notwithstanding the foregoing, on any Payment Date on
which the sum of the Certificate Principal Balance of
the Subordinate Certificates and the
Overcollateralization Amount is zero, any amounts of
principal payable to the Owners of the Class A
Certificates on such Payment Date shall be
distributed pro rata in accordance with the
respective Certificate Principal Balances.
(B) Second, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the amount
distributed to the Owners of the Class A Certificates
in clause (A) above and (y) the Class M-1 Principal
Distribution Amount shall be distributed to the
Owners of the Class M-1 Certificates, until the Class
M-1 Certificate Principal Balance has been reduced to
zero;
(C) Third, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amount distributed to the Owners of the Class A
Certificates in clause (A) above and the amount
distributed to the Owners of the Class M-1
Certificates in clause (B) above and (y) the Class
M-2 Principal Distribution Amount shall be
distributed to the Owners of the Class M-2
Certificates, until the Class M-2 Certificate
Principal Balance has been reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i) the
Principal Distribution Amount over (ii) the sum of
the amount distributed to the Owners of the Class A
Certificates pursuant to clause (A) above, the amount
distributed to the Owners of the Class M-1
Certificates pursuant to clause (B) above and the
amount distributed to the Owners of the Class M-2
Certificates pursuant to clause (C) above and (y) the
Class B Principal Distribution Amount shall be
delivered to the Owners of the Class B Certificates,
until the Class B Certificate Principal Balance has
been reduced to zero; and
(E) Fifth, any portion of the Principal Remittance Amount
remaining after making all of the distributions in
clauses (A), (B), (C) and (D) above shall be
distributed as provided in subsection (d) of this
Section 7.03.
(d) On any Payment Date, the Monthly Excess Cashflow Amount is required
to be applied in the following order of priority on such Payment Date:
(i) to fund the Extra Principal Distribution Amount for such
Payment Date;
(ii) to fund the Class M-1 Interest Carry Forward Amount, if any;
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(iii) to fund the Class M-1 Realized Loss Amortization Amount for
such Payment Date;
(iv) to fund the Class M-2 Interest Carry Forward Amount, if any;
(v) to fund the Class M-2 Realized Loss Amortization Amount for
such Payment Date;
(vi) to fund the Class B Interest Carry Forward Amount, if any;
(vii) to fund the Class B Realized Loss Amortization Amount for such
Payment Date;
(viii) to the Servicer to the extent of any unreimbursed Delinquency
Advances or Servicing Advances;
(ix) to the Trustee for the reimbursement of expenses of the
Trustee not reimbursed pursuant to Section 7.03(b)(i) above
which expenses were incurred in connection with its duties and
obligations hereunder; and
(x) to fund a distribution to the Owners of the Class R
Certificates, the remainder; provided, however, that if the
Overcollateralization Release Amount is zero solely due to the
existence of a Subordinated Trigger Event, then the amount
which otherwise would constitute the related
Overcollateralization Release Amount shall be distributed as a
reduction of the Certificate Principal Balance of the
Subordinate Certificates, as follows: first, to the Owners of
the Class B Certificates until the related Class B Certificate
Termination Date, second, to the Owners of the Class M-2
Certificates, until the Class M-2 Certificate Termination
Date, and third, to the Owners of the Class M-1 Certificates
until the Class M-1 Certificate Termination Date.
(e) On each Payment Date, the Trustee shall allocate an amount equal to
the excess of (x) the Aggregate Certificate Principal Balance over (y) the Loan
Balance of the Home Equity Loans plus the Pre-Funded Amount, if any, to reduce
the Certificate Principal Balances of the Subordinate Certificates in the
following order of priority:
(i) to the Class B-1 Certificates until the Class B-1
Certificate Principal Balance is reduced to zero;
(ii) to the Class M-2 Certificates until the Class M-2
Certificate Principal Balance is reduced to zero; and
(iii) to the Class M-1 Certificates until the Class M-1 Certificate
Principal Balance is reduced to zero.
(f) Notwithstanding anything above, the aggregate amounts distributed
on all Payment Dates to the Owners of the Certificates on account of principal
pursuant to clauses (c), (d)(i) and (d)(x) shall not exceed the original
Certificate Principal Balance of the related Certificates.
(g) 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
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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 Offered
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 Offered Certificates in the Pre-Funding Account the Original
Pre-Funded Amount from the proceeds of the sale of the Offered 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
Depositor upon satisfaction of the conditions set forth in Sections 3.05 and
3.07 hereof with respect to such transfer. In no event shall the Depositor be
permitted to instruct the Trustee to release from the Pre-Funding Account to the
Certificate Account an amount in excess of the Original Pre-Funded Amount.
(c) If the Pre-Funded Amount has been reduced to $100,000 or less on or
before the April 1998 Monthly Remittance Date, the Depositor shall instruct the
Trustee to withdraw from the Pre-Funding Account the amount (exclusive of any
related Pre-Funding Account Earnings still on deposit therein) remaining in the
Pre-Funding Account and deposit such amount to the Certificate Account, on the
April 1998 Monthly Remittance Date and if the Pre-Funded Amount has been reduced
to $100,000 or less by April 30, 1998, then the Trustee shall withdraw from the
Pre-Funding Account the amount (exclusive of any related Pre-Funding Account
Earnings still on deposit therein) remaining in the Pre-Funding Account and
deposit such amount to the Certificate Account, on the May 1998 Monthly
Remittance Date, which will be distributed to the related Owners of the Offered
Certificates.
(d) On the Payment Dates in April and May 1998,the Trustee shall transfer
from the Pre-Funding Account to the Capitalized Interest Account the Pre-Funding
Account Earnings, if any, applicable to such Payment Date.
(e) On the Payment Dates in April and May 1998,the Trustee shall transfer
from the Capitalized Interest Account to the Certificate Account, the sum of any
Capitalized Interest Requirement, if any, and any Pre-Funding Account Earnings
for such Payment Date.
(f) On each Subsequent Transfer Date the Trustee shall distribute the
Overfunded Interest Amount, if any (calculated by the Trustee on the day prior
to such Subsequent Transfer Date) from the Capitalized Interest Account to the
Seller and on the Payment Date immediately following the Funding Period, the
Trustee shall distribute to the Seller any amounts remaining in the Capitalized
Interest Account after taking into account the transfers on such Payment Date
described in clause (e) above. 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.
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(g) Any amounts transferred to the Certificate Account from the
Capitalized Interest Account on the April and May 1998 Payment Dates shall be
transferred to the Upper-Tier Distribution Account and distributed to the Owners
of the Offered Certificate in accordance with Section 7.03(c).
(h) The Pre-Funding Account and the Capitalized Interest Account shall
not be an asset of either the Lower-Tier REMIC or the Upper-Tier REMIC.
Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners shall be invested
and reinvested by the Trustee in the name of the Trust 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 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
(including Trustee's fees and expenses not covered by Section 7.03(b)(i) and
7.03(d)(ix)), and the Seller shall promptly pay such expenses directly to the
Persons to whom such amounts are due.
(b) The Seller shall pay directly on the Startup Day the reasonable
fees and expenses of counsel to the Trustee.
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Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States, FHLMC
senior debt obligations, and Fannie Mae 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) Fannie Mae 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 F-1+ by
Fitch, A-1+ or better 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 each of Standard &
Poor's and by Fitch) 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, A-1+ or AA, respectively or
better by Standard & Poor's and F-1+ or AA, respectively, or better by Fitch,
provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank or (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, 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 C.F.R. 306.1
et seq. or 31 C.F.R. 350.0 et seq., in such securities is created for
the benefit of the Trustee, and
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d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than weekly and will liquidate the collateral securities if any
deficiency in the required collateral percentage is not restored within
two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106%.
(i) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each Rating Agency;
(j) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated AAAm or AAAm-G by Standard & Poor's, AAA by Fitch and Aaa by
Moody's; and
(k) Any other investment permitted by each of the Rating Agencies.
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 and each Owner of the following
information with respect to the next Payment Date (which notification may be
given by facsimile, or by telephone promptly confirmed in writing):
(1) The aggregate amount on deposit in the Certificate Account
as of the related Determination Date;
(2) The Class A Distribution Amount, with respect to each Class
individually, and all Classes of the Class A Certificates in the
aggregate on the next Payment Date, the Class M-1 Distribution Amount,
the Class M-2 Distribution Amount and the Class B Distribution Amount;
(3) The application of the amounts described in clause (1)
above in respect of the distribution of the Class A Distribution
Amount, the Class M-1 Distribution Amount, the Class M-2 Distribution
Amount and the Class B Distribution Amount on such Payment Date in
accordance with Section 7.03 hereof;
(4) The Certificate Principal Balance of each Class of the
Offered Certificates, the Class A-7IO Notional Principal Amount, the
aggregate amount of the principal of each Class of
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Certificates to be paid on such Payment Date and the remaining
Certificate Principal Balance (or Class A-7IO Notional Principal
Amount) of each Class of Certificates following any such payment;
(5) The amount, if any, of any Realized Losses for the related
Remittance Period;
(6) The amount of 60+ Day Delinquent Loans;
(7) For the Payment Dates in April and May 1998, (A) the
Pre-Funded Amount previously used to purchase Subsequent Home Equity
Loans, (B) the Pre-Funded Amount distributed as principal, (C) the
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 Overfunded Interest Amount
transferred to the Seller, if any; and
(8) The amount by which the Servicing Fee is reduced because
of the Underwater Loans.
Section 7.09 Reports by Trustee to Owners.
(a) On the Business Day preceding each Payment Date the Trustee shall
transmit a report in writing to each Owner, and the Rating Agencies:
(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 and any Pre-Funded Amounts distributed as a
prepayment (based on a Certificate in the original principal amount of
$1,000);
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) the related Interest Carry Forward Amount for each Class;
(v) the principal amount (or notional principal amount) of
each Class of 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;
(vi) the aggregate Loan Balance of all Home Equity Loans after
giving effect to any payment of principal on such Payment Date.
(vii) 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;
(viii) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution;
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(ix) the weighted average Coupon Rate of the Home Equity
Loans;
(x) whether a Trigger Event or Subordinated Trigger Event has
occurred;
(xi) the Senior Enhancement Percentage;
(xii) the Overcollateralization Amount
(xiii) the amount of any Applied Realized Loss Amount,
Realized Loss Amortization Amount and Unpaid Realized Loss Amount for
each Class as of the close of such Payment Date, and
(xiv) for the Payment Dates in April and May 1998, the total
remaining Pre-Funded Amount in the Pre-Funding Account.
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 Rating Agencies, together with the
information described in Subsection (a) preceding, the following information
which is hereby required to be prepared by the Servicer and furnished to the
Trustee for such purpose on or prior to the related Monthly Reporting Date:
(i) the number and aggregate principal balances of Home Equity
Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90
or more days Delinquent, as of the close of business on the last
Business Day of the calendar month immediately preceding the Payment
Date, (d) the numbers and aggregate Loan Balances of all Home Equity
Loans as of such Payment Date and (e) the percentage that each of the
amounts represented by clauses (a), (b) and (c) represent as a
percentage of the respective amounts in clause (d);
(ii) the status and the number and dollar amounts of all Home
Equity Loans in foreclosure proceedings as of the close of business on
the last Business Day of the calendar month immediately preceding such
Payment Date, separately stating, for this purpose, all Home Equity
Loans with respect to which foreclosure proceedings were commenced in
the immediately preceding calendar month;
(iii) the number of Mortgagors and the Loan Balances of (a)
the related Mortgages involved in bankruptcy proceedings as of the
close of business on the last Business Day of the calendar month
immediately preceding such Payment Date and (b) Home Equity Loans that
are "balloon" loans;
(iv) the existence and status of any REO Properties, as of the
close of business of the last Business Day of the calendar month
immediately preceding the Payment Date;
(v) the book value of any REO Property as of the close of
business on the last Business Day of the calendar month immediately
preceding the Payment Date;
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(vi) the Cumulative Loss Percentage, the amount of cumulative
Realized Losses and the current period Realized Losses, and
(vii) the aggregate Loan Balance of 60+ Day Delinquent Loans.
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, the Seller and each
Owner, with respect to the amount on deposit in the Certificate Account and the
identity of the investments included therein, as the Depositor, the Seller or
any Owner 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 or any Owner transmit promptly to the Depositor, the
Seller and any Owner copies of all accountings of receipts in respect of the
Home Equity Loans furnished to it by the Servicer and shall notify the Seller if
any Monthly Remittance Amount has not been received by the Trustee when due.
(b) The Trustee shall report to 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 Fannie Mae 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 Fannie Mae Guide (as such provisions relate
to second lien mortgages); provided, however, that to the extent that such
standards, such obligations or the Fannie Mae Guide are amended by Fannie Mae
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 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 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
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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 Fannie Mae 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 enter into Sub-Servicing Agreements for any servicing
and administration of Home Equity Loans with any institution 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 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 of the
Offered Certificates). For purposes of this Agreement, the Servicer shall be
deemed to have received payments on Home Equity Loans when any Sub-Servicer has
received such payments. Each Sub-Servicer shall be required to service the Home
Equity Loans in accordance with this Agreement and any such Sub-Servicing
Agreement shall be consistent with and not violate the provisions of this
Agreement. Each Sub-Servicing Agreement shall provide that the Trustee (if
acting as successor Servicer) or any other successor Servicer shall have the
option to terminate such agreement without payment of any fees if the original
Servicer is terminated or resigns. The Servicer shall deliver to the Trustee
copies of all Sub-Servicing Agreements, and any amendments or modifications
thereof promptly upon the Servicer's execution and delivery of such instrument.
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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; provided, however, that 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 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 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 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) 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 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 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.
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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 1998-1 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 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 Monthly Excess Interest Amount 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 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").
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(d) (i) The Servicer may make withdrawals for its own account from the
Principal and Interest Account, only in the following priority and for the
following purposes:
(A) on each Monthly Remittance Date, to pay itself the Servicing
Fee;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the Principal
and Interest Account in error;
(D) to reimburse itself pursuant to Section 8.09(a) for
unrecovered Delinquency Advances and 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, a monthly servicing report, containing
(without limitation) the following information: principal and interest collected
in respect of the Home Equity Loans, scheduled principal and interest that was
due on the Home Equity Loans, relevant information with respect to Liquidated
Loans, if any, summary and detailed delinquency reports, Liquidation Proceeds
and other similar information concerning the servicing of the Home Equity Loans.
In addition, the Servicer shall inform the Trustee on each Monthly Reporting
Date of the amounts of any Loan Purchase Prices or Substitution Amounts so
remitted during the related Remittance Period.
(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".
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(d)(viii).
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
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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; 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(d)(viii). 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(d)(viii).
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 Trustee at the Servicer's expense, an
opinion of counsel acceptable to 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 either the Upper-Tier
REMIC or the Lower-Tier REMIC (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) 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.
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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 each Rating Agency.
(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.
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. 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
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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 Fannie Mae Guide, including, but not
limited to, advancing funds for the payment of taxes, amounts due with respect
to Senior Liens, and insurance premiums. Any amounts so advanced shall
constitute "Servicing Advances" within the meaning of Section 8.09(b) hereof.
The Servicer shall sell any REO Property within 35 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 Trustee, an opinion of
counsel (the expense of which opinion shall be a Servicing Advance) experienced
in federal income tax matters acceptable to the Trustee, addressed to the
Trustee and the Servicer, to the effect that the holding by the Trust of such
REO Property for any greater period will not result in the imposition of taxes
on "Prohibited Transactions" of the Trust or any REMIC therein as defined in
Section 860F of the Code or cause either the Lower-Tier REMIC or the Upper-Tier
REMIC 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 Lower-Tier REMIC or the Upper-Tier
REMIC of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is
subject to taxation under the REMIC Provisions. Pursuant to its efforts to sell
such REO Property, the Servicer shall either itself or through an agent selected
by the Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and may, incident to its conservation and protection of the interests of the
Owners, rent the same, or any part thereof, as the Servicer deems to be in the
best interest of the Owners for the period prior to the sale of such REO
Property. The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in the
Comprehensive Environmental Response Compensation and Liability Act, the
Resource Conservation and Recovery Act of 1976, or other federal, state or local
environmental legislation, on a Property in determining whether to foreclose
upon or otherwise comparably convert the ownership of such Property.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan and in accordance with the procedures set forth in the Fannie Mae
Guide, when it has recovered, whether through
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trustee's sale, foreclosure sale or otherwise, all amounts it expects to recover
from or on account of such defaulted Home Equity Loan, whereupon such Home
Equity Loan shall become a "Liquidated Loan."
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a default with respect to such Home Equity Loan or in
the event that a default with respect to such Home Equity Loan is imminent;
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 Offered 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 prior to
the execution of any modification, waiver or amendment of any provision of any
Home Equity Loan and after the Servicer effectuates such modification, waiver or
amendment it 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 Fannie Mae "Request for Release of
Documents" (Fannie Mae 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 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
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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%; 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 Rating Agencies if an
application is approved under clause (y) above.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the related Servicing Fee with respect to each
Home Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 8.20 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Trustee, the successor
Servicer and the majority of the Percentage Interests of the Class R
Certificates.
The right to receive the Servicing Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Depositor, and the Rating Agencies, on or before April 30 of each year,
commencing in 1999, 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 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 Officers' Certificate of
any event which with the giving of notice or the lapse of time would become a
Service Termination Event.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
On or before April 30 of each year, commencing in 1999, 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 Depositor, and the Rating Agencies a letter or
letters of a firm of independent, nationally recognized certified public
accountants stating that such firm has examined the Servicer's overall servicing
operations in accordance with the requirements of the Uniform Single Audit
Procedure for Mortgage Bankers, and stating such firm's conclusions relating
thereto.
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Section 8.18 Access to Certain Documentation and Information Regarding
the Home Equity Loans.
The Servicer shall provide to the Trustee, the Office of Thrift
Supervision (the "OTS"), the FDIC and the supervisory agents and examiners of
each of the FDIC and the OTS (which, in the case of supervisory agents and
examiners, may be required by applicable state and federal regulations) access
to the documentation regarding the Home Equity Loans, such access being afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Servicer designated by it.
Section 8.19 Assignment of Agreement.
Other than with respect to entering into Sub-Servicing Agreements
pursuant to Section 8.03 hereof, the Servicer may not assign its obligations
under this Agreement, in whole or in part, unless it shall have first obtained
and delivered to the trustee a letter from each such Rating Agency that such
assignment will not result in the withdrawal or downgrading of its respective
ratings of the Offered Certificates; 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 Trustee acting upon the request of the Owners of a majority of
the Percentage Interests of the Offered Certificates then Outstanding 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
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or Owners of 25% of the Percentage Interests then Outstanding of any
Class affected thereby of said failure; 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 for a
period of sixty (60) days after the earlier of the Servicer's discovery
or receipt of notice thereof from the Trustee or Owners of 25% of the
Percentage Interests of any Class then Outstanding;
(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) agrees to assume the
Servicer's obligations thereunder and (D) each Rating Agency has
delivered written confirmation that such merger, consolidation or other
combination will not result in the withdrawal or downgrading of its
respective ratings of the Offered Certificates; or
(vi) On any date of determination hereof, the Cumulative Loss
Percentage exceeds 5.00%.
(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 Trustee from removing the Servicer pursuant to Section 8.20(a).
(c) Each party 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 such party from time to time.
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel
acceptable to the Trustee at the expense of the Servicer to such effect which
shall be delivered to the Trustee.
(e) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home
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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 Fannie Mae or FHLMC for first
and second home equity loans and having equity of not less than $5,000,000, as
determined in accordance with generally accepted accounting principles 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 and the majority of the Percentage Interest 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.
(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
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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 and the Owners 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 Fitch of the transfer of the
servicing to the successor.
(m) The Trustee shall give notice to the Owners, the Trustee, the
Seller and the Rating Agencies of the occurrence of any event described in
paragraphs (a) above of which the Trustee is aware.
Section 8.21 Inspections; Errors and Omissions Insurance.
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, 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 Fannie Mae
Guide or any successor provision thereof; provided, however, that in any event
that the fidelity bond or the errors and omissions coverage is no longer in
effect, the Trustee shall promptly give such notice to the 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.
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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/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 Owners; provided,
however, that no such additional advance need be made if such advance would be
nonrecoverable. The Servicer shall thereafter take such action as is necessary
to recover the amount so advanced. Any expenses incurred by the Servicer
pursuant to this Section 8.22 shall be Servicing Advances.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates 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 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 (i) unanimously direct the Trustee on
behalf of the Lower-Tier REMIC and the Upper-Tier REMIC to adopt a plan of
complete liquidation as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee, at their expense, an opinion of counsel experienced in
federal income tax matters acceptable to 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 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 Termination Date 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. In connection with
such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
(b) In the event that the Owners of the Class R Certificates purchase
all Home Equity Loans and each REO Property remaining in the Trust Estate
pursuant to Section 9.02(a), the Trust Estate shall be terminated in accordance
with the following additional requirements:
(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 Lower-Tier REMIC and the Upper-Tier REMIC
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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 an opinion of counsel at the expense
of such Owners experienced in federal income tax matters acceptable to the
Trustee to the effect that such purchase and liquidation constitutes a Qualified
Liquidation of the Lower-Tier REMIC and the Upper-Tier REMIC.
(e) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of such Class R Certificates or
otherwise upon their order, in a manner similar to that described in Section
8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that either the Lower-Tier REMIC or the Upper-Tier REMIC
does not and will no longer qualify as a REMIC pursuant to Section 860D of the
Code (the "Final Determination"), at any time on or after the date which is 30
calendar days following such Final Determination, the Owners of a majority in
Percentage Interests represented by the Offered Certificates then Outstanding
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.
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 Termination Date Pass-Through Rate, (b) the aggregate
amount of any unreimbursed Delinquency Advances and Servicing Advances and (c)
any Delinquency Advances which the Servicer has theretofore failed to remit. If,
during the Purchase Option Period, the Owners of the Class R Certificates have
not exercised the option described in the immediately preceding paragraph, then
upon the expiration of the Purchase Option Period in the event that the Owners
of the Offered Certificates 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
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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 Owners of the Offered Certificates
shall permit or direct in writing, after the expiration of the Purchase Option
Period. 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 Interests of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Trustee of an opinion of counsel experienced in
federal income tax matters, acceptable to the Trustee and selected by the Owners
of the Class R Certificates, which opinion shall be reasonably satisfactory in
form and substance to the Trustee, 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
Termination Date Pass-Through Rate, (b) the aggregate amount of unreimbursed
Delinquency Advances and (c) any Delinquency Advances which the Servicer has
theretofore failed to remit. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the Certificate Account, which deposit shall be
deemed to have occurred immediately preceding such purchase. The foregoing
opinion shall be deemed satisfactory unless the Trustee gives the Owners of a
majority of the Percentage Interests of the Class R Certificates notice that
such opinion is not satisfactory within thirty days after receipt of such
opinion. In connection with any such purchase, such Owners shall direct the
Trustee to adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an opinion of counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
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 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 Owners of a majority in Percentage
Interest of the Certificates of the affected Class or Classes
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 or by the Owners of at least 25% of the aggregate
Percentage Interests in the Trust Estate represented by the Offered
Certificates then Outstanding, or, if there are no Offered 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 Rating Agencies 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 the Depositor and the Owners of a majority of the
Percentage Interests represented by the Offered Certificates or if there are no
Offered 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 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 (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.
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
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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(d)(ix), 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(d)(ix) 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 Owners of a majority of the Percentage Interests of
the Offered Certificates and having a deposit rating of at least A- from Fitch
and 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, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
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 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
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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, the Depositor may remove the Trustee and appoint a successor Trustee
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 Offered Certificates or, if there are no Offered 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 by delivering to the Trustee to be removed, to the successor Trustee so
appointed, to the Depositor, to the Servicer, 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 Seller may remove the Trustee and appoint a successor
Trustee by written instrument, in triplicate, signed by the Seller 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 Owners
of the majority of Percentage Interests of the Offered 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 Seller or the Owners of a majority of the Percentage Interests
represented by the Offered Certificates then Outstanding, the successor Trustee
so appointed shall forthwith upon its acceptance of such appointment become the
successor Trustee and supersede the successor Trustee appointed by the
Depositor. If no successor Trustee shall have been so appointed by the Depositor
or the Owners and shall have accepted appointment in the manner hereinafter
provided, any Owner may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor Trustee.
(g) The Servicer shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, 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
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predecessor hereunder; but, on request of the Depositor or the successor
Trustee, such predecessor Trustee shall, upon payment of its charges then
unpaid, execute and deliver an instrument transferring to such successor Trustee
all of the rights, powers and trusts of the Trustee so ceasing to act, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such Trustee so ceasing to act hereunder. Upon request of any such
successor trustee, the Depositor on behalf of the Trust shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in (a) preceding, the Trustee shall
timely file all reports prepared by the Seller and required to be filed by the
Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the 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.
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(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 to act as Co-Trustee or Co-Trustees, jointly with the Trustee, of all or
any part of the Trust Estate or separate Trustee or separate Trustees of any
part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Owners, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section 10.14,
such powers, duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case any event indicated in Section 8.20(a) shall have
occurred and be continuing, the Trustee 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:
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(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 Trustee acting jointly may at any
time accept the resignation of or remove any separate Trustee or
Co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and Co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or Co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and Co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate Trustee or Co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or Co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
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 or the
Owners to the Trustee to take any action under any provision of this Agreement,
the Depositor, the Seller or the Owners, as the case may be, shall furnish to
the Trustee a certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Agreement relating to such particular application or request, no
additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any opinion of counsel may be based, insofar as it
relates to factual matter upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, the Seller or the
Servicer, stating that the information with respect to such factual matters is
in the possession of the Depositor, the Seller or the Servicer, unless such
Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Any opinion of counsel may also be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Trustee, stating that the
information with respect to such matters is in the possession of the Trustee,
unless such counsel knows, or in the exercise 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
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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 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) 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
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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 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
Agreement11 (with the exception of any Monthly Remittance Date or any Monthly
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
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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 or the Servicer 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.
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
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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, 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 Upper-Tier REMIC and
Lower-Tier REMIC (other than the Pre-Funding Account and the Capitalized
Interest Account), (iii) curing any ambiguity, (iv) correcting or supplementing
any provisions of this Agreement which are inconsistent with any other
provisions of this Agreement, or adding provisions to this Agreement which are
not inconsistent with the 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 any Class of Certificates. 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 or (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.
(b) 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.
(c) Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an opinion of counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust pursuant to the REMIC Provisions or cause
either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to qualify as a
REMIC at any time that any of the Certificates are outstanding.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
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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 Owners by mailing notice thereof at their
addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Lower-Tier REMIC and the
Upper-Tier REMIC shall each constitute, and that the affairs of the Lower-Tier
REMIC and the Upper-Tier REMIC shall each 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 Lower-Tier REMIC and the Upper-Tier
REMIC created hereunder using a calendar year as the taxable year for the
Lower-Tier REMIC and the Upper-Tier REMIC; (ii) in the related first such tax
return, make (or cause to be made) an election satisfying the requirements of
the REMIC Provisions, on behalf of the Lower-Tier REMIC and the Upper-Tier 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
Lower-Tier REMIC and the Upper-Tier 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
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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 Lower-Tier REMIC or the Upper-Tier
REMIC created hereunder, except as provided under this Agreement; (v) represent,
the Trust or the Lower-Tier REMIC or the Upper-Tier 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 Lower-Tier REMIC or the Upper-Tier 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 Lower-Tier REMIC or the Upper-Tier REMIC created hereunder, and otherwise
act on behalf of the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC
created hereunder in relation to any tax matter involving the Trust or the
Lower-Tier REMIC or the Upper-Tier 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 1998, 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 1999), 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 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 (i) to take no action which would result
in the termination of REMIC status for the Lower-Tier REMIC or the Upper-Tier
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.
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(c) The Lower-Tier REMIC and the Upper-Tier 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 Trustee 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 Lower-Tier REMIC or the Upper-Tier 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 on
the Trust or the Lower-Tier REMIC or the Upper-Tier REMIC 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 Trustee 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 Lower-Tier REMIC or the Upper-Tier REMIC or cause a termination of REMIC
status for the Lower-Tier or the Upper-Tier REMIC, (i) sell any assets in the
Trust Estate, (ii) accept any contribution of assets after the Startup Day
(other than Subsequent Home Equity Loans), (iii) allow the Servicer to foreclose
upon any Home Equity Loan if such foreclosure would result in a tax on the Trust
or the Lower-Tier REMIC or the Upper-Tier REMIC or cause termination of the
REMIC status for the Lower-Tier REMIC or the Upper-Tier REMIC or (iv) agree to
any modification of this Agreement. To the extent that sufficient amounts cannot
be so retained to pay or provide for the payment of such tax, the Trustee is
hereby authorized to and shall segregate, into a separate non-interest bearing
account, the net income from any such Prohibited Transactions of the Lower-Tier
REMIC or the Upper-Tier REMIC and use such income, to the extent necessary, to
pay such tax; provided that, to the extent that any such income is paid to the
Internal Revenue Service, the Trustee shall retain an equal amount from future
amounts otherwise distributable to the Owners of Class R Certificates and shall
distribute such retained amounts to the Owners of the Offered 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
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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 Lower-Tier REMIC and the
Upper-Tier REMIC for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters Person
under the Code. The Tax Matters Person for the Lower-Tier REMIC and the
Upper-Tier REMIC shall be the Trustee as long as it owns a Class R Certificate.
If the Trustee does not own a Class R Certificate, the Tax Matters Person may be
any other entity that owns a Class R Certificate and accepts a designation
hereunder as Tax Matters person by delivering an affidavit in the form of
Exhibit I.
Section 11.19 [Reserved].
Section 11.20 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: The Chase Manhattan Bank
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Structured Finance Services
(212) 946-8600
(212) 946-3240 - Fax
The Depositor: IMC Securities, Inc.
5901 East Fowler Avenue
Tampa, FL 33617-2362
(813) 984-8801
(813) 984-2595 - Fax
The Seller: IMC Mortgage Company
5901 East Fowler Avenue
Tampa, FL 33617-2362
(813) 984-8801
(813) 984-2595 - Fax
The Servicer: IMC Mortgage Company
5901 East Fowler Avenue
Tampa, FL 33617-2362
(813) 984-8801
(813) 984-2595 - Fax
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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
PaineWebber Incorporated
1285 Avenue of the Americas
11th Floor
New York, New York 10019
Attention: Barbara Dawson (cc: John Fearey)
Tel: (212) 713-8601
Fax: (212) 713-7999
Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, New York 10019
Attention: John Rothman
Tel: (212) 469-8688
Fax: (212) 469-7678
J. P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attention: Peggyann Wallace
Tel: (212) 648-4513
Fax: (212) 648-5251
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
Fitch: Fitch Investors Service, Inc.
One State Street Plaza
New York, New York 10004
Tel: (212) 753-4824
Fax: (212) 376-6964
Standard & Poor's: Standard & Poor's Rating Service
20 Broadway, 15th Floor
New York, New York 10004
Tel: (212) 208-8000
Fax: (212) 412-0224
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Section 11.21 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 11.21
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 11.21 shall agree that such
information shall not be disclosed or used for any purpose other than the
evaluation of the Class R Certificates by the prospective purchaser. The Trustee
shall have no responsibility for the sufficiency under Rule 144A of any
information so provided by the Servicer to any Owner or prospective purchaser of
Class R Certificates.
END OF ARTICLE XI
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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
----------------------------
IMC MORTGAGE COMPANY,
as Seller
By: /s/ George Nicholas
----------------------------
Title: Chief Executive Officer
----------------------------
IMC MORTGAGE COMPANY,
as Servicer
By: /s/ George Nicholas
----------------------------
Title: Chief Executive Officer
----------------------------
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Ann Marie Jose
----------------------------
Title: Trust Officer
----------------------------
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STATE OF FLORIDA )
: ss.:
COUNTY OF HILLSBOROUGH )
On the 11th day of March, 1998, 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 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 11th day of March, 1998, 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 IMC Mortgage
Company, 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/ Jennnifer L. Ellis
-------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 11th day of March, 1998, before me personally came Ann Marie
Jose, to me known, who, being by me duly sworn did depose and say that she
resides at 208 Roosevelt Ave; that 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 she signed 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.
/s/ James A. Nash
-----------------------
Notary Public
[NOTARIAL SEAL]
<PAGE>
SCHEDULE I
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
