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): June 30, 1997
EQCC RECEIVABLES CORPORATION
EQCC ASSET BACKED CORPORATION
(re EQCC HOME EQUITY LOAN TRUST 1997-2)
(Exact name of registrant as specified in governing instruments)
Delaware 333-20675 59-3450527
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
organization) No.)
10401 Deerwood Park Boulevard, Jacksonville, Florida 32256-0505
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 987-5000
(Former name or former address, if changed since last report)
Exhibit Index located at Page 2
<PAGE>
Items 1 through 4 and Items 6 and 8 are not included because they are not
applicable.
Item 5. Other Events.
Revisions to Prospectus Supplement. The Prospectus Supplement dated June
24, 1997 for EQCC Home Equity Loan Trust 1997-2 (the "Trust"), previously filed
with the Commission, contains statistical information and related data
concerning the Mortgage Pool as of an original Cut-off Date of June 1, 1997.
Submitted with this Form 8-K report are marked change pages to the Prospectus
Supplement (marked sequentially as pages 5 through 27 of this report) showing
all statistical information for the final Mortgage Pool. Such statistical
information has been updated to reflect origination data as of the Closing Date
of June 30, 1997 for all Mortgage Loans originated prior to such date. The
change pages are limited to those sections of the Prospectus Supplement which
present such updated statistical information on the Mortgage Pool. Such change
pages are being filed in paper format only pursuant to a continuing hardship
exemption granted pursuant to Section 202 of Regulation S-T of the Securities
Act of 1933, as amended from time to time.
For purposes of the original Prospectus Supplement, the Initial Mortgage
Pool consisted of $644,433,136.81. For purposes of this Form 8-K report, the
Mortgage Pool is no longer pre-funded; the amount on deposit in the Pre-Funding
Account as of the close of business on the Closing Date is zero. The amount of
the final Mortgage Pool is $688,660,439.42, but is still referred to throughout
the attached change pages to the Prospectus Supplement as the Initial Mortgage
Pool. References to the Initial Mortgage Pool or the Initial Mortgage Loans as
of the Cut-off Date should now be read as referring to the Closing Date.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements - Not Applicable
(b) Pro Forma Financial Information - Not Applicable
(c) Exhibits (executed copies) - The following execution
copies of Exhibits to the Form S-3 Registration
Statement of the Registrant are hereby filed with
respect to the Trust:
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
<S> <C> <C>
+ 1.1 (A) Underwriting Agreement dated as of June 24, 1997 28
among EQCC Asset Backed Corporation, EQCC
Receivables Corporation, Lehman Brothers Inc., Bear,
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Stearns & Co. Inc., Salomon Brothers Inc and Prudential
Securities Incorporated
+ 1.1 (B) Representations Letter dated as of June 24, 1997 57
among EquiCredit Corporation of America, EquiCredit
Corporation/Ala. & Miss., California/EquiCredit
Corporation, EquiCredit Corporation of In., EquiCredit
Corporation of Pa., EquiCredit Corporation of SC, Lehman
Brothers Inc., Bear, Stearns & Co. Inc., Salomon Brothers
Inc and Prudential Securities Incorporated
+ 4.1 (A) Pooling and Servicing Agreement, dated as of June 1, 73
1997, among EquiCredit Corporation of America, as Servicer,
EQCC Asset Backed Corporation, EQCC Receivables
Corporation and First Bank National Association, as Trustee
+ 10.1 Transfer Agreement dated as of June 1, 1997 among 644
EquiCredit Corporation of America, EquiCredit
Corporation/Ala. & Miss., California/EquiCredit
Corporation, EquiCredit Corporation of In., EquiCredit
Corporation of Pa., EquiCredit Corporation of SC, EQCC
Asset Backed Corporation and EQCC Receivables
Corporation
+ 10.3 Custodial Agreement dated as of June 1, 1997 among 1,196
EquiCredit Corporation of America, EquiCredit
Corporation/Ala. & Miss., California/EquiCredit Corporation,
EquiCredit Corporation of In., EquiCredit Corporation of Pa.,
EquiCredit Corporation of SC, EQCC Receivables
Corporation, EQCC Asset Backed Corporation, First Bank
National Association, as Trustee, and BankBoston, N.A., as
Custodian.
</TABLE>
+ Those schedules and exhibits to the foregoing documents which present
statistical or related information regarding the underlying mortgage pool
are being filed in paper format only pursuant to a continuing hardship
exemption granted pursuant to Rule 202 of Regulation S-T of the Securities
Act of 1933, as amended from time to time. For reference purposes, the
documents themselves have also been filed in paper format as well as in
electronic format.
[Remainder of page intentionally left blank.]
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<PAGE>
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.
EQCC RECEIVABLES CORPORATION
July 15, 1997 By:/s/ Terence G. Vane, Jr.
Terence G. Vane, Jr., Vice President
EQCC ASSET BACKED CORPORATION
July 15, 1997 By:/s/ Terence G. Vane, Jr.
Terence G. Vane, Jr., Vice President
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EXECUTION COPY
EQCC HOME EQUITY LOAN TRUST 1997-2
Approximately $65,666,000 EQCC Home Equity Loan Asset Backed Certificates,
Class A-1, 6. 5% Pass-Through Rate
Approximately $31,292,000 EQCC Home Equity Loan Asset Backed Certificates,
Class A-2, 5.93% Pass-Through Rate
Approximately $78,276,000 EQCC Home Equity Loan Asset Backed Certificates,
Class A-3, 6.21% Pass-Through Rate
Approximately $62,228,000 EQCC Home Equity Loan Asset Backed Certificates,
Class A-4, 6.37% Pass-Through Rate
Approximately $86,789,000 EQCC Home Equity Loan Asset Backed Certificates,
Class A-5, 6.54% Pass-Through Rate
Approximately $22,646,000 EQCC Home Equity Loan Asset Backed Certificates,
Class A-6, 6.72% Pass-Through Rate
Approximately $72,769,000 EQCC Home Equity Loan Asset Backed Certificates,
Class A-7, 6.89% Pass-Through Rate
Approximately $33,034,000 EQCC Home Equity Loan Asset Backed Certificates,
Class A-8, 7.22% Pass-Through Rate
Approximately $50,300,000 EQCC Home Equity Loan Asset Backed Certificates,
6.81% Pass-Through Rate
Approximately $185,000,000 EQCC Home Equity Loan Asset Backed Certificates,
Class A-10, Adjustable Pass-Through Rate
UNDERWRITING AGREEMENT
As of June 24, 1997
Lehman Brothers Inc. Prudential Securities
Three World Financial Center Incorporated
12th Floor One New York Plaza
New York, New York 10285 New York, New York 10292
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Bear, Stearns & Co. Inc. Salomon Brothers Inc
245 Park Avenue 7 World Trade Center
New York, New York 10167
32nd Floor
New York, New York 10048
Ladies and Gentlemen:
1. Introductory. EQCC Receivables Corporation and EQCC Asset Backed
Corporation (each a "Seller" and, collectively, the "Sellers") propose to sell
to Lehman Brothers Inc., Bear, Stearns & Co. Inc., Prudential Securities
Incorporated and Salomon Brothers Inc (the "Underwriters") EQCC Home Equity Loan
Asset Backed Certificates, Class A-1, 6.05% Pass-Through Rate (the "Class A-1
Certificates"), Class A-2, 5.93% Pass-Through Rate (the "Class A-2
Certificates"), Class A-3, 6.21% Pass-Through Rate (the "Class A-3
Certificates"), Class A-4, 6.37% Pass-Through Rate (the "Class A-4
Certificates"), Class A-5, 6.54% Pass- Through Rate (the "Class A-5
Certificates"), Class A-6, 6.72% Pass-Through Rate (the "Class A- 6
Certificates"), Class A-7, 6.89% Pass-Through Rate (the "Class A-7
Certificates"), Class A-8, 7.22% Pass-Through Rate (the "Class A-8
Certificates"), Class A-9, 6.81% Pass-Through Rate (the "Class A-9
Certificates") and Class A-10, Adjustable Pass-Through Rate (the "Class A-10
Certificates" and, with the Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates, Class A-4 Certificates, Class A-5 Certificates, Class
A-6 Certificates, Class A-7 Certificates, Class A-8 Certificates, Class A-9
Certificates and Class A-10 Certificates, the "Class A Certificates"). Each
class of Class A Certificates and the Class R Certificates (with the Class A
Certificates, the "Certificates") will represent a fractional undivided interest
in the Trust. The assets of the Trust will include, among other things, (i) a
pool of fixed-rate and adjustable-rate one-to four-family first and second
mortgage loans (the "Mortgage Loans") originated or acquired by EquiCredit
Corporation of America, EquiCredit Corporation/Ala. & Miss.,
California/EquiCredit Corporation, EquiCredit Corporation of In., EquiCredit
Corporation of Pa. and EquiCredit Corporation of SC (each, an "Originator" and
collectively, the "Originators") and transferred to the Sellers pursuant to a
Transfer Agreement to be dated as of June 1, 1997 (the "Transfer Agreement")
between the Originators and the Sellers, and by the Sellers to the Trust
pursuant to a Pooling and Servicing Agreement to be dated as of June 1, 1997
(the "Pooling and Servicing Agreement") among the Sellers, EquiCredit
Corporation of America, as Servicer (in such capacity, the "Servicer"), and
First Bank National Association, as trustee (the "Trustee"), (ii) certain monies
due or to become due under the Mortgage Loans, (iii) an irrevocable guaranty
surety bond (the "Securities Insurance Policy") to be issued by AMBAC Indemnity
Corporation (the "Insurer"), pursuant to which the Insurer will guaranty certain
payments to the holders of the Class A Certificates in the manner and to the
extent described in the Securities Insurance Policy. The Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class
A-5 Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates, Class A-9 Certificates and the Class A-10 Certificates will be
issued in initial aggregate principal amounts of approximately $65,666,000,
$31,292,000, $78,276,000, $62,228,000, $86,789,000, $22,646,000, $72,769,000,
$33,034,000, $50,300,000 and $185,000,000, respectively. The Class A
Certificates are sometimes collectively referred to herein as the "Offered
Securities."
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<PAGE>
This Underwriting Agreement shall hereinafter be referred to as "this
Agreement." This Agreement, the Pooling and Servicing Agreement, the Transfer
Agreement, the Custodial Agreement and the Securities Insurance Policy are
collectively hereinafter referred to as the "Basic Documents." Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement.
2. Representations and Warranties of the Sellers. Each Seller, jointly and
severally, represents and warrants to, and agrees with, the Underwriters that:
(a) A registration statement on Form S-3 (No. 333-20675), including a
prospectus and such amendments thereto as may have been required to the
date hereof, relating to the Offered Securities and the offering thereof
from time to time in accordance with Rule 415 under the Securities Act of
1933, as amended (the "Act"), has been filed with the Securities and
Exchange Commission (the "Commission") and such registration statement, as
amended, has become effective; such registration statement, as amended, and
the prospectus relating to the sale of the Offered Securities offered
thereby constituting a part thereof, as from time to time amended or
supplemented (including the base prospectus and any prospectus supplement
filed with the Commission pursuant to Rule 424(b) of the rules and
regulations of the Commission (the "Rules and Regulations") under the Act),
are respectively referred to herein as the "Registration Statement" and the
"Prospectus"; provided, however, that a supplement to the Prospectus
prepared pursuant to Section 5(a) hereof shall be deemed to have
supplemented the Prospectus only with respect to the offering of the
Offered Securities; and the conditions to the use of a registration
statement on Form S-3 under the Act, as set forth in the General
Instructions to Form S-3, and the conditions of Rule 415 under the Act,
have been satisfied with respect to the Registration Statement; 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 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 Sellers
filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the effective date of the Registration Statement that is
incorporated by reference in the Registration Statement.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Prospectus conformed in all respects to the
requirements of the Act and the Rules and Regulations, and did not include
any untrue statement of a material fact or, in the case of the Registration
Statement, omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, in the case of
the Prospectus, omit to state any material fact necessary to make the
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<PAGE>
statements therein, in the light of the circumstances under which they were
made, not misleading; any further documents filed and incorporated by
reference in the Prospectus, when such documents become effective or are
filed with the Commission, as the case may be, (i) will conform in all
material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and
(ii) 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; and on the date of this Agreement,
the Registration Statement and the Prospectus will conform in all respects
to the requirements of the Act and the Rules and Regulations, and neither
of such documents included or will include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the foregoing does not apply to statements in or
omissions from either of the documents based upon written information
(including Derived Information (as defined herein)) furnished to the
Sellers by any Underwriter specifically for use therein; as of the Closing
Date, the representations and warranties of the Sellers and the Originators
in the Basic Documents will be true and correct.
(c) As of the Closing Date, each consent, approval, authorization or
order of, or filing with, any court or governmental agency or body required
to be obtained or made by either Seller or their affiliates for the
consummation of the transactions contemplated by this Agreement shall have
been obtained, except as otherwise provided in the Basic Documents with
respect to the Mortgage Loans.
(d) Each Seller has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation and each Seller is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
ownership or lease of its properties or the conduct of its business
requires such qualification. Neither Seller is in violation of its
organization certificate, certificate of incorporation or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any agreement or instrument to which it
is a party or by which it or its properties are bound which would have a
material adverse effect on the transactions contemplated herein or any
other Basic Document. The execution, delivery and performance of each Basic
Document, and the issuance and sale by the Sellers of the Offered
Securities, and compliance with the terms and provisions thereof will not,
subject to obtaining any consents or approvals as may be required under the
real estate syndication, securities or "blue sky" laws of various
jurisdictions, result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court having
jurisdiction over the Sellers or any of their respective properties or any
agreement or instrument to which either of the Sellers is a party or by
which either of the Sellers is bound or to which any of the properties of
either of the Sellers is subject, or the organization certificate,
certificate of incorporation or by-laws of either of the Sellers, and each
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<PAGE>
Seller has corporate power to enter into each Basic Document to which it is
a party and to consummate the transactions contemplated hereby and thereby.
(e) This Agreement has been duly authorized, executed and delivered by
each Seller and constitutes a legal, valid and binding instrument
enforceable against each Seller in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
enforcement of creditors' rights generally.
(f) Each Basic Document, when executed and delivered as contemplated
hereby and thereby, will have been duly authorized, executed and delivered
by, each Seller party thereto and, when so executed and delivered, will
constitute a legal, valid and binding instrument enforceable against each
such Seller in accordance with its terms, except as enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting enforcement of creditors' rights generally.
(g) As of the Closing Date, the Offered Securities will have been duly
and validly authorized by each Seller and, when executed and authenticated
as specified in the Pooling and Servicing Agreement, will be validly issued
and outstanding and will be entitled to the benefits set forth in the
Pooling and Servicing Agreement.
(h) There are no actions, proceedings or investigations now pending
against either Seller or, to the knowledge of either Seller, threatened
against either Seller (A) which are required to be disclosed in the
Registration Statement, other than those disclosed therein, or (B)(1)
asserting the invalidity of any Basic Document or the Certificates, (2)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by the Basic Documents, (3) which
might materially and adversely affect the performance by either Seller of
its obligations under, or the validity or enforceability of, the Basic
Documents or the Certificates, or (4) seeking to affect adversely the
federal income tax attributes of the Certificates as described in the
Prospectus under "Certain Federal Income Tax Consequences."
(i) Any taxes, fees and other governmental charges that are assessed
and due in connection with the execution, delivery and issuance of this
Agreement and each other Basic Document shall have been paid by the Sellers
at or prior to the Closing Date.
(j) Each Seller possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies deemed by such Seller to be reasonably
necessary to conduct the business now operated by it and as described in
the Prospectus, and neither of the Sellers received notice of proceedings
relating to the revocation or modification of any such license,
certificate, authority or permit which, singly or in the aggregate, if the
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<PAGE>
subject of any unfavorable decision, ruling or finding, would materially
and adversely affect the conduct of the business, operations, financial
condition or income of such Seller. The Servicer is (i) an approved
seller/servicer of first and second mortgage loans for FNMA and FHLMC in
good standing and (ii) a mortgagee approved by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing
Act.
(k) As of the Closing Date, the Trustee will have good title, free and
clear of all prior liens, charges and encumbrances, to the Mortgage Notes
and the related Mortgages included in the assets of the Trust, upon (a)
with respect to the Mortgage Notes, delivery thereof to the Trustee (or to
the Custodian on behalf of the Trustee) and (b) with respect to the
Mortgages, delivery to the Trustee (or to the Custodian on behalf of the
Trustee) of the instruments of assignment set forth in Sections 2.04(c) and
(h) of the Pooling and Servicing Agreement.
(l) None of the Trust Fund, either Seller or any Originator will be
subject to registration as an "investment company" under the Investment
Company Act of 1940, as amended.
(m) The Securities Insurance Policy, upon issuance by the Insurer as
described in the Prospectus, will conform to the description thereof set
forth in the Prospectus. The representations and warranties made by the
Sellers to the Insurer in connection with issuance of the Securities
Insurance Policy will be true and correct as of the Closing Date. Neither
Seller is aware of any existing facts or circumstances which could cause
the Securities Insurance Policy not to be in full force and effect from and
after the Closing Date. To the best of the Sellers' knowledge, there is not
presently contemplated any downgrading in the rating of the securities of
either Seller, any Originator or the Insurer by any "nationally recognized
statistical rating organization" (as such term is defined for purposes of
Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any securities
of either Seller or any Originator or the Insurer (other than an
announcement without an implication of a possible downgrading of such
rating).
(n) As of the Cut-off Date, each of the Mortgage Loans meets the
eligibility criteria described in the Prospectus and conforms to the
descriptions thereof contained in the Prospectus.
3. Purchase, Sale and Delivery of Offered Securities.
On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the Sellers
agree to sell to the Underwriters, and the Underwriters agree, severally and not
jointly, to purchase from the Sellers, the aggregate principal amounts of the
Offered Securities set forth below opposite the names of the Underwriters. The
Class A-1 Certificates are to be purchased at the purchase price of 99.819800%
of the aggregate principal amount thereof plus accrued interest at the Class A-1
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Pass-Through Rate from (and including) June 15, 1997 to (but excluding) the
Closing Date (as defined herein). The Class A-2 Certificates are to be purchased
at the purchase price of 99.871570% of the aggregate principal amount thereof
plus accrued interest at the Class A-2 Pass-Through Rate from (and including)
June 15, 1997 to (but excluding) the Closing Date. The Class A-3 Certificates
are to be purchased at the purchase price of 99.819170% of the aggregate
principal amount thereof plus accrued interest at the Class A-3 Pass-Through
Rate from (and including) June 15, 1997 to (but excluding) the Closing Date. The
Class A-4 Certificates are to be purchased at the purchase price of 99.784375%
of the aggregate principal amount thereof plus accrued interest at the Class A-4
Pass-Through Rate from (and including) June 15, 1997 to (but excluding) the
Closing Date. The Class A-5 Certificates are to be purchased at the purchase
price of 99.759375% of the aggregate principal amount thereof plus accrued
interest at the Class A-5 Pass-Through Rate from (and including) June 15, 1997
to (but excluding) the Closing Date. The Class A-6 Certificates are to be
purchased at the purchase price of 99.693750% of the aggregate principal amount
thereof plus accrued interest at the Class A-6 Pass-Through Rate from (and
including) June 15, 1997 to (but excluding) the Closing Date. The Class A-7
Certificates are to be purchased at the purchase price of 99.593750% of the
aggregate principal amount thereof plus accrued interest at the Class A-7
Pass-Through Rate from (and including) June 15, 1997 to (but excluding) the
Closing Date. The Class A-8 Certificates are to be purchased at the purchase
price of 99.375000% of the aggregate principal amount thereof plus accrued
interest at the Class A-8 Pass-Through Rate from (and including) June 15, 1997
to (but excluding) the Closing Date. The Class A-9 Certificates are to be
purchased at the purchase price of 99.518750% of the aggregate principal amount
thereof plus accrued interest at the Class A-9 Pass-Through Rate from (and
including) June 15, 1997 to (but excluding) the Closing Date. The Class A-10
Certificates are to be purchased at the purchase price of 99.730000% of the
aggregate principal amount thereof.
<TABLE>
<CAPTION>
Prudential
Lehman Brothers Bear, Stearns & Securities Salomon
Certificates Inc. Co. Inc. Incorporated Brothers Inc
<S> <C> <C> <C> <C>
Class A-1 $16,418,000 $16,416,000 $16,416,000 $16,416,000
Class A-2 $ 7,823,000 $ 7,823,000 $ 7,823,000 $ 7,823,000
Class A-3 $19,636,000 $19,633,000 $19,633,000 $19,633,000
Class A-4 $15,557,000 $15,557,000 $15,557,000 $15,557,000
Class A-5 $21,698,000 $21,697,000 $21,697,000 $21,697,000
Class A-6 $ 5,663,000 $ 5,661,000 $ 5,661,000 $ 5,661,000
Class A-7 $18,193,000 $18,192,000 $18,192,000 $18,192,000
Class A-8 $ 8,260,000 $ 8,258,000 $ 8,258,000 $ 8,258,000
Class A-9 $12,575,000 $12,575,000 $12,575,000 $12,575,000
Class A-10 $46,405,000 $46,405,000 $46,405,000 $46,405,000
</TABLE>
The Sellers will deliver the Class A Certificates to the Underwriters
against payment of the purchase price therefor in immediately available funds to
the order of the Sellers at the office of Orrick, Herrington & Sutcliffe, 666
Fifth Avenue, New York, New York 10103, at 10:00 A.M., New York City time, on
June 30, 1997 or at such other time not later than seven full Business Days
thereafter as the Underwriters and the Sellers determine, such time being herein
referred to as the "Closing Date." Each of the Class A Certificates will be
initially represented by one or
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more certificates registered in the name of Cede & Co., the nominee of The
Depository Trust Company ("DTC") (the "DTC Securities"). The interests of
beneficial owners of the DTC Securities will be represented by book entries on
the records of DTC and participating members thereof. Definitive certificates
evidencing the Class A Certificates will be available only under the limited
circumstances specified in the Pooling and Servicing Agreement. Such
Certificates will be made available for examination and packaging by the
Underwriters no later than 12:00 noon on the first business day prior to the
Closing Date.
4. Offering by the Underwriters. It is understood that the Underwriters
propose to offer the Offered Securities for sale to the public (which may
include selected dealers) as set forth in the Prospectus.
5. Certain Agreements of the Sellers. Each Seller, jointly and severally,
covenants and agrees with the Underwriters that:
(a) Immediately following the execution of this Agreement, the Sellers
will prepare a Prospectus Supplement in a form approved by the Underwriters
setting forth the amount of Offered Securities covered thereby and the
terms thereof not otherwise specified in the Prospectus, the price at which
such Offered Securities are to be purchased by the Underwriters from the
Sellers, either the initial public offering price or the method by which
the price at which such Offered Securities are to be sold will be
determined, the selling concessions and reallowances, if any, and such
other information as the Underwriters and the Sellers deem appropriate in
connection with the offering of such Offered Securities, and the Sellers
will timely file such Prospectus Supplement with the Commission pursuant to
Rule 424(b) promulgated under the Act, but the Sellers will not file any
amendments to the Registration Statement as in effect with respect to the
Offered Securities, or any amendments or supplements to the Prospectus,
unless it shall first have delivered copies of such amendments or
supplements to the Underwriters, or if the Underwriters shall have
reasonably objected thereto promptly after receipt thereof; the Sellers
will file promptly all reports and any definitive proxy or information
statements required to be filed by the Sellers with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and, for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Offered Securities;
the Sellers will immediately advise the Underwriters or the Underwriters'
counsel (i) when notice is received from the Commission that any
post-effective amendment to the Registration Statement has become or will
become effective and (ii) of any order or communication suspending or
preventing, or threatening to suspend or prevent, the use of the
Prospectus, the offer and sale of the Offered Securities or of any
proceedings or examinations that may lead to such an order or
communication, whether by or of the Commission or any authority
administering any state securities or Blue Sky law, as soon as the Sellers
are advised thereof, and will use their best efforts to prevent the
issuance of any such order or communication and to obtain as soon as
possible its lifting, if issued. Subject to the Underwriters' compliance
with its obligations set forth in Section 7(g) hereof, the Sellers shall
file with the Commission a current report on Form 8-K including any Derived
Information (as defined herein) provided to it by the Underwriters pursuant
to Section 7(g) hereof (i) no later than the
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date that the Prospectus Supplement is filed with respect to "computational
materials" and "structural terms sheets" (as such terms are interpreted in
the No-Action letters addressed to Kidder, Peabody Acceptance Corporation
I, et al. and the Public Securities Association dated May 20, 1994 and
February 17, 1995, respectively (collectively, the "PSA Letters") or (ii)
no later than two days following their date of first use with respect to
"collateral term sheets" (as such term is interpreted in the PSA Letters).
(b) If, at any time when a Prospectus relating to the Offered
Securities is required to be delivered under the Act, any event occurs 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 to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend or supplement the Prospectus to comply with
the Act or the Rules and Regulations, the Sellers will promptly prepare and
file with the Commission, an amendment or supplement that will correct such
statement or omission or an amendment that will effect such compliance.
(c) The Sellers will make generally available to the holders of the
Offered Securities (the "holders") as soon as practicable, earning
statements covering (i) a period of 12 months beginning not later than the
first day of the Trust Fund's fiscal quarter next following the effective
date of the Registration Statement and (ii) a period of 12 months beginning
no later than the first day of the Trust Fund's fiscal quarter next
following the date of this Agreement which will satisfy the provisions of
Section 11(a) of the Act and Rule 158 of the Commission with respect to the
Offered Securities. The Sellers will cause the Trustee to furnish or make
available, within a reasonable time after the end of each calendar year, to
each holder of an Offered Security at any time during such year, such
information as the Sellers deem necessary or desirable to assist holders in
preparing their federal income tax returns.
(d) The Sellers will furnish to the Underwriters copies of the
Registration Statement (two of which will be signed and will include all
documents and exhibits thereto or incorporated by reference therein), the
Prospectus, and all amendments and supplements to such documents relating
to the Offered Securities, including, without limitation, any document
incorporated by reference in the Prospectus (including exhibits thereto) in
each case as soon as available and in such quantities as the Underwriters
reasonably request.
(e) The Sellers will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions in the United
States as the Underwriters may designate and will continue such
qualifications in effect so long as required for the distribution of the
Offered Securities; provided, however, that no Seller shall be obligated to
qualify to do business in any jurisdiction where it is not now so qualified
or to take any action which would subject it to general or unlimited
service of process in any jurisdiction where it is not now so subject.
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<PAGE>
(f) So long as any of the Offered Securities are outstanding, the
Sellers will deliver to the Underwriters (i) as soon as available, the
annual statements of compliance and the annual independent public
accountants' reports furnished to the Trustee pursuant to Sections 7.04 and
7.05, respectively, of the Pooling and Servicing Agreement; (ii) as soon as
available, copies of each Remittance Report and such other reports
regarding the Offered Securities mailed to holders pursuant to Section 7.07
of the Pooling and Servicing Agreement; (iii) as soon as available, copies
of each document relating to the Trust or the Certificates required to be
filed with the Commission pursuant to the Exchange Act or any order of the
Commission thereunder and (iv) such other information concerning the Trust,
the Sellers, the Originators and the Certificates as the Underwriters may
reasonably request from time to time.
(g) The Sellers will pay all expenses incident to the performance of
their obligations under this Agreement, including (i) the printing (or
other reproducing) and filing of the Registration Statement as originally
filed and of each amendment thereto; (ii) the reproducing of the Basic
Documents; (iii) the preparation, issuance and delivery of the certificates
for the Offered Securities to the Underwriters; (iv) the fees of DTC in
connection with the book-entry registration of the Offered Securities; (v)
the fees and disbursements of (A) the Sellers' and the Originators' counsel
and accountants, (B) the Insurer and its counsel and (C) the Trustee and
its counsel; (vi) the qualification of the Offered Securities under state
securities laws in accordance with the provisions of Section 5(f) hereof,
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey; (vii) the fees and disbursements of Orrick,
Herrington & Sutcliffe in connection with the preparation of the legal
opinion described in Section 6(f) hereof and in connection with the
preparation of a legal opinion regarding the enforceability of this
Agreement and the Basic Documents under New York law; (viii) the printing
(or otherwise reproducing) and delivery to the Underwriters of copies of
the Registration Statement as originally filed and of each amendment
thereto, and of each preliminary prospectus and the Prospectus and any
amendments or supplements thereto; (ix) the reproducing and delivery to the
Underwriters of copies of the Blue Sky Survey, and (x) the fees charged by
the Rating Agencies for rating the Offered Securities.
(h) [Intentionally omitted]
(i) On or before the Closing Date, the Sellers shall cause the
Originators to mark their computer records relating to the Mortgage Loans
to show the Trust's absolute ownership of the Mortgage Loans as of the
Cut-off Date (other than the Representative's Yield and amounts received
after the Cut-off Date in respect of interest accrued prior to the Cut-off
Date), and from and after the Closing Date neither of the Sellers shall
take any action inconsistent with the Trust's ownership of such Mortgage
Loans, other than as permitted by the Pooling and Servicing Agreement.
(j) To the extent, if any, that the rating provided with respect to
the Offered Securities by the Rating Agencies is conditional upon the
furnishing of documents or the taking of any other actions by the Sellers
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<PAGE>
or the Originators, the Sellers shall furnish (or cause to be furnished)
such documents and take (or cause to be taken) any such other actions.
(k) For a period of 30 days from the date hereof, neither of the
Sellers will, without the prior written consent of the Underwriters,
directly or indirectly, offer, sell or contract to sell, or announce the
offering of, in a public or private transaction, any other series of notes
secured by, or certificates evidencing interests in, home equity mortgage
loans with similar terms as the Offered Securities, except for sales into
the Originators' warehousing lines. Nothing herein shall be deemed to limit
or prohibit the Sellers from selling whole mortgage loans to FNMA, with or
without the retention of servicing rights, and, with the consent of the
Underwriters, which shall not be unreasonably withheld, the Sellers may
make other sales of whole mortgage loans, with or without the retention of
servicing rights.
(l) The Sellers will prepare, or cause to be prepared, and file, or
cause to be filed, a timely election to treat the Trust Fund as a "real
estate mortgage investment conduit" ("REMIC") for federal income tax
purposes and will file, or cause to be filed, such tax returns and take, or
cause to be taken, such actions, all on a timely basis, as are required to
elect and maintain the Trust Fund's status as a REMIC.
6. Conditions of the Obligations of the Underwriters. The obligation of the
Underwriters to purchase and pay for the Offered Securities will be subject to
the accuracy of the representations and warranties on the part of the Sellers
herein, to the accuracy of the statements of officers of the Sellers made
pursuant to the provisions hereof, to the performance by the Sellers of their
obligations hereunder and to the following additional conditions precedent:
(a) The Underwriters shall have received from Arthur Andersen & Co.
(i) a letter, dated the date hereof, confirming that they are independent
public accountants within the meaning of the Act and the Rules and
Regulations and otherwise in form and substance satisfactory to the
Underwriters and counsel to the Underwriters and (ii) a letter dated the
Closing Date, updating the letters referred to in clause (i) above, in form
and substance satisfactory to the Underwriters and counsel for the
Underwriters.
(b) All actions required to be taken and all filings required to be
made by the Sellers under the Act prior to the sale of the Offered
Securities shall have been duly taken or made. At and prior to the Closing
Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Sellers or the
Underwriters, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Sellers, the Originators, the Servicer or the Insurer which, in the
reasonable judgment of the Underwriters, materially impairs the investment
quality of the Offered Securities; (ii) any downgrading in the rating of
the securities of either Seller, any Originator or the Insurer by any
"nationally recognized
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<PAGE>
statistical rating organization" (as such term is defined for purposes of
Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any securities
of either Seller, any Originator or the Insurer (other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (iii) any suspension or limitation
of trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange; (iv) any banking
moratorium declared by federal, New York, Florida, Minnesota or Illinois
authorities or (v) any outbreak or escalation of major hostilities in which
the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in
the reasonable judgment of the Underwriters, the effects of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the sale of and
payment for the Offered Securities.
(d) The Underwriters, unless otherwise agreed to by them, shall have
received a favorable opinion of each of the following counsels to the
Sellers and the Originators, addressed to the Underwriters, dated the
Closing Date in form and substance satisfactory to the Underwriters and
their counsel:
(i) Hutchins, Wheeler & Dittmar (Exhibit 6(d)(i));
(ii) Rogers, Towers, Bailey, Jones & Gay (Exhibit 6(d)(ii));
(iii) Bradley, Arant, Rose & White (Exhibit 6(d)(iii));
(iv) Gourley & Burstein (Exhibit 6(d)(iv));
(v) James Dodd (Exhibit 6(d)(v));
(vi) Pepper, Hamilton & Scheetz (Exhibit 6(d)(vi)); and
(vii) Sinkler & Boyd (Exhibit 6(d)(vii)).
Each such counsel will also deliver to the Underwriters reliance letters
relating to each opinion rendered to the Rating Agencies.
With respect to the opinion of Hutchins, Wheeler & Dittmar, insofar as
such opinions involve matters of law of any jurisdiction other than the
Commonwealth of Massachusetts, the General Corporation Law of the State of
Delaware or the United States of America, such opinions may be given in
reliance upon an opinion of counsel in such jurisdiction reasonably
acceptable to the Underwriters, a copy of which shall be delivered to the
Underwriters.
(e) The Underwriters shall have received a favorable opinion of
Terence G. Vane, Jr., Esq., Associate General Counsel of each of the
Sellers and the Originators, dated the Closing Date and substantially in
the form attached hereto as Exhibit 6(e).
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<PAGE>
(f) The Underwriters shall have received a favorable opinion of
Orrick, Herrington & Sutcliffe, special tax counsel for the Sellers,
addressed to the Underwriters and dated the Closing Date and satisfactory
in form and substance to the Underwriters, generally to the effect that (i)
the information in the Prospectus under "Certain Federal Income Tax
Consequences" and in the Prospectus Supplement under "Certain Federal
Income Tax Consequences," insofar as such information describes federal
statutes and regulations or otherwise constitute matters of law or legal
conclusions of the statutes or regulations of such jurisdiction have been
prepared or reviewed by such counsel, and such information is correct in
all material respects; and (ii) assuming compliance with all of the
provisions of the Pooling and Servicing Agreement, the Trust Fund will
qualify as a REMIC pursuant to Section 860D of the Internal Revenue Code of
1986 (the "Code") for federal income tax purposes as of the Closing Date
and will continue to qualify as a REMIC for so long as the Trust Fund
continues to meet the requirements set forth in the Code and applicable
treasury regulations.
(g) The Underwriters shall have received a favorable opinion of
Orrick, Herrington & Sutcliffe, counsel for the Underwriters, addressed to
the Underwriters and dated the Closing Date and satisfactory in form and
substance to the Underwriters, with respect to the validity of the
Certificates, ERISA matters and such other related matters as the
Underwriters shall require, and the Sellers and Originators shall have
furnished or caused to be furnished to such counsel such documents as they
may reasonably request for the purpose of enabling them to pass upon such
matters.
(h) The Underwriters shall have received a favorable opinion of Karl
T. Molin, Esq., Counsel of the Insurer (or such other counsel acceptable to
the Underwriters), addressed to the Underwriters, dated the Closing Date
and satisfactory in form and substance to the Underwriters and counsel for
the Underwriters, substantially to the effect that:
(i) The Insurer has been duly incorporated and is validly
existing as a stock insurance company in good standing under the laws
of the State of New York.
(ii) The Insurer has full power and authority to execute, deliver
and perform its duties under the Securities Insurance Policy and has
duly issued the Securities Insurance Policy, and the Securities
Insurance Policy constitutes the legal, valid and binding obligation
of the Insurer enforceable against the Insurer in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting enforcement of creditors' rights generally.
(iii) No approval, authorization or other action by, or filing
with, any governmental authority of the United States of America or
any state having jurisdiction over the Insurer is required in
connection with the issuance by the Insurer of the Securities
Insurance Policy or the performance by the Insurer of its duties
thereunder except such as have been obtained, taken or made. The
issuance of the Securities Insurance Policy will not contravene any
law or governmental
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<PAGE>
regulation or order presently binding on the Insurer or the charter or
the bylaws of the Insurer or contravene any provision of or constitute
a default under any indenture, contract or other instrument to which
the Insurer is a party or by which it is bound.
(iv) Except for changes, if any, approved by the Underwriters,
the Securities Insurance Policy conforms in all material respects to
the description thereof in the Prospectus under the caption "The
Securities Insurance Policy and the Insurer." To the extent required
by applicable legal requirements, the Securities Insurance Policy form
has been filed with, and approved by, all governmental authorities
having jurisdiction over the Insurer in connection with such policy.
(v) The description of the Insurer in the Prospectus is true and
correct in all material respects.
(i) The Underwriters shall have received an opinion addressed to the
Underwriters of counsel for the Trustee, dated the Closing Date and
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters, substantially to the effect that:
(i) The Trustee has been duly organized and is validly existing
and in good standing as a national banking association under the laws
of the United States of America.
(ii) The Trustee has full power and authority to execute, deliver
and perform its duties under the Pooling and Servicing Agreement and
has duly executed and delivered the Pooling and Servicing Agreement
and, assuming due authorization, execution and delivery thereof by the
other parties thereto, the Pooling and Servicing Agreement constitutes
the legal, valid and binding obligation of the Trustee enforceable
against the Trustee in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
enforcement of creditors' rights generally.
(iii) The Certificates have been duly executed, authenticated and
delivered by the Trustee.
(iv) No approval, authorization or other action by, or filing
with, any governmental authority of the United States of America or
the State of Minnesota having jurisdiction over the trust powers of
the Trustee is required in connection with the execution and delivery
by the Trustee of the Pooling and Servicing Agreement or the
performance by the Trustee of its duties thereunder except such as
have been obtained, taken or made.
(v) The Trustee has the power to perform its duties pursuant to
Section 10.01 of the Pooling and Servicing Agreement to act as
successor servicer, including the
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<PAGE>
making of Advances as described in Sections 10.01 and 10.02 of the
Pooling and Servicing Agreement.
(j) The Underwriters shall have received a certificate dated the
Closing Date of the President, any Vice President or the Secretary of each
Seller and each Originator in which such officer shall state that, to the
best of his knowledge after reasonable investigation, (i) the
representations and warranties of such Seller or Originator with respect to
the Mortgage Loans contained in the Prospectus and any Basic Document are
true and correct, (ii) the representations and warranties of such Seller or
Originator, as the case may be, in this Agreement are true and correct,
(iii) such Seller or Originator has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued, (v) no
proceedings for that purpose have been instituted or are contemplated by
the Commission, and (vi) there has been no amendment or other document
filed affecting the Certificate of Incorporation or bylaws of the Sellers
since March 15, 1994 and no such amendment has been authorized.
(k) On or before the Closing Date, the Underwriters shall have
received evidence satisfactory to the Underwriters that the Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class
A-8, Class A-9 and Class A-10 Certificates have each been rated Aaa by
Moody's and "AAA" by S&P.
(l) At the Closing Date, the Insurer shall have issued the Securities
Insurance Policy and the Underwriters shall have received a certificate
from an officer of the Insurer dated the Closing Date, to the effect that
the information in the Prospectus Supplement under "The Securities
Insurance Policy and the Insurer" is true and accurate in all material
respects, and since the respective dates as of which information concerning
the Insurer is given in the Prospectus Supplement, there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Insurer and its
subsidiaries considered as a whole, whether or not arising in the ordinary
course of business.
(m) At the Closing Date, the Originators shall have delivered to the
Underwriters the Representation Letter attached hereto as Exhibit 7.
(n) At the Closing Date, the Class A Certificates and the Pooling and
Servicing Agreement will conform in all material respects to the
descriptions thereof contained in the Prospectus.
(o) The Underwriters shall not have discovered and disclosed to the
Sellers 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
Orrick, Herrington & Sutcliffe, counsel to the Underwriters, is material
and is required to be stated therein or is necessary to make the statements
therein not misleading.
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<PAGE>
(p) All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Pooling and
Servicing Agreement, the Securities Insurance Policy, 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 counsel for the Underwriters, and the
Sellers shall have furnished to such counsel all documents and information
that they may reasonably request to enable them to pass upon such matters.
The Sellers will provide or cause to be provided to the Underwriters such
conformed copies of such opinions, certificates, letters and documents as the
Underwriters may reasonably request.
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 counsel for the Underwriters.
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 Sellers 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 hereof.
7. Indemnification and Contribution. (a) The Sellers agree to indemnify and
hold harmless the Underwriters and each person, if any, who controls the
Underwriters within the meaning of Section 15 of the 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 Class A
Certificates), to which the Underwriters or any such controlling person may
become subject, under the 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, (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 (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 the Underwriters
and each such controlling person promptly upon demand for any legal or other
expenses reasonably incurred by the Underwriters 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 Sellers 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 the Registration Statement in
reliance upon and in conformity with written information (including the Derived
Information, as defined in Section 7(g) hereof) furnished to the Sellers by or
on behalf of the Underwriters specifically for inclusion therein, except nothing
herein shall relieve the Sellers of any liability for any Seller-Provided
Information that is not accurate and complete. The foregoing indemnity agreement
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<PAGE>
is in addition to any liability which the Sellers may otherwise have to the
Underwriters or any controlling person of any of the Underwriters.
(b) Each Underwriter severally agrees to indemnify and hold harmless each
Seller, each of its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls each Seller within the meaning
of Section 15 of the Act against any and all loss, claim, damage or liability,
or any action in respect thereof, to which the Sellers or any such director,
officer or controlling person may become subject, under the Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) 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, (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus or (iii) 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 Sellers by such Underwriter specifically for inclusion therein,
and shall reimburse the Sellers and any such director, officer or controlling
person for any legal or other expenses reasonably incurred by the Sellers 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 the Underwriters may otherwise have to the
Sellers or any such director, officer or controlling person.
(c) Promptly after receipt by any indemnified party under this Section 7 or
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 7, 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 7 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 7.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, except to the extent provided in the
next following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section 7 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
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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 local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the Underwriters, if the indemnified
parties under this Section 7 consist of the Underwriters or any of its
controlling persons, or by the Seller, if the indemnified parties under this
Section 7 consist of the Sellers or any of the Sellers' directors, officers or
controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 7(a) and (b) hereof, 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.
(d) Each Underwriter agrees to provide the Sellers with a copy of any
Derived Information (as defined in Section 7(g) below) no later than the date
preceding the date such Derived Information is required to be filed with the
Commission on Form 8-K pursuant to the PSA Letters.
(e) Each Underwriter severally agrees, assuming all information provided by
the Sellers is accurate and complete in all material respects, to indemnify and
hold harmless the Sellers, each of the Seller's officers and directors and each
person who controls the Sellers within the meaning of Section 15 of the Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement of a material fact contained in the
Derived Information provided by such Underwriter, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, 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 7(e)
shall be in addition to any liability which such Underwriter may otherwise have.
The procedures set forth in Section 7(c) above shall be equally applicable
to this Section 7(e).
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<PAGE>
(f) If the indemnification provided for in this Section 7 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 7(a) or (b) hereof 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 Sellers on the one hand and the Underwriters on the other from
the offering of the Class A 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 7(c) hereof, 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 Underwriters on the one hand
and the Sellers 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 Underwriters and the Sellers shall be deemed
to be in such proportion as the total net proceeds from the offering (before
deducting expenses) received by the Sellers bear to the total underwriting
discounts received by each of the Underwriters as set forth on the cover page of
the Prospectus.
The relative fault of the Underwriters and the Sellers shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Sellers or by the Underwriters, 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 Sellers and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(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 7(f)
shall be deemed to include, for purposes of this Section 7(f), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
In no case shall any Underwriter (except (x) with respect to any Derived
Information incorporated by reference into the Registration Statement or
Prospectus at the request of such Underwriter (i) which had not been approved by
the Sellers for use by the Underwriters or (ii) for which the Sellers have not
received a letter from Arthur Andersen & Co. in form and substance satisfactory
to them and (y) as may be provided in any agreement among the Underwriters
relating to the offering of the Class A Certificates) be responsible for any
amount (not including the fees and expenses of its counsel) in excess of the
total underwriting discounts received by such Underwriter as set forth on the
cover page of the Prospectus. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
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<PAGE>
(g) For purposes of this Section 7, as to each Underwriter the term
"Derived Information" means such portion, if any, of the information delivered
to the Sellers by such Underwriter pursuant to Section 7(d) hereof 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;
(ii) does not constitute Seller-Provided Information (as defined below);
and
(iii) is of the type of information defined as "computational materials,"
"structural term sheets" or "collateral term sheets" (as such terms are
interpreted in the PSA Letters).
"Seller-Provided Information" means any computer tape furnished to the
Underwriters by the Sellers concerning the assets comprising the Trust.
(h) The Underwriters confirm that the information set forth in the last
paragraph on the cover page of the Prospectus and in the third paragraph under
the caption "Underwriting" in the Prospectus is correct, and together with the
Derived Information, constitutes the only information furnished in writing to
the Sellers by or on behalf of the Underwriters specifically for inclusion in
the Registration Statement and the Prospectus.
(i) Each Underwriter severally represents and warrants to, and covenants
with, the Sellers that all Derived Information provided to the Sellers
pursuant to this Section 7, as of the date such information is so provided
and as of the date such information is filed by the Sellers with the
Commission will not include any untrue statement of a material fact, when
considered in conjunction with the Prospectus, and will not omit to state
any material fact necessary, when considered in conjunction with the
Prospectus, to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
(ii) Each Underwriter severally further covenants with the Sellers that if
any Derived Information required to be provided to the Sellers pursuant to
Section 7(d) hereof is determined to contain any information that is
inaccurate or misleading, such Underwriter (whether or not such Derived
Information was provided to the Sellers or filed by the Sellers with the
Commission) shall promptly prepare and deliver to the Sellers and each
prospective investor which received such Derived Information corrected
Derived Information. All information provided to the Sellers pursuant to
this Section 7(i) shall be provided within the time periods set forth in
Section 7(d) hereof.
(iii) Each Underwriter severally covenants with the Sellers that all
Derived Information delivered by it to prospective investors shall contain
a legend satisfactory in substance to the Sellers.
(j) Notwithstanding any other provision herein, each Underwriter severally
agrees to pay all costs and expenses of the Sellers incurred in connection with
(i) the filing by the Sellers of any Derived Information with the Commission and
(ii) any action by the Sellers against such
- 24 -
<PAGE>
Underwriter to enforce any of its rights set forth in this Section 7, including,
without limitation, legal fees and expenses.
8. Default of Underwriter. If any or all Underwriters default in their
obligations to purchase Class A Certificates hereunder, and the aggregate
principal amount of Class A Certificates that the defaulting Underwriter agreed
but failed to purchase does not exceed 10% of the total principal amount of the
Class A Certificates, the Underwriters may make arrangements satisfactory to the
Sellers for the purchase of such Class A Certificates by other persons including
the non-defaulting Underwriter, but if no such arrangements are made by the
Closing Date, the non-defaulting Underwriter shall be obligated, in proportion
to its commitment hereunder, to purchase the Class A Certificates that such
defaulting Underwriter agreed but failed to purchase. If any or all the
Underwriters so default and the aggregate principal amount of Class A
Certificates with respect to which such default or defaults occur exceeds 10% of
the total principal amount of Class A Certificates and arrangements satisfactory
to the Underwriters and the Sellers for the purchase of such Class A
Certificates by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of the Sellers,
except as provided in Section 9 hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve the Underwriter from liability for its
default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
each Seller and their respective officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of the Underwriters or any Seller or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Class A Certificates. If for any reason
the purchase of the Class A Certificates by the Underwriters is not consummated,
the Sellers shall remain responsible for the expenses to be paid or reimbursed
by the Sellers pursuant to Section 5 hereof and the respective obligations of
the Sellers and the Underwriters pursuant to Section 7 hereof shall remain in
effect. If the purchase of the Class A Certificates by the Underwriters is not
consummated for any reason other than solely because of Section 8 hereof or the
occurrence of any event specified in clauses (iii), (iv) or (v) of Section 6(c)
hereof, the Sellers will reimburse the Underwriters for all out-of-pocket
expenses (including fees and disbursements of counsel) reasonably incurred by
them in connection with the offering of the Class A Certificates. If the
purchase of the Class A Certificates by the Underwriters is not consummated
solely because of Section 8 hereof or the occurrence of any event specified in
clauses (iii), (iv) or (v) of Section 6(c) hereof, the Sellers shall have no
such reimbursement obligation.
10. Notices. All communications hereunder will be in writing and, if sent
to Lehman Brothers Inc., will be mailed, delivered or telegraphed and confirmed
to it at Lehman Brothers Inc., Three World Financial Center, 12th Floor, New
York, NY 10285; if sent to Bear, Stearns & Co. Inc. will be mailed, delivered or
telegraphed and confirmed to it at Bear, Stearns & Co. Inc., Attention:
Asset-Backed Securities Group, 245 Park Avenue, New York, New York 10167; if
sent to Prudential Securities Incorporated, will be mailed, delivered or
telegraphed and confirmed to it at Prudential Securities Incorporated, One New
- 25 -
<PAGE>
York Plaza, New York, New York 10292; if sent to Salomon Brothers Inc, will be
mailed, delivered or telegraphed and confirmed to it at Salomon Brothers Inc, 7
World Trade Center, 32nd Floor, New York, NY 10048; or if sent to the Sellers,
will be mailed, delivered or telegraphed and confirmed to it c/o EquiCredit
Corporation of America, 10401 Deerwood Park Blvd., Jacksonville, Florida 32256,
Attention: Chief Financial Officer.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7 hereof, and no other
person will have any right or obligations hereunder.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Representation of Underwriters. Any action under this Agreement taken
by the Underwriters jointly or by Lehman Brothers Inc. will be binding on the
Underwriters.
14. Applicable Law and Time. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York. Unless
otherwise set forth herein, specified times of day refer to New York City time.
15. Entire Agreement. This Agreement (including the exhibits and schedules
hereto) constitutes the entire agreement and understanding between the parties
hereto with respect to the subject matter of this Agreement and supersedes all
prior agreements or understandings, written or oral, among the parties with
respect to the subject matter of this Agreement.
- 26 -
<PAGE>
If the foregoing is in accordance with the Underwriters understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Sellers and the
Underwriters in accordance with its terms.
Very truly yours,
EQCC RECEIVABLES CORPORATION
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Vice President
EQCC ASSET BACKED CORPORATION
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Vice President
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the
date first above written.
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO. INC.
PRUDENTIAL SECURITIES INCORPORATED
SALOMON BROTHERS INC
By: LEHMAN BROTHERS INC.
as Representative of
the Underwriters
By:___________________________
Name: Martin P. Harding
Title: Managing Director
<PAGE>
EXECUTION COPY
EQCC HOME EQUITY LOAN TRUST 1997-2
REPRESENTATIONS LETTER
As of June 24, 1997
Lehman Brothers Inc.
Three World Financial Center, 12th Floor
New York, New York 10285
Bear, Stearns & Co. Inc.
245 Park Avenue Inc.
New York, NY 10167
Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Salomon Brothers Inc
7 World Trade Center, 32nd Floor
New York, New York 10048
Ladies and Gentlemen:
1. Introductory. EQCC Receivables Corporation and EQCC Asset Backed
Corporation (each a "Seller" and, collectively, the "Sellers") propose to sell
to Lehman Brothers Inc., Bear, Stearns & Co. Inc., Prudential Securities
Incorporated, and Salomon Brothers Inc, and (collectively, the "Underwriters")
EQCC Home Equity Loan Asset Backed Certificates, Class A-1, 6.05% Pass-Through
Rate (the "Class A-1 Certificates"), Class A-2, 5.93% Pass-Through Rate (the
"Class A-2 Certificates"), Class A-3, 6.21% Pass-Through Rate (the "Class A-3
Certificates"), Class A-4, 6.37% Pass-Through Rate (the "Class A-4
Certificates"), Class A-5, 6.54% Pass-Through Rate (the "Class A-5
Certificates"), Class A-6, 6.72% Pass-Through Rate (the "Class A-6
Certificates"), Class A-7, 6.89% Pass-Through Rate (the "Class A-7
Certificates"), Class A-8, 7.22% Pass-Through Rate (the "Class A-8
Certificates"), Class A-9, 6.81% Pass-Through Rate (the "Class A-9
Certificates"), Class A-10, Adjustable Pass-Through Rate (the "Class A-10
Certificates") and, with the Class A-1 Certificates, Class A-2 Certificates,
Class A-3 Certificates, Class A-4 Certificates, Class A-5 Certificates, Class
A-6 Certificates, Class A-7 Certificates, Class A- 8 Certificates, Class A-9
Certificates and Class A-10 Certificates, the "Class A Certificates"). Each
class of Class A Certificates and the Class R Certificates (with the Class A
Certificates, the "Certificates") will represent a fractional undivided interest
<PAGE>
in the Trust. The assets of the Trust will include, among other things, (i) a
pool of fixed-rate and adjustable-rate and one- to "four-family first and second
mortgage loans (the "Mortgage Loans") originated or acquired by EquiCredit
Corporation of America, EquiCredit Corporation/Ala. & Miss.,
California/EquiCredit Corporation, EquiCredit Corporation of In., EquiCredit
Corporation of Pa., and EquiCredit Corporation of SC (each, an "Originator" and
collectively, the "Originators") and transferred to the Sellers pursuant to a
Transfer Agreement to be dated as of June 1, 1997 (the "Transfer Agreement")
between the Originators and the Sellers, and by the Sellers to the Trust
pursuant to a Pooling and Servicing Agreement to be dated as of June 1, 1997
(the "Pooling and Servicing Agreement") among the Sellers, EquiCredit
Corporation of America, as Servicer (in such capacity, the "Servicer") and First
Bank National Association, as trustee (the "Trustee"), (ii) certain monies due
or to become due under the Mortgage Loans, (iii) an irrevocable guaranty surety
bond (the "Securities Insurance Policy") to be issued by AMBAC Indemnity
Corporation (the "Insurer"), pursuant to which the Insurer will guaranty certain
payments to the holders of the Class A Certificates in the manner and to the
extent described in the Securities Insurance Policy. The Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class
A-5 Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates, Class A-9 Certificates and Class A-10 Certificates will be issued
in initial aggregate principal amounts of approximately $65,666,000,
$31,292,000, $78,276,000, $62,228,000, $86,789,000, $22,646,000, $72,769,000,
$33,034,000, $50,300,000 and $185,000,000, respectively. The Class A
Certificates are sometimes collectively referred to herein as the "Offered
Securities."
The Originators are delivering this Representations Letter to induce the
Underwriters to enter into the transactions described above, and the Originators
acknowledge that the Underwriters have entered into the Underwriting Agreement
and have agreed to purchase the Class A Certificates in reliance on the
representations and undertakings contained herein. The Underwriting Agreement,
the Pooling and Servicing Agreement, the Transfer Agreement, the Custodial
Agreement and the Securities Insurance Policy are collectively hereinafter
referred to as the "Basic Documents". Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Underwriting
Agreement.
2. Representations and Warranties of the Originators. Each Originator,
jointly and severally, represents and warrants to, and agrees with, the
Underwriters that:
(a) As of the date of the Underwriting Agreement and as of the Closing
Date, the representations and warranties of the Sellers contained in the
Underwriting Agreement were and will be true and accurate in all material
respects.
(b) As of the Closing Date, each consent, approval, authorization or
order of, or filing with, any court or governmental agency or body required
to be obtained or made by any Originator or their affiliates for the
consummation of the transactions contemplated by this Agreement shall have
been obtained, except as otherwise provided in the Basic Documents with
respect to the Mortgage Loans.
<PAGE>
(c) Each Originator has been duly incorporated and is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation and each Originator is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which the ownership or lease of its properties or the
conduct of its business requires such qualification. No Originator is in
violation of its organization certificate, certificate of incorporation or
by-laws or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any agreement or instrument
to which it is a party or by which it or its properties are bound which
would have a material adverse effect on the transactions contemplated
herein or any other Basic Document. The execution, delivery and performance
of each Basic Document and compliance with the terms and provisions thereof
will not, subject to obtaining any consents or approvals as may be required
under the real estate syndication, securities or "blue sky" laws of various
jurisdictions, result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court having
jurisdiction over such Originator or any of its respective properties or
any agreement or instrument to which such Originator is a party or by which
such Originator is bound or to which any of the properties of such
Originator is subject, or the organization certificate, certificate of
incorporation or by-laws of such Originator and each Originator has
corporate power to enter into each Basic Document to which it is a party
and to consummate the transactions contemplated hereby and thereby.
(d) This Agreement has been duly authorized, executed and delivered by
each Originator and constitutes a legal, valid and binding instrument
enforceable against each Originator in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
enforcement or creditors' rights generally.
(e) Each Basic Document, when executed and delivered as contemplated
hereby and thereby, will have been duly authorized, executed and delivered
<PAGE>
by each Originator party thereto and, when so executed and delivered, will
constitute a legal, valid and binding instrument enforceable against each
such Originator in accordance with its terms, except as insolvency,
reorganization, moratorium or other laws relating to or affecting
enforcement of creditors' rights generally.
(f) There are no actions, proceedings or investigations now pending
against any Originator or, to the knowledge of the Originators, threatened
against any Originator or (A) which are required to be disclosed in the
Registration Statement, other than those disclosed therein, or (B)(1)
asserting the invalidity of any Basic Document or the Certificates, (2)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by the Basic Documents, (3) which
might materially and adversely affect the performance by any Originator of
its obligations under, or the validity or enforceability of, the Basic
Documents or the Certificates, or (4) seeking to affect adversely the
federal income tax attributes of the Certificates as described in the
Prospectus under "Certain Federal Income Tax Consequences."
(g) Any taxes, fees and other governmental charges that are assessed
and due in connection with the execution, delivery and issuance of this
Agreement and each other Basic Document shall have been paid by the
Originators at or prior to the Closing Date.
(h) Each Originator possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies deemed by such Originator to be reasonably
necessary to conduct the business now operated by it and as described in
the Prospectus, and none of the Originators received notice of proceedings
relating to the revocation or modification of any such license,
certificate, authority or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of the business, operations, financial
condition or income of such Originator. The Servicer is (i) an approved
seller/servicer of first and second mortgage loans for FNMA and FHLMC in
good standing and (ii) a mortgagee approved by the secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing
Act.
<PAGE>
(i) No Originator will be subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended.
3. Certain Agreements of the Originators. (a) Each Originator, jointly and
severally, covenants and agrees with the Underwriter that the Originators will
cause the Sellers to comply with their obligations under Section 5 of the
Underwriting Agreement.
(b) The Originators will pay, to the extent not paid by the Sellers, all
expenses incident to the issuance and sale of the Offered Securities, including
(i) the printing (or other reproducing) and filing of the Registration Statement
as originally filed and of each amendment thereto; (ii) the reproducing of the
Basic Documents; (iii) the preparation, issuance and delivery of the
certificates for the Offered Securities to the Underwriters; (iv) the fees of
the Depository Trust Company in connection with the book-entry registration of
the Offered Securities; (v) the fees and disbursements of (A) the Trust's, the
Seller's and the Originators' counsel and accountants, (B) the Insurer and its
counsel, (C) the Trustee and its counsel and (D) the Custodian and its counsel;
(vi) the qualification of the Offered Securities under state securities laws,
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation of
the Blue Sky Survey; (vii) the fees and disbursements of Orrick, Herrington &
Sutcliffe LLP in connection with the preparation of the legal opinion described
in Section 6(f) of the Underwriting Agreement and in connection with the
preparation of a legal opinion regarding the enforceability of the Basic
Documents under New York law; (viii) the printing (or otherwise reproducing) and
delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, and of each preliminary
prospectus and the Prospectus and any amendments or supplements thereto; (ix)
the reproducing and delivery to the Underwriters of copies of the Blue Sky
Survey, and (x) the fees charged by the Rating Agencies for rating the Offered
Securities.
(c) On or before the Closing Date, the Originators shall mark their
computer records relating to the Mortgage Loans to show the Trust's absolute
ownership of the Mortgage Loans as of the Cut-off Date (other than the
Representative's Yield and amounts received after the Cut-off Date), and from
and after the Closing Date the Originators shall take no action inconsistent
with Trust's ownership of such Mortgage Loans, other than as permitted by the
Pooling and Servicing Agreement.
(d) For a period of 30 days from the date hereof, none of the Originators
will, without the prior written consent of the Underwriters, directly or
indirectly, offer, sell or contract to sell, or announce the offering of, in a
public or private transaction, any other series of notes secured by, or
certificates evidencing interests in, home equity mortgage loans with similar
terms as the Offered Securities. Nothing herein shall be deemed to limit or
prohibit the Originators from selling whole mortgage loans to FNMA, with or
without the retention of servicing rights, and, with the consent of the
Underwriters, which shall not be unreasonably withheld, the Originators may make
other sales of whole mortgage loans, with or without the retention of servicing
rights.
4. Indemnification and Contribution. (a) The Originators agree to indemnify
and hold harmless the Underwriters and each person, if any, who controls the
<PAGE>
Underwriters 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 Class A
Certificates), to which the Underwriters or any such controlling person may
become subject, under the 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, (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 (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 the Underwriters
and each such controlling person promptly upon demand for any legal or other
expenses reasonably incurred by the Underwriters 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 Originators 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 the Registration Statement in
reliance upon and in conformity with written information (including the Derived
Information, as defined in Section 4(d)) furnished to the Originators by or on
behalf of the Underwriters specifically for inclusion therein, except nothing
herein shall relieve the Sellers of any liability for any Seller-Provided
Information that is not accurate and complete. The foregoing indemnity agreement
is in addition to any liability which the Originators may otherwise have to the
Underwriters or any controlling person of any of the Underwriters.
(b) Each Underwriter severally agrees to indemnify and hold harmless each
Originator, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls each Originator
within the meaning of Section 15 of the Act against any and all loss, claim,
damage or liability, or any action in respect thereof, to which the Originators
or any such director, officer or controlling person may become subject, under
the 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, (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 (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 Originators by
such Underwriter specifically for inclusion therein, and shall reimburse the
Originators and any such director, officer or controlling person for any legal
or other expenses reasonably incurred by the Originators 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 the Underwriters may otherwise have to the Originators or
any such director, officer or controlling person.
(c) Promptly after receipt by any indemnified party under this Section 4 or
notice of any claim or the commencement of any action, such indemnified
<PAGE>
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 4, 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 4 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 4.
If any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, except to the extent provided in the
next following paragraph, the indemnifying party shall not be liable to the
indemnified party under this Section 4 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 local counsel) at any time for all such indemnified parties, which
firm shall be designated in writing by the Underwriters, if the indemnified
parties under this Section 4 consist of the Underwriters or any of its
controlling persons, or by the Originator, if the indemnified parties under this
Section 4 consist of the Originators or any of the Originators' directors,
officers or controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 4(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.
(d) Each Underwriter agrees to provide the Originators with a copy of any
Derived Information (as defined in Section 4(g) below) no later than the date
preceding the date such Derived Information is required to be filed with the
Commission on Form 8- K pursuant to the PSA Letters.
<PAGE>
(e) Each Underwriter severally agrees, assuming all information provided by
the Originators is accurate and complete in all material respects, to indemnify
and hold harmless the Originators, each of the Originator's officers and
directors and each person who controls the Originators within the meaning of
Section 15 of the Act against any and all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of a
material fact contained in the Derived Information provided by such Underwriter,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, 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 4(e) shall be in addition to any liability which
such Underwriter may otherwise have.
The procedures set forth in Section 4(c) shall be equally applicable to
this Section 4(e).
(f) If the indemnification provided for in this Section 4 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 4(a) or (b) 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
Originators on the one hand and the Underwriters on the other from the offering
of the Class A 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 4(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 Underwriters on the one hand and the
Originators 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 Underwriters and the Originators shall be
deemed to be in such proportion as the total net proceeds from the offering
(before deducting expenses) received by the Originators bear to the total
underwriting discounts received by each of the Underwriters as set forth on the
cover page of the Prospectus.
The relative fault of the Underwriters and the Originators shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Originators or by the Underwriters, 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 Originators and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 4(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
<PAGE>
liability, or action in respect thereof, referred to above in this Section 4(f)
shall be deemed to include, for purposes of this Section 4(f), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
In no case shall any Underwriter (except (x) with respect to any Derived
Information incorporated by reference into the Registration Statement or
Prospectus at the request of such Underwriter (i) which had not been approved by
the Originators for use by the Underwriters or (ii) for which the Originators
have not received a letter from Arthur Andersen & Co. in form and substance
satisfactory to them and (y) as may be provided in any agreement among the
Underwriters relating to the offering of the Class A Certificates) be
responsible for any amount (not including the fees and expenses of its counsel)
in excess of the total underwriting discounts received by such Underwriter as
set forth on the cover page of the Prospectus. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(g) For purposes of this Section 4, as to each Underwriter the term
"Derived Information" means such portion, if any, of the information delivered
to the Originators by such Underwriter pursuant to Section 4(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;
(ii) does not constitute Originator-Provided Information (as defined
below); and
(iii) is of the type of information defined as "computational
materials," "structural term sheets" or "collateral term sheets" (as each
term is defined in the No-Action letters addressed to Kidder, Peabody
Acceptance Corporation I, et al. and the Public Securities Association
dated May 20, 1994 and February 17, 1995, respectively).
"Originator-Provided Information" means any computer tape furnished to the
Underwriters by the Originators concerning the assets comprising the Trust.
(h) The Underwriters confirm that the information set forth in the last
paragraph on the cover page of the Prospectus and in the third paragraph under
the caption "Underwriting" in the Prospectus is correct, and together with the
Derived Information, constitutes the only information furnished in writing to
the Originators by or on behalf of the Underwriters specifically for inclusion
in the Registration Statement and the Prospectus.
(i) Each Underwriter severally represents and warrants to, and
covenants with, the Originators that all Derived Information provided to
the Originators pursuant to this Section 4, as of the date such information
is so provided and as of the date such information is filed by the
Originators with the Commission will not include any untrue statement of a
material fact, when considered in conjunction with the Prospectus, and will
not omit to state any material facts necessary, when considered in
conjunction with the Prospectus, to make the statements contained therein,
in the light of the circumstances under which they were made, not
misleading.
<PAGE>
(ii) Each Underwriter severally further covenants with the Originators
that if any Derived Information required to be provided to the Originators
pursuant to Section 4(d) is determined to contain any information that is
inaccurate or misleading, such Underwriter (whether or not such Derived
Information was provided to the Originators or filed by the Originators
with the Commission) shall promptly prepare and deliver to the Originators
and each prospective investor which received such Derived Information
corrected Derived Information. All information provided to the Originators
pursuant to this Section 4(i) shall be provided within the time periods set
forth in Section 4(d) hereof.
(iii) Each Underwriter severally covenants with the Originators that
all Derived Information delivered by it to prospective investors shall
contain a legend satisfactory in substance to the Sellers.
(j) Notwithstanding any other provision herein, each Underwriter severally
agrees to pay all costs and expenses of the Originators incurred in connection
with (i) the filing by the Originators of any Derived Information with the
Commission and (ii) any action by the Originators against such Underwriter to
enforce any of its rights set forth in this Section 4, including, without
limitation, legal fees and expenses.
5. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
each Originator and their respective officers and of the Underwriters set forth
in or made pursuant hereto will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of the Underwriters or any Originator or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Class A Certificates. If for any reason
the purchase of the Class A Certificates by the Underwriters is not consummated,
the Originators shall remain responsible for the expenses to be paid or
reimbursed by the Originators pursuant to Section 3 hereof and the respective
obligations of the Originators and the Underwriters pursuant to Section 4 hereof
shall remain in effect. If the purchase of the Class A Certificates by the
Underwriters is not consummated for any reason other than solely because of
Section 8 of the Underwriting Agreement or the occurrence of any event specified
in clauses (iii), (iv) or (v) of Section 6(c) of the Underwriting Agreement, the
Originators will reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Class A Certificates. If the purchase of the
Class A Certificates by the Underwriters is not consummated solely because of
Section 8 of the Underwriting Agreement or the occurrence of any event specified
in clauses (iii), (iv) or (v) of Section 6(c) of the Underwriting Agreement, the
Originators shall have no such reimbursement obligation.
6. Notices. All communications hereunder will be in writing and, if sent to
Lehman Brothers Inc., will be mailed, delivered or telegraphed and confirmed to
it at Lehman Brothers Inc., Three World Financial Center, 12th Floor, New York,
New York 10285; if sent to Bear, Stearns & Co. Inc., will be mailed delivered or
telegraphed, and confirmed to it at Bear Stearns & Co. Inc., Attention:
Asset-Backed Securities Group, 245 Park Avenue, New York, New York 10167; if
sent to Prudential Securities Incorporated, will be mailed delivered or
telegraphed and confirmed to it at Prudential Securities Incorporated, One New
York Plaza, New York, New York 10292; if sent to Salomon Brothers Inc, will be
mailed, delivered or telegraphed and confirmed to it at Salomon Brothers Inc,
Seven World Trade Center, New York, New York, 10048; or if sent to the
Originators, will be mailed, delivered or telegraphed and confirmed to them c/o
EquiCredit Corporation of
<PAGE>
America, 10401 Deerwood Park Blvd., Jacksonville, Florida 32256, Attention:
Chief Financial Officer.
7. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 4 hereof, and no other
person will have any right or obligations hereunder.
8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
9. Applicable Law and Time. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York. Unless
otherwise set forth herein, specified times of day refer to New York City time.
10. Entire Agreement. This Agreement (including the exhibits and schedules
hereto) constitutes the entire agreement and understanding between the parties
hereto with respect to the subject matter of this Agreement and supersedes all
prior agreements or understandings, written or oral, among the parties with
respect to the subject matter of this Agreement.
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us one of the counterparts hereof, whereupon it will
become a binding agreement between the Originators and the Underwriters in
accordance with its terms.
Very truly yours,
ORIGINATORS
EQUICREDIT CORPORATION OF AMERICA
EQUICREDIT CORPORATION/ALA. & MISS.
CALIFORNIA/EQUICREDIT CORPORATION
EQUICREDIT CORPORATION OF IN.
EQUICREDIT CORPORATION OF PA.
EQUICREDIT CORPORATION OF SC.
By:_____________________________
Name: Terence G. Vane, Jr.
Title: Senior Vice President
The foregoing Representations Letter is hereby confirmed and accepted as of the
date first above written.
LEHMAN BROTHERS INC.
BEAR, STEARNS & CO. INC.
PRUDENTIAL SECURITIES INCORPORATED
SALOMON BROTHERS INC
By: LEHMAN BROTHERS INC.
as Representative of the
Underwriters
By:____________________________
Name: Martin P. Harding
Title: Managing Director
<PAGE>
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1997
EQCC RECEIVABLES CORPORATION
EQCC ASSET BACKED CORPORATION
(Depositors)
and
EQUICREDIT CORPORATION OF AMERICA
(Representative and Servicer)
and
FIRST BANK NATIONAL ASSOCIATION
(Trustee)
EQCC Home Equity Loan Asset Backed Certificates,
Series 1997-2
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS
Account .................................................................................................. 3
Account Party.............................................................................................. 3
Accrual Period............................................................................................. 3
Adjustable Rate Carry-Forward Amount....................................................................... 3
Adjustable Rate Certificates............................................................................... 3
Adjustable Rate Certificateholder.......................................................................... 3
Adjustable Rate Group...................................................................................... 4
Adjustable Rate Interest Remittance Amount................................................................. 4
Adjustable Rate Pre-Funded Amount.......................................................................... 4
Adjustable Rate Principal Balance.......................................................................... 4
Adjustable Rate Principal Remittance Amount................................................................ 4
Adjustable Rate Remittance Amount.......................................................................... 4
Advance .................................................................................................. 4
Affiliate.................................................................................................. 4
Agreement.................................................................................................. 4
Assignment of Beneficial Interest.......................................................................... 4
Assignment of Mortgage..................................................................................... 5
Authorized Denominations................................................................................... 5
Available Payment Amount................................................................................... 5
Bankruptcy Loan............................................................................................ 5
Base Spread Account Requirement............................................................................ 5
Base Spread Account Requirement Trigger Event.............................................................. 6
Basic Documents............................................................................................ 6
Basic Principal Amount..................................................................................... 6
Book-Entry Certificates.................................................................................... 6
Business Day............................................................................................... 6
Certificate................................................................................................ 7
Certificate Depository Agreement........................................................................... 7
Certificate Insurance Policy............................................................................... 7
Certificate Insurer........................................................................................ 7
Certificate Owner.......................................................................................... 7
Certificate Register....................................................................................... 7
Certificateholder or Holder................................................................................ 7
Class .................................................................................................. 8
Class A-1 Certificate...................................................................................... 8
Class A-2 Certificate...................................................................................... 8
Class A-3 Certificate...................................................................................... 8
Class A-4 Certificate...................................................................................... 8
- i -
<PAGE>
Page
Class A-5 Certificate...................................................................................... 8
Class A-6 Certificate...................................................................................... 8
Class A-7 Certificate...................................................................................... 8
Class A-8 Certificate...................................................................................... 8
Class A-9 Certificate...................................................................................... 8
Class A-10 Certificate..................................................................................... 8
Class A Certificateholder.................................................................................. 8
Class A Certificates....................................................................................... 9
Class A-10 LIBOR Rate...................................................................................... 9
Class A-9 Lockout Percentage............................................................................... 9
Class A-9 Lockout Pro Rata Remittance Amount............................................................... 9
Class A-9 Lockout Remittance Amount........................................................................ 9
Class A-1 Pass-Through Rate................................................................................ 9
Class A-2 Pass-Through Rate................................................................................ 9
Class A-3 Pass-Through Rate................................................................................ 9
Class A-4 Pass-Through Rate................................................................................ 10
Class A-5 Pass-Through Rate................................................................................ 10
Class A-6 Pass-Through Rate................................................................................ 10
Class A-7 Pass-Through Rate................................................................................ 10
Class A-8 Pass-Through Rate................................................................................ 10
Class A-9 Pass-Through Rate................................................................................ 10
Class A-10 Pass-Through Rate............................................................................... 10
Class A Pool Factor........................................................................................ 10
Class A-1 Principal Balance................................................................................ 10
Class A-2 Principal Balance................................................................................ 10
Class A-3 Principal Balance................................................................................ 10
Class A-4 Principal Balance................................................................................ 10
Class A-5 Principal Balance................................................................................ 11
Class A-6 Principal Balance................................................................................ 11
Class A-7 Principal Balance................................................................................ 11
Class A-8 Principal Balance................................................................................ 11
Class A-9 Principal Balance................................................................................ 11
Class A-10 Principal Balance............................................................................... 11
Class A Remittance Amount.................................................................................. 12
Class R Certificate........................................................................................ 12
Class R Certificateholder.................................................................................. 12
Closing Date............................................................................................... 12
Code .................................................................................................. 12
Collection Account......................................................................................... 12
Combined Loan-To-Value Ratio or CLTV....................................................................... 12
Commission................................................................................................. 12
Corporate Trust Office..................................................................................... 12
Cross-over Date............................................................................................ 12
Cumulative Excess Spread Receipts.......................................................................... 12
Cumulative Losses.......................................................................................... 13
- ii -
<PAGE>
Page
Current CLTV............................................................................................... 13
Curtailment................................................................................................ 13
Custodial Agreement........................................................................................ 13
Custodian.................................................................................................. 13
Cut-off Date............................................................................................... 13
Default .................................................................................................. 13
Definitive Certificates.................................................................................... 13
Deleted Mortgage Loan...................................................................................... 13
Depositor.................................................................................................. 13
Depository................................................................................................. 13
Depository Participant..................................................................................... 14
Destroyed Mortgage Note.................................................................................... 14
Destroyed Mortgage Note Affidavit.......................................................................... 14
Determination Date......................................................................................... 14
Disqualified Organization.................................................................................. 14
Draw Amount................................................................................................ 14
Due Date .................................................................................................. 14
Due Period................................................................................................. 15
Eligible Account........................................................................................... 15
Event of Nonpayment........................................................................................ 15
Excess Proceeds............................................................................................ 16
Excess Spread.............................................................................................. 16
Exchange Act............................................................................................... 16
FDIC .................................................................................................. 16
FHLMC .................................................................................................. 16
Fidelity Bond.............................................................................................. 16
Final Scheduled Payment Date............................................................................... 16
First Lien................................................................................................. 16
Fixed Rate Carry-Forward Amount............................................................................ 17
Fixed Rate Certificateholder............................................................................... 17
Fixed Rate Certificates.................................................................................... 17
Fixed Rate Group........................................................................................... 17
Fixed Rate Interest Remittance Amount...................................................................... 17
Fixed-Rate Pre-Funded Amount............................................................................... 17
Fixed Rate Principal Balance............................................................................... 17
Fixed Rate Principal Remittance Amount..................................................................... 18
Fixed Rate Remittance Amount............................................................................... 18
FNMA .................................................................................................. 18
Holder .................................................................................................. 18
Home Equity Loan Ratio..................................................................................... 18
IBCA .................................................................................................. 18
Illinois Land Trust........................................................................................ 18
Increased LC Costs......................................................................................... 18
Independent................................................................................................ 19
Initial Mortgage Loan...................................................................................... 20
- iii -
<PAGE>
Page
Insurance Account.......................................................................................... 20
Insurance Proceeds......................................................................................... 20
Insured Payment............................................................................................ 20
LC Obligation:............................................................................................. 20
Latest Maturity Date....................................................................................... 20
Letter of Credit........................................................................................... 21
Letter of Credit Bank...................................................................................... 21
Letter of Credit Fee Account............................................................................... 21
Letter of Credit Fee Amount................................................................................ 21
Letter of Credit Proceeds Sub-Account...................................................................... 21
LIBOR .................................................................................................. 21
LIBOR Determination Date................................................................................... 21
Lien .................................................................................................. 21
Liquidated Mortgage Loan................................................................................... 21
Liquidation Proceeds....................................................................................... 22
Majority in Aggregate Voting Interest...................................................................... 22
Monthly Excess Spread Amount............................................................................... 22
Monthly Payment............................................................................................ 22
Monthly Premium............................................................................................ 22
Moody's .................................................................................................. 22
Mortgage .................................................................................................. 22
Mortgage File.............................................................................................. 22
Mortgage Impairment Insurance Policy....................................................................... 22
Mortgage Interest Rate..................................................................................... 22
Mortgage Loan.............................................................................................. 23
Mortgage Loan Group........................................................................................ 23
Mortgage Loan Losses....................................................................................... 23
Mortgage Loan Schedule..................................................................................... 23
Mortgage Note.............................................................................................. 24
Mortgage Pool.............................................................................................. 24
Mortgaged Property......................................................................................... 24
Mortgaged Property State................................................................................... 24
Mortgagor.................................................................................................. 24
Net Funds Cap Rate......................................................................................... 24
Net Liquidation Proceeds................................................................................... 24
Net Spread Account Excess.................................................................................. 24
Nondisqualification Opinion................................................................................ 24
Nonrecoverable Advances.................................................................................... 24
Non-United States Person................................................................................... 25
Officer's Certificate...................................................................................... 25
Opinion of Counsel......................................................................................... 25
Optional Purchase Date..................................................................................... 25
Original Class A-1 Principal Balance....................................................................... 25
Original Class A-2 Principal Balance....................................................................... 25
Original Class A-3 Principal Balance....................................................................... 25
- iv -
<PAGE>
Page
Original Class A-4 Principal Balance....................................................................... 25
Original Class A-5 Principal Balance....................................................................... 25
Original Class A-6 Principal Balance....................................................................... 25
Original Class A-7 Principal Balance....................................................................... 25
Original Class A-8 Principal Balance....................................................................... 25
Original Class A-9 Principal Balance....................................................................... 25
Original Class A-10 Principal Balance...................................................................... 25
Original Pool Principal Balance............................................................................ 25
Original Pre-Funded Amount................................................................................. 25
Originator................................................................................................. 26
Owner-Occupied Mortgaged Property.......................................................................... 26
Pass-Through Rate.......................................................................................... 26
Payment Date............................................................................................... 26
Percentage Interest........................................................................................ 26
Performance Default........................................................................................ 26
Permitted Instruments...................................................................................... 26
Permitted Transferee....................................................................................... 28
Person .................................................................................................. 28
Plan .................................................................................................. 28
Pool Factor................................................................................................ 28
Pool Principal Balance..................................................................................... 28
Pre-Funding Account........................................................................................ 28
Pre-Plan Interest.......................................................................................... 28
Pre-Plan Interest Payments................................................................................. 28
Principal and Interest Account............................................................................. 28
Principal Balance.......................................................................................... 29
Principal Prepayment....................................................................................... 29
Proceeding................................................................................................. 29
Projected Excess Spread.................................................................................... 29
Prospectus................................................................................................. 29
Qualified Substitute Mortgage Loan......................................................................... 29
Rating Agencies............................................................................................ 30
Reassignment of Assignment of Beneficial Interest.......................................................... 30
Record Date................................................................................................ 30
Reference Banks............................................................................................ 30
Registered Holder.......................................................................................... 30
Reimbursable Amounts....................................................................................... 30
Released Mortgaged Property Proceeds....................................................................... 30
Remainder Excess Spread Amount............................................................................. 31
REMIC .................................................................................................. 31
REMIC Provisions........................................................................................... 31
Remittance Report.......................................................................................... 31
REO Disposition............................................................................................ 31
REO Property............................................................................................... 31
Representative............................................................................................. 31
- v -
<PAGE>
Page
Representative's Yield..................................................................................... 31
Residential Dwelling....................................................................................... 31
Responsible Officer........................................................................................ 32
Rule of 78s Method......................................................................................... 32
Rule of 78s Mortgage Loan.................................................................................. 32
Series .................................................................................................. 32
Servicer .................................................................................................. 33
Servicer Default........................................................................................... 33
Servicer Employees......................................................................................... 33
Servicing Advances......................................................................................... 33
Servicing Compensation..................................................................................... 33
Servicing Fee.............................................................................................. 33
Servicing Officer.......................................................................................... 33
Specified Spread Account Requirement....................................................................... 34
Spread Account............................................................................................. 34
Spread Account Amount...................................................................................... 34
Spread Account Excess:..................................................................................... 34
S&P .................................................................................................. 34
Startup Day................................................................................................ 34
Subordinated Amount........................................................................................ 34
Subsequent Mortgage Loan................................................................................... 36
Subservicer................................................................................................ 36
Subservicing Agreement..................................................................................... 36
Substitution Adjustment.................................................................................... 37
Targeted Amount............................................................................................ 37
Tax Matters Person......................................................................................... 37
Termination Price.......................................................................................... 37
Transfer Agreement......................................................................................... 37
Trust .................................................................................................. 37
Trust Fund................................................................................................. 37
Trustee .................................................................................................. 38
Trust REMIC................................................................................................ 38
UCC .................................................................................................. 38
United States Person....................................................................................... 38
ARTICLE II
CONVEYANCE OF THE TRUST ASSETS
Section 2.01 Sale and Conveyance of Trust Assets; Priority and
Subordination of Ownership Interests..................................................... 38
Section 2.02 Possession of Mortgage Files............................................................. 39
Section 2.03 Books and Records........................................................................ 40
Section 2.04 Delivery of Mortgage Loan Documents...................................................... 40
Section 2.05 [Reserved]............................................................................... 43
- vi -
<PAGE>
Page
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee.................................................. 43
Section 2.07 REMIC ................................................................................... 45
Section 2.08 Execution of Certificates................................................................ 51
Section 2.09 Application of Principal and Interest.................................................... 51
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the Depositors....................................... 51
Section 3.02 Assignment of Transfer Agreement; Representations and
Warranties as to the Individual Mortgage Loans and the
Mortgage Pool............................................................................ 56
Section 3.03 Purchase and Substitution................................................................ 69
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates......................................................................... 71
Section 4.02 Registration of Transfer and Exchange of Certificates.................................... 74
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates........................................ 77
Section 4.04 Persons Deemed Owners.................................................................... 78
Section 4.05 Determination of LIBOR................................................................... 78
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 Duties of the Servicer................................................................... 79
Section 5.02 Liquidation of Mortgage Loans............................................................ 82
Section 5.03 Establishment of Principal and Interest Accounts; Deposits
in Principal and Interest Accounts....................................................... 83
Section 5.04 Permitted Withdrawals From the Principal and Interest
Account.................................................................................. 84
Section 5.05 Payment of Taxes, Insurance and Other Charges............................................ 87
Section 5.06 Transfer of Accounts; Monthly Statements................................................. 87
Section 5.07 Maintenance of Hazard Insurance.......................................................... 88
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy...................................... 89
Section 5.09 Fidelity Bond............................................................................ 89
Section 5.10 Title, Management and Disposition of REO Property........................................ 90
Section 5.11 Collection of Certain Mortgage Loan Payments............................................. 92
Section 5.12 Access to Certain Documentation and Information
Regarding the Mortgage Loans............................................................. 92
- vii -
<PAGE>
Page
Section 5.13 Superior Liens........................................................................... 92
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Establishment of Collection Account; Deposit in Collection
Account.................................................................................. 93
Section 6.02 Permitted Withdrawals from Collection Account............................................ 94
Section 6.03 Establishment of Insurance Account: Deposits in Insurance
Account: Permitted Withdrawals from Insurance Account.................................... 95
Section 6.04 Investment of Accounts................................................................... 96
Section 6.05 Priority and Subordination of Distributions.............................................. 97
Section 6.06 Certificate Insurer Default..............................................................101
Section 6.07 Statements...............................................................................101
Section 6.08 Advances by the Servicer.................................................................106
Section 6.09 Establishment of Spread Account; Deposits in Spread
Account; Permitted Withdrawals from Spread Account.......................................107
Section 6.10 Establishment of Letter of Credit Fee Account; Deposits in
Letter of Credit Fee Account; Permitted Withdrawals from
Letter of Credit Fee Account.............................................................111
Section 6.11 Letters of Credit........................................................................112
Section 6.12 Pre-Funding Account......................................................................114
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Assumption Agreements....................................................................115
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files..................................116
Section 7.03 Servicing Compensation...................................................................118
Section 7.04 Annual Statement as to Compliance........................................................119
Section 7.05 Annual Independent Public Accountants' Servicing Report..................................119
Section 7.06 Right to Examine Servicer Records........................................................119
Section 7.07 Reports to the Trustee; Principal and Interest Account
Statements...............................................................................120
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements.....................................................................120
ARTICLE IX
- viii -
<PAGE>
Page
THE SERVICER
Section 9.01 Indemnification; Third Party Claims......................................................120
Section 9.02 Merger or Consolidation of the Servicer..................................................121
Section 9.03 Limitation on Liability of the Servicer and Others.......................................122
Section 9.04 Servicer Not to Resign...................................................................122
Section 9.05 Removal of Servicer......................................................................122
ARTICLE X
SERVICER DEFAULT
Section 10.01 Servicer Default.........................................................................123
Section 10.02 Trustee to Act; Appointment of Successor Servicer........................................126
Section 10.03 Waiver of Defaults.......................................................................129
Section 10.04 Control by Majority in Aggregate Voting Interest.........................................129
- ix -
<PAGE>
Page
ARTICLE XI
TERMINATION
Section 11.01 Termination..............................................................................130
Section 11.02 Additional Termination Requirements......................................................131
Section 11.03 Accounting Upon Termination of Servicer..................................................133
Section 11.04 Representative's Right to Representative's Yield Absolute................................133
Section 11.05 Termination Upon Loss of REMIC Status....................................................134
ARTICLE XII
THE TRUSTEE
Section 12.01 Duties of Trustee........................................................................135
Section 12.02 Certain Matters Affecting the Trustee....................................................137
Section 12.03 Trustee Not Liable for Certificates or Mortgage Loans....................................139
Section 12.04 Trustee May Own Certificates.............................................................139
Section 12.05 Servicer to Pay Trustee's Fees and Expenses..............................................139
Section 12.06 Eligibility Requirements for Trustee.....................................................140
Section 12.07 Resignation and Removal of the Trustee...................................................141
Section 12.08 Successor Trustee........................................................................142
Section 12.09 Merger or Consolidation of Trustee.......................................................143
Section 12.10 Appointment of Co-Trustee or Separate Trustee............................................143
Section 12.11 [Reserved]...............................................................................144
Section 12.12 Appointment of Custodians................................................................144
Section 12.13 Protection of Trust Fund.................................................................145
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 The Certificate Insurer..................................................................146
Section 13.02 Amendment................................................................................146
Section 13.03 Recordation of Agreement.................................................................147
Section 13.04 Duration of Agreement....................................................................148
Section 13.05 Governing Law............................................................................148
Section 13.06 Notices..................................................................................148
Section 13.07 Severability of Provisions...............................................................148
Section 13.08 No Partnership...........................................................................149
Section 13.09 Counterparts.............................................................................149
Section 13.10 Successors and Assigns...................................................................149
Section 13.11 Headings.................................................................................149
Section 13.12 Limitation of Liability of Trustee.......................................................149
Section 13.13 Limitations on Rights of Others..........................................................149
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Page
Section 13.14 No Petition..............................................................................150
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EXHIBITS
EXHIBIT A - Contents of Mortgage File
EXHIBIT B-1 - Form of Class A Certificate
EXHIBIT B-2 - Form of Class R Certificate
EXHIBIT C - Certificate Depository Agreement
EXHIBIT D - Mortgage Loan Schedule
EXHIBIT E - Form of Trustee Initial Certification
EXHIBIT F-1 - Form of Trustee Interim Certification
EXHIBIT F-2 - Form of Trustee Final Certification
EXHIBIT G - List of Bankruptcy Loans
EXHIBIT H - Form of Delinquency Report
EXHIBIT I - Certificate Insurance Policy
EXHIBIT J - [Reserved]
EXHIBIT K - List of Originators
EXHIBIT L-1 - Certification for Transfers Made Other Than Pursuant to Rule 144A
EXHIBIT L-2 - Certification for Transfers Made Pursuant to Rule 144A
EXHIBIT M-1 - Form of Transfer Affidavit
EXHIBIT M-2 - Form of Transferee's Letter
EXHIBIT N - Form of Custodial Agreement
EXHIBIT O - Form of Liquidation Report
EXHIBIT P - Principal and Interest Account Letter Agreement
EXHIBIT Q - Form of Notice of Event of Nonpayment
EXHIBIT R - Monthly Information Delivered by Servicer
EXHIBIT S - List of Delinquent Loans
EXHIBIT T - Schedule of Mortgage Loans subject to the Home Ownership and Equity
Protection Act of 1994
EXHIBIT U - Destroyed Mortgage Note Affidavit
EXHIBIT V - Targeted Amounts for Class A-1 Principal Payments
EXHIBIT W - Schedule of Mortgage Loans that do not have Title Insurance Policies
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</TABLE>
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POOLING AND SERVICING AGREEMENT
This Pooling and Servicing Agreement, dated as of June 1, 1997 (the
"Agreement"), is by and among EQUICREDIT CORPORATION OF AMERICA, as
representative (the "Representative") and as servicer (the "Servicer"), EQCC
RECEIVABLES CORPORATION and EQCC ASSET BACKED CORPORATION (collectively, the
"Depositors") and FIRST BANK NATIONAL ASSOCIATION, as trustee (the "Trustee"):
PRELIMINARY STATEMENT
In order to transfer certain Mortgage Loans from the Depositors to the
Trustee for the benefit of the Certificateholders and to facilitate the
servicing of certain Mortgage Loans by the Servicer, the Representative, the
Servicer and the Depositors are entering into this Agreement with the Trustee.
The Depositors are transferring the Mortgage Loans to the Trustee for the
benefit of the Certificateholders under this Agreement, pursuant to which eleven
classes of Certificates are being issued, denominated on the face thereof as
EQCC Home Equity Loan Asset Backed Certificates, Series 1997-2, Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A- 8, Class
A-9 , Class A-10 and Class R, respectively, representing in the aggregate a 100%
ownership interest in the Mortgage Loans and all payments and other collections
thereon received on or after June 1, 1997 (the "Cut-off Date") (exclusive of the
Representative's Yield and amounts received after the Cut-off Date in respect of
interest accrued prior to the Cut-off Date). As of the Cut-off Date, the
Mortgage Loans have an aggregate outstanding principal balance of
$688,879.164.42, the Mortgage Loans in the Adjustable Rate Group have an
aggregate outstanding principal balance of $185,620,086.35, and the Mortgage
Loans in the Fixed Rate Group have an aggregate outstanding principal balance of
$503,259,078.07, in each case after application of payments received by the
Depositors on or before such date.
As provided herein, the Trustee will make an election to treat the
assets of the Trust Fund other than the Pre-Funding Account and the Spread
Account as a REMIC (as defined herein) for federal income tax purposes. The
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9 and Class A-10 Certificates will constitute "regular
interests" in the Trust REMIC and the Class R Certificates will constitute the
"residual interests" in the Trust REMIC, for purposes of the REMIC Provisions
(as defined herein).
The following table sets forth the designation, type, Pass-Through
Rate, aggregate Original Principal Balance and Final Scheduled Payment Date for
each Class of Certificates comprising the interests in the Trust REMIC created
hereunder.
<TABLE>
<CAPTION>
Pass-Through Aggregate Original Principal Final Scheduled
Designation Type Rate Balance Payment Date
<S> <C> <C> <C> <C>
Class A-1 Senior 6.05% $65,666,000 August 15, 2028
Class A-2 Senior 5.93% $31,292,000 May 15, 2004
Class A-3 Senior 6.21% $78,535,000 May 15, 2004
Class A-4 Senior 6.37% $62,228,000 April 15, 2007
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Class A-5 Senior 6.54% $86,789,000 April 15, 2011
Class A-6 Senior 6.72% $22,646,000 February 15, 2012
Class A-7 Senior 6.89% $72,769,000 February 15, 2020
Class A-8 Senior 7.22%* $33,034,000 August 15, 2028
Class A-9 Senior 6.81% $50,300,000 August 15, 2028
Class A-10 Senior Adjustable** $185,620,000 August 15, 2028
Class R Residual Variable*** $0.0 August 15, 2028
</TABLE>
* The Pass-Through Rate on the Class A-8 Certificates for any Accrual Period
will equal the lower of (i) the weighted average Mortgage Interest Rate of
the Mortgage Loans in the Fixed Rate Group less the Servicing Fee Rate and
the per annum rate at which the Monthly Premium accrues and (ii) 7.22% per
annum.
** The Pass-Through Rate on the Class A-10 Certificates for any Accrual period
will equal the adjustable interest rate set forth in the definition of
"Class A-10 Pass-Through Rate" herein.
*** Class R Certificateholders will be entitled to distributions pursuant to
Section 6.05(d) and 6.09(b) and (c).
Except as described in the following sentence, all calculations of
interest pursuant to this Agreement are based on a 360-day year consisting of
twelve 30-day months. Calculations of interest on the Class A-10 Certificates
are based on a 360-day year and the actual number of days in the related Accrual
Period. Unless otherwise noted, references in this Agreement to percentages of
Mortgage Loans refer in each case to the percentage of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date, based on the outstanding
balances of the Mortgage Loans as of the Cut-off Date, and giving effect to
principal payments received prior to the Cut-off Date.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings.
Account: The Principal and Interest Account, the Collection Account,
the Spread Account, the Pre-Funding Account, the Insurance Account or the Letter
of Credit Fee Account.
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Account Party: With respect to any Letter of Credit, the Person
obligated to reimburse the related Letter of Credit Bank for any drawings
thereunder; provided, however, that if such Letter of Credit Bank is to be
reimbursed only from amounts deposited into the Spread Account, then such Letter
of Credit Bank shall be deemed to be the Account Party.
Accrual Period: With respect to each Payment Date and the Fixed Rate
Certificates, the period from and including the fifteenth day of the immediately
preceding calendar month, commencing June 15, 1997, to but not including the
fifteenth day of the calendar month in which such Payment Date occurs. With
respect to each Payment Date and the Adjustable Rate Certificates, the period
from and including the immediately preceding Payment Date or, in the case of the
initial Accrual Period, June 30, 1997, to but excluding such Payment Date.
Adjustable Rate Carry-Forward Amount: As of any Payment Date, the sum
of (i) the amount, if any, by which (x) the Adjustable Rate Remittance Amount as
of the immediately preceding Payment Date exceeded (y) the amount of the actual
distribution made to the Adjustable Rate Certificateholders pursuant to Section
6.05 hereof, exclusive of any portion of such amount attributable to any Insured
Payment, on such immediately preceding Payment Date and (ii) if any portion of
the amount in clause (i) represents Insured Payments made by the Certificate
Insurer, interest on such portion, if any, described in clause (i) above, at the
Class A-10 LIBOR Rate (for the related Accrual Period) from such immediately
preceding Payment Date.
Adjustable Rate Certificates: The Class A-10 Certificates.
Adjustable Rate Certificateholder: A Holder of an Adjustable Rate
Certificate.
Adjustable Rate Group: The group of Mortgage Loans indicated on the
Mortgage Loan Schedule as belonging to the Adjustable Rate Group.
Adjustable Rate Interest Remittance Amount: For any Payment Date, the
aggregate interest accrued during the related Accrual Period at the Class A-10
Pass-Through Rate on the Adjustable Rate Principal Balance from time to time
outstanding during such Accrual Period (after giving effect to payments of
principal made on the preceding Payment Date), calculated on the basis of actual
number of days over a 360-day year.
Adjustable Rate Pre-Funded Amount: $8,470,150.12.
Adjustable Rate Principal Balance: As of any date of determination, the
Original Class A- 10 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-10 Certificateholders in respect of
principal.
Adjustable Rate Principal Remittance Amount: As to any Payment Date,
the lesser of (A) the Adjustable Rate Principal Balance as of such Payment Date
and (B) the sum of (a) the Basic Principal Amount for the Adjustable Rate Group
for such Payment Date and (b) the Adjustable Rate Carry-Forward Amount.
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Adjustable Rate Remittance Amount: As to any Payment Date, the sum of
(i) the Adjustable Rate Principal Remittance Amount and (ii) the Adjustable Rate
Interest Remittance Amount.
Advance: An advance made by the Servicer pursuant to Section 6.08
hereof.
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Assignment of Beneficial Interest: With respect to each Mortgage Loan
secured by an interest in an Illinois Land Trust, an instrument executed by all
of the beneficiaries of such Illinois Land Trust and by any Person having any
interest in such Illinois Land Trust or the power to direct the trustee under
such Illinois Land Trust, which assigns and transfers to the respective
Depositor as a secured party, all of the beneficiaries' rights, powers,
privileges and beneficial interest in such Illinois Land Trust.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument sufficient, upon proper recordation thereof,
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect of record the transfer of the Mortgage to the party named as
assignee therein.
Authorized Denominations: The authorized denominations of the
Certificates, as set forth in Section 4.01 of this Agreement.
Available Payment Amount: With respect to any Payment Date and any
Mortgage Loan Group, an amount equal to (i)the sum of all amounts described in
clauses (i) through (vii), inclusive, of Section 5.03 received by the Servicer
or any Subservicer (including any amounts paid by the Servicer and the
Representative and excluding any amounts not required to be deposited in the
Principal and Interest Account pursuant to Section 5.03 and excluding any
amounts withdrawn by the Servicer pursuant to Section 5.04(ii), (iii), (v),
(vi), (vii) and (x) as of the related Determination Date) during the related Due
Period with respect to the Mortgage Loans in such Mortgage Loan Group and on
deposit in the Collection Account on such Payment Date, plus (ii) the amount of
any Advances remitted pursuant to Section 6.08 for such Payment Date with
respect to the Mortgage Loans in such Mortgage Loan Group and on deposit in the
Collection Account on such Payment Date, less (iii) the Excess Spread with
respect to such Payment Date and such Mortgage Loan Group. No amount included in
the Available Payment Amount by virtue of being described by any component of
the definition thereof shall be included more than once by virtue of also being
described by any other component or otherwise.
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Bankruptcy Loan: Each Mortgage Loan set forth on Exhibit G hereto (as
such Exhibit G may be supplemented in accordance with an Assignment Agreement).
Base Spread Account Requirement: (x) $32,721,752.50 or (y) for any
Payment Date on or after a Base Spread Account Requirement Trigger Event occurs,
$43,629,003.22 provided, however, that (i) the Certificate Insurer may, in its
sole discretion, reduce the Base Spread Account Requirement to such amount as is
specified in a notice delivered to the Trustee, the Representative and each
Rating Agency; provided, further, that (i)such reduction shall not affect the
rating assigned to the Certificates and (ii) the Certificate Insurer may, in its
sole discretion, increase the amount of the Base Spread Account Requirement for
any period during which a Letter of Credit is used to fund the Spread Account.
Base Spread Account Requirement Trigger Event: (a) Prior to the 25th
Payment Date, any Payment Date on which the Cumulative Losses exceed 1.25% of
the Original Pool Principal Balance; (b) on or after the 25th Payment Date and
before the 37th Payment Date, any Payment Date on which the Cumulative Losses
exceed 2.75% of the Original Pool Principal Balance; (c) on or after the 37th
Payment Date and before the 49th Payment Date, any Payment Date on which the
Cumulative Losses exceed 4.75% of the Original Pool Principal Balance; and (d)
on or after the 49th Payment Date, any Payment Date on which the Cumulative
Losses exceed 6.25% of the Original Pool Principal Balance.
Basic Documents: The Transfer Agreement, this Pooling and Servicing
Agreement, the Custodial Agreement, the Certificate Depository Agreement, and
the other documents and certificates delivered in connection therewith.
Basic Principal Amount: With respect to the Mortgage Loans in a
Mortgage Loan Group and any Payment Date and related Due Period, the sum
(without duplication) of (i) the principal portion of all Monthly Payments
received by the Servicer or any Subservicer in the related Due Period, (ii) all
Curtailments and all Principal Prepayments received during such related Due
Period, (iii) the principal portion of all Insurance Proceeds, Released
Mortgaged Property Proceeds and Net Liquidation Proceeds received during the
related Due Period, (iv) (A) that portion of the purchase price (as set forth in
Section 2.06(b)) of any purchased Mortgage Loans which represents principal and
(B)the principal portion of any Substitution Adjustments deposited into the
Principal and Interest Account as of the related Determination Date and (v) the
Principal Balance of each Mortgage Loan as of the beginning of the related Due
Period which became a Liquidated Mortgage Loan during the related Due Period
(exclusive of any principal payments in respect thereof included in clauses (i)
through (iv) above).
Book-Entry Certificates: A beneficial interest in the Certificates, the
ownership and transfer of which shall be made through book entries by the
Depository as described in Section 4.01 hereof.
Business Day: Any day other than (i) a Saturday or Sunday or (ii) a day
on which banking institutions in the States of Illinois, New York or Florida are
authorized or obligated by law or executive order to be closed; provided,
however, that on the Closing Date the Servicer shall provide the Trustee and the
Certificate Insurer with an Officer's Certificate listing the dates on
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which banking institutions in the States of Illinois, Florida and New York are
authorized or obligated by law or executive order to be closed and the Servicer
shall deliver a new Officer's Certificate annually thereafter to the Trustee and
the Certificate Insurer prior to the expiration of the most recent list
provided. Failure to provide such an Officer's Certificate shall not constitute
an Event of Default; provided that the Trustee and the Certificate Insurer may
rely on the most recently delivered list without further investigation.
Certificate: Any Class A Certificate or Class R Certificate executed by
the Trustee on behalf of the Trust Fund and authenticated by the Trustee or its
authenticating agent, substantially in the form annexed hereto as Exhibits B-1
or B-2, respectively.
Certificate Depository Agreement: The agreement, dated as of the
Closing Date, among the Depositors and the initial Depository, relating to the
Class A Certificates and substantially in the form of Exhibit C hereto.
Certificate Insurance Policy: The certificate guaranty surety bond,
policy number AB0115BE, in the name of the Trustee, dated the Closing Date,
issued by the Certificate Insurer for the benefit of the Class A
Certificateholders, pursuant to which the Certificate Insurer guarantees Insured
Payments, a copy of which is attached hereto as ExhibitI.
Certificate Insurer: AMBAC Indemnity Corporation, a Wisconsin stock
insurance company, or any successor thereof, as issuer of the Certificate
Insurance Policy.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the books
of the Depository or on the books of a Depository Participant.
Certificate Register: As described in Section 4.02 hereof.
Certificateholder or Holder: Each Person in whose name a Certificate is
registered in the Certificate Register; provided, however, that, solely for the
purposes of giving any consent (except any consent required to be obtained
pursuant to Section 10.02), waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Representative, the
Servicer, any Originator or either Depositor, or any Affiliate of any of them,
shall be deemed not to be outstanding and the undivided Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite percentage of Certificates necessary to effect any such consent,
waiver, request or demand has been obtained. For purposes of any consent,
waiver, request or demand of Certificateholders pursuant to this Agreement, upon
the Trustee's or the Certificate Insurer's request, the Servicer, the
Representative, any Originator and either Depositor shall provide to the Trustee
and the Certificate Insurer a notice identifying any of their respective
Affiliates that is a Certificateholder as of the date(s) specified by the
Trustee or the Certificate Insurer in such request.
Class: Collectively, Certificates bearing the same alphabetical
designation (A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9, A-10 or R).
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Class A-1 Certificate: A Certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class A-1 Certificate, 6.05%
Pass-Through Rate.
Class A-2 Certificate: A Certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class A-2 Certificate, 5.93%
Pass-Through Rate.
Class A-3 Certificate: A Certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class A-3 Certificate, 6.21%
Pass-Through Rate.
Class A-4 Certificate: A Certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class A-4 Certificate, 6.37%
Pass-Through Rate.
Class A-5 Certificate: A Certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class A-5 Certificate, 6.54%
Pass-Through Rate.
Class A-6 Certificate: A Certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class A-6 Certificate, 6.72%
Pass-Through Rate.
Class A-7 Certificate: A Certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class A-7 Certificate, 6.89%
Pass-Through Rate.
Class A-8 Certificate: A Certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class A-8 Certificate, 7.22%
Pass-Through Rate.
Class A-9 Certificate: A Certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class A-9 Certificate, 6.81%
Pass-Through Rate.
Class A-10 Certificate: A Certificate denominated as an EQCC Home
Equity Loan Asset Backed Certificate, Series 1997-2, Class A-10 Certificate,
Adjustable Pass-Through Rate.
Class A Certificateholder: A Holder of a Class A Certificate.
Class A Certificates: The Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates, Class A-9 Certificates and Class A-10 Certificates.
Class A-10 LIBOR Rate: For any Accrual Period, LIBOR as of the related
LIBOR Determination Date plus (i) 0.23% per annum on each Payment Date on or
prior to the Optional Purchase Date and (ii) 0.46% per annum on each Payment
Date following the Optional Purchase Date.
Class A-9 Lockout Percentage: For any Payment Date, the percentage that
corresponds to the range of Payment Dates in which such Payment Date is
included, as set forth in the following table:
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Class A-9
Payment Dates Lockout Percentage
July 1997 - June 2000 0%
July 2000 - June 2002 45%
July 2002 - June 2003 80%
July 2003 - June 2004 100%
July 2004 and thereafter 300%
Class A-9 Lockout Pro Rata Remittance Amount: For any Payment Date, an
amount, determined immediately prior to giving effect to any payment of
principal of the Fixed Rate Certificates on such date, equal to the product of
(x) a fraction, the numerator of which is the principal balance of the Class A-9
Certificates as of such Payment Date and the denominator of which is the Fixed
Rate Principal Balance as of such Payment Date, and (y) the Fixed Rate Principal
Remittance Amount for such Payment Date.
Class A-9 Lockout Remittance Amount: For any Payment Date, an amount,
determined immediately prior to giving effect to any payment of principal of the
Fixed Rate Certificates on such date, equal to the least of: (a) the product of
(i) the applicable Class A-9 Lockout Percentage for such Payment Date and (ii)
the Class A-9 Lockout Pro Rata Remittance Amount for such Payment Date; (b) the
Fixed Rate Principal Remittance Amount for such Payment Date; and (c) the Class
A-9 Principal Balance as of such Payment Date.
Class A-1 Pass-Through Rate: 6.05% per annum.
Class A-2 Pass-Through Rate: 5.93% per annum.
Class A-3 Pass-Through Rate: 6.21% per annum.
Class A-4 Pass-Through Rate: 6.37% per annum.
Class A-5 Pass-Through Rate: 6.54% per annum.
Class A-6 Pass-Through Rate: 6.72% per annum.
Class A-7 Pass-Through Rate: 6.89% per annum.
Class A-8 Pass-Through Rate: With respect to any Accrual Period, the
lower of (i) the weighted average Mortgage Interest Rate of the Mortgage Loans
in the Fixed Rate Group during the related Due Period less the Servicing Fee
Rate and the per annum rate at which the Monthly Premium accrues and (ii) 7.22%
per annum.
Class A-9 Pass-Through Rate: 6.81% per annum.
Class A-10 Pass-Through Rate: For any Accrual Period, the lesser of the
Class A-10 LIBOR Rate for such Accrual Period and the Net Funds Cap Rate for
such Accrual Period.
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Class A Pool Factor: As of any date of determination with respect to
any Class of Class A Certificates, the principal balance of such Class divided
by the original principal balance of such Class.
Class A-1 Principal Balance: As of any date of determination, the
Original Class A-1 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-1 Certificateholders in respect of
principal.
Class A-2 Principal Balance: As of any date of determination, the
Original Class A-2 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-2 Certificateholders in respect of
principal.
Class A-3 Principal Balance: As of any date of determination, the
Original Class A-3 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-3 Certificateholders in respect of
principal.
Class A-4 Principal Balance: As of any date of determination, the
Original Class A-4 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-4 Certificateholders in respect of
principal.
Class A-5 Principal Balance: As of any date of determination, the
Original Class A-5 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-5 Certificateholders in respect of
principal.
Class A-6 Principal Balance: As of any date of determination, the
Original Class A-6 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-6 Certificateholders in respect of
principal.
Class A-7 Principal Balance: As of any date of determination, the
Original Class A-7 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-7 Certificateholders in respect of
principal.
Class A-8 Principal Balance: As of any date of determination, the
Original Class A-8 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-8 Certificateholders in respect of
principal.
Class A-9 Principal Balance: As of any date of determination, the
Original Class A-9 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting
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the Certificate Insurer's subrogation rights, that portion of Insured Payments,
if any, made in respect of principal) previously distributed to Class A-9
Certificateholders in respect of principal.
Class A-10 Principal Balance: As of any date of determination, the
Original Class A-10 Principal Balance, reduced by the sum of all amounts
(including, except for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Class A-10 Certificateholders in respect of
principal.
Class A Remittance Amount: As to any Payment Date, the sum of (i) the
Adjustable Rate Remittance Amount and (ii) the Fixed Rate Remittance Amount.
Class R Certificate: A certificate denominated as an EQCC Home Equity
Loan Asset Backed Certificate, Series 1997-2, Class R.
Class R Certificateholder: A Holder of a Class R Certificate.
Closing Date: June 30, 1997.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Collection Account: The collection account established and maintained
by the Trustee pursuant to Section 6.01 hereof.
Combined Loan-To-Value Ratio or CLTV: With respect to any Mortgage
Loan, the ratio (expressed as a percentage) of (a) the sum of the original
principal balance of such Mortgage Loan and the outstanding principal balance of
any related First Lien as of the date of origination of the Mortgage Loan,
divided by (b) (i) the lesser of (1) the value of the related Mortgaged
Property, based upon the appraisal made at the time such Mortgage Loan was
originated, or (2) the purchase price of the Mortgaged Property if the Mortgage
Loan proceeds were used to purchase the Mortgaged Property or (ii) in the case
of a Mortgage Loan that has been deemed reissued for purposes of Section 1001 of
the Code as a result of modifications thereto, the value of the Mortgaged
Property based upon the appraisal made at the date of the most recent deemed
reissuance.
Commission: The Securities and Exchange Commission.
Corporate Trust Office: With respect to the Trustee, the principal
office at which at any particular time the corporate trust business of the
Trustee shall be principally administered, which offices at the Closing Date are
located at First Bank National Association, c/o First Trust National
Association, 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601.
Cross-over Date: The date on which the Subordinated Amount is reduced
to zero.
Cumulative Excess Spread Receipts: As of any date of determination, the
aggregate amount of Excess Spread from and after the Closing Date paid to the
Class A Certificateholders pursuant to Section 6.09(b)(iii), to the extent
attributable to Mortgage Loan Losses.
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Cumulative Losses: As of any date of determination, the aggregate
Mortgage Loan Losses for all Due Periods since the Cut-off Date.
Current CLTV: With respect to any Bankruptcy Loan, the ratio (expressed
as a percentage) of (a) the sum of (i) the outstanding principal balance as of
the Cut-off Date of such Mortgage Loan and (ii) the outstanding principal
balance of any related First Lien as of the Cutoff Date divided by (b) the
current appraised value of the related Mortgaged Property, as determined by an
independent fee appraiser acceptable to the Certificate Insurer within 60 days
of the Closing Date.
Curtailment: With respect to a Mortgage Loan, any payment of principal
received in any month during a Due Period as part of a payment which is neither
intended to satisfy the Mortgage Loan in full nor to cure a delinquency.
Custodial Agreement: The agreement for the retention of the Mortgage
Files initially in the form attached hereto as Exhibit N.
Custodian: Initially, with respect to all Mortgage Loans, BankBoston,
N.A., and thereafter, any successor custodian approved by the Certificate
Insurer appointed pursuant to either Custodial Agreement which is not affiliated
with the Servicer, the Representative, the Depositors or the Originators.
Cut-off Date: June 1, 1997; provided, that with respect to a Mortgage
Loan included in the Mortgage Pool on the Closing Date but originated after June
1, 1997, if any, Cut-off Date shall mean the date of origination of such
Mortgage Loan.
Default: Any occurrence that is, or with notice or the lapse of time
or both would become, a Servicer Default under Section 10.01 hereof.
Definitive Certificates: As set forth in Section 4.01 hereof.
Deleted Mortgage Loan: A Mortgage Loan replaced by or to be replaced
by a Qualified Substitute Mortgage Loan.
Depositor: Either EQCC Asset Backed Corporation or EQCC Receivables
Corporation, each of which is a direct or an indirect wholly-owned subsidiary of
the Representative.
Depository: Initially, The Depository Trust Company, the nominee of
which is Cede & Co., as the registered Holder of the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 and Class
A-10 Certificates evidencing an amount in the Original Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 and
Adjustable Rate Principal Balances, respectively, as designated by the Servicer.
The Depository shall at all times constitute a "clearing corporation" as defined
in Section 8-102(3) of the Uniform Commercial Code of the State of New York.
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Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Destroyed Mortgage Note: A Mortgage Note the original of which was
permanently lost or destroyed and has not been replaced.
Destroyed Mortgage Note Affidavit: An affidavit in the form of Exhibit
U delivered pursuant to Section 2.04(a)(i)(B) with respect to a Destroyed
Mortgage Note.
Determination Date: With respect to each Payment Date, the seventh
Business Day of the month in which such Payment Date occurs.
Disqualified Organization: Either (i) the United States, (ii) any state
or political subdivision thereof, (iii)any foreign government, (iv)any
international organization, (v)any agency or instrumentality of any of the
foregoing, (vi)any tax-exempt organization (other than a cooperative described
in Section 521 of the Code) which is exempt from the tax imposed by Chapter 1 of
the Code unless such organization is subject to the tax imposed by Section 511
of the Code, (vii)any organization described in Section 1381(a)(2)(C) of the
Code, or (viii)any other entity designated as a Disqualified Organization by
relevant legislation amending the REMIC Provisions and in effect at or proposed
to be effective as of the time of the determination. Notwithstanding the
foregoing, a corporation will not be treated as an instrumentality of the United
States or of any state or political subdivision thereof if all of its activities
are subject to tax and a majority of its board of directors is not selected by
such governmental unit. The terms "United States" and "international
organization" shall have the meanings set forth in Section 7701 of the Code.
Draw Amount: As defined in Section 6.05(b)(iii).
Due Date: The day of the month on which the Monthly Payment is due
from the Mortgagor on a Mortgage Loan.
Due Period: With respect to any Payment Date, the calendar month
immediately preceding the calendar month in which such Payment Date occurs.
Eligible Account: Either (A) a segregated account or segregated
accounts maintained with an institution whose deposits are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, (x) the
unsecured and uncollateralized debt obligations of which shall be rated "A" or
better by S&P or have the highest short-term rating by S&P and (y) the unsecured
and uncollateralized debt obligations of which shall be rated A1 or better by
Moody's and have the highest short-term rating by Moody's and which is either
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) approved in writing by the
Certificate Insurer, S&P and Moody's or (B) a
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segregated trust account or accounts maintained with the corporate trust
department of a federal or state chartered depository institution or trust
company, having capital and surplus of not less than $50,000,000, acting in its
fiduciary capacity, and has a rating from Moody's for long-term deposits of at
least Baa3; provided, that any Eligible Account maintained with any Affiliate of
Barnett Banks, Inc. must be consented to by the Certificate Insurer. Any
Eligible Accounts maintained with the Trustee shall conform to the preceding
clause (B).
Event of Nonpayment: An event of nonpayment shall occur with respect to
any Payment Date if the amount remitted by the Servicer pursuant to Sections
5.04(i), 6.04(e) and 6.08 and on deposit in the Collection Account for such
Payment Date, plus any amounts withdrawn from the Spread Account pursuant to
Section 6.09(b)(iii) and on deposit in the Collection Account, that are not
subject to any automatic stay under Section 362 of the United States Bankruptcy
Code pursuant to an order of a United States bankruptcy court of competent
jurisdiction, will not, taken together, be sufficient to pay the sum of (X) the
Fixed Rate Remittance Amount and the Adjustable Rate Remittance Amount
(exclusive of the portion of the Fixed Rate Carry-Forward Amount and the
Adjustable Rate Carry-Forward Amount representing amounts previously paid to the
Fixed Rate Certificateholders and Adjustable Rate Certificateholders,
respectively, as Insured Payments) and (Y) the amount to be withdrawn from the
Collection Account for deposit into the Insurance Account and Letter of Credit
Fee Account pursuant to Sections 6.02(i) and (iii), respectively, in respect of
such Payment Date, unless such insufficiency results from a failure by the
Certificate Insurer to perform in accordance with the terms of this Agreement or
the Certificate Insurance Policy or a failure by the Trustee to perform in
accordance with this Agreement.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
excess, if any, of (a) the Net Liquidation Proceeds received in respect thereof
over (b) the Principal Balance of such Mortgage Loan as of the date such
Mortgage Loan became a Liquidated Mortgage Loan plus accrued but unpaid interest
thereon at the Mortgage Interest Rate.
Excess Spread: With respect to any Payment Date and any Mortgage Loan
Group, the excess (if any) of the aggregate interest accrued for the related Due
Period on the Mortgage Loans in such Mortgage Loan Group at their respective
Mortgage Interest Rates over the sum of (i) interest accrued on the Fixed Rate
Certificates or Adjustable Rate Certificates, as applicable, since the
immediately prior Payment Date, (ii)the Monthly Premium due with respect to the
applicable Certificates for such Payment Date, (iii) the Letter of Credit Fee
Amount accrued during the related Due Period with respect to the applicable
Certificates and (iv)the Servicing Fee accrued during the related Due Period on
the Mortgage Loans in such Mortgage Loan Group.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC:The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
Fidelity Bond: As described in Section 5.09.
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Final Scheduled Payment Date: August 15, 2028 with respect to the Class
A-1 Certificates, May 15, 2004 with respect to the Class A-2 Certificates, May
15, 2004 with respect to the Class A-3 Certificates, April 15, 2007 with respect
to the Class A-4 Certificates, April 15, 2011 with respect to the Class A-5
Certificates, February 15, 2012 with respect to the Class A-6 Certificates,
February 15, 2020 with respect to the Class A-7 Certificates, August 15, 2028
with respect to the Class A-8 Certificates, August 15, 2028 with respect to the
Class A-9 Certificates, and August 15, 2028 with respect to the Class A-10
Certificates.
First Lien: With respect to any Mortgage Loan secured by a second
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property secured by a first priority lien.
Fixed Rate Carry-Forward Amount: As of any Payment Date, the sum of (i)
the amount, if any, by which (x) the Fixed Rate Remittance Amount as of the
immediately preceding Payment Date exceeded (y) the amount of the actual
distribution made to the Fixed Rate Certificateholders pursuant to Section 6.05
hereof, exclusive of any portion of such amount attributable to any Insured
Payment, on such immediately preceding Payment Date and (ii) if any portion of
the amount in clause (i) represents Insured Payments made by the Certificate
Insurer, interest on such portion, if any, described in clause (i) above, at the
Pass-Through Rate with respect to the Class of Fixed Rate Certificates to which
such Insured Payment was applied from such immediately preceding Payment Date.
Fixed Rate Certificateholder: A Holder of a Fixed Rate Certificate.
Fixed Rate Certificates: The Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates and Class A-9 Certificates.
Fixed Rate Group: The group of Mortgage Loans indicated on the
Mortgage Loan Schedule as belonging to the Fixed Rate Group.
Fixed Rate Interest Remittance Amount: For any Payment Date, the
aggregate interest accrued during the related Accrual Period at the Class A-1
Pass-Through Rate, Class A-2 Pass- Through Rate, Class A-3 Pass-Through Rate,
Class A-4 Pass-Through Rate, Class A-5 Pass- Through Rate, Class A-6
Pass-Through Rate, Class A-7 Pass-Through Rate, Class A-8 Pass- Through Rate and
Class A-9 Pass-Through Rate on the principal balance of the related Fixed Rate
Certificates outstanding during such Accrual Period (after giving effect to
payments of principal made on the preceding Payment Date).
Fixed-Rate Pre-Funded Amount: $35,975,877.49.
Fixed Rate Principal Balance: As of any date of determination, the sum
of the Original Class A-1 Principal Balance, the Original Class A-2 Principal
Balance, the Original Class A-3 Principal Balance, the Original Class A-4
Principal Balance, the Original Class A-5 Principal Balance, the Original Class
A-6 Principal Balance, the Original Class A-7 Principal Balance, the Original
Class A-8 Principal Balance and the Original Class A-9 Principal Balance,
reduced by the sum of all amounts (including, except for purposes of effecting
the Certificate Insurer's
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subrogation rights, that portion of Insured Payments, if any, made in respect of
principal) previously distributed to Fixed Rate Certificateholders in respect of
principal.
Fixed Rate Principal Remittance Amount: As to any Payment Date, the
lesser of (A) the Fixed Rate Principal Balance as of such Payment Date and (B)
the sum of (a) the Basic Principal Amount for the Fixed Rate Group for such
Payment Date and (b) the Fixed Rate Carry-Forward Amount.
Fixed Rate Remittance Amount: The sum of (i) the Fixed Rate Principal
Remittance Amount and (ii) the Fixed Rate Interest Remittance Amount.
FNMA: The Federal National Mortgage Association and any successor
thereto.
Holder: A Certificateholder.
Home Equity Loan Ratio: With respect to any Mortgage Loan, the ratio
(expressed as a percentage) of (a) the original principal balance of such
Mortgage Loan, divided by (b) the lesser of (i) the value of the related
Mortgaged Property, based upon the appraisal made at the time such Mortgage Loan
was originated or (ii) the purchase price of the Mortgaged Property if the
Mortgage Loan proceeds were used to purchase the Mortgaged Property.
IBCA: International Bank Credit Agency.
Illinois Land Trust: A trust formed under a trust agreement between the
trustee and one or more beneficiaries named therein, pursuant to which such
trustee holds legal and equitable title to a Mortgaged Property located in the
State of Illinois and such beneficiaries are the owners of the beneficial
interest in such trust.
Increased LC Costs: With respect to any Letter of Credit Bank and the
related Letter of Credit, costs which are imposed on such Letter of Credit Bank
and charged to the related Account Party in accordance with an agreement between
such Letter of Credit Bank and such Account Party following the date of delivery
of the related Letter of Credit to the Trustee resulting from:
(A) any enactment, promulgation or adoption of or
change in any applicable law, regulation or rule or in the
interpretation or administration thereof by any court,
administrative or governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by such Letter of Credit
Bank with any guideline, request or directive issued after the
date of such delivery (whether or not having the force of law)
of any such authority, central bank or comparable agency,
which shall either (i) impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, a guideline, request or directive which
affects the manner in which such Letter of Credit Bank
allocates capital resources to its commitments, including its
obligations under the related Letter of Credit), (ii) subject
such Letter of Credit Bank to any tax or change the basis of
taxation of such Letter of Credit
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Bank (other than a change in a rate of tax based on overall
net income of such Letter of Credit Bank), or (iii) impose on
such Letter of Credit Bank any other condition regarding the
related Letter of Credit, with the result that the direct or
indirect cost to such Letter of Credit Bank of issuing or
maintaining the related Letter of Credit is increased or that
the amounts receivable by such Letter of Credit Bank hereunder
are reduced (which increase in cost or reduction in amounts
receivable shall be determined by such Letter of Credit Bank's
reasonable allocation of such cost increase or reduction in
amounts receivable resulting from such event); or
(B) any enactment, promulgation or adoption of or
change in any applicable law, regulation, rule or guideline
regarding capital adequacy, or in the interpretation or
administration thereof, by any administrative or governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
such Letter of Credit Bank (or any controlling affiliate) with
any guideline, request or directive regarding capital adequacy
(whether or not having the force of law and whether or not
failure to comply thereunder would be unlawful) of any such
authority, central bank or comparable agency, with the result
that the amount of capital required or expected to be
maintained by such Letter of Credit Bank (or any controlling
affiliate) is affected and such Letter of Credit Bank
determines, on the basis of reasonable allocations, that the
amount of such capital is increased by or is based on its
issuance or maintenance of the related Letter of Credit.
Independent: When used with respect to any specified Person, that the
Person (i) does not have any direct financial interest or any material indirect
financial interest in the Depositors, the Representative, the Servicer, the
Originators or any Affiliate of any of the foregoing Persons and (ii) is not
connected with the Representative, the Servicer, the Originators or any
Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
Initial Mortgage Loan: A Mortgage Loan defined as such in the
Prospectus for which statistical and other data have been provided therein.
Insurance Account: The insurance account established and maintained by
the Trustee in accordance with Section 6.03 hereof.
Insurance Proceeds: Proceeds paid to the Trustee or the Servicer by any
insurer (except the Certificate Insurer) or by the Servicer pursuant to a
deductible clause under a blanket policy insuring against fire and hazards of
extended coverage on all of the Mortgage Loans pursuant to Section 5.08, in
either event pursuant to any insurance policy covering a Mortgage Loan,
Mortgaged Property, or REO Property or any other insurance policy net of any
expenses which are incurred by the Servicer or the Trustee in connection with
the collection of such proceeds and not otherwise reimbursed to the Servicer,
other than proceeds to be applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with customary second
mortgage servicing procedures.
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Insured Payment: As of each Payment Date, the amount, if any, by which
(A)the sum of the Fixed Rate Remittance Amount and the Adjustable Rate
Remittance Amount (excluding from such amounts any amount thereof attributable
to clause (iv) of the definition of "Basic Principal Amount", to the extent such
amount is due but not paid by the Representative, the Depositors, or the
Originators) exceeds (B) the sum of (x) the Available Payment Amounts for each
Mortgage Loan Group (minus the amount withdrawable from the Collection Account
pursuant to Sections 6.02(i), (ii) and (iii)) plus any amount transferred from
the Spread Account to the Collection Account pursuant to Section 6.09(b)(iii)
and (y) the aggregate amount of any previous Insured Payments for which the
Certificate Insurer has not been reimbursed pursuant to Section 6.05(c);
provided, however, that the determination of Insured Payments shall not be
affected in any way by any recharacterization of the transactions contemplated
by this Agreement as a financing in any bankruptcy, insolvency or similar
proceeding to which the Depositors or the Originators may be subject, and the
Available Payment Amount shall for the purpose of this definition be deemed to
be decreased by the amount thereof that has been deposited in the Collection
Account but may not be withdrawn therefrom pursuant to an order of a United
States bankruptcy court of competent jurisdiction imposing a stay pursuant to
Section 362 of the United States Bankruptcy Code.
LC Obligation: As defined in Section 6.11(c) hereof.
Latest Maturity Date: With respect to any Class of Certificates, its
Final Scheduled Maturity Date.
Letter of Credit: An unconditional irrevocable letter of credit (i)
issued by a bank holding company, commercial bank or trust company acceptable to
the Certificate Insurer, the short-term and long-term debt obligations of which
(or, in the case of the principal bank in a bank holding system, the short-term
and long-term obligations of the bank holding company) at the date of delivery
of such Letter of Credit are rated "A-2" or better and "A-" or better,
respectively, by S&P and Prime-1 or better and A-2 or better, respectively, by
Moody's, (ii)in form and substance reasonably acceptable to the Certificate
Insurer and the Trustee, (iii) with a maximum term of one year, (iv) for the
benefit of the Trustee and (v) providing for the amount thereof to be available
to the Trustee in multiple drawings conditioned only upon presentation of the
applicable certificate in the form attached to such Letter of Credit.
Letter of Credit Bank: Any bank holding company, commercial bank or
trust company issuing a Letter of Credit to the Trustee.
Letter of Credit Fee Account: The letter of credit fee account
established and maintained by the Trustee in accordance with Section 6.10
hereof.
Letter of Credit Fee Amount: Any monthly fees due to any Letter of
Credit Bank, in such amount as certified in writing to the Trustee by the
Account Party and the Servicer for the related Letter of Credit, which amounts,
in the aggregate, to the extent funded from cash flows on the Mortgage Loans,
shall in no event exceed $4,000 per month.
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Letter of Credit Proceeds Sub-Account: The sub-account established as
part of the Spread Account pursuant to Section6.09 hereof and maintained by the
Trustee.
LIBOR: For any Accrual Period and the Adjustable Rate Certificates, the
London interbank offered rate for one-month United States dollar deposits
determined by the Trustee for each Accrual Period in accordance with the
provisions of Section 4.05.
LIBOR Determination Date: With respect to any Accrual Period, the
second business day preceding such Accrual Period (which for the initial Accrual
Period shall be June 26, 1997).
Lien: Any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach by operation of law.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan or REO Property
as to which the Servicer has determined that all amounts which it reasonably and
in good faith expects to recover have been recovered from or on account of such
Mortgage Loan.
Liquidation Proceeds: Cash, including Insurance Proceeds, proceeds of
any REO Disposition, amounts required to be deposited in the Principal and
Interest Account pursuant to Section 5.10 hereof, and any other amounts received
in connection with the liquidation of defaulted Mortgage Loans, whether through
trustee's sale, foreclosure sale or otherwise.
Majority in Aggregate Voting Interest: Class A Certificateholders
representing Class A Certificates voting together as a single class, the
aggregate denominations of which, when divided by the sum of the Original Class
A-1, Original Class A-2, Original Class A-3, Original Class A-4, Original Class
A-5, Original Class A-6, Original Class A-7, Original Class A-8, Original Class
A-9 and Original Class A-10 Principal Balances would be at least 51% when
expressed as a percentage rounded to four decimal places.
Monthly Excess Spread Amount: On any Payment Date, the amount equal to
the product of 100% and the amount of the Excess Spread as of such Payment Date;
provided, however, that the percentage set forth above may be reduced at any
time, solely at the discretion of the Certificate Insurer, with the consent of
each Account Party, at which time written notice shall be sent to the
Representative, the Trustee, S&P and Moody's.
Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Mortgage Loan, as set
forth in the related Mortgage Note.
Monthly Premium: The monthly premium payable to the Certificate Insurer
pursuant to the Certificate Insurance Policy and the Letter Agreement dated as
of the Closing Date, among the Certificate Insurer and the Depositors.
Moody's: Moody's Investors Service, a division of Dun & Bradstreet, or
any successor thereto.
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Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on the Mortgaged Property.
Mortgage File: As described in Exhibit A.
Mortgage Impairment Insurance Policy: As defined in Section 5.08.
Mortgage Interest Rate: With respect to a Mortgage Loan in the Fixed
Rate Group, the fixed per annum rate of interest borne by a Mortgage Note, as
shown on the Mortgage Loan Schedule, and with respect to a Mortgage Loan in the
Adjustable Rate Group and any date of determination, the per annum rate of
interest for the related Due Period computed in accordance with the related
Mortgage Note, subject to any minimum rate, maximum rate and periodic cap on
such rate applicable from time to time to the calculation of interest thereon as
set forth in the related Mortgage Note.
Mortgage Loan: An individual mortgage loan which is assigned and
transferred to the Trustee pursuant to this Agreement, together with the rights
and obligations of a holder thereof and payments thereon and proceeds therefrom,
the Mortgage Loans originally subject to this Agreement being identified on the
Mortgage Loan Schedules annexed hereto as Exhibit D (which are collectively the
Initial Mortgage Loans and the Subsequent Mortgage Loans). Any mortgage loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trustee by the applicable
Depositor, in fact was not transferred and assigned to the Trustee for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 3.02(g) hereof with respect to such mortgage
loan, shall nevertheless be considered a "Mortgage Loan" for all purposes of
this Agreement. As applicable, Mortgage Loan shall be deemed to refer to the
related REO Property.
Mortgage Loan Group: Either the Fixed Rate Group or the Adjustable
Rate Group.
Mortgage Loan Losses: With respect to any Payment Date, the sum of the
following amounts for each Mortgage Loan that became a Liquidated Mortgage Loan
during the related Due Period: the amount, if any, by which (i) the sum of (A)
the Principal Balance of such Mortgage Loan (determined immediately before such
Mortgage Loan became a Liquidated Mortgage Loan) and (B) accrued and unpaid
interest thereon at the Mortgage Interest Rate to the date on which such
Mortgage Loan became a Liquidated Mortgage Loan exceeds (ii) the Net Liquidation
Proceeds received during such Due Period in connection with the liquidation of
such Mortgage Loan which have not theretofore been used to reduce the Principal
Balance of such Mortgage Loan. For purposes of this definition, a Mortgage Loan
as to which the related Mortgaged Property is held by the Trust Fund shall be
deemed to have continued to accrue interest at the related Mortgage Interest
Rate.
Mortgage Loan Schedule: The schedules of Mortgage Loans attached hereto
as Exhibit D as each may be amended to reflect Qualified Substitute Mortgage
Loans, such schedule identifying each applicable Mortgage Loan by address of the
Mortgaged Property and the name of the Mortgagor and setting forth as to each
such Mortgage Loan the following information: (i) the Principal Balance as of
the Cut-off Date, (ii) the account number, (iii) the original principal
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amount, (iv) the CLTV and Home Equity Loan Ratio as of the date of the
origination of the related Mortgage Loan, (v) the Due Date, (vi) the Mortgage
Interest Rate, (vii) the first date on which a Monthly Payment is due under the
Mortgage Note, (viii) the Monthly Payment, (ix) the original stated maturity
date of the Mortgage Note, (x) the remaining number of months to maturity as of
the Cut-off Date, (xi) the Mortgaged Property State and (xii) whether the
Mortgage Loan is included in the Fixed Rate Group or the Adjustable Rate Group.
Mortgage Note: The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Pool: The Mortgage Loans indicated on the Mortgage Loan
Schedule.
Mortgaged Property: The underlying property securing a Mortgage Loan,
consisting of a fee simple estate or, with respect to certain properties located
in Maryland, a leasehold estate, in a single parcel of land improved by a
Residential Dwelling.
Mortgaged Property State: The state in which the Mortgaged Property
related to a Mortgage Loan is located, as set forth on the Mortgage Loan
Schedule.
Mortgagor: The obligor on a Mortgage Note.
Net Funds Cap Rate: With respect to any Accrual Period, a rate equal to
the weighted average of the Mortgage Interest Rates on the Mortgage Loans in the
Adjustable Rate Group as of the first day of the related Due Period less either
(i) 0.71% per annum, with respect to the first twelve Accrual Periods or (ii)
1.21% per annum, with respect to each subsequent Accrual Period.
Net Liquidation Proceeds: Liquidation Proceeds net of any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(ii).
Net Spread Account Excess: As defined in Section 6.09(b).
Nondisqualification Opinion: An Independent Opinion of Counsel
addressed to the Trustee that a contemplated action will neither cause the Trust
REMIC to fail to qualify as a REMIC at any time the Class A Certificates are
outstanding nor cause an unindemnified "prohibited transaction" or a "prohibited
contribution" tax to be imposed on the Trust REMIC.
Nonrecoverable Advances: With respect to any Mortgage Loan, (i) any
Servicing Advance or Advance previously made and not reimbursed pursuant to
Section 5.04(ii), or (ii) a Servicing Advance proposed to be made, in respect of
any Mortgage Loan or REO Property which, in the good faith business judgment of
the Servicer would not be ultimately recoverable from late collections,
Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property
or otherwise.
Non-United States Person: Any Person other than a United States Person.
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Officer's Certificate: A certificate delivered hereunder or under any
other Basic Document signed by the President or a Vice President or an Assistant
Vice President of the Representative, a Depositor, the Trustee or the Servicer,
as required hereunder or thereunder.
Opinion of Counsel: A written opinion of counsel delivered hereunder or
under any Basic Document, reasonably acceptable to the Trustee, and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to (a) the qualification of the Trust REMIC as a REMIC or (b)
compliance with the REMIC Provisions must be an opinion of counsel who (i)is in
fact Independent of the Representative and the Servicer, (ii)does not have any
direct financial interest or any material indirect financial interest in the
Representative or the Servicer or in an affiliate thereof and (iii)is not
connected with the Representative or Servicer as an officer, employee, director
or person performing similar functions.
Optional Purchase Date: As defined in Section 11.01.
Original Class A-1 Principal Balance: $65,666,000
Original Class A-2 Principal Balance: $31,292,000
Original Class A-3 Principal Balance: $78,535,000
Original Class A-4 Principal Balance: $62,228,000
Original Class A-5 Principal Balance: $86,789,000
Original Class A-6 Principal Balance: $22,646,000
Original Class A-7 Principal Balance: $72,769,000
Original Class A-8 Principal Balance: $33,034,000
Original Class A-9 Principal Balance: $50,300,000
Original Class A-10 Principal Balance: $185,620,000
Original Pool Principal Balance: The Pool Principal Balance as of the
Cut-off Date, which amount is equal to $688,879,164.42.
Original Pre-Funded Amount: $44,446,027.61
Originator: Any of the entities listed on Exhibit K hereto, each of
which is an "Originator" pursuant to the Transfer Agreement and, other than
EquiCredit Corporation of America, is (i) a direct wholly-owned subsidiary of
the Representative, and (ii) a Subservicer as of the date hereof with respect to
the Mortgage Loans sold by it to either Depositor pursuant to the Transfer
Agreement.
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Owner-Occupied Mortgaged Property: A Residential Dwelling that the
related Mortgagor represented an intent to occupy as such Mortgagor's primary or
secondary residence at the origination of the Mortgage Loan.
Pass-Through Rate: Any one of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A- 5, Class A-6, Class A-7, Class A-8, Class A-9 or Class A-10
Pass-Through Rates.
Payment Date: The 15th day of any month, or if such 15th day is not a
Business Day, the first Business Day immediately following, commencing on July
15, 1997.
Percentage Interest: With respect to a Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 or Class A-10
Certificate, the portion of the Certificates evidenced by such Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9
or Class A-10 Certificate, respectively, expressed as a percentage rounded to
four decimal places, equal to a fraction the numerator of which is the
denomination represented by such Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 or Class A-10 Certificate,
respectively, and the denominator of which is the Original Class A-1, Original
Class A-2, Original Class A-3, Original Class A-4, Original Class A- 5, Original
Class A-6, Original Class A-7, Original Class A-8, Original Class A-9 or
Original Class A-10 Principle Balance, respectively. With respect to a Class R
Certificate, the portion of the Class evidenced thereby as stated on the face of
such Certificate, which shall be either a portion of 99.9999% or, but only with
respect to the Class R Certificate held by the Tax Matters Person, 0.0001%.
Performance Default: Any Servicing Default described in clauses (vii),
(viii) and (ix) of Section 10.01(a).
Permitted Instruments: As used herein, Permitted Instruments shall
include the following:
(i) (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, and (B) Federal Housing Administration
debentures, FHLMC senior debt obligations, and FNMA senior debt
obligations assigned ratings in at least one of the top two long-term
rating categories by S&P and Moody's, but excluding any of such
securities described in clauses (A) and (B) whose terms do not provide
for payment of a fixed dollar amount upon maturity or call for
redemption;
(ii) federal funds, certificates of deposit, time and demand
deposits and banker's acceptances (in each case having maturities of
not more than 365 days) of any bank or trust company incorporated under
the laws of the United States or any state thereof, provided that (A)
the short-term debt obligations of such bank or trust company at the
date of acquisition thereof have been rated "A-1+" or better by S&P
(or, if so consented to by the Certificate Insurer, "A-1" or better by
S&P) and (B) the short-term and long-term debt obligations of such bank
or trust company at the date of acquisition thereof have been rated
Prime-1 and A1 or better, respectively, by Moody's;
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(iii) deposits of any bank or savings and loan association
which has combined capital, surplus and undivided profits of at least
$3,000,000, which deposits are not in excess of the applicable limits
insured by the Bank Insurance Fund or the Savings Association Insurance
Fund of the FDIC, provided that the long-term deposits of such bank or
savings and loan association are rated at least "BBB" by S&P and Baa3
by Moody's;
(iv) commercial paper (having original maturities of not more
than 180 days) rated "A-1+" or better by S&P and Prime-1 by Moody's;
(v) investments in money market funds rated "AAAm" or
"AAAm-G" by S&P and Aaa by Moody's;
(vi) investments in Permitted Instruments on an overnight
basis in investment accounts maintained at the Trustee; provided,
however, that any such account shall be an Eligible Account; and
(vii) any other obligation or security acceptable to the
Rating Agencies and the Certificate Insurer (as certified by a letter
from each Rating Agency and the Certificate Insurer to the Trustee);
provided, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments
derived from obligations underlying such instrument and the interest
and principal payments with respect to such instrument provided a yield
to maturity at par greater than 120% of the yield to maturity at par of
the underlying obligations; and provided, further, that no instrument
described hereunder may be purchased at a price greater than par if
such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity; and provided, further that no
instrument shall be a Permitted Instrument unless such instrument is a
"permitted investment" within the meaning of Section 860G(a)(5) of the
Code.
Permitted Transferee: Any Person other than a Disqualified Organization
or an agent or nominee acting on behalf of a Disqualified Organization.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
Plan: A Plan filed by a Mortgagor pursuant to the Bankruptcy Code (11
U.S.C. Section 1321) and either confirmed or pending confirmation by a court of
competent jurisdiction pursuant to the Bankruptcy Code (11 U.S.C. Section 1325),
providing for, among other things, the payment of defaulted Mortgage Loan
payments all of which were due prior to, but in no event after, the
effectiveness of the Plan.
Pool Factor: As of any date of determination, the Pool Principal
Balance as of such date divided by the Original Pool Principal Balance.
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Pool Principal Balance: With respect to either or both Mortgage Loan
Groups, the aggregate Principal Balances of the related Mortgage Loans, as of
any date of determination.
Pre-Funding Account: The pre-funding account established and
maintained by the Trustee in accordance with Section 6.12 hereof.
Pre-Plan Interest: With respect to a Bankruptcy Loan, accrued but
unpaid interest relating to the period prior to the filing of the related Plan.
Pre-Plan Interest Payments: With respect to a Bankruptcy Loan,
payments made by a Mortgagor on account of Pre-Plan Interest.
Principal and Interest Account: One of the principal and interest
accounts established and maintained by the Trustee pursuant to Section 5.03
hereof.
Principal Balance: With respect to any Mortgage Loan or related REO
Property, at any date of determination, the principal balance of the Mortgage
Loan outstanding as of such date. The Principal Balance of any REO Property as
of the date on which such REO Property became an REO Property shall be the
Principal Balance of the related Mortgage Loan as of the date referred to in the
preceding sentence, and the Principal Balance of a Mortgage Loan at the time it
becomes a Liquidated Mortgage Loan shall be zero.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date, that is intended to satisfy a Mortgage
Loan in full.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Projected Excess Spread: With respect to any Payment Date, five (5)
times the amount of the Monthly Excess Spread Amount deposited in the Spread
Account pursuant to Section 6.09(a) hereof as of such Payment Date.
Prospectus: The prospectus (including the prospectus supplement)
prepared by the Representative and the Depositors in connection with the initial
issuance and sale of the Class A Certificates.
Qualified Substitute Mortgage Loan: A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.06 or 3.03 hereof,
which (i) has or have a mortgage interest rate or rates of not less than (and
not more than two percentage points more than) the Mortgage Interest Rate for
the Deleted Mortgage Loan (which, in the case of a Mortgage Loan in the
Adjustable Rate Group, shall mean a Mortgage Loan having the same interest rate
index, and a margin over such index and a maximum interest rate at least equal
to (and in each case not more than two percentage points more than) those
applicable to the related Deleted Mortgage Loan), (ii) relates or relate to the
same type of Residential Dwelling as the Deleted Mortgage Loan, or relates to a
one- to four-family dwelling, and has or have a lien
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priority that is no more junior or subordinate than that of the Deleted Mortgage
Loan, (iii) matures or mature no later than (and not more than one year earlier
than) the Deleted Mortgage Loan, (iv)has or have a Combined Loan-to-Value Ratio
or Combined Loan-to-Value Ratios at the time of such substitution no higher than
the Combined Loan-to-Value Ratio of the Deleted Mortgage Loan, (v) has or have a
principal balance or principal balances (after application of all payments
received on or prior to the date of substitution) equal to or less than the
Principal Balance of the Deleted Mortgage Loan as of such date, (vi) is of equal
or better Class quality (as described in the Prospectus) as the Deleted Mortgage
Loan, (vii) complies or comply as of the date of substitution with each
representation and warranty set forth in Sections 3.01(b) and 3.02, (viii) is of
the same type, either a balloon loan or fully-amortizing Mortgage Loan, as the
Deleted Mortgage Loan and (ix) would be in the same Mortgage Loan Group, the
Fixed Rate Group or Adjustable Rate Group, as the related Deleted Mortgage Loan.
Rating Agencies: Collectively, Moody's and S&P.
Reassignment of Assignment of Beneficial Interest: With respect to each
Mortgage Loan secured by an interest in an Illinois Land Trust, an assignment of
the Assignment of Beneficial Interest, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to effect the
transfer of the entire beneficial interest in such Illinois Land Trust to the
Depositors and the sale of such beneficial interest to the Trustee for the
benefit of the Certificateholders.
Record Date: The calendar day immediately preceding each Payment Date
or, if Definitive Certificates are issued, the last calendar day of the month
preceding the month in which each such Payment Date occurs.
Reference Banks: Barclay's Bank PLC, Chase Manhattan Bank, Citibank,
N.A. 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 any Depositor or any affiliate thereof, (iii) whose quotations
appear on the Telerate LIBOR Page on the relevant Interest Determination Date
and (iv) which have been designated as such by the Trustee.
Registered Holder: The Person in whose name a Certificate is
registered on the Certificate Register.
Reimbursable Amounts: As of any date of determination, an amount
payable to the Servicer, the Representative or the Depositors with respect to
(i) the Servicing Advances and Advances reimbursable pursuant to Section
5.04(ii) not previously reimbursed, (ii) any advances reimbursable pursuant to
Section 9.01 and not previously reimbursed pursuant to Section 6.05(d)(viii),
and (iii) any other amounts reimbursable to the Servicer or the Depositors prior
to a distribution to the Class R Certificateholders pursuant to this Agreement.
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Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law, customary mortgage servicing
procedures and this Agreement.
Remainder Excess Spread Amount: As of any Payment Date, the amount
equal to the excess of the aggregate Excess Spread over the Monthly Excess
Spread Amount.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of the Code, and related provisions, and temporary and final Treasury
regulations promulgated thereunder, as the foregoing may be in effect from time
to time (or proposed, if proposed to be retroactive).
Remittance Report: As defined in Section 6.07.
REO Disposition: The final sale by the Servicer of a Mortgaged Property
acquired by the Servicer in foreclosure or by deed in lieu of foreclosure. The
proceeds of any REO Disposition constitute part of the definition of Liquidation
Proceeds.
REO Property: As described in Section 5.10.
Representative: EquiCredit Corporation of America, or its successor in
interest.
Representative's Yield: For each Mortgage Loan, the sum of (A)
prepayment penalties and premiums collected on the Mortgage Loans and (B) any
sum or other finance charge payable by the Mortgagor on a prepaid Rule of 78s
Mortgage Loan that is in addition to (i) the Curtailment or Principal Prepayment
(as the case may be) on the related Mortgage Loan, together with accrued and
unpaid interest thereon at the Mortgage Interest Rate, plus (ii) the Servicing
Compensation exclusive of Servicing Fees. The Representative's Yield is retained
by the Representative and is not part of the assets of the Trust Fund.
Residential Dwelling: Any of the following: (i) a one- to four-family
dwelling, (ii) a unit in a planned unit development, (iii) a unit in a
condominium development, or (iv) a permanently affixed mobile home or a
permanently affixed manufactured housing unit, as defined in the FNMA Selling
Guide, which does not constitute other than real property under state law
provided that such home or housing would qualify as a single family residence
under ss. 25(c)(10) of the Code.
Responsible Officer: When used with respect to the Trustee, any officer
assigned to the Corporate Trust Division (or any successor thereto) with direct
responsibility for the administration of this Agreement, including any Vice
President, Assistant Vice President, Senior Trust Officer, Trust Officer,
Assistant Trust Officer, any Assistant Secretary, any trust officer or
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any other officer of such Trustee customarily performing functions similar to
those performed by any of the above designated officers and to whom, with
respect to a particular matter, such matter is referred because of such
officer's knowledge of and familiarity with the particular subject. When used
with respect to the Representative, a Depositor, an Originator or the Servicer,
the President or any Vice President, Assistant Vice President, or any Secretary
or Assistant Secretary authorized to perform the actions required, including,
without limitation, each Person whose name appears on a list of Responsible
Officers furnished to the Trustee and the Certificate Insurer on the Closing
Date, as such list may be amended from time to time.
Rule of 78s Method: The method of calculating interest on indebtedness
represented by a Mortgage Note under which (a) the total of the Monthly Payments
specified in the Mortgage Note represents the principal amount borrowed plus
interest in an amount calculated on the basis of the stated Mortgage Interest
Rate for the term of the Mortgage Loan, (b) the portion of a Monthly Payment
allocated to reduction of the outstanding Principal Balance is determined by
multiplying the total amount of add-on interest payable over the term of the
Mortgage Loan by a fraction (i) the numerator of which is the sum of the series
of numbers representing the number of each Monthly Payment remaining due under
the Mortgage Loan (prior to giving effect to the payment to which the fraction
is being applied) and (ii) the denominator of which is the sum of the series of
numbers representing the number of each Monthly Payment originally due under the
Mortgage Loan (from the first to the last, inclusive) and (c) upon the
prepayment in full of the Mortgage Loan, a rebate is made in an amount equal to
the difference between the amount described in the preceding clause (b) minus
the amount of interest calculated on the basis of the stated Mortgage Interest
Rate at the origination of the Mortgage Loan. Notwithstanding the foregoing or
any provision of this Agreement to the contrary, payments to the
Certificateholders and the Servicing Fee and with respect to Rule of 78s
Mortgage Loans will be computed as if such Mortgage Loans were simple interest
Mortgage Loans.
Rule of 78s Mortgage Loan: A Mortgage Loan that uses the Rule of 78s
Method of allocating interest payments during the term of such Mortgage Loan.
Series: 1997-2.
Servicer: EquiCredit Corporation of America or any successor appointed
as herein provided.
Servicer Default: As specified in Section 10.01(a).
Servicer Employees: As defined in Section 5.09.
Servicing Advances: All reasonable and customary "out-of-pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, including, without
limitation, advances in respect of real estate taxes and assessments and
insurance premiums on fire, hazard and flood insurance policies and leasehold
payments, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of the REO Property, (iv) compliance with
the obligations under Sections 5.02, 5.05 and 5.07,
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which Servicing Advances are reimbursable to the Servicer to the extent provided
in Section 5.04(ii), and (v) in connection with the liquidation of a Mortgage
Loan, expenditures relating to the purchase or maintenance of the First Lien
pursuant to Section 5.13, for all of which costs and expenses the Servicer is
entitled to reimbursement in accordance with this Agreement. Notwithstanding
anything herein to the contrary, no Servicing Advance shall be required to be
made hereunder if such Servicing Advance would, if made, constitute a
Nonrecoverable Advance. The determination by the Servicer that it has made a
Nonrecoverable Advance or that any proposed Servicing Advance, if made, would
constitute a Nonrecoverable Advance, shall be evidenced by an Officer's
Certificate delivered to the Certificate Insurer, the Depositors and the Trustee
no later than the Business Day following such determination.
Servicing Compensation: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 7.03.
Servicing Fee: As to each Mortgage Loan (including any Mortgage Loan as
to which the related Mortgaged Property has become an REO Property), the annual
fee payable to the Servicer, which is calculated at a rate equal to 0.60% per
annum with respect to all Mortgage Loans, which fee shall be payable monthly and
shall be computed on the same basis as interest is accrued on such Mortgage
Loan. The Servicing Fee is payable solely from the interest portion of (i)
Monthly Payments, (ii) Liquidation Proceeds or (iii) Released Mortgaged Property
Proceeds collected by the Servicer or as otherwise provided in Section 5.04. The
Servicing Fee includes any servicing fees owed or payable to any Subservicer.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by the Servicer on the Closing Date, as such list may from time to
time be amended.
Specified Spread Account Requirement: As of:
(x) any date on or prior to the thirtieth Payment Date (occurring in
December 1999), the greatest of (a) the Base Spread Account Requirement as of
such date; (b) the sum of the Principal Balances of the three largest Mortgage
Loans as of such date; and (c) two times the excess of (i) one-half of the
aggregate Principal Balance of the Mortgage Loans which are 90 or more days
delinquent (including REO Properties) over (ii) the Projected Excess Spread as
of such date;
(y) any date after the thirtieth Payment Date (occurring in December
1999), the greatest of (a) the lesser of (A) the Base Spread Account Requirement
as of such date and (B) the product of (x) 9.50% and (y) the Pool Principal
Balance as of such date; (b) the sum of the Principal Balances of the three
largest Mortgage Loans as of such date; and (c) two times the excess of (i)
one-half of the aggregate Principal Balance of the Mortgage Loans which are 90
or more days delinquent (including REO Properties) over (ii) the Projected
Excess Spread as of such date. Notwithstanding the foregoing, however, the
Specified Spread Account Requirement for any date shall in no event be greater
than the Subordinated Amount as of such date and may be reduced by the
Certificate Insurer at any time after the amount in the Spread Account is equal
to
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the Base Spread Account Requirement; provided that such reductions shall not
affect the rating assigned by S&P or Moody's to the ClassA Certificates.
Spread Account: The account maintained pursuant to Section 6.09.
Spread Account Amount: As defined in Section 6.09(b)(iii) hereof.
Spread Account Excess: As defined in Section 6.09(b)(v) hereof.
S&P: Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc.,
or any successor thereto.
Startup Day: The day designated as such pursuant to Section 2.06
hereof.
Subordinated Amount: (a) The Subordinated Amount as of the Cut-off
Date shall be 11.00% times the sum of the Original Pool Principal Balance (which
is initially equal to $75,776,708.08).
(b) As of any Payment Date, the Subordinated Amount shall equal the
Subordinated Amount as of the preceding June 1, minus Cumulative Excess Spread
Receipts since such preceding June 1, through the last day of the month
preceding such Payment Date. After giving effect to such adjustment, the
Subordinated Amount may be further adjusted on each respective June 1 as follows
to equal:
(i) on each June 1 up to but not including June 1, 2002 the
amount, if any, by which (A) 11.00% of the Original Pool Principal
Balance exceeds (B) Cumulative Excess Spread Receipts since the Cut-off
Date through the last day of May preceding such June 1;
(ii) on June 1, 2002, the lesser of (A) the Subordinated
Amount as of the preceding Payment Date, and (B) the sum of (x) 11.00%
of the Pool Principal Balance at the close of business on June 1, 2002,
and (y) 80% of the amount, if any, by which the amount set forth under
(A) exceeds the amount computed under clause (B)(x) of this paragraph
(ii);
(iii) on June 1, 2003, the lesser of (A) the Subordinated
Amount as of the preceding Payment Date, and (B) the sum of (x) 11.00%
of the Pool Principal Balance at the close of business on June 1, 2003,
and (y) 75% of the amount, if any, by which the amount set forth under
(A) exceeds the amount computed under clause (B)(x) of this paragraph
(iii);
(iv) on June 1, 2004, the lesser of (A) the Subordinated
Amount as of the preceding Payment Date, and (B) the sum of (x) 11.00%
of the Pool Principal Balance at the close of business on June 1, 2004,
and (y) 66-2/3% of the amount, if any, by which the amount set forth
under (A) exceeds the amount computed under clause (B)(x) of this
paragraph (iv);
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(v) on June 1, 2005, the lesser of (A) the Subordinated
Amount as of the preceding Payment Date, and (B) the sum of (x) 11.00%
of the Pool Principal Balance at the close of business on June 1, 2005,
and (y) 50% of the amount, if any, by which the amount set forth under
(A) exceeds the amount computed under clause (B)(x) of this paragraph
(v); and
(vi) on June 1, 2006, and on each June 1, thereafter, the
lesser of (A) the applicable Subordinated Amount on the preceding June
1, minus Cumulative Excess Spread Receipts since such preceding June 1,
through the last day of the preceding June 1, as appropriate, and
(B)11.00% of the Pool Principal Balance at the close of business on
such current June 1;
provided, however, that the amount determined for part (B) of clauses (ii)
through (vi) above shall not be less than the sum of the Principal Balances of
the three largest Mortgage Loans at the beginning of each such period. Subject
to the preceding sentence, the Subordinated Amount as of any date other than a
Payment Date shall be equal to the Subordinated Amount as of the immediately
preceding Payment Date; and provided, further, however, that in no event shall
the Subordinated Amount be less than zero.
Notwithstanding anything to the contrary herein contained, no reduction
to the Subordinated Amount described in clauses (ii) through (vi) hereof shall
be permitted to take effect if (x) as of June 1, 2002, the amount equal to
aggregate Cumulative Excess Spread Receipts exceeds 1% of the Original Pool
Principal Balance or (y) as of any June 1, after June 1, 2002, (I)the amount
equal to aggregate Cumulative Excess Spread Receipts exceeds 5% of the
Subordinated Amount in effect on the preceding June 1, or (II) on any Payment
Date occurring within the annual period immediately preceding such June 1, the
aggregate principal balance of all Mortgage Loans which were 60 or more days
delinquent on such Payment Date equalled or exceeded 2.5% of the aggregate
principal balance of all Mortgage Loans outstanding on such Payment Date. If, by
reason of the application of the provisions of clause (y) of the immediately
preceding sentence, reduction of the Subordinated Amount pursuant to the
provisions of any one of clauses (ii) through (vi) shall not have taken effect,
and, if as of any subsequent June 1, no event shall have occurred the effect of
which would be to prohibit a reduction in the Subordinated Amount as of such
June 1, then the Subordinated Amount shall be reduced on such June 1, to the
amount permitted by the clause which would have otherwise taken effect had the
provisions of the immediately preceding sentence not been applied.
Subsequent Mortgage Loan: A Mortgage Loan purchased on the Closing Date
and transferred to the Trust Fund on such date in accordance with Section 6.12
hereof.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer. As of the
Closing Date, the only Subservicers are the Originators (other than EquiCredit
Corporation of America).
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section
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5.01(b), a copy of which shall be delivered, along with any modifications
thereto, to the Certificate Insurer and the Trustee.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.06 or 3.03, the amount (if any) by which the aggregate
Principal Balances of any Qualified Substitute Mortgage Loans as of the date of
substitution, together with accrued and unpaid interest thereon (but only to the
extent deposited in the Principal and Interest Account and transferred to the
Collection Account), are less than the aggregate of the Principal Balances
(after application of principal payments received on or before the date of
substitution and deposited into the Principal and Interest Account), together
with accrued and unpaid interest thereon to the date of substitution, of the
related Deleted Mortgage Loans plus any unreimbursed Servicing Advances.
Targeted Amount: With respect to any Payment Date and the Class A-1
Certificates, the "Targeted Amount" set forth for such Payment Date on Exhibit V
attached hereto.
Tax Matters Person: The Person designated from time to time to act as
the "tax matters person" (within the meaning of the REMIC Provisions) of the
Trust REMIC.
Termination Price: As defined in Section 11.01.
Transfer Agreement: The agreement, dated as of June 1, 1997, among the
Originators and the Depositors, pursuant to which the Originators transferred
the Mortgage Loans to the Depositors.
Trust: EQCC Home Equity Loan Trust 1997-2.
Trust Fund: The segregated pool of assets subject hereto, constituting
the trust created hereby and to be administered hereunder, consisting of: (i)
such Mortgage Loans as from time to time are subject to this Agreement, together
with the Mortgage Files relating thereto and all proceeds thereof, (ii) such
assets as from time to time are identified as REO Property or are deposited in
the Collection Account, Principal and Interest Account, Spread Account, Pre-
Funding Account and Insurance Account, including amounts on deposit in the
foregoing accounts and invested in Permitted Instruments, (iii) the Trustee's
rights under all insurance policies with respect to the Mortgage Loans required
to be maintained pursuant to this Agreement and any Insurance Proceeds, (iv) the
Certificate Insurance Policy, (v) Liquidation Proceeds and (vi) Released
Mortgaged Property Proceeds. The Representative's Yield and amounts received on
and after the Cut-off Date in respect of interest accrued on the Mortgage Loans
prior to the Cut-off Date do not constitute part of the Trust Fund.
Trustee: First Bank National Association, not in its individual
capacity but solely as trustee under this Agreement, or its successor in
interest, or any successor trustee appointed pursuant to this Agreement.
Trust REMIC: As defined in Section 2.07(a)(1).
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UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
United States Person: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
ARTICLE II
CONVEYANCE OF THE TRUST ASSETS
Section 2.01 Sale and Conveyance of Trust Assets; Priority and
Subordination of Ownership Interests.
(a)The Depositors do hereby sell, transfer, assign, setover and convey
to the Trustee (for the benefit of the Certificateholders) without recourse, all
of the right, title andinterest of the Depositors in and to (i) the Mortgage
Loans (excepting the Representative's Yield and amounts received on andafter the
Cut-off Date in respect of interest accrued on the Mortgage Loans prior to the
Cut-off Date), (ii) the Mortgage Files relating to the Mortgage Loans, (iii)the
related Mortgaged Properties, (iv) the Depositors' rights under all insurance
policies with respect to the Mortgage Loans required to be maintained by it, (v)
all right, title and interest of the Depositors in, to and under the Transfer
Agreement, including theright to cause the Originators to repurchase the
Mortgage Loans under certain circumstances, (vi) all right, title and interest
of the Depositors in each of the Accounts established and maintained pursuant to
Articles V and VI and (vii) the interest of the Depositors in any proceeds of
the property described in clauses (i), (ii), (iii), (iv), (v) and (vi),
including all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including
without limitation, all amounts from time to time held or invested in the
Accounts.
(b)The rights of the Holders to receive payments with respect to the
Mortgage Loans in respect of the Certificates, andall ownership interests of the
Certificateholders in such payments, shall be as set forth in this Agreement.
(c)It is the intention of this Agreement that the transfer of the
Depositors' right, title and interest in and to the assets of the Trust pursuant
to this Agreement shall constitute an absolute sale by the Depositors to the
Trustee of the Mortgage Loans for the benefit of the Certificateholders and not
a loan. If a transfer of Mortgage Loans from an Originator to a Depositor
pursuant to the Transfer Agreement is characterized as a pledge and not an
absolute sale, then such Depositor shall be deemed tohave transferred to the
Trustee for the benefit of the Certificateholders all of such Depositor's right,
title and interest in, to and under the obligations of such Originator deemed to
be secured by said pledge; and it is the intention of this Agreement that the
Depositors shall also be deemed to have granted and for such purposes the
Depositors hereby grant, to the Trustee for the benefit of the
Certificateholders a first priority security interest in all of the Depositors'
right, title, and interest in, to and under the obligations of the Originators
to the
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Depositors deemed to be secured by said pledge and that the Trustee shall be
deemed to be an independent custodian for purposes of perfection of the security
interest granted to the Depositors. If the transfer of the Mortgage Loans and
the other assets of the Trust from the Depositors to the Trustee for the benefit
of the Certificateholders is characterized as a pledge, it is the intention of
this Agreement that this Agreement shall constitute a security agreement under
applicable law, and that the Depositors shall be deemed to have granted and for
such purposes the Depositors hereby grant, to the Trustee for the benefit of the
Certificateholders a first priority security interest in all of the Depositors'
right, title and interest in, to and under the Mortgage Loans, all payments of
principal of or interest on such Mortgage Loans, all other rights relating to
and payments made in respect of the assets of the Trust, and all proceeds of any
thereof, including all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property, including
without limitation all amounts from time to time held or invested in the
Accounts. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
Section 2.02 Possession of Mortgage Files.
(a) Upon the issuance of the Certificates, the ownership of each
Mortgage Note, the Mortgage and the contents of the related Mortgage File is
vested in the Trustee for the benefit of the Certificateholders.
(b) Pursuant to Section 2.04, the Depositors have delivered or caused
to be delivered each Mortgage File to the Custodian.
Section 2.03 Books and Records.
The sale of each Mortgage Loan shall be reflected on the Depositor's
balance sheets and other financial statements prepared in accordance with
generally accepted accounting principles as a sale of assets by each Depositor.
The Depositors shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be clearly
marked to reflect the ownership of each Mortgage Loan by the Trustee for the
benefit of the Certificateholders.
Section 2.04 Delivery of Mortgage Loan Documents.
Contemporaneously with the delivery of this Agreement, the Depositors
delivered or caused to be delivered hereunder to the Trustee the Certificate
Insurance Policy, and each Depositor has delivered to the Trustee (which may be
by delivery to the Custodian on behalf of the Trustee) each of the following
documents for each Mortgage Loan:
(a) (i) (A) The original Mortgage Note, with any intervening
endorsements, endorsed "Pay to the order of BankBoston, N.A., as Custodian under
the Custodial Agreement dated as of June 1, 1997, without recourse" and signed,
by facsimile or manual signature, in the name of the Originator transferring
such Mortgage Loan to the applicable Depositor pursuant to the Transfer
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Agreement by a Responsible Officer, with all prior and intervening endorsements
showing a complete chain of endorsement from the originator to such Originator,
if the Originator from whom the Depositor acquired such Mortgage Loan was not
the originator or (B) if such Mortgage Note is a Destroyed Mortgage Note, an
original Destroyed Mortgage Note Affidavit together with a copy of such Mortgage
Note attached thereto and, (ii) with respect to manufactured housing units, the
certificate of title, if any;
(b) Either: (i) the original Mortgage, with evidence of recording
thereon (and, in the case of a Mortgage Loan secured by a Mortgaged Property
held in an Illinois Land Trust, signed by the trustee of such Illinois Land
Trust), (ii) a copy of the Mortgage certified as a true copy by a Responsible
Officer of the Originator transferring such Mortgage Loan to the applicable
Depositor pursuant to the Transfer Agreement (provided, however, that such
Responsible Officer may complete one or more blanket certificates attaching
copies of one or more Mortgages relating thereto) or by the closing attorney, or
by an officer of the title insurer or agent of the title insurer which issued
the related title insurance policy, or commitment therefor, if the original has
been transmitted for recording until such time as the original is returned by
the public recording office or (iii) a copy of the Mortgage certified by the
public recording office in those instances where the original recorded Mortgage
has been lost or not yet returned;
(c) The original Assignment of Mortgage from the Originator
transferring such Mortgage Loan to the applicable Depositor pursuant to the
Transfer Agreement by assignment to "BankBoston, N.A., as Custodian under the
Custodial Agreement dated as of June 1, 1997, without recourse" or in blank; any
such Assignments of Mortgage may be made by blanket assignments for Mortgage
Loans secured by the Mortgaged Properties located in the same county if
permitted by applicable local law;
(d) Except with respect to any Mortgage Loan secured by a second
priority lien and having a Principal Balance not in excess of $50,000 and listed
in Exhibit W, the original policy of title insurance or a true copy thereof or,
if such policy has not yet been delivered by the insurer, the commitment or
binder to issue same, or original documents of assurance of title;
(e) All intervening assignments, if any, showing a complete chain of
assignment from the originator to the applicable Originator, including any
recorded warehousing assignments, with evidence of recording thereon, certified
by a Responsible Officer of the applicable Originator as a true copy of the
original of such intervening assignments;
(f) A copy of all assumption and modification agreements, if any,
certified as a true copy by a Responsible Officer of the applicable Originator;
(g) If the Mortgaged Property is held in an Illinois Land Trust, the
original Assignment of Beneficial Interest, or, if the trustee of such Illinois
Land Trust retains such original Assignment of Beneficial Interest, a certified
true copy of such Assignment of Beneficial Interest so certified by such
trustee;
(h) If the Mortgaged Property is held in an Illinois Land Trust, an
original Reassignment of Assignment of Beneficial Interest from the applicable
Originator to "BankBoston, N.A., as
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Custodian under the Custodial Agreement dated as of June 1, 1997, Series 1997-2"
or in blank. In the event that the Mortgage Loan was acquired by the applicable
Originator in a merger, the Reassignment of the Assignment of Beneficial
Interest must be by "Originator, successor by merger to [name of predecessor]";
and in the event that the Mortgage Loan was acquired or originated by the
applicable Originator while doing business under another name, the Reassignment
of Assignment of Beneficial Interest must be by "Originator, formerly known as
[previous name]";
(i) If the Mortgaged Property is held in an Illinois Land Trust,
originals of all intervening Reassignments of Assignment of Beneficial Interest,
showing a complete chain of assignment from the beneficiaries of such Illinois
Land Trust to the applicable Originator of all of such beneficiaries' right,
title, and interest in, to, and under the trust agreement with respect to such
Illinois Land Trust; and
(j) If the Mortgaged Property is held in an Illinois Land Trust, (A) a
certified copy of the instrument creating the Illinois Land Trust, (B) a copy of
the UCC-1 Financing Statement evidencing the assignment of the Mortgagor's
beneficial interest in the Illinois Land Trust, with evidence of filing thereon,
and (C) the original personal guaranty of the Mortgage Note, executed by each
beneficiary of the Illinois Land Trust.
The applicable Depositor shall use its reasonable efforts to promptly
deliver or cause to be delivered to the Trustee or the Custodian: (a) the
original recorded Mortgage in those instances where a copy thereof was delivered
hereunder; (b) the original recorded Assignment of Mortgage to the applicable
Originator, which, together with any intervening assignments of Mortgage,
evidences a complete chain of assignment from the originator to the applicable
Originator in those instances where copies of such Assignments were delivered;
and (c) the title insurance policy or assurance required in paragraph (d) above.
The applicable Depositor shall, within five (5) Business Days after the receipt
thereof, and in any event, within twelve months after the Closing Date, deliver
or cause to be delivered to the Trustee or the Custodian each document described
in any of the preceding clauses (a), (b) and (c); provided, however, that if a
document described in the preceding clause (a) or clause (b) has not been
returned from the appropriate public recording office, the applicable Depositor
shall deliver a certified copy of the Mortgage and a receipted copy of the
Assignment from the appropriate recording office prior to the expiration of such
twelve-month period. Notwithstanding anything to the contrary contained in this
Section 2.04, the applicable Depositor shall be deemed to have satisfied its
obligations to deliver a Mortgage or Assignment of Mortgage upon delivery to the
Trustee or the Custodian a copy of such Mortgage or Assignment of Mortgage, as
applicable, certified by the public recording office to be a true copy of the
recorded original thereof. From time to time the applicable Depositor may
forward or cause to be forwarded to the Trustee or the Custodian additional
original documents evidencing an assumption or modification of a Mortgage Loan.
All Mortgage Loan documents held by the Trustee or the Custodian as to each
Mortgage Loan are referred to herein as the "Mortgage File".
The Servicer covenants and agrees to take all action necessary or
desirable under applicable state law to transfer the benefits of the lien and
security interest in each manufactured or mobile home and the related Mortgaged
Property to the Trustee, including, without limitation,
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the filing of UCC-3 assignments, notations on the certificates of title and
recordation of the Assignment of Mortgage within the time periods required by
this Section 2.04.
Contemporaneously with the issuance of the Certificates, the Trustee
shall cause the Custodian to (A) endorse each Mortgage Note to the order of the
Trustee for the benefit of the Certificateholders, which endorsement shall be in
substantially the form set forth in Section 2.04(a)(i), with appropriate
alterations to reflect the interest of the Trustee and the limited nature of the
Custodian's interest therein as may be acceptable to the Depositors, the
Servicer and the Trustee, (B) execute (or complete) each Assignment of Mortgage
to the Trustee, which assignment shall be in substantially the form set forth in
Section 2.04(c), with appropriate alterations to reflect the interest of the
Trustee and (C) with respect to each Illinois Land Trust, execute a Reassignment
of Assignment of Beneficial Interest to the Trustee for the benefit of the
Certificateholders, which reassignment shall be substantially in the form set
forth in Section 2.04(h), with appropriate alterations to reflect the interest
of the Trustee. The Servicer shall promptly cause each Assignment of Mortgage to
be recorded in the applicable recording office in the name of the Trustee.
All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Servicer. For purposes of determining
whether a signature is made on an instrument or document, stapling of an
attachment shall be a sufficient affixation to cause the attachment to
constitute part of the instrument or document.
Section 2.05 [Reserved].
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee.
(a) The Trustee hereby acknowledges receipt of, for each Mortgage Loan,
the items listed in Section 2.04 (a), (b), (c), (g) and (h) and declares that it
will hold such documents and any amendments, replacements or supplements
thereto, as well as any other assets delivered to it in trust, upon and subject
to the conditions set forth in this Agreement for the benefit of the
Certificateholders. The Trustee shall execute and deliver on the Closing Date an
initial certification of receipt by it or by the Custodian on its behalf, for
each Mortgage Loan of the items listed in Section 2.04(a), (b), (c), (g) and
(h), in the form attached as Exhibit E hereto, and declares that it will hold
such documents and any amendments, replacements or supplements thereto, as well
as any other assets delivered to it in trust, to the extent set forth herein,
for the benefit of the Certificateholders. The Trustee agrees to review (or
cause to be reviewed) each Mortgage File within 45 days after the Closing Date
(or, with respect to any Qualified Substitute Mortgage Loan, within 45 days
after the receipt thereof by the Custodian) and to deliver to the
Representative, the Depositors, the Servicer and the Certificate Insurer an
interim certification in the form attached hereto as Exhibit F-1 on or before
such date to the effect that, as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it pursuant to
this Agreement are in its possession (other than those described in Section
2.04(a)(ii) and 2.04(f)), (ii) such documents have been reviewed by it and have
not been mutilated, damaged, torn or otherwise physically
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altered (handwritten additions, changes or corrections shall not constitute
physical alteration if properly initialled by the Mortgagor) and relate to such
Mortgage Loan, and (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Mortgage Loan Schedule (other than
items (i), (iv) and (x) of the definition of Mortgage Loan Schedule) accurately
reflects the information set forth in the Mortgage File. The Trustee shall be
under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face. Within 375 days after the Closing
Date, the Trustee shall deliver (or cause to be delivered) to the Servicer, the
Depositors and the Certificate Insurer a final certification in the form
attached hereto as Exhibit F- 2 evidencing the completeness of the Mortgage
Files.
(b) If the Certificate Insurer or the Trustee during the process of
reviewing the Mortgage Files finds any document constituting a part of a
Mortgage File which is not executed, has not been received, is unrelated to the
Mortgage Loan identified in the Mortgage Loan Schedule, or does not conform to
the requirements of Section 2.04 or substantively to the description thereof as
set forth in the Mortgage Loan Schedule, the Trustee, or the Certificate
Insurer, as applicable, shall promptly so notify the Servicer, the Trustee, the
Representative, the Depositors and the Certificate Insurer. In performing any
such review, such Person may conclusively rely on the related Originator as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of such Person's review of the Mortgage Files is
limited solely to confirming that the documents listed in Section 2.04 (other
than those described in Section 2.04(f)) have been executed and received and
relate to the Mortgage Files identified in the Mortgage Loan Schedule. The
Servicer agrees to use reasonable efforts to cause to be remedied a material
defect in a document constituting part of a Mortgage File of which it is so
notified by the Certificate Insurer or the Trustee. If, however, within 60 days
after receipt by it of the final certification referred to in paragraph (a) of
this Section 2.06, the Servicer has not caused to be remedied any defect
described in such final certification and such defect materially and adversely
affects the interest of the Certificateholders in the related Mortgage Loan or
the interests of the Certificate Insurer, the Servicer will on the third
Business Day preceding the Payment Date immediately succeeding the end of such
60 day period (i) substitute, or cause the Depositors or the applicable
Originator to substitute, in lieu of such Mortgage Loan a Qualified Substitute
Mortgage Loan in the manner and subject to the conditions set forth in Section
3.03 or (ii)purchase, or cause the Depositors or the applicable Originators to
purchase, such Mortgage Loan at a purchase price equal to the Principal Balance
of such Mortgage Loan as of the date of purchase, plus all accrued and unpaid
interest on such Principal Balance, computed at the Mortgage Interest Rate, net
of the Servicing Fee if the Representative is the Servicer, plus the amount of
any unreimbursed Servicing Advances made by the Servicer with respect to such
Mortgage Loan out of funds on deposit in the Principal and Interest Account
pursuant to Section 5.01(f), which purchase price shall be deposited in the
Principal and Interest Account on the next succeeding Determination Date (after
deducting therefrom any amounts received in respect of such purchased Mortgage
Loan or Loans and being held in the Principal and Interest Account for future
distribution).
(c)Upon receipt by the Trustee of a certification of a Servicing
Officer of the Servicer of such substitution or acceptance and the deposit of
the amounts described above in the Principal
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and Interest Account (which certification shall be in the form of Exhibit O
hereto), the Trustee shall release to the Servicer for release to the Depositors
or the Originators, as appropriate, the related Mortgage File and shall execute,
without recourse, and deliver such instruments of transfer necessary to transfer
such Mortgage Loan to the Representative or the respective Depositor.
Section 2.07 REMIC Administration.
(a)Tax Administration
(1) An election will be made by the Trustee on behalf of the
Trust Fund to treat the assets of the Trust Fund, excluding the Pre-Funding
Account and the Spread Account (which for the purpose of this Section 2.07 is
understood to include amounts on deposit therein invested in Permitted
Instruments and the proceeds of such investments), as a REMIC under the Code
(the "Trust REMIC"). Such election will be made on Form 1066 or other
appropriate federal tax or information return for the taxable year ending on the
last day of the calendar year in which the Certificates are issued. For purposes
of such election, the Class A Certificates shall be designated as the "regular
interests" in the Trust REMIC and the Class R Certificates shall be designated
as the "residual interests" in the Trust REMIC. The final scheduled distribution
date for the Class A Certificates is August 15, 2028. The second anniversary of
such date (August 15, 2030) shall be the "latest possible maturity date" within
the meaning of Treasury Regulation Section 1.860G-1(a)(4) and all amounts due on
the Class A Certificates, if not previously paid, shall be due and payable on
that date.
(2) The Closing Date is hereby designated as the "Startup Day"
of the Trust REMIC within the meaning of Section 860G(a)(9) of the Code.
(3) Except as provided in Section 12.05, the Trustee shall pay
(and shall be entitled to reimbursement thereof by the Servicer or otherwise in
accordance with the terms of this Agreement) the ordinary and usual expenses in
connection with the preparation, filing and mailing of tax information reports
and returns that are incurred by it in the ordinary course of its administration
of its tax-related duties under this Agreement, but extraordinary or unusual
expenses, costs or liabilities incurred in connection with its tax-related
duties under this Agreement, including without limitation any expenses, costs or
liabilities associated with audits, required independent opinions regarding tax
methodology and related matters or any administrative or judicial proceedings
with respect to the Trust REMIC that involve the Internal Revenue Service or
state tax authorities, shall be expenses of the Trust Fund.
(4) The Trustee shall prepare and file all of the Trust
REMIC's federal and state income or franchise tax and information returns.
Except as provided in Section 12.05, the expenses of preparing and filing such
returns shall be borne by the Trustee. The Servicer and the Depositors shall
provide on a timely basis to the Trustee or its designee such information with
respect to the Trust REMIC as is in their possession, which the Servicer or the
Depositors has or have received or prepared by virtue of its activities as
Servicer or Depositors hereunder and reasonably requested by the Trustee to
enable it to perform its obligations under this subsection, and the Trustee
shall be entitled to rely on such information in the performance of its
obligations hereunder.
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(5) The Trustee shall perform on behalf of the Trust Fund and
the Trust REMIC all tax reporting duties and other tax compliance duties that
are the responsibility of the Trust REMIC under the Code, REMIC Provisions, or
other compliance guidance issued by the Internal Revenue Service or any state or
local taxing authority. Among its other duties, the Trustee shall provide (i) to
the Internal Revenue Service or other Persons (including, but not limited to,
the transferor of any Class R Certificates to a Disqualified Organization or to
an agent that has acquired the Class R Certificates on behalf of a Disqualified
Organization) such information as is necessary for the application of any tax
relating to the transfer of any Class R Certificates to any Disqualified
Organization pursuant to Section 860E(e) of the Code and the Treasury
Regulations thereunder and (ii) to the Certificateholders such information or
reports as are required by the Code or REMIC Provisions. Each of the Depositors
and the Servicer shall provide on a timely basis (and in no event later than 30
days after the Trustee's request) to the Trustee or its designee such
information with respect to the Trust REMIC as is in its possession and
reasonably requested in writing by the Trustee to enable it to perform its
obligations under this subsection.
(6) The Trustee or an affiliate of the Trustee shall acquire
and retain a 0.0001% Percentage Interest in the Class R Certificates and shall
act as Tax Matters Person of the REMIC.
(7) The Trustee, the Holders of the Class R Certificates and
the Servicer shall perform their obligations under this Agreement and the REMIC
Provisions in a manner consistent with the status of the Trust REMIC as a REMIC
or, as appropriate, shall adopt a plan of complete liquidation.
(8) The Trustee, the Holders of the Class R Certificates and
the Servicer shall not take any action or cause the Trust REMIC to take any
action, within their respective control and the scope of their specific
respective duties under this Agreement that, under the REMIC Provisions, could
(i) endanger the status of the Trust REMIC as a REMIC or (ii) result in the
imposition of a tax upon the Trust REMIC (including but not limited to the tax
on prohibited transactions as defined in Code Section 860F(a)(2) and the tax on
prohibited contributions as defined in Code Section 860G(d)) unless (A) the
Trustee has received a Nondisqualification Opinion (at the expense of the party
seeking to take such action) with respect to such action or (B) the Trustee has
received an opinion (at the expense of the party seeking to take such action) to
the effect that such action will not cause the Trust REMIC to fail to qualify as
a REMIC and the Trustee has calculated that no tax will actually be imposed.
(9) To the extent not paid pursuant to paragraph (d) of this
Section 2.07, each Holder of a Class R Certificate shall pay when due its pro
rata share of any and all federal, state and local taxes imposed on the Trust
REMIC or its assets or transactions, including, without limitation, "prohibited
transaction" taxes, as defined in Section 860F of the Code, any tax on
contributions imposed by Section 860G(d) of the Code, and any tax on "net income
from foreclosure property" as defined in Section 860G(c) of the Code. To the
extent that such Trust REMIC taxes are not paid by the Class R
Certificateholders, the Trustee shall pay any remaining Trust REMIC taxes out of
current or future amounts otherwise distributable to the Holders of the Class R
Certificates.
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(10) The Trustee shall, for federal income tax purposes,
maintain books and records with respect to the Trust REMIC on a calendar year
and on an accrual basis. Notwithstanding anything to the contrary contained
herein, all amounts collected on the Mortgage Loans shall, for federal income
tax purposes, be allocated first to interest due and payable on the Mortgage
Loans (including interest on overdue interest) (other than additional interest
at a penalty rate payable following a default). The books and records must be
sufficient concerning the nature and amount of the Trust REMIC's investments to
show that the Trust REMIC has complied with the REMIC Provisions.
(11) Neither the Trustee nor the Servicer shall enter into any
arrangement by which the Trust REMIC will receive a fee or other compensation
for services.
(12) In order to enable the Trustee to perform its duties as
set forth herein, the Depositors shall provide, or cause to be provided, to the
Trustee within 10 days after the Closing Date all information or data that the
Trustee reasonably determines to be relevant for tax purposes on the valuations
and offering prices of the Certificates, including, without limitation, the
yield, issue prices, pricing prepayment assumption and projected cash flows of
the Class A Certificates and the Class R Certificates, as applicable, and the
projected cash flows on the Mortgage Loans. Thereafter, the Depositors shall
provide to the Trustee, promptly upon request therefor, any such additional
information or data that the Trustee may, from time to time, reasonably request
in order to enable the Trustee to perform its duties as set forth herein. The
Trustee is hereby directed to use any and all such information or data provided
by the Depositors in the preparation of all federal and state income or
franchise tax and information returns and reports for the Trust REMIC to
Certificateholders as required herein. The Depositors hereby indemnify the
Trustee for any losses, liabilities, damages, claims or expenses of the Trustee
arising from any errors or miscalculations of the Trustee pursuant to this
Section that result from any failure of the Depositors to provide, or to cause
to be provided, accurate information or data to the Trustee (but not resulting
from the methodology employed by the Trustee) on a timely basis and such
indemnifications shall survive the termination of this Agreement.
(13) The Servicer shall prepare and file with the Internal
Revenue Service, on behalf of the Trust REMIC, an application for a taxpayer
identification number for the Trust REMIC on IRS Form SS-4. The Trustee, upon
receipt from the Internal Revenue Service of the Notice of Taxpayer
Identification Number Assigned, shall promptly forward a copy of such notice to
the Depositors. The Trustee shall prepare and file Form 8811 on behalf of the
Trust REMIC and shall designate from time to time an appropriate Person (the
"REMIC Reporting Agent") to respond to inquiries by or on behalf of
Certificateholders for original issue discount and related information in
accordance with applicable provisions of the Code. It is understood that the
Trustee shall initially use the services of the accounting firm of Grant
Thornton LLP in discharging its responsibilities under this subsection 2.07(a).
The Trustee agrees that all such information or data so obtained by it
are to be regarded as confidential information and agrees that it shall use its
best reasonable efforts to retain in confidence, and shall ensure that its
officers, employees and representatives retain in confidence, and shall not
disclose, without the prior written consent of the Depositors, any or all of
such information or data, or make any use whatsoever (other than for the
purposes contemplated by
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this Agreement) of any such information or data without the prior written
consent of the Depositors, unless such information is generally available to the
public (other than as a result of a breach of this Section) or is required by
law or applicable regulations to be disclosed.
(14) The Spread Account shall be an "outside reserve fund"
within the meaning of Treasury Regulation ss.1.860G-2(h) and shall not be an
asset of the Trust REMIC. The owner of the Spread Account shall be the Holders
of the Class R Certificates in proportion to their respective ownership
interests in the Class R Certificates. For all federal income tax purposes, the
Trustee and the Holders of the Class R Certificates shall treat amounts
distributed by the Trust REMIC to the Spread Account as having been distributed
on the residual interests represented by the Class R Certificates and
distributions on the Class R Certificates out of the Spread Account shall be
considered not to be distributions from the REMIC. Further, amounts on deposit
in the Spread Account will be treated as owned by the Class R
Certificateholders, not in the capacity as holders of the residual interest, but
as owners of the separate Spread Account.
(b) Modifications of Mortgage Loans. Notwithstanding anything to the
contrary in this Agreement, neither the Trustee nor the Servicer shall permit
any modification of, or take any action with respect to, the Mortgage Loans
(including the Mortgage Interest Rate or, in the case of a Mortgage Loan in the
Adjustable Rate Group, the method of determining the Mortgage Interest Rate, the
Principal Balance, the amortization schedule, or any other term affecting the
amount or timing of payments on the Mortgage Loans) that would result in an
exchange within the meaning of Section 1001 of the Code unless the Trustee or
the Servicer has received a Nondisqualification Opinion or a ruling from the
Internal Revenue Service (at the expense of the party making the request of the
Servicer or the Trustee to modify the Mortgage Loans) to the same effect as a
Nondisqualification Opinion with respect to such modification.
(c) Prohibited Transactions and Activities. The Trustee shall not
permit the sale, disposition (except in a disposition pursuant to (i) the
bankruptcy or insolvency of the Trust REMIC or (ii) the termination of the Trust
REMIC in a "qualified liquidation" as defined in Section 860F(a)(4) of the Code)
or substitution of the Mortgage Loans (except a substitution pursuant to
Sections2.06(b) or 3.03) or the substitution of a property for a Mortgaged
Property, nor acquire any assets for the Trust REMIC (other than REO Property or
a Qualified Substitute Mortgage Loan pursuant to Sections2.06(b) or 3.03), nor
accept any contributions to the Trust REMIC (other than a cash contribution
during the 3-month period beginning on the Startup Day), unless it has received
an Opinion of Counsel (at the expense of the Person requesting the Trustee to
take such action) to the effect that such disposition, acquisition,
substitution, or acceptance will not (a) affect adversely the status of the
Trust REMIC as a REMIC or of the Class A Certificates as the regular interests
therein, (b) affect the distribution of interest or principal on the
Certificates, (c) result in the encumbrance of the assets transferred or
assigned to the Trust REMIC (except pursuant to the provisions of this
Agreement) or (d) cause the Trust REMIC to be subject to an unindemnified tax on
"prohibited transactions" or "prohibited contributions" pursuant to the REMIC
Provisions.
(d) In the event that any tax is imposed on "prohibited transactions"
of the Trust REMIC as defined in Section 860F(a)(2) of the Code, on the "net
income from foreclosure property" of the Trust REMIC as defined in Section
860G(c) of the Code, on any contribution to the Trust
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REMIC after the Startup Day pursuant to Section 860G(c) of the Code, or any
other tax is imposed, such tax shall be paid by (i) the Trustee, if such tax
arises out of or results from a breach by the Trustee of any of its obligations
under this Agreement, which breach constitutes negligence or willful misconduct
of the Trustee or (ii) the Servicer or the Depositors, if such tax arises out of
or results from a breach by the Servicer or the Depositors of any of their
respective obligations under this Agreement. In no event shall the Trust Fund or
the Trust REMIC be liable for any such taxes.
(e) Any inconsistencies or ambiguities in this Agreement or in the
administration of the Trust REMIC shall be resolved in a manner that preserves
the validity of the election to be treated as a REMIC.
Section 2.08 Execution of Certificates.
The Trustee acknowledges (i) the assignment to it of Mortgage Loans in
trust for the benefit of the Certificateholders and subject to the terms and
conditions of this Agreement and (ii) the delivery of the Mortgage Files as set
forth above and, concurrently with such delivery, in exchange for the Mortgage
Loans, the Mortgage Files and the other assets conveyed by the Depositors
pursuant to Section 2.01 and Section 2.04, the Trustee has executed and caused
to be authenticated and delivered to or upon the order of the Depositors, the
Certificates, each in Authorized Denominations.
Section 2.09 Application of Principal and Interest.
In the event that Net Liquidation Proceeds on a Liquidated Mortgage
Loan are less than the Principal Balance of such Mortgage Loan plus accrued
interest thereon, or any Mortgagor makes a partial payment of any Monthly
Payment due on a Mortgage Loan, such Net Liquidation Proceeds or partial payment
shall be applied to payment of the related Mortgage Note as provided therein,
and if not so provided or if the related Mortgaged Property has become an REO
Property, first to interest accrued at the Mortgage Interest Rate and then to
principal; provided, however, the Net Liquidation Proceeds with respect to a
Bankruptcy Loan shall be applied first, to unpaid accrued interest with respect
to the period after the date of the related Plan, second, to principal and
third, to Pre-Plan Interest.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer and the Depositors.
(1) The Servicer hereby represents and warrants to the Trustee, the
Certificate Insurer and the Certificateholders as of the Closing Date:
(a) The Servicer is duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has all licenses
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necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in each Mortgaged Property State if the laws
of such state require licensing or qualification in order to conduct
business of the type conducted by the Servicer and perform its obligations
as Servicer hereunder; the Servicer has the power and authority to execute
and deliver this Agreement and the Basic Documents to which it is a party
and to perform in accordance herewith; the execution, delivery and
performance of this Agreement and the Basic Documents to which it is a
party (including all instruments of transfer to be delivered pursuant to
this Agreement and the Basic Documents to which it is a party) by the
Servicer and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary action; each of this
Agreement and the Basic Documents to which it is a party is the valid,
binding and enforceable obligation of the Servicer; and all requisite
action has been taken by the Servicer to make this Agreement and the Basic
Documents to which it is a party valid, binding and enforceable upon the
Servicer in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium and other, similar laws relating to
or affecting creditors' rights generally or the application of equitable
principles in any proceeding, whether at law or in equity;
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required
to be taken, given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Servicer makes no such
representation or warranty), that are necessary in connection with the
performance by the Servicer of its obligations hereunder or under the Basic
Documents to which it is a party or the purchase and sale of the
Certificates and the execution and delivery by the Servicer of the
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, 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 Basic Documents and
the other documents on the part of the Servicer and the performance by the
Servicer of its obligations as the Servicer under this Agreement and such
of the other Basic Documents to which it is a party;
(c) The consummation of the transactions contemplated by this
Agreement and the Basic Documents will not result in the breach of any
terms or provisions of the bylaws of the Servicer or result in the breach
of any term or provision of, or conflict with or constitute a default under
or result in the acceleration of any obligation under, any material
agreement, indenture or loan or credit agreement or other material
instrument to which the Servicer or its property is subject, or result in
the violation of any law, rule, regulation, order, judgment or decree to
which the Servicer or its property is subject;
(d) None of this Agreement, any of the Basic Documents to which it is
a party or the Prospectus nor any statement, report or other document
prepared by the Servicer and furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading;
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(e)There is no action, suit, proceeding or investigation pending or,
to the best of the knowledge of the Servicer, threatened against the
Servicer which, either in any one instance or in the aggregate, may result
in any material adverse change in the business, operations, financial
condition, properties or assets of the Servicer or in any material
impairment of the right or ability of the Servicer to carry on its business
substantially as now conducted, or in any material liability on the part of
the Servicer or any Basic Document to which it is a party or which would
draw into question the validity of this Agreement or the Mortgage Loans or
of any action taken or to be taken in connection with the obligations of
the Servicer contemplated herein, or which would be likely to impair
materially the ability of the Servicer to perform under the terms of this
Agreement or any Basic Document to which it is a party;
(f) 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 default might have consequences
that would materially and adversely affect the condition (financial or
other) or operations of the Servicer or its properties or might have
consequences that would materially and adversely affect its performance
hereunder or under the Basic Documents or under any Subservicing Agreement;
(g) The collection practices used by the Servicer with respect to each
Mortgage Note and Mortgage have been in and will be all material respects
legal, proper, prudent and customary in the second mortgage origination and
servicing business;
(h) The Servicer is (i) an approved seller/servicer of first and
second mortgage loans for FNMA and FHLMC in good standing, and (ii) a
mortgagee approved by the Secretary of Housing and Urban Development
pursuant to Section 203 and 211 of the National Housing Act.
(2) Each Depositor hereby represents and warrants to the Trustee, the
Certificate Insurer and the Certificateholders as of the Closing Date:
(a) Such Depositor is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation and has
all licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing in each Mortgaged Property
State if the laws of such state require licensing or qualification in order
to conduct business of the type conducted by such Depositor and perform its
obligations as a Depositor hereunder; such Depositor has the power and
authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this
Agreement and the Basic Documents to which it is a party (including all
instruments of transfer to be delivered pursuant to this Agreement and the
Basic Documents to which it is a party) by such Depositor and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action; each of this Agreement and the
Basic Documents to which it is a party is the valid, binding and
enforceable obligation of such Depositor; and all requisite action has been
taken by such Depositor to make this Agreement and the Basic Documents to
which it is a party valid, binding and enforceable upon such Depositor in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
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reorganization, moratorium and other, similar laws relating to or affecting
creditors rights generally or the application of equitable principles in
any proceeding, whether at law or in equity;
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required
to be taken, given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which such Depositor makes no
such representation or warranty), that are necessary in connection with the
purchase and sale of the Certificates and the execution and delivery by
such Depositor of the Basic 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, 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 Basic Documents on the part of such
Depositor and the performance by such Depositor of its obligations as a
Depositor under this Agreement, the Transfer Agreement and such of the
other Basic Documents to which it is a party;
(c) The consummation of the transactions contemplated by this
Agreement and the Basic Documents will not result in the breach of any
terms or provisions of the bylaws of such Depositor or result in the breach
of any term or provision of, or conflict with or constitute a default under
or result in the acceleration of any obligation under, any material
agreement, indenture or loan or credit agreement or other material
instrument to which such Depositor or its property is subject, or result in
the violation of any law, rule, regulation, order, judgment or decree to
which the Depositor or its property is subject;
(d) None of this Agreement, any of the Basic Documents to which such
Depositor is a party or the Prospectus nor any statement, report or other
document prepared by the Depositor and furnished or to be furnished
pursuant to this Agreement or the Basic Documents or in connection with the
transactions contemplated hereby contains any untrue statement of material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(e) There is no action, suit, proceeding or investigation pending or,
to the best of such Depositor's knowledge, threatened against such
Depositor which, either in any one instance or in the aggregate, may result
in any material adverse change in the business, operations, financial
condition, properties or assets of such Depositor or in any material
impairment of the right or ability of such Depositor to carry on its
business substantially as now conducted, or in any material liability on
the part of such Depositor or which would draw into question the validity
of this Agreement or the Basic Documents or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of such
Depositor contemplated herein, or which would be likely to impair
materially the ability of the Depositor to perform under the terms of this
Agreement or the Basic Documents to which it is a party;
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(f) Such 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 might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of such Depositor or its properties or
might have consequences that would materially and adversely affect its
performance hereunder, under the Basic Documents to which it is a party or
under any Subservicing Agreement;
(g) Upon the receipt of each Mortgage File under this Agreement, the
Trustee will have good and indefeasible title on behalf of the
Certificateholders to each Mortgage Loan (other than the Representative's
Yield and amounts received after the Cut-off Date in respect of interest
accrued on or prior to the Cut-off Date) and such other items conveyed by
the Depositors to the Trustee hereunder free and clear of any lien (other
than liens which will be simultaneously released);
(h) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by such Depositor pursuant to this Agreement are not subject
to the bulk transfer laws or any similar statutory provisions in effect in
any applicable jurisdiction;
(i) Such Depositor did not transfer any interest in any Mortgage Loan
with any intent to hinder, delay or defraud any of its respective
creditors;
(j) Such Depositor is solvent and such Depositor will not be rendered
insolvent as a result of the transfer of the Mortgage Loans to the Trust
Fund or the sale of any of the Certificates;
(k) Such Depositor will not amend Articles THIRD, NINTH, TENTH and
ELEVENTH of its Certificate of Incorporation without the prior written
consent of the Certificate Insurer and the Rating Agencies; and
(l) Such Depositor will not engage in any activity which would result
in a downgrading of the Certificates by any Rating Agency or in a
downgrading of the "shadow rating" (that is, the rating without taking into
account the Certificate Insurance Policy) below investment grade by any
Rating Agency.
Section 3.02 Assignment of Transfer Agreement; Representations and
Warranties as to the Individual Mortgage Loans and
the Mortgage Pool.
Pursuant to Section 2.01, each Depositor assigns to the Trustee (for
the benefit of the Certificateholders) all of its right, title and interest in,
to and under the Transfer Agreement including, without limitation, the
representations and warranties of the Originators made to the Depositors
pursuant to Section 3.01 of the Transfer Agreement. The Depositors hereby
represent and warrant to the Trustee that the Depositors have taken no action
which would cause such representations and warranties of the Originators to be
false in any material respect as of the Closing Date, and acknowledge that the
Trustee relies on the representations and warranties of the Depositors under
this Agreement and of the Originators under the Transfer Agreement in accepting
the Mortgage Loans and executing and delivering the Certificates. The foregoing
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representation and warranty speaks as of the Closing Date, but shall survive the
transfer and assignment of the Mortgage Loans to the Trustee for the benefit of
the Certificateholders.
Each Depositor hereby represents and warrants as follows to the
Trustee, the Certificate Insurer and the Certificateholders, with respect to
each Mortgage Loan as of the Closing Date (except as otherwise indicated);
provided, that all references to percentages of the Mortgage Loans in this
Section 3.02 refer in each case to the percentage of the aggregate Principal
Balance of the Mortgage Loans (or of the Mortgage Loans in the Fixed Rate Group
or Adjustable Rate Group, as applicable) as of the Cut-off Date (rounded to two
decimal points):
(a)The information with respect to each Mortgage Loan set forth in the
Mortgage Loan Schedule is true and correct;
(b)All of the original or certified documentation set forth in Section
2.04 (including all material documents related thereto) has been or will be
delivered to the Trustee (or the Custodian on behalf of the Trustee) on the
Closing Date or as otherwise provided in Section 2.04;
(c)(i)Each Mortgage Loan is principally secured by Mortgaged Property.
Each Mortgaged Property is improved by a one- to four-family Residential
Dwelling, which, to the best of such Depositor's knowledge, does not include (A)
cooperatives or (B) mobile homes other than permanently affixed mobile homes
which constitute real property under state law, or (C) manufactured housing
units, as defined in the FNMA Selling Guide, which constitute none of the
Mortgage Loans in the Adjustable Rate Group and not more than approximately
0.51% of the Mortgage Loans in the Fixed Rate Group, and which constitute other
than real property under state law; and
(ii)With respect to each Mortgage Loan involving property improved by a
manufactured or mobile home, the Originator has taken all action necessary to
create a valid and perfected first or second priority (as reflected in the
Mortgage Loan Schedule) lien and security interest in such manufactured or
mobile home and the related Mortgaged Property, including, without limitation,
the filing of UCC financing statements or notations on certificates of title if
necessary, under applicable state law;
(d)Each Mortgage Loan is being serviced by the Servicer or one or more
Subservicers;
(e)The Mortgage Note related to each Mortgage Loan in the Fixed Rate
Group bears a fixed Mortgage Interest Rate; the Mortgage Note related to each
Mortgage Loan in the Adjustable Rate Group bears a Mortgage Interest Rate that
adjusts semi-annually, based on the London interbank offered rate for six-month
United States dollar deposits;
(f)Mortgage Loans constituting approximately 40.22% of the Mortgage
Loans in the Fixed Rate Group, and approximately 90.26% of the Mortgage Loans in
the Adjustable Rate Group, are balloon loans which will provide for a final
Monthly Payment substantially greater than the preceding Monthly Payments.
Approximately 0.02%, 26.99%, 4.67% and 8.52% of the Mortgage Loans in the Fixed
Rate Group (and approximately 80.74%, 6.06% and 3.45% of the Mortgage Loans in
the Adjustable Rate Group) are balloon loans based on a 30-year amortization
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schedule and a single payment of the remaining loan balance 5, 7, 10 and 15years
(or 7, 10 and 15 years, with respect to the Mortgage Loans in the Adjustable
Rate Group) after origination, respectively. All of such balloon loans provide
for Monthly Payments based on an amortization schedule specified in the related
Mortgage Note and have a final balloon payment no earlier than 60 months
following origination and no later than 180 months following origination. Each
other Mortgage Note will provide for a schedule of substantially equal Monthly
Payments which are, if timely paid, sufficient to fully amortize the principal
balance of such Mortgage Note on or before its maturity date;
(g)Each Mortgage relating to a Mortgage Loan in the Fixed Rate Group is
a valid and subsisting first or more junior lien on the Mortgaged Property
subject, in the case of any second Mortgage Loan, only to a First Lien on such
Mortgaged Property, and each Mortgage relating to a Mortgage Loan in the
Adjustable Rate Group is a valid and subsisting First Lien on the Mortgaged
Property, and subject in all cases to the exceptions to title set forth in the
title insurance policy or the other evidence of title enumerated in Section
2.04(d), with respect to the related Mortgage Loan, which exceptions are
generally acceptable to second mortgage lending companies, 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. If the Mortgaged
Property is held in an Illinois Land Trust (a "Land Trust Mortgage"), (i) a
natural person is the beneficiary of such Illinois Land Trust, and either is a
party to the Mortgage Note or is a guarantor thereof, in either case, in an
individual capacity, and not in the capacity of trustee or otherwise, and, if a
party to the Mortgage Note, is jointly and severally liable under the Mortgage
Note; (ii) the Mortgagor is the trustee of such Illinois Land Trust, is a party
to the Mortgage Note and is the mortgagor under the Mortgage in its capacity as
such trustee and not otherwise; (iii) a land trust trustee, duly qualified under
applicable law to serve as such, has been properly designated and currently so
serves and is named as such in the land trust agreement and such trustee is
named in the Land Trust Mortgage as Mortgagor; (iv) all fees and expenses of the
land trust trustee which have previously become due or owing have been paid and
no such fees or expenses are or will become payable by the Certificateholders or
the Trust Fund; (v) the beneficiary is solely obligated to pay any fees and
expenses of the land trust trustee and the priority of the lien of the Land
Trust Mortgage is not and will not be subject or subordinate to any amounts
owing to the land trust trustee; (vi) the Mortgaged Property is occupied by the
beneficiary under the land trust agreement (if indicated to be owner occupied on
the Mortgage Loan Schedule) and, if such land trust agreement terminates, the
beneficiary will become the owner of the Mortgaged Property; (vii) the
beneficiary is obligated to make payments under the related Mortgage Note and
(subject to applicable law) will have personal liability for deficiency
judgments; (viii) the Land Trust Mortgages and assignments of beneficial
interest relating to land trusts in the Mortgage Pool were made in compliance
with their respective land trust agreements, were validly entered into by their
respective land trust trustee or beneficiary and did not, do not currently, and
will not in the future, violate any provision of their respective land trust
agreement; (ix) a UCC financing statement has been filed, continued, and will be
continued, without intervening liens, as the first lien upon the beneficial
interest in the Land Trust Mortgage; (x) each assignment of beneficial interest
with respect to Land Trust Mortgages in the Mortgage Pool was at the time of
respective assignment the only assignment of such beneficial interest in the
land trust, such assignment was accepted by the respective land trust trustee,
to the best of the Depositors' knowledge, subsequent assignments
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of the beneficial interest in whole or in part have not been made, and such
subsequent assignments of the beneficial interest or any part thereof are not
permitted pursuant to a written agreement between the respective beneficiary and
the Mortgagee, until the expiration of the Mortgage Note in each respective land
trust; (xi) the Land Trust Mortgages are the first or second liens on the
Mortgaged Properties; no liens are in place against the beneficial interests, or
any part thereof, of any Land Trust Mortgage or collateral assignment of
beneficial interest, which liens are superior to the interest held by the
related Depositor; and the beneficiary or land trust trustee is forbidden,
pursuant to a written agreement between the beneficiary or the land trust
trustee (as applicable) and the Mortgagee, from using the land trust property or
beneficial interest, or any part of either, as security for any other debt of
the same priority as or senior to such Land Trust Mortgage until the expiration
date of its respective Mortgage Note; and (xii) the terms and conditions of the
land trust agreement do not prevent the free and absolute marketability of the
Mortgaged Property. As of the Cut-off Date, approximately 0.02% of the Mortgage
Loans in the Fixed Rate Group and approximately 0.21% of the Mortgage Loans in
the Adjustable Rate Group were related to Land Trust Mortgages;
(h)Except with respect to liens released immediately prior to the
transfer herein contemplated, immediately prior to the transfer and assignment
herein contemplated, the applicable Depositor held good and indefeasible title
to, and was the sole owner of, each Mortgage Loan conveyed by such Depositor
subject to no liens, charges, mortgages, encumbrances or rights of others; and
immediately upon the transfer and assignment herein contemplated, the Trustee
for the benefit of the Certificateholders will hold good and indefeasible title,
to, and be the sole owner of, each Mortgage Loan (other than the
Representative's Yield and amounts received on or after the Cut-off Date) in
respect of interest accrued prior to the Cut-off Date subject to no liens,
charges, mortgages, encumbrances or rights of others;
(i)None of the Mortgage Loans in the Fixed Rate Group, and none of the
Mortgage Loans in the Adjustable Rate Group (excluding Bankruptcy Loans) are 30
or more days contractually delinquent; none of the Mortgage Loans in the
Mortgage Pool (excluding Bankruptcy Loans) have been 30 or more days
contractually delinquent more than once in the 12 months preceding the Cut-off
Date. For purposes of this representation and warranty "30 to or more days
contractually delinquent" means that a Monthly Payment due on a Due Date was
unpaid as of the end of the month of the next succeeding Due Date or following
Due Dates. Approximately 0.10% of the Mortgage Loans in the Fixed Rate Group,
and 0.12% of the Mortgage Loans in the Adjustable Rate Group are Bankruptcy
Loans. None of the Mortgage Loans in the Fixed Rate Group and none of the
Mortgage Loans in the Adjustable Rate Group are Bankruptcy Loans which are 30
days or more contractually delinquent. Except for the Mortgage Loans listed on
Exhibit G, to the best of such Depositor's knowledge, none of the Mortgage Loans
is subject to a Plan. Except for the Bankruptcy Loans and the Mortgage Loans
listed on Exhibit S, as of the Cut-off Date no Mortgage Loan is 30 or more days
contractually delinquent. ExhibitS accurately sets forth the number of days that
each Mortgage Loan listed therein was contractually delinquent as of the Cut-off
Date;
(j)To the best of such Depositor's knowledge, (i) there is no
delinquent tax or assessment lien on any Mortgaged Property and (ii) each
Mortgaged Property is free of material damage and is in average repair;
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(k)No Mortgage Loan is subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto;
(l)To the best of such Depositor's knowledge, there is no mechanics'
lien or claim for work, labor or material affecting any Mortgaged Property which
is or may be a lien prior to, or equal with, the lien of such Mortgage except
those which are insured against by the title insurance policy referred to in
Section 3.02(n) below;
(m)Each Mortgage Loan at the time it was made complied in all material
respects with applicable state and federal laws and regulations, including,
without limitation, usury, equal credit opportunity and disclosure laws;
(n)With respect to each Mortgage Loan, other than any Mortgage Loan
secured by a second priority lien and having a Principal Balance not in excess
of $50,000 and listed on ExhibitW hereto, a written commitment for a lender's
title insurance policy, issued in standard American Land Title Association or
California Land Title Association form, or other form customary and acceptable
in a particular jurisdiction, by a title insurance company acceptable to FNMA
and FHLMC and authorized to transact business in the state in which the related
Mortgaged Property is situated, together with a condominium endorsement, if
applicable, in an amount at least equal to the original Principal Balance of
such Mortgage Loan insuring the mortgagee's interest under the related Mortgage
Loan as the holder of a valid first or second mortgage lien of record on the
real property described in the Mortgage, subject only to exceptions of the
character referred to in Section 3.02(g) above, was effective on the date of the
origination of such Mortgage Loan, and, as of the Closing Date, such commitment
will be valid and thereafter the policy issued pursuant to such commitment shall
continue in full force and effect or, with respect to Mortgage Properties
located in jurisdictions in which it is customary and acceptable to obtain an
assurance of title in lieu of a title insurance policy, such assurance of title
has been obtained;
(o)The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage representing coverage described in
Sections 5.07 and 5.08;
(p)A flood insurance policy is in effect with respect to each Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Sections 5.07 or 5.08, if and to the extent required by Section
5.07 or 5.08;
(q)Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), and all parties to
each
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Mortgage Loan had full legal capacity to execute all Mortgage Loan documents and
convey the estate therein purported to be conveyed;
(r)The applicable Depositor has directed the Servicer to perform any
and all acts required to be performed to preserve the rights and remedies of the
Trustee in any insurance policies applicable to the Mortgage Loans 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;
(s)No more than approximately 0.11% of the Mortgage Loans in the Fixed
Rate Group, and no more than approximately 0.16% of the Mortgage Loans in the
Adjustable Rate Group, are secured by Mortgaged Properties located within any
single zip code area within the State of California. No more than approximately
0.33% of the Mortgage Loans in the Fixed Rate Group, and no more than
approximately 1.35% of the Mortgage Loans in the Adjustable Rate Group, are
secured by Mortgaged Properties located within any single zip code area outside
the State of California;
(t)At least approximately 95.13% of the Mortgage Loans in the Fixed
Rate Group, and approximately 99.96% of the Mortgage Loans in the Adjustable
Rate Group, are secured by Owner Occupied Mortgaged Property;
(u)The terms of the Mortgage Note and the Mortgage have not been
impaired, altered or modified in any material respect, except by a written
instrument which has been recorded or is in the process of being recorded, if
necessary, to protect the interests of the Trustee and which has been or will be
delivered to the Trustee. The substance of any such alteration or modification
is reflected on the Mortgage Loan Schedule. Each original Mortgage was recorded,
and all subsequent assignments of the original Mortgage have been recorded in
the appropriate jurisdictions wherein such recordation is necessary to perfect
the lien thereof as against creditors of the Depositor (or, subject to Section
2.04 hereof, are in the process of being recorded);
(v)No instrument of release or waiver has been executed in connection
with the Mortgage Loan, and no Mortgagor has been released, in whole or in part;
(w)To the best of such Depositor's knowledge, all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have been paid,
or an escrow of funds has been established in an amount sufficient to pay for
every such item which remains unpaid and which has been assessed but is not yet
due and payable. Except for payments in the nature of escrow payments, including
without limitation, taxes and insurance payments, the Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the date of
the Mortgage Note or date of disbursement of the Mortgage proceeds, whichever is
greater, to the day which precedes by one month the Due Date of the first
installment of principal and interest. With respect to Mortgaged Properties that
are the subject of a ground lease, to the best of such Depositor's knowledge,
all lease rents, other payments or assessments that have become due have been
paid and the
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Mortgagor is not in material default under any other provisions of the lease and
the lease is valid, in good standing and in full force and effect;
(x)To the best of such Depositor's knowledge, there is no proceeding
pending or threatened for the total or partial condemnation of the Mortgaged
Property, nor is such a proceeding currently occurring, and such property is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty, so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the premises
were intended;
(y)To the best of such Depositor's knowledge, all of the improvements
which were included for the purpose of determining the appraised value of the
Mortgaged Property lie wholly within the boundaries and building restriction
lines of such property, and no improvements on adjoining properties encroach
upon the Mortgaged Property;
(z)To the best of such Depositor's knowledge, no improvement located on
or being part of the Mortgaged Property is in violation of any applicable zoning
law or regulation. To the best of such Depositor's knowledge, all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged 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 the Mortgaged Property is lawfully occupied under
applicable law;
(aa) The proceeds of the Mortgage 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 the Mortgage Loans were paid;
(bb) The related Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(cc) No Mortgage Loan was originated under a buydown plan;
(dd) There is no obligation on the part of the applicable Depositor or
any other party to make payments in addition to those made by the Mortgagor;
(ee) 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 Trustee to the trustee under such
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor. If the Mortgaged Property is held in an Illinois Land Trust, the
trustee thereof is duly qualified under applicable law to serve as such, and has
been properly designated and currently so serves, and no fees or expenses are or
will become payable by the Trustee to such trustee;
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(ff) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(gg) With respect to each Mortgage Loan secured by a second priority
lien, the related First Lien requires equal monthly payments, or if it bears an
adjustable interest rate, the monthly payments for the related First Lien may be
adjusted not more frequently than once every six months;
(hh) With respect to each Mortgage Loan secured by a second priority
lien, either (i) no consent for the Mortgage Loan is required by the holder of
the related First Lien or (ii) such consent has been obtained and is contained
in the Mortgage File;
(ii) The maturity date of each Mortgage Loan secured by a second
priority lien is prior to the maturity date of the related First Lien if such
First Lien provides for a balloon payment; and with respect to any First Lien
that provides for negative amortization or deferred interest, the balance of
such First Lien used to calculate the Combined Loan-to-Value Ratio for the
Mortgage Loan is based on the maximum amount of negative amortization possible
under such First Lien;
(jj) All parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state so as to require qualification or
licensing;
(kk) The Mortgage contains a customary provision for the acceleration
of the payment of the unpaid principal balance of the Mortgage Loan in the event
the related security for the Mortgage Loan is sold without the prior consent of
the mortgagee thereunder;
(ll)Any future advances made prior to (and excluding) the Cut-off Date
have been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the Mortgage Loan Schedule
(or single method of determining the Mortgage Interest Rate if such Mortgage
Loan is in the Adjustable Rate Group). The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan. The Mortgage Note
does not permit or obligate the Servicer to make future advances to the
Mortgagor at the option of the Mortgagor;
(mm) The related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial or non-judicial foreclosure.
There is no homestead or other exemption available to the Mortgagor which would
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage except as set forth in the
Prospectus;
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(nn) Except for bankruptcy-related defaults under the Bankruptcy Loans,
to the best of such Depositor's knowledge, there is no default, breach,
violation or event of acceleration existing under the Mortgage or the related
Mortgage 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 applicable
Depositor has waived any default, breach, violation or event of acceleration;
(oo) All parties to the Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the Mortgage and each Mortgage Note
and Mortgage have been duly and properly executed by such parties;
(pp)All amounts received on and after the Cut-off Date with respect to
the Mortgage Loans that are required to be deposited into the Principal and
Interest Account pursuant to Section 5.03 have been so deposited;
(qq) Each Mortgage Loan in the Fixed Rate Group, and each Mortgage Loan
in the Adjustable Rate Group, was originated and underwritten by the
Representative or by a wholly-owned subsidiary of the Representative;
(rr) As of the Cut-off Date, each Mortgage Loan conforms, and all
Mortgage Loans in the aggregate conform, in all material respects, to the
description thereof set forth in the Prospectus dated June 24, 1997, including
all statistical data provided therein in tabular format or otherwise;
(ss) The Mortgage Loans were not selected by the Originators or the
Depositors for transfer to the Trustee (for the benefit of the
Certificateholders) hereunder on any basis intended to adversely affect the
assets of the Trust;
(tt) A full interior inspection appraisal was performed in connection
with each Mortgaged Property;
(uu) The Mortgage Interest Rate for each Mortgage Loan in the Fixed
Rate Group is not less than 7.40% per annum, and the Mortgage Interest Rate for
each Mortgage Loan in the Fixed Rate Group is not more than 16.85% per annum;
approximately 0.13% of the Mortgage Loans in the Fixed Rate Group have Mortgage
Interest Rates less than 7.92%;
(vv) The gross margin for each Mortgage Loan in the Adjustable Rate
Group is not less than 4.25% per annum and not more than 8.20% per annum. All of
the Mortgage Loans in the Adjustable Rate Group have periodic adjustment caps of
1.0%, and none of the Mortgage Loans in the Adjustable Rate Group have periodic
adjustment caps of 2.0%.
(ww) Each hazard insurance policy required to be maintained under
Section 5.07 of this Agreement with respect to such Mortgage Loan is a valid,
binding, enforceable and subsisting insurance policy of its respective kind and
is in full force and effect;
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(xx) If the Mortgaged Property consists of a leasehold estate, the
Mortgage covers property improvements and the Mortgagor's leasehold interest in
the land upon which such improvements are situated; at origination of the
Mortgage Loan the term of the leasehold estate was scheduled to last for at
least ten years beyond the maturity date of the Mortgage or provided for
perpetual renewal covenants; the leasehold estate is assignable by the
Mortgagee; and the lease is valid and in full force and effect;
(yy) To the best of such Depositors' knowledge, no Mortgaged Property
was, at origination, located within a 1 mile radius of any site with
environmental or hazardous waste risks;
(zz) With respect to each Bankruptcy Loan as of the Cut-off Date, (a)
except for the Bankruptcy Loans specified on Exhibit G, the Mortgagor is not
contractually delinquent more than 30 days with respect to any payment due under
the related Plan, (b) the Current CLTV is less than or equal to 85%, and (c)
either (i) if the Current CLTV is between 60% and 85%, as of the Cut-off Date,
the Mortgagor has made at least six consecutive payments under the related Plan
or (ii) if the Current CLTV is less than 60%, as of the Cut-off Date, the
Mortgagor has made at least three consecutive payments under the related Plan;
(aaa) With respect to each Mortgage Loan which was originated in the
State of Alabama (each, an "Alabama Loan"), (i) each such Alabama Loan was (A)
originated and underwritten by EquiCredit Corporation/Ala.& Miss. ("EQCC/Ala.&
Miss.") or (B) purchased and re- underwritten by EQCC/Ala.& Miss. from another
lender (each originating entity, an "Alabama Originator"), (ii) with respect
each such Alabama Loan secured by second mortgages, (A) the total "prepaid
finance charge" (as defined in Regulation Z promulgated under the Federal Truth-
in-Lending Act) paid by the related Mortgagor to the related Alabama Originator
plus (B) any yield spread premium ("rate participation") paid by the Alabama
Originator did not exceed 5% of the original Principal Balance of such Alabama
Loan, (iii) the original Principal Balance of such Alabama Loan exceeded $2,000,
(iv) the aggregate of all points and broker's fees did not exceed 10% of the
original principal balance of the Mortgage Loan, (v) no "referral fee" (as
defined in Regulation X promulgated under the Real Estate Settlement and
Procedures Act) was paid to any third party by the related Alabama Originator
with respect to such Alabama Loan, (vi) such Alabama Loan and the manner in
which it was originated fully complied with Alabama law, and (vii) such Alabama
Loan was not originated in such a manner, and neither the related Mortgage Note
nor Mortgage contain any provisions, that would cause such Alabama Loan to be
deemed unconscionable under Alabama law; the aggregate of all such Alabama
Mortgage Loans does not exceed approximately 0.03% of the Mortgage Loans in the
Fixed Rate Group. 0.08% of the Mortgage Loans in the Adjustable Rate Group are
Alabama Mortgage Loans;
(bbb) Approximately 0.39% of the Mortgage Loans in the Fixed Rate Group
and none of the Mortgage Loans in the Adjustable Rate Group of the Mortgage
Loans were originated in connection with the sale of properties acquired by the
Originators through foreclosure and were not originated in accordance with all
of the underwriting standards described in the Prospectus;
(ccc) With respect to each Mortgage Loan in the Adjustable Rate Group,
the CLTV does not exceed 100.00% and with respect to Mortgage Loans in the Fixed
Rate Group, the CLTV does not exceed 100.00%;
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(ddd) Except for the Mortgage Loans listed on ExhibitT, as of the
Cut-off Date none of the Mortgage Loans are subject to the Home Ownership and
Equity Protection Act of 1994; all notices required to be delivered to the
related Mortgagor pursuant to the Home Ownership and Equity Protection Act of
1994 have been delivered with respect to each Mortgage Loan listed on Exhibit T
and all other requirements of that Act have been complied with for each such
Mortgage Loan;
(eee) Each Subsequent Mortgage Loan in the Fixed Rate Group (i) is not
30 or more days delinquent as of the Cut-off Date; (ii) has an original term to
stated maturity of not more than 360 months; (iii) has a Mortgage Interest Rate
of not less than 7.95% per annum; (iv) was originated in accordance with the
underwriting standards described under "The Depositors, The Servicer, The
Representative and The Originators--Specific Underwriting Criteria; Underwriting
Programs" in the Prospectus; and (v) has a Principal Balance not in excess of
$300,000.00. Each Subsequent Mortgage Loan in the Adjustable Rate Group (i) is
not 30 or more days delinquent as of the Cut-off Date; (ii) has an original term
to stated maturity of not more than 360 months; (iii) has a Mortgage Interest
Rate of not less than 7.60% per annum; (iv) was originated in accordance with
the underwriting standards described under "The Depositors, The Servicer, The
Representative and The Originators--Specific Underwriting Criteria; Underwriting
Programs" in the Prospectus; and (v)following the transfer of such Subsequent
Mortgage Loans into the Trust, the Mortgage Loans (including the Subsequent
Mortgage Loans) in the Adjustable Rate Group (a) will have a weighted average
interest rate of at least 8.40% per annum; (b) will have a weighted average
original term to stated maturity of not more than 120 months; (c) will have a
maximum principal balance not in excess of $350,000.00; and (d) will have a
weighted average gross margin of at least 5.50%.
(fff) Each Mortgage Loan in the Adjustable Rate Group was originated by
a mortgagee approved by the Secretary of Housing and Urban Development pursuant
to Sections203 and 211 of the National Housing Act; and
(ggg) The representations and warranties with respect to the Mortgage
Loans and Mortgage Pool set forth in Section 3.02(a) through (fff), inclusive,
have been made to the Depositors by the Originators and the Representative
pursuant to Section 3.02(a) through (fff), inclusive, of the Transfer Agreement
with respect to the Mortgage Loans and the Mortgage Pool, and the Certificate
Insurer is entitled to rely thereon.
Section 3.03 Purchase and Substitution.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive transfer of the Mortgage Loans and
delivery of the Certificates hereunder. Upon discovery by any Depositor, the
Servicer, any Subservicer, any Custodian, a Responsible Officer of the Trustee
or the Certificate Insurer of a breach of any of such representations and
warranties which materially and adversely affects the value of Mortgage Loans or
the interest of the Trustee, or the Certificateholders, or which materially and
adversely affects the interests of the Trustee, the Certificate Insurer, or the
Certificateholders in the related Mortgage Loan in the case of a representation
and warranty relating to a particular Mortgage Loan (notwithstanding that such
representation and warranty was made to the Depositors' best
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knowledge), the party discovering such breach shall give prompt written notice
to the others. Within 60 days of the earlier of its discovery or its receipt of
notice of any breach of a representation or warranty, the Servicer shall (a)
promptly cure, or cause the applicable Depositor or the applicable Originator to
cure, such breach in all material respects, or (b) purchase, or cause the
applicable Depositor or applicable Originator to purchase, such Mortgage Loan by
depositing in the Principal and Interest Account, on the next succeeding
Determination Date, in the manner and at the price specified in Section 2.06(b),
or by causing the applicable Depositor or the applicable Originator to
substitute, one or more Qualified Substitute Mortgage Loans, provided such
substitution is effected not later than the date which is two years after the
Closing Date. Any such substitution shall be accompanied by payment of the
Substitution Adjustment, if any, to be deposited in the Principal and Interest
Account.
As to any Deleted Mortgage Loan for which a Qualified Substitute
Mortgage Loan or Loans is substituted, the Servicer shall effect such
substitution by delivering to the Trustee or the Custodian on behalf of the
Trustee, a certification in the form of Exhibit B attached to the Custodial
Agreement, executed by a Servicing Officer and delivering to the Trustee (or the
Custodian on behalf of the Trustee, with a copy of such certification to the
Trustee) a copy of such certification, the documents constituting the Mortgage
File for such Qualified Substitute Mortgage Loan or Loans and a trust receipt of
the Custodian as to the Substitute Mortgage Loan or Loans.
The Servicer shall deposit in the Principal and Interest Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution; provided, however, that any amounts
received after the date of substitution in respect of interest accrued on or
prior to the date of substitution on such Qualified Substitute Mortgage Loan
will constitute the property of the related Depositor or Originator, as the case
may be. Monthly Payments received with respect to Qualified Substitute Mortgage
Loans on or before the date of substitution will be retained by the Servicer on
behalf of the related Depositor or related Originator, as the case may be. The
Trustee will own, for the benefit of the Certificateholders, all payments
received on the Deleted Mortgage Loan on or before the date of substitution, and
the Servicer on behalf of the Depositors or Originator, as the case may be,
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. The Servicer shall give written notice to
the Trustee, the Representative and the Certificate Insurer that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan. Upon
such substitution, such Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects, and the Depositors shall
be deemed to have made with respect to such Qualified Substitute Mortgage Loan
or Loans, as of the date of substitution, the covenants, representations and
warranties set forth in Sections 3.01 and 3.02. On the date of such
substitution, the applicable Depositor or the applicable Originator, as the case
may be, will remit to the Servicer, and the Servicer will deposit into the
Principal and Interest Account, an amount equal to the Substitution Adjustment,
if any.
It is understood and agreed that the obligations of the Servicer set
forth in Sections2.06 and 3.03 to cure, purchase or substitute or cause to be
cured, purchased or substituted for a
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defective Mortgage Loan as provided in Sections 2.06 and 3.03 constitute the
sole remedies of the Trustee, the Certificate Insurer and the Certificateholders
respecting a breach of the foregoing representations and warranties.
Any cause of action against either of the Depositors or the Servicer
relating to or arising out of a defect in a Mortgage File as contemplated by
Section 2.06 or the breach of any representations and warranties made in
Sections 3.01 or 3.02 shall arise as to any Mortgage Loan upon the occurrence of
not less than all of the following events: (i) discovery of such defect or
breach by any party and notice thereof to the Servicer or notice thereof by the
Servicer to the Trustee and the Certificate Insurer, (ii) failure by the
Servicer to cure or cause to be cured such defect or breach or purchase or
substitute or cause to be purchased or substituted such Mortgage Loan as
specified above, and (iii) demand upon the Servicer by the Trustee or the
Certificate Insurer for all amounts payable in respect of such Mortgage Loan.
The party delivering such notice shall also deliver a copy thereof to the
Certificate Insurer.
Notwithstanding any contrary provision of this Agreement, with respect
to any Mortgage Loan which is not in default or as to which no default is
imminent, no purchase, or substitution pursuant to Sections 2.06(b) or 3.03
shall be made unless the Representative provides to the Trustee an Opinion of
Counsel, addressed to the Trustee, to the effect that such purchase or
substitution would not (i)result in the imposition of taxes on "prohibited
transactions" of the Trust REMIC, as defined in Section 860F of the Code or a
tax on contributions to the Trust REMIC under the REMIC Provisions, or (ii)cause
the Trust REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding. Any Mortgage Loan as to which purchase or substitution was
delayed pursuant to this paragraph shall be purchased or substituted (subject to
compliance with Sections 2.06 and 3.03) upon the earlier of (a)the occurrence of
a default or imminent default with respect to such loan and (b)receipt by the
Trustee of an Opinion of Counsel to the effect that such purchase or
substitution will not result in the events described in clauses (i) and (ii) of
the preceding sentence. The Trustee shall give prompt written notice to Moody's,
S&P, the Certificate Insurer and to each Certificateholder of any repurchase or
substitution made pursuant to this Section 3.03 or Section 2.06(b).
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates.
(a) The Class A and the Class R Certificates shall be substantially in
the forms annexed hereto as Exhibits B-1 and B-2, respectively, and the Class A
Certificates shall be issued in minimum denominations of $1,000 and in integral
multiples thereof. All Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by at least one authorized officer and
authenticated by the manual signature of an authorized officer. Certificates
bearing the signatures of individuals who were at the time of the execution of
the Certificates the authorized officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such
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offices at the date of such Certificates. All Certificates issued hereunder
shall be dated the date of their authentication.
(b) The Class A Certificates, upon original issuance, shall be issued
in the form of a typewritten Certificate or Certificates representing Book-Entry
Certificates, to be delivered to the Depository. Such Class A Certificate or
Certificates shall initially be registered on the Certificate Register in the
name of Cede & Co., the nominee of the initial Depository, and no Certificate
Owner of a Class A Certificate or Certificates shall receive a definitive Class
A Certificate representing such Certificate Owner's interest in such Class A
Certificate, except as provided in Section 4.01(c). Unless and until definitive
fully registered Class A Certificates (the "Definitive Certificates") shall have
been issued to Certificate Owners pursuant to Section 4.01(c):
(i) the provisions of this Section 4.01(b) shall be in full force
and effect;
(ii) the Certificate Registrar and the Trustee shall be entitled
to deal with the Depository for all purposes of this Agreement
(including the payment of principal of and interest on the
Certificates and the giving of instructions or directions hereunder)
as the sole Holder of the Class A Certificates, and shall have no
obligation to the Certificate Owners with respect thereto;
(iii) to the extent that the provisions of this Section 4.01(b)
conflict with any other provisions of this Agreement, the provisions
of this Section 4.01(b) shall control;
(iv) the rights of the Certificate Owners with respect to the
Class A Certificates shall be exercised only through the Depository
and shall be limited to those established by law and agreements
between such Certificate Owners and the Depository and/or the
Depository Participants. Pursuant to the Certificate Depository
Agreement in the form attached hereto as Exhibit C, unless and until
Definitive Certificates are issued pursuant to Section 4.01(c), the
initial Depository will make book-entry transfers among the Depository
Participants and receive and transmit payments of principal of and
interest on the ClassA Certificates to such Depository Participants;
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified aggregate Percentage Interest, the Depository
shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Certificate Owners
and/or Depository Participants owning or representing, respectively,
such required aggregate Percentage Interest of Class A Certificates
(taking into account the proviso contained in the definition of
"Certificateholder" contained herein) and has delivered such
instructions to the Trustee; and
(vi) whenever a notice or other communication to the ClassA
Certificateholders is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section4.01(c), the Trustee shall give all such notices
and communications specified herein to be given to ClassA
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Certificateholders to the Depository and shall have no further
obligation to the Certificate Owners of the ClassA Certificates.
provided, however, that the provisions of this Section 4.01(b) shall not be
applicable in respect of Class A Certificates issued to the Depositors. The
Depositors or the Trustee may set a record date for the purpose of determining
the identity of Holders of Class A Certificates entitled to vote or to consent
to any action by vote as provided in this Agreement;
(c)The Class R Certificates shall be issued in the form of Definitive
Certificates. With respect to the Class A Certificates, if (i) the Servicer
advises the Trustee in writing that the Depository is no longer willing or able
to properly discharge its responsibilities with respect to the Class A
Certificates, and the Servicer is unable to locate a qualified successor; (ii)
the Servicer at its option advises the Trustee in writing that it elects to
terminate the book-entry system through the Depository; or (iii) after the
occurrence of a Servicer Default, a Majority in Aggregate Voting Interest advise
the Depository in writing that the continuation of a book-entry system through
the Depository is no longer in the best interests of the Certificate Owners of
the ClassA Certificates, then the Depository shall notify all Certificate Owners
and the Trustee of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the typewritten Certificate or Certificates
representing the Book-Entry Certificates by the Depository, accompanied by
registration instructions, the Trustee shall execute and authenticate the
Definitive Certificates in accordance with the instructions of the Depository.
Neither the Certificate Registrar nor the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders.
Section 4.02 Registration of Transfer and Exchange of
Certificates.
(a)The Trustee shall cause to be kept at its office or agency in
Chicago, Illinois, or at its designated agent, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, it shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder, as well
as the Series and the number in the Series.
(b)The Class R Certificates have not been registered or qualified under
the Securities Act of 1933, as amended (the "1933 Act"), or any state securities
laws or "Blue Sky" laws. No transfer, sale, pledge or other disposition of any
Class R Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the 1933 Act and effective registration
or qualification under applicable state securities laws or "Blue Sky" laws, or
is made in a transaction which does not require such registration or
qualification. In the event that a transfer is to be made in reliance upon an
exemption from the 1933 Act, the Trustee, in order to assure compliance with the
1933 Act, shall not be required to register such transfer unless:
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(i) the Class R Certificateholder desiring to effect such
disposition and such Certificateholder's prospective transferee each
certify to the Trustee in writing the facts surrounding such
disposition, which certification shall be substantially in the form of:
(A) Exhibit L-1 hereto in the case of any transfer made other
than pursuant to Rule 144A under the 1933 Act; or
(B) Exhibit L-2 hereto in the case of any transfer made
pursuant to Rule 144A under the 1933 Act; or
(ii) the Class R Certificateholder desiring to effect such
disposition delivers to the Trustee an Opinion of Counsel satisfactory
to it that such transfer may be made pursuant to an exemption from the
1933 Act, which Opinion of Counsel shall not be an expense of the
Trustee.
None of the Servicer, the Depositors or the Trustee are obligated under this
Agreement to register the Class R Certificates under the 1933 Act or any other
securities law or to take any action not otherwise required under this Agreement
to permit the transfer of Class R Certificates without such registration or
qualification. Any such Class R Certificateholder desiring to effect such
transfer shall, and does hereby agree to, promptly reimburse the Trustee, each
Depositor and the Servicer for costs and expenses incurred in connection with
any liability that results if the transfer is not so exempt or is not made in
accordance with such applicable federal and state laws.
(c)Notwithstanding anything to the contrary contained herein or in this
Agreement, no Class R Certificate nor any percentage interest therein may be
owned, pledged or transferred, directly or indirectly, by or to a Disqualified
Organization. Prior to and as a condition of the registration of any transfer,
sale or other disposition of a Class R Certificate or any percentage interest
therein, the proposed transferee shall deliver to the Certificate Registrar an
affidavit in substantially the form attached hereto as Exhibit M-1 representing
and warranting that such transferee is a Permitted Transferee. In addition, the
Certificate Registrar shall require, prior to and as a condition of any such
transfer, the delivery by the proposed transferee of an Opinion of Counsel
satisfactory in form and substance to the Certificate Registrar, that such
proposed transferee or, if the proposed transferee is an agent or nominee, the
proposed beneficial owner, is not a Disqualified Organization. The Certificate
Registrar shall not be under any liability to any person for any registration or
transfer of a Class R Certificate to a Disqualified Organization or for the
maturity of any payments due on a Class R Certificate to the Holder thereof or
for taking any other action with respect to such Holder under the provisions of
this Agreement, so long as the transfer was effected in accordance with this
Section 4.02(c), unless the Certificate Registrar shall have actual knowledge at
the time of such transfer or the time of such payment or other action that the
transferee is a Disqualified Organization (or an agent or nominee thereof).
In addition to the foregoing restrictions on transfer of the Class R
Certificates, the Certificate Registrar shall not register the transfer of a
Class R Certificate unless it has received a transferee letter in the form
attached as Exhibit M-2. Upon satisfaction of the foregoing requirements, the
Certificate Registrar shall register the Class R Certificate in the name of the
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transferee on whose behalf the transferee letter is made and delivered (and not
in the name of any nominee thereof).
Each Holder of the Class R Certificate or any interest therein, by such
Holder's acceptance thereof, shall be deemed for all purposes to have consented
to the provisions of this Section 4.02(c).
The Class R Certificate shall bear a legend describing the restrictions
on transferability set forth in this Section 4.02(c).
Transfers of the Class R Certificates to Non-United States Persons are
prohibited.
In the case of any Class R Certificate presented for registration in
the name of an employee benefit plan or other plan subject to the fiduciary
responsibility provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), an investment manager, a named
fiduciary or a trustee of any such plan, or any other Person who is using "plan
assets" of any such plan to effect such acquisition, the Trustee shall require
an Opinion of Counsel acceptable to and in the form and substance satisfactory
to the Trustee and the Servicer to the effect that the purchase or holding of a
Class R Certificate is permissible under applicable law, will not constitute or
result in any non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code, and will not subject the Trustee, the Depositors or
the Servicer to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in this Agreement or any other liability, which Opinion of Counsel
shall not be an expense of the Trustee, either Depositor or the Servicer.
None of (i) the Servicer, (ii) the Representative, (iii) any Depositor,
(iv) any Originator or (v) any Subservicer shall be a Class A Certificateholder.
Any attempted or purported transfer in violation of the preceding sentence shall
be absolutely null and void and shall vest no rights in the purported
transferee. If any purported transferee shall become a Holder of a Class A
Certificate in violation of such sentence, then the last preceding Holder shall
be restored to all rights as Holder thereof retroactive to the date of
registration of transfer of such Certificate. The Trustee shall notify the
Servicer of any transfer in violation of that paragraph upon receipt of written
notice thereof. The Trustee shall be under no liability to any Person for any
registration of transfer of a Class A Certificate not permitted by this
paragraph or for making any payments due on such Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was registered without such
receipt. The Trustee shall be entitled, but not obligated, to recover from any
holder of a Class A Certificate that was in fact not a permitted Holder under
this paragraph, all payments made on such Certificate at and after such time.
Any such payments so recovered by the Trustee shall be paid and delivered by the
Trustee to the last preceding Holder of such Certificate.
Subject to the preceding paragraphs, upon surrender for registration of
transfer of any Certificate at the office or agency of the Trustee located in
New York, New York or Chicago, Illinois, the Trustee shall execute, authenticate
and deliver in the name of the designated transferee
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or transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. The Trustee shall notify the
Servicer of any such transfer.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of Authorized Denominations of a like aggregate
Percentage Interest, upon surrender of the Certificates to be exchanged at such
office. Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute, authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive.
No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
All Certificates surrendered for transfer and exchange shall be marked
"canceled" by the Trustee.
(e) At the option of the holder of the Class R Certificate, the
residual interest in the Trust REMIC may be represented by separate
certificates; provided, however, that such separate certification may not occur
until the Servicer receives an Opinion of Counsel to the effect that separate
certification in the form and manner proposed would not result in the imposition
of federal income tax upon the Trust REMIC or cause the Trust REMIC to fail to
qualify as a REMIC; and provided, further, that the provisions of Sections
4.02(c) and 11.05(b) will apply to each such separate certificate as if the
separate certificate were a Class R Certificate.
Section 4.03 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) there is delivered to the Servicer and the Trustee
such security or indemnity, which may include a letter of indemnity delivered by
an insurance company reasonably acceptable to the Trustee and the Servicer, as
may be required by each of them to save each of them harmless, then, in the
absence of notice to the Servicer and the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest, but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section 4.03, the Servicer and the Trustee may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected
therewith. Any duplicate Certificate issued pursuant to this Section 4.03 shall
constitute complete and indefeasible evidence of ownership in the REMIC, as if
originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time.
Section 4.04 Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Servicer, the Depositors and the Trustee may treat the Person in
whose name any Certificate is registered as
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the owner of such Certificate for the purpose of receiving remittances pursuant
to Section 6.05 and for all other purposes whatsoever, and the Servicer, the
Depositors and the Trustee shall not be affected by notice to the contrary.
Section 4.05 Determination of LIBOR.
(a) On each LIBOR Determination Date, the Trustee shall determine LIBOR
on the basis of the rate for one-month United States dollar deposits that
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such date. If
such rate does not appear on Telerate Page 3750, the rate for that date will be
determined on the basis of the rates at which one-month United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market. 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. 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 that day for
one-month loans in United States dollars to leading European banks.
(b) The Class A-10 Pass-Through Rate applicable to the then current and
the immediately preceding Accrual Period may be obtained by any Class A-10
Certificateholder by telephoning the Trustee at its Corporate Trust Office at
612-973-6700.
(c) On each LIBOR Determination Date, the Trustee shall send to the
Servicer by facsimile notification of LIBOR for the following Accrual Period.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 Duties of the Servicer.
(a) It is intended that the Trust REMIC formed hereunder shall
constitute, and that the affairs of the Trust REMIC shall be conducted so as to
qualify it as, a REMIC as defined in and in accordance with the REMIC
Provisions. In furtherance of such intention, the Servicer covenants and agrees
that it shall not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of the Trust REMIC.
(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
entity which is in compliance with the laws of each state necessary to enable it
to perform its obligations
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under such Subservicing Agreement and (x) has been designated an approved
Seller-Servicer by FHLMC or FNMA for first and second mortgage loans, or (y) is
an affiliate or wholly owned subsidiary of the Servicer. The Servicer shall give
notice to the Depositors, the Trustee and the Certificate Insurer of the
appointment of any Subservicer other than a Subservicer which is an affiliate or
wholly-owned subsidiary of the Servicer. Any such Subservicing Agreement shall
be consistent with and not violate the provisions of this Agreement. The
Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions of such Subservicing Agreement and either itself
directly service the related Mortgage Loans or enter into a Subservicing
Agreement with a successor subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Depositors, the Trustee, the Certificate Insurer and the Certificateholders for
the servicing and administering of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. For purposes of this Agreement, the Servicer shall be deemed
to have received payments on Mortgage Loans when the Subservicer has received
such payments. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification or limit or modify indemnification provided by the Servicer
herein.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an Originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Depositors, the Trustee, the
Certificate Insurer and Certificateholders shall not be deemed parties thereto
and shall have no claims, rights, obligations, duties or liabilities with
respect to the Subservicer except as set forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of a Servicer Default), the Trustee or its
designee shall, subject to Section 10.02 hereof, thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the Trustee elects to terminate any
Subservicing Agreement. If the Trustee does not terminate a Subservicing
Agreement, the Trustee, its designee or the successor servicer for the Trustee
shall be deemed to have assumed all of the Servicer's interest therein and to
have replaced the Servicer as a party to each Subservicing Agreement to the same
extent as if the Subservicing Agreements had been assigned to the assuming
party, except that the Servicer shall not thereby be relieved of any liability
or obligations under the Subservicing Agreements. The Servicer at its expense
and without right of reimbursement therefor, shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to each
Subservicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
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efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
(f) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Depositors, the Certificateholders and the Certificate Insurer;
provided, however, that (unless (x) the Mortgagor is in default with respect to
the Mortgage Loan, or such default is, in the judgment of the Servicer,
imminent, (y) with respect to any modification lowering the Mortgage Interest
Rate (or, with respect to any Mortgage Loan in the Adjustable Rate Group, a
modification to the method of determination which may result a lower Mortgage
Interest Rate) or effecting the forgiveness of any amount owed under the
Mortgage Note, or extending the final maturity date on such Mortgage Loan, the
Certificate Insurer has consented to such modification and notice of such
modification has been delivered to the Rating Agencies and (z) such waiver,
modification, postponement or indulgence would not be considered to constitute
the acquisition by the REMIC of a new mortgage loan for federal income tax
purposes) the Servicer may not permit any modification with respect to any
Mortgage Loan that would change the Mortgage Interest Rate, defer (except as
permitted by Section 5.11) or forgive the payment of any principal or interest
(unless in connection with the liquidation of the related Mortgage Loan) or
extend the final maturity date on the Mortgage Loan. No costs incurred by the
Servicer or any Subservicer in respect of Servicing Advances shall, for the
purposes of distributions to Certificateholders, be added to the Principal
Balance of the related Mortgage Loan for purposes of this Agreement. Without
limiting the generality of the foregoing, and subject to the consent of the
Certificate Insurer, the Servicer shall continue, and is hereby authorized and
empowered to execute and deliver on behalf of the Trustee, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. If reasonably required by the Servicer (as
evidenced by an Officer's Certificate of the Servicer to such effect delivered
to the Trustee), the Trustee shall furnish the Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties under this Agreement.
Notwithstanding anything to the contrary contained herein, the
Servicer, in servicing and administering the Mortgage Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
Property management procedures) and exercise the same care that it customarily
employs and exercises in servicing and administering mortgage loans for its own
account, in accordance with accepted second mortgage servicing practices of
prudent lending institutions and giving due consideration to the Depositor's,
the Certificate Insurer's and Certificateholders' reliance on the Servicer.
Notwithstanding anything to the contrary contained herein, the Servicer
may reimburse itself for Servicing Advances pursuant to Section 5.04 and may pay
all or a portion of any Servicing Advance out of excess amounts on deposit in
the Principal and Interest Account and held for future distribution on the date
such Servicing Advance is made; any excess amounts so used shall be replaced by
the Servicer by deposit to the Principal and Interest Account on or before the
next succeeding Determination Date.
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(g) On and after such time as the Trustee receives the resignation of,
or notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to any resignation pursuant to Section 9.04,
after receipt of the Opinion of Counsel required pursuant to Section 9.04, the
Trustee or its designee shall assume all of the rights and obligations of the
Servicer, subject to Section 9.02 hereof. The Servicer shall, upon request of
the Trustee but at the expense of the Servicer, deliver to the Trustee all
documents and records relating to the Mortgage Loans and an accounting of
amounts collected and held by the Servicer and otherwise use its best efforts to
effect the orderly and efficient transfer of servicing rights and obligations to
the assuming party.
(h) The Servicer shall take all actions required to be taken under
sections 6050H, 6050J and 6050P of Code in respect of the Mortgage Loans, the
Mortgaged Property and the REO Property.
Section 5.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 5.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as it shall deem in
its good faith business judgment to be in the best interest of the Depositors,
the Certificate Insurer and the Certificateholders and otherwise in accordance
with the accepted second mortgage servicing practices of prudent lending
institutions. The Servicer in accordance with the provisions of Section 5.10
shall foreclose upon or otherwise comparably effect the ownership in the name of
the Trustee for the benefit of the Certificateholders of Mortgaged Properties
relating to defaulted Mortgage Loans as to which no satisfactory arrangements
can be made for collection of delinquent payments; provided, however, that the
Servicer shall not be obligated to foreclose in the event that the Servicer, in
its good faith reasonable business judgment, determines that it would not be in
the best interests of the Depositors, the Certificateholders or the Certificate
Insurer, which judgment shall be evidenced by an Officer's Certificate delivered
to the Trustee and the Certificate Insurer. In connection with such foreclosure
or other conversion, the Servicer shall exercise and use collection and
foreclosure procedures with the same degree of care and skill as it would
exercise or use under the circumstances in the conduct of its own affairs. Any
amounts advanced in connection with such foreclosure or other action shall
constitute "Servicing Advances."
After a Mortgage Loan has become a Liquidated Mortgage Loan, the
Servicer shall promptly prepare and forward to the Depositors, the Trustee and
the Certificate Insurer a Liquidation Report, in the form attached hereto as
ExhibitO, detailing the Liquidation Proceeds received from the Liquidated
Mortgage Loan, expenses incurred with respect thereto, and any loss incurred in
connection therewith.
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Section 5.03 Establishment of Principal and Interest Accounts;
Deposits in Principal and Interest Accounts.
The Servicer, for the benefit of the Certificateholders, shall cause to
be established and maintained one or more Principal and Interest Accounts in the
name of the Trustee, which shall be Eligible Accounts, which may be
interest-bearing, titled "EQCC Home Equity Loan Trust 1997-2 Principal and
Interest Account", bearing an additional designation clearly indicating that the
funds deposited therein are held for the benefit of the Certificateholders. Such
Principal and Interest Accounts shall be insured by the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC, as the case may be, to the
maximum extent provided by law. The creation of any Principal and Interest
Account shall be evidenced by a letter agreement in the form of Exhibit P
hereto. A copy of such letter agreement shall be furnished by the Servicer to
the Depositors, the Trustee and the Certificate Insurer. The Servicer shall use
reasonable efforts to deposit (without duplication) within one Business Day, and
shall in any event deposit within two Business Days of receipt thereof, in the
Principal and Interest Account and retain therein:
(i) all payments received on or after the Cut-off Date on account
of principal on the Mortgage Loans and all Principal Prepayments and
Curtailments collected on or after the Cut-off Date;
(ii) (a) all payments received on or after the Cut-off Date on
account of interest accrued on the Mortgage Loans on or after the
Cut-off Date and (b) Pre-Plan Interest Payments;
(iii) all Net Liquidation Proceeds;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the purchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant
to Sections 2.06 and 3.03;
(vii) any amount required to be deposited in the Principal and
Interest Account pursuant to Section 5.04, 5.07, 5.08 or 5.10; and
(viii) all payments made by the Servicer pursuant to the final
paragraph of Section 5.01(f) to replace any amount withdrawn from the
Principal and Interest Account to make Servicing Advances.
In making the deposits set forth in clauses (i) through (viii)
(inclusive) above, the Servicer shall note in its records the respective amounts
deposited with respect to the Fixed Rate Group and the Adjustable Rate Group.
The foregoing requirements for deposit in the Principal and Interest Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, with respect to each Mortgage Loan, the
Representative's Yield, amounts received on and after the Cut-off Date in
respect of interest accrued on the Mortgage Loans prior to the Cut-off Date
(other than amounts referred to in Section 5.03(ii)(b)), the Servicing Fee, late
payment charges and assumption fees, to the extent permitted by Sections 7.01
and 7.03, Excess Proceeds, and any amounts received after the date of
substitution of a Qualified
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Substitute Mortgage Loan pursuant to Section 2.06 or 3.03 in respect of interest
accrued on such Qualified Substitute Mortgage Loan on or prior to the date of
substitution (except to the extent taken into account in calculating the
Substitution Adjustment with respect thereto), need not be deposited by the
Servicer in the Principal and Interest Account. Any investment earnings on funds
held in the Principal and Interest Account shall be for the account of the
Servicer. Any reference herein to amounts on deposit in the Principal and
Interest Account shall refer to amounts net of such investment earnings.
Section 5.04 Permitted Withdrawals From the Principal and Interest
Account.
The Servicer shall withdraw or cause to be withdrawn funds from the
Principal and Interest Account for the following purposes:
(i) to remit to the Trustee for deposit into the Collection
Account on the third Business Day prior to the Payment Date, the sum of
the amounts set forth in Section 5.03 deposited in the Principal and
Interest Account during the related Due Period (excluding any amounts
not required to be deposited in the Principal and Interest Account
pursuant to Section 5.03 and excluding any amounts withdrawn by the
Servicer pursuant to clauses (ii), (iii), (v), (vi), (vii) and (x)
below as of the related Determination Date);
(ii) to reimburse itself for any accrued unpaid Servicing
Fees, for unreimbursed Servicing Advances and, with respect to any
Advance made by the Servicer from its own funds, any unreimbursed
Advance; provided, that any withdrawal of accrued unpaid Servicing Fees
pursuant to this Section 5.04(ii) shall be used first by the Servicer
to pay any amounts due to the Trustee pursuant to this Agreement. The
Servicer's right to reimbursement for unpaid Servicing Fees and
unreimbursed Servicing Advances shall be limited to late collections on
the related Mortgage Loan, including Liquidation Proceeds, Released
Mortgaged Property Proceeds, Insurance Proceeds and such other amounts
as may be collected by the Servicer from the related Mortgagor or
otherwise relating to the Mortgage Loan in respect of which such
unreimbursed Advances are owed. The Servicer's rights to reimbursement
for any unreimbursed Advances shall be limited to collections of
interest on any Mortgage Loan with respect to which an Advance was made
or from late collections on such Mortgage Loans, including Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Servicer from the related
Mortgagors or otherwise relating to the Mortgage Loans in respect of
which such unreimbursed amounts are owed. It is understood that the
Servicer's right to reimbursement pursuant hereto shall be prior to the
rights of Certificateholders unless the Representative is the Servicer
and the Servicer or any Depositor or Originator is required to purchase
or substitute (or cause to be purchased or substituted) a Mortgage Loan
pursuant to Sections 2.06 and 3.03, in which case the Servicer's right
to such reimbursement shall be subsequent to the deposit into the
Principal and Interest Account of the purchase price or Substitution
Adjustment pursuant to such Sections 2.06 and 3.03;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the
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United States Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction;
(iv) (a) to make investments in Permitted Instruments and (b)
after effecting the remittance to the Trustee as provided in Section
5.04(i), to pay to itself interest earned in respect of Permitted
Instruments or on funds deposited in the Principal and Interest
Account;
(v) to withdraw any funds deposited in the Principal and
Interest Account that were not required to be deposited therein (such
as Servicing Compensation) or were deposited therein in error;
(vi) to pay itself Servicing Compensation pursuant to Section
7.03 hereof to the extent not retained or paid pursuant to Section
5.03;
(vii) to withdraw funds necessary for the conservation and
disposition of REO Property pursuant to the third paragraph of Section
5.10 hereof to the extent such funds were deposited in the Principal
and Interest Account;
(viii) to utilize any excess funds on deposit to make any
Advance pursuant to Section 6.08 or any Servicing Advance pursuant to
the final paragraph of Section 5.01(f);
(ix) to clear and terminate the Principal and Interest
Account upon the termination of this Agreement and allocate the amounts
therein pursuant to the priority set forth in Section 6.05(d); and
(x) to effect, with respect to a Bankruptcy Loan, the
remittance to the Depositor transferring such Bankruptcy Loan, of an
amount equal to the excess, if any, of (a) Pre-Plan Interest Payments
collected in the preceding Due Period with respect to such Bankruptcy
Loan over (b) the interest accrued in such preceding Due Period, but
uncollected as of the last day of such Due Period, with respect to such
Bankruptcy Loan.
In making the withdrawals set forth in clauses (i) through (x)
(inclusive) above, the Servicer shall note (when applicable) in its records the
respective amounts withdrawn with respect to the Fixed Rate Group and the
Adjustable Rate Group. So long as no Servicer Default shall have occurred and be
continuing, the funds held in the Principal and Interest Account may be invested
by the Servicer (to the extent practicable) in Permitted Instruments, as
directed in writing to the Trustee by the Servicer. In either case, funds in the
Principal and Interest Account must be available for withdrawal without penalty,
and any Permitted Instruments must mature not later than the Business Day
immediately preceding the day on which such funds are to be remitted to the
Trustee for deposit in the Collection Account, but in no event later than the
Business Day immediately preceding the Determination Date next following the
date of such investment (except, in each case, that if such Permitted Instrument
is an obligation of the institution that maintains the Principal and Interest
Account, then such Permitted Instrument shall mature not later than such
Determination Date) and shall not be sold or disposed of prior to its maturity.
All Permitted Instruments in which funds in the Principal and Interest Account
are invested must be
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held by or registered in the name of the Trustee. All interest or other earnings
from funds on deposit in the Principal and Interest Account (or any Permitted
Instruments thereof) shall be the exclusive property of the Servicer, and may be
withdrawn from the Principal and Interest Account pursuant to clause (iv) above.
The amount of any losses incurred in connection with the investment of funds in
the Principal and Interest Account in Permitted Instruments shall be deposited
in the Principal and Interest Account by the Servicer from its own funds
immediately as realized without reimbursement therefor.
Section 5.05 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan as to which the Servicer maintains
escrow accounts, the Servicer shall maintain accurate records reflecting the
status of ground rents, property taxes and assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of primary mortgage guaranty insurance premiums, if any, and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in any escrow account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage. To the extent that a Mortgage does not
provide for escrow payments, the Servicer shall monitor such payments to
determine if they are made by the Mortgagor at the time they become due and, if
not paid by the Mortgagor, shall advance such amounts as Servicing Advances. To
the extent ground lease payments are not made by the Mortgagor, and the Servicer
has notice of such failure to pay, the Servicer shall advance such delinquent
payments. Any out-of-pocket expenses incurred by the Servicer pursuant to this
Section 5.05 shall constitute Servicing Advances.
Section 5.06 Transfer of Accounts; Monthly Statements.
The Accounts (other than the Principal and Interest Account, which
shall be established pursuant to Section5.03 hereof) shall be established, as of
the Closing Date, in the name of the Trustee as Eligible Accounts pursuant to
clause (B) of the definition thereof. Any Account may, upon written notice from
the Servicer to the Trustee, be transferred to a different depository
institution so long as (i) such transfer (A) is to an Eligible Account and the
Certificate Insurer receives notice thereof from the Servicer or (B) is approved
in writing by the Certificate Insurer, which approval shall not be unreasonably
withheld and (ii) written notice of such transfer is sent to Moody's. The
Trustee shall provide to the Certificate Insurer a monthly statement of activity
in the Accounts established by it, and the Servicer shall provide to the Trustee
and the Certificate Insurer a monthly statement of activity in the Principal and
Interest Account from the party holding such account.
Section 5.07 Maintenance of Hazard Insurance.
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The Servicer shall cause to be maintained, subject to the provisions of
Section 5.08 hereof, fire and hazard insurance with extended coverage customary
in the area where the Mortgaged Property is located, in an amount which is at
least equal to the least of (a) the outstanding principal balance owing on the
Mortgage Loan (and any prior lien if the related Mortgage Loan is in a junior
lien position), (b) the full insurable value of the Mortgaged Property securing
the Mortgage Loan and (c) the minimum amount required to compensate for damage
or loss on a replacement cost basis. If the Mortgaged Property is in an area
identified in the Federal Register by the Flood Emergency Management Agency as
Flood Zone "A", and such flood insurance has been made available, the Servicer
will cause to be purchased a flood insurance policy with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(i) the outstanding principal balance of the Mortgage Loan (plus the principal
balance of any lien having priority over the Mortgage Loan), (ii) the full
insurable value of the Mortgaged Property, or (iii) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended.
The Servicer shall also maintain on REO Property, to the extent reasonably
available, on REO Property, fire and hazard insurance in the amounts described
above, liability insurance and, to the extent required and available under the
National Flood Insurance Act of 1968, as amended, and the Servicer determines
that such insurance is necessary in accordance with accepted second mortgage
servicing practices of prudent lending institutions, flood insurance in an
amount equal to that required above. Any amounts collected by the Servicer under
any such policies (other than amounts to be applied to the restoration or repair
of the Mortgaged Property, or to be released to the Mortgagor in accordance with
customary second mortgage servicing procedures) shall be deposited in the
Principal and Interest Account, subject to (X)retention by the Servicer to the
extent such amounts constitute Servicing Compensation or (Y)withdrawal pursuant
to Section 5.04. It is understood and agreed that no earthquake or other
additional insurance need be required by the Servicer of any Mortgagor or
maintained on REO Property, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder shall be endorsed with
standard mortgagee clauses with losses payable to the Servicer. Any
out-of-pocket expenses incurred by the Servicer pursuant to this Section 5.07,
including, without limitation, any advances of premiums on insurance policies
required by this Section 5.07, shall constitute Servicing Advances.
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a blanket policy
insuring against fire and hazards of extended coverage on all of the Mortgage
Loans, then, to the extent such policy names the Servicer as loss payee and
provides coverage in an amount equal to the aggregate unpaid principal balance
on the Mortgage Loans without co-insurance, and otherwise complies with the
requirements of Section 5.07, the Servicer shall be deemed conclusively to have
satisfied its obligations with respect to fire and hazard insurance coverage
under Section 5.07, it being understood and agreed that such blanket policy may
contain a deductible clause, in which case the Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with Section 5.07, and there shall have been a loss which would have
been covered by such policy, deposit in the Principal and Interest Account from
the Servicer's own funds the difference, if any, between the amount that would
have been payable under a policy complying with Section 5.07 and the amount paid
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under such blanket policy. Upon the request of the Certificate Insurer or the
Trustee, the Servicer shall cause to be delivered to such requesting Person a
certified true copy of such policy.
Section 5.09 Fidelity Bond.
The Servicer shall maintain with a responsible company, at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy in
a minimum amount acceptable to FNMA or FHLMC or otherwise as is commercially
available at a cost that is not generally regarded as excessive by industry
standards, with broad coverage on all officers, employees or other persons
acting in any capacity requiring such persons to handle funds, money, documents
or papers relating to the Mortgage Loans ("Servicer Employees"). Any such
fidelity bond and errors and omissions insurance shall protect and insure the
Servicer against losses, including losses resulting from forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of such Servicer
Employees. Such fidelity bond shall also protect and insure the Servicer against
losses in connection with the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 5.09 requiring such fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. Upon the request of the Trustee or
the Certificate Insurer, the Servicer shall cause to be delivered to such
requesting Person a certified true copy of such fidelity bond and errors and
omissions insurance policy. On the Closing Date, such fidelity bond and errors
and omissions insurance policy is maintained with certain underwriters at
National Union Fire Insurance Company of Pittsburgh, Pa.
Section 5.10 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be taken in the name of the Trustee for the benefit of
the Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders solely for the purpose of its prudent and
prompt disposition and sale. The Servicer shall, either itself or through an
agent selected by the Servicer, manage, conserve, protect and operate the REO
Property in the same manner that it manages, conserves, protects and operates
for its own account similar property in the same locality as the REO Property is
managed. The Servicer shall attempt to sell the same (and may temporarily rent
the same) on such terms and conditions as the Servicer deems to be in the best
interests of the Certificate Insurer and the Certificateholders. Any
out-of-pocket expenses incurred by the Servicer pursuant to this Section 5.10
shall constitute Servicing Advances. The Servicer shall cause the Trustee to be
named as a beneficiary and loss payee under the REO liability provisions of the
Servicer's general comprehensive liability insurance policy.
The Servicer shall cause to be deposited in the Principal and Interest
Account all revenues received with respect to the conservation and disposition
of the related REO Property and shall retain or withdraw therefrom funds
necessary for the proper operation, management and maintenance of the REO
Property and the fees of any managing agent acting on behalf of the Servicer.
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The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interest of the Certificateholders and the Certificate Insurer and, as
soon as practicable thereafter, the expenses of such sale shall be paid. The
proceeds of sale of the REO Property and other proceeds of any REO Disposition
shall be deposited in the Principal and Interest Account, net of related
liquidation expenses, Excess Proceeds, any related unreimbursed Servicing
Advances, accrued and unpaid Servicing Fees and unreimbursed Advances payable to
the Servicer in accordance with Section 5.04(ii).
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer shall have received an Opinion of Counsel to the
effect that the holding of such Mortgaged Property subsequent to two years after
its acquisition will not result in the imposition of taxes on "prohibited
transactions" as defined in Section 860F of the Code or cause the Trust REMIC to
fail to qualify as a REMIC at any time that any Class A Certificates are
outstanding. Notwithstanding any other provision of this Agreement, (i)no
Mortgaged Property acquired by the Servicer pursuant to this Section shall be
rented (or allowed to continue to be rented) or otherwise used for the
production of income or by or on behalf of the Trust Fund, and (ii)no
construction shall take place on such Mortgaged Property if such activity as
described in the preceding clause (i) or clause (ii) is conducted or otherwise
undertaken in such a manner or pursuant to any terms that would cause such
Mortgaged 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 Trust
REMIC of any "net income from foreclosure property" which is subject to taxation
within the meaning of Sections 860G(c) and 857(b)(4)(B) of the Code. If a period
greater than two years is permitted under this Agreement and is necessary to
sell any REO Property, the Servicer shall give appropriate notice to the
Trustee, the Certificate Insurer and the Certificateholders and shall report
monthly to the Trustee as to the progress being made in selling such REO
Property.
If the Servicer has actual knowledge that a Mortgaged Property which
the Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a 1 mile radius of any site with environmental or
hazardous waste risks known to the Servicer, the Servicer will notify the
Certificate Insurer and the Trustee prior to acquiring the Mortgaged Property
and shall not take any action without the prior written approval of the
Certificate Insurer and the Trustee.
Nothing in this Section shall affect the Servicer's right to deem
certain advances proposed to be made Nonrecoverable Advances. For the purpose of
this Section 5.10, actual knowledge of the Servicer means actual knowledge of a
Responsible Officer of the Servicer involved in the servicing of the relevant
Mortgage Loan. Actual knowledge of the Servicer does not include knowledge
imputable by virtue of the availability of or accessibility to information
relating to environmental or hazardous waste sites or the locations thereof.
Section 5.11 Collection of Certain Mortgage Loan Payments.
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The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with this Agreement, comply with
the terms and provisions of any applicable hazard insurance policy. 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 Mortgage Loan or any other fee
or charge which the Servicer would be entitled to retain hereunder as Servicing
Compensation and extend the due date for payments due on a Mortgage Note for a
period (with respect to each payment as to which the due date is extended) not
greater than 125 days after the initially scheduled due date for such payment,
provided that such extension may only be made once in any twelve month period
without the prior written consent of the Certificate Insurer, which consent
shall not be unreasonably withheld. In the event the Servicer shall consent to
the deferment of the Due Dates for payments due on a Mortgage Note, the Servicer
shall nonetheless remit any required Advance in accordance with Section 6.08
hereof 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.
Section 5.12 Access to Certain Documentation and Information
Regarding the Mortgage Loans.
The Servicer and the Depositors shall provide to the Trustee, the
Certificateholders, the Certificate Insurer, the FDIC, the Office of Thrift
Supervision, and to the supervisory agents and examiners of each of the
foregoing, access to the documentation regarding the Mortgage Loans (such access
in the case of the FDIC, the Office of Thrift Supervision and the supervisory
agents and examiners shall be limited to that required by applicable state and
federal regulations), 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 5.13 Superior Liens.
The Servicer shall file (or cause to be filed) of record a request for
notice of any action by a superior lienholder under a First Lien for the
protection of the Depositor's and the Trustee's interest, where permitted by
local law and whenever applicable state law does not require that a junior
lienholder be named as a party defendant in foreclosure proceedings in order to
foreclose such junior lienholder's equity of redemption. The Servicer must also
notify any superior lienholder in writing of the existence of the Mortgage Loan
and request notification of any action (as described below) to be taken against
the Mortgagor or the Mortgaged Property by the superior lienholder.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First Lien,
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 advance the
necessary funds to cure the default or reinstate the superior lien, if such
advance is in the best interests of the Depositors, the Certificate Insurer and
the Certificateholders. The Servicer shall not make such an advance except to
the extent that it determines in its reasonable good faith judgment that the
advance would be recoverable from Liquidation Proceeds on the related
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Mortgage Loan. The Servicer shall thereafter take such action as is necessary to
recover the amount so advanced.
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Establishment of Collection Account; Deposit in
Collection Account.
No later than the Closing Date, the Trustee, for the benefit of the
Certificateholders, will establish and maintain one or more Eligible Accounts as
trust accounts with itself which shall not be interest-bearing, titled "EQCC
Home Equity Loan Trust 1997-2 Collection Account" and bearing an additional
designation clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders. The Trustee shall, promptly upon receipt,
deposit in the Collection Account and retain therein:
(i) the amounts remitted by the Servicer pursuant to Section 5.04(i);
(ii) the Advances pursuant to Section 6.08 remitted to the Trustee by
the Servicer;
(iii) amounts transferred from the Spread Account pursuant to Section
6.09(b)(iii) and Insured Payments pursuant to Section 6.05(c); and
(iv) amounts required to be paid by the Servicer pursuant to Section
6.04(e) in connection with losses on investments of amounts in the
Collection Account.
In making the deposits set forth in clauses (i) through (iv)
(inclusive) above, the Trustee shall note in its records (if applicable) the
respective amounts deposited with respect to the Fixed Rate Group and the
Adjustable Rate Group.
Section 6.02 Permitted Withdrawals from Collection Account.
The Trustee shall withdraw amounts on deposit in the Collection Account
on each Payment Date (except as set forth in clause(v) below) in the following
order of priority:
(i) to make deposits in the Insurance Account pursuant to Section
6.03(a);
(ii) to make deposits in the Spread Account pursuant to Section
6.09(a)(i);
(iii) to make deposits in the Letter of Credit Fee Account pursuant to
Section 6.10(a)(i);
(iv) to make the distributions pursuant to Section 6.05(d); and
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(v) on any day during the related Accrual Period, and in no particular
order of priority:
(A) to invest amounts on deposit in the Collection Account in
Permitted Instruments or such other instruments as may be approved in
writing by the Certificate Insurer (with written notice to Moody's)
pursuant to Section 6.04;
(B) to pay to the Servicer interest paid and earnings realized on
Permitted Instruments;
(C) to withdraw any amount not required to be deposited in the
Collection Account or deposited therein in error;
(D) to withdraw any amount that constitutes a Advance by Servicer
of its own funds or a Mortgagor payment previously deposited into the
Collection Account that is held to constitute a voidable preference by
a trustee in bankruptcy pursuant to the United States Bankruptcy Code
in accordance with a final, nonappealable order of a court having
competent jurisdiction; and
(E) to clear and terminate the Collection Account upon the
termination of this Agreement and allocate amounts therein pursuant to
Section 6.05(d).
In making the withdrawals set forth in clauses (i) through (v)
(inclusive) above, the Trustee shall note in its records (if applicable) the
respective amounts withdrawn with respect to the Fixed Rate Group and the
Adjustable Rate Group.
Section 6.03 Establishment of Insurance Account: Deposits in
Insurance Account: Permitted Withdrawals from
Insurance Account.
(a) No later than the Closing Date, the Trustee, for the benefit of the
Certificateholders and the Certificate Insurer, will establish and maintain one
or more Eligible Accounts as trust accounts with itself which shall not be
interest-bearing, titled "EQCC Home Equity Loan Trust 1997-2 Insurance Account".
The Insurance Account shall bear an additional designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders and the Certificate Insurer. On each Payment Date, the
Trustee, upon receipt (and to the extent received), promptly shall deposit into
the Insurance Account in accordance with Section 6.02:
(i) an amount equal to the aggregate Monthly Premium with
respect to the Fixed Rate Certificates and Adjustable Rate Certificates
(in each case based on the respective principal balances of the related
Certificates) due on such Payment Date in accordance with Sections
6.05(d) and (e); and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.04(e) in connection with losses on
investments of amounts in the Insurance Account.
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If at any time the amount then on deposit in the Insurance Account
shall be insufficient to pay in full the fees and expenses of the Certificate
Insurer then due, the Trustee shall withdraw such amount from the Spread
Account, and any excess funds available after payment of the Monthly Premium in
the amount so withdrawn from the Spread Account shall be deposited by the
Trustee in the Spread Account.
(b) The Trustee may make withdrawals from the Insurance Account for
investment in Permitted Instruments pursuant to Section 6.04, and the Trustee
shall withdraw amounts on deposit in the Insurance Account for applications in
the following order:
(i) pay the Certificate Insurer the aggregate Monthly Premium on
each Payment Date in accordance with Section 6.05(d) and (e);
(ii) [reserved];
(iii) withdraw amounts not required to be deposited in the
Insurance Account or deposited therein in error; and
(iv) deposit in the Spread Account for amounts withdrawn from it
pursuant to the last paragraph of subclause (a) above; and
(v) remit to the Servicer as additional Servicing Compensation
any such remaining amounts.
Section 6.04 Investment of Accounts.
(a) So long as no Servicer Default shall have occurred and be
continuing, all or a portion of any Account held by the Trustee shall be
invested and reinvested by the Trustee (or remain uninvested), as directed in
writing by the Servicer on its own behalf, in one or more Permitted Instruments
(or, in the case of the Collection Account, in such other instruments approved
in writing by the Certificate Insurer (with written notice to Moody's)) bearing
interest or sold at a discount. If a Servicer Default shall have occurred and be
continuing, the Trustee shall invest all Accounts in Permitted Instruments
described in paragraph (iv) of the definition of Permitted Instruments. At no
time shall any such investment in any Account mature later than the Business Day
immediately preceding the date on which such amounts are required by the terms
hereof to be withdrawn from such Account, which (i) in the case of the
Collection Account, shall be the next Payment Date, (ii) in the case of the
Principal and Interest Account, shall be the third business day preceding the
next Payment date and (iii) in all other cases, until the day actually withdrawn
pursuant to the terms hereof.
(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. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 6.04 is the cause
of such loss or charge.
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(c) Subject to Section 12.01 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 investment loss on any Permitted Instrument (or other
instrument permitted by Section 6.04(a)) included herein (except to the extent
that the Trustee is the obligor and has defaulted thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
it, to the fullest extent practicable, in such manner as the Servicer shall from
time to time direct as set forth in Section 6.04(a), but only in one or more
Permitted Instruments (or other instrument permitted by Section 6.04(a)).
(e) All income or other gain from investments in any Account held by
the Trustee, or from amounts on deposit in such Account and invested in
Permitted Instruments, shall be deposited in such Account, as the case may be,
immediately on receipt, and the Trustee shall notify the Servicer of any loss
resulting from such investments. Upon receipt of such notification, the Servicer
shall promptly remit the amount of any such loss from its own funds, without
reimbursement therefor, to the Trustee for deposit in the Account from which the
related funds were withdrawn for investment.
(f) Any investment earnings on funds held in the Principal and Interest
Account may be reinvested by the Servicer and the proceeds of such reinvestment
are for the account of the Servicer.
Section 6.05 Priority and Subordination of Distributions.
(a) The rights of the Certificateholders to receive distributions from
the proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. The rights of the Class R Certificateholders to receive distributions
in respect of the Class R Certificates shall be subject and subordinate to the
preferential rights of the Class A Certificateholders to receive distributions
in respect of the Class A Certificates, to the extent set forth herein, and
distributions on the Class R Certificates are subject and subordinate to the
maintenance of the Specified Spread Account Requirement as specified herein. In
accordance with the foregoing, the ownership interests of the Class R
Certificateholders 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, no Certificateholder shall
be required to refund any amount properly distributed to it pursuant to Section
6.02, 6.05, 6.09(b) or 6.09(d).
(b) No later than 10:00a.m. New York time on the Business Day
immediately following each Determination Date occurring on or prior to the
earlier to occur of (x) the Cross-Over Date or (y) the Payment Date on which all
amounts due have been paid to the ClassA Certificateholders (including the
Certificate Insurer as subrogee of the ClassA Certificateholders) based
exclusively on the computer tape and other information prepared by the Servicer
pursuant to Section 6.07, indicating with respect to the immediately succeeding
Payment Date:
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(i) whether, any withdrawals from the Spread Account would
be required pursuant to Section 6.09(b)(iii);
(ii) if so, whether the amount available in cash and from
liquidation of Permitted Instruments on deposit in the Spread
Account would be insufficient to fund such withdrawal; and
(iii) if so, the amount that is the lesser of (A) the amount
of shortfall and (B) the amount then available to be drawn under
the Letter(s) of Credit then on deposit in the Spread Account
(the "Draw Amount");
the Trustee shall promptly cause to be presented to the Letter of Credit Bank(s)
of such Letter(s) of Credit a drawing certificate(s) of proper form for payment
thereunder such that the proceeds of such drawing(s) will be available on the
Business Day next preceding the next Payment Date and otherwise in conformity
with the terms thereof for the aggregate Draw Amount.
The Trustee shall draw upon all other Letters of Credit, to the full
extent amounts are available thereunder. Proceeds received in payment of any
Letter of Credit drawings shall be deposited and held in the Letter of Credit
Proceeds Sub-Account of the Spread Account.
(c) As soon as possible, and in no event later than 10:00 a.m. New York
time on the Business Day immediately preceding each Payment Date, the Trustee
shall furnish the Certificate Insurer and the Servicer with a completed notice
in the form set forth as Exhibit Q hereto (the "Notice") in the event that an
Event of Nonpayment will occur, pursuant to the definition thereof, with respect
to such Payment Date. The Notice shall specify the amount of Insured Payment and
shall constitute a claim for an Insured Payment pursuant to the Certificate
Insurance Policy. Upon receipt of Insured Payments for the benefit of the Class
A Certificateholders under the Certificate Insurance Policy, the Trustee shall
deposit such Insured Payments in the Collection Account.
The Trustee shall receive, as attorney-in-fact of each Holder of a
Class A Certificate, any Insured Payment from the Certificate Insurer and
disburse the same to each Holder of a Class A Certificate, respectively, in
accordance with the provisions of this Section 6.05. Insured Payments disbursed
by the Trustee from proceeds of the Certificate Insurance Policy shall not be
considered payment by the Trust Fund nor shall such payment discharge the
obligation of the Trust Fund with respect to such Class A Certificates, and the
Certificate Insurer shall become the owner of such unpaid amounts due from the
Trust Fund in respect of Class A Certificates. The Trustee hereby agrees on
behalf of each Holder of a Class A Certificate for the benefit of the
Certificate Insurer that it recognizes that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee), to the Class A Certificateholders, the Certificate Insurer
will be subrogated to the rights of the Class A Certificateholders, as
applicable, with respect to such Insured Payment and shall be deemed to the
extent of the payments so made to be a registered Class A Certificateholder and
shall receive all future Class A Remittance Amounts, as the case may be, until
all such Insured Payments by the Certificate Insurer have been fully reimbursed
together with interest thereon at the applicable Pass-Through Rate, subject to
the following paragraph. To evidence such subrogation, the Trustee shall note
the Certificate Insurer's rights as subrogee on the registration books
maintained by the Trustee upon receipt from the
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Certificate Insurer of proof of payment of any Insured Payment. Except as
otherwise described herein, the Certificate Insurer shall not acquire any voting
rights hereunder as a result of such subrogation.
It is understood and agreed that the intention of the parties is that the
Certificate Insurer shall not be entitled to reimbursement on any Payment Date
for amounts previously paid by it unless on such Payment Date the Class A
Certificateholders shall also have received the full amount of the Class A
Remittance Amount (exclusive of the principal portion of any Class A
Carry-Forward Amount representing amounts previously paid to the Class A
Certificateholders as Insured Payments), for such Payment Date.
(d) Not later than 12:00 p.m. New York time on each Payment Date, with
respect to the Fixed Rate Certificates and the Adjustable Rate Certificates, the
Trustee shall withdraw from the Collection Account from the amounts available
therein as set forth in this Article VI, if any, and shall, to the extent
available, distribute (without duplication) such amount in the priority
indicated:
(i) first, for deposit into the Insurance Account for the benefit
of the Certificate Insurer, the Monthly Premium with respect to such
Certificates payable to the Certificate Insurer;
(ii) second, for deposit into the Spread Account, the Excess
Spread with respect to the related Mortgage Loan Group;
(iii) third, for deposit into the Letter of Credit Fee Account,
the Letter of Credit Fee Amount with respect to such Certificates;
(iv) fourth, from amounts attributable to the related Mortgage
Loan Group, (A) to each of the Fixed Rate Certificateholders, the
Fixed Rate Interest Remittance Amount; and (B) to the Adjustable Rate
Certificateholders, the Adjustable Rate Interest Remittance Amount;
(v) fifth, [Reserved];
(vi) sixth, to the Fixed Rate Certificates and to the Adjustable
Rate Certificates, the Fixed Rate Principal Remittance Amount and the
Adjustable Rate Principal Remittance Amount, respectively, as follows:
(a) the Fixed Rate Principal Remittance Amount as follows:
(i) first, to the Class A-9 Certificates, in the amount equal to
the Class A-9 Lockout Remittance Amount; (ii) second, to the
Class A-1 Certificates, until the Class A-1 Principal Balance has
been reduced to its Targeted Amount (as set forth in the table
entitled "Targeted Amounts" attached hereto as Exhibit V); (iii)
third, after the Class A-1 Principal Balance has been reduced to
its Targeted Amount, to the Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-1 (without
regard to its Targeted Amount) and Class A-9 Certificates
(without regard to the Class A-9 Lockout Remittance Amount), in
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that order, in each case until the Principal Balance of each such
Class has been reduced to zero; and
(b) concurrently, to the Class A-10 Certificates, until the
Principal Balance of such Class has been reduced to zero, the
Adjustable Rate Principal Remittance Amount;
(vii) seventh, to the Trustee, any amounts then due and owing
representing fees of the Trustee (without regard to amounts
attributable to either Mortgage Loan Group); provided, that the
Trustee certifies in writing that such amount is due and owing and has
not been paid by the Servicer within 30 days after written demand
therefor;
(viii) eighth, to the Servicer and/or the Representative, as
applicable, any Reimbursable Amount (without regard to amounts
attributable to either Mortgage Loan Group);
(ix) ninth, to the Servicer an amount equal to Nonrecoverable
Advances previously made by the Servicer and not previously reimbursed
(without regard to amounts attributable to either Mortgage Loan
Group); and
(x) tenth, to the Class R Certificateholders, the balance, if
any.
(e) [Reserved]
(f) All distributions made to the Class A Certificateholders or the
Class R Certificateholders as a Class on each Payment Date will be made on a pro
rata basis among the Certificateholders of the respective Class of record on the
next preceding Record Date based on the Percentage Interest represented by their
respective Certificates, and shall be made by wire transfer of immediately
available funds to the account of such Certificateholder at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
own of record Class A Certificates which have denominations aggregating at least
$1,000,000 appearing in the Certificate Register, and in all cases with respect
to the Class R Certificates, and shall have provided complete wiring
instructions at least five Business Days prior to the Record Date, and otherwise
by check mailed to the address of such Certificateholder appearing in the
Certificate Register.
Section 6.06 Certificate Insurer Default.
If, as of any Payment Date, the Certificate Insurer fails to make an
Insured Payment, the amount available for distribution to Fixed Rate
Certificateholders and Adjustable Rate Certificateholders pursuant to Section
6.05(d) shall be distributed among holders of each Class of Class A
Certificateholders in the priority set forth in Section 6.05(d) in proportion to
the percentage interests set forth on each such Certificate; provided that, if
as of such Payment Date there are no amounts on deposit in the Spread Account,
the amount available for distribution to the Class A Certificateholders pursuant
to Section 6.05(d) shall be distributed among the holders of the Class A
Certificates on a pro rata basis, based on the respective Principal Balances for
each such Class of Class A Certificates.
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Section 6.07 Statements.
Not later than 12:00 noon Chicago, Illinois time on the Business Day
preceding each Determination Date, the Servicer shall deliver to the Trustee and
the Certificate Insurer a computer tape or written report containing the
information set forth on ExhibitR as to each Mortgage Loan with respect to the
related Due Period and such other information with respect to the Mortgage Loans
in the aggregate as the Trustee shall reasonably require. Not later than 12:00
noon Chicago, Illinois time two Business Days preceding each Payment Date, the
Trustee shall deliver to the Depositors, any Paying Agent, the Servicer, the
Certificate Insurer, Moody's and S&P by telecopy, by request, a statement (the
"Remittance Report") containing the information set forth below with respect to
the succeeding Payment Date, with a hard copy thereof to be delivered on the
immediately succeeding Business Day:
(i) the Available Payment Amount attributable to each
Mortgage Loan Group and any portion of the Available Payment Amount
that has been deposited in the Collection Account but may not be
withdrawn therefrom pursuant to an order of a United States bankruptcy
court of competent jurisdiction imposing a stay pursuant to Section 362
of the United States Bankruptcy Code;
(ii) the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class A-3 Principal Balance, the Class A-4 Principal
Balance, the Class A-5 Principal Balance, the Class A-6 Principal
Balance, the Class A-7 Principal Balance, the Class A-8 Principal
Balance, the Class A-9 Principal Balance, the Class A-10 Principal
Balance and the Pool Principal Balance with respect to each Mortgage
Loan Group, as reported in the Remittance Report provided pursuant to
subclause (xiii) below for the immediately preceding Payment Date, or,
in the case of the first Determination Date, the Original Class A-1
Principal Balance, the Original Class A-2 Principal Balance, the
Original Class A-3 Principal Balance, the Original Class A-4 Principal
Balance, the Original Class A-6 Principal Balance, the Original Class
A-7 Principal Balance, the Original Class A-8 Principal Balance, the
Original Class A-9 Principal Balance, the Original Class A-10 Principal
Balance and the Original Pool Principal Balance with respect to each
Mortgage Loan Group;
(iii) with respect to the Mortgage Pool and each Mortgage Loan
Group, the number and Principal Balances of all Mortgage Loans which
were the subject of Principal Prepayments during the related Due
Period;
(iv) with respect to the Mortgage Pool and each Mortgage Loan
Group, the amount of all Curtailments which were received during the
related Due Period;
(v) with respect to the Mortgage Pool and each Mortgage Loan
Group, the aggregate amount of principal portion of all Monthly
Payments received during the related Due Period;
(vi) with respect to the Mortgage Pool and each Mortgage Loan
Group, the amount of interest received on the Mortgage Loans during the
related Due Period;
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(vii) with respect to the Mortgage Pool and each Mortgage Loan
Group, the aggregate amount of the Advances made and recovered with
respect to such Payment Date;
(viii) with respect to the Mortgage Pool and each Mortgage Loan
Group, the delinquency and foreclosure information set forth in the
form attached hereto as ExhibitH and the amount of Mortgage Loan Losses
during the related Due Period;
(ix) the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class A-3 Principal Balance, the Class A-4 Principal
Balance, the Class A-5 Principal Balance, the Class A-6 Principal
Balance, the Class A-7 Principal Balance, the Class A-8 Principal
Balance, the Class A-9 Principal Balance and the Class A-10 Principal
Balance after giving effect to the distribution to be made on such
Payment Date;
(x) with respect to the Mortgage Pool and each Mortgage Loan
Group, the weighted average maturity and the weighted average Mortgage
Interest Rate of the Mortgage Loans in each Mortgage Loan Group as of
the last day of the related Due Period;
(xi) the Servicing Fees paid and Servicing Fees accrued
during the related Due Period;
(xii) the amount of all payments or reimbursements to the
Servicer pursuant to Section 5.04 (ii), (iv), (v), (vi) and (vii) paid
or to be paid since the prior Payment Date (or in the case of the first
Payment Date, since the Closing Date);
(xiii) the Pool Principal Balance and aggregate Principal
Balance for each Mortgage Loan Group as of the last day of the related
Due Period;
(xiv) such other information as the Certificate Insurer,
each Account Party and the Certificateholders may reasonably require;
(xv) the amounts which are reimbursable to the Servicer,
the Representative or the Depositors, as appropriate, pursuant to
Section 6.05;
(xvi) with respect to the Mortgage Pool and each Mortgage Loan
Group, the number of Mortgage Loans outstanding at the beginning and at
the end of the related Due Period;
(xvii) the aggregate interest accrued on the Mortgage Loans at
their respective Mortgage Interest Rates for the related Due Period;
(xviii) [Reserved]
(xix) the Subordinated Amount, the amount on deposit in the
Spread Account, the Cumulative Excess Spread Receipts, in each case
after giving effect to any payments
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or withdrawals on such Payment Date, and with respect to the Mortgage
Pool and each Mortgage Loan Group, the Excess Spread with respect to
such Payment Date;
(xx) the aggregate Mortgage Loan Losses since the Cut-off
Date as of the end of the related Due Period; and
(xxi) [Reserved]
The Trustee shall forward such report to the Certificateholders on the
Payment Date, by telecopy, with a hard copy to follow (in the case of the
Depository) or by first class mail. The Depositors and the Trustee may fully
rely upon and shall have no liability with respect to information provided by
the Servicer.
To the extent that there are inconsistencies between the telecopy of
the Remittance Report and the hard copy thereof, the Servicer and the Trustee
may rely upon the telecopy.
In the case of information furnished pursuant to subclauses (ii) and
(ix) above, the amounts shall be expressed in a separate section of the report
as a dollar amount for each of the Class A Certificates for each $1,000 original
dollar amount as of the Cut-off Date.
(a) Upon reasonable advance notice in writing, the Servicer will
provide to the Trustee access to information and documentation regarding the
Mortgage Loans sufficient to permit any Holder which is a savings and loan
association, bank or insurance company to comply with applicable regulations of
the FDIC or other regulatory authorities with respect to investment in the
Certificates, as applicable.
(b) The Servicer shall furnish to the Trustee and to the Certificate
Insurer, during the term of this Agreement, such periodic, special, or other
reports or information not specifically provided for herein, as may be
necessary, reasonable, or appropriate with respect to the Trustee or the
Certificate Insurer, as the case may be, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the
Trustee or the Certificate Insurer may reasonably require; provided, that the
Servicer shall be entitled to be reimbursed by the requesting party, for the
fees and actual expenses associated with providing such reports, if such reports
are not generally produced in the ordinary course of its business.
(c) Reports and computer tapes furnished by the Servicer pursuant to
this Agreement shall be deemed confidential and of proprietary nature, and shall
not be copied or distributed except in connection with the purposes and
requirements of this Agreement; provided that the Certificate Insurer may copy
or distribute such information (A) pursuant to a subpoena or order issued by a
court of competent jurisdiction or by a judicial or administrative or
legislative body or committee, (B) as may be required in any report, statement
or testimony submitted to any Federal, state, municipal or other regulatory body
having jurisdiction over the Certificate Insurer, (C) in order to comply with
any law, ruling, order or regulation applicable to the Certificate Insurer, or
(D) as may be required by any rating agency or reinsurer. No Person entitled to
receive copies of
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such reports or tapes shall use the information therein for the purpose of
soliciting the customers of the Originators or for any other purpose except as
set forth in this Agreement.
(d) The Trustee shall promptly send to the Certificate Insurer and,
upon request, to each Certificateholder in writing:
(i) notice of any reduction in the Specified Spread Account
Requirement;
(ii) notice of any reduction of the percentages set forth in the
definition of "Monthly Excess Spread Amount";
(iii) notice of the appointment of any Subservicer;
(iv) notice of any transfer of any Account to a different
depository institution;
(v) notice of any reduction in the rating of any Letter of Credit
Bank below the minimum ratings described in Section 6.11(b);
(vi) a copy of each Officer's Certificate delivered pursuant to
Section 7.04 and any notice received from the Servicer of a change in
the fiscal year of the Servicer;
(vii) a copy of each letter delivered pursuant to Section 7.05;
and
(viii) notice of the receipt by the Trustee of any information
regarding the Servicer's servicing activities pursuant to the last
paragraph of Section 10.01(c);
provided, that in each case the Trustee shall only be required to send such
notices and other items to such Persons to the extent that the Trustee has
itself received the related information.
The Depositors, the Servicer and the Trustee on behalf of
Certificateholders (the "Trust Parties") hereby authorize the Certificate
Insurer to include the information contained in reports provided to the
Certificate Insurer hereunder (the "Information") on The Bloomberg, an on-line
computer based information network maintained by Bloomberg L.P. ("Bloomberg"),
or in other electronic or print information services. The Trust Parties agree
not to commence any actions or proceedings, or otherwise assert any claims,
against the Certificate Insurer or its affiliates or any of the Certificate
Insurer's or its affiliates' respective agents, representatives, directors,
officers or employees (collectively, the "Certificate Insurer Parties"), arising
out of, or related to or in connection with the dissemination and/or use of any
Information by the Certificate Insurer, including, but not limited to, claims
based on allegations of inaccurate, incomplete or erroneous transfer of
information by the Certificate Insurer to Bloomberg or otherwise (other than in
connection with the Certificate Insurer's negligence or willful misconduct). The
Trust Parties waive their rights to assert any such claims against the
Certificate Insurer Parties and fully and finally release the Certificate
Insurer Parties from any and all such claims, demands, obligations, actions and
liabilities (other than in connection with the Certificate Insurer's negligence
or willful misconduct). The Certificate Insurer makes no representations or
warranties, expressed or implied, of any kind whatsoever with respect to the
accuracy, adequacy, timeliness, completeness,
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merchantability or fitness for any particular purpose of any Information in any
form or manner. The Certificate Insurer reserves the right at any time to
withdraw or suspend the dissemination of the Information by the Certificate
Insurer. The authorizations, covenants and obligations of the Trust Parties
under this section shall be irrevocable and shall survive the termination of
this Agreement.
Section 6.08 Advances by the Servicer.
Not later than the close of business on the third Business Day
preceding each Payment Date, the Servicer shall remit to the Trustee (but solely
from and to the extent of amounts on deposit in the Principal and Interest
Account as of the related Determination Date, after giving effect to withdrawals
from the Principal and Interest Account as of the Determination Date for such
Payment Date pursuant to Section 5.04(i)), an amount (the "Advance") equal to
the sum of (a) the interest accrued in the related Due Period on the Mortgage
Loans but uncollected as of the close of business on the last day of such Due
Period (net of the Servicing Fee) and (b) with respect to each REO Property
which was acquired during or prior to the related Due Period and as to which an
REO Disposition did not occur during the related Due Period, an amount equal to
the excess, if any, of interest on the Principal Balance of such REO Property
computed at the related Mortgage Interest Rate (net of the Servicing Fee) for
the most recently ended Due Period over the net income from the REO Property
deposited in the Principal and Interest Account during such Due Period pursuant
to Section 5.10.
Notwithstanding the provisions in the foregoing paragraph of this
Section 6.08, with respect to the Payment Dates occurring on or before August
15, 1997 if the amounts on deposit in the Principal and Interest Account are
insufficient to make the full Advance (as defined herein), and as a result
thereof an Event of Nonpayment would occur, the Servicer shall make a Advance
from its own funds equal to such insufficiency to the extent of delinquent
payments of interest, and may reimburse itself for such Advances from
collections on the related Mortgage Loans pursuant to Section 5.04(ii).
Section 6.09 Establishment of Spread Account; Deposits in Spread
Account; Permitted Withdrawals from Spread Account.
(a) No later than the Closing Date, the Trustee will establish and
maintain in a non-interest bearing trust account with itself, a Spread Account
(and therein, a Letter of Credit Proceeds Sub-Account) which shall be an
Eligible Account, titled "EQCC Home Equity Loan Trust 1997-2 Spread Account". At
the time of the issuance of the Certificates, there shall be deposited in the
Spread Account from the proceeds of the sale of ClassA Certificates an amount
equal to $0.00. The Spread Account shall not be an asset of the Trust REMIC. Any
deposits in the Letter of Credit Proceeds Sub-Account shall be and hereby are
deemed deposits in the Spread Account. After the time of the issuance of the
Certificates, the Trustee shall, promptly upon receipt, deposit into the Spread
Account and retain therein:
(i) on each Payment Date, the Excess Spread with respect to
each Mortgage Loan Group remitted by the Servicer pursuant to Section
5.04(i) for deposit into the Collection Account and transferred from
the Collection Account by the Trustee pursuant
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to Section 6.02(ii) and the portion of the Advance allocable to the
Excess Spread remitted by the Servicer pursuant to Section 6.08 for
deposit into the Collection Account and transferred by the Trustee
pursuant to Section 6.02(ii) for the related Payment Date;
(ii) upon receipt, amounts required to be withdrawn from the
Insurance Account for deposit in the Spread Account pursuant to Section
6.03(b)(iv);
(iii) upon receipt, amounts required to be withdrawn from the
Letter of Credit Fee Account for deposit in the Spread Account pursuant
to Section 6.10(b)(iv);
(iv) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.04(e); and
(v) amounts drawn under any Letter of Credit pursuant to
Section 6.05 or 6.11;
provided, however, that the Trustee shall not accept funds for deposit into the
Spread Account from any Person, other than funds constituting Excess Spread,
without the consent of the Certificate Insurer.
(b) From amounts on deposit in the Spread Account (after giving effect
to the deposits therein pursuant to Section 6.09(a)) the Trustee shall make
withdrawals on each Payment Date in the following order of priority:
(i) to deposit in the Insurance Account the amount of any
insufficiency in such Account which the Servicer failed to advance
pursuant to Section 6.03(a);
(ii) to deposit in the Letter of Credit Fee Account the
amount of any insufficiency in such Account which the Servicer failed
to advance pursuant to Section 6.10(a), which amount shall not exceed
the Letter of Credit Fee Amount;
(iii) to deposit in the Collection Account, an amount (the
"Spread Account Amount") equal to the excess of (x) the sum of (A) the
Fixed Rate Remittance Amount and (B) the Adjustable Rate Remittance
Amount over (y) the Available Payment Amount with respect to both
Mortgage Loan Groups, less the amounts withdrawn from the Collection
Account with respect to both Mortgage Loan Groups, pursuant to Section
6.02(i) and (iii). Amounts on deposit in the Spread Account shall be
available to all Class A Certificateholders pursuant to this clause
(iii) without regard to whether such Certificates are Fixed Rate
Certificates or Adjustable Rate Certificates;
(iv) (1) to pay to the related Account Party any Increased LC
Costs; provided that payments pursuant to this Section 6.09(b)(iv)(1)
shall not exceed $4,000 in the aggregate; and (2) to pay to the
Servicer from the Remainder Excess Spread Amount (net of any such
amounts paid pursuant to clauses (b)(i), (b)(ii) and (b)(iii) above)
with respect to any Payment Date for any Reimbursable Amounts and (3)
the remainder of such Remainder Excess Spread Amount to the Class R
Certificateholders;
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(v) to the extent that the remaining amount then on deposit
in the Spread Account (taking into account the amounts available to be
drawn under any Letters of Credit in the Spread Account) then exceeds
the Specified Spread Account Requirement as of such Payment Date (such
excess, a "Spread Account Excess"), an amount equal to such Spread
Account Excess shall be distributed in the following order of priority:
(A)first, from amounts then on deposit in the Spread
Account (other than any amounts available to be drawn
under Letters of Credit), to each Account Party which is
then entitled to repayment of an LC Obligation, the
amount then due and owing on such LC Obligation, applying
the amount of any partial payment of such LC Obligation
first to interest and second to principal; provided,
however, that such amounts shall be applied to repay such
LC Obligations in direct order of the dates on which such
Obligations were incurred, and no payment on account of
any LC Obligation shall be made until all LC Obligations
which were incurred prior to the date that such LC
Obligation was incurred have been paid in full;
(B)second, from amounts then on deposit in the Spread
Account and equal to the difference, if any, between the
Spread Account Excess on such Payment Date and the
aggregate payments made on such Payment Date pursuant to
clause (A) above (such difference, the "Net Spread
Account Excess") the amount of such Net Spread Account
Excess (other than amounts available to be drawn under
Letters of Credit) shall be distributed to the Servicer
and/or the Representative to the extent of any
Reimbursable Amounts and the remainder to the Holders of
the Class R Certificates; provided, however, that if any
Letter(s) of Credit are then on deposit in the Spread
Account, the Trustee shall, in lieu of distributing the
amount of such Net Spread Account Excess to the Holders
of the Adjustable Rate Certificates and Class R
Certificates, follow such written instructions as may be
delivered to the Trustee by the Holders of the Class R
Certificates for the purpose of reducing the aggregate
amounts available to be drawn under such Letter(s) of
Credit in an amount not to exceed the amount of such Net
Spread Account Excess; and
(C)third, to the extent any Net Spread Account Excess
remaining after the distributions made pursuant to
subclause(B) above, the Trustee shall reduce the
aggregate amounts available to be drawn under the Letters
of Credit.
and also, in no particular order of priority:
(vi) to invest amounts on deposit in the Spread Account in
Permitted Instruments pursuant to Section 6.04;
(vii) to pay to the Class R Certificateholders the amount
available under a replacement Letter of Credit delivered in replacement
of amounts on deposit in the Spread Account, pursuant to Section
6.11(f);
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(viii) to withdraw any amount not required to be deposited in
the Spread Account or deposited therein in error; and
(ix) to clear and terminate the Spread Account upon the
termination of this Agreement.
(c) Any amounts which are required to be withdrawn from the Spread
Account pursuant to paragraph (b) above shall be withdrawn from the Spread
Account in the following order of priority: (i) first, from any uninvested funds
therein, (ii) second, from the proceeds of the liquidation of any investments
therein pursuant to Section 6.04(b) and (iii) third, from the proceeds of
drawings under any Letter(s) of Credit in the order of priority specified by the
holders of the Class R Certificates, or, in the absence of such specifications,
pro rata.
(d) (i) Upon the earlier to occur of the Cross-Over Date or the Payment
Date on which all amounts due have been paid to the Class A Certificateholders,
including the Certificate Insurer as subrogee of the Class A Certificateholders,
the Trustee, after making any withdrawals from the Spread Account required
pursuant to the preceding paragraph, shall surrender any Letters of Credit held
in the Spread Account to the respective Letter of Credit Bank, and no further
withdrawals from the Spread Account pursuant to subclause (b)(iii) above shall
be made.
(ii) Upon the later to occur of (X) the earlier of the dates
referred to in subclause (d)(i) above or (Y) the date on which there remain no
LC Obligations due and owing, the Trustee shall:
(A) clear and terminate the Spread Account, liquidate
any investments therein and distribute any uninvested funds
therein or the proceeds of such liquidation to the Servicer
and/or the Representative to the extent of any Reimbursable
Amounts and the remainder to the Class R Certificateholders;
(B) distribute future receipts of the Excess Spread
to the Servicer and/or the Representative to the extent of any
Reimbursable Amounts and the remainder to the Class R
Certificateholders.
Section 6.10 Establishment of Letter of Credit Fee Account;
Deposits in Letter of Credit Fee Account; Permitted
Withdrawals from Letter of Credit Fee Account.
(a) No later than the Closing Date, the Trustee will establish a
non-interest bearing trust account with itself, which shall be an Eligible
Account, titled "EQCC Home Equity Loan Trust, 1997-2, Letter of Credit Fee
Account" (the "Letter of Credit Fee Account"). The Trustee shall deposit into
the Letter of Credit Fee Account in accordance with Section 6.02(iii):
(i) an amount equal to the Letter of Credit Fee Amount with
respect to the Fixed Rate Certificates and the Adjustable Rate
Certificates;
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(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.04(e) in connection with losses on
investments of amounts in the Letter of Credit Fee Account.
If at any time the amount then on deposit in the Letter of Credit Fee Account
shall be insufficient to pay in full the fees and expenses of each Letter of
Credit Bank then due pursuant to the terms of the related Letter of Credit, the
appropriate Letter of Credit Bank shall make demand on the Servicer to advance
the amount of such insufficiency, and the Servicer shall promptly advance such
amount. Thereafter, the Servicer shall be entitled to reimbursement from the
Letter of Credit Fee Account for the amount of any such advance from any excess
funds available in the Letter of Credit Fee Account pursuant to subclause
(b)(iv) below. If the Servicer fails to advance the amount of such
insufficiency, the Servicer or the appropriate Letter of Credit Bank shall
promptly give the Trustee written notice thereof and the Trustee shall withdraw
such amount from the Spread Account, and any excess funds available in the
Letter of Credit Fee Account after payment of such expenses shall be deposited
by the Trustee in the Spread Account.
(b) The Trustee may make withdrawals from the Letter of Credit Fee
Account for investment in Permitted Instruments pursuant to Section 6.04, and
the Trustee shall withdraw amounts on deposit in the Letter of Credit Fee
Account to:
(i) remit on a monthly basis to each Letter of Credit Bank, an
amount equal to the Letter of Credit Fee Amount due to such Letter of
Credit Bank;
(ii) pay on a monthly basis to Servicer as additional servicing
compensation interest paid and earnings realized on Permitted
Instruments;
(iii) withdraw amounts not required to be deposited in the Letter
of Credit Fee Account or deposited therein in error;
(iv) deposit in the Spread Account for amounts withdrawn from it,
and reimburse the Servicer for advances made by it, pursuant to the
last paragraph of subclause (a) above; and
(v) to deposit in the Spread Account any amounts remaining in the
Letter of Credit Fee Account after withdrawals made pursuant to the
clauses (i), (ii), (iii) and (iv) above.
Section 6.11 Letters of Credit.
(a) If, as of any date that is five Business Days prior to the
stated expiration date of any Letter of Credit, a Letter of Credit (which may be
a renewal or extension of the expiring Letter of Credit) in the same amount as
the amount then available for drawing under the expiring Letter of Credit has
not been delivered to the Trustee, the Trustee shall, on the next Business Day,
cause to be presented to the issuer of the expiring Letter of Credit a draft in
proper form for payment thereunder and otherwise in conformity with the terms
thereof for the full
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amount then available to be drawn thereunder. Proceeds received in payment of
each such draft shall be deposited and held in the Letter of Credit Proceeds
Sub-Account of the Spread Account.
(b) Upon discovery by the Representative, any Account Party,
the Certificate Insurer or the Trustee that the short-term or long-term debt
obligations, if any, of any Letter of Credit Bank have a rating of lower than
"A-2" or "A-" by S&P, respectively, or Prime-1 or A2 by Moody's, respectively,
the party discovering such rating hereby covenants and warrants that it shall
promptly give written notice to the others. If, within 15 days of its giving or
receipt of such notice, as the case may be, the Trustee has not received a
substitute Letter of Credit meeting the requirements of this Agreement in
replacement of such Letter of Credit, the Trustee shall cause to be presented to
the issuer of such Letter of Credit a draft in proper form for payment
thereunder and otherwise in conformity with the terms thereof for the full
amount available to be drawn thereunder. Proceeds received in payment of each
such draft shall be deposited and held in the payment of each such draft shall
be deposited and held in the Letter of Credit Proceeds Sub- Account of the
Spread Account.
(c) The receipt by the Trustee of any Draw Amount or of the
proceeds of a drawing under a Letter of Credit pursuant to Section 6.11(a) or
6.11(b) hereof shall be deemed to create an obligation to reimburse the Account
Party of the related Letter of Credit. Each such obligation (an "LC Obligation")
shall be deemed to have an original principal amount equal to the related Draw
Amount or drawing pursuant to Section 6.11(a) or 6.11(b) as the case may be, and
shall accrue interest at the rate agreed to by the related Account Party and the
Representative, and shall be payable only to the extent set forth in Section
6.09(b)(v).
(d) Upon receipt by the Trustee of the proceeds of a drawing
under any Letter of Credit, (i) the Trustee will deposit the same directly to
the Letter of Credit Proceeds Sub- Account of the Spread Account, (ii) no
portion of said proceeds shall be applied by the Trustee for any other purpose,
and (iii) no portion of said proceeds shall be commingled with other funds held
by the Trustee.
(e) At any time and from time to time the Class R
Certificateholders may cause to be delivered to the Trustee, upon written notice
to S&P, one or more Letters of Credit for deposit in the Spread Account, to be
held by the Trustee in lieu of cash or Permitted Instruments or in replacement
of any other Letter(s) of Credit. The Trustee shall accept any such Letter of
Credit only if such Letter of Credit is accompanied by (i) an opinion of counsel
to the issuer thereof reasonably satisfactory to the Certificate Insurer, the
Trustee, S&P and Moody's to the effect that (x) such Letter of Credit has been
duly authorized, executed and delivered by the issuer thereof and constitutes a
valid and binding obligation of such issuer, subject only to laws affecting
creditors' rights generally, (y) such Letter of Credit does not require
registration under the Securities Act of 1933, as amended, and (z) payments by
the Trustee in respect of the Class A Certificates, as provided in the
Agreement, derived from a draw by the Trustee under the Letter of Credit and
held in non-commingled funds would not constitute transfers avoidable under 11
U.S.C. ss. 547(b) and recoverable from the Trustee or the holders of the Class A
Certificates under 11 U.S.C. ss. 550(a) should the Account Party be the debtor
in a case under the United States Bankruptcy Code (Title 11, U.S.C), and (ii) an
opinion of tax counsel reasonably acceptable to the Certificate Insurer and the
Trustee to the effect that delivery of such Letter of Credit either in
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lieu of cash or Permitted Instruments, or in replacement of any other Letter(s)
of Credit, as the case may be, will not cause (x) any tax to be imposed on the
Trust Fund, including without limitation, any tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code and (y) the Trust Fund to
fail to qualify as a REMIC at any time that any Certificate is outstanding.
The Trustee may from time to time accept cash in replacement
of any Letter of Credit, but only upon the prior written consent of the
Certificate Insurer, and upon delivery of any Opinions of Counsel which may be
required by the Certificate Insurer. The Trustee shall give prompt notice of the
delivery of any such cash to Moody's and S&P.
Upon receipt of such Letter of Credit and opinions, the amount
available to be drawn under the Letter of Credit shall be deemed to be on
deposit in the Spread Account for all purposes of this Agreement. As soon as
practicable after the delivery of any Letter of Credit, or, in any event within
two Business Days after its effective date, the Trustee shall surrender to the
issuer of any Letter of Credit being replaced, such Letter of Credit which is
being replaced, or, if such Letter of Credit is being delivered in replacement
of amounts (other than amounts represented by Letters of Credit) then on deposit
in the Spread Account, withdraw from the Spread Account and pay to the Class R
Certificateholders delivering such Letter of Credit an amount equal to the
amount available to be drawn under such Letter of Credit.
(f) At any time and from time to time the Class R
Certificateholders may deliver cash or Permitted Instruments to the Trustee for
deposit in the Spread Account, and the Trustee shall accept any such delivery if
such delivery is accompanied by an opinion of tax counsel reasonably acceptable
to the Certificate Insurer to the effect that such delivery will not cause (a)
any tax to be imposed on the Trust Fund, including without limitation, any tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the code and
(b) the Trust Fund to fail to qualify as a REMIC at any time that any
Certificate is outstanding.
Section 6.12 Pre-Funding Account.
(a) No later than the Closing Date, the Trustee will establish
and maintain in a non-interest bearing account with itself a Pre-Funding Account
which shall be an Eligible Account titled "EQCC Home Equity Loan Trust 1997-2,
Pre-Funding Account." At the time of the issuance of the Certificates, there
shall be deposited in the Pre-Funding Account from the proceeds of the sale of
ClassA Certificates an amount equal to approximately $44,446,027.61.
Approximately $35,975,877.49 of the Pre-Funded Amount (the "Fixed-Rate Prefunded
Amount") will be available to purchase Subsequent Mortgage Loans for inclusion
in the Fixed Rate Group, and approximately $8,470,150.12 of the Pre-Funded
Amount (the "Adjustable Rate Prefunded Amount") will be available to purchase
Subsequent Mortgage Loans for inclusion in the Adjustable Rate Group which
amount shall be simultaneously applied to the purchase of Subsequent Mortgage
Loans as described below. On the Closing Date, the Depositors shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
Cut-off Date Principal Balances of the Subsequent Mortgage Loans transferred to
the Trust Fund on the Closing Date and pay such amount to or upon the order of
the Depositors. The Original
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Fixed Rate Pre-Funded Amount and the Original Adjustable Rate Pre-Funded Amount
will be fully utilized on the Closing Date to purchase Subsequent Fixed Rate
Mortgage Loans and Adjustable Rate Mortgage Loans, respectively, which shall be
considered Mortgage Loans for all purposes of this Agreement.
(b) The Pre-Funding Account will be part of the Trust Fund,
but not part of the Trust REMIC.
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01 Assumption Agreements.
When a Mortgaged 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 Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage 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. In such event, the
Servicer shall enter into an assumption 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 Mortgage Note and, unless prohibited by applicable law
or the Mortgage Documents, the Mortgagor remains liable thereon. The Servicer is
also authorized with the prior approval of the Certificate Insurer 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 Mortgage Note. The Servicer shall notify
the Depositors, the Trustee and the Certificate Insurer that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee (or to the Custodian on behalf of the Trustee) the original of such
substitution or assumption agreement and a duplicate thereof to the Depositors
and the Certificate Insurer, which original shall be added by the Trustee (or by
the Custodian on behalf of the Trustee) to the related Mortgage File and shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. In
connection with any assumption or substitution agreement entered into pursuant
to this Section 7.01, the Servicer shall not change the Mortgage Interest Rate
or the Monthly Payment, defer or forgive the payment of principal or interest,
reduce the outstanding principal amount or extend the final maturity date on
such Mortgage Loan. Any fee collected by the 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
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
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With respect to any mortgage loan secured by an interest in an Illinois
Land Trust, if the Servicer receives notice of the sale of the beneficial
interest in a Illinois Land Trust or the related Mortgaged Property by the
holder of a First Lien secured thereby to a Person other than the Servicer, the
Depositors or the Trustee, then, prior to distribution of any proceeds of such
sale, the Servicer shall demand in writing that such holder of a First Lien pay
the amount necessary to satisfy all indebtedness under the Mortgage Loan from
the proceeds of such sale. If such holder of a First Lien so requests, the
Servicer shall furnish reasonable proof of the Depositor's and Trustee's
interest with respect to such proceeds. Unless and until the Servicer has
received instruction otherwise from the Majority in Aggregate Voting Interest
(with the consent of the Certificate Insurer) or from the Certificate Insurer,
the Servicer shall, with respect to any such First Lien and the related Mortgage
Loan, follow servicing standards consistent with those of prudent lending
institutions in the geographic area where the Mortgaged Property is located,
including the making of any appropriate Servicing Advances with respect thereto.
In any event, the Servicer shall follow any instructions from the Majority in
Aggregate Voting Interest with the consent of the Certificate Insurer or from
the Certificate Insurer as soon as practicable following receipt thereof.
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.
The Servicer shall not grant a satisfaction or release of a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or otherwise prejudice any right the Certificateholders may have under
the mortgage instruments subject to Section 5.01 hereof. The Servicer shall
maintain the Fidelity Bond as provided for in Section 5.09 insuring the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
Upon the payment in full of any Mortgage Loan, 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 will immediately notify the Trustee or
the Custodian on behalf of the Trustee by an Officers' Certificate in the form
of Exhibit B attached to the Custodial Agreement (which certification shall
include a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the Principal
and Interest Account pursuant to Section 5.03 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File.
Upon receipt of such certification and request, the Trustee or the Custodian on
behalf of the Trustee shall promptly release the related Mortgage File to the
Servicer. Expenses incurred in connection with any instrument of satisfaction or
deed of reconveyance shall be payable by the Servicer and shall not be
reimbursed from the Principal and Interest Account or the Collection Account.
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any primary
mortgage guaranty insurance policy, the Trustee or the Custodian on behalf of
the Trustee shall, upon request of the Servicer and delivery to the Trustee or
the Custodian on behalf of the Trustee of a certification in the form of Exhibit
B attached to the Custodial Agreement signed, by a Servicing Officer, promptly
release the related Mortgage File or any document therein to the Servicer, and
the Trustee shall execute such documents as shall be necessary to the
prosecution of any such proceedings. Such servicing
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receipt shall obligate the Servicer to return the Mortgage File or any document
released therefrom to the Trustee or the Custodian on behalf of the Trustee when
the need therefor by the Servicer no longer exists, unless the Mortgage Loan has
been liquidated and the Net Liquidation Proceeds relating to the Mortgage Loan
have been deposited in the Principal and Interest Account and remitted to the
Trustee for deposit in the Collection Account or the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Servicer has delivered to the Trustee a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. Upon receipt of a certificate of a
Servicing Officer stating that such Mortgage Loan was liquidated, the servicing
receipt shall be released promptly by the Trustee to the Servicer.
The Trustee shall promptly execute and deliver to the Servicer any
legal notices, court pleadings, requests for trustee's sale in respect of a
Mortgaged Property or any legal action brought to obtain judgment against any
Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency judgment,
or to enforce any other remedies or rights provided by the Mortgage Note or
Mortgage or otherwise available at law or in equity. Together with such
documents or pleadings, the Servicer shall deliver to the Trustee a certificate
of a Servicing Officer requesting that such pleadings or documents be executed
by the Trustee and certifying as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.
The Trustee shall, upon receipt of a written request from a Servicing Officer,
execute any document provided to the Trustee by the Servicer or take any other
action requested in such request that is, in the opinion of the Servicer as
evidenced by such request, required by any state or other jurisdiction to
discharge the lien of a Mortgage upon the satisfaction thereof and the Trustee
will promptly sign and deliver, but will not guarantee receipt of, any such
documents to the Servicer, or such other party as the Servicer may direct,
within five Business Days, or more promptly if needed, of the Trustee's receipt
of such certificate or documents. Such certificate or documents shall establish
to the Trustee's satisfaction that the related Mortgage Loan has been paid in
full by or on behalf of the Mortgagor and that such payment has been deposited
in the Principal and Interest Account.
Section 7.03 Servicing Compensation.
As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Principal and Interest Account or to retain from
interest payments on the Mortgage Loans, the Servicer's Servicing Fee.
Additional servicing compensation in the form of assumption and other
administrative fees (including bad check charges, late payment fees and similar
fees), interest paid on funds on deposit in the Principal and Interest Account,
amounts remitted pursuant to Section 6.03(b)(v) and Excess Proceeds shall be
retained by or remitted to the Servicer, to the extent not otherwise required to
be remitted to the Trustee for deposit in the Collection Account and not
constituting the Representative's Yield. The Servicer shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided for herein. The Representative's Yield is
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the property of the Representative, and not the property of the Servicer, and
such ownership shall not be affected by any termination of the Servicer.
Section 7.04 Annual Statement as to Compliance.
The Servicer will deliver to the Certificate Insurer, the Trustee and
each Rating Agency, not later than the last day of the fourth month following
the end of the Servicer's fiscal year, which currently ends on December 31,
beginning with the fiscal year ending December 31, 1997, an Officers'
Certificate stating that (i) the Servicer has fully complied with the provisions
of Articles V and VIII, (ii) a review of the activities of the Servicer during
the preceding fiscal year and of performance under this Agreement has been made
under such officers' supervision, and (iii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officers and the nature and status thereof and the action being taken by
the Servicer to cure such default. The Servicer shall promptly notify the
Certificate Insurer, the Trustee and each Rating Agency promptly upon any change
in the basis on which its fiscal year is determined.
Section 7.05 Annual Independent Public Accountants' Servicing Report.
Not later than the last day of the fourth month following the end of
the Servicer's fiscal year, beginning with the fiscal year ending December 31,
1997, the Servicer, at its expense, shall cause a firm of independent public
accountants reasonably acceptable to the Trustee and the Certificate Insurer to
furnish a letter or letters to the Certificate Insurer, the Trustee and each
Rating Agency to the effect that such firm has with respect to the Servicer's
overall servicing operations examined such operations in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
Section 7.06 Right to Examine Servicer Records.
The Trustee or the Trustee at the request of a Majority in Aggregate
Voting Interest (or the representatives thereof) and the Certificate Insurer
shall have the right upon reasonable prior notice, during normal business hours
and as often as reasonably required, to examine and audit any and all of the
books, records or other information of the Servicer, whether held by the
Servicer or by another on behalf of the Servicer, which may be relevant to the
performance or observance by the Servicer of the terms, covenants or conditions
of this Agreement.
Section 7.07 Reports to the Trustee; Principal and Interest Account
Statements.
If the Principal and Interest Account is not maintained with the
Trustee, then not later than 25 days after each Payment Date, the Servicer shall
forward to the Certificate Insurer and the Trustee a statement, certified by a
Servicing Officer, setting forth the status of the Principal and Interest
Account as of the end of the preceding Due Period and showing, for the period
covered by such statement, the aggregate of deposits into the Principal and
Interest Account for each category of deposit specified in Section 5.03, the
aggregate of withdrawals from the Principal and Interest Account for each
category of withdrawal specified in Section 5.04, the aggregate amount
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of permitted withdrawals not made in the related period, and the amount of
Advances, if any, for the related period.
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements.
The Servicer will furnish to the Certificate Insurer, the Depositors or
the Trustee on request (i) annual audited financial statements of the Servicer
for the most recently completed three fiscal years for which such statements are
available and (ii) interim, unaudited financial statements of the Servicer
relating to periods subsequent to the most recent annual audited period.
The Servicer also agrees to make available on a reasonable basis to the
Certificate Insurer, the Depositor, the Trustee, any Certificateholder or any
prospective Certificateholder a knowledgeable financial or accounting officer
for the purpose of answering reasonable questions respecting recent developments
affecting the Servicer or the financial statements of the Servicer.
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims.
The Servicer agrees to indemnify and hold the Depositors, the
Custodian, the Trustee, the Certificate Insurer and each Holder 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 Custodian, the Certificate Insurer and any Holder may sustain in
any way related to the failure of the Servicer to perform its duties and service
the Mortgage Loans in compliance with the terms of this Agreement. The Servicer
shall immediately notify the Depositors, the Trustee, the Custodian, the
Certificate Insurer and each Certificateholder, if a claim is made by a third
party with respect to this Agreement, and the Servicer shall assume (with the
consent of the Trustee and the Certificate Insurer) the defense of any such
claim and advance all expenses in connection therewith, including reasonable
counsel fees, and promptly advance funds to pay, discharge and satisfy any
judgment or decree which may be entered against the Servicer, the Trustee, the
Certificate Insurer and/or any Certificateholder in respect of such claim. The
Trustee may, if necessary, reimburse the Servicer from amounts otherwise
distributable on the Class R Certificates for all amounts advanced by it
pursuant to the preceding sentence except when the claim relates directly to the
failure of the Servicer to service and administer the Mortgage Loans in
compliance with the terms of this Agreement. The Servicer shall have no lien on
the assets of the Trust with respect to amounts advanced pursuant to this
Section 9.01 directly as a result of Servicer's failure to service and
administer the Mortgage Loans in compliance with the terms of this Agreement.
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Section 9.02 Merger or Consolidation of the Servicer.
The Servicer will each keep in full effect its existence, rights and
franchises as a corporation and will obtain and preserve its qualification to do
business as a foreign corporation, in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer or the Representative shall be a party, or any Person succeeding to
the business of the Servicer, shall be an established mortgage loan servicing
institution that has a net worth of at least $15,000,000 and shall be the
successor of the Servicer or the Representative, as applicable hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Servicer shall send notice of any such merger or consolidation to the Trustee,
the Certificate Insurer and each Rating Agency.
Section 9.03 Limitation on Liability of the Servicer and Others.
The Servicer and any director, officer, employee or agent of the
Servicer may rely on any document of any kind which it in good faith reasonably
believes to be genuine and to have been adopted or signed by the proper
authorities respecting any matters arising hereunder. Subject to the terms of
Section 9.01 herein, the Servicer shall have no obligation to appear with
respect to, prosecute or defend, any legal action which is not incidental to the
Servicer's duty to service the Mortgage Loans in accordance with this Agreement.
Section 9.04 Servicer Not to Resign.
The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Representative (if the Representative is not the Servicer), the
Certificate Insurer, the Trustee and the Majority in Aggregate Voting Interest,
or upon the determination that the Servicer's duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by a written Opinion of Counsel (who may be counsel for the
Servicer) to such effect delivered to the Trustee, the Representative (if the
Representative is not the Servicer) and the Certificate Insurer, which Opinion
of Counsel shall be in form and substance acceptable to the Certificate Insurer
and the Trustee. No such resignation shall become effective until a successor
has assumed the Servicer's responsibilities and obligations hereunder in
accordance with Section 9.02. The Servicer shall promptly notify each Rating
Agency promptly of its intention to resign pursuant to this Section 9.04.
Section 9.05 Removal of Servicer.
The Depositors may, with the prior written consent of the Certificate
Insurer and a Majority in Aggregate Voting Interest, remove the Servicer upon 90
days' prior written notice to the Servicer. No such removal shall become
effective until a successor (other than the Trustee,
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unless the Trustee agrees to so act) has assumed the Servicer's responsibilities
and obligations hereunder in accordance with Section 9.02. The Servicer shall
promptly notify each Rating Agency of such removal.
ARTICLE X
SERVICER DEFAULT
Section 10.01 Servicer Default.
(a) In case one or more of the following events (each a "Servicer
Default") by the Servicer shall occur and be continuing:
(i) (A) an Event of Nonpayment (subject to paragraph (c)
below); (B) the failure by the Servicer to make any required Servicing
Advance (other than a Nonrecoverable Advance), to the extent such
failure materially and adversely affects the interests of the
Certificate Insurer or the Certificateholders; (C) the failure by the
Servicer to make a required Advance (other than a Nonrecoverable
Advance) pursuant to the second paragraph of Section 6.08; or (D) any
other failure by the Servicer to remit to the Trustee for the benefit
of any Holders, any payment required to be made under the terms of this
Agreement (other than a Nonrecoverable Advance) which continues
unremedied after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to a Servicing
Officer of the Servicer by the Certificate Insurer, the Trustee or to a
Servicing Officer of the Servicer and the Trustee by any Holder; or
(ii) the failure by the Servicer duly to observe or perform,
in any material respect, any other covenants, obligations or agreements
of the Servicer as set forth in this Agreement, which failure continues
unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer by the Certificate Insurer or the Trustee or
to the Servicer and the Trustee by any Holder or the Certificate
Insurer; or
(iii) 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 Servicer and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or of or relating to all or
substantially all of the Servicer's property; or
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(v) the Servicer shall admit in writing its inability to pay
its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations;
(vi) the Servicer shall fail for 60 days to pay, or bond
against, an unappealable, undischarged, unvacated and unstayed final
judgment by a court of competent jurisdiction in an aggregate amount of
$250,000 or more;
(vii) subject to paragraph (c) below, if on three consecutive
Payment Dates the aggregate Principal Balance of Mortgage Loans
(including Bankruptcy Loans) more than 90 days contractually delinquent
as of the end of the last day of the preceding Due Period exceeds
(A)(1) with respect to each Due Period occurring from and including
June 1997 to and including November 1998, 8.00%, (2) with respect to
each Due Period occurring from and including December 1998 to and
including November 1999, 10.00% and (3) with respect to each Due Period
thereafter, 12.00%, multiplied by (B) the Pool Principal Balance of the
Mortgage Pool as of the end of the last day of the preceding Due
Period;
(viii) if on any Payment Date occurring in May of any year,
commencing in May 1998, the aggregate Mortgage Loan Losses over the
prior twelve month period exceed 1.00% of the average Pool Principal
Balance as of the end of the last day of each of the twelve preceding
Due Periods (subject to paragraph(c) below); or
(ix) if on any Payment Date the aggregate Mortgage Loan
Losses for all prior Due Periods since the Cut-off Date exceed 2.00% of
the Original Pool Principal Balance (subject to paragraph(c) below.
(b) then, and in each and every such case, so long as such Servicer
Default shall not have been remedied, and in the case of clause (i) above
(except for clause (i)(C)), if such Servicer Default shall not have been
remedied within three Business Days after the Servicer has received notice of
such Servicer Default, (x) with respect solely to clause (i)(C) above, if such
Advance is not made by 4:00 p.m. New York time on the second Business Day prior
to the applicable Payment Date, the Certificate Insurer or the Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer, and the Trustee shall notify each Certificateholder and, unless
such failure is cured, either by receipt of payment or receipt of evidence
satisfactory to the Certificate Insurer (e.g., a wire reference number
communicated by the sending bank; the Certificate Insurer shall notify the
Trustee, if the Certificate Insurer receives satisfactory evidence that such
funds have been sent), by 12:00 noon New York time on the following Business
Day, the Trustee, or a successor servicer appointed in accordance with Section
10.02, shall immediately make such Advance (unless such Advance is a
Nonrecoverable Advance) and assume, pursuant to Section 10.02 hereof, the duties
of a successor Servicer; and (y) in the case of clauses (i)(A), (i)(B), (i)(D),
(ii), (iii), (iv), (v), (vi), (vii), (viii) and (ix) above, the Majority in
Aggregate Voting Interest, subject to the prior written consent of the
Certificate Insurer, which consent may not be unreasonably withheld, or the
Certificate Insurer, by notice in writing to the Servicer and a Responsible
Officer of the Trustee may, in addition to whatever rights they or it
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may have at law or equity to damages, including injunctive relief and specific
performance, commence termination of all the rights and obligations of the
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, as servicer. Upon receipt by the Servicer of a second written notice
(except relative to clause (i)(C) above) from the Majority in Aggregate Voting
Interest, subject to the prior written consent of the Certificate Insurer, which
consent may not be unreasonably withheld, or the Certificate Insurer stating
that they or it intend to terminate the Servicer as a result of such Servicer
Default, all authority and power of the Servicer under this Agreement, whether
with respect to the Mortgage Loans or otherwise, shall, subject to Section
10.02, pass to and be vested in the Trustee or its designee and the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the transfer and endorsement or assignment of the Mortgage Loans
and related documents. The Servicer agrees to cooperate with the Trustee in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee, for the
benefit of the Holders of the Certificates, or its designee for administration
by it of all amounts which shall at the time be credited by the Servicer to the
Principal and Interest Account or thereafter received with respect to the
Mortgage Loans.
The Trustee shall not be deemed to have knowledge of a Servicer Default
unless a Responsible Officer thereof has received written notice thereof.
(c) Notwithstanding anything to the contrary contained in this
Agreement, upon the occurrence of an Event of Nonpayment or a Performance
Default of which the Certificate Insurer has knowledge, the Certificate Insurer
shall promptly notify the Trustee. During any applicable grace period following
receipt of such notice (or immediately following such notice in the case of a
Performance Default), the Trustee and the Certificate Insurer shall cooperate
with each other to determine if the occurrence of such Event of Nonpayment is in
their reasonable business judgment or Performance Default is in the reasonable
business judgment of the Certificate Insurer (x) the result of the acts or
omissions of the Servicer or (y) the result of events beyond the control of the
Servicer. If the Trustee and the Certificate Insurer conclude that such Event of
Nonpayment or Performance Default is the result of the latter, Section 10.01(b)
above shall not apply, and the Servicer shall not be terminated, unless and
until an Event of Default unrelated to such Event of Nonpayment or Performance
Default has occurred and is continuing, whether or not the Servicer has cured
such Event of Nonpayment or Performance Default. If the Trustee and the
Certificate Insurer conclude that the Event of Nonpayment or Performance Default
is the result of the former, the Certificate Insurer or the Majority in
Aggregate Voting Interest, as the case may be, may terminate the Servicer in
accordance with Section 10.01(b) above, provided that the Trustee shall have
until the 60th day following the date of receipt of notice of the Event of
Nonpayment or Performance Default to either assume the servicing or appoint a
successor servicer pursuant to Section 10.02 hereof.
If the Trustee and the Certificate Insurer cannot agree, and the basis
for such disagreement is not arbitrary or unreasonable, as to the cause of the
Event of Nonpayment or Performance Default, the decision of the Certificate
Insurer shall control; provided, however, that if the Certificate Insurer
decides to terminate the Servicer, the Trustee shall be relieved of its
obligation
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to assume the servicing or to appoint a successor, which shall be the exclusive
obligation of the Certificate Insurer.
The Trustee shall promptly notify each Rating Agency, the Certificate
Insurer, the Trustee and each Certificateholder, of the occurrence of a Servicer
Default.
Section 10.02 Trustee to Act; Appointment of Successor Servicer.
On and after the time the Servicer receives a notice of termination
pursuant to Section 10.01, or the Trustee receives the resignation of the
Servicer evidenced by an Opinion of Counsel pursuant to Section 9.04, or the
Servicer is removed as servicer pursuant to this Article X (in which event the
Trustee shall promptly notify each Rating Agency), except as otherwise provided
in Section 10.01, the Trustee shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof; provided, however, that the Trustee shall
not be liable for any actions of any servicer prior to the Trustee becoming the
Servicer under this Agreement. The Trustee shall be obligated to make advances
pursuant to Sections 5.10, 5.13 and 6.08 unless, and only to the extent the
Trustee determines reasonably and in good faith that, such advances would not be
recoverable pursuant to Section 5.04(ii) or 6.05(d)(vii) and (viii), such
determination to be evidenced by a certification of a Responsible Officer of the
Trustee delivered to the Certificate Insurer; provided that the Trustee shall
not be required to make an advance from its own funds if such advance is
prohibited by law. As compensation therefor, the Trustee, or any successor
servicer appointed pursuant to the following paragraph, shall be entitled to all
funds relating to the Mortgage Loans which the Servicer would have been entitled
to receive from the Principal and Interest Account pursuant to Section 5.04 and
from the Collection Account pursuant to Section 6.05 if the Servicer had
continued to act as servicer hereunder, together with other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 7.01 and 7.03. In no event shall the assets of the Trust
include, nor the Trustee or any other successor servicer acquire any rights to,
the Representative's Yield.
Notwithstanding the above, the Trustee may, if it shall be unwilling to
so act, and shall, if it is unable to so act or if the Majority in Aggregate
Voting Interest (with the consent of the Certificate Insurer), or the
Certificate Insurer so request in writing to the Trustee, appoint, or petition a
court of competent jurisdiction to appoint, any established mortgage loan
servicing institution acceptable to the Certificate Insurer, which acceptance
shall not be unreasonably withheld, that has a net worth of not less than
$15,000,000 and which is approved as a servicer by FNMA and FHLMC 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. Any
collections received by the Servicer after removal or resignation shall be
endorsed by it to the Trustee and remitted directly to the Trustee or, at the
direction of the Trustee, to the successor servicer. The compensation of any
successor servicer (including, without limitation, the Trustee) so appointed
shall be the aggregate Servicing Fees, together with other Servicing
Compensation in the form of assumption fees, late payment charges or otherwise.
In the event the Trustee is required to solicit bids, 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.
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Such public announcement shall specify that the successor servicer shall be
entitled to the full amount of the aggregate Servicing Fees as servicing
compensation, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise. 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 qualifying bid. 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 and the amount of any unreimbursed
Servicing Advances and Advances. After such deductions, the remainder of such
sum shall be paid by the Trustee to the Servicer at the time of such sale,
transfer and assignment to the Servicer's successor. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. The Servicer agrees to cooperate
with the Trustee and any successor servicer in effecting the termination of the
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume the Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor servicer, as applicable, all amounts which then have been or should
have been deposited in the Principal and Interest Account by the Servicer or
which are thereafter received with respect to the Mortgage 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
hereunder. No appointment of a successor to the Servicer hereunder (other than
the Trustee) shall be effective until the Trustee and the Certificate Insurer
shall have consented thereto. The Trustee shall not resign as servicer until a
successor servicer reasonably acceptable to the Certificate Insurer has been
appointed.
Pending appointment of a successor to the Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer pursuant to Section 8.03, together with
other servicing compensation in the form of assumption fees, late payment
charges or otherwise as provided in this Agreement. The Servicer, the Trustee,
any Custodian and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
Section 10.03 Waiver of Defaults.
The Certificate Insurer or a Majority in Aggregate Voting Interest may,
on behalf of all Certificateholders, and subject to the consent of the
Certificate Insurer, which consent may not be unreasonably withheld, waive any
events permitting removal of the Servicer as servicer pursuant to this Article
X. Upon any waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any
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right consequent thereto except to the extent expressly so waived. Notice of any
such waiver shall be given by the Trustee to each Rating Agency.
Section 10.04 Control by Majority in Aggregate Voting Interest.
The Certificate Insurer, or the Majority in Aggregate Voting Interest
with the consent of the Certificate Insurer, which consent may not be
unreasonably withheld, may direct the time, method and place of conducting any
proceeding relating to the assets of the Trust or the Certificates or 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 assets of the Trust, provided that:
(i) such direction shall not be in conflict with any rule of law
or with this Agreement;
(ii) the Trustee shall have been provided with indemnity
satisfactory to it; and
(iii) the Trustee may take any other action deemed proper by it
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 Holders not so
directing. If inconsistent directions are given, the Certificate
Insurer's directions shall control.
ARTICLE XI
TERMINATION
Section 11.01 Termination.
Subject to Section 11.03, this Agreement shall terminate upon notice to
the Trustee of either: (a) the collection with respect to the last Mortgage Loan
(or Advances of same by the Servicer), or the disposition of all funds with
respect to the last Mortgage Loan and the remittance of all funds due hereunder
and the payment of all amounts due and payable to the Certificate Insurer and
the Trustee or (b) mutual consent of the Servicer, the Certificate Insurer and
all Certificateholders in writing.
Subject to Section 11.03, the Servicer may, at its option, elect to
terminate this Agreement on any date following the first Payment Date on which
the Pool Principal Balance is less than 10% of the Original Pool Principal
Balance (such Payment Date being the "Optional Purchase Date") by causing the
Trust to sell (which may be to the Depositors or the Class R
Certificateholders), as of the last day of the Due Period with respect to the
next succeeding Payment Date, all of the outstanding Mortgage Loans and REO
Properties at a price (the "Termination Price") equal to the fair market value
thereof (determined as provided below); provided, that the Trust shall not sell
the Mortgage Loans and REO Properties if the Termination Price to be received is
less than the sum of (x) 100% of the aggregate Principal Balance of the
outstanding Mortgage Loans and REO
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Properties and (y) accrued and unpaid interest on each such Mortgage Loan at a
rate equal to its respective Mortgage Interest Rate. In connection with any such
sale, the Servicer shall pay any outstanding and unpaid fees and expenses of the
Trustee and the Certificate Insurer relating to this Agreement that such parties
would otherwise have been entitled to pursuant to Section 6.05(d).
The fair market value of the outstanding Mortgage Loans and REO
Properties for purposes of this Section 11.01 shall be an amount equal to the
average of the bid prices for such assets taken as a whole, provided to the
Servicer by two Independent, nationally recognized dealers in whole loans
substantially similar to the Mortgage Loans.
Any such sale pursuant to this Section 11.01 shall be accomplished by
depositing into the Collection Account, on the third Business Day immediately
preceding the final Payment Date on which such purchase is to be effected, the
amount of the Termination Price. On the same day that the Termination Price is
deposited into the Collection Account, any other amounts then on deposit in the
Principal and Interest Account shall be transferred to the Collection Account
pursuant to Section 5.04(ii) for payment to Certificateholders pursuant to
Section 6.05(d) on the final Payment Date as specified in the notice to
Certificateholders described below; and any amounts received with respect to the
Mortgage Loans and REO Properties subsequent to the last day of the related Due
Period shall belong to the Person purchasing the Mortgage Loans and REO
Properties. Promptly upon receipt of the Termination Price, the Trustee shall
release (or cause to be released) each related Mortgage File to the Person
purchasing the Mortgage Loans and REO Properties as set forth herein.
Notice of any termination, specifying the Payment Date upon which this
Agreement will terminate shall be given promptly by the Trustee by letter to the
Certificateholders mailed during the month of such final Payment Date before the
Determination Date in such month, specifying (i) the Payment Date upon which
final payment of the Certificates will be made and (ii) the amount of any such
final payment. The obligations of the Certificate Insurer hereunder shall
terminate upon the deposit by the Servicer with the Trustee for deposit into the
Collection Account of a sum sufficient to purchase all of the Mortgage Loans and
REO Properties as set forth above.
Each Holder 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 canceled and shall no longer be
outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
In the event that any amount due to any Class A Certificateholder
remains unclaimed, the Servicer shall, at the expense of the Trust Fund, which
amount shall be allocated to the Trust REMIC, cause to be published once, in the
eastern edition of The Wall Street Journal, notice that such money remains
unclaimed. If, within the period then specified in the escheat laws of the State
of New York after such publication such amount remains unclaimed, the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds and the Certificateholders shall
look to the Class R Certificateholders for payment.
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Section 11.02 Additional Termination Requirements.
(a)In the event the Servicer exercises its purchase option as provided
in Section 11.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been furnished with an
Opinion of Counsel to the effect that the failure of the Trust Fund to comply
with the requirements of this Section 11.02 will not (i) result in the
imposition of taxes on prohibited transactions" of the Trust REMIC as defined in
Section 860F of the Code, or (ii) cause the Trust REMIC to fail to qualify as a
REMIC at any time that any Certificates are outstanding:
(i) Within 89 days prior to the final Payment Date the
Trustee shall adopt a plan of complete liquidation of the REMIC meeting
the requirements of a "Qualified Liquidation" under Section 860F of the
Code and any regulations thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Payment Date, the
Trustee shall sell all of the assets of the Trust Fund to the Servicer
or the Certificate Insurer for cash;
(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 (A) to the Fixed Rate Certificateholders, the
Fixed Rate Principal Balance, plus one month's interest on each Class
of Fixed Rate Certificates at the respective Pass-Through Rate, (B) to
the Adjustable Rate Certificateholders, the Adjustable Rate Principal
Balance, plus one month's interest on the Adjustable Rate Certificates
at the Class A-10 Pass-Through Rate and (C) to the Class R
Certificateholders, all cash on hand after such payment to the Class A
Certificateholders (other than cash retained to meet claims), and the
Trust REMIC and the Trust Fund shall terminate at such time; and
(iv) In no event may the final payment on the Certificates
(except to the extent permitted in Section 11.01 with respect to
Certificateholders who fail to surrender their Certificates) be made
after the 89th day from the date on which the plan of complete
liquidation is adopted.
(b)By their acceptance of the Certificates, the holders thereof hereby
agree to appoint the Trustee as their attorney-in-fact to (i) adopt such a plan
of complete liquidation as appropriate or upon the written request of the
Certificate Insurer and (ii) to take such other action in connection therewith
as may be reasonably required to carry out such plan of complete liquidation all
in accordance with the terms hereof.
(c)On the final federal income tax return for the Trust REMIC, the
Trustee will attach a statement specifying the date of the adoption of the plan
of liquidation.
Section 11.03 Accounting Upon Termination of Servicer.
Upon termination of the Servicer under Article X hereof, the Servicer
shall:
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(a) deliver to its successor or, if none shall yet have been
appointed, to the Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee, the Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders, a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer under this
Agreement.
Section 11.04 Representative's Right to Representative's Yield Absolute.
The Representative's right to receive the Representative's Yield with
respect to each Mortgage Loan shall be absolute and unconditional, and shall
survive notwithstanding the termination of the rights and obligations of the
Servicer hereunder, the resignation of the Servicer or the termination of this
Agreement. The Representative's right to receive the Representative's Yield
shall not be subject to offset or counterclaim, whether or not such right has
been assigned in whole or in part, notwithstanding any breach of any
representation or warranty of the Representative or any Depositor under this
Agreement or any default by the Representative or any Depositor of any of its
obligations or covenants under this Agreement. The Representative shall have the
right to assign any or all of its rights in and to the Representative's Yield,
without notice to or the consent of any party to this Agreement or any
Noteholder or any Certificateholder.
Section 11.05 Termination Upon Loss of REMIC Status.
(a)Following a final determination by the Internal Revenue Service, or
by a court of competent jurisdiction, in either case, from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that the Trust REMIC does not and will no longer qualify
as a REMIC pursuant to Section 860D of the Code (the "Final Determination"), at
any time on or after the date which is 30 calendar days following such Final
Determination (i) the Majority in Voting Interest may direct the Trustee on
behalf of the Trust REMIC to adopt a "plan of complete liquidation" (within the
meaning of Section 860F(a)(4)(B)(i) of the Code) and (ii) the Certificate
Insurer may notify the Trustee of the Certificate Insurer's determination to
purchase from the Trust Fund all Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then remaining in the Trust Fund at a price equal to the
Termination Price. Upon receipt of notice from the Certificate Insurer, the
Trustee shall notify the Class R Certificateholders of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Holders of a
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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 Mortgage
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in the
Trust Fund at a purchase price equal to the Termination Price. Any such purchase
shall be accomplished in the manner set forth in Section 11.01.
(b)If, during the Purchase Option Period, the Class R Certificateholders
have not exercised the option described in the immediately preceding paragraph,
then upon the expiration of the Purchase Option Period (i) in the event that the
Majority in Aggregate Voting Interest have given the Trustee the direction
described in clause (a)(i) above, the Trustee shall sell the Mortgage Loans and
distribute the proceeds of the liquidation of the Trust Fund, each in accordance
with the plan of complete liquidation, such that, if so directed, the
liquidation of the Trust Fund, 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 Majority in Aggregate Voting Interest
shall permit or direct in writing, after the expiration of the Purchase Option
Period and (ii) in the event that the Certificate Insurer has given the Trustee
notice of the Certificate Insurer's determination to purchase the Trust Fund
described in clause (a)(ii) preceding, the Certificate Insurer shall so purchase
the Trust Fund within 60 days after the expiration of the Purchase Option
Period.
(c)Following a Final Determination, the Holders of a majority of the
Percentage Interest of the Class R Certificates then outstanding may, at their
option and upon delivery to the Class A Certificateholders and the Certificate
Insurer of an opinion of nationally recognized tax counsel selected by the
Holders of the Class R Certificates, which opinion shall be reasonably
satisfactory in form and substance to the Majority in Aggregate Voting Interest
and the Certificate Insurer, to the effect that the effect of the Final
Determination is to increase substantially the probability that the gross income
of the Trust REMIC will be subject to federal taxation, purchase from the Trust
Fund all Mortgage Loans and all property theretofore acquired by foreclosure,
deed in lieu of foreclosure, or otherwise in respect of any Mortgage Loan then
remaining in the Trust Fund at a purchase price equal to the Termination Price.
Any such purchase shall be accomplished in the manner set forth in Section
11.01. The foregoing opinion shall be deemed satisfactory unless the Majority in
Aggregate Voting Interest give the Holders of a majority of the Percentage
Interest of the Class R Certificates notice that such opinion is not
satisfactory within thirty days after receipt of such opinion.
ARTICLE XII
THE TRUSTEE
Section 12.01 Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Default and after
the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If a Servicer Default has occurred and has
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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 its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; 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 or either Depositor hereunder. If any such instrument
is found not to conform to the requirements of this Agreement, the Trustee shall
notify the Certificate Insurer and request written instructions as to the action
it deems appropriate to have the instrument corrected, and if the instrument is
not so corrected, the Trustee will provide notice thereof to the Certificate
Insurer who shall then direct the Trustee as to the action, if any, to be taken.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of a Servicer Default, and after
the curing of all Servicer Defaults which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) The Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or other
officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Certificate Insurer or
the Class A Certificateholders, 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;
(iv) The Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any Default or Servicer Default
unless a Responsible Officer of the Trustee shall have received notice
thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that there is no default or Servicer Default;
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(v) The Trustee shall not be required to expend or risk its
own funds or otherwise incur financial liability for the performance of
any of its duties hereunder or the exercise of any of its rights or
powers if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it, and 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;
(vi) Subject to the other provisions of this Agreement and
without limiting the generality of this Section, 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, (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 Fund or the Trust REMIC, (D) to confirm
or verify the contents of any reports or certificates of the Servicer
delivered to the Trustee pursuant to this Agreement believed by the
Trustee to be genuine and to have been signed or presented by the
proper party or parties; and
(vii) The Trustee shall not be deemed a fiduciary for the
Certificate Insurer in its capacity as such, except to the extent the
Certificate Insurer has made an Insured Payment and is thereby
subrogated to the rights of the Certificateholders with respect
thereto.
Section 12.02 Certain Matters Affecting the Trustee.
(a)Except as otherwise provided in Section 12.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
Opinion of Counsel, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend by litigation hereunder or in relation hereto at the
request, order or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders or the Certificate Insurer, as
applicable, shall have offered to the
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Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of a Servicer Default (which has not been cured),
to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in its exercise
as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs;
(iv) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) Prior to the occurrence of a Servicer Default hereunder
and after the curing of all Defaults which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the
Certificate Insurer or Holders of Class A Certificates evidencing not
less than 25% of the sum of the Fixed Rate Principal Balance and the
Adjustable Rate Principal Balance; 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
expense or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be repaid by the Servicer
upon demand from the Servicer's own funds;
(vi) 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;
(vii) The Trustee shall not be required to give any bond or
surety in respect of the execution of the Trust created hereby or the
powers granted hereunder; and
(viii) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder, including, without
limitation, under Section2.06 hereof, either directly or by or through
agents or attorney.
(b)Following the Startup Day, the Trustee shall not knowingly accept
any contribution of assets, including substitutions, to the Trust Fund or the
Trust REMIC, unless the Trustee shall have received an Opinion of Counsel to the
effect that the inclusion of such assets in the Trust Fund or the Trust REMIC
will not cause the Trust REMIC to fail to qualify as a REMIC at any time that
any Certificates are outstanding or subject the Trust REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
Section 12.03 Trustee Not Liable for Certificates or Mortgage
Loans.
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The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Depositors, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositors of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee, and may otherwise deal with the parties hereto.
Section 12.05 Servicer to Pay Trustee's Fees and Expenses.
The Servicer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, including the powers and duties
described in Section 2.07 hereof, and the Servicer will pay or reimburse the
Trustee upon its request, and, if such amounts are not paid by the Servicer
within thirty (30) days of demand therefor, with interest thereon at the
Trustee's prime rate (which prime rate shall not exceed 10% per annum), for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement (including, without
limitation, the reasonable fees, expenses and disbursements of its counsel
(including, reasonable compensation of its in-house counsel on an hourly basis)
and of all persons not regularly in its employ, including any agents, attorneys
and accountants of the Trustee, as described in Section 2.07(a) hereof) and such
out-of-pocket expenses as may be incurred by the Trustee in assuming servicing
responsibilities under Section 10.02 hereof, such reimbursable amounts to
include expenses incurred due to the Servicer's failure to properly discharge
its responsibilities hereunder or to the representations and warranties as to
any Mortgage Loan or Loans being untrue, but not to include general overhead
incurred by the Trustee as a result of becoming Successor Servicer (provided
however, prior to incurring such expenses, disbursements and advances ("costs"),
the Trustee will give the Servicer an opportunity to provide such services to
render such costs unnecessary), except any such expense, disbursement or advance
as may arise from its negligence or bad faith, provided that the Trustee shall
have no lien on the Trust Fund or the REMIC for the payment of its fees and
expenses. Failure by the Servicer to pay any such fees or other expenses shall
not relieve the Trustee of its obligation hereunder. The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by the
Servicer and held harmless against any loss, liability or expense (i) incurred
in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad
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faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder, and (ii) resulting from
any error in any tax or information return prepared by the Servicer. The
obligations of the Servicer under this Section 12.05 shall survive termination
of the Servicer and payment of the Certificates, and shall extend to any
co-trustee appointed pursuant to this Article XII. The compensation due to the
Trustee pursuant to this Section 12.05 shall be paid by the Servicer from it own
funds.
Section 12.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be (i) a banking association
organized and doing business under the laws of any state or the United State of
America, (ii) authorized under such laws to exercise corporate trust powers,
including taking title to the Trust Fund asset on behalf of the
Certificateholders, (iii) having a combined capital and surplus of at least
$50,000,000, (iv) whose long-term deposits, if any, shall be rated at least
"BBB" by S&P or such lower long-term deposit rating by S&P as may be approved in
writing by the Certificate Insurer and S&P, and with a long-term deposit rating
of at least "Baa2" from Moody's (or such lower rating which would not cause
Moody's to reduce its then current ratings of the Class A Certificates), (v) is
subject to supervision or examination by federal or state authority and (vi) is
reasonably acceptable to the Certificate Insurer as evidenced in writing. If
such banking association 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 12.06 its combined capital and
surplus shall be deemed to be as set forth in it most recent report of condition
so published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall give notice of
such ineligibility to the Certificate Insurer and shall resign, upon the request
of the Certificate Insurer or the Majority in Aggregate Voting Interest, in the
manner and with the effect specified in Section 12.07.
Section 12.07 Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the Certificate
Insurer and to all Certificateholders. Upon receiving such notice of
resignation, the Servicer shall, with the consent of the Certificate Insurer,
promptly appoint a successor trustee by written instrument, in duplicate, which
Instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to the Certificateholders
by the Servicer. Unless a successor trustee shall have been appointed and have
accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 12.06 and shall fail to resign after written
request therefor by the Servicer, the Certificate Insurer or the Majority in
Aggregate Voting Interest, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Servicer may remove the
Trustee and shall, within 30 days after such removal, appoint, subject to
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the approval of the Certificate Insurer, which approval shall not be
unreasonably withheld, a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the
Certificateholders by the Servicer.
The Majority in Aggregate Voting Interest or, if the Trustee fails to
perform in accordance with this Agreement, the Certificate Insurer may remove
the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, or by the Certificate Insurer, as the case may be, one complete
set of which instruments shall be delivered to the Servicer, one complete set to
the Trustee so removed and one complete set to the Successor Trustee so
appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.08.
Upon any termination of, or appointment of any successor to, the
Trustee hereunder, the Trustee shall promptly transfer all of the interest in
the Class R Certificates acquired by the Tax Matters Person pursuant to Section
2.07(a)(6) hereof to the Successor Trustee.
Section 12.08 Successor Trustee.
Any successor trustee appointed as provided in Section 12.07 shall
execute, acknowledge and deliver to the Servicer and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Trustee's Mortgage Files and related documents and statement held by it
hereunder, and the Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses shown in the
Certificate Register and to Moody's and S&P. If the Servicer 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
Servicer.
Section 12.09 Merger or Consolidation of Trustee.
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Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 12.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Certificate Insurer with written notice to Moody's to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 12.10, 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 case a Servicer Default shall have occurred and be continuing, the Trustee
alone (with the consent of the Certificate Insurer with written notice to
Moody's) 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 12.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 12.10, 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, 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 Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. 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.
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Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 12.11 [Reserved].
Section 12.12 Appointment of Custodians.
The Trustee may, with the consent of the Servicer and the Certificate
Insurer and notice to Moody's, appoint one or more Custodians to hold all or a
portion of the Trustee's Mortgage Files as agent for the Trustee, by entering
into a Custodial Agreement. BankBoston is initially appointed Custodian with
respect to all Mortgage Loans and, for so long as it shall be the Custodian
hereunder, agrees to comply with the terms of the provisions of Exhibit N hereto
applicable to the duties of the Custodian. Subject to this Article XII, the
Trustee agrees to comply with the terms of each Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the benefit
of the Certificateholders and the Certificate Insurer. The Servicer shall be
liable for the fees of any Custodian appointed hereunder. Each Custodian shall
be a depository institution subject to supervision by federal or state authority
and shall be qualified to do business in the jurisdiction in which it holds any
Trustee's Mortgage File. Each Custodial Agreement may be amended only as
provided in Section 13.02.
Section 12.13 Protection of Trust Fund.
(a) The Trustee will hold the Trust Fund in trust for the benefit of
the Holders and the Certificate Insurer and, upon request of the Certificate
Insurer, or, with the consent of the Certificate Insurer, at the request of the
Depositors, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 13.02 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request to:
(i) more effectively hold in trust all or any portion of the
Trust Fund;
(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 Mortgage Loans; or
(iv) preserve and defend title to the Trust Fund and the rights
of the Trustee, and the ownership Interests of the Holders represented
thereby, in such Trust Fund against the claims of all Persons and
parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Depositors to take any action pursuant to this
Section 12.13 to the others.
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(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement and of the Certificate Insurer, by action, suit or proceeding at law
or equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Holders; provided, however, that nothing in this Section 12.13 shall require
any action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and second (ii) when required by this Agreement,
have been requested to take such action by the Majority in Aggregate Voting
Interest, the Certificate Insurer or the Depositors in accordance with the terms
of this Agreement.
(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.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall be
suspended during any period in which the Certificate Insurer is in default in
its payment obligations under the Certificate Insurance Policy, and its rights
during such period shall vest in the Majority in Aggregate Voting Interest. At
such time as the Certificates are no longer outstanding, and no amounts owed to
the Certificate Insurer hereunder remain unpaid and the Certificate Insurance
Policy has expired in accordance with its terms, the Certificate Insurer's
rights hereunder shall terminate.
Section 13.02 Amendment.
(a) This Agreement may be amended from time to time by the Depositors
and the Servicer by written agreement, upon the prior written consent of the
Trustee and the Certificate Insurer, without notice to or consent of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement, or any
Custodial Agreement; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel, at the expense of the party requesting the change,
delivered to the Certificate Insurer, the Trustee and the Depositors, adversely
affect the interests of any Certificateholder or the Certificate Insurer; and
provided, further, that no such amendment shall reduce in any manner the amount
of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, or change the rights or obligations of any other party
hereto without the consent of such party. The Trustee shall give prompt written
notice to each Rating Agency of any amendment made pursuant to this Section
13.02(a).
(b) This Agreement may be amended from time to time by the Depositors
and the Servicer, with the consent of the Trustee and the Certificate Insurer,
the Majority in Aggregate
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Voting Interest of the Class A Certificates and the Holders of the majority of
the Percentage Interest in the Class R Certificates for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment shall reduce in any manner the amount
of, or delay the timing of, any payments which are required to be distributed on
any Class A Certificate without the consent of the Holder of such Certificate or
reduce the percentage for each Class of Certificates the Holders of which are
required to consent to any such amendment without the consent of the Holders of
100% of each Class of Certificates affected thereby. Prior notice of any
proposed amendment pursuant to this Section 13.02(b) shall be given to each
Rating Agency.
(c) It shall not be necessary for the consent of Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
(d) Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment or
the exercise of any power granted to the Servicer, the Representative, any
Depositor, the Certificate Insurer or the Trustee in accordance with such
amendment will not result in the imposition of a tax on the Trust REMIC or cause
the Trust REMIC to fail to qualify as a REMIC at any time that any Certificate
is outstanding. No amendment shall have the effect of varying the latest
possible maturity, principal amount or interest rate of the Trust unless the
Trustee shall have received an Opinion of Counsel that the amendment will not
cause the regular interest to lack fixed terms within the meaning of the REMIC
provisions.
(e) An amendment or supplement to the original issue discount legend
shall not be an amendment or supplement for purposes of this Article 13.
Section 13.03 Recordation of Agreement.
To the extent permitted by applicable law, this Agreement, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of the
counties or other comparable jurisdictions in which any or all of the properties
subject to the Mortgages are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Servicer
at the Holders' or Certificate Insurer's expense on direction and at the expense
of the Majority in Aggregate Voting Interest or the Certificate Insurer
requesting such recordation, but only when accompanied by an Opinion of Counsel
to the effect that such recordation materially and beneficially affects the
interests of the Certificateholders or the Certificate Insurer or is necessary
for the administration or servicing of the Mortgage Loans.
Section 13.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated
as herein provided.
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Section 13.05 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 13.06 Notices.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Servicer and the Representative, EquiCredit Corporation of
America, 10401 Deerwood Park Boulevard, Jacksonville, Florida 32256-0505
Attention: General Counsel, or such other addresses as may hereafter be
furnished to the Trustee in writing by the Representative and the Servicer, (ii)
in the case of each Depositor, c/o EquiCredit Corporation of America, 10401
Deerwood Park Boulevard, Jacksonville, Florida 32256-0505 Attention: General
Counsel, or such other addresses as may hereafter be furnished to the Trustee in
writing by such Depositor, (iii) in the case of the Certificateholders, as set
forth in the Certificate Register, (iv) in the case of the Trustee, First Bank
National Association, c/o First Trust National Association, 111 East Wacker
Drive, Suite 3000, Chicago, Illinois 60601, Attention: Corporate Trust
Department, (v) in the case of Moody's, 99 Church Street, New York, New York
10007, Attention: Home Equity Monitoring Group, (vi) in the case of S&P, 26
Broadway, New York, New York 10004, Attention: Ms. Nancy Gigante and (vii) in
the case of the Certificate Insurer, AMBAC Indemnity Corporation, One State
Street Plaza, New York, New York 10004, Attention: Structured Financed MBS (re:
EQCC Home Equity Loan Trust 1997-2). Any such notices shall be deemed to be
effective with respect to any party hereto upon the receipt of such notice by
such party, except that notices to the Certificateholders shall be effective
upon mailing or personal delivery.
Section 13.07 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 13.08 No Partnership.
Except for federal, state and local income, franchise or similar tax
purposes, nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificateholders.
Section 13.09 Counterparts.
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This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 13.10 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Representative, the Servicer, the Depositors, the Trustee and the
Certificateholders and their respective successors and assigns.
Section 13.11 Headings.
The headings of the various Sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
Section 13.12 Limitation of Liability of Trustee.
Notwithstanding anything contained herein to the contrary, this
Agreement has been executed by First Bank National Association not in its
individual capacity but solely as Trustee and in no event shall First Bank
National Association have any liability for the representations, warranties,
covenants, agreements or other obligations of the Depositors hereunder or in any
of the certificates, notices or agreements delivered pursuant hereto, as to all
of which recourse shall be had solely to the assets of the Trust Fund.
Section 13.13 Limitations on Rights of Others.
The provisions of this Agreement are solely for the benefit of the
Depositors, the Servicer, the Trustee, the Certificateholders and the
Originators and nothing in this Agreement whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the assets of the Trust or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein. The Certificate Insurer is
an intended third party beneficiary of this Agreement.
Section 13.14 No Petition.
The Servicer and the Trustee by entering into this Agreement hereby
covenants and agrees that it shall not, prior to the date which is one year and
one day after the termination of this Agreement pursuant to Article XI hereof,
acquiesce, petition or otherwise invoke or cause the Depositors to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Depositors under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of each of the
Depositors or any substantial part of its respective property, or ordering the
winding up or liquidation of the affairs of each of the Depositors.
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IN WITNESS WHEREOF, the Servicer, the Trustee and the Depositors have
caused their names to be signed hereto by their respective officers thereunto
duly authorized as of the day and year first above written.
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Name: David S. Vick
Title: Vice President
EQUICREDIT CORPORATION OF AMERICA,
as Representative and Servicer
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Senior Vice President
THE DEPOSITORS
EQCC RECEIVABLES CORPORATION
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Vice President
EQCC ASSET BACKED CORPORATION
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Vice President
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 1997 before me, a Notary Public in and for the
State of _________________, personally appeared Terence G. Vane, Jr., known to
me to be the Vice President of EQCC Receivables Corporation, the corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
--------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 1997 before me, a Notary Public in and for the
State of _________________, personally appeared Terence G. Vane, Jr., known to
me to be the Vice President of EQCC Asset Backed Corporation, the corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
--------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 1997 before me, a Notary Public in and for the
State of _________________, personally appeared Terence G. Vane, Jr., known to
me to be the Vice President of EquiCredit Corporation of America, a corporation
that executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
--------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of June, 1997 before me, a Notary Public in and for the
State of __________________, personally appeared David S. Vick, known to me to
be Vice President of First Bank National Association, a national banking
association that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
--------------------------------
Notary Public
<PAGE>
EXHIBIT A
CONTENTS OF MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include each of
the following items (copies to the extent the originals have been delivered to
the Depositors pursuant to Section 2.04 of the Pooling and Servicing Agreement),
all of which shall be available for inspection by the Trustee and the Custodian,
to the extent required by applicable laws:
1. The original Mortgage Note, with any intervening endorsements,
endorsed*/ "Pay to the order of BankBoston, N.A., as Custodian under
the Custodial Agreement dated as of June 1, 1997, Series 1997-2,
without recourse" and signed, by facsimile or manual signature, in the
name of the Originator transferring such Mortgage Loan to the
applicable Depositor pursuant to the Transfer Agreement by a
Responsible Officer, with all prior and intervening endorsements
showing a complete chain of endorsement from the originator to such
Originator, if the Originator from whom the Depositor acquired such
Mortgage Loan was not the originator and, with respect to manufactured
housing units, the certificate of title, if any;
2. Either: (i) the original Mortgage, with evidence of recording thereon
(and, in the case of a Mortgaged Property held in an Illinois Land
Trust, signed by the trustee of such Illinois Land Trust), (ii) a copy
of the Mortgage certified as a true copy by a Responsible Officer of
the applicable Depositor (provided, however, that such Responsible
Officer may complete one or more blanket certificates attaching copies
of one or more Mortgages relating thereto) or by the closing attorney,
or by an officer of the title insurer or agent of the title insurer
which issued the related title insurance policy, or commitment
therefor, if the original has been transmitted for recording until
such time as the original is returned by the public recording office
or (iii) a copy of the Mortgage certified by the public recording
office in those instances where the original recorded Mortgage has
been lost;
3. Except for a Mortgaged Property held in an Illinois Land Trust, either
(i) the original Assignment of Mortgage from the Originator to*/
- ----------
1/ contemporaneously with the issuance of the Certificates, the Depositors
shall cause the Custodian to (A) endorse each Mortgage Note to the order of
the Trustee, which endorsement shall be in substantially the form set forth
in Section 2.04(a)(i) of the Pooling and Servicing Agreement, with
appropriate alterations to reflect the interest of the Trustee and the
limited nature of the Custodian's interest therein as may be acceptable to
the Depositors, the Servicer and the Trustee, (B) execute each Assignment
of Mortgage to the Trustee, which assignment shall be in substantially the
form set forth in Section 2.04(c) of the Pooling and Servicing Agreement,
with appropriate alterations to reflect the interest of the Trustee and (C)
with respect to each Illinois Land Trust, execute a Reassignment of
Assignment of Beneficial Interest to the Trustee, which reassignment shall
be substantially in the form set forth in Section 2.04(h) of the Pooling
and Servicing Agreement, with appropriate alterations to reflect the
interest of the Trustee. The Servicer shall promptly cause each Assignment
of Mortgage to be recorded in the applicable recording office in the name
of the Trustee.
A-3
<PAGE>
BankBoston, N.A., as Custodian under the Custodial Agreement dated as
of June 1, 1997: or in blank pursuant to the Transfer Agreement;
4. The original policy of title insurance or a true copy thereof or, if
such policy has not yet been delivered by the insurer, the commitment
or binder to issue same.
5. All intervening assignments, if any, showing a complete chain of
assignment from the originator to the applicable Originator, including
any recorded warehousing assignments, with evidence of recording
thereon, certified by a Responsible Officer of the applicable
Originator as a true copy of the original of such intervening
assignments;
6. Originals of all assumption and modification agreements, if any or a
copy certified as a true copy by a Responsible Officer of the
applicable Originator.
7. Except for a Mortgaged Property held in an Illinois Land Trust,
either: (i) originals of all intervening assignments, if any showing a
complete chain of title from the originator to the applicable
Depositor, including any recorded warehousing assignments, with
evidence of recording thereon, or, (ii) if the original intervening
assignments have not yet been returned from the recording office, a
copy of the originals of such intervening assignments together with a
certificate of a Responsible Officer of the Depositor or the closing
attorney or an officer of the title insurer which issued the related
title insurance policy, or commitment therefor, or its duly authorized
agent certifying that the copy is a true copy of the original of such
intervening assignments or (iii) a copy of the intervening assignment
certified by the public recording office in those instances where the
original recorded intervening assignment has been lost.
8. If the Mortgaged Property is held in an Illinois Land Trust, the
original Assignment of Beneficial Interest, or, if the trustee of such
Illinois Land Trust retains such original Assignment of Beneficial
Interest, a certified true copy of such Assignment of Beneficial
Interest so certified by such trustee;
9. If the Mortgaged Property is held in an Illinois Land Trust, an
original Reassignment of Assignment of Beneficial Interest from the
Company to*/ BankBoston, N.A., as Custodian under the Custodial
Agreement dated as of June 1, 1997, Series 1997-2 or in blank. In the
event that the Mortgage Loan was acquired by the applicable Originator
in a merger, the Reassignment of the Assignment of Beneficial Interest
A-4
<PAGE>
must be by "[Originator], successor by merger to "[name of
predecessor]"; and in the event that the Mortgage Loan was acquired or
originated by such Depositor while doing business under another name,
the Reassignment of Assignment of Beneficial Interest must be by
"[Originator], formerly known as [previous name]";
10. If the Mortgaged Property is held in an Illinois Land Trust, originals
of all intervening Reassignments of Assignment of Beneficial Interest,
showing a complete chain of assignment from the beneficiaries of such
Illinois Land Trust to the applicable Originator of all of such
beneficiaries' right, title, and interest in, to, and under the trust
agreement with respect to such Illinois Land Trust; and
11. If the Mortgaged Property is held in an Illinois Land Trust, (A) a
certified copy of the instrument creating the Illinois Land Trust, (B)
a copy of the UCC-1 Financing Statement evidencing the assignment of
the Mortgagor's beneficial interest in the Illinois Land Trust, with
evidence of filing thereon, and (C) the original personal guaranty of
the Mortgage Note, executed by each beneficiary of the Illinois Land
Trust.
12. Mortgage Loan closing statement and any other truth-in-lending or real
estate settlement procedure forms required by law.
13. Residential loan application.
14. Verification of employment and income, and tax returns, if any.
15. Credit report on the mortgagor.
16. The full appraisal made in connection with the origination of the
related Mortgage Loan with photographs of the subject property and of
comparable properties, constituting evidence sufficient to indicate
that the Mortgaged Property relates to a Residential Dwelling.
17. Copy of the First Lien, if in the Servicer's file.
18. All other papers and records developed or originated by the applicable
Depositor or others, required to document the Mortgage Loan or to
service the Mortgage Loan.*/
- --------------------
*/ contemporaneously with the issuance of the Certificates, the Depositor
shall cause the Custodian to (A) endorse each Mortgage Note to the order of
the Trustee, which endorsement shall be in substantially the form set forth
in Section 2.04(a)(i) of the Pooling and Servicing Agreement, with
appropriate alterations to reflect the interest of the Trustee and the
limited nature of the Custodian's interest therein as may be acceptable to
the Depositors, the Servicer and the Trustee, (B) execute each Assignment
of Mortgage to the Trustee, which assignment shall be in substantially the
form set forth in Section 2.04(c) of the Pooling and Servicing Agreement,
with appropriate alterations to reflect the interest of the Trustee and (C)
with respect to each Illinois Land Trust, execute a Reassignment of
Assignment of Beneficial Interest to the Trustee, which reassignment shall
be substantially in the form set forth in Section 2.04(h) of the Pooling
and Servicing Agreement, with appropriate alterations to reflect the
interest of the Trustee. The Servicer shall promptly cause each Assignment
of Mortgage to be recorded in the applicable recording office in the name
of the Trustee.
A-6
<PAGE>
EXHIBIT B-1
[FORM OF CLASS A-_ CERTIFICATE]
[Form of Face of Certificate]
EQCC HOME EQUITY LOAN ASSET BACKED CERTIFICATES
Series 1997-2 Original Class A-_
CLASS A Principal Balance:
$----------
[Original] Class A-_
Pass-Through Rate: Original Dollar Amount
[____%][*] as of the Cut-off Date
Represented by this
No. A-__ Certificate:
Date of Pooling and $__________
Servicing Agreement
and Cut-off Date: Percentage Interest of
June 1, 1997 this Certificate:
----%
Servicer:
EquiCredit Initial Pool
Corporation of America Principal Balance:
$688,879,164.42
First Payment Date:
July 15, 1997 Latest Maturity Date:
__________ __, 15__
Closing Date:
June 30, 1997 Trustee:
First Bank National Association
Cusip: ___________
[* The Class A-8 Pass-Through Rate for any Accrual Period will
equal the lower of (i) the weighted average Mortgage Interest
Rate of the Mortgage Loans in the Fixed Rate Group during the
related Due Period less the Servicing Fee Rate and the per
annum rate at which the Monthly Premium accrues and (ii) 7.22%
per annum.]
[THE ISSUE PRICE OF THIS CERTIFICATE IS % OF THE ORIGINAL PRINCIPAL
AMOUNT OF THIS CERTIFICATE. IT IS POSSIBLE THAT APPLICABLE LAW AND
TREASURY REGULATIONS COULD BE INTERPRETED TO PROVIDE THAT ALL
INTEREST PAYMENTS ON THIS CERTIFICATE ARE TO BE TREATED AS PART OF
THE STATED REDEMPTION PRICE AT MATURITY OF THIS CERTIFICATE (I.E.,
PRINCIPAL) THEREBY CAUSING THIS CERTIFICATE TO HAVE OID. IN SUCH CASE,
B-1-1
<PAGE>
THE FOLLOWING INFORMATION WOULD BE APPLICABLE, ASSUMING THAT THIS CERTIFICATE
PAYS IN ACCORDANCE WITH PROJECTED CASH FLOWS BASED ON CERTAIN ASSUMPTIONS USED
IN PRICING THE CERTIFICATE: (I) THE AMOUNT OF OID AS A PERCENTAGE OF THE
ORIGINAL PRINCIPAL AMOUNT OF THIS CERTIFICATE WOULD BE APPROXIMATELY %; (II) THE
ANNUAL YIELD OF THIS CERTIFICATE FOR PURPOSES OF COMPUTING OID WOULD BE
APPROXIMATELY % PER ANNUM; AND (III) THE TOTAL AMOUNT OF OID ALLOCABLE TO THE
INITIAL ACCRUAL PERIOD (JUNE 30, 1997 TO APRIL 14, 1997) FOR PURPOSES OF
COMPUTING OID ON THIS CERTIFICATE AS A PERCENTAGE WOULD BE APPROXIMATELY %. THE
METHOD USED TO CALCULATE THE ANNUAL YIELD AND THE AMOUNT OF OID ALLOCABLE TO THE
INITIAL ACCRUAL PERIOD IS THE EXACT METHOD. THE ACTUAL YIELD TO MATURITY AND OID
ON THIS CERTIFICATE MAY DIFFER FROM THE PROJECTED AMOUNTS. A 100% PREPAYMENT
ASSUMPTION WAS USED IN DETERMINING THE ANNUAL YIELD FOR FEDERAL INCOME TAX
PURPOSES.]
B-1-2
<PAGE>
This certifies that _________________________ is the registered owner
of a Class A-_ percentage interest (the "Percentage Interest") in certain
residential first and second mortgage loans (the "Mortgage Loans") master
serviced by EquiCredit Corporation of America (hereinafter called the
"Servicer", in its capacity as Servicer, and "Representative", in its capacity
as Representative, which terms include any successor entity under the Agreement
referred to below). The Mortgage Loans were originated or acquired by the
Representative and certain of its wholly-owned subsidiaries as set forth in the
Agreement referred to below (the Representative and such subsidiaries, the
"Depositors"). The Mortgage Loans will be serviced by the Servicer pursuant to
the terms and conditions of that certain Pooling and Servicing Agreement dated
as of June 1, 1997 (the "Agreement") by and among the Representative, the
Servicer, the Depositors and First Bank National Association, as trustee (the
"Trustee"), certain of the pertinent provisions of which are set forth herein.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The Mortgage Loans in the Mortgage
Pool have aggregate outstanding principal balances, at the close of business on
the Cut-Off Date herein referred to, after application of payments received by
the Servicer on or before such date, of $688,879,164.42.
On each Payment Date, commencing on July 15, 1997, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding each Payment Date (or, if Definitive
Certificates are issued, the last calendar day of the month preceding the month
in which such Payment Date occurs) (the "Record Date"), an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the amount
required to be distributed to Holders of Class A Certificates on such Payment
Date pursuant to Section 6.05 of the Agreement.
B-1-3
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed under its official seal.
EQCC HOME EQUITY LOAN TRUST 1997-2
By: First Bank National Association,
as Trustee
By:____________________
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is a Class A-_ Certificate referred to in the within-mentioned
Agreement, which Certificate is issued to
______________________________________________ in the initial denomination
of $_____________.
First Bank National Association,
as Trustee
By:_________________________
Authorized Signatory
B-1-4
<PAGE>
[Form of Reverse of Certificate]
Distributions on this Certificate will be made by the Trustee by wire
transfer of immediately available funds to the account of the Person entitled
thereto as shall appear on the Certificate Register without the presentation or
surrender of this Certificate or the making of any notation thereon, at a bank
or other entity having appropriate facilities therefor, if such Person shall own
of record Class A Certificates which have denominations aggregating at least
$1,000,000 appearing in the Certificate Register and in all cases to the Class R
Certificates, and shall have so notified the Trustee at least five business days
prior to the related Record Date, or by check mailed to the address of such
Person appearing in the Certificate Register.
Upon receiving the final distribution hereon, the Holder hereof is
required to send this Certificate to the Trustee. The Agreement provides that,
in any event, upon the making of the final distribution due on this Certificate,
this Certificate shall be deemed cancelled for all purposes under the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as EQCC Home Equity Loan Asset Backed Certificates, Series 1997-2,
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class A-10 and Class R (herein called the "Certificates")
and, as set forth in the Agreement, representing interests in (i) such Mortgage
Loans as from time to time are subject to the Agreement, together with the
Mortgage Files relating thereto and all proceeds thereof (other than the
Representative's Yield), (ii) such assets as from time to time are identified as
REO Property or are deposited in the Collection Account, Principal and Interest
Account (including all earnings thereon and proceeds thereof), Spread Account,
or Insurance Account, including amounts on deposit in the Accounts or the
Principal and Interest Account and invested in Permitted Instruments, (iii) the
Trustee's rights under all insurance policies with respect to the Mortgage Loans
required to be maintained pursuant to the Agreement and any Insurance Proceeds,
(iv) the Certificate Insurance Policy, (v) Liquidation Proceeds and (vi)
Released Mortgaged Property Proceeds (all of the foregoing being hereinafter
collectively called the "Trust Fund"). The Class R Certificates are subordinate
in right of payment to the Class A Certificates, to the extent set forth in the
Agreement.
The Certificates do not represent an obligation of, or an interest in,
the Servicer, the Representative, the Depositors or the Trustee and are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, the Federal Housing Administration or
the Veterans Administration or any other governmental agency. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the Mortgage Loans, and amounts withdrawable from the Collection Account, all as
more specifically set forth herein and in the Agreement.
AMBAC Indemnity Corporation has issued a certificate guaranty surety
bond with respect to the Class A Certificates, a copy of which is attached as
Exhibit I to the Agreement.
As provided in the Agreement, deposits and withdrawals from the
Collection Account and the Insurance Account may be made by the Trustee from
time to time for purposes other than
B-1-5
<PAGE>
distributions to Certificateholders, such purposes including reimbursement of
certain expenses incurred by the Servicer and investment in Permitted
Instruments.
Subject to certain restrictions, the Agreement permits the amendment
thereof with respect to certain modifications (a) by the Servicer and the
Trustee without the consent of the Certificate holders, and (b) by the
Depositors, the Representative, the Servicer, the Trustee, the Majority in
Voting Interest (as defined in the Agreement) and the holders of a majority of
the Percentage Interest in the Class R Certificates. The Agreement permits the
Majority in Voting Interest to waive, on behalf of all Certificateholders, any
default by the Servicer in the performance of its obligations under the
Agreement and its consequences, except in a default in making any required
distribution on a Certificate. Any such consent or waiver by the Majority in
Voting Interest shall be conclusive and binding on the holder of this
Certificate and upon all future holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in New York, New York or Chicago,
Illinois duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Class A-1, Class A-2,
Class A-3, Class A- 4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class A-10 or Class R Certificates. As provided in the Agreement and subject to
certain limitations therein set forth, the Certificate is exchangeable for a new
Certificate evidencing the same undivided ownership interest, as requested by
the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Servicer, the Representative, the Depositors and the Trustee and
any agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon notice to
the Trustee of: (i) the later of the distribution to Certificateholders of the
final payment or collection with respect to the last Mortgage Loan, or the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due under the Agreement and the payment of all amounts
due and payable to the Certificate Insurer and the Trustee, (ii) the purchase by
the Servicer of all outstanding Mortgage Loans and REO Properties at a price
determined as provided in the Agreement (the exercise of the right of the
Servicer to purchase all the Mortgage Loans and property in respect of Mortgage
Loans will result in early retirement of the Certificates), the right of the
Servicer to purchase being subject to the Pool Principal Balance of the Mortgage
Loans
B-1-6
<PAGE>
and REO Properties at the time of purchase being less than ten percent (10%) of
the Original Pool Principal Balance, (iii) by the mutual consent of the
Servicer, the Certificate Insurer and all Certificateholders in writing, or (iv)
upon the failure of the Trust to qualify as a REMIC, pursuant to Section 11.05
of the Agreement. By its acceptance of this Certificate, the Certificateholder
hereby appoints the Servicer as its attorney-in-fact to adopt a plan of
liquidation of the Trust Fund in accordance with Section 11.02 of the Agreement.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
B-1-7
<PAGE>
EXHIBIT B-2
[FORM OF CLASS R CERTIFICATE]
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (The "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE. ANY
RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN OPINION OF COUNSEL TO THE
TRUSTEE AND (2) AN AFFIDAVIT TO THE DEPOSITOR AND THE TRUSTEE THAT SUCH
TRANSFEREE IS A PERMITTED TRANSFEREE (AS DEFINED IN THE POOLING AND SERVICING
AGREEMENT) OR AN AGENT OF A PERMITTED TRANSFEREE AND IS NOT AN AGENT FOR A
PERSON WHO IS NOT A PERMITTED TRANSFEREE AND (3) THE TRANSFEROR PROVIDES A
CERTIFICATE TO THE REPRESENTATIVE AND THE TRUSTEE TO THE EFFECT THAT SUCH
TRANSFEROR HAS NO ACTUAL KNOWLEDGE THAT THE PROPOSED TRANSFEREE IS NOT A
PERMITTED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE
REGISTER OF ANY TRANSFER OF THIS CLASS R CERTIFICATE TO A PERSON OTHER THAN A
PERMITTED TRANSFEREE OR AN AGENT OF A PERMITTED TRANSFEREE (NOT INCLUDING AGENTS
OF A PERSON WHO IS NOT A PERMITTED TRANSFEREE) SUCH REGISTRATION SHALL BE DEEMED
TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED
TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE.
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF
THE CODE (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR TO AN
INVESTMENT MANAGER, A NAMED FIDUCIARY OR A TRUSTEE OF ANY SUCH PLAN, OR ANY
OTHER PERSON WHO IS USING "PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH
ACQUISITION, UNLESS THE TRANSFEREE PROVIDES AN OPINION OF COUNSEL SATISFACTORY
TO THE SERVICER AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE BY OR ON
BEHALF OF SUCH PLAN IS
B-2-1
<PAGE>
PERMISSIBLE UNDER APPLICABLE LAW, WILL NOT CONSTITUTE OR RESULT IN ANY
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE AND WILL NOT SUBJECT THE SERVICER, THE DEPOSITORS OR THE TRUSTEE TO ANY
OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR
SECTION 4975 OF THE CODE) IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
THE POOLING AND SERVICING AGREEMENT DEFINES A PERMITTED TRANSFEREE AS ANY PERSON
OTHER THAN (I) THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, OR
ANY AGENCY OF INSTRUMENTALITY OF ANY OF THE FOREGOING, (II) A FOREIGN
GOVERNMENT, INTERNATIONAL ORGANIZATION OR ANY AGENCY OR INSTRUMENTALITY OF
EITHER OF THE FOREGOING, (III) AN ORGANIZATION (EXCEPT CERTAIN FARMERS'
COOPERATIVES DESCRIBED IN CODE SECTION 521) WHICH IS EXEMPT FROM TAX IMPOSED BY
CHAPTER 1 OF THE CODE (INCLUDING THE TAX IMPOSED BY SECTION 511 OF THE CODE ON
UNRELATED BUSINESS TAXABLE INCOME) ON ANY EXCESS INCLUSIONS (AS DEFINED IN CODE
SECTION 860E(C)(1)) WITH RESPECT TO ANY CLASS R CERTIFICATE, (IV) RURAL ELECTRIC
AND TELEPHONE COOPERATIVES DESCRIBED IN CODE SECTION 1381(A)(2)(C) AND (V) ANY
OTHER PERSON SO DESIGNATED BY THE SERVICER BASED UPON AN OPINION OF COUNSEL THAT
THE TRANSFER OF A PERCENTAGE INTEREST IN A CLASS R CERTIFICATE TO SUCH PERSON
MAY CAUSE THE TRUST FUND TO FAIL TO QUALIFY AS A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" AT ANY TIME THAT THE CLASS A CERTIFICATES ARE OUTSTANDING.
THE TERMS "UNITED STATES," "STATE" AND "INTERNATIONAL ORGANIZATION" SHALL HAVE
THE MEANINGS SET FORTH IN CODE SECTION 7701 OR SUCCESSOR PROVISIONS. A
CORPORATION WILL NOT BE TREATED AS AN INSTRUMENTALITY OF THE UNITED STATES OR OF
ANY STATE OR POLITICAL SUBDIVISION THEREOF FOR THESE PURPOSES IF ALL OF ITS
ACTIVITIES ARE SUBJECT TO TAX AND, WITH THE EXCEPTION OF THE FEDERAL HOME LOAN
MORTGAGE CORPORATION, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT SELECTED BY
SUCH GOVERNMENTAL UNIT.
B-2-2
<PAGE>
EQCC Home Equity Loan ASSET BACKED CERTIFICATES
Series 1997-2
CLASS R
No. R-_
Date of Pooling and Percentage Interest of
Servicing Agreement this Certificate:
and Cut-off Date: ____%
June 1, 1997
Servicer: Initial Pool
EquiCredit Corporation Principal Balance:
of America $688,879,164.42.
First Payment Date: Latest Maturity Date:
July 15, 1997 ______________
Closing Date: Trustee:
June 30, 1997 First Bank National Association
This certifies that _________________________ is the registered owner of a
Class R percentage interest (the "Percentage Interest") in certain residential
first and second mortgage loans (the "Mortgage Loans") master serviced by
EquiCredit Corporation of America (hereinafter called the "Servicer", in its
capacity as Servicer, and "Representative", in its capacity as Representative,
which terms include any successor entity under the Agreement referred to below).
The Mortgage Loans were originated or acquired by the Representative and certain
of its wholly-owned subsidiaries as set forth in the Agreement referred to below
(the Representative and such subsidiaries, the "Depositors"). The Mortgage Loans
will be serviced by the Servicer pursuant to the terms and conditions of that
certain Pooling and Servicing Agreement dated as of June 1, 1997 (the
"Agreement") by and among the Representative, the Servicer, the Depositors and
First Bank National Association, as trustee (the "Trustee"), certain of the
pertinent provisions of which are set forth herein. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the holder of
this Certificate by virtue of the acceptance hereof assents and by which such
holder is bound. The Mortgage Loans in the Mortgage Pool have aggregate
outstanding principal balances, at the close of business on the Cut-Off Date
herein referred to, after application of payments received by the Servicer on or
before such date, of $688,879,164.42.
On each Payment Date, commencing on July 15, 1997, the Trustee shall
distribute to the Person in whose name this Certificate is registered on the
calendar day immediately preceding
B-2-3
<PAGE>
each Payment Date (or, if Definitive Certificates are issued, the last calendar
day of the month preceding the month in which such Remittance Date occurs) (the
"Record Date"), an amount equal to the product of the Percentage Interest
evidenced by this Certificate and any amount required to be distributed to the
Holders of the Class R Certificates on such Remittance Date pursuant to Section
6.05 and 6.09 of the Agreement.
B-2-4
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed under its official seal.
EQCC Home Equity Loan Trust 1997-2
By: First Bank National Association, as Trustee
By:_______________________
Authorized Officer
Name:
Title:
Dated:
CERTIFICATE OF AUTHENTICATION
This is a Class R Certificate referred to in the within-mentioned
Agreement, which Certificate is issued to
______________________________________________ in the initial
denomination of _____________ Percentage Interest.
First Bank National Association,
as Trustee
By:_______________________
Authorized Signatory
B-2-5
<PAGE>
[Form of Reverse Certificate]
Distributions on this Certificate will be made by the Trustee by wire
transfer of immediately available funds to the account of the Person entitled
thereto as shall appear on the Certificate Register without the presentation or
surrender of this Certificate or the making of any notation thereon, at a bank
or other entity having appropriate facilities therefor, if such Person shall own
of record Class A Certificates of the same Class which have denominations
aggregating at least $1,000,000 appearing in the Certificate Register and in all
cases to the Class R Certificates, and shall have so notified the Trustee at
least five business days prior to the related Record Date, or by check mailed to
the address of such Person appearing in the Certificate Register.
Upon receiving the final distribution hereon, the Holder hereof is
required to send this Certificate to the Trustee. The Agreement provides that,
in any event, upon the making of the final distribution due on this Certificate,
this Certificate shall be deemed cancelled for all purposes under the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as EQCC Home Equity Loan Asset Backed Certificates, Series 1997-2,
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class A-10 and Class R (herein called the "Certificates")
and, as set forth in the Agreement, representing interests in (i) such Mortgage
Loans as from time to time are subject to the Agreement, together with the
Mortgage Files relating thereto and all proceeds thereof (other than the
Representative's Yield), (ii) such assets as from time to time are identified as
REO Property or are deposited in the Collection Account, Principal and Interest
Account (including all earnings thereon and proceeds thereof), Spread Account,
or Insurance Account, including amounts on deposit in the Accounts or the
Principal and Interest Account and invested in Permitted Instruments, (iii) the
Trustee's rights under all insurance policies with respect to the Mortgage Loans
required to be maintained pursuant to the Agreement and any Insurance Proceeds,
(iv) the Certificate Insurance Policy, (v) Liquidation Proceeds and (vi)
Released Mortgaged Property Proceeds (all of the foregoing being hereinafter
collectively called the "Trust Fund"). The Class R Certificates are subordinate
in right of payment to the Class A Certificates, to the extent set forth in the
Agreement.
The Certificates do not represent an obligation of, or an interest in,
the Servicer, the Representative, the Depositors or the Trustee and are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, the Federal Housing Administration or
the Veterans Administration or any other governmental agency. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the Mortgage Loans, and amounts withdrawable from the Collection Account, all as
more specifically set forth herein and in the Agreement.
AMBAC Indemnity Corporation has issued a certificate guaranty surety
bond with respect to the Class A Certificates, a copy of which is attached as
Exhibit I to the Agreement.
B-2-6
<PAGE>
As provided in the Agreement, deposits and withdrawals from the
Collection Account and the Insurance Account may be made by the Trustee from
time to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of certain expenses incurred by the Servicer
and investment in Permitted Instruments.
Subject to certain restrictions, the Agreement permits the amendment
thereof with respect to certain modifications (a) by the Servicer and the
Trustee without the consent of the Certificate holders, and (b) by the
Depositors, the Representative, the Servicer, the Trustee, the Majority in
Voting Interest and the holders of a majority of the Percentage Interest in the
Class R Certificates. The Agreement permits the Majority in Voting Interest to
waive, on behalf of all Certificateholders, any default by the Servicer in the
performance of its obligations under the Agreement and its consequences, except
in a default in making any required distribution on a Certificate. Any such
consent or waiver by the Majority in Voting Interest shall be conclusive and
binding on the holder of this Certificate and upon all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate.
As provided in the Agreement and subject to certain limitations therein
set forth, including, without limitation, execution and delivery as appropriate
of the Assignment and Resale Certification (Exhibit L-1 or L-2 to the
Agreement), Transfer Affidavit and Transferee Letter (Exhibits M-1 and M-2 to
the Agreement) and the Transfer Certificate described in Section 4.02(c)(ii) of
the Agreement, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in New York, New
York or Chicago, Illinois duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to, the Trustee, duly executed by
the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of authorized denominations evidencing
the same aggregate undivided Percentage Interest will be issued to the
designated transferee or transferees.
The Certificates are issuable only as registered Class A Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Servicer, the Representative, the Depositors and the Trustee and
any agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon notice to
the Trustee of: (i) the later of the distribution to Certificateholders of the
final payment or collection with respect to the last Mortgage Loan, or the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due under the Agreement and the payment of all amounts
due and payable to the Certificate Insurer and the Trustee, (ii) the purchase by
the Servicer of all
B-2-7
<PAGE>
outstanding Mortgage Loans and REO Properties at a price determined as provided
in the Agreement (the exercise of the right of the Servicer to purchase all the
Mortgage Loans and property in respect of Mortgage Loans will result in early
retirement of the Certificates), the right of the Servicer to purchase being
subject to the Pool Principal Balance of the Mortgage Loans and REO Properties
at the time of purchase being less than ten percent (10%) of the Original Pool
Principal Balance, (iii) by the mutual consent of the Servicer, the Certificate
Insurer and all Certificateholders in writing or (iv) upon the failure of the
Trust to qualify as a REMIC, pursuant to Section 11.05 of the Agreement. By its
acceptance of this Certificate, the Certificateholder hereby appoints the
Servicer as its attorney-in-fact to adopt a plan of liquidation of the Trust
Fund in accordance with Section 11.02 of the Agreement.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
B-2-8
<PAGE>
EXHIBIT C
DTC LETTER OF REPRESENTATIONS
C-1
<PAGE>
EXHIBIT D
MORTGAGE LOAN SCHEDULE
D-1
<PAGE>
EXHIBIT E
FORM OF TRUSTEE INITIAL CERTIFICATION
June 30, 1997
[Representative]
[Insurer]
[Servicer]
[Depositors]
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), EQCC Home Equity Loan Asset Backed Certificates,
Series 1997-2, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and
Class R, dated as of June 1, 1997 among EquiCredit Corporation of
America, as Servicer, the Depositors listed therein and First
Bank National Association, as Trustee
Ladies and Gentlemen:
In accordance with Section 2.06 of the Agreement, the undersigned, as
Trustee, hereby certifies that, except as noted on the Master Exception Report
dated March [ ], 1997 and made a part hereof, it or the Custodian on its behalf
has received, with respect to each Mortgage Loan, the documents specified in
Sections 2.04(a), (b), (c), (g) and (h) of the Pooling and Servicing Agreement,
as applicable, a Mortgage, or a certified copy thereof, Assignment of Mortgage,
or a certified copy thereof, and a Mortgage Note with respect to each Mortgage
Loan listed in the Mortgage Loan Schedule and the documents contained therein
appear to bear original signatures or copies of originals if the originals have
not yet been delivered.
Neither the Trustee nor the Custodian on its behalf has made any
independent examination of any such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any such documents or any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
E-1
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
First Bank National Association
By:_______________________
Name:
Title:
E-2
<PAGE>
EXHIBIT F-1
FORM OF TRUSTEE INTERIM CERTIFICATION
, 19__
[Representative]
[Insurer]
[Depositors]
[Servicer]
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), EQCC Home Equity Loan Asset Backed Certificates,
Series 1997-2, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and
Class R, dated as of June 1, 1997, among EquiCredit Corporation
of America, as Servicer, the Depositors listed therein and First
Bank National Association, as Trustee
Ladies and Gentlemen:
In accordance with the provisions of Section 2.06 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan listed
on the attachment hereto), it or the Custodian on its behalf has reviewed the
documents delivered to it or the Custodian on its behalf pursuant to Section
2.04 of the Pooling and Servicing Agreement and has determined that (i) all such
documents are in its possession or in the possession of the Custodian on its
behalf (other than those listed in Section 2.04(f)), (ii) such documents have
been reviewed by it or the Custodian on its behalf and have not been mutilated,
damaged, torn or otherwise physically altered and relate to such Mortgage Loan,
(iii) based on its examination, or the examination of the Custodian on its
behalf, and only as to the foregoing documents, the information set forth in the
Mortgage Loan Schedule (other than items (i), (iv) and (x) of the definition of
Mortgage Loan Schedule) respecting such Mortgage Loan accurately reflects the
information set forth in the Mortgage File and (iv) each Mortgage Note has been
endorsed as provided in Section 2.04 of the Pooling and Servicing Agreement.
Neither the Trustee nor the Custodian on its behalf has made any independent
examination of such documents beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, enforceability
F-1-1
<PAGE>
or genuineness of any such documents contained in each or any of the Mortgage
Loans identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and servicing
Agreement.
----------------------------,
as Trustee
By:___________________________
Name:
Title:
F-1-2
<PAGE>
EXHIBIT F-2
FORM OF TRUSTEE FINAL CERTIFICATION
, 19__
[Representative]
[Insurer]
[Servicer]
[Depositors]
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), EQCC Home Equity Loan Asset Backed Certificates,
Series 1997-2, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and
Class R, dated as of June 1, 1997 among EquiCredit Corporation of
America, as Servicer, the Depositors listed therein and First
Bank National Association, as Trustee
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that, except
as noted on the attachment hereto, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it or to the Custodian on its behalf has reviewed the
documents delivered to it or to the Custodian on its behalf pursuant to Section
2.04 of the Pooling and Servicing Agreement and has determined that (i) all such
documents are in its possession or in the possession of the Custodian on its
behalf (other than those listed in Section 2.04(f)), (ii) such documents have
been reviewed by it and have not been mutilated, damaged, torn or otherwise
physically altered and relate to such Mortgage loan, (iii) based on its
examination, and only as to the foregoing documents, the information set forth
in the Mortgage Loan Schedule (other than items (i), (iv) and (x) of the
definition of Mortgage Loan Schedule) respecting such Mortgage Loan accurately
reflects the information set forth in the Trustee's Mortgage File and (iv) each
Mortgage Note has been endorsed as provided in Section 2.04 of the Pooling and
Servicing Agreement. Neither the Trustee nor the Custodian on its behalf has
made any independent examination of such documents beyond the review
specifically required in the above-referenced Pooling and Servicing Agreement.
The Trustee makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
F-2-1
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
--------------------------,
as Trustee
By:_________________________
Name:
Title:
F-2-2
<PAGE>
EXHIBIT G
LIST OF BANKRUPTCY LOANS
G-1
<PAGE>
EXHIBIT H
FORM OF DELINQUENCY REPORT
<TABLE>
<CAPTION>
Mortgage Pool
% of
Number of Principal Aggregate
Accounts Balance Principal
<S> <C> <C> <C>
Potentially Delinquent $ %
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In Foreclosure
In Bankruptcy
30 Days Delinquent
60 Days Delinquent
90 or More Days Delinquent
In REO
</TABLE>
<TABLE>
<CAPTION>
Fixed Rate Group
% of
Number of Principal Aggregate
Accounts Balance Principal
<S> <C> <C> <C>
Potentially Delinquent $ %
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In Foreclosure
In Bankruptcy
30 Days Delinquent
60 Days Delinquent
90 or More Days Delinquent
In REO
</TABLE>
H-1
<PAGE>
<TABLE>
<CAPTION>
Adjustable Rate Group
% of
Number of Principal Aggregate
Accounts Balance Principal
<S> <C> <C> <C>
Potentially Delinquent $ %
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In Foreclosure
In Bankruptcy
30 Days Delinquent
60 Days Delinquent
90 or More Days
Delinquent
In REO
</TABLE>
H-2
<PAGE>
EXHIBIT I
CERTIFICATE INSURANCE POLICY
I-1
<PAGE>
EXHIBIT J
[RESERVED]
J-1
<PAGE>
EXHIBIT K
LIST OF ORIGINATORS
EquiCredit Corporation of America
EquiCredit Corporation/Ala. & Miss.
California/EquiCredit Corporation
EquiCredit Corporation of In.
EquiCredit Corporation of Pa.
EquiCredit Corporation of SC
K-1
<PAGE>
EXHIBIT L-1
ASSIGNMENT AND RESALE CERTIFICATION
THIS ASSIGNMENT dated as of the day of __________, 19___, by and between
_______________________________ ("Assignor") and _______________________________
("Assignee"), provides:
That for and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereby agree as follows:
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor, as Certificateholder, in, to and under
that certain Pooling and Servicing Agreement, EQCC Home Equity Loan Asset Backed
Certificates, Series 1997-2, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and Class R (the
"Pooling and Servicing Agreement"), dated as of June 1, 1997 by and among
EquiCredit Corporation of America, as Representative and Servicer, the
Depositors listed therein ("Depositors") and First Bank National Association, as
trustee ("Trustee"), and that certain Certificate, Class R, No. __, Series
1997-2 (the "Certificate") issued thereunder and authenticated by the Trustee.
2. For the purpose of inducing Assignee to purchase the Certificate from
Assignor, Assignor warrants and represents that:
a. Assignor is the lawful owner of the Certificate with the full right
to transfer the Certificate free from any and all claims and encumbrances
whatsoever;
b. The Assignor has not received notice, and has no actual current
knowledge of any offsets, counterclaims or other defenses available to the
Servicer with respect to the Pooling and Servicing Agreement or the
Certificate; and
c. The Assignor has no actual current knowledge of and has not
received notice of any amendments to the Pooling and Servicing Agreement or
the Certificate.
3. In connection with the transfer of the Certificate, and in accordance
with Section 4.02 of the Pooling and Servicing Agreement, Assignor hereby
warrants and represents to each of the Assignee, the Servicer, the
Representative, the Depositors and the Trustee that:
a. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security
L-1-1
<PAGE>
with,any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action which
would constitute a distribution of the Certificate under the Securities Act
of 1933, as amended (the "1933 Act"), or which would render the disposition
of the Certificate a violation of Section 5 of the 1933 Act or require
registration pursuant thereto.
b. The Assignor understands that the Assignee may resell the
Certificate in reliance on Rule 144A under the 1933 Act.
4. The Assignee warrants and represents to, and covenants with, each of the
Servicer, the Representative, the Depositors, the Trustee and the Assignor
pursuant to Section 4.02 of the Pooling and Servicing Agreement that:
a. The Assignee agrees to be bound, as Certificateholder, by all of
the terms, covenants and conditions of the Pooling and Servicing Agreement,
the Certificate and the Custodial Agreement, and from and after the date
hereof, the Assignee assumes for the benefit of each of the Servicer the
Representative, the Depositors, the Trustee and the Assignor all of the
Assignor's obligations as Certificateholder thereunder;
b. The Assignee understands that the Certificate has not been
registered under the 1933 Act or the securities laws of any state;
c. The Assignee is not acquiring the Certificate with a view to or for
sale in connection with any distribution thereof within the meaning of the
1933 Act;
d. The Assignee considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Certificate; and
e. The Assignee has been furnished with all information regarding the
Certificate that it has requested from the Assignor, the Trustee or the
Servicer.
5. The Assignee warrants and represents to, and covenants with, the
Assignor, the Representative, the Depositors and the Servicer that:
a. The Assignee agrees to be bound, as Certificateholder, by the
restrictions on transfer contained in the Pooling and Servicing Agreement;
b. The Assignee is not an employee benefit plan or other plan subject
to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), nor a Person acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any such plan, and
understands that registration of transfer of any Certificate to any such
plan, or to any Person acting on behalf of or purchasing any Certificate
with "plan assets" of any such plan, will not be made unless such plan or
Person delivers an opinion of counsel, addressed and satisfactory to the
L-1-2
<PAGE>
Trustee, the Representative and the Servicer, to the effect that the
purchase and holding of a Certificate by, on behalf of or with "plan
assets" of any such plan is permissible under applicable law, would not
constitute or result in any non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code, and would not subject the
Representative, the Servicer or the Trustee to any obligation or liability
(including liabilities under Section 406 of ERISA or Section 4975 of the
Code) in addition to those undertaken in the Pooling and Servicing
Agreement or any other liability.
6. This Assignment and Resale Certification may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Assignment and Resale
Certification to be executed by their duly authorized officers as of the date
first above written.
- ----------------------- -------------------------
Assignor Assignee
By:______________________ By:_____________________
Name:____________________ Name:___________________
Title:___________________ Title:__________________
Taxpayer Taxpayer
Identification No._______ Identification No.______
L-1-3
<PAGE>
EXHIBIT L-2
ASSIGNMENT AND RESALE CERTIFICATION
(FOR RULE 144A TRANSFERS)
THIS ASSIGNMENT dated as of the day of __________, 19__, by and between
_____________________________ ("Assignor") and _________________________________
("Assignee"), provides:
That for and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereby agree as follows:
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor, as Certificateholder, in, to and under
that certain Pooling and Servicing Agreement, EQCC Home Equity Loan Asset Backed
Certificates, Series 1997-2, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and Class R (the
"Pooling and Servicing Agreement"), dated as of June 1, 1997 by and among
EquiCredit Corporation of America, as Representative and Servicer, the
Depositors listed therein ("Depositors") and First Bank National Association, as
trustee ("Trustee") and that certain Certificate, Class R, No. __, Series 1997-2
(the "Certificate") issued thereunder and authenticated by the Trustee.
2. For the purpose of inducing Assignee to purchase the Certificate from
Assignor, Assignor warrants and represents that:
a. Assignor is the lawful owner of the Certificate with the full right
to transfer the Certificate free from any and all claims and encumbrances
whatsoever;
b. The Assignor has not received notice, and has no actual current
knowledge of any offsets, counterclaims or other defenses available to the
Servicer with respect to the Pooling and Servicing Agreement or the
Certificate; and
c. The Assignor has no actual current knowledge of and has not
received notice of any amendments to the Pooling and Servicing Agreement or
the Certificate.
3. In connection with the transfer of the Certificate, and in accordance
with Section 4.02 of the Pooling and Servicing Agreement, Assignor hereby
warrants and represents to each of the Assignee, the Servicer, the
Representative, the Depositors and the Trustee that:
a. Neither the Assignor nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of
L-2-1
<PAGE>
the Certificate, any interest in the Certificate or any other similar
security with, any person in any manner, or made any general solicitation
by means of general advertising or in any other manner, or taken any other
action which would constitute a distribution of the Certificate under the
Securities Act of 1933, as amended (the "1933 Act"), or which would render
the disposition of the Certificate a violation of Section 5 of the 1933 Act
or require registration pursuant thereto.
b. The Assignor understands that the Assignee may resell the
Certificate in reliance on Rule 144A under the 1933 Act.
4. The Assignee warrants and represents to, and covenants with, each of the
Servicer, the Representative, the Depositors, the Trustee and the Assignor
pursuant to Section 4.02 of the Pooling and Servicing Agreement that:
a. The Assignee agrees to be bound, as Certificateholder, by all of
the terms, covenants and conditions of the Pooling and Servicing Agreement,
the Certificate and the Custodial Agreement, and from and after the date
hereof, the Assignee assumes for the benefit of each of the Servicer, the
Representative, the Depositors, the Trustee and the Assignor all of the
Assignor's obligations as Certificateholder thereunder;
b. The Assignee understands that the Certificate has not been
registered under the 1933 Act or the securities laws of any state;
c. The Assignee is not acquiring the Certificate with a view to or for
sale in connection with any distribution thereof within the meaning of the
1933 Act;
d. The Assignee considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Certificate;
e. The Assignee has been furnished with all information regarding the
Certificate that it has requested from the Assignor, the Trustee or the
Servicer; and
f. The Assignee is a "qualified institutional buyer" as that term is
defined in Rule 144A under the 1933 Act and has completed either of the
forms of certification to that effect attached hereto as Annex 2 or Annex
3. The Assignee is aware that the sale to it is being made in reliance on
Rule 144A. The Assignee is acquiring the Certificate for its own account or
for the account of a qualified institutional buyer, understands that such
Certificate may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer that purchases
for its own account or for the account of a qualified institutional buyer
to whom notice is given that the resale, pledge or transfer is being made
in reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the 1933 Act.
5. The Assignee warrants and represents to, and covenants with, the
Assignor, the Representative, the Depositors and the Servicer that:
L-2-2
<PAGE>
a. The Assignee agrees to be bound, as Certificateholder, by the
restrictions on transfer contained in the Pooling and Servicing Agreement;
b. The Assignee is not an employee benefit plan or other plan subject
to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), nor a Person acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any such plan, and
understands that registration of transfer of any Certificate to any such
plan, or to any Person acting on behalf of or purchasing any Certificate
with "plan assets" of any such plan, will not be made unless such plan or
Person delivers an opinion of counsel, addressed and satisfactory to the
Trustee, the Representative and the Servicer, to the effect that the
purchase and holding of a Certificate by, on behalf of or with "plan
assets" of any such plan is permissible under applicable law, would not
constitute or result in any non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code, and would not subject the
Representative, the Servicer or the Trustee to any obligation or liability
(including liabilities under Section 406 of ERISA or Section 4975 of the
Code) in addition to those undertaken in the Pooling and Servicing
Agreement or any other liability.
6. This Assignment and Resale Certification may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
L-2-3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Assignment and Resale
Certification to be executed by their duly authorized officers as of the date
first above written.
- ------------------------- ------------------------
Assignor Assignee
By:____________________ By: ____________________
Name:__________________ Name:___________________
Title:_________________ Title:__________________
Taxpayer Taxpayer
Identification No._____ Identification No.______
L-2-4
<PAGE>
ANNEX 1 TO EXHIBIT L-2
SELLER:
SERVICER:
TRUSTEE:
CERTIFICATE REGISTRAR:
L-2-5
<PAGE>
ANNEX 2 TO EXHIBIT L-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to the parties listed in Annex I to
the Rule 144A Investment Representation to which this certification relates with
respect to the Rule 144A Securities described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice president or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested on a
discretionary basis $________________*/ in securities (except for the excluded
securities referred to below) as of the end of the Buyer's most recent fiscal
year (such amount being calculated in accordance with Rule 144A) and (ii) the
Buyer satisfies the criteria in the category marked below.
____ Corporation. etc. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business
trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal
Revenue Code.
____ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business
of which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank
or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which
is attached hereto.
____ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority having supervision over
any such institutions or is a foreign
- --------
1/ Buyer must own and/or invest on a discretionary basis at least $100,000,000
in securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
L-2-6
<PAGE>
savings and loan association or equivalent
institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is
attached hereto.
____ Broker-dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange Act
of 1934.
____ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is
the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
subject to supervision by the insurance commissioner
or a similar official or agency of a State, territory
or the District of Columbia.
____ State or Local Plan. The Buyer is a plan established
and maintained by a State, its political
subdivisions, or any agency or instrumentality of the
State or its political subdivisions, for the benefit
of its employees.
____ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
____ Investment Advisor. The Buyer is an investment
advisor registered under the Investment Advisers Act
of 1940.
____ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S.
Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958.
____ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940.
3. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if
L-2-7
<PAGE>
the investments of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
Will the Buyer be purchasing the Rule 144A Securities only for
the Buyer's own account?
Yes No
6. If the answer to the foregoing question is "No", the Buyer agrees
that, in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer will only purchase for the account of a third party that at the
time is a "qualified institutional buyer" within the meaning of Rule 144A. In
addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Buyer is a bank or savings and loan as provided
above, the Buyer agrees that it will furnish to such parties updated annual
financial statements promptly after they become available.
Print Name of Buyer
By:________________________
Name:
Title:
Date:
L-2-8
<PAGE>
ANNEX 3 TO EXHIBIT L-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows to the parties listed in
Annex I to the Rule 144A Investment Representation to which this certification
relates with respect the Rule 144A Securities described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and (ii)
as marked below, the Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year. For
purposes of determining the amount of securities owned by the Buyer or the
Buyer's Family of Investment Companies, the cost of such securities was used.
____ The Buyer owned $ in securities (other than the
excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $__________ in
securities (other than the excluded securities
referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities
L-2-9
<PAGE>
owned but subject to a repurchase agreement and (vii) currency, interest rate
and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in Annex I to the Rule 144A Investment Representation to which
this certification relates are relying and will continue to rely on the
statements made herein because one or more sales to the Buyer will be in
reliance on Rule 144A. In addition, the Buyer will only purchase for the Buyer's
own account.
6. The undersigned will notify the parties listed in Annex I to the
Rule 144A Investment Representation to which this certification relates of any
changes in the information and conclusions herein. Until such notice, the
Buyer's purchase of Rule 144A Securities will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
Print Name of Buyer or Adviser
By:_____________________________
Name:
Title:
IF AN ADVISER:
Print Name of Buyer
Date:
L-2-10
<PAGE>
EXHIBIT M-1
CLASS R AFFIDAVIT PURSUANT TO SECTION 860E(e)
OF THE INTERNAL REVENUE CODE OF 1986
Re: EQCC Home Equity Loan Trust 1997-2
EQCC Home Equity Loan Asset Backed Certificates
Series 1997-2
STATE OF )
) ss.:
COUNTY OF )
I, __________________, under penalties of perjury, declare that, to the
best of my knowledge and belief, the following representations are true,
correct, and complete and being first sworn, depose and say:
1. That I am the _______________ of __________________ (the "Inves tor"),
whose taxpayer identification number is _______________, on behalf of which I
have the authority to make this affidavit.
2. That the Investor is acquiring a Class R Certificate in the initial
principal amount of $0. An election will be made to treat certain assets of the
Trust as a real estate mortgage investment conduit ("REMIC") under Section 860D
of the Internal Revenue Code of 1986, as amended (the "Code"). The Class R
Certificate will be designated as a "residual interest" in the REMIC.
3. That no purpose of the acquisition of the Class R Certificate by the
Investor is to avoid or impede the assessment or collection of federal income
tax.
4. That the Investor is not a "Disqualified Organization" (as defined
below), and that the Investor is not acquiring a Class R Certificate for the
account of, or as agent or nominee of, or with a view to the transfer of direct
or indirect record or beneficial ownership to, a Disqualified Organization. For
the purposes hereof, a Disqualified Organization is any of the following: (i)
the United States, any State or political sub-division thereof, any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing; (ii) any organization (other than a Farmer's Cooperative
as defined in Section 521 of the Code) that is exempt from federal income
taxation (including taxation under the unrelated business taxable income
provisions of the Code); (iii) any rural telephone or electrical service
cooperative described in Section 1381(a)(2)(C) of the Code or (iv) any other
M-1-1
<PAGE>
entity designated as a Disqualified Organization by relevant legislation
amending the REMIC Provisions and in effect at or proposed to be effective as of
the time of the determination.
5. That the Investor acknowledges that Section 860E(e) of the Code imposes
a substantial tax on the transferor or, in certain circumstances, on an agent
for the transferee, with respect to any transfer of any interest in any Class R
Certificate to a Disqualified Organization.
6. That the Investor is a "U.S. Person" as that term is defined in the
Transferee's Letter of even date herewith, and that the Investor is the
beneficial owner of the Class R Certificate, and is not holding the Class R
Certificate as nominee for any other person.
7. That the following information of the Investor is true and correct:
Address: _____________________________________; contact for tax matters
______________; phone number ___________; form of Organization of Investor
_________________; and acquisition date ________________.
8. That capitalized terms used herein without definition shall have the
meaning assigned such terms in the Pooling and Servicing Agreement dated as of
June 1, 1997 among First Bank National Association, Equicredit Corporation of
America, EQCC Receivables Corporation and EQCC Asset Backed Corporation.
M-1-2
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be duly
executed on its behalf, by its ________________ and its seal to be hereunto
attached, this ____ day of _____________, 19__.
[Name of Investor]
By: _______________________
Name:
Title:
Personally appeared before me _______________, known or proved
to me to be the same person who executed the foregoing instrument and to be a
_______________ of the Investor, and acknowledged to me that he executed the
same as his free act and deed and as the free act and deed of the Investor.
Subscribed and sworn before me
this ____ day of __________, 19__
- ---------------------------------
Notary Public
My commission expires the ____ day of _______________, 19__.
M-1-3
<PAGE>
EXHIBIT M-2
TRANSFEREE'S LETTER
[DATE]
EQCC Receivables Corporation
EQCC Asset Backed Corporation
[ADDRESS]
First Bank National Association
[ADDRESS]
Ladies and Gentlemen:
We propose to purchase a Class R Certificate issued under the Pooling and
Servicing Agreement, dated as of June 1, 1997 (the "Pooling and Servicing
Agreement"), among First Bank National Association, as trustee (the "Trustee"),
Equicredit Corporation of America, EQCC Receivables Corporation and EQCC Asset
Backed Corporation. Capitalized terms used but not defined herein shall have the
meanings set forth in the Pooling and Servicing Agreement.
1. We certify that on the date hereof we have simultaneously herewith
delivered to you an affidavit certifying, among other things, that (i) we are
not a Disqualified Organization and (ii) we are not purchasing such Class R
Certificate on behalf of a Disqualified Organization. We understand that any
breach by us of this certification may cause us to be liable for a tax imposed
upon transfers to Disqualified Organizations.
2. We acknowledge that we will be the beneficial owner of the Class R
Certificate and that the Class R Certificate will be registered in our name and
not in the name of a nominee.
3. We certify that no purpose of our purchase of the Class R Certificate is
to avoid or impede the assessment or collection of tax.
M-2-1
<PAGE>
4. We represent that:
(a) We understand that the Class R Certificate represents for federal
income tax purposes, a "residual interest" in a real estate mortgage
investment conduit;
(b) We understand that as the holder of a Class R Certificate we will
be required to take into account, in determining our taxable income, our
pro rata percentage interest of the taxable income of the Trust REMIC in
accordance with all applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code").
5. We understand that if, notwithstanding the transfer restrictions, the
Class R Certificate is in fact transferred to a Disqualified Organization, a tax
may be imposed on the transferor of the Class R Certificate. We agree that any
breach by us of these representations shall render such transfer of the Class R
Certificate by us absolutely null and void and shall cause no rights in the
Class R Certificate to vest in the transferee.
6. The sale to us and our purchase of the Class R Certificate constitutes a
sale for tax and all other purposes and each party thereto has received due and
adequate consideration. In our view, the transaction represents fair value,
representing the results of arms length negotiations and taking into account our
analysis of the tax and other consequences of investment in the Class R
Certificate.
7. We expect that the purchase of the Class R Certificate, together with
the receipt of the price, if any, therefore will be economically neutral or
profitable to us overall, after all related expenses (including taxes) have been
paid and based on conservative assumptions with respect to discount rates,
prepayments and other factors necessary to evaluate profitability.
8. We are a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust that
is subject to U.S. federal income tax regardless of the source of its income. We
are duly organized and validly existing under the jurisdiction of our
organization. We are neither bankrupt nor insolvent nor do we have reason to
believe that we will become bankrupt or insolvent. We have conducted and are
conducting our business so as to comply in all material respects with all
applicable statutes and regulations. The person executing and delivering this
letter on our behalf is duly authorized to do so, the execution and delivery by
us of this letter and the consummation of the transaction on the terms set forth
herein are within our corporate power and, upon such execution and delivery,
this letter will constitute our legal, valid and binding obligation, enforceable
against us in accordance with its terms, subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the rights of creditors generally and to general principles
of equity and the discretion of the court (regardless of whether enforcement of
such remedies is considered in a proceeding in equity or at law).
M-2-2
<PAGE>
9. Neither the execution and delivery by us of this letter, nor the
compliance by us with the provisions hereof, nor the consummation by us of the
transactions as set forth herein, will (i) conflict with or result in a breach
of, or constitute a default or result in the acceleration of any obligation
under, our articles or by-laws or after giving effect to the consents or the
taking of the actions contemplated by clause (ii) of this subparagraph, any of
the provisions of any law, governmental rule, regulation, judgment, decree or
order binding on us or our properties, or any of the provisions of any indenture
or mortgage or any other contract or in strument to which we are a party or by
which we or any of our properties is bound, or (ii) require the consent of or
notice to or any filing with, any person, entity or governmental body, which has
not been obtained or made by us.
10. We anticipate being a profit-making entity on a ongoing basis.
11. We have filed all required federal and state income tax returns and
have paid all federal and state income taxes due; we intend to file and pay all
such returns and taxes in the future.
12. We agree that in the event that at some future time we wish to transfer
the Class R Certificate, we will transfer the Class R Certificate only to a
transferee that:
(i) is not a Disqualified Organization and is not pur chasing such
Class R Certificate on behalf of a Disqualified Organization, and
(ii) has delivered to the Certificate Registrar a transferee letter in
the form of Exhibit M-1 to the Pooling and Servicing Agree ment
and an affidavit in the form of Exhibit M-2 to the Pooling and
Servicing Agreement, and, if requested by the Certificate
Registrar, an opinion of counsel (in form acceptable to the
Certificate Registrar), that the proposed transfer will not cause
the Class R Certificate to be held by a Disqualified
Organization.
13. We are knowledgeable and experienced in financial, business and tax
matters generally and in particular, the investment risks and tax consequences
of REMIC residuals that provide little or no cash flow, and are capable of
evaluating the merits and risks of an investment in the Class R Certificate; we
are able to bear the economic risks of an investment in the Class R Certificate.
14. We are acquiring the Class R Certificate for our own account for the
purpose of investment and not within view to or for sale in connection with any
distribution there of, subject nevertheless to any requirement or law that the
disposition of our property shall at all times be and remain within our control.
15. We will comply with all applicable federal and state securities laws in
connection with any subsequent resale by us of the Class R Certificate.
M-2-3
<PAGE>
16. We understand that none of the Depositor, the Underwriter, the Servicer
or the Trustee is required to register the Class R Certificate under the
Securities Act of 1933.
17. We are either (a) not an employee benefit plan or other plan subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), nor
a Person acting, directly or indirectly, on behalf of or purchasing any
Certificate with "plan assets" of any such plan, and we understand that
registration of transfer of any Certificate to any such plan, or to any Person
acting on behalf of or purchasing any Certificate with "plan assets" of any such
plan, will not be made unless such plan or Person delivers an opinion of
counsel, addressed and satisfactory to the Trustee, the Representative and the
Servicer, to the effect that the purchase and holding of a Certificate by, on
behalf of or with "plan assets" of any such plan is permissible under applicable
law, would not constitute or result in any non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code, and would not subject
the Representative, the Servicer or the Trustee to any obligation or liability
(including liabilities under Section 406 of ERISA or Section 4975 of the Code)
in addition to those undertaken in the Pooling and Servicing Agreement or any
other liability, or (b) we have provided to the Trustee an opinion of counsel as
described in clause (a) of this paragraph 17.
18. We hereby designate the Trustee as our fiduciary to perform the duties
of the Tax Matters Person for the Trust REMIC.
Very truly yours,
[Name of Transferee]
By:_______________________
Name:
Title:
M-2-4
<PAGE>
EXHIBIT N
FORM OF CUSTODIAL AGREEMENT
(See Item 4)
N-1
<PAGE>
EXHIBIT O
FORM OF LIQUIDATION REPORT
Customer Name:
Account Number:
Original Principal Balance:
1. Liquidation Proceeds
Principal Prepayment $________
Property Sale Proceeds ________
Insurance Proceeds ________
Other (Itemize) ________
Total Proceeds $_______
2. Servicing Advances $________
Monthly Advances ________
Servicing Fees ________
Total Advances $_______
3. Net Liquidation Proceeds $_______
(Line 1 minus Line 2)
4. Principal Balance of the Mortgage $_______
Loan on date of liquidation
5. Loss, if any $_______
(Line 4 minus Line 3)
O-1
<PAGE>
EXHIBIT P
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
(date)
To: (the "Account Depository")
As "Servicer" under the Pooling and Servicing Agreement, dated as of
June 1, 1997 (the "Agreement") with respect to EQCC Home Equity Loan Asset
Backed Certificates, Series 1997-2, Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and Class R
(collectively, the "Certificates"), we hereby authorize and request you to
establish an account, as a Principal and Interest Account pursuant to Section
5.03 of the Agreement, in the name of First Bank National Association and to be
titled "EQCC Home Equity Loan Trust, Series 1997-2 Principal and Interest
Account". The Principal and Interest Account shall bear an additional
designation clearly indicating that the funds deposited therein are held for the
Trustee for the benefit of the holders of the Certificates. All deposits in the
account shall be subject to withdrawal therefrom by order signed by the
Servicer. You may refuse any deposit which would result in violation of the
requirement that the account be fully insured as described below. This letter is
submitted to you in duplicate. Please execute and return one original to us.
EQUICREDIT CORPORATION OF AMERICA
By:_______________________________
Name:
Title:
P-1
<PAGE>
The undersigned, as Account Depository, hereby certifies that the above
described account has been established under Account Number ___________, at the
office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amounts deposited at any time in the account
will be insured to the maximum amount provided by applicable law by the Bank
Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation.
(Name of Account Depository)
By:___________________________
Name:
Title:
P-2
<PAGE>
EXHIBIT Q
FORM OF NOTICE
TO: AMBAC Indemnity Corporation
One State Street Plaza
New York, New York 10004
Attention: General Counsel
Telephone: (212) 668-0340
Telecopier: (212) 363-1459
RE: EQCC Home Equity Loan Asset Backed Certificates, Series 1997-2, Class
A-1, Class A-2 and Class A-3, Class A-4, Class A-5, Class A-6, Class
A-7, Class A-8, Class A-9 and Class A-10
Policy No. __________
Determination Date:
Payment Date:
We refer to that certain Pooling and Servicing Agreement among Credit
Corporation of America, the Depositors listed therein and First Bank National
Association, as trustee, relating to EQCC Home Equity Loan Asset Backed
Certificates, Series 1997-2, Class A-1, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and Class R (the
"Pooling and Servicing Agreement") dated as of June 1, 1997; all capitalized
terms not otherwise defined herein shall have the same respective meanings as
set forth in such Pooling and Servicing Agreement.
As of the Determination Date, the Trustee has determined under the Pooling and
Servicing Agreement and hereby certifies that in respect of the related Payment
Date:
(i) The Class A Remittance Amount ($__________) exclusive of
amounts attributable to clause (iv) of the definition of
"Basic Principal Amount," to the extent such amount is due
but not paid by the Representative, the Depositors or the
Originators.
(ii) The Available Payment Amount with respect to each Mortgage
Loan Group in the Mortgage Pool is $______________ and the
amount of Excess Spread on deposit in the Collection
Account is $_____________ (less $_____________, the
amounts to be withdrawn for deposit into the Insurance
Account, Spread
Q-1
<PAGE>
Account or Letter of Credit Fee Account pursuant to
Sections 6.02(i), (ii) and (iii) of the Pooling and
Servicing Agreement).
(iii) $_________, amounts previously paid to Class A
Certificateholders as Insured Payments.
(iv) The amount that has been deposited in the Collection
Account but may not be withdrawn therefrom pursuant to an
order of a United States bankruptcy court of competent
jurisdiction imposing a stay pursuant to Section 362 of
the United States Bankruptcy Code and would otherwise have
constituted all or a portion of the amount described in
Item (ii) above is $_______________.
(v) The excess of the amount stated in (i), above, over the
amount stated in (ii), above, less the amount described in
(iii), above, less the amount stated in (iv) above is
$_________________.
(vi) Monthly installments of principal and interest on the
Mortgage Loans that were due during the Due Period related
to this Payment Date and were not received prior to this
Payment Date equal $_____________.
(vii) In accordance with the above and the Agreement, the
Insured Payment is $_________________.
[Attached hereto is a copy of the court order in connection with a voidable
preference that constitutes a component of the Class A Principal Remittance
Amount in the amount set forth therein.]
Accordingly, an Event of Nonpayment has occurred and, pursuant to Section 6.05
of the Pooling and Servicing Agreement, this statement constitutes a claim for
an Insured Payment in the amount of $__________ under the Insurance Policy.
Any person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance or statement of claim containing
any materially false information, or conceals for the purpose of misleading,
information concerning any fact material thereto, commits a fraudulent insurance
act, which is a crime, and shall also be subject to a civil penalty not to
exceed Five Thousand ($5,000.00) Dollars and the stated value of the claim for
each such violation.
The amount claimed should be paid as follows:
---------------------------
---------------------------
---------------------------
---------------------------
-------, as Trustee
Q-2
<PAGE>
By:__________________________
Name:________________________
Title:_______________________
Telephone #:_________________
For AMBAC Indemnity Corporation Use Only
Wire Transfer Sent On:
By:___________________________
Confirmation Number:
Q-3
<PAGE>
EXHIBIT R
MONTHLY INFORMATION DELIVERED BY SERVICER
1. With respect to the Mortgage Pool and each Mortgage Loan Group, the number
and Principal Balances of all Mortgage Loans which were the subject of
Principal Prepayments during the related Due Period.
2. With respect to the Mortgage Pool and each Mortgage Loan Group, the amount
of all Curtailments which were received during the related Due Period.
3. With respect to the Mortgage Pool and each Mortgage Loan Group, the
aggregate amount of principal portion of all Monthly Payments received
during the related Due Period.
4. With respect to the Mortgage Pool and each Mortgage Loan Group, the amount
of interest received on the Mortgage Loans during the related Due Period.
5. With respect to the Mortgage Pool and each Mortgage Loan Group, the
aggregate amount of the Advances made and recovered with respect to such
Payment Date.
6. With respect to the Mortgage Pool and each Mortgage Loan Group, the
delinquency and foreclosure information set forth in Exhibit H to the
Pooling and Servicing Agreement and the amount of Mortgage Loan Losses
during the related Due Period.
7. With respect to the Mortgage Pool and each Mortgage Loan Group, the
weighted average maturity, the weighted average Mortgage Interest Rate and
the weighted average Net Mortgage Interest Rate as of the last day of the
Due Period preceding of the related Accrual Period.
8. The Servicing Fees paid and Servicing Fees accrued during the related Due
Period.
9. The amount of all payments or reimbursements to the Servicer pursuant to
Section 5.04 (ii), (iv), (v), (vi) and (vii) paid or to be paid since the
prior Payment Date (or in the case of the first Payment Date, since the
Closing Date).
10. The Pool Principal Balance and aggregate Principal Balance for each
Mortgage Loan Group.
11. Such other information as the Certificate Insurer, each Account Party and
the Certificateholders may reasonably require.
R-1
<PAGE>
12. The amounts which are reimbursable to the Servicer, the Representative or
the Depositors, as appropriate, pursuant to Section 6.05.
13. With respect to the Mortgage Pool and each Mortgage Loan Group, the number
of Mortgage Loans outstanding at the beginning and at the end of the
related Due Period.
14. The aggregate interest accrued on the Mortgage Loans at their respective
Mortgage Interest Rates for the related Due Period.
15. The amount deposited in the Collection Account which may not be withdrawn
therefrom pursuant to an Order of a United States Bankruptcy Court of
competent jurisdiction imposing a stay pursuant to Section 362 of U.S.
Bankruptcy Code.
16. The Principal Balance of Mortgage Loans in the Fixed Rate Group with
Mortgage Interest Rates less than 7.93% per annum.
17. The aggregate Mortgage Loan Losses since the Cut-off Date as of the end of
the related Due Period.
18. The LIBOR Interest Carryover with respect to such Payment Date.
R-2
<PAGE>
EXHIBIT S
LIST OF DELINQUENT LOANS
S-1
<PAGE>
EXHIBIT T
SCHEDULE OF MORTGAGE LOANS SUBJECT TO
THE HOME OWNERSHIP AND EQUITY PROTECTION ACT OF 1994
NOTICE: Each Mortgage Loan listed on this Mortgage Loan Schedule is subject to
special rules under the federal Truth in Lending Act. Purchasers or assignees of
a Mortgage Loan listed on this Mortgage Loan Schedule could be liable for all
claims and defenses with respect to such Mortgage Loan that the related
Mortgagor could assert against the original lender.
T-1
<PAGE>
EXHIBIT U
DESTROYED MORTGAGE NOTE AFFIDAVIT
I, being duly sworn, do hereby state under oath that:
1. I, ____________________, as __________________ , [name of Originator]
(the "Originator"), am authorized to make this Affidavit.
2. The Originator is the lawful owner under the following described
Mortgage Note (the "Note"):
Date:
Loan No.:
Borrower(s):
Original Payee (if not Originator):
Original Amount:
Initial Rate of Interest:
Address of Mortgage Property:
3. The Originator has full authority to sell and deliver the Mortgage Note.
4. The Originator is the lawful owner of the Mortgage Note, and the
Originator has not canceled, altered, assigned or hypothecated the Mortgage Note
other than pursuant to the Transfer Agreement, dated as of June 1, 1997, among
the Originators and Depositors named therein.
5. The Mortgage Note was not located after a thorough and diligent search
and inquiry.
6. Attached hereto are true, complete and correct copies of the Mortgage
Note, endorsed in blank by the Originator.
7. The Originator hereby agrees that in the event the Mortgage Note is ever
located, the Originator (i) shall not assign, transfer, pledge, hypothecate,
encumber or otherwise dispose of the Mortgage Note or any interest therein and
(ii) shall deliver the Mortgage Note promptly to the Trustee or Custodian, if
any.
U-1
<PAGE>
8. The Originator agrees to indemnify and hold the Trustee and any
Custodian and its successors and assigns harmless from any and all loss or
damage incurred or relating to the Originator's failure to deliver the original
Mortgage Note, promptly endorsed, to the Trustee.
9. Attached hereto as Exhibit "A" is a true, complete and correct photocopy
of the original Mortgage Note.
[name of Originator]
--------------------------------
Name:
Title:
SWORN TO and subscribed before me this _____ day of __________, 1997.
---------------------------------
Notary Public
State of ________________________
My Commission Expires:
U-2
<PAGE>
EXHIBIT V
Targeted Amounts
Payment Date Targeted Amount
July 1997 $62,865,125.51
August 1997 $60,072,989.50
September 1997 $57,289,538.97
October 1997 $54,514,721.07
November 1997 $51,748,483.11
December 1997 $48,990,772.54
January 1998 $46,241,536.95
February 1998 $43,500,724.09
March 1998 $40,768,281.82
April 1998 $38,044,158.19
May 1998 $35,328,301.36
June 1998 $32,620,659.64
July 1998 $29,921,181.48
August 1998 $27,229,815.47
September 1998 $24,546,510.33
October 1998 $21,871,214.92
November 1998 $19,203,878.24
December 1998 $16,544,449.43
January 1999 $13,892,877.76
February 1999 $11,249,112.62
March 1999 $ 8,613,103.55
April 1999 $ 5,984,800.21
May 1999 $ 3,364,152.39
June 1999 $ 751,110.02
July 1999 and thereafter 0.00
V-1
<PAGE>
EXHIBIT W
SCHEDULE OF MORTGAGE LOANS THAT DO NOT HAVE TITLE INSURANCE
POLICIES
W-1
<PAGE>
EXECUTION COPY
TRANSFER AGREEMENT
AMONG
EQUICREDIT CORPORATION OF AMERICA
EQUICREDIT CORPORATION/ALA. & MISS.
CALIFORNIA/EQUICREDIT CORPORATION
EQUICREDIT CORPORATION OF IN.
EQUICREDIT CORPORATION OF PA.
EQUICREDIT CORPORATION OF SC
TRANSFERORS
EQUICREDIT CORPORATION OF AMERICA
REPRESENTATIVE
AND
EQCC RECEIVABLES CORPORATION
EQCC ASSET BACKED CORPORATION
TRANSFEREES
DATED AS OF JUNE 1, 1997
EQCC HOME EQUITY LOAN TRUST 1997-2
<PAGE>
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TABLE OF CONTENTS
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ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01.............................................................................................1
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOANS
SECTION 2.01 Conveyance of Mortgage Loans..................................................1
SECTION 2.02 Possession of Mortgage Files..................................................2
SECTION 2.03 Books and Records.............................................................2
SECTION 2.04 Delivery of Mortgage Loan Documents...........................................2
SECTION 2.05 Acceptance by Transferees of the Mortgage Loans; Certain
Substitutions; Certification by the Trustee...................................4
SECTION 2.06 Acceptance by Transferees.....................................................6
SECTION 2.07 The Closing...................................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the Representative and the
Transferors...................................................................7
SECTION 3.02 Representations and Warranties as to the Mortgage Loans and the
Mortgage Pool............................................................... 12
SECTION 3.03 Purchase and Substitution................................................... 22
ARTICLE IV
CONDITIONS
SECTION 4.01 Conditions to Obligation of the Transferees................................. 24
SECTION 4.02 Conditions To Obligation of the Representative and each Transferor.......... 25
ARTICLE V
THE TRANSFERORS
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SECTION 5.01 Third Party Servicers....................................................... 26
SECTION 5.02 Enforceability; Merger or Consolidation of the Transferors.................. 26
SECTION 5.03 Mandatory Delivery; Grant of Security Interest.............................. 26
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Conflicts With Pooling and Servicing Agreement.............................. 27
SECTION 6.02 Protection of Title to Trust................................................ 27
SECTION 6.03 Other Liens or Interests.................................................... 27
SECTION 6.04 Purchase Events............................................................. 28
SECTION 6.05 Indemnification............................................................. 28
SECTION 6.06 Trust....................................................................... 28
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment................................................................... 29
SECTION 7.02 Waivers..................................................................... 29
SECTION 7.03 Costs and Expenses.......................................................... 29
SECTION 7.04 Survival.................................................................... 29
SECTION 7.05 Confidential Information.................................................... 29
SECTION 7.07 Headings and Cross-References............................................... 30
SECTION 7.08 Recordation of Agreement.................................................... 30
SECTION 7.09 Governing Law............................................................... 30
SECTION 7.10 Notices..................................................................... 30
SECTION 7.11 Counterparts................................................................ 31
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EXHIBIT A List of Transferors
EXHIBIT B Mortgage Loan Schedules
EXHIBIT C Form of Transferee Receipt
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THIS TRANSFER AGREEMENT is made as of June 1, 1997, by and
among THE TRANSFERORS LISTED ON THE SIGNATURE PAGE HERETO (the "Transferors"),
EQUICREDIT CORPORATION OF AMERICA, as representative (the "Representative") and
EQCC ASSET BACKED CORPORATION ("EQBC") and EQCC RECEIVABLES CORPORATION ("EQC",
and collectively with EQBC the "Transferees").
WHEREAS, Transferors and the Transferees wish to set forth the
terms pursuant to which the Mortgage Loans are to be transferred by the
Transferors to the Transferees in exchange for (i) the delivery of cash from the
Transferees and (ii) the acceptance by EQC of a capital contribution from
EquiCredit Corporation of America;
NOW, THEREFORE, in consideration of the foregoing, the other
good and valuable consideration and the mutual terms and covenants contained
herein, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01 Certain capitalized terms used in this Agreement
are defined in and shall have the respective meanings assigned them in Article I
to the Pooling and Servicing Agreement, dated as of June 1, 1997, among the
Transferees, as Depositors, EquiCredit Corporation of America, as Servicer and
First Bank National Association, as Trustee (the "Pooling and Servicing
Agreement"). All references herein to "the Agreement" or "this Agreement" are to
this Transfer Agreement, and all references herein to Articles, Sections and
subsections are to Articles, Sections or subsections of this Transfer Agreement
unless otherwise specified.
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOANS
SECTION 2.01 Conveyance of Mortgage Loans.
(a) Immediately prior to consummation on the Closing Date of
the transactions contemplated by the Pooling and Servicing Agreement, in
consideration of each Transferee's delivery of the amount of cash and other
consideration to or to the order of the applicable Transferor as set forth on
Exhibit A hereto, each Transferor does hereby transfer, assign, set over and
convey to the related Transferee without recourse, all of the right, title and
interest of such Transferor in and to the Mortgage Loans set forth in the
applicable Mortgage Loan Schedules attached hereto as Exhibit B-1, B-2, B-3,
B-4, B-5 and B-6, together with the Mortgage Files relating thereto and all
proceeds thereof (excepting the Representative's Yield and amounts received on
and after the Cut-off Date in respect of interest accrued on such Mortgage Loans
prior to the Cut-off Date).
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SECTION 2.02 Possession of Mortgage Files.
(a) Upon the delivery to each Transferor of the consideration
set forth in Section 2.01, the ownership of each Transferor's Mortgage Notes,
related Mortgages and the contents of the related Mortgage Files are vested in
the related Transferee.
(b) Pursuant to Section 2.04, each Transferor has delivered or
caused to be delivered each Transferees' Mortgage File with respect to its
Mortgage Loans to the related Transferee.
SECTION 2.03 Books and Records.
The transfer of each Mortgage Loan to a Transferee shall be
reflected on the Transferors' balance sheets and other financial statements as a
sale of assets by the Representative and each Transferor. The Transferors shall
be responsible for maintaining, and shall maintain, a complete set of books and
records for each Mortgage Loan which shall be clearly marked to reflect the
ownership of each Mortgage Loan by a Transferee.
SECTION 2.04 Delivery of Mortgage Loan Documents.
Each Transferor has delivered or caused to be delivered to the
related Transferee or its designee in accordance with the instructions of such
Transferee, each of the documents referred to in Section 2.04 of the Pooling and
Servicing Agreement, as follows:
(a) (i)(A) The original Mortgage Note, with any intervening
endorsements, endorsed "Pay to the order of BankBoston, N.A., as Custodian under
the Custodial Agreement dated as of June 1, 1997, without recourse" and signed,
by facsimile or manual signature, in the name of the applicable Transferor by a
Responsible Officer, with all prior and intervening endorsements showing a
complete chain of endorsement from the originator of such Mortgage Note to the
related Transferor, if the applicable Transferor was not the originator or (B)
if such Mortgage Note is a Destroyed Mortgage Note, an original Destroyed
Mortgage Note Affidavit together with a copy of such Mortgage Note attached
hereto, and (ii) with respect to manufactured housing units, the certificate of
title, if any;
(b) Either: (i) the original Mortgage, with evidence of
recording thereon (and, in the case of an Mortgage Loan secured by a Mortgaged
Property held in an Illinois Land Trust, signed by the trustee of such Illinois
Land Trust), (ii) a copy of the Mortgage certified as a true copy (A) by a
Responsible Officer of the applicable Transferor (provided, however, that such
Responsible Officer may complete one or more blanket certificates attaching
copies of one or more Mortgages relating thereto) or (B) by the closing
attorney, or by an officer of the title insurer or agent of the title insurer
which issued the related title insurance policy, or commitment therefor, if the
original has been transmitted for recording until such time as the original is
returned by the public recording office or (iii) a copy of the Mortgage
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certified by the public recording office in those instances where the original
recorded Mortgage has been lost or not yet returned;
(c) The original Assignment of Mortgage in recordable form
from the applicable Transferor in blank or to the order of the applicable
Transferee;
(d) Except with respect to any Mortgage Loan secured by a
second priority lien and having a Principal Balance not in excess of $30,000,
the original policy of title insurance or a true copy thereof or, if such policy
has not yet been delivered by the insurer, the commitment or binder to issue
same, or original documents of assurance of title;
(e) All intervening assignments, if any, showing a complete
chain of assignment from the originator thereof to the applicable Transferor,
including any recorded warehousing assignments, with evidence of recording
thereon, certified by a Responsible Officer of the applicable Transferor as a
true copy of the original of such intervening assignments;
(f) A copy of all assumption and modification agreements, if
any, certified as a true copy by a Responsible Officer of the applicable
Transferor;
(g) If the Mortgaged Property is held in an Illinois Land
Trust, the original Assignment of Beneficial Interest, or, if the trustee of
such Illinois Land Trust retains such original Assignment of Beneficial
Interest, a certified true copy of such Assignment of Beneficial Interest so
certified by such trustee;
(h) If the Mortgaged Property is held in an Illinois Land
Trust, an original Reassignment of Assignment of Beneficial Interest from the
applicable Transferor in blank or to the order of the Transferee;
(i) If the Mortgaged Property is held in an Illinois Land
Trust, originals of all intervening Reassignments of Assignment of Beneficial
Interest, showing a complete chain of assignment from the beneficiaries of such
Illinois Land Trust to the applicable Transferor of all of such beneficiaries'
right, title, and interest in, to, and under the trust agreement with respect to
such Illinois Land Trust; and
(j) If the Mortgaged Property is held in an Illinois Land
Trust, (A) a certified copy of the instrument creating the Illinois Land Trust,
(B) a copy of the UCC-1 Financing Statement evidencing the assignment of the
Mortgagor's beneficial interest in the Illinois Land Trust, with evidence of
filing thereon, and (C) the original personal guaranty of the Mortgage Note,
executed by each beneficiary of the Illinois Land Trust.
The applicable Transferor shall use its reasonable efforts to
promptly deliver or cause to be delivered to the Transferees: (a) the original
recorded Mortgage in those instances where a copy thereof certified by such
Transferor was delivered to the related Transferee; (b) any intervening
assignments of Mortgage evidencing a complete chain of assignment from the
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originator of such Mortgage to the related Transferor in those instances where
copies of such assignments certified by such Transferor were delivered to the
Transferee; and (c) the title insurance policy or assurance of title required in
Section 2.04 above. The applicable Transferor shall, within five (5) Business
Days after the receipt thereof, and in any event, within twelve months after the
Closing Date, deliver or cause to be delivered to the Transferees each document
described in any of the preceding clauses (a), (b) and (c); provided, however,
that if a document described in the preceding clause (a) or clause (b) has not
been returned from the appropriate public recording office, the applicable
Transferor shall deliver a certified copy of the Mortgage and a receipted copy
of the assignment from the appropriate recording office prior to the expiration
of such twelve-month period. Notwithstanding anything to the contrary contained
in this Section 2.04, the applicable Transferor shall be deemed to have
satisfied its obligations to deliver a Mortgage or assignment of Mortgage upon
delivery to the related Transferee of a copy of such Mortgage or Assignment of
Mortgage, as applicable, certified by the public recording office to be a true
copy of the recorded original thereof. From time to time the applicable
Transferor may forward or cause to be forwarded to the applicable Transferee
additional original documents evidencing an assumption or modification of an
Mortgage Loan. All Mortgage Loan documents held by a Transferee as to each
Mortgage Loan are referred to herein as the "Transferees' Mortgage File."
All recording required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Transferors.
SECTION 2.05 Acceptance by Transferees of the Mortgage Loans;
Certain Substitutions; Certification by the Trustee.
(a) Each Transferee agrees to execute and deliver on the
Closing Date an acknowledgment of receipt of, for each Mortgage Loan, the items
listed in Section 2.04 (a), (b), (c), (g) and (h) above, in the form attached as
Exhibit C hereto, and declare that they will hold such documents and any
amendments, replacements or supplements thereto, as well as any other assets
transferred pursuant to the terms hereof. Pursuant to the Pooling and Servicing
Agreement, the Custodial Agreement and this Agreement, the Trustee will, for the
benefit of the Transferees and the Certificate Insurer, review (or cause to be
reviewed) each of the documents set forth in Section 2.04 within 45 days after
the Closing Date (or, with respect to any Qualified Substitute Mortgage Loan,
within 45 days after the delivery thereof) and to deliver a certification in the
form attached to the Pooling and Servicing Agreement as Exhibit F-1 to the
effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), (i) all
documents required to be delivered to it pursuant to this Agreement are in its
possession (other than those described in Section 2.04(a)(ii) and 2.04(f)), (ii)
such documents have been reviewed by it and have not been mutilated, damaged,
torn or otherwise physically altered (handwritten additions, changes or
corrections shall not constitute physical alteration if initialled by the
Mortgagor) and relate to such Mortgage Loan, and (iii) based on its examination
and only as to the foregoing documents, the information set forth on the
Mortgage
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Loan Schedule (other than items (i), (iv) and (x) of the definition of Mortgage
Loan Schedule) accurately reflects the information set forth in the Mortgage
File. Pursuant to the Pooling and Servicing Agreement, the Custodial Agreement
and this Agreement, the Trustee shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face. Within 375 days after the Closing Date, pursuant to the Pooling and
Servicing Agreement, the Trustee shall deliver (or cause to be delivered) a
final certification in the form attached to the Pooling and Servicing Agreement
as Exhibit F-2 evidencing the completeness of the Mortgage Files.
(b) If the Trustee during the process of reviewing the
Mortgage Files finds any document constituting a part of a Mortgage File which
is not executed, has not been received, is unrelated to the Mortgage Loan
identified in the Mortgage Loan Schedule, or does not conform to the
requirements of Section 2.04 or substantively to the description thereof as set
forth in the Mortgage Loan Schedule, the Trustee is required by the Pooling and
Servicing Agreement to promptly give notice of the same. In performing any such
review, the Trustee may conclusively rely on the applicable Transferor as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's review of the Mortgage Files is
limited solely to confirming that the documents listed in Section 2.04 (other
than those described in Section 2.04(f)) have been executed and received and
relate to the Mortgage Files identified in the Mortgage Loan Schedule. The
applicable Transferor agrees to use its reasonable efforts to cause to be
remedied a material defect in a document constituting part of a Mortgage File of
which the Representative is so notified by the Trustee or the Certificate
Insurer. If, however, within 60 days after notice to it respecting such defect,
the applicable Transferor has not caused to be remedied the defect and the
defect materially and adversely affects the interest of the related Transferee
in the Mortgage Loan, upon demand therefor by the Servicer, the Transferor will
on the Payment Date immediately succeeding the end of such 60 day period (i)
substitute, in lieu of such Mortgage Loan, a Qualified Substitute Mortgage Loan
in the manner and subject to the conditions set forth in Section 3.03 or (ii)
purchase such Mortgage Loan at a purchase price equal to the Principal Balance
of such Mortgage Loan as of the date of purchase, plus all accrued and unpaid
interest on such Principal Balance, computed at the Mortgage Interest Rate, net
of the Servicing Fee if the Representative is the Servicer, plus the amount of
any unreimbursed Servicing Advances made by the Servicer with respect to such
Mortgage Loan (after deducting therefrom any amounts received in respect of such
purchased Mortgage Loan or Loans).
(c) Upon receipt by the Trustee of a certification of a
Servicing Officer of the Servicer of such substitution or purchase described
above and receipt of the Mortgage File relating to the purchase price for such
Deleted Mortgage Loan or the Qualified Substitute Mortgage Loan and any
Substitution Adjustment, the Trustee is required to release to the
Representative or to the applicable Transferor the related Mortgage File and
shall execute, without recourse, and deliver such instruments of transfer
necessary to transfer such Mortgage Loan to the Representative or to the
applicable Transferor.
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SECTION 2.06 Acceptance by Transferees.
Each Transferee acknowledges the assignment to it of the
Mortgage Loans being transferred hereby by the related Transferors and the
delivery of the Mortgage Files to it or upon its order and, concurrently with
such delivery, has executed, authenticated and delivered to or upon the order of
the Representative on behalf of the related Transferors, in exchange for such
Mortgage Loans and the related Mortgage Files, cash and other consideration as
set forth in Section 2.01.
SECTION 2.07 The Closing.
The conveyance of the Mortgage Loans shall take place at the
offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New
York 10103, on the Closing Date, immediately prior to the closing of the
transactions contemplated by the Pooling and Servicing Agreement, the
Underwriting Agreement and the other Basic Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the
Representative and the Transferors.
(1) The Representative hereby represents and warrants to the
Transferees as of the Closing Date:
(a) The Representative is duly organized, validly existing,
and in good standing under the laws of the State of Delaware and has all
licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each Mortgaged Property State if the
laws of such state require licensing or qualification in order to conduct
business of the type conducted by the Representative and perform its obligations
as Representative hereunder; the Representative has the power and authority to
execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by the Representative
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary action; this Agreement is the valid, binding
and enforceable obligation of the Representative; and all requisite action has
been taken by the Representative to make this Agreement valid, binding and
enforceable upon the Representative in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity;
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(b) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Representative makes no such
representation or warranty), that are necessary in connection with the purchase
and sale of the Certificates and the execution and delivery by such
Representative of the 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, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other documents on the part
of the Representative and the performance by the Representative of its
obligations as a Representative under this Agreement and such of the other Basic
Documents to which it is a party;
(c) The consummation of the transactions contemplated by this
Agreement will not result in the breach of any terms or provisions of the bylaws
of the Representative or result in the breach of any term or provision of, or
conflict with or constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or credit agreement
or other material instrument to which the Representative or its property is
subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Representative or its property is subject;
(d) Neither this Agreement nor the Prospectus nor the
Prospectus Supplement nor any statement, report or other document prepared by
the Representative and furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby, by the Pooling and
Servicing Agreement or by any Basic Document contains any untrue statement of
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(e) There is no action, suit, proceeding or investigation
pending or, to the best of the knowledge of the Representative, threatened
against the Representative which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Representative or
in any material impairment of the right or ability of the Representative to
carry on its business substantially as now conducted, or in any material
liability on the part of the Representative or which would draw into question
the validity of this Agreement or the Mortgage Loans or of any action taken or
to be taken in connection with the obligations of the Representative
contemplated herein, or which would be likely to impair materially the ability
of the Representative to perform under the terms of this Agreement;
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(f) The Representative is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have consequences
that would materially and adversely affect the condition (financial or other) or
operations of the Representative or its properties or might have consequences
that would materially and adversely affect its performance hereunder;
(g) Upon the receipt of each Mortgage File by the Transferees
under this Agreement, the Transferees will have good and indefeasible title to
each Mortgage Loan (other than the Representative's Yield and amounts received
after the Cut-off Date in respect of interest accrued on or prior to the Cut-off
Date) and such other items transferred hereunder, free and clear of any Lien
(other than Liens which will be simultaneously released);
(h) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Transferor pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions in effect
in any applicable jurisdiction;
(i) The origination and collection practices used by the
Representative with respect to each Mortgage Note and Mortgage (other than each
Mortgage Note and Mortgage related to an Acquired Mortgage Loan) have been in
all material respects legal, proper, prudent and customary in the second
mortgage origination and servicing business; and, to the best knowledge of the
Representative, the origination and collection practices used by the originator
with respect to each Mortgage Note and Mortgage related to an Acquired Mortgage
Loan have been in all material respects legal, proper, prudent and customary in
the second mortgage origination and servicing business;
(j) The Representative did not transfer and will not transfer
any Mortgage Loan with any intent to hinder, delay or defraud any of its
creditors;
(k) The Representative is solvent and will not be rendered
insolvent as a result of the transfer of the Mortgage Loans to the Transferees
or the sale of the Certificates; and
(l) The Representative is (i) an approved seller/servicer of
first and second mortgage loans for FNMA and FHLMC in good standing, and (ii) a
mortgagee approved by the Secretary of Housing and Urban Development pursuant to
Section 203 and 211 of the National Housing Act.
(2) Each Transferor hereby represents and warrants to the
Transferees as of the Closing Date:
(a) Such Transferor is duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its incorporation and has
all licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each Mortgaged Property State if the
laws of such state require licensing or qualification in order to
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conduct business of the type conducted by such Transferor and perform its
obligations as a Transferor hereunder; such Transferor has the power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by such
Transferor and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary action; this Agreement is the
valid, binding and enforceable obligation of such Transferor; and all requisite
action has been taken by such Transferor to make this Agreement valid, binding
and enforceable upon such Transferor in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors rights generally or the
application of equitable principles in any proceeding, whether at law or in
equity;
(b) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which such Transferor makes no such
representation or warranty), that are necessary in connection with the execution
and delivery by such Transferor of the Basic 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, 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 con templated by this Agreement
and the other documents on the part of such Transferor and the performance by
such Transferor of its obligations as a Transferor under this Agreement and such
of the other Basic Documents to which it is a party;
(c) The consummation of the transactions contemplated by this
Agreement will not result in the breach of any terms or provisions of the bylaws
of such Transferor or result in the breach of any term or provision of, or
conflict with or constitute a default under or result in the acceleration of any
obligation under, any material agreement, indenture or loan or credit agreement
or other material instrument to which such Transferor or its property is
subject, or result in the violation of any law, rule, regulation, order,
judgment or decree to which such Transferor or its property is subject;
(d) Neither this Agreement nor the Prospectus nor any
statement, report or other document prepared by the Representative or such
Transferor and furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby, by the Pooling and
Servicing Agreement or by any Basic Document, contains any untrue statement of
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
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(e) There is no action, suit, proceeding or investigation
pending or, to the best of such Transferor's knowledge, threatened against such
Transferor which, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial condition,
properties or assets of such Transferor or in any material impairment of the
right or ability of such Transferor to carry on its business substantially as
now conducted, or in any material liability on the part of such Transferor or
which would draw into question the validity of this Agreement or the Mortgage
Loans or of any action taken or to be taken in connection with the obligations
of such Transferor contemplated herein, or which would be likely to impair
materially the ability of the Transferor to perform under the terms of this
Agreement;
(f) Such Transferor is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have consequences
that would materially and adversely affect the condition (financial or other) or
operations of such Transferor its properties or might have consequences that
would materially and adversely affect its performance hereunder or under any
Subservicing Agreement;
(g) Upon the receipt of each Mortgage File by the Transferees
under this Agreement, the Transferees will have good and indefeasible title to
each Mortgage Loan (other than the Representative's Yield and amounts received
after the Cut-off Date in respect of interest accrued on or prior to the Cut-off
Date) and such other assets transferred hereunder free and clear of any Lien
(other than Liens which will be simultaneously released);
(h) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by such Transferor pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions in effect
in any applicable jurisdiction;
(i) Such Transferor did not transfer any interest in any
Mortgage Loan with any intent to hinder, delay or defraud any of its respective
creditors;
(j) Such Transferor is solvent and such Transferor will not
be rendered insolvent as a result of the transfer of the Mortgage Loans to the
Transferees; and
(k) The origination and collection practices used by such
Transferor with respect to each Mortgage Note and Mortgage (other than each
Mortgage Note and Mortgage related to an Acquired Mortgage Loan) have been in
all material respects legal, proper, prudent and customary in the second
mortgage origination and servicing business; and, to the best knowledge of such
Transferor, the origination and collection practices used by the originator with
respect to each Mortgage Note and Mortgage related to an Acquired Mortgage Loan
have been in all material respects legal, proper, prudent and customary in the
second mortgage origination and servicing business.
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SECTION 3.02 Representations and Warranties as to the Mortgage
Loans and the Mortgage Pool.
The Transferors hereby represent and warrant to the
Transferees, jointly and severally, with respect to each Mortgage Loan, as of
the Closing Date:
(a) The information with respect to each Mortgage Loan set
forth in the Mortgage Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth
in Section 2.04 (including all material documents related thereto) has been or
will be delivered to the Transferees on the Closing Date or as otherwise
provided in Section 2.04;
(c) (i) Each Mortgage Loan is principally secured by Mortgaged
Property. Each Mortgaged Property is improved by a one- to four-family
Residential Dwelling, which, to the best of such Transferor's knowledge, does
not include (A) cooperatives or (B) mobile homes other than permanently affixed
mobile homes which do not constitute other than real property under state law,
or manufactured housing units, as defined in the FNMA Selling Guide, which
constitute none of the Mortgage Loans in the Adjustable Rate Group and not more
than approximately 0.51% of the Mortgage Loans in the Fixed Rate Group and which
does not constitute other than real property under state law;
(ii) With respect to each Mortgage Loan involving property
improved by a manufactured or mobile home, the Originator has taken all action
necessary to create a valid and perfected first or second priority (as reflected
in the Mortgage Loan Schedule) lien and security interest in such manufactured
or mobile home and the related Mortgaged Property, including, without
limitation, the filing of UCC financing statements or notations on certificates
of title if necessary, under applicable state law;
(d) Each Mortgage Loan is being serviced by the Servicer or
one or more Subservicers;
(e) The Mortgage Note related to each Mortgage Loan in the
Fixed Rate Group bears a fixed Mortgage Interest Rate; the Mortgage Note related
to each Mortgage Loan in the Adjustable Rate Group bears a Mortgage Interest
Rate that adjusts semi-annually, based on the London interbank offered rate for
six-month United States dollar deposits;
(f) Mortgage Loans constituting approximately 40.22% of the
Mortgage Loans in the Fixed Rate Group, and approximately 90.26% of the Mortgage
Loans in the Adjustable Rate Group, are balloon loans which will provide for a
final Monthly Payment substantially greater than the preceding Monthly Payments.
Approximately 0.02%, 26.99%, 4.67% and 8.52% of the Mortgage Loans in the Fixed
Rate Group (and approximately 80.74%, 6.06% and 3.45% of the Mortgage Loans in
the Adjustable Rate Group) are balloon loans based on a 30-year amortization
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schedule and a single payment of the remaining loan balance 5, 7, 10 and 15
years (or 7, 10 and 15 years, with respect to the Mortgage Loans in the
Adjustable Rate Group) after origination, respectively. All of such balloon
loans provide for Monthly Payments based on an amortization schedule specified
in the related Mortgage Note and have a final balloon payment no earlier than 60
months following origination and no later than 180 months following origination.
Each other Mortgage Note will provide for a schedule of substantially equal
Monthly Payments which are, if timely paid, sufficient to fully amortize the
principal balance of such Mortgage Note on or before its maturity date;
(g) Each Mortgage is a valid and subsisting first or second
lien on the Mortgaged Property subject, in the case of any second Mortgage Loan,
only to a First Lien on such Mortgaged Property, and each Mortgage relating to a
Mortgage Loan in the Adjustable Rate Group is a valid and subsisting First Lien
on the Mortgaged Property, and subject in all cases to the exceptions to title
set forth in the title insurance policy or the other evidence of title
enumerated in Section 2.04(d), with respect to the related Mortgage Loan, which
exceptions are generally acceptable to second mortgage lending companies, 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. If the
Mortgaged Property is held in an Illinois Land Trust (a "Land Trust Mortgage"),
(i) a natural person is the beneficiary of such Illinois Land Trust, and either
is a party to the Mortgage Note or is a guarantor thereof, in either case, in an
individual capacity, and not in the capacity of trustee or otherwise, and, if a
party to the Mortgage Note, is jointly and severally liable under the Mortgage
Note; (ii) the Mortgagor is the trustee of such Illinois Land Trust, is a party
to the Mortgage Note and is the mortgagor under the Mortgage in its capacity as
such trustee and not otherwise; (iii) a land trust trustee, duly qualified under
applicable law to serve as such, has been properly designated and currently so
serves and is named as such in the land trust agreement and such trustee is
named in the Land Trust Mortgage as Mortgagor; (iv) all fees and expenses of the
land trust trustee which have previously become due or owing have been paid and
no such fees or expenses are or will become payable by the Certificateholders or
the Trust Fund; (v) the beneficiary is solely obligated to pay any fees and
expenses of the land trust trustee and the priority of the lien of the Land
Trust Mortgage is not and will not be subject or subordinate to any amounts
owing to the land trust trustee; (vi) the Mortgaged Property (only if indicated
to be owner occupied on the Mortgage Loan Schedule) is occupied by the
beneficiary under the land trust agreement and, if such land trust agreement
terminates, the beneficiary will become the owner of the Mortgaged Property;
(vii) the beneficiary is obligated to make payments under the related Mortgage
Note and (subject to applicable law) will have personal liability for deficiency
judgments; (viii) the Land Trust Mortgages and assignments of beneficial
interest relating to land trusts in the Mortgage Pool were made in compliance
with their respective land trust agreements, were validly entered into by their
respective land trust trustee or beneficiary and did not, do not currently, and
will not in the future, violate any provision of their respective land trust
agreement; (ix) a UCC financing statement has been filed, continued, and will be
continued, without intervening liens, as the first lien upon the beneficial
interest in the Land Trust Mortgage; (x) each assignment of beneficial interest
with respect to Land Trust Mortgages in the Mortgage Pool was
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at the time of respective assignment the only assignment of such beneficial
interest in the land trust, such assignment was accepted by the respective land
trust trustee, to the best of the Depositors' knowledge, subsequent assignments
of the beneficial interest in whole or in part have not been made, and such
subsequent assignments of the beneficial interest or any part thereof are not
permitted pursuant to a written agreement between the respective beneficiary and
the Mortgagee, until the expiration of the Mortgage Note in each respective land
trust; (xi) the Land Trust Mortgages are the first or second liens on the
Mortgaged Properties; no liens are in place against the beneficial interests, or
any part thereof, of any Land Trust Mortgage or collateral assignment of
beneficial interest, which liens are superior to the interest held by the
related Depositor; and the beneficiary or land trust trustee is forbidden,
pursuant to a written agreement between the beneficiary or the land trust
trustee (as applicable) and the Mortgagee, from using the land trust property or
beneficial interest, or any part of either, as security for any other debt of
the same priority as or senior to such Land Trust Mortgage until the expiration
date of its respective Mortgage Note; and (xii) the terms and conditions of the
land trust agreement do not prevent the free and absolute marketability of the
Mortgaged Property. As of the Cut-off Date, approximately 0.02% of the Mortgage
Loans in the Fixed Rate Group and 0.21% of the Mortgage Loans in the Adjustable
Rate Group were related to Land Trust Mortgages.
(h) Except with respect to liens released immediately prior to
the transfer herein contemplated, immediately prior to the transfer and
assignment herein contemplated, the applicable Transferor held good and
indefeasible title to, and was the sole owner of, each Mortgage Loan conveyed by
such Transferor subject to no liens, charges, mortgages, encumbrances or rights
of others; and immediately upon the transfer and assignment herein contemplated,
the applicable Transferee will hold good and indefeasible title, to, and be the
sole owner of, each Mortgage Loan (other than the Representative's Yield and
amounts received on or after the Cut-off Date in respect of interest accrued
prior to the Cut-off Date) subject to no liens, charges, mortgages, encumbrances
or rights of others;
(i) None of the Mortgage Loans in the Fixed Rate Group and
none of the Mortgage Loans in the Adjustable Rate Group (excluding Bankruptcy
Loans) are 30 or more days contractually delinquent; none of the Mortgage Loans
in the Mortgage Pool (excluding Bankruptcy Loans) have been 30 or more days
contractually delinquent more than once in the 12 months preceding the Cut-off
Date. For purposes of this representation and warranty "30 or more days
contractually delinquent" means that a Monthly Payment due on a Due Date was
unpaid as of the end of the month of the next succeeding Due Date or following
Due Dates and "60 to 89 days contractually delinquent" means that a Monthly
Payment due on a Due Date was unpaid as of the end of the month of the second
Due Date following the Due Date on which such Monthly Payment was due.
Approximately 0.10% of the Mortgage Loans in the Fixed Rate Group, and 0.12% of
the Mortgage Loans in the Adjustable Rate Group, are Bankruptcy Loans. None of
the Mortgage Loans in the Fixed Rate Group and none of the Mortgage Loans in the
Adjustable Rate Group are Bankruptcy Loans which are 30 or more days
contractually delinquent. Except for the Mortgage Loans listed on Exhibit G to
the Pooling and Servicing Agreement, to the best of such Transferor's knowledge,
none of the Mortgage Loans is subject to
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a Plan. Except for the Bankruptcy Loans and the Mortgage Loans listed on Exhibit
S to the Pooling and Servicing Agreement, as of the Cut-off Date none of the
Mortgage Loans are 30 or more days contractually delinquent. Exhibit S to the
Pooling and Servicing Agreement accurately sets forth the number of days that
each Mortgage Loan listed therein was contractually delinquent as of the Cut-off
Date;
(j) To the best of such Transferor's knowledge, (i) there is
no delinquent tax or assessment lien on any Mortgaged Property and (ii) each
Mortgaged Property is free of material damage and is in average repair;
(k) No Mortgage Loan is subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(l) To the best of such Transferor's knowledge, there is no
mechanics' lien or claim for work, labor or material affecting any Mortgaged
Property which is or may be a lien prior to, or equal with, the lien of such
Mortgage except those which are insured against by the title insurance policy
referred to in Section 3.02(n) below;
(m) Each Mortgage Loan, at the time it was made, complied in
all material respects with applicable state and federal laws and regulations,
including, without limitation, usury, equal credit opportunity and disclosure
laws;
(n) With respect to each Mortgage Loan, other than any
Mortgage Loan secured by a second priority lien and having a Principal Balance
not in excess of $50,000 or listed in Exhibit W to the Pooling and Servicing
Agreement, a written commitment for a lender's title insurance policy, issued in
standard American Land Title Association or California Land Title Association
form, or other form customary and acceptable in a particular jurisdiction, by a
title insurance company acceptable to FNMA and FHLMC and authorized to transact
business in the state in which the related Mortgaged Property is situated,
together with a condominium endorsement, if applicable, in an amount at least
equal to the original Principal Balance of such Mortgage Loan insuring the
mortgagee's interest under the related Mortgage Loan as the holder of a valid
first or second mortgage lien of record on the real property described in the
Mortgage, subject only to exceptions of the character referred to in Section
3.02(g) above, was effective on the date of the origination of such Mortgage
Loan, and, as of the Closing Date, such commitment will be valid and thereafter
the policy issued pursuant to such commitment shall continue in full force and
effect or, with respect to the Mortgaged Properties located in jurisdictions in
which it is customary and acceptable to obtain an assurance of title in lieu of
a title insurance policy, such assurance of title has been obtained;
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(o) The improvements upon each Mortgaged Property are covered
by a valid and existing hazard insurance policy with a generally acceptable
carrier that provides for fire and extended coverage representing coverage
described in Sections 5.07 and 5.08 of the Pooling and Servicing Agreement;
(p) A flood insurance policy is in effect with respect to each
Mortgaged Property with a generally acceptable carrier in an amount representing
coverage described in Sections 5.07 or 5.08 of the Pooling and Servicing
Agreement, if and to the extent required by Section 5.07 or 5.08 of the Pooling
and Servicing Agreement;
(q) Each Mortgage and Mortgage Note is the legal, valid and
binding obligation of the maker thereof and is enforceable in accordance with
its terms, except only as such enforce ment may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law), and all
parties to each Mortgage Loan had full legal capacity to execute all Mortgage
Loan documents and convey the estate therein purported to be conveyed;
(r) The applicable Transferor has directed the Servicer to
perform any and all acts required to be performed to preserve the rights and
remedies of the Transferees in any insurance policies applicable to the Mortgage
Loans 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 Transferees;
(s) No more than approximately 0.11% of the Mortgage Loans in
the Fixed Rate Group, and no more than approximately 0.16% of the Mortgage Loans
in the Adjustable Rate Group, are secured by Mortgaged Properties located within
any single zip code area within the State of California. No more than
approximately 0.33% of the Mortgage Loans in the Fixed Rate Group, and no more
than approximately 1.35% of the Mortgage Loans in the Adjustable Rate Group, are
secured by Mortgaged Properties located within any single zip code area outside
the State of California;
(t) At least approximately 95.13% of the Mortgage Loans in the
Fixed Rate Group, and approximately 99.96% of the Mortgage Loans in the
Adjustable Rate Group, are secured by Owner Occupied Mortgaged Property;
(u) The terms of the Mortgage Note and the Mortgage have not
been impaired, altered or modified in any material respect, except by a written
instrument which has been recorded or is in the process of being recorded, if
necessary, to protect the interest of the Transferees and which has been or will
be delivered to the Transferees. The substance of any such alteration or
modification is reflected on the Mortgage Loan Schedule. Each original Mortgage
was recorded, and all subsequent assignments of the original Mortgage have been
recorded in the appropriate jurisdictions wherein such recordation is necessary
to perfect the lien
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thereof as against creditors of the Transferors (or, subject to Section 2.04
hereof, are in the process of being recorded);
(v) No instrument of release or waiver has been executed in
connection with the Mortgage Loan, and no Mortgagor has been released, in whole
or in part;
(w) To the best of such Transferor's knowledge, all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been
assessed but is not yet due and payable. Except for payments in the nature of
escrow payments, including without limitation, taxes and insurance payments, the
Transferor has not advanced funds, or induced, solicited or knowingly received
any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage, except for
interest accruing from the date of the Mortgage Note or date of disbursement of
the Mortgage proceeds, whichever is greater, to the day which precedes by one
month the Due Date of the first installment of principal and interest. With
respect to Mortgaged Properties that are the subject of a ground lease, to the
best of the such Transferor's knowledge, all lease rents, other payments or
assessments that have become due have been paid and the Mortgagor is not in
material default under any other provisions of the lease and the lease is valid,
in good standing and in full force and effect;
(x) To the best of the such Transferor's knowledge, there is
no proceeding pending or threatened for the total or partial condemnation of the
Mortgaged Property, nor is such a proceeding currently occurring, and such
property is undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty, so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the use for which the
premises were intended;
(y) To the best of such Transferor's knowledge, all of the
improvements which were included for the purpose of determining the appraised
value of the Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining properties
encroach upon the Mortgaged Property;
(z) To the best of such Transferor's knowledge, no improvement
located on or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation. To the best of such Transferor's knowledge,
all inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged 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 the Mortgaged Property is lawfully occupied
under applicable law;
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(aa) The proceeds of the Mortgage 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 the Mortgage Loans were paid;
(bb) The related Mortgage Note is not and has not been secured
by any collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(cc) No Mortgage Loan was originated under a buydown plan;
(dd) There is no obligation on the part of the applicable
Transferor or any other party to make payments in addition to those made by the
Mortgagor;
(ee) 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 Transferees to the trustee
under such deed of trust, except in connection with a trustee's sale after
default by the Mortgagor. If the Mortgaged Property is held in an Illinois Land
Trust, the trustee thereof is duly qualified under applicable law to serve as
such, and has been properly designated and currently so serves, and no fees or
expenses are or will become payable by the Transferees to such trustee;
(ff) No Mortgage Loan has a shared appreciation feature, or
other contingent interest feature;
(gg) With respect to each Mortgage Loan secured by a second
priority lien, the related First Lien requires equal monthly payments, or if it
bears an adjustable interest rate, the monthly payments for the related First
Lien may be adjusted not more frequently than once every six months;
(hh) With respect to each Mortgage Loan secured by a second
priority lien, either (i) no consent for the Mortgage Loan is required by the
holder of the related First Lien or (ii) such consent has been obtained and is
contained in the Mortgage File;
(ii) The maturity date of each Mortgage Loan secured by a
second priority lien is prior to the maturity date of the related First Lien if
such First Lien provides for a balloon payment; and with respect to any First
Lien that provides for negative amortization or deferred interest, the balance
of such First Lien used to calculate the Combined Loan-to-Value Ratio for the
Mortgage Loan is based on the maximum amount of negative amortization possible
under such First Lien;
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(jj) All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (2)(A) organized under the laws
of such state, or (B) qualified to do business in such state, or (C) federal
savings and loan associations or national banks having principal offices in such
state, or (D) not doing business in such state so as to require qualification or
licensing;
(kk) The Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event the related security for the Mortgage Loan is sold without the
prior consent of the mortgagee thereunder;
(ll) Any future advances made prior to (and excluding) the
Cut-off Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on the Mortgage
Loan Schedule (or single method of determining the Mortgage Interest Rate if
such Mortgage Loan is in the Adjustable Rate Group). The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan. The
Mortgage Note does not permit or obligate the Servicer to make future advances
to the Mortgagor at the option of the Mortgagor;
(mm) The related Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial or non-judicial
foreclosure. There is no homestead or other exemption available to the Mortgagor
which would materially interfere with the right to sell the Mortgaged Property
at a trustee's sale or the right to foreclose the Mortgage except as set forth
in the Prospectus;
(nn) Except for bankruptcy-related defaults under the
Bankruptcy Loans, there is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Mortgage 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 Transferor has waived any
default, breach, violation or event of acceleration;
(oo) All parties to the Mortgage Note and the Mortgage had
legal capacity to execute the Mortgage Note and the Mortgage and each Mortgage
Note and Mortgage have been duly and properly executed by such parties;
(pp) All amounts received by the Transferors on and after the
Cut-off Date with respect to the Mortgage Loans that are required to be paid to
the Transferees have been transferred to the Transferees;
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(qq) Each Mortgage Loan in the Fixed Rate Group, and each
Mortgage Loan in the Adjustable Rate Group, was originated and underwritten by
the Representative or by a wholly-owned subsidiary of the Representative;
(rr) As of the Cut-off Date, each Mortgage Loan conforms, and
all Mortgage Loans in the aggregate conform, in all material respects, to the
description thereof set forth in the Prospectus dated June 24, 1997, including
all statistical data provided therein in tabular format or otherwise;
(ss) The Mortgage Loans were not selected by the
Representative or the Transferors for transfer to the Transferees on any basis
intended to adversely affect the Transferees;
(tt) A full interior inspection appraisal was performed in
connection with each Mortgaged Property;
(uu) The Mortgage Interest Rate for each Mortgage Loan in the
Fixed Rate Group is not less than 7.40% per annum and not more than 16.85% per
annum;
(vv) The gross margin for each Mortgage Loan in the Adjustable
Rate Group is not less than approximately 4.25% per annum and not more than
approximately 8.20% per annum. All of the Mortgage Loans in the Adjustable Rate
Group have periodic rate adjustment caps of 1.0%. Approximately 0.13% of the
Mortgage Loans in the Fixed Rate Group have Mortgage Interest Rates less than
7.92%.
(ww) Each hazard insurance policy required to be maintained
under Section 5.07 of the Pooling and Servicing Agreement with respect to such
Mortgage Loan is a valid, binding, enforceable and subsisting insurance policy
of its respective kind and is in full force and effect;
(xx) If the Mortgaged Property consists of a leasehold estate,
the Mortgage covers property improvements and the Mortgagor's leasehold interest
in the land upon which such improvements are situated; at origination of the
Mortgage Loan the term of the leasehold estate was scheduled to last for at
least ten years beyond the maturity date of the Mortgage or provided for
perpetual renewal covenants; the leasehold estate is assignable by the
Mortgagee; and the lease is valid and in full force and effect;
(yy) To the best of such Transferor's knowledge, no Mortgaged
Property was, at origination, located within a 1 mile radius of any site with
environmental or hazardous waste risks;
(zz) With respect to each Bankruptcy Loan, except for the
Bankruptcy Loans specified in Exhibit G to the Pooling and Sericing Agreement,
(a) as of the Cut-off Date, the Mortgagor is not contractually delinquent more
than 30 days with respect to any payment due under the related Plan, (b) the
Current CLTV is less than or equal 85%, and (c) either (i) if the
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Current CLTV is between 60% and 85%, as of the Cut-off Date, the Mortgagor has
made at least six consecutive payments under the related Plan or (ii) if the
Current CLTV is less than 60%, as of the Cut-off Date, the Mortgagor has made at
least three consecutive payments under the related Plan;
(aaa) With respect to Mortgage Loans which were originated in
the State of Alabama (each, an "Alabama Loan"), (i) each such Alabama Loan was
(A) originated and underwritten by EQCC/Ala. & Miss., or (B) purchased and
re-underwritten by EQCC/Ala. & Miss. from another lender (each originating
entity, an "Alabama Originator"), (ii) with respect each such Alabama Loan
secured by second mortgages, (A) the total "prepaid finance charge" (as defined
in Regulation Z promulgated under the Federal Truth-in-Lending Act) paid by the
related Mortgagor to the related Alabama Originator plus (B) any yield spread
premium ("rate participation") paid by the Alabama Originator did not exceed 5%
of the original Principal Balance of such Alabama Loan, (iii) the original
Principal Balance of such Alabama Loan exceeded $2,000, (iv) the aggregate of
all points and broker's fees did not exceed 10% of the original principal
balance of the Mortgage Loan, (v) no "referral fee" (as defined in Regulation X
promulgated under the Real Estate Settlement and Procedures Act) was paid to any
third party by the related Alabama Originator with respect to such Alabama Loan,
(vi) such Alabama Loan and the manner in which it was originated fully complied
with Alabama law, and (vii) such Alabama Loan was not originated in such a
manner, and neither the related Mortgage Note nor Mortgage contain any
provisions, that would cause such Alabama Loan to be deemed unconscionable under
Alabama law. The aggregate of all such Mortgage Loans does not exceed
approximately 0.03% of the Mortgage Loans in the Fixed Rate Group. Approximately
0.08% of the Mortgage Loans in the Adjustable Rate Group are Alabama Mortgage
Loans;
(bbb) With respect to each Mortgage Loan in the Adjustable
Rate Group, the CLTV does not exceed 100.00%, and with respect to each Mortgage
Loan in the Fixed Rate Group, the CLTV does not exceed 100.00%;
(ccc) Except for the Mortgage Loans listed on Exhibit T to the
Pooling and Servicing Agreement, as of the Cut-off Date no Mortgage Loan is
subject to The Home Ownership and Equity Protection Act of 1994; all notices
required to be delivered to the related Mortgagor pursuant to the Home Ownership
and Equity Protection Act of 1994 have been delivered with respect to each
Mortgage Loan listed on Exhibit T to the Pooling and Servicing Agreement and all
other requirements of that Act have been complied with for each such Mortgage
Loan; and
(ddd) Each Mortgage Loan in the Adjustable Rate Group was
originated by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act.
SECTION 3.03 Purchase and Substitution.
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It is understood and agreed that the representations and
warranties set forth in Sections 3.01 and 3.02 shall survive delivery of the
Mortgage Loans to the Transferees. Upon discovery by the Trustee, the
Representative, any Transferee, the Servicer, any Subservicer, the Certificate
Insurer or the Custodian of a breach of any of such representations and
warranties which materially and adversely affects the value of Mortgage Loans or
the interest of the Transferees, or which materially and adversely affects the
interests of the Transferees in the case of a representation and warranty
relating to a particular Mortgage Loan (notwithstanding that such representation
and warranty was made to the Representative's or the Transferors' best
knowledge), the party discovering such breach shall give prompt written notice
to the others. Within 60 days of the earlier of its discovery or its receipt of
notice of any breach of a representation or warranty, the Representative shall
(a) promptly cure, or cause the applicable Transferor to cure, such breach in
all material respects, or (b) purchase, or cause the applicable Transferor to
purchase, such Mortgage Loan by remitting to the Servicer for deposit in the
Principal and Interest Account, on the next succeeding Determination Date
relating to a Payment Date, in the manner and at the price specified in Section
2.05(b), or by substituting, or causing the applicable Transferor to substitute,
one or more Qualified Substitute Mortgage Loans, provided such substitution is
effected not later than the date which is two years after the Closing Date. Any
such substitution shall be accompanied by payment by the Representative or
applicable Transferor of the Substitution Adjustment.
As to any Deleted Mortgage Loan for which a Transferor
substitutes a Qualified Substitute Mortgage Loan or Loans, the Representative
shall effect such substitution by delivering to the applicable Transferee a
certification in the form attached to the Pooling and Servicing Agreement as
Exhibit F, and delivering to the applicable Transferee the documents
constituting the Mortgage File for such Qualified Substitute Mortgage Loan or
Loans.
The Servicer is required to deposit in the Principal and
Interest Account all payments received in connection with such Qualified
Substitute Mortgage Loan or Loans after the date of such substitution; provided,
however, that any amounts received after the date of substitution in respect of
interest accrued on or prior to the date of substitution on such Qualified
Substitute Mortgage Loan will constitute the property of the applicable
Transferor. Monthly Payments received with respect to Qualified Substitute
Mortgage Loans on or before the date of substitution will be retained by the
Representative on behalf of the applicable Transferor. The applicable Transferee
will own all payments received on the Deleted Mortgage Loan on or before the
date of substitution, and the Representative on behalf of the Transferors shall
thereafter be entitled to retain all amounts subsequently received in respect of
such Deleted Mortgage Loan. The Representative shall amend the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan.
Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall
be subject to the terms of this Agreement in all respects, and the
Representative and the Transferors shall be deemed to have made with respect to
such Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set
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forth in Sections 3.01 and 3.02. On the date of such substitution, the
Representative will remit to the applicable Transferee an amount equal to the
Substitution Adjustment, if any.
It is understood and agreed that the obligations of the
Representative or any Transferor set forth in Sections 2.05 and 3.03 to cure,
purchase or substitute for a defective Mortgage Loan as provided in Sections
2.05 and 3.03 constitute the sole remedies of the Transferees respecting a
breach of the foregoing representations and warranties.
Any cause of action against the Representative or any
Transferor relating to or arising out of a defect in a Mortgage File as
contemplated by Section 2.05 or the breach of any representations and warranties
made in Sections 3.01 or 3.02 shall arise as to any Mortgage Loan upon the
occurrence of not less than all of the following events: (i) discovery of such
defect or breach by the Certificate Insurer or any party and notice thereof to
the Representative or notice thereof by the Representative to the Transferees,
(ii) failure by the Representative to cure such defect or breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Representative by the Certificate Insurer or any Transferee for all amounts
payable in respect of such Mortgage Loan. The party delivering such notice shall
also deliver a copy thereof to the Certificate Insurer.
ARTICLE IV
CONDITIONS
SECTION 4.01 Conditions to Obligation of the Transferees. The
obligation of the Transferees to purchase the Mortgage Loans is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations
and warranties of the Representative and the Transferors hereunder shall be true
and correct on the Closing Date with the same effect as if then made, and the
Representative and the Transferors shall have performed all obligations to be
performed by them hereunder on or prior to the Closing Date.
(b) Documents to be Delivered By the Representative and
the Transferors at the Closing.
(i) Final Mortgage Loan Schedule specifying the
Mortgage Loans to be Transferred hereunder, one copy to be
attached to each counterpart to the Pooling and Servicing
Agreement as the Mortgage Loan Schedule thereto;
(ii) Officer's Certificate dated as of the Closing Date,
in the form attached to the Underwriting Agreement with
respect to the Representative and each Transferor, and
attached thereto the resolutions of the Representative or such
Transferor, as the case may be, authorizing the transactions
contemplated by this Agreement and
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the other Basic Documents, together with copies of the
charter, by-laws and a Certificate of Good Standing dated as
of recent date (acceptable to the Transferees and their
counsel) of the Representative or such Transferor, as the case
may be;
(iii) Opinion of Counsel to the Representative and each
Transferor dated as of the Closing Date in the form attached
to the Underwriting Agreement and any Opinion of Counsel
required to be delivered to any Rating Agency or the
Certificate Insurer;
(iv) Certificate or other evidence of merger or changes of
name, signed or stamped by the applicable regulatory
authority, if any of the Mortgage Loans were acquired by the
applicable Transferor by merger or acquired or originated by
the applicable Transferor while conducting business under a
name other than its present name.
(c) Other Documents. At the Closing, the Representative and
the Transferors shall provide such other documents as either Transferee may
reasonably request.
(d) Other Transactions. The transactions contemplated by
the Pooling and Servicing Agreement and the other Basic Documents shall be
consummated on the Closing Date.
SECTION 4.02 Conditions To Obligation of the Representative
and each Transferor.
The obligation of the Representative and the Transferors to
transfer the Mortgage Loans to the Transferees is subject to the satisfaction of
the condition that at the Closing Date, each Transferee shall deliver to its
related Transferor or Transferors the amount of cash set forth on Exhibit A
hereto, as provided in Section 2.01 and EQC shall accept a capital contribution
from EquiCredit Corporation of America in an amount set forth on Exhibit A
hereto, as provided in Section 2.01.
ARTICLE V
THE TRANSFERORS
SECTION 5.01 Third Party Servicers.
As of the Closing Date, the Representative and the Transferors
have represented to the Transferees that the Mortgage Loans are serviced by the
Servicer or the Transferors and are not subject to servicing agreements with
third parties. It is understood and agreed between the Representative and the
Transferors and the Transferees that the Mortgage Loans which are the subject of
this Agreement are to be delivered free and clear of any servicing agreements
with third party servicers. The Representative and the Transferor, without
reimbursement from the
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Transferees, shall pay any fees or penalties required by any third party
servicer for releasing the Mortgage Loans from any such servicing agreement and
shall arrange for the orderly transfer of such servicing from any such third
party servicer to the Transferees.
SECTION 5.02 Enforceability; Merger or Consolidation of the
Transferors.
(a) The Transferors will keep in full effect its respective
existence, rights and franchises as a corporation, and will obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Basic Documents, the Pooling and
Servicing Agreement, and any of the Mortgage Loans and to perform its duties
under such agreements.
(b) Any Person into which any Transferor may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which any Transferor shall be a party, or any Person succeeding
to the business of any Transferor, shall be the successor of any Transferor
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
SECTION 5.03 Mandatory Delivery; Grant of Security Interest.
The transfer and delivery on the Closing Date by each
Transferor of its Mortgage Loans is mandatory, it being specifically understood
and agreed that each Mortgage Loan is unique and identifiable on the date hereof
and that an award of money damages would be insufficient to compensate the
applicable Transferee for the loss and damages incurred by such Transferee
(including damages to prospective purchasers of the Certificates) in the event
of such Transferor's failure to deliver the Mortgage Loans on or before the
Closing Date. Each Transferor hereby grants to its applicable Transferee a lien
on and continuing security interest in each Mortgage Loan and each document and
instrument evidencing such Mortgage Loan to secure the performance by such
Transferors of their obligations hereunder, and such Transferors agree that it
holds each Mortgage Loan in custody for the Transferees subject to the
Transferees' (i) right to reject any Mortgage Loan under the terms of this
Agreement and (ii) obligation to deliver cash and other consideration as set
forth in Section 2.01 for the Mortgage Loans. All rights and remedies of the
Transferees under this Agreement are distinct from, and cumulative with, any
other rights or remedies under this Agreement or afforded by law or equity, and
all such rights and remedies may be exercised concurrently, independently or
successively.
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ARTICLE VI
ADDITIONAL AGREEMENTS
The Transferors agree with the Transferees as follows:
SECTION 6.01 Conflicts With Pooling and Servicing Agreement.
To the extent that any provision of Sections 6.02 through 6.04
of this Agreement conflicts with any provision of the Pooling and Servicing
Agreement, the Pooling and Servicing Agreement shall govern.
SECTION 6.02 Protection of Title to Trust.
(a) The Transferors shall from time to time execute and
deliver all such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance and other
instruments, and shall take such other action necessary or advisable to:
(i) maintain or preserve the transfer evidenced by this
Agreement or carry out more effectively the purposes hereof; or
(ii) preserve and defend the Transferees' title to the Mortgage
Loans and the rights of the Transferees in such assets against the
claims of all persons and parties, and the Transferors hereby designate
each Transferee, its agent and attorney-in-fact to execute any
financing statement, continuation statement or other instrument
required by the Transferees pursuant to this Section 6.02.
SECTION 6.03 Other Liens or Interests.
Except for the conveyances hereunder and pursuant to this
Agreement and the other Basic Documents, the Transferors shall not sell, pledge,
assign or transfer the Mortgage Loans to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on any interest therein, and the
Transferors shall defend the right, title and interest of the Transferees in, to
and under such Mortgage Loans against all claims of third parties claiming
through or under the Transferors.
SECTION 6.04 Purchase Events.
The Transferors and the Representative acknowledge that the
Transferees have assigned all of their right, title and interest in, to and
under this Agreement, including the Transferees' right to cause the
Representative or the Transferors to purchase the Mortgage Loans from the
Transferees under certain circumstances, to the Issuer pursuant to Section 2.01
of the
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Pooling and Servicing Agreement, and the Issuer has granted to the Trustee a
security interest in and Lien on the Mortgage Loans and its right, title and
interest in this Agreement. The Transferors and the Representative hereby
covenant and agree with the Transferees for the benefit of the Transferees, the
Trustee, the Certificateholders and the Certificate Insurer that the occurrence
of a breach of any of the Representative's or the Transferor's representations
and warranties contained in Section 3.02 hereof shall constitute events
obligating the Transferor and the Representative, to the extent specified in
Section 3.03 of the Pooling and Servicing Agreement, and without further notice
from the Transferees hereunder, to purchase an Mortgage Loan from the Trustee (a
"Purchase Event"). It is understood and agreed that the obligation of the
Representative or the Transferors to purchase any Mortgage Loan as to which a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against the Transferors and the Representative for
such breach available to the Trustee, the Certificateholders or the Certificate
Insurer.
SECTION 6.05 Indemnification.
The Transferors shall indemnify the Transferees for any
liability as a result of the failure of an Mortgage Loan to be originated in
compliance with all requirements of law. This indemnity obligation shall be in
addition to any obligation that the Transferors may otherwise have.
SECTION 6.06 Trust.
The Transferors acknowledge that the Transferees shall,
pursuant to the Pooling and Servicing Agreement, transfer the Mortgage Loans to
the Trustee (for the benefit of the Certificateholders), and the Transferees
assign their rights hereunder to the Trustee (for the benefit of the
Certificateholders) as set forth in the Pooling and Servicing Agreement.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment.
This Agreement may be amended from time to time (upon prior
notice to each of the Rating Agencies and with the prior written consent of the
Certificate Insurer) by a written amendment duly executed and delivered by the
Transferors, the Representative and the Transferees, provided, however, that any
such amendment that materially adversely affects the rights of the
Certificateholders under the Pooling and Servicing Agreement must be consented
to by a Majority in Voting Interest of the Certificates.
26
<PAGE>
SECTION 7.02 Waivers.
No failure or delay on the part of the Transferees in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or further exercise thereof or the exercise
of any other power, right or remedy.
SECTION 7.03 Costs and Expenses.
The Transferors agree to pay all reasonable out-of-pocket
costs and expenses of the Transferees, including fees and expenses of counsel,
in connection with the perfection as against third parties of the Transferees'
right, title and interest in, to and under the Mortgage Loans and the
enforcement of any obligation of the Transferors or the Representative
hereunder.
SECTION 7.04 Survival.
The representations, warranties and covenants of the
Transferor and the Representative set forth in Sections 3.01 and 3.02 and
Article V of this Agreement shall remain in full force and effect and shall
survive the closing under Section 2.07 and the transfers contemplated by
Sections 6.04 and 6.06.
SECTION 7.05 Confidential Information.
The Transferees agree that it shall neither use nor disclose
to any person the names and addresses of the Mortgagors, except in connection
with the enforcement of the Transferees' rights (i) hereunder, (ii) under the
Mortgage Loans, (iii) under the Basic Documents or (iv) as required by law.
SECTION 7.06 Severability Clause.
Any part, provision, representation or warranty of this
Agreement which is prohibited or which is held to be void or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
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<PAGE>
SECTION 7.07 Headings and Cross-References.
The various headings in this Agreement are included for
convenience only and shall not affect the meaning or interpretation of any
provision of this Agreement.
SECTION 7.08 Recordation of Agreement.
To the extent permitted by applicable law, the Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Transferors at the Transferors' expense on direction of the
Transferees accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Transferees.
SECTION 7.09 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
ITS CONFLICT OF LAWS PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 7.10 Notices.
All demands, notices and communications under this Agreement
shall be in writing, personally delivered or mailed by certified mail with
return receipt requested, and shall be deemed to have been duly given upon
receipt at the appropriate address set forth in the Pooling and Servicing
Agreement.
SECTION 7.11 Counterparts.
This Agreement may be executed in two or more counterparts and
by different parties on separate counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
instrument.
SECTION 7.12 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder shall
be suspended during any period in which the Certificate Insurer is in default in
its payment obligations under the Insurance Policy. At such time as the
Certificates are no longer outstanding under the Pooling and Servicing
Agreement, and no amounts owed to the Certificate Insurer under any Basic
28
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Document remain unpaid, the Certificate Insurer's rights hereunder shall
terminate. The Certificate Insurer is an intended third-party beneficiary of
this Agreement.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date and year first above written.
ORIGINATORS:
EquiCredit Corporation
of America ("ECA")
EquiCredit Corporation/Ala. & Miss.
California/EquiCredit Corporation
EquiCredit Corporation of In.
EquiCredit Corporation of Pa.
EquiCredit Corporation of SC
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Senior Vice President
DEPOSITORS:
EQCC Receivables Corporation
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Vice President
EQCC Asset Backed Corporation
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Vice President
30
<PAGE>
EXHIBIT A
AMOUNTS TRANSFERRED BY TRANSFEREES
TO TRANSFERORS
EQCC RECEIVABLES CORPORATION
HAS TRANSFERRED THE FOLLOWING AMOUNT:
$576,488,866.49 to EquiCredit Corporation of America*
EQCC ASSET BACKED CORPORATION
HAS TRANSFERRED THE FOLLOWING AMOUNTS:
a) $32,990,347.70 to EquiCredit Corporation of Pa.
b) $11,546,429.43 to EquiCredit Corporation of SC
c) $ 290,543.52 to EquiCredit Corporation/Ala. & Miss.
d)$39,559,335.90 to California/EquiCredit Corporation
e)$28,003,641.38 to EquiCredit Corporation of In.
- -------------
* EQCC Receivables Corporation has transferred cash to EquiCredit Corporation of
America in an amount equal to $573,653,613.29 and has accepted a capital
contribution from EquiCredit Corporation of America in an amount equal to
$2,835,253.20.
A-1
<PAGE>
EXHIBIT B-1
MORTGAGE LOANS TRANSFERRED BY
EQUICREDIT CORPORATION OF AMERICA
A-2
<PAGE>
EXHIBIT B-2
MORTGAGE LOANS TRANSFERRED BY
EQUICREDIT CORPORATION OF PA
B-2-1
<PAGE>
EXHIBIT B-3
MORTGAGE LOANS TRANSFERRED BY
EQUICREDIT CORPORATION OF SC
B-3-1
<PAGE>
EXHIBIT B-4
MORTGAGE LOANS TRANSFERRED BY
EQUICREDIT CORPORATION/ALA. & MISS.
B-4-1
<PAGE>
EXHIBIT B-5
MORTGAGE LOANS TRANSFERRED BY
CALIFORNIA/EQUICREDIT CORPORATION
B-5-1
<PAGE>
EXHIBIT B-6
MORTGAGE LOANS TRANSFERRED BY
EQUICREDIT CORPORATION OF IN.
B-6-1
<PAGE>
EXHIBIT C-1
FORM OF TRANSFEREE RECEIPT
______ __, 19__
EquiCredit Corporation of America
EquiCredit Corporation/Ala. & Miss.
California/EquiCredit Corporation
EquiCredit Corporation of In.
EquiCredit Corporation of Pa.
EquiCredit Corporation of SC
Re: Transfer Agreement (the "Transfer Agreement"), EQCC
Home Equity Loan Asset Backed Certificates, Series
1997-2, Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class
A-9, Class A-10 and Class R dated as of June 1, 1997
among the Transferors and the Transferees listed
therein
Gentlemen:
In accordance with Section 2.05 of the Transfer Agreement, the
undersigned hereby certifies that, except as noted on the attachment hereto, if
any (the "Loan Exception Report"), it or the Custodian on its behalf has
received, with respect to each Mortgage Loan, the documents specified in
Sections 2.04(a), (b), (c), (g) and (h) of the Transfer Agreement, as
applicable, a Mortgage, or a certified copy thereof, Assignment of Mortgage, or
a certified copy thereof, and a Mortgage Note with respect to each Mortgage Loan
listed in the Transfer Agreement and the documents contained therein appear to
bear original signatures or copies of originals if the originals have not yet
been delivered.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Transfer Agreement.
[EQCC ASSET BACKED CORPORATION]
[EQCC RECEIVABLES CORPORATION]
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Vice President
C-1-1
<PAGE>
EXECUTION COPY
CUSTODIAL AGREEMENT
AMONG
EQUICREDIT CORPORATION OF AMERICA
CALIFORNIA/EQUICREDIT CORPORATION
EQUICREDIT CORPORATION OF IN.
EQUICREDIT CORPORATION OF PA.
EQUICREDIT CORPORATION OF SC
EQUICREDIT CORPORATION/ALA. & MISS.
ORIGINATORS
EQUICREDIT CORPORATION OF AMERICA
REPRESENTATIVE AND SERVICER
EQCC RECEIVABLES CORPORATION
EQCC ASSET BACKED CORPORATION
DEPOSITORS
FIRST BANK NATIONAL ASSOCIATION
TRUSTEE
AND
BANKBOSTON, N.A.
CUSTODIAN
DATED AS OF JUNE 1, 1997
EQCC HOME EQUITY LOAN TRUST 1997-2
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.............................................................................. 2
ARTICLE II
CUSTODIAL ARRANGEMENT
Section 2.1. Appointment as Custodian................................................................. 2
Section 2.2. Maintenance of Office.................................................................... 2
ARTICLE III
CUSTODIAL ARRANGEMENT
Section 3.1. Transfer of Mortgage Loans; Delivery of
Documents..................................................................................... 3
Section 3.2. Trust Receipt and Certification.......................................................... 4
Section 3.3. Release of Mortgage Files................................................................ 4
Section 3.4. Purchase; Payment In Full................................................................ 5
Section 3.5. Other Duties of Custodian................................................................ 5
Section 3.6. Access to Records........................................................................ 6
Section 3.7. Instructions; Authority to Act........................................................... 6
ARTICLE IV
OWNERSHIP AND TRANSFER OF MORTGAGE LOANS
Section 4.1. Transfer of Mortgage Loans............................................................... 6
Section 4.2. Substitution and Purchase of Mortgage
Loans......................................................................................... 7
Section 4.3. No Service Charge for Transfer of
Mortgage Loans................................................................................ 7
Section 4.4. Defeasance............................................................................... 7
ARTICLE V
CUSTODIAN
Section 5.1. Representations, Warranties and Covenants of
Custodian..................................................................................... 8
i
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Page
Section 5.2. Charges and Expenses..................................................................... 9
Section 5.3. No Adverse Interests..................................................................... 10
Section 5.4. Inspections.............................................................................. 10
Section 5.5. Insurance................................................................................ 10
Section 5.6. Limitation of Liability.................................................................. 10
Section 5.7. Indemnification.......................................................................... 10
Section 5.8. Further Rights of Custodian.............................................................. 11
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Amendment................................................................................ 12
Section 6.2. Governing Law............................................................................ 12
Section 6.3. Notices.................................................................................. 12
Section 6.4. Severability of Provisions............................................................... 12
Section 6.5. No Partnership........................................................................... 13
Section 6.6. Termination of Agreement................................................................. 13
Section 6.7. Counterparts............................................................................. 13
Section 6.8. Assignment............................................................................... 13
Section 6.9. Headings................................................................................. 13
Section 6.10. Advice of Counsel....................................................................... 13
Section 6.11. Third Party Beneficiary................................................................. 13
Section 6.12. Resignation of Custodian................................................................ 13
Section 6.13. Limitation of Liability of Trustee...................................................... 14
EXHIBIT A Trust Receipt and Certification..................................................... A-1
EXHIBIT B Request for Release of Documents.................................................... B-1
EXHIBIT C List of Originators..................................................................C-1
EXHIBIT D Transfer Certificate.................................................................D-1
SCHEDULE I Mortgage Loan Schedule
</TABLE>
ii
<PAGE>
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT is made as of June 1, 1997, by and
among THE ORIGINATORS LISTED ON EXHIBIT C HERETO (collectively, the
"Originators"), EQUICREDIT CORPORATION OF AMERICA, as Representative (the
"Representative") and as Servicer (the "Servicer"), EQCC RECEIVABLES CORPORATION
and EQCC ASSET BACKED CORPORATION (collectively, the "Depositors"), FIRST BANK
NATIONAL ASSOCIATION, as Trustee under the Pooling and Servicing Agreement (the
"Trustee") and BANKBOSTON, N.A., as Custodian (the "Custodian").
RECITALS
WHEREAS, the Originators collectively are the owners of the
Mortgage Loans.
WHEREAS, pursuant to the Transfer Agreement, each Originator
will transfer its related Mortgage Loans to one of the Depositors.
WHEREAS, pursuant to the Pooling and Servicing Agreement, each
Depositor will transfer its related Mortgage Loans acquired pursuant to the
Transfer Agreement to the Trustee for the benefit of the Certificateholders.
WHEREAS, during such time as the Depositors or the Trustee
holds the Mortgage Loans, such Person or Persons shall be referred to herein as
the "Mortgage Holder," and the Custodian shall hold all Mortgage Loans as bailee
of and agent for the benefit of each Depositor and the Trustee (for the benefit
of the Certificateholders) during such time as such Person is a Mortgage Holder.
References in this Agreement to the Mortgage Holder, when referring to transfers
or possession of, or security interests in, Mortgage Loans, shall refer to
Custodian, in its capacity as custodian for the benefit of such Mortgage Holder.
WHEREAS, in connection with the foregoing, the parties hereto
desire to provide for the custody and management of the Mortgage Loans which
become subject to these transfers of Mortgage Loans (each, a "Transfer").
WHEREAS, Custodian is a financial institution regulated by the
Comptroller of the Currency of the United States.
WHEREAS, each Originator, each Depositor and the Trustee
during such time as such Person is a Mortgage Holder desires to have Custodian
(i) hold title to the Mortgage Loans as custodian for each such party, (ii) take
possession of the Mortgage Notes and the Mortgages related to the Mortgage
Loans, along with certain other documents specified in this Agreement (the
"Collateral"), as the custodian for, and bailee of, such Mortgage Holder in
accordance with the terms and conditions of this Agreement, and (iii) endorse
the Mortgage Notes to the order of the Trustee and retain possession of the
Mortgage Notes and Mortgages and such other documents as custodian for and
bailee of the Trustee. Custodian is willing and able to perform the duties and
obligations of a custodian and bailee as set forth herein.
1
<PAGE>
WHEREAS, Servicer will act as servicer of the Mortgage Loans
pursuant to the Pooling and Servicing Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the Originators, the Representative,
the Servicer, the Depositors, the Trustee and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Certain capitalized terms used in
this Agreement and not otherwise defined herein shall have the respective
meanings assigned them in Article I of the Pooling and Servicing Agreement dated
as of June 1, 1997 (the "Pooling and Servicing Agreement") among the Depositors
and the Servicer. All references in this Agreement to Articles, Sections,
Subsections and Exhibits are to the same contained in or attached to this
Agreement unless otherwise specified. All terms defined in this Agreement shall
have the defined meanings when used in any certificate, notice or other document
made or delivered pursuant hereto unless otherwise defined therein.
ARTICLE II
CUSTODIAL ARRANGEMENT
Section 2.1. Appointment as Custodian. Subject to the terms
and conditions hereof, the Depositors and the Trustee (for the benefit of the
Certificateholders), as their interests may appear, hereby appoint BankBoston,
N.A., and BankBoston, N.A., hereby accepts such appointment, as Custodian to
maintain custody of the Mortgage Files during such time as each such Person is a
Mortgage Holder. The Servicer shall be liable for all of the Custodian's fees
and expenses under this Agreement.
Section 2.2. Maintenance of Office. The Custodian agrees to
maintain each Mortgage File identified in Section 2.04 of the Pooling and
Servicing Agreement and Section 2.04 of the Transfer Agreement (a) initially at
its office located at 7861 Bayberry Road, Jacksonville, Florida 32256 and (b)
then at such of its other offices in Florida or Massachusetts as Custodian shall
designate from time to time after giving the Originators, the Depositors, the
Trustee and the Certificate Insurer 30 days prior written notice.
ARTICLE III
CUSTODIAL ARRANGEMENT
Section 3.1. Transfer of Mortgage Loans; Delivery of
Documents. Before a mortgage loan shall become a Mortgage Loan subject to this
Agreement, the Originators shall deliver, or cause to be delivered, to
Custodian, the Mortgage File for such Mortgage Loan referred to in Section 2.04
of the Transfer Agreement. Until the Closing Date and the occurrence
2
<PAGE>
of the applicable initial Transfer described below, the Custodian shall hold the
Mortgage Loans (including the Mortgage Files) as custodian and bailee for the
Originators.
On the Closing Date, the Originators shall deliver to the
Custodian a Transfer Certificate in the form attached hereto as Exhibit D
evidencing the Transfer by the Originators to the Depositors of the Mortgage
Loans pursuant to the Transfer Agreement. Upon receipt of any such Transfer
Certificate duly executed by the Originators, the Custodian shall issue to the
Depositors a Trust Receipt and Certification (the "Depositors' Trust Receipt"),
as described in Section 3.2 below.
On the Closing Date, upon receipt of the Depositors' Trust
Receipt, the Depositors shall deliver to the Custodian a Transfer Certificate in
the form attached hereto as Exhibit D evidencing the Transfer by the Depositors
to the Trustee (for the benefit of the Certificateholders) of the Mortgage Loans
pursuant to the Pooling and Servicing Agreement, together with the Depositor's
Trust Receipt. Upon receipt of a Transfer Certificate duly executed by the
Depositors and the Depositor's Trust Receipt, the Custodian shall issue to the
Trustee a Trust Receipt and Certification (the "Trustee's Trust Receipt"), as
described in Section 3.2 below, and shall cancel the Depositor's Trust Receipt.
Promptly after delivery of the Trustee's Trust Receipt, the Custodian shall
endorse the related Mortgage Notes to the Trustee in the form specified in the
Pooling and Servicing Agreement and shall forward the Assignments of Mortgage to
the Servicer, whereupon, the Servicer shall (a) cause the Assignments of
Mortgage to be recorded in the name of the Trustee (for the benefit of the
Certificateholders) in accordance with Section 2.04 of the Pooling and Servicing
Agreement and (b) return the acknowledgment copies of such Assignments of
Mortgage to the Custodian immediately upon the Servicer's receipt thereof.
Custodian hereby acknowledges receipt of the Transfer
Agreement and the Pooling and Servicing Agreement. Custodian further
acknowledges that, on the Closing Date and pursuant to this Agreement, the
Transfer Agreement and the Pooling and Servicing Agreement, Custodian will be
given possession of the Mortgage Files relating to the Mortgage Loans, each of
which Mortgage Loans will be described specifically on the Mortgage Loan
Schedule, a copy of which will be delivered to Custodian simultaneously with the
delivery of the Mortgage Files relating thereto. On and after the Closing Date
and the completion of the Transfers described above, and so long as this
Agreement shall remain in effect, Custodian shall hold the Mortgage Loans and
other Collateral now and hereafter, from time to time, in its custody or control
as custodian for and bailee of the Trustee, as trustee for the benefit of the
Certificateholders, unless and until released in accordance with the Pooling and
Servicing Agreement, in which event, Custodian shall hold the Mortgage Files
relating to the Mortgage Loans and other Collateral as agent, trustee and bailee
for the benefit of the applicable Mortgage Holder.
Section 3.2. Trust Receipt and Certification. Upon delivery to
Custodian of the Mortgage Files, as specified in Section 3.1, Custodian shall
review the same on account of the Depositors and the Trustee in accordance with
the terms of Section 2.05(a) of the Transfer Agreement and Section 2.06(a) of
the Pooling and Servicing Agreement and (subject to Section 4.1 hereof) shall
provide to the Originators, the Depositors and the Trustee, as the case may be,
with a copy to the Certificate Insurer, a receipt indicating that (i) all the
documents in the Mortgage Files required to be delivered under Section 3.1
(being the documents described in Section 2.04 of the Transfer Agreement, and
Section 2.04 of the Pooling and Servicing
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Agreement) have been delivered (subject to any exceptions noted in the related
exception report referred to in such receipt) and (ii) Custodian holds such
documents on behalf of the applicable Mortgage Holder pursuant to this Agreement
(the "Mortgage Receipt"). Upon consummation of a Transfer in accordance with
Article IV hereof, Custodian shall, with respect to the Mortgage Loans
transferred to the applicable Mortgage Holder in connection with the applicable
Transfer, as described in Section 3.1 hereof, number, execute and deliver to the
applicable Mortgage Holder (with a copy to the Originators and the Certificate
Insurer) one or more certifications (each, a "Trust Receipt and Certification")
in the form attached hereto as Exhibit A. Upon issuance of a Trust Receipt and
Certification with respect to any Transfer, the Mortgage Receipt relating to
such Mortgage Loans previously delivered shall be deemed cancelled with respect
to such Mortgage Loans.
Section 3.3. Release of Mortgage Files. From time to time and
as provided in the Pooling and Servicing Agreement, Custodian is hereby
authorized, upon written request of Servicer in the form annexed hereto as
Exhibit B, to release to Servicer the Mortgage File related to any Mortgage Loan
or the specific documents identified in such request to Servicer. All documents
so released to Servicer shall be held by it in trust for the benefit of the
Trustee (for the benefit of the Certificateholders). Servicer shall return the
Mortgage File, or such other documents which have been released to Servicer, to
Custodian when Servicer's need therefor in connection with such foreclosure or
repossession no longer exists, unless the Mortgage Loan shall be liquidated, in
which case, upon receipt of a certification to this effect from Servicer to
Custodian in the form annexed hereto as Exhibit B, the related Mortgage File
shall be released by Custodian to Servicer, and Custodian shall thereupon
reflect any such liquidation on the related Mortgage.
Section 3.4. Purchase; Payment In Full. Upon the purchase or
substitution of any Mortgage Loan pursuant to Section 2.06 or 3.03 of the
Pooling and Servicing Agreement or Section 2.06 or 3.03 of the Transfer
Agreement, or upon the payment in full of any Mortgage Loan, which shall be
evidenced by Custodian's receipt of the request for release in the form annexed
hereto as Exhibit B, Custodian shall promptly release the related Mortgage File
to Servicer and the interest in such Mortgage Loan and related Mortgage File
granted by the Depositors to the Trustee pursuant to the Pooling and Servicing
Agreement shall terminate without any further action by the Custodian, the
Originators, the Depositors or Trustee.
Section 3.5. Other Duties of Custodian. The Custodian shall
have and perform the other following powers and duties:
(a) Safekeeping. To segregate the Mortgage Files from all
other mortgages and mortgage notes and similar documents in its
possession, to identify the Mortgage Files as being held and to hold
the Mortgage Files for and on behalf of the Mortgage Holders (which, on
and after the Closing Date, and after completion of the Transfers
described in Section 3.1, shall be the Trustee for the benefit of the
Certificateholders), to maintain accurate records pertaining to each
Mortgage Note and Mortgage in the Mortgage Files, to provide monthly a
list of all Mortgage Loan Files held by it, together with a current
exception report, and to provide such information as is necessary to
enable the Trustee to deliver the reports and notifications required by
Section 2.06 of the Pooling and Servicing Agreement. Custodian will
promptly report to the Trustee any failure on its part to hold
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the Mortgage Files as herein provided and promptly take appropriate
action to remedy any such failure.
(b) Administration; Reports. In general, to attend to all
non-discretionary details in connection with maintaining custody of the
Mortgage Files on behalf of the Mortgage Holders as may be expressly
provided herein or as may be required or customary for a custodian or
bailee pursuant to FNMA guidelines. In addition, Custodian shall assist
the Trustee and the Servicer (at Servicer's cost) generally in the
preparation of reports to holders or to regulatory bodies to the extent
necessitated by Custodian's custody of the Mortgage Files.
Section 3.6. Access to Records. Custodian shall permit the
Trustee, the Certificate Insurer and their respective duly authorized agents,
attorneys or auditors and those Persons permitted access pursuant to Section
5.12 of the Pooling and Servicing Agreement to inspect the Mortgage Files and
the books and records maintained by the Custodian pursuant hereto at such
reasonable times as they may reasonably request, subject only to compliance with
the terms of the Pooling and Servicing Agreement.
Section 3.7. Instructions; Authority to Act. The Custodian
shall be deemed to have received proper instructions with respect to the
Mortgage Files upon its receipt of written instructions signed by a Responsible
Officer of the Trustee and may conclusively rely on such instructions. In
addition, the Custodian may conclusively rely upon any release request delivered
to it in the form attached as Exhibit B hereto duly executed by the Servicer,
such release form being agreed to constitute certification to the Custodian
(upon which Custodian may rely) that all conditions precedent to the release of
the Mortgage File have been met.
ARTICLE IV
OWNERSHIP AND TRANSFER OF MORTGAGE LOANS
Section 4.1. Transfer of Mortgage Loans. The transfer of
Mortgage Loans in connection with any Transfer shall occur in the following
manner:
(i) Custodian shall, promptly upon receiving a Transfer Certificate
relating to the transfer of Mortgage Loans pursuant to a Transfer:
(a) Determine whether each document in the
Mortgage File listed in Section 2.04 of the Transfer Agreement
and Section 2.04 of the Pooling and Servicing Agreement with
respect to each Mortgage Loan listed on the Mortgage Loan
Schedule has been delivered to Custodian, and whether
Custodian is able to deliver a Trust Receipt and
Certification;
(b) promptly advise the applicable Mortgage
Holder, the Certificate Insurer, the Trustee, the applicable
Originator and the applicable Depositor by telephone or by
facsimile transmission if it determines that any document
referred to in (a) above has not been so delivered and take no
further
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action under this Section 4.1 until it determines that such
documents have been so delivered;
(c) upon determining that such documents
have been so delivered, Custodian shall issue and deliver to
applicable Mortgage Holder the Trust Receipt and Certification
in accordance with Sections 3.1 and 3.2 of this Agreement; and
(ii) Custodian shall hold the Mortgage Files for
each Mortgage Holder subject to satisfaction of the conditions
precedent with respect to the applicable Transfer.
Section 4.2. Substitution and Purchase of Mortgage Loans. The
substitution or purchase of Mortgage Loans pursuant to Section 2.05 or Section
3.03 of the Transfer Agreement and Section 2.06 or Section 3.03 of the Pooling
and Servicing Agreement shall occur in the following manner:
(i) On or before the date of such substitution or
purchase, the Servicer shall send the Trustee notice, with a copy to
Custodian, indicating the Mortgage Loans to be replaced with Qualified
Substitute Mortgage Loans or to be purchased and the aggregate purchase
prices and Substitution Adjustments, if any, to be paid on such date.
(ii) Upon receiving written confirmation from the
applicable Depositors and the Trustee on behalf of the
Certificateholders that they have received the applicable purchase
price, Qualified Substitute Mortgage Loans or Substitution Adjustments,
Custodian shall return to the applicable party (as identified to the
Custodian by the Trustee) Mortgage Files related to the Mortgage Loans
purchased or substituted on such date.
Section 4.3. No Service Charge for Transfer of Mortgage Loans.
No service charge shall be made for any transfer of Mortgage Loans, but
Custodian may require payment from the Servicer of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer
of Mortgage Loans.
Section 4.4. Defeasance. When a Mortgage Loan is purchased or
substituted by the Servicer, the Depositor or the applicable Originator pursuant
to the terms of the Transfer Agreement and the Pooling and Servicing Agreement,
the applicable Mortgage Holder's interest in such Mortgage Loan and all
Collateral with respect to such Mortgage Loan shall terminate, such Mortgage
Loan and related Collateral shall revert to the applicable Originator and the
applicable Mortgage Holder's rights, title and interest therein shall cease, and
the Trustee shall execute such instruments acknowledging termination and
discharge of its interest therein as are required by applicable law.
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ARTICLE V
CUSTODIAN
Section 5.1. Representations, Warranties and Covenants of
Custodian. Custodian hereby represents and warrants to, and covenants with, the
Originators, the Depositors, the Representative, the Servicer, the Certificate
Insurer and the Trustee, that as of the date of each Trust Receipt and
Certification:
(i) Custodian is duly organized, validly existing
and in good standing under the laws of the United States;
(ii) Custodian has the full power and authority to
hold each Mortgage Loan (whether acting alone or through an agent), to
hold title to the Mortgage Loans as custodian on behalf of the Mortgage
Holders, and to execute, deliver and perform, and to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement,
has duly executed and delivered this Agreement, and this Agreement
constitutes a legal, valid and binding obligation of Custodian,
enforceable against it in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and by the availability of equitable remedies;
(iii) Neither the execution and delivery of this
Agreement, the delivery of Mortgage Loans and assignments of Mortgages
to Custodian, the issuance of the Mortgage Receipts and Trust Receipt
and Certifications, the consummation of the transactions contemplated
hereby or thereby, nor the fulfillment of or compliance with the terms
and conditions of this Agreement will conflict with or result in a
breach of any of the terms, conditions or provisions of Custodian's
charter or bylaws or any agreement or instrument to which Custodian is
now a party or by which it is bound, or constitute a default or result
in an acceleration under any of the foregoing, or result in the
violation of any law, rule, regulation, order, judgment or decree to
which Custodian or its property is subject; except that no
representation or warranty is made as to compliance with laws and
regulations, other than those of the United States, the State of
Florida and the Commonwealth of Massachusetts, relating to
qualifications, licensure or regulation of custodians of mortgage loans
originated in states or commonwealths other than Florida or
Massachusetts;
(iv) Custodian does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(v) To Custodian's knowledge after due inquiry,
there is no litigation pending or threatened, which if determined
adversely to Custodian, would adversely affect the execution,
delivery or enforceability of this Agreement, or any of the duties
or obligations of Custodian
thereunder, or which would have a material adverse effect on the
financial condition of Custodian;
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(vi) No consent, approval, authorization or order
of any court or governmental agency or body is required for the
execution, delivery and performance by Custodian of or compliance by
Custodian with this Agreement or the consummation of the transactions
contemplated hereby or thereby; except that no representation or
warranty is made as to consents, approvals, authorizations or orders of
any courts or governmental agencies or bodies, other than those of the
United States, the State of Florida and the Commonwealth of
Massachusetts, relating to qualifications, licensure or regulation of
custodians of mortgage loans originated in states or commonwealths
other than Florida and Massachusetts; and
(vii) Upon written request of the Trustee or the
Certificate Insurer, Custodian shall take such steps as requested by
the Trustee or the Certificate Insurer to protect or maintain any
interest in any Mortgaged Property and any insurance applicable
thereto.
Custodian makes no representations or warranties as to the
validity, legality, sufficiency, enforceability, perfection, genuineness or
prior recorded status of any of the documents contained in each Mortgage File or
the collectability, insurability, effectiveness or suitability of any Mortgage
Loan.
Section 5.2. Charges and Expenses. The Servicer will pay all
fees of Custodian in connection with the performance of its duties hereunder in
accordance with written agreements to be entered into from time to time between
the parties hereto and Custodian, including fees and expenses of counsel
incurred by Custodian in the performance of its duties hereunder; provided,
however, that (i) Custodian shall in no event acquire any lien upon any Mortgage
Loan deposited under this Agreement or the Transfer Agreement or the Pooling and
Servicing Agreement, or any claim against any Mortgage Holder by reason of the
failure of the Servicer to pay any of such charges or expenses and (ii) in the
event the Servicer fails to pay the fees and expenses of Custodian as set forth
in such written agreements, Custodian shall have no obligation to take actions
or incur costs in connection with this Agreement unless the Servicer or another
Person has made adequate provision for payment of Custodian's fees and expenses.
The Servicer shall indemnify the Custodian against payment of any documentary
stamp taxes, intangible taxes and other similar taxes, penalties and interest
incurred in connection with the Mortgage Loans and the transactions contemplated
hereby.
Section 5.3. No Adverse Interests. Custodian covenants and
warrants to the Originators, the Depositors, the Representative, the Servicer,
the Certificate Insurer, and the Trustee, that as of the date of each Trust
Receipt and Certification: (i) it holds no adverse interest, by way of security
or otherwise, in any Mortgage Loan; and (ii) the execution of this Agreement and
the creation of the custodial relationship hereunder does not create any
interest, by way of security or otherwise, of Custodian in or to any Mortgage
Loan, other than Custodian's rights as custodian hereunder.
Section 5.4. Inspections. Upon reasonable prior written notice
to Custodian, the Servicer, the Depositors, the Trustee, the Certificate Insurer
and such Person's agents, accountants, attorneys and auditors will be permitted
during normal business hours to examine
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Custodian's documents, records and other papers in possession of or under the
control of Custodian relating to the Mortgage Loans.
Section 5.5. Insurance. Custodian shall, at its own expense,
maintain at all times during the existence of this Agreement and keep in full
force and effect, (1) fidelity insurance, (2) theft of documents insurance, and
(3) forgery insurance subject to deductibles and in such amounts, as is
customary for custodians of this kind, and with insurance companies reasonably
acceptable to the Servicer, the Trustee and the Certificate Insurer. A
certificate of the respective insurer as to each such policy or a blanket policy
for such coverage shall be furnished to the Servicer, the Trustee or the
Certificate Insurer, upon request, containing the insurer's statement or
endorsement that such insurance shall not terminate prior to receipt by such
party, by registered mail, of 10 days advance notice thereof.
Section 5.6. Limitation of Liability. Custodian assumes no
obligation, and shall be subject to no liability, under this Agreement, except
for its negligence or willful misconduct in the performance of the obligations
and duties as are specifically set forth herein. Custodian shall not be liable
for any action or non-action by it in reliance on advice of counsel believed by
it in good faith to be competent to give such advice. Custodian may rely and
shall be protected in acting upon any written notice, order, request, direction
or other document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
Section 5.7. Indemnification. The Servicer hereby agrees to
indemnify and hold the Custodian harmless from and against all claims,
liabilities, losses, actions, suits or proceedings at law or in equity, or any
other expenses, fees or charges of any character or nature, which the Custodian
may incur or with which the Custodian may be threatened by reasons of its acting
as custodian under this Agreement, including indemnification of the Custodian
against any and all expenses, including attorney's fees if counsel for the
Custodian has been approved by the Servicer (said approval not to be
unreasonably withheld), and the cost of defending any action, suit or
proceedings or resisting any claim. Notwithstanding the foregoing, it is
specifically understood and agreed that in the event any such claim, liability,
loss, action, suit or proceeding or other expense, fees or charge shall have
been caused by reason of any negligent act, negligent failure to act, or willful
misconduct on the part of the Custodian, or which shall constitute a willful
breach of its duties hereunder, the indemnification provisions of this Agreement
shall not apply. The Custodian agrees to indemnify, defend and hold harmless the
Trustee against any liability to Certificateholders arising out of the
negligence or willful misconduct of the Custodian (a) in the verification or
execution of any Trust Receipt and Certification or (b) resulting in the loss of
Mortgage Files in the custody of the Custodian. This indemnity shall include
indemnification as to reasonable attorneys' fees and costs, whether or not suit
be brought, and including such fees and costs on appeal. The Trustee shall give
prompt written notice to the Custodian of any claim for which indemnity is or
may be sought and shall afford to the Custodian the opportunity to defend such
claim.
Section 5.8. Further Rights of Custodian. If the Custodian is
at any time uncertain of its obligations hereunder, the Custodian, upon prior
written notice to the Trustee, the Originators, the Depositors and the Servicer,
may refrain from taking any action with respect to such matter until such
uncertainty is removed. If conflicting demands are made on the Custodian with
respect to any matter, the Trustee's demand shall control, except during the
period prior to
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the issuance of the Trustee's Trust Receipt pursuant to Section 3.1 hereof, when
the applicable Mortgage Holder's demand shall control and the Custodian shall
have the right to rely on such controlling demand. The Custodian shall have the
right in any such case to interplead any or all of the documents contained in
the Mortgage Files in a court of competent jurisdiction and, upon delivery
thereof, shall have no further obligations thereunder with respect to such
documents.
(b) The obligations of the Custodian shall be determined
solely by the express provisions of this Agreement. No representation, warranty,
covenant or obligation of the Custodian shall be implied with respect to this
Agreement or the Custodian's service hereunder. Without limiting the generality
of the foregoing statement, except as specifically required herein, the
Custodian shall be under no obligation to inspect, review or examine the
Mortgage Files to determine that the contents thereof are complete, genuine,
enforceable or appropriate for the represented purpose or that they have been
actually recorded or filed in required offices or that they are other than what
they purport to be on their face.
(c) No provision of this Agreement shall require the Custodian
to spend or risk its own funds or otherwise incur financial liability in
performance of its duties under this Agreement unless, pursuant to Section 5.2
hereof, adequate provision has been made for the reimbursement of the
Custodian's expenses hereunder.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Amendment. This Agreement may be amended from
time to time by Custodian, the Originators, the Depositors, the Representative,
the Servicer and the Trustee (subject to the prior written consent of the
Certificate Insurer) by written agreement signed by such parties.
Section 6.2. Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK GOVERNING
AGREEMENTS MADE AND TO BE PERFORMED THEREIN, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 6.3. Notices. All demands, notices and communication
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by overnight mail, certified mail or
registered mail, postage prepaid, to (i) in the case of the Servicer, each
Originator and the Representative, EquiCredit Corporation of America, 10401
Deerwood Park Boulevard, Jacksonville, Florida 32256-0505, Attention: General
Counsel, (ii) in the case of each Depositor, c/o EquiCredit Corporation of
America, 10401 Deerwood Park Boulevard, Jacksonville, Florida 32256-0505,
Attention: General Counsel, (iii) in the case of the Trustee, First Bank
National Association, c/o First Trust National Association, 111 East Wacker
Drive, Suite 3000, Chicago, Illinois 60601, Attention: EquiCredit Funding Trust
1997-A, (iv) in the case of the Custodian, BankBoston, N.A., 100 Federal Street,
Boston, Massachusetts 02110, Attention: Mail Stop 01-1B-06 and (v) in the case
of the Certificate Insurer and the Rating Agencies, at their respective
addresses set forth in the Pooling and Servicing Agreement, and, in
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each such case, at such other addresses as may hereafter be furnished to each
party hereto in writing.
Section 6.4. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 6.5. No Partnership. Nothing herein contained shall
be deemed or construed to create a co-partnership or joint venture between
Custodian and the other parties hereto.
Section 6.6. Termination of Agreement. This Agreement shall be
terminated upon termination of the Pooling and Servicing Agreement or at the
option of Trustee on 30 days written notice to Custodian, the Depositors and the
Originators. Concurrently with, or as soon as practicable after, the termination
of this Agreement, Custodian shall redeliver the Mortgage Files to the Trustee
at such place as the Trustee may reasonably designate. In connection with the
administration of this Agreement, Custodian and the Trustee may agree from time
to time upon the interpretation of the provisions of this Agreement, as such
interpretation may in their opinion be consistent with the general tenor and
purposes of this Agreement, any such interpretation to be signed and annexed
hereto.
Section 6.7. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 6.8. Assignment. No party hereto shall sell, pledge,
assign or otherwise transfer this Agreement without the prior written consent of
the other parties hereto.
Section 6.9. Headings. Section headings are for reference
purposes only and shall not be construed as a part of this Agreement.
Section 6.10. Advice of Counsel. Custodian shall be entitled
to rely and act upon advice of counsel with respect to its performance hereunder
as Custodian and shall be without liability for any action reasonably taken
pursuant to such advice, provided that such action is not in violation of
application Federal or State law. This paragraph shall not negate Custodian's
obligations under Section 5.7.
Section 6.11. Third Party Beneficiary. The Certificate Insurer
is an intended third party beneficiary of this Agreement.
Section 6.12. Resignation of Custodian. (a) The Custodian
may at any time resign and terminate its obligations under this Agreement upon
at least 90 days' prior written notice to the Servicer and the Trustee.
The Custodian may be removed at any time at the written request of the Trustee
or the Servicer. In the event of such resignation or removal, the Servicer shall
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promptly appoint a successor custodian acceptable to the Trustee and the
Certificate Insurer (which approvals shall not be unreasonably withheld). If the
Servicer fails to appoint a successor custodian within 30 days, the Trustee
shall appoint a successor custodian. In no event shall the resignation of the
Custodian be effective until a successor custodian is duly appointed hereunder.
If a successor Custodian has not been appointed and/or has not accepted
appointment within 90 days after giving notice of such resignation, the
resigning Custodian may petition any court of competent jurisdiction for the
appointment of a successor custodian. One original counterpart of such
instrument of appointment shall be delivered to each of the Servicer, the
Custodian and the successor custodian. The Servicer shall notify S&P and Moody's
of any such resignation or removal and the appointment of a successor custodian.
(b) In the event of any resignation, the Custodian
shall promptly transfer to the successor custodian (or to the Trustee if no
successor custodian has been appointed) all of the Mortgage Files in its
possession under this Agreement and take such other action as may be reasonably
requested by the Servicer or Trustee to effect the transfer of the Custodian's
Mortgage Files to the successor custodian, which shall provide a written
receipt for all such transferred documents and instruments. On completion of
such transfer, the Custodian shall be relieved of all further responsibilities
and obligations hereunder.
Section 6.13. Limitation of Liability of Trustee.
Notwithstanding anything contained herein to the contrary, this Agreement has
been executed by First Bank National Association, not in its individual capacity
but solely in its capacity as Trustee, and in no event shall First Bank National
Association in its individual capacity have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Depositors hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Depositors.
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IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed hereto by their respective officers thereunto duly authorized, all
as of the day and year first above written.
ORIGINATORS
EQUICREDIT CORPORATION OF AMERICA
CALIFORNIA/EQUICREDIT CORPORATION
EQUICREDIT CORPORATION OF IN.
EQUICREDIT CORPORATION OF PA.
EQUICREDIT CORPORATION OF SC.
EQUICREDIT CORPORATION/ALA. & MISS.
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Vice President
EQUICREDIT CORPORATION OF AMERICA,
as Representative and Servicer
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Senior Vice President
DEPOSITORS
EQCC RECEIVABLES CORPORATION
EQCC ASSET BACKED CORPORATION
By:_______________________________
Name: Terence G. Vane, Jr.
Title: Vice President
<PAGE>
TRUSTEE
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
By:_______________________________
Name: David S. Vick
Title: Vice President
CUSTODIAN
BANKBOSTON, N.A.,
as Custodian
By:_______________________________
Name: Maureen B. Ekblom
Title: Manager Real Estate Custody
<PAGE>
EXHIBIT A
TRUST RECEIPT AND CERTIFICATION
Trust Receipt No._____
Aggregate Outstanding
Principal Amount:________
June 1, 1997
To: [DEPOSITOR]
[TRUSTEE]
Re: Custodial Agreement, dated as of June 1, 1997 (the "Custodial
Agreement"), by and among the Originators listed on Exhibit C thereto
(collectively, the "Originators") Equicredit Corporation of America,
as Representative (the "Representative") and as Servicer (the
"Servicer"), EQCC Receivables Corporation and EQCC Asset Backed
Corporation (collectively, the "Depositors"), First Bank National
Association, as Trustee (the "Trustee") and BankBoston, N.A., as
Custodian (the "Custodian")
Gentlemen:
In accordance with the provisions of Section 3.2 of the above-referenced
Custodial Agreement, the undersigned, as Custodian, hereby certifies that it has
received all of the items listed in Section 3.1 of the Custodial Agreement with
respect to each Mortgage Loan identified on the Mortgage Loan Schedule (the
"Mortgage Loan Schedule") attached hereto dated as of _______, 199_. Custodian
confirms that the Mortgage Loan number in each Mortgage File conforms to the
respective Mortgage Loan number listed on the Mortgage Loan Schedule and that
the "Aggregate Outstanding Principal Amount" set forth above corresponds to like
information contained on the Mortgage Loan Schedule. Any exceptions or
deficiencies in a Mortgage File which are required by the Custodial Agreement to
be reported are set forth in the Master Exception Report dated _________ , 199_
and made a part hereof. Capitalized terms used herein without definition shall
have the meanings ascribed to them in the Custodial Agreement.
Custodian further certifies that as to each Mortgage Loan, Custodian holds
the Mortgage Loan in its name as custodian for the benefit of [the Depositor]
[the Trustee], without written notice (a) of any adverse claims, liens or
encumbrances, (b) that any Mortgage Loan was overdue or has been dishonored, (c)
of evidence on the face of any Mortgage Loan or other document in the Mortgage
File of any security interest therein, or (d) of any defense against or claim to
the Mortgage Loan by any other party.
A-1
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Custodian makes no representations or warranties as to the validity,
legality, sufficiency, enforceability, genuineness or prior recorded status of
any of the documents contained in each Mortgage File or the collectability,
insurability, effectiveness or suitability of any Mortgage Loan.
Custodian confirms that it holds each Mortgage Loan and the other documents
in the related Mortgage File for the benefit of [the Depositor][the Trustee] and
its transferees from time to time. Custodian hereby acknowledges and agrees that
it is holding such Mortgage Loans now and hereafter, from time to time, in its
custody or control as agent and bailee for the [Depositor][the Trustee], if the
transfer of Mortgage Loans is deemed not to be an absolute transfer of such
Mortgage Loans, subject to the continuing pledge and security interest granted
by [Originator][Depositor] to [the Depositor][the Trustee] under the [Transfer
Agreement] [Pooling and Servicing Agreement].
Upon repurchase or substitution of the Mortgage Loans to which this Trust
Receipt and Certification relates and payment of the applicable repurchase
price, the Mortgage Loans to which this Trust Receipt and Certification relates
shall be returned and released by Custodian to [Depositor][the Trustee], and
this Trust Receipt and Certification shall be and be deemed to be canceled by
Custodian and of no force and effect.
------------------------
----------------,
as Custodian
By_______________________
Name:
Title:
A-2
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EXHIBIT B
REQUEST FOR RELEASE OF DOCUMENTS
[DATE]
To: [Custodian]
Re: Custodial Agreement, dated as of June 1, 1997, by and among the
Originators listed on Exhibit C thereto (collectively, the
"Originators"), Equicredit Corporation of America, as Representative
(the "Representative") and as Servicer (the "Servicer"), EQCC
Receivables Corporation and EQCC Asset Backed Corporation
(collectively, the "Depositors"), First Bank National Association, as
Trustee (the "Trustee") and BankBoston, N.A., as Custodian (the
"Custodian")
In connection with the administration of the Mortgage Loans held by you as
Custodian under the above-referenced Custodial Agreement, [_________], on behalf
of [________], requests the release, and acknowledges receipt, of the following
for the Mortgage Loan described below, for the reason indicated:
A. Documents Released
_____ 1. Mortgage Note
_____ 2. Mortgage
_____ 3. Assignment of Mortgage
_____ 4. Other documents:_______________________
=======================================
---------------------------------------
B. Mortgagor's Name, Address & Zip Code:
C. Mortgage Loan Number:
D. Reason for Requesting Documents (check one)
_____ 1. Mortgage Loan Paid in Full.
_____ 2. Mortgage Loan in Foreclosure.
B-1
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_____ 3. Mortgage Loan Substituted.
_____ 4. Other Liquidation (Mortgage Loan in Bankruptcy,
Repurchase, Rescission).
_____ 5. Non Liquidation (Other, explain)
--------------------------------------------
--------------------------------------------
If box 1, 3 or 4 above is checked, and if all or part of Mortgage File
was previously released to us, please release to us our previous receipt on
file with you, as well as any additional documents in your possession
relating to the above specified Mortgage Loan.
If box 2 or 5 above is checked, upon our return of all of the above
documents to you as Custodian, please acknowledge your receipt by signing
in the space indicated below, and returning this form.
The Servicer hereby certifies that all amounts received or to be
received in connection with such payment which are required to be deposited
in the Principal and Interest Account pursuant to Section 5.03 of the
Pooling and Servicing Agreement dated June 1, 1997, have been or will be so
deposited.
EQUICREDIT CORPORATION OF AMERICA,
as Representative and Servicer
By__________________________
Name:
Title:
Date:
[--------------------------]
By__________________________
Name:
Title:
Date:
B-2
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Documents returned to Custodian:
- -----------------------------------------
as Custodian
By____________________________
Name:
Title:
Date:
B-3
<PAGE>
EXHIBIT C
ORIGINATORS
EQUICREDIT CORPORATION OF AMERICA
CALIFORNIA/EQUICREDIT CORPORATION
EQUICREDIT CORPORATION OF IN.
EQUICREDIT CORPORATION OF PA.
EQUICREDIT CORPORATION OF SC
EQUICREDIT CORPORATION/ALA. & MISS.
C-1
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EXHIBIT D
Transfer Certificate
[Date]
BANKBOSTON, N.A.
as Custodian under the
Custodial Agreement (defined below)
100 Federal Street
Boston, Massachusetts 02110
RE: Custodial Agreement, dated as of June 1, 1997 (the "Custodial
Agreement"), by and among the Originators listed in Exhibit C thereto
(collectively, the "Originators"), Equicredit Corporation of America,
as Representative (the "Representative") and as Servicer (the
"Servicer"), EQCC Receivables Corporation and EQCC Asset Backed
Corporation (collectively, the "Depositors"), First Bank National
Association, as Trustee (the "Trustee") and BankBoston, N.A., as
Custodian (the "Custodian")
To whom it may concern:
Pursuant to Section 3.1 of the above-referenced Custodial Agreement
(capitalized terms used herein but not otherwise defined shall have the same
meanings assigned to such terms in the Custodial Agreement), we hereby advise
you of the Transfer by the undersigned to [Depositor][the Trustee] of the
Mortgage Loans identified on the Mortgage Loan Schedule[s] attached [hereto] [to
the [Depositor's Trust Receipt[s]] with respect to the undersigned which we are
delivering to you for cancellation]. You are instructed to deliver to
[Depositor][the Trustee] a [Depositor's] [Trustee's] Trust Receipt evidencing
[such Depositor's] [the Trustee's] interest in these Mortgage Loans.
Very truly yours,
[--------------------------------]
By________________________________
Name:
Title:
D-1
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SCHEDULE I
MORTGAGE LOAN SCHEDULE
(See Exhibit D to the Pooling and Servicing Agreement)
<PAGE>
