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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 31, 1998
Bear Stearns Asset Backed Securities, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 333-43091 13-3836437
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(State or Other Jurisdiction) (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
245 Park Avenue
New York, New York 10167
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 272-2000
N/A
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(Former name or former address, if changed since last report)
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<PAGE>
Item 5. Other Events.
Reference is hereby made to the Registration Statement on Form S-3
(Registration File No. 333-43091), as amended, filed by Bear Stearns Asset
Backed Securities, Inc. (the "Depositor") with the Securities and Exchange
Commission (the "Commission") on December 23, 1997, pursuant to which the
Depositor registered $2,500,000,000 aggregate principal amount of its mortgage
asset- backed certificates and notes, issuable in various series, for sale in
accordance with the provisions of the Securities Act of 1933, as amended (the
"Act"). Reference is also hereby made to the Prospectus, dated January 23, 1998,
and the related Prospectus Supplement, dated March 20, 1998, which were
previously filed with the Commission pursuant to Rule 424(b)(2), with respect to
the IMC HOME EQUITY LOAN OWNER TRUST 1998-2 Adjustable Rate Home Equity Loan
Asset Backed Notes, Series 1998-2 (the "Notes").
The Notes were sold to Bear, Stearns & Co. Inc., as representative for
the several underwriters pursuant to the terms of an underwriting agreement
dated March 20, 1998 (the "Underwriting Agreement") among Bear Stearns Asset
Backed Securities, Inc., IMC Mortgage Company and Bear, Stearns & Co. Inc.,
acting on its own behalf and as a representative of PaineWebber Incorporated,
Deutsche Morgan Grenfell Inc. and J.P. Morgan Securities Inc. A copy of the
Underwriting Agreement is filed herewith as Exhibit 1.1.
The Notes were issued pursuant to an Indenture dated as of March 1, 1998
(the "Indenture") between IMC Home Equity Loan Owner Trust 1998-2 (the
"Registrant" or the "Trust") and The Chase Manhattan Bank, as Indenture Trustee.
A copy of the Indenture is filed herewith as Exhibit 4.1.
The Notes are secured by the assets of the Trust pursuant to the
Indenture. The assets of the Trust primarily include a pool of fixed and
adjustable rate home equity loans (the "Home Equity Loans") secured by first
lien mortgages or deeds of trust on one-to-four family residential properties.
Beneficial interests in the Trust are represented by certificates issued
pursuant to the Trust Agreement dated as of March 1, 1998 (the "Trust
Agreement") between the Depositor and Wilmington Trust Company, as Owner
Trustee. A copy of the Trust Agreement is filed herewith as Exhibit 4.2.
The Home Equity Loans were sold by IMC Mortgage Company (the
"Seller/Servicer") to the Depositor and were simultaneously sold by the
Depositor to the Registrant pursuant to the Sale and Servicing Agreement dated
as of March 1, 1998 (the "Sale and Servicing Agreement") among IMC Mortgage
Company as Seller and Servicer, the Depositor, the Registrant and The Chase
Manhattan Bank as Indenture Trustee. The Home Equity Loans will be serviced by
the Seller/Servicer pursuant to the terms of the Sale and Servicing Agreement.
A copy of the Sale and Servicing Agreement is filed herewith as Exhibit 10.1.
<PAGE>
As of the Closing Date, the Home Equity Loans possessed the
characteristics described in the Prospectus dated January 23, 1998 and the
Prospectus Supplement dated March 20, 1998 filed pursuant to Rule 424(b)(2) of
the Act on March 30, 1998. In such Prospectus Supplement, a commitment was made
to provide a description of the pool of Home Equity Loans, including loans
acquired between the Cut-Off Date (March 1, 1998) and the Closing Date (March
31, 1998), in a current report on Form 8-K. Such description is attached hereto
as Exhibit 99.1.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement dated March 20, 1998, among Bear
Stearns Asset Backed Securities, Inc., IMC Mortgage
Company and Bear, Stearns & Co. Inc., acting on its own
behalf and as a representative of PaineWebber
Incorporated, Deutsche Morgan Grenfell, Inc. and J.P.
Morgan Securities Inc.
4.1 Indenture, dated as of March 1, 1998, between IMC Home
Equity Loan Owner Trust 1998-2, as Issuer and The Chase
Manhattan Bank, as Indenture Trustee.
4.2 Trust Agreement, dated as of March 1, 1998 between Bear
Stearns Asset Backed Securities, Inc., as Depositor, and
Wilmington Trust Company, as Owner Trustee.
10.1 Sale and Servicing Agreement dated as of March 1, 1998,
among Bear Stearns Asset Backed Securities, Inc., as
Depositor, IMC Home Equity Loan Owner Trust 1998-2, as
Issuer, IMC Mortgage Company, as Seller and Servicer, and
The Chase Manhattan Bank, as Indenture Trustee.
99.1 Description of the Home Equity Loans as of the Closing
Date (March 31, 1998).
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
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<S> <C> <C>
1.1 Underwriting Agreement dated March 20, 1998, among Bear
Stearns Asset Backed Securities, Inc., IMC Mortgage Company
and Bear, Stearns & Co. Inc., acting on its own behalf and as a
representative of PaineWebber Incorporated, Deutsche Morgan
Grenfell, Inc. and J.P. Morgan Securities Inc.
4.1 Indenture, dated as of March 1, 1998, between IMC Home
Equity Loan Owner Trust 1998-2, as Issuer and The Chase
Manhattan Bank, as Indenture Trustee.
4.2 Trust Agreement, dated as of March 1, 1998 between Bear
Stearns Asset Backed Securities, Inc., as Depositor, and
Wilmington Trust Company, as Owner Trustee.
10.1 Sale and Servicing Agreement dated as of March 1, 1998,
among Bear Stearns Asset Backed Securities, Inc., as
Depositor, IMC Home Equity Loan Owner Trust 1998-2, as
Issuer, IMC Mortgage Company, as Seller and Servicer, and
The Chase Manhattan Bank, as Indenture Trustee.
99.1 Description of the Home Equity Loans as of the Closing Date
(March 31, 1998).
</TABLE>
Exhibit 1.1
EXECUTION COPY
$700,000,000
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
Adjustable Rate Home Equity Loan Asset Backed Notes,
Series 1998-2
UNDERWRITING AGREEMENT
March 20, 1998
BEAR, STEARNS & CO. INC.
As representative of the several underwriters
245 Park Avenue
New York, New York 10167
Dear Sirs:
Bear Stearns Asset Backed Securities, Inc. (the "Depositor"), a Delaware
corporation, has authorized (i) the creation of IMC Home Equity Loan Owner Trust
1998-2, a Delaware business trust (the "Issuer"), pursuant to the Owner Trust
Agreement, dated as of March 1, 1998 (the "Trust Agreement"), between the
Depositor and Wilmington Trust Company ("Wilmington Trust"), as owner trustee
(the "Owner Trustee") and (ii) the issuance and sale of $700,000,000 aggregate
original principal amount of the Issuer's Adjustable Rate Home Equity Loan Asset
Backed Notes Series 1998-2 (the "Notes"). The Notes will evidence non-recourse
obligations of, and will be issued by, the Issuer pursuant to the terms of the
Indenture, dated as of March 1, 1998 (the "Indenture"), between the Issuer and
The Chase Manhattan Bank, as indenture trustee (the "Indenture Trustee").
Pursuant to the Trust Agreement, the Issuer also will issue certificates
evidencing the residual interest in the Issuer (the "Residual Interest"). The
Residual Interest and the Notes are sometimes collectively referred to as the
"Securities."
The Notes will be secured by a trust estate (the "Trust Estate")
consisting primarily of a pool of adjustable-rate and fixed-rate home equity
loans secured by mortgages or deeds of trust creating first and second liens on
primarily one- to four-family residential properties (the "Home Equity Loans")
and such amounts as may be held by the Indenture Trustee in any accounts for the
Owners. The Notes will be secured by (i) the Home Equity Loans in an amount of
approximately $525,000,000 as of the close of business on March 1, 1998 (the
"Cut-Off Date") and (ii) funds deposited in the Pre-Funding Account and the
Capitalized Interest Account. The Home Equity Loans will be sold by IMC Mortgage
Company ("IMC") to the Depositor, and by the Depositor to the Issuer pursuant to
the Sale and Servicing Agreement, dated as of March 1, 1998 (the "Sale and
Servicing Agreement"), among IMC, as seller (the "Seller") and as servicer (the
"Servicer"), the Depositor, the Indenture Trustee and the Issuer.
<PAGE>
Pursuant to the Sale and Servicing Agreement, the Servicer will service the Home
Equity Loans on behalf of the Issuer.
The Notes will have the benefit of a financial guaranty insurance
policy (the "Insurance Policy") issued by MBIA Insurance Corporation (the "Note
Insurer"), issued pursuant to the Insurance Agreement, dated as of March 1, 1998
(the "Insurance Agreement") among the Seller, the Servicer, the Depositor, the
Indenture Trustee and the Note Insurer. The Note Insurer, the Seller, the
Depositor, Bear, Stearns & Co. Inc., PaineWebber Incorporated, Deutsche Morgan
Grenfell Inc. and J.P. Morgan Securities Inc. as Underwriters, also will enter
into an Indemnification Agreement, dated as of March 31, 1998 (the
"Indemnification Agreement"). This Agreement, the Trust Agreement, the Sale and
Servicing Agreement, the Indenture, the Indemnification Agreement and the
Insurance Agreement are sometimes referred to herein collectively as the
"Agreements".
The Notes are more fully described in a Registration Statement
(hereinafter defined) which the Depositor has furnished to the Underwriters.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Agreements.
The Notes are being purchased by the Underwriters named in Schedule A
hereto (the "Underwriters"), and the Underwriters are purchasing, severally,
only the Notes set forth opposite their names in Schedule A, except that the
amounts purchased by the Underwriters may change in accordance with Section 10
of this Agreement. Bear, Stearns & Co. Inc. (the "Representative") is acting for
itself and as representative of the other Underwriters.
SECTION 1 Representations and Warranties of the Depositor. The Depositor
represents and warrants to, and agrees with the Underwriters that:
A. A Registration Statement on Form S-3 (No. 333-43091) has (i) been
prepared by the Depositor in conformity with the requirements of the
Securities Act of 1933 (the "Securities Act"), the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act") and the rules and
regulations (the "Rules and Regulations") of the United States
Securities and Exchange Commission (the "Commission") under the
Securities Act and the Trust Indenture Act, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act. Copies of such Registration Statement have been
delivered by the Depositor to the Underwriters. As used in this
Agreement, "Effective Time" means the date and the time as of which such
Registration Statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Registration Statement"
means such registration statement, at the Effective Time, including any
documents incorporated by reference therein at such time; and "Basic
Prospectus" means such final prospectus dated January 23, 1998; and
"Prospectus Supplement" means the final prospectus supplement relating
to the Notes, to be filed with the Commission pursuant to paragraph (2),
(3) or (5) of Rule 424(b) of the Rules
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and Regulations. "Prospectus" means the Basic Prospectus together with
the Prospectus Supplement. Reference made herein to the Prospectus shall
be deemed to refer to and include any documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Securities
Act, as of the date of the Prospectus and any reference to any amendment
or supplement to the Prospectus shall be deemed to refer to and include
any document filed under the Securities Exchange Act of 1934 (the
"Exchange Act") after the date of the Prospectus, and incorporated by
reference in the Prospectus and any reference to any amendment to the
Registration Statement shall be deemed to include any report of the
Depositor filed with the Commission pursuant to Section 13(a) or 15(d)
of the Exchange Act after the Effective Time that is incorporated by
reference in the Registration Statement. The Commission has not issued
any order preventing or suspending the use of the Prospectus. There are
no contracts or documents of the Depositor which are required to be
filed as exhibits to the Registration Statement pursuant to the
Securities Act, the Rules and Regulations or the Trust Indenture Act
which have not been so filed or incorporated by reference therein on or
prior to the Effective Date of the Registration Statement other than
such documents or materials, if any, as any Underwriter delivers to the
Depositor pursuant to Section 8(D) hereof for filing on Form 8-K. The
conditions for use of Form S-3, as set forth in the General Instructions
thereto, have been satisfied.
B. The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act, the Trust Indenture Act and the
Rules and Regulations. The Registration Statement, as of the Effective
Date thereof and of any amendment thereto, did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. The Prospectus as of its date, and as amended or
supplemented as of the Closing Date, does not and will not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
no representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with (x) the Seller Information (as hereinafter
defined) or (y) written information furnished to the Depositor in
writing by the Underwriters expressly for use therein. The only
information furnished by the Underwriters or on behalf of the
Underwriters for use in connection with the preparation of the
Registration Statement or the Prospectus is described in Section 8(I)
hereof.
C. The documents incorporated by reference to the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder, and none of such documents contained an
untrue statement of a material fact or omitted to state a
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material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus, when such documents
become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided that no representation is made as to (x) any Future
Seller Information (as hereinafter defined) or (y) documents deemed to
be incorporated by reference in the Prospectus as the result of filing a
Form 8-K at the request of the Underwriters except to the extent such
documents reflect information furnished by the Depositor to the
Underwriters for the purpose of preparing such documents.
D. Since the respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in the
general affairs, management, financial condition, or results of
operations of the Depositor, otherwise than as set forth or contemplated
in the Prospectus as supplemented or amended as of the Closing Date.
E. The Depositor has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
is in good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its business
requires such qualification, and has all power and authority necessary
to own or hold its properties, to conduct the business in which it is
engaged and to enter into and perform its obligations under each
Agreement to which it is a party and to cause the Securities to be
issued.
F. There are no actions, proceedings or investigations pending with
respect to which the Depositor has received service of process before or
threatened by any court, administrative agency or other tribunal to
which the Depositor is a party or of which any of its properties is the
subject (a) which if determined adversely to the Depositor would have a
material adverse effect on the business or financial condition of the
Depositor, (b) asserting the invalidity of any of the Agreements or the
Securities, (c) seeking to prevent the issuance of the Securities or the
consummation by the Depositor of any of the transactions contemplated by
the Agreements, or (d) which might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity
or enforceability of, the Agreements or the Securities.
G. This Agreement has been, and each other Agreement to which the
Depositor is a party when executed and delivered as contemplated hereby
and thereby will have been, duly authorized, executed and delivered by
the Depositor, and this Agreement constitutes, and each such other
Agreement when executed and delivered as contemplated herein, will
constitute, legal, valid and binding instruments enforceable against the
Depositor in accordance with their respective terms, subject as to
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enforceability to (x) applicable bankruptcy, reorganization, insolvency
moratorium or other similar laws affecting creditors' rights generally,
(y) general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law), and (z) with respect to
rights of indemnity under this Agreement and the Indemnification
Agreement, limitations of public policy under applicable securities
laws.
H. The execution, delivery and performance of each Agreement to which
the Depositor is a party and the consummation of the transactions
contemplated hereby and thereby, and the issuance and delivery of the
Notes do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Depositor is a party, by which the
Depositor is bound or to which any of the properties or assets of the
Depositor or any of its subsidiaries is subject, which breach or
violation would have a material adverse effect on the business,
operations or financial condition of the Depositor, nor will such
actions result in any violation of the provisions of the articles of
incorporation or by-laws of the Depositor or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets,
which breach or violation would have a material adverse effect on the
business, operations or financial condition of the Depositor.
I. [Reserved]
J. The direction by the Depositor to the Owner Trustee to execute, issue
and deliver and the direction by the Depositor to the Indenture Trustee
to authenticate the Notes has been duly authorized by the Depositor, and
assuming the Owner Trustee and the Indenture Trustee have been duly
authorized to do so, when executed, authenticated, issued and delivered
in accordance with the Indenture, the Notes will be validly issued and
outstanding and will be entitled to the benefits provided by the
Indenture.
K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the
United States is required for the issuance of the Securities and the
sale of the Notes to the Underwriters, or the consummation by the
Depositor of the other transactions contemplated by the Agreements
except such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or blue sky
laws in connection with the purchase and distribution of the Notes by
the Underwriters or as have been obtained.
L. The Depositor possesses all material licenses, certificates,
authorities or permits issued by the appropriate State, Federal or
foreign regulatory agencies or bodies necessary to conduct the business
now conducted by it and as described in the Prospectus, and the
Depositor has not received notice of any proceedings relating to the
revocation or modification of any such license, certificate, authority
or permit which if
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decided adversely to the Depositor would, singly or in the aggregate,
materially and adversely affect the conduct of its business, operations
or financial condition.
M. At the time of execution and delivery of the Sale and Servicing
Agreement, the Depositor will: (i) have beneficial title to the Home
Equity Loans conveyed by the Seller, free and clear of any lien,
mortgage, pledge, charge, encumbrance, adverse claim or other security
interest (collectively, "Liens"); (ii) not have assigned to any person
any of its right or title in the Home Equity Loans or in the Sale and
Servicing Agreement or in the Notes being issued pursuant to the
Indenture and (iii) have the power and authority to sell its interest in
the Home Equity Loans to the Issuer and to sell the Notes to the
Underwriters. Upon execution and delivery of the Sale and Servicing
Agreement by the Issuer, the Issuer will have acquired beneficial
ownership of all of the Depositor's right, title and interest in and to
the Home Equity Loans. Upon execution and delivery of the Indenture by
the Issuer and the Indenture Trustee, the Indenture Trustee will have a
valid and perfected security interest in the Trust Estate free of any
other Liens. Upon delivery to the Underwriters of the Notes, the
Underwriters will have good title to the Notes, free of any Liens.
N. [RESERVED]
O. [RESERVED]
P. [RESERVED]
Q. Neither the Depositor nor the Issuer is an "investment company"
within the meaning of such term under the Investment Company Act of 1940
(the "1940 Act") and the rules and regulations of the Commission
thereunder.
R. [RESERVED]
S. At the Closing Date, the Notes shall have been rated in the
respective rating categories by the nationally recognized rating
agencies, as described in the Prospectus Supplement under "Ratings".
T. Any taxes, fees and other governmental charges in connection with the
execution, delivery and issuance of each Agreement and the Securities
have been paid or will be paid at or prior to the Closing Date.
U. At the Closing Date, each of the representations and warranties of
the Depositor set forth in each Agreement to which it is a party will be
true and correct in all material respects.
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Any certificate signed by an officer of the Depositor and delivered to
an Underwriter or counsel for the Underwriters in connection with an offering of
the Notes shall be deemed, and shall state that it is, a representation and
warranty as to the matters covered thereby to each person to whom the
representations and warranties in this Section 1 are made.
SECTION 1A. Representations and Warranties of the Seller. The Seller
represents and warrants to, and agrees with the Depositor and the Underwriters
that:
A. [RESERVED]
B. The Prospectus Supplement and any further amendments or supplements
to the Prospectus Supplement will, when they are filed with the
Commission, conform in all respects to the requirements of the
Securities Act, the Trust Indenture Act and the Rules and Regulations.
The Seller Information (as defined in Section 8 I.) as of its date, and
as amended or supplemented as of the Closing Date, does not and will not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
C. The documents regarding the Trust and the Home Equity Loans filed
after the Closing Date and incorporated by reference to the Prospectus,
when such documents become effective or are filed with the Commission,
as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that no representation is
made as to documents deemed to be incorporated by reference in the
Prospectus as the result of filing a Form 8-K at the request of the
Underwriters except to the extent such documents reflect information
furnished by the Depositor to the Underwriters for the purpose of
preparing such documents.
D. Since the respective dates as of which the Seller Information is
given, there has not been any material adverse change in the general
affairs, management, financial condition, or results of operations of
the Seller, otherwise than as set forth or contemplated in the Seller
Information as supplemented or amended as of the Closing Date.
E. The Seller has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Florida and
is in good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of its business
requires such qualification, and has all power and authority necessary
to own or hold its properties, to conduct the business in which it is
engaged and to enter into and perform its obligations under each
Agreement to which it is a party.
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F. There are no actions, proceedings or investigations pending with
respect to which the Seller has received service of process before or
threatened by any court, administrative agency or other tribunal to
which the Seller is a party or of which any of its properties is the
subject (a) which if determined adversely to the Seller would have a
material adverse effect on the business or financial condition of the
Seller, (b) asserting the invalidity of any of the Agreements or the
Securities, (c) seeking to prevent the issuance of the Securities or the
consummation by the Seller of any of the transactions contemplated by
the Agreements, or (d) which might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, the Agreements or the Securities.
G. This Agreement has been, and each other Agreement to which the Seller
is a party when executed and delivered as contemplated hereby and
thereby will have been, duly authorized, executed and delivered by the
Seller, and this Agreement constitutes, and each such other Agreement
when executed and delivered as contemplated herein, will constitute,
legal, valid and binding instruments enforceable against the Seller in
accordance with their respective terms, subject as to enforceability to
(x) applicable bankruptcy, reorganization, insolvency moratorium or
other similar laws affecting creditors' rights generally, (y) general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), and (z) with respect to rights of
indemnity under this Agreement and the Indemnification Agreement,
limitations of public policy under applicable securities laws.
H. The execution, delivery and performance of each Agreement to which
the Seller is a party and the consummation of the transactions
contemplated hereby and thereby, do not and will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Seller is a
party, by which the Seller is bound or to which any of the properties or
assets of the Seller or any of its subsidiaries is subject, which breach
or violation would have a material adverse effect on the business,
operations or financial condition of the Seller, nor will such actions
result in any violation of the provisions of the articles of
incorporation or by-laws of the Seller or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Seller or any of its properties or assets, which
breach or violation would have a material adverse effect on the
business, operations or financial condition of the Seller.
I. The Seller has no reason to believe that Coopers & Lybrand L.L.P. are
not independent public accountants with respect to the Seller as
required by the Securities Act and the Rules and Regulations.
J. [RESERVED]
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K. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the
United States is required for the consummation by the Seller of the
transactions contemplated by the Agreements except such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or blue sky laws in connection with the
purchase and distribution of the Notes by the Underwriters or as have
been obtained.
L. The Seller possesses all material licenses, certificates, authorities
or permits issued by the appropriate State, Federal or foreign
regulatory agencies or bodies necessary to conduct the business now
conducted by it and as described in the Prospectus, and the Seller has
not received notice of any proceedings relating to the revocation or
modification of any such license, certificate, authority or permit which
if decided adversely to the Seller would, singly or in the aggregate,
materially and adversely affect the conduct of its business, operations
or financial condition.
M. At the time of execution and delivery of the Sale and Servicing
Agreement, the Seller will: (i) have good title to the Initial Home
Equity Loans conveyed by the Seller, free and clear of any lien,
mortgage, pledge, charge, encumbrance, adverse claim or other security
interest (collectively, "Liens"); (ii) not have assigned to any person
any of its right or title in the Initial Home Equity Loans, in the Sale
and Servicing Agreement and (iii) have the power and authority to sell
its interest in the Home Equity Loans to the Depositor. Upon execution
and delivery of the Sale and Servicing Agreement by the Depositor, the
Depositor will have acquired beneficial ownership of all of the Seller's
right, title and interest in and to the Initial Home Equity Loans.
N. At the time of execution and delivery of any Subsequent Transfer
Agreement, the Seller will: (i) have good title to the Subsequent Home
Equity Loans conveyed by the Seller, free and clear of any Liens; (ii)
not have assigned to any person any of its right or title in the
Subsequent Home Equity Loans or in the Sale and Servicing Agreement; and
(iii) have the power and authority to sell the Subsequent Home Equity
Loans to the Issuer. Upon execution and delivery of the Subsequent
Transfer Agreement by the Issuer, the Issuer will acquire beneficial
ownership of all of the Seller's right, title and interest in and to the
Subsequent Home Equity Loans.
O. As of the Cut-Off Date, each of the Initial Home Equity Loans will
meet the eligibility criteria described in the Prospectus and will
conform to the descriptions thereof contained in the Prospectus.
P. As of any Subsequent Transfer Date, each of the Subsequent Home
Equity Loans will meet the eligibility criteria described in the
Prospectus and will conform to the descriptions thereof contained in the
Prospectus.
Q. [RESERVED]
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R. At the Closing Date, the Notes and each Agreement will conform in all
material respects to the descriptions thereof contained in the
Prospectus Supplement.
S. [RESERVED]
T. [RESERVED]
U. At the Closing Date, each of the representations and warranties of
the Seller set forth in each Agreement to which it is a party will be
true and correct in all material respects.
Any certificate signed by an officer of the Seller and delivered to the
Depositor or an Underwriter or their respective counsel in connection with an
offering of the Notes shall be deemed, and shall state that it is, a
representation and warranty as to the matters covered thereby to each person to
whom the representations and warranties in this Section 1A are made.
SECTION 2 Purchase and Sale. The commitment of the Underwriters to
purchase the Notes pursuant to this Agreement shall be deemed to have been made
on the basis of the representations and warranties herein contained and shall be
subject to the terms and conditions herein set forth. The Depositor agrees to
instruct the Issuer to issue the Notes and agrees to sell to each Underwriter,
and each Underwriter agrees (except as provided in Sections 10 and 11 hereof)
severally and not jointly to purchase from the Depositor the aggregate initial
principal amounts of the Notes set forth opposite their names on Schedule A, at
the purchase price or prices set forth in Schedule A. The Underwriters may offer
the Notes to certain dealers at such price less a concession not in excess of
the amount set forth in Schedule A. The Underwriters may allow and such dealers
may reallow a discount to certain dealers not in excess of the amount set forth
in Schedule A.
SECTION 3 Delivery and Payment. Delivery of and payment for the Notes to
be purchased by the Underwriters shall be made at the offices of Stroock &
Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038, or at such other
place as shall be agreed upon by the Representative and the Depositor at 10:00
A.M. New York City time on March 31, 1998, or at such other time or date as
shall be agreed upon in writing by the Representative and the Depositor (such
date being referred to as the "Closing Date"). Payment shall be made to the
Depositor by wire transfer of same day funds payable to the account of the
Depositor. Delivery of the Notes shall be made to the Representative for the
accounts of the applicable Underwriters against payment of the purchase price
thereof. The Notes shall be in such authorized denominations and registered in
such names as the Representative may request in writing at least two business
days prior to the Closing Date. The Notes will be made available for examination
by the Representative no later than 2:00 P.M. New York City time on the first
business day prior to the Closing Date.
SECTION 4 Offering by the Underwriters. It is understood that, subject
to the terms and conditions hereof, the Underwriters propose to offer the Notes
for sale to the public as set
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forth in the Prospectus.
SECTION 5 Covenants of the Depositor and IMC. The Depositor and, with
respect to the provisions of Section I and J. below, IMC each agrees as follows:
A. To prepare the Prospectus in a form approved by the Underwriters and
to file such Prospectus pursuant to Rule 424(b) under the Securities Act
not later than the Commission's close of business on the second business
day following the availability of the Prospectus to the Underwriters to
make no further amendment or any supplement to the Registration
Statement or to the Prospectus prior to the Closing Date except as
permitted herein; to advise the Underwriters, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective prior to the Closing Date
or any supplement to the Prospectus or any amended Prospectus has been
filed prior to the Closing Date and to furnish the Underwriters with
copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Depositor with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of the Prospectus and, for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Notes; to promptly advise the Underwriters of its receipt of
notice of the issuance by the Commission of any stop order or of: (i)
any order preventing or suspending the use of the Prospectus; (ii) the
suspension of the qualification of the Notes for offering or sale in any
jurisdiction; (iii) the initiation of or threat of any proceeding for
any such purpose; (iv) any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information. In the event of the issuance of any stop order
or of any order preventing or suspending the use of the Prospectus or
suspending any such qualification, the Depositor promptly shall use its
best efforts to obtain the withdrawal of such order by the Commission.
B. To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and of each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith.
C. To deliver promptly to the Underwriters such number of the following
documents as the Underwriters shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case including exhibits);
(ii) the Prospectus and any amended or supplemented Prospectus; and
(iii) any document incorporated by reference in the Prospectus
(including exhibits thereto). If the delivery of a prospectus is
required at any time prior to the expiration of nine months after the
Effective Time in connection with the offering or sale of the Notes, and
if at such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary in order
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to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary during such same
period to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus in
order to comply with the Securities Act or the Exchange Act, the
Depositor shall notify the Underwriters and, upon the Underwriters'
request, shall file such document and prepare and furnish without charge
to the Underwriters and to any dealer in securities as many copies as
the Underwriters may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which corrects such
statement or omission or effects such compliance, and in case the
Underwriters are required to deliver a Prospectus in connection with
sales of any of the Notes at any time nine months or more after the
Effective Time, upon the request of the Underwriters but at their
expense, the Depositor shall prepare and deliver to the Underwriters as
many copies as the Underwriters may reasonably request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the
Securities Act.
D. To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Depositor or the
Underwriters, be required by the Securities Act, the Trust Indenture Act
or requested by the Commission.
E. The Depositor will cause any Computational Materials (as defined
below) with respect to the Offered Certificates which are delivered by
any Underwriter to the Depositor to be filed with the Commission on a
Current Report on Form 8-K (the "Form 8-K -- Computational Materials")
at or before the time of filing of the Prospectus pursuant to Rule
424(b) under the 1933 Act; provided, however, that the Depositor shall
have no obligation to file any materials which, in the reasonable
determination of the Depositor after consultation with such Underwriter,
(i) are not required to be filed pursuant to the Kidder Letters (as
defined below) or (ii) contain any erroneous information or untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; it being understood, however, that the Depositor shall have
no obligation to review or pass upon the accuracy or adequacy of, or to
correct, any Computational Materials provided by any Underwriter to the
Depositor as aforesaid. For purposes hereof, as to each Underwriter, the
term "Computational Materials" shall mean those materials delivered by
an Underwriter to the Depositor within the meaning of the no-action
letter dated May 20, 1994 issued by the Division of Corporation Finance
of the Commission to Kidder, Peabody Acceptance Corporation I and
certain affiliates and the no-action letters dated May 27, 1994 and
February 17, 1995, each issued by the Division of Corporation Finance of
the Commission to the Public Securities Association (all three of such
letters, the "Kidder Letters") for which the filing of such material is
a condition of the relief granted in such letters.
F. To furnish the Underwriters and counsel for the Underwriters, prior
to filing
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with the Commission, and to obtain the consent of the Underwriters for
the filing of the following documents relating to the Notes: (i)
amendment to the Registration Statement or supplement to the Prospectus,
or document incorporated by reference in the Prospectus, or (ii)
Prospectus pursuant to Rule 424 of the Rules and Regulations.
G. To make generally available to holders of the Notes as soon as
practicable, but in any event not later than 90 days after the close of
the period covered thereby, a statement of earnings of the Issuer (which
need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the
Depositor, Rule 158) and covering a period of at least twelve
consecutive months beginning not later than the first day of the first
fiscal quarter following the Closing Date.
H. To use its best efforts, in cooperation with the Underwriters, to
qualify the Notes for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States or
elsewhere as the Underwriters may designate, and maintain or cause to be
maintained such qualifications in effect for as long as may be required
for the distribution of the Notes. The Depositor will file or cause the
filing of such statements and reports as may be required by the laws of
each jurisdiction in which the Notes have been so qualified.
I. Unless the Underwriters shall otherwise have given their written
consent, no pass-through certificates or debt instruments backed by home
equity loans or other similar securities representing interest in or
secured by other mortgage-related assets originated or owned by IMC or
an affiliate shall be publicly offered, sold nor shall IMC enter into
any contractual arrangements that contemplate the public offering or
sale of such securities for a period of seven (7) business days
following the commencement of the offering of the Notes to the public.
J. So long as the Notes shall be outstanding and IMC shall be the
Servicer, IMC shall cause the Indenture Trustee, pursuant to the Sale
and Servicing Agreement, to deliver to the Underwriters as soon as such
statements are furnished to the Owners: (i) the annual statement as to
compliance delivered to the Indenture Trustee pursuant to Section 4.16
of the Sale and Servicing Agreement; (ii) the annual statement of a firm
of independent public accountants furnished to the Indenture Trustee
pursuant to Section 4.17 of the Sale and Servicing Agreement; (iii) the
monthly servicing report furnished to the Trustee pursuant to Section
3.08 of the Sale and Servicing Agreement; and (iv) the monthly reports
furnished to the Noteholders pursuant to Section 3.09 of the Indenture.
K. To apply the net proceeds from the sale of the Notes in the manner
set forth in the Prospectus.
SECTION 6 Conditions to the Underwriters' Obligations. The obligations
of the Underwriters to purchase the Notes pursuant to this Agreement are subject
to: (i) the accuracy
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on and as of the Closing Date of the representations and warranties on the part
of the Depositor and IMC herein contained; (ii) the performance by the Depositor
and IMC of all of its respective obligations hereunder; and (iii) the following
conditions as of the Closing Date:
A. The Underwriters shall have received confirmation of the
effectiveness of the Registration Statement. No stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission. Any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus shall have been complied with.
B. The Underwriters shall not have discovered and disclosed to the
Depositor on or prior to the Closing Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact or omits to state a fact which,
in the opinion of Stroock & Stroock & Lavan LLP, counsel for the
Underwriters, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
C. All corporate proceedings and other legal matters relating to the
authorization, form and validity of the Agreements, the Issuer, the
Notes, the Registration Statement and the Prospectus, and all other
legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to the
Underwriters and their counsel, and the Depositor and IMC shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
D. Stroock & Stroock & Lavan LLP shall have furnished to the
Underwriters their written opinion, as counsel to the Depositor,
addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that:
1. The conditions to the use by the Depositor of a registration
statement on Form S-3 under the Securities Act, as set forth in
the General Instructions to Form S-3, have been satisfied with
respect to the Registration Statement and the Prospectus.
2. The Registration Statement and any amendments thereto have
become effective under the Securities Act; to the best of such
counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and not withdrawn
and no proceedings for that purpose have been instituted or
threatened and not terminated; and the Registration Statement,
the Prospectus and each amendment or supplement thereto, as of
their respective effective or issue dates (other than the
financial and statistical information contained therein, as to
which such counsel need express no opinion), complied
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<PAGE>
as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations
thereunder.
3. To the best of such counsel's knowledge, there are no material
contracts, indentures or other documents of a character required
to be described or referred to in the Registration Statement or
the Prospectus or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto.
4. The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended and complies with the
requirements of the Trust Indenture Act and the applicable Rules
and Regulations.
5. Neither the Depositor nor the Issuer is an "investment
company" or under the "control" of an "investment company" as
such terms are defined in the 1940 Act.
6. The Notes, when duly and validly executed, authenticated and
delivered in accordance with the Indenture and delivered to the
Underwriters and paid for in accordance with the Underwriting
Agreement, will be entitled to the benefits of the Indenture.
7. The statements set forth in the Basic Prospectus under the
captions "Description of The Securities," "Servicing of Loans"
and "The Agreements", as modified by the statements" and in the
Prospectus Supplement under the captions "Description of the
Notes" and "Administration," to the extent such statements
purport to summarize certain provisions of the Notes or of the
Agreements, are fair and accurate in all material respects.
8. The statements set forth in the Prospectus and the Prospectus
Supplement under the captions "ERISA Considerations" and "Federal
Income Tax Consequences" to the extent that they relate to the
Notes and constitute matters of federal law, provide a fair and
accurate summary of such law or conclusions.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the closing Date, in
form and substance satisfactory to the Underwriters to the effect that
no facts have come to the attention of such counsel which lead them to
believe that: (a) the Registration Statement, at the time such
Registration Statement became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (except as to financial or statistical data contained in the
Registration Statement); (b) the Prospectus, as of its date and as of
the Closing Date, contained or contains an untrue statement of a
material fact or omitted or
15
<PAGE>
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (c) any
document incorporated by reference in the Prospectus or any further
amendment or supplement to any such incorporated document made by the
Depositor prior to the Closing Date contained, as of the time it became
effective or was filed with the Commission, as the case may be, an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
E. Arter & Hadden shall have furnished to the Underwriters their written
opinion, as counsel to the Seller, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
1. The Agreements conform in all material respects to the
descriptions thereof contained in the Prospectus Supplement.
2. For federal income tax purposes, the Notes will be treated as
debt obligations of the Issuer, and the Issuer will not be
characterized as an association (or publicly traded partnership)
taxable as a corporation.
3. The Notes will, when issued, conform to the descriptions
thereof contained in the Prospectus Supplement.
4. The execution of the Sale and Servicing Agreement is
sufficient to convey all of IMC's right, title and interest in
the Initial Home Equity Loans to the Depositor and following the
consummation of the transaction contemplated by Section 2 of the
Sale and Servicing Agreement, the transfer of the Initial Home
Equity Loans by IMC to the Depositor is a sale thereof.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the closing Date, in
form and substance satisfactory to the Underwriters to the effect that
no facts have come to the attention of such counsel which lead them to
believe that the Prospectus, as of its date and as of the Closing Date,
contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
F. The Underwriters shall have received the favorable opinion, dated the
Closing Date, of Arter & Hadden, special counsel to the Seller,
addressed to the Depositor and satisfactory to Standard & Poor's, a
division of the McGraw-Hill Companies, Moody's Investors Service, Inc.
and the Underwriters, with respect to certain matters relating to the
transfer of the Initial Home Equity Loans to the Depositor and such
counsel shall
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have consented to the reliance on such opinion by Standard & Poor's, a
division of the McGraw-Hill Companies, Moody's Investors Service, Inc.
and the Underwriters as though such opinion had been addressed to each
such party.
G. The Underwriters shall have received the favorable opinion, dated the
Closing Date, of Stroock & Stroock & Lavan LLP, special counsel to the
Depositor, addressed to the Depositor and satisfactory to Standard &
Poor's, a division of the McGraw-Hill Companies, Moody's Investors
Service, Inc. and the Underwriters, with respect to certain matters
relating to the transfer of the Initial Home Equity Loans from the
Depositor to the Issuer, and such counsel shall have consented to the
reliance on such opinion by Standard & Poor's, a division of the
McGraw-Hill Companies, Moody's Investors Service, Inc. and the
Underwriters as though such opinion had been addressed to each such
party.
H. Mitchell W. Legler, P.A., special counsel for IMC, in IMC's capacity
as both Seller and Servicer under the Sale and Servicing Agreement,
shall have furnished to the Underwriters their written opinion,
addressed to the Underwriters and the Depositor and dated the Closing
Date, in form and substance satisfactory to the Underwriters, to the
effect that:
1. IMC has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Florida and has duly authorized all actions contemplated hereby.
2. IMC has full power and authority to serve in the capacity of
seller and servicer of the Home Equity Loans as contemplated in
the Sale and Servicing Agreement and to transfer the Home Equity
Loans to the Depositor as contemplated in the Sale and Servicing
Agreement and has the requisite power and authority and legal
right to own the Residual Interest.
3. This Agreement and the Sale and Servicing Agreement have been
duly authorized, executed and delivered by IMC and, assuming the
due authorization, execution and delivery of such agreements by
the other parties thereto, constitute the legal, valid and
binding agreements of IMC, enforceable against IMC in accordance
with their terms, subject as to enforceability to (x) bankruptcy,
insolvency, reorganization, moratorium, receivership or other
similar laws now or hereafter in effect relating to creditors'
rights generally and (y) the qualification that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the
discretion, with respect to such remedies, of the court before
which any proceedings with respect thereto may be brought.
4. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
having jurisdiction over
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IMC is required for the consummation by IMC of the transactions
contemplated by the Sale and Servicing Agreement, except such
consents, approvals, authorizations, registrations and
qualifications as have been obtained.
5. Neither the transfer of the Home Equity Loans by IMC to the
Depositor, nor the execution, delivery or performance by IMC of
the Sale and Servicing Agreement and the transactions
contemplated thereby (A) conflict with or result in a breach of,
or constitute a default under, (i) any term or provision of the
formation documents of IMC, as applicable; (ii) any term or
provision of any material agreement, deed of trust, mortgage loan
agreement, contract, instrument or indenture, or other agreement
to which IMC is a party or is bound or to which any of the
property or assets of IMC or any of its subsidiaries is subject;
(iii) to the best of such firm's knowledge without independent
investigation any order, judgment, writ, injunction or decree of
any court or governmental authority having jurisdiction over IMC;
or (iv) any law, rule or regulations applicable to IMC; or (B) to
the best of such firm's knowledge without independent
investigation, results in the creation or imposition of any lien,
charge or encumbrance upon the Trust Estate or upon the Notes.
6. There are, to the best of such counsel's knowledge without
independent investigation, no actions, proceedings or
investigations pending with respect to which IMC has received
service of process or threatened against IMC before any court,
administrative agency or other tribunal (a) asserting the
invalidity of any of the Agreements or the Notes, (b) seeking to
prevent the consummation of any of the transactions contemplated
by the Agreements or (c) which would materially and adversely
affect the performance by IMC of its obligations under, or the
validity or enforceability of, the Sale and Servicing Agreement
or this Agreement.
I. The documents listed in Schedule B hereto shall have been executed
and delivered and the Underwriters shall be entitled to rely on any such
opinions as though the same were addressed to the Underwriters.
J. The Underwriters shall have received an opinion of Richards, Layton &
Finger, counsel to the Owner Trustee, dated the Closing Date, in form
and substance satisfactory to the Underwriters and counsel for the
Underwriters, to the effect that:
1. The Owner Trustee is a Delaware banking corporation duly
incorporated and validly existing under the laws of the State of
Delaware.
2. The Owner Trustee has the full power and authority to accept
the office of owner trustee under the Trust Agreement and to
enter into and perform its obligations under the Trust Agreement
and the transactions
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contemplated thereby.
3. The execution and delivery of the Trust Agreement by the Owner
Trustee and the performance by the Owner Trustee of its
obligations under the Trust Agreement have been duly authorized
by all necessary action of the Owner Trustee and the Trust
Agreement has been duly executed and delivered by the Owner
Trustee.
4. The Trust Agreement constitutes valid and binding obligations
of the Owner Trustee enforceable against the Owner Trustee in
accordance with its terms, except as the enforceability thereof
may be (a) limited by bankruptcy, insolvency, reorganization,
moratorium, liquidation or other similar laws affecting the
rights of creditors generally, and (b) subject to general
principals of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
5. The execution and delivery by the Owner Trustee of the Trust
Agreement and the consummation of the transactions contemplated
thereby do not require any consent, approval or authorization of,
or any registration or filing with, any applicable governmental
authority of the State of Delaware which has not been obtained or
done.
6. Neither the consummation by the Owner Trustee of the
transactions contemplated in the Trust Agreement, nor the
fulfillment of the terms thereof by the Owner Trustee will
conflict with, result in a breach or violation of, or constitute
a default under the Articles of Association, By-Laws or other
organizational documents of the Owner Trustee
K. The Underwriters shall have received an opinion of Richards, Layton &
Finger, special Delaware counsel for the Issuer dated the Closing Date,
in form and substance satisfactory to the Underwriters and counsel for
the Underwriters, to the effect that:
1. The Trust Agreement is the legal, valid and binding agreement
of the Owner Trustee, and the Depositor, enforceable against the
Owner Trustee, and the Depositor in accordance with its terms
subject to (i) applicable bankruptcy, insolvency, moratorium,
receivership, reorganization, fraudulent conveyance and similar
laws relating to and affecting the rights and remedies of
creditors generally, (ii) principles of equity (regardless of
whether considered and applied in a proceeding in equity or at
law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution.
2. The Certificate of Trust has been duly filed with the
Secretary of
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State of the State of Delaware. The Issuer as been duly formed
and is validly existing as a business trust under the Delaware
Business Trust Act.
3. The Issuer has the power and authority under the Trust
Agreement and the Delaware Business Trust Act to execute, deliver
and perform its obligations under the Trust Agreement, the
Indenture, the Sale and Servicing Agreement, the Notes and the
Residual Interests and to issue the Securities.
4. The Issuer has duly authorized and executed the Trust
Agreement, the Indenture, the Sale and Servicing Agreement, the
Notes and the Residual Interests.
5. The Trust has the power under the Trust Agreement and the
Delaware Business Trust Act to pledge the Trust Estate to the
Indenture Trustee as security for the Notes.
6. The Notes have been executed, authorized and delivered by the
Owner Trustee upon the order of the Depositor in accordance with
the Trust Agreement and the Indenture.
7. To the extent that Article 9 of the Uniform Commercial Code as
in effect in the State of Delaware (the "Delaware UCC") is
applicable (without regard to conflicts of laws principles), and
assuming that the security interest created by the Indenture in
the Collateral has been duly created and has attached, upon the
filing of a UCC-1 financing statement with the Secretary of State
of the State of Delaware, the Indenture Trustee will have a
perfected security interest in such Collateral and the proceeds
thereof; and such security interest will be prior to any other
security interest granted by the Trust that is perfected solely
by the filing of financing statements under the Delaware UCC,
excluding purchase money security interests under ss.9-312 of the
Delaware UCC and temporarily perfected security interests in
proceeds under ss.9-306 of the Delaware UCC.
8. No re-filing or other action is necessary under the Delaware
UCC in the State of Delaware in order to maintain the perfection
of the security interest referenced above except for the filing
of continuation statements at five-year intervals.
9. Under ss.3805(b) of the Delaware Business Trust Act, no
creditor of any holder of the Residual Interest shall have any
right to obtain possession of, or otherwise exercise legal or
equitable remedies with
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respect to, the property of the Trust except in accordance with
the terms of the Trust Agreement subject to (i) applicable
bankruptcy, insolvency, moratorium, receivership, reorganization,
fraudulent conveyance and similar laws relating to and affecting
the rights and remedies of creditors generally, (ii) principles
of equity (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
10. Under ss.3805(c) of the Delaware Business Trust Act, and
assuming that the Sale and Servicing Agreement conveys good title
to the Home Equity Loans to the Issuer as a true sale and not as
a security arrangement, the Issuer, rather than the holders of
the Residual Interest, is the owner of the Home Equity Loans
subject to (i) applicable bankruptcy, insolvency, moratorium,
receivership, reorganization, fraudulent conveyance and similar
laws relating to and affecting the rights and remedies of
creditors generally, (ii) principles of equity (regardless of
whether considered and applied in a proceeding in equity or at
law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution.
11. The execution and delivery by the Owner Trustee of the Trust
Agreement and, on behalf of the Issuer, of the Indenture and the
Sale and Servicing Agreement do not require any consent, approval
or authorization of, or any registration or filing with, any
governmental authority of the State of Delaware, except for the
filing of the Certificate of Trust with the Secretary of State.
12. Neither the consummation by the Owner Trustee of the
transactions contemplated by the Trust Agreement or, on behalf of
the Trust, the transactions contemplated by the Trust Agreement,
Indenture and the Sale and Servicing Agreement nor the
fulfillment of the terms thereof by the Owner Trustee will
conflict with or result in a breach or violation of any law of
the State of Delaware.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriters. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the Federal law of the United States of America and the
laws of the State of Delaware.
L. The Underwriters shall have received the favorable opinion dated the
Closing Date, from Kutak Rock, counsel to the Note Insurer, in form and
scope satisfactory to counsel for the Underwriters, substantially to the
effect that:
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1. The Note Insurer is a monoline insurance company duly
incorporated, validly existing, and in good standing under the
laws of the State of New York. The Note Insurer is validly
licensed and authorized to issue the Insurance Policy and perform
its obligations under the Insurance Agreement in accordance with
the terms thereof, under the laws of the State of New York.
2. The Note Insurer has the corporate power to execute and
deliver, and to take all action required of it under the
Insurance Agreement and the Insurance Policy.
3. The execution, delivery and performance by the Note Insurer of
the Insurance Policy, the Indemnification Agreement and Insurance
Agreement does not require the consent or approval of, the giving
of notice to, the prior registration with, or the taking of any
other action in respect of any state or other governmental agency
or authority which has not previously been obtained
or effected.
4. The Insurance Policy, the Indemnification Agreement and
Insurance Agreement have been duly authorized, executed and
delivered by the Note Insurer and constitute the legal, valid and
binding agreement of the Note Insurer, enforceable against the
Note Insurer in accordance with its terms subject, as to
enforcement, to (x) bankruptcy, reorganization, insolvency,
moratorium and other similar laws relating to or affecting the
enforcement of creditors' rights generally, including, without
limitation, laws relating to fraudulent transfers or conveyances,
preferential transfers and equitable subordination, presently or
from time to time in effect and general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law), as such laws may be applied in
any such proceeding with respect to the Note Insurer and (y) the
qualification that the remedy of specific performance and other
forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceedings
with respect thereto may be brought.
5. To the extent the Insurance Policy constitutes a security
within the meaning of Section 2(1) of the Securities Act, it is a
security that is exempt from the registration requirements of the
Act.
6. The information set forth under the caption, "The Note
Insurer" in the Prospectus Supplement, insofar as such
information constitutes a description of the Insurance Policy,
accurately summarizes such Insurance Policy.
M. The Underwriters shall have received the favorable opinion of counsel
to the Indenture Trustee, dated the Closing Date, addressed to the
Underwriters and in form
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and scope satisfactory to counsel to the Underwriters, to the effect
that:
1. The Indenture Trustee is a banking corporation duly
incorporated and validly existing under the laws of the State of
New York.
2. The Indenture Trustee has the full corporate trust power to
execute, deliver and perform its obligations under the Indenture
3. The execution and delivery by the Indenture Trustee of the
Indenture and the performance by the Indenture Trustee of its
obligations under the Indenture have been duly authorized by all
necessary corporate action of the Indenture Trustee.
4. The Indenture is a valid and legally binding obligation of the
Indenture Trustee enforceable against the Trustee.
5. The execution and delivery by the Indenture Trustee of the
Indenture does not (a) violate the Organization Certificate of
the Trustee or the Bylaws of the Indenture Trustee, (b) to such
counsel's knowledge, violate any judgment, decree or order of any
New York or United States federal court or other New York or
United States federal governmental authority by which the
Indenture Trustee is bound or (c) assuming the non-existence of
any judgment, decree or order of any court or other governmental
authority that would be violated by such execution and delivery,
violate any New York or United States federal statute, rule or
regulation or require any consent, approval or authorization of
any New York or United States federal court or other New York or
United States federal governmental authority.
6. The Notes have been duly authenticated and delivered by the
Indenture Trustee.
7. If the Indenture Trustee were acting as Servicer under Sale
and Servicing Agreement as of the date of such opinion, the
Indenture Trustee would have the full corporate trust power to
perform the obligations of the Servicer under the Sale and
Servicing Agreement; and
8. To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or
affecting the Indenture Trustee before or by any court,
arbitrator, administrative agency or other governmental authority
which, if decided adversely to the Indenture Trustee, would
materially and adversely affect the ability of the Indenture
Trustee to carry out the transactions contemplated in the
Indenture.
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N. The Underwriters shall have received the favorable opinion or
opinions, dated the date of the Closing Date, of counsel for the
Underwriters, with respect to the issue and sale of the Notes, the
Registration Statement, this Agreement, the Prospectus and such other
related matters as the Underwriters may reasonably require.
O. IMC shall have furnished to the Underwriters a certificate, dated the
Closing Date and signed by the Chairman of the Board, the President or a
Vice President of IMC, stating as it relates to such entity:
1. The representations and warranties made by such entity in the
Agreements to which it is a party are true and correct as of the
Closing Date; and such entity has complied with all agreements
contained herein which are to have been complied with on or prior
to the Closing Date.
2. The Seller Information is true and accurate in all material
respects and nothing has come to his or her attention that would
lead such officer to believe that the Seller Information includes
any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein not
misleading.
3. There has been no amendment or other document filed affecting
the Certificate of Incorporation or bylaws of such entity since
_______10, 199_ and no such amendment has been authorized. No
event has occurred since March 1, 1998 which has affected the
good standing of such entity under the laws of the State of
Florida.
4. There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings,
business or operations of such entity from December 31, 1998.
P. The Indenture Trustee shall have furnished to the Underwriters a
certificate of the Indenture Trustee, signed by one or more duly
authorized officers of the Indenture Trustee, dated the Closing Date, as
to the due authorization, execution and delivery of the Indenture by the
Indenture Trustee and the acceptance by the Indenture Trustee of the
trusts created thereby and the due authentication and delivery of the
Notes by the Indenture Trustee thereunder and such other matters as the
Representative shall reasonably request.
Q. The Notes shall have been rated in the respective rating categories
and by the nationally recognized statistical rating organizations
described in the Prospectus Supplement under "Ratings."
R. IMC shall have furnished to the Underwriters such further
information,
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certificates and documents as the Underwriters may reasonably have
requested not less than three full business days prior to the Closing
Date.
S. Prior to the Closing Date, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may reasonably
require for the purpose of enabling them to pass upon the issuance and
sale of the Notes as herein contemplated and related proceedings or in
order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the
conditions, herein contained, and all proceedings taken by the Depositor
in connection with the issuance and sale of the Notes as herein
contemplated shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.
T. Subsequent to the execution and delivery of this Agreement none of
the following shall have occurred: (i) trading in securities generally
on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended or minimum prices
shall have been established on either of such exchanges or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction; (ii) a banking moratorium
shall have been declared by federal or state authorities; (iii) the
United States shall have become engaged in hostilities, there shall have
been an escalation of hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the
United States; or (iv) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets of the
United States shall be such) as to make it in each of the instances set
forth in clauses (i), (ii), (iii) and (iv) herein, in the reasonable
judgment of the Underwriters, impractical or inadvisable to proceed with
the public offering or delivery of the Notes on the terms and in the
manner contemplated in the Prospectus.
U. The Underwriters shall have received from Coopers & Lybrand LLP and
Deloitte & Touche LLP, certified public accountants, a letter dated the
date of the Prospectus Supplement and a letter dated the date hereof and
satisfactory in form and substance to the Underwriters and their
counsel, to the effect that they have performed certain specified
procedures, all of which have been agreed to by the Underwriters, as a
result of which they determined that certain information of an
accounting, financial or statistical nature set forth in the Prospectus
Supplement on the cover page thereof and under the captions "Summary of
Terms - The Home Equity Loans", "Risk Factors Risk of Home Equity Loan
Coupon Rates Reducing the Note Rate," "The Seller and Servicer -
General", "The Seller and Servicer - Delinquency, Loan Loss and
Foreclosure Information" and "The Home Equity Loan Pool - General,"
agrees with the records of IMC excluding any questions of legal
interpretation.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the
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Depositor and IMC at any time at or prior to the Closing Date, and such
termination shall be without liability of any party to any other party except as
provided in Section 7.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to the Underwriters and their counsel.
SECTION 7 Payment of Expenses. IMC agrees to pay: (a) the costs incident
to the authorization, issuance, sale and delivery of the Notes and any taxes
payable in connection therewith; (b) the costs incident to the preparation,
printing and filing under the Securities Act of any amendments and exhibits to
the Registration Statement in connection with the transactions contemplated
hereby; (c) the costs of distributing the Registration Statement as originally
filed and each amendment thereto and any post-effective amendments thereof
(including, in each case, exhibits), the Prospectus and any amendment or
supplement to the Prospectus or any document incorporated by reference therein,
all as provided in this Agreement; (d) the costs of reproducing and distributing
this Agreement; (e) the fees and expenses of qualifying the Notes under the
securities laws of the several jurisdictions designated by the Underwriters as
provided in Section 5(H) hereof and of preparing, printing and distributing a
Blue Sky Memorandum and a Legal Investment Survey (including related fees and
expenses of counsel to the Underwriters); (f) any fees charged by securities
rating services for rating the Notes; (g) the costs of the accountant's letters
referred to in Section 6(S) hereof; and (h) all other costs and expenses
incident to the performance of the obligations of IMC (including costs and
expenses of its counsel); provided that, except as provided in this Section 7,
the Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Notes which they may sell
and the expenses of advertising any offering of the Notes made by the
Underwriters, and the Underwriters shall pay the cost of any accountant's
letters relating to any Computational Materials (as defined in Section 5(E)
hereof).
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 6 or Section 11, IMC shall cause the Underwriters to
be reimbursed for all reasonable out-of-pocket expenses, including fees and
disbursements of Stroock & Stroock & Lavan LLP, counsel for the Underwriters.
SECTION 8 Indemnification and Contribution. A. The Depositor agrees to
indemnify and hold harmless the Seller, each Underwriter and each person, if
any, who controls the Seller or such Underwriter within the meaning of Section
15 of the Securities Act from and against any and all loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of the Notes), to which the Seller, such Underwriter or any
such controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment thereof
or supplement thereto, (ii) the omission or alleged omission to state therein a
material fact
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<PAGE>
required to be stated therein or necessary to make the statements therein not
misleading, (iii) any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus, or any amendment thereof or supplement
thereto, or (iv) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading and
shall reimburse the Seller, such Underwriter and each such controlling person
promptly upon demand for any legal or other expenses reasonably incurred by the
Seller, such Underwriter or such controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Depositor shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in the Prospectus, or any amendment thereof or supplement thereto, or the
Registration Statement, or any amendment thereof or supplement thereto, in
reliance upon and in conformity with (x) the Seller Information or Future Seller
Information or (y) written information furnished to the Depositor by or on
behalf of such Underwriter specifically for inclusion therein. The foregoing
indemnity agreement is in addition to any liability which the Depositor may
otherwise have to the Seller, any Underwriter or any controlling person of the
Seller or any such Underwriter. The only information furnished by the
Underwriters or on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement or the Prospectus is described in
Section 8(I) hereof.
B. IMC agrees to indemnify and hold harmless the Depositor, each of its
directors, each of its officers who signed the Registration Statement, each
Underwriter and each person, if any, who controls the Depositor or such
Underwriter within the meaning of Section 15 of the Securities Act against any
and all loss, claim, damage or liability, or any action in respect thereof, to
which the Depositor, any Underwriter or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereof or
supplement thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) any untrue statement or alleged untrue statement
of a material fact contained in the Prospectus, or any amendment thereof or
supplement thereto, or (iv) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with the Seller Information or Future Seller Information,
and shall reimburse the Depositor, each Underwriter and any such director,
officer or controlling person for any legal or other expenses reasonably
incurred by the Depositor, any Underwriter 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 IMC may otherwise have to the Depositor, any
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<PAGE>
Underwriter or any such director, officer or controlling person. The Seller
Information and Future Seller Information is described in Section 8(I) hereof.
C. Each Underwriter severally agrees to indemnify and hold harmless the
Depositor, each of its directors, each of its officers who signed the
Registration Statement, IMC and each person, if any, who controls the Depositor
or IMC within the meaning of Section 15 of the Securities Act against any and
all loss, claim, damage or liability, or any action in respect thereof, to which
the Depositor, IMC or any such director, officer or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereof or supplement thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus, or any amendment thereof or supplement thereto, or (iv) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Depositor by or on behalf of such Underwriter
specifically for inclusion therein, and shall reimburse the Depositor, IMC and
any such director, officer or controlling person for any legal or other expenses
reasonably incurred by the Depositor, IMC or any director, officer or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Depositor, IMC or any
such director, officer or controlling person. The only information furnished by
the Underwriters or on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement or the Prospectus is described in
Section 8(I) hereof.
D. Promptly after receipt by any indemnified party under this Section 8
of notice of any claim or the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 8, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
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party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, except to the extent
provided in the next following paragraph, the indemnifying party shall not be
liable to the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to one local counsel per jurisdiction) at any time for all such
indemnified parties, which firm shall be designated in writing by (i) the
related Underwriter, if the indemnified parties under this Section 8 consist of
one or more Underwriters or any of its or their controlling persons, (ii) the
Depositor, if the indemnified parties under this Section 8 consist of the
Depositor or any of the Depositor's directors, officers or controlling persons
or (iii) by IMC, if the indemnified parties under this Section 8 consist of IMC
or any of its controlling persons.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 8A., 8B., and 8C., shall use its best efforts to cooperate
with the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
Notwithstanding the foregoing paragraph, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such
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request prior to the date of such settlement.
E. Each Underwriter agrees to provide the Depositor no later than two
Business Days prior to the day on which the Prospectus Supplement is required to
be filed pursuant to Rule 424 with a copy of any Computational Materials (as
defined in Section 5(E) hereof) produced by such Underwriter for filing with the
Commission on Form 8-K.
F. Each Underwriter severally agrees, assuming all Seller Information is
accurate and complete in all material respects, to indemnify and hold harmless
the Depositor, each of the Depositor's officers and directors and each person
who controls the Depositor within the meaning of Section 15 of the Securities
Act against any and all losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of a material fact
contained in the Computational Materials provided by such Underwriter and agrees
to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by him, her or it in connection with investigating or
defending or preparing to defend any such loss, claim, damage, liability or
action as such expenses are incurred. The obligations of an Underwriter under
this Section 8F. shall be in addition to any liability which such Underwriter
may otherwise have.
The procedures set forth in Section 8D. shall be equally applicable to
this Section 8F.
G. If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8A., 8B., 8C. or 8F. 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 IMC, the Depositor and the related Underwriter, respectively, from
the offering of the related Notes 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 8D, 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 IMC, the Depositor and the related
Underwriter, respectively, 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 IMC, the Depositor and an Underwriter shall be
deemed to be in such proportion as the total net proceeds from the offering
(before deducting expenses) received by IMC, or retained the Depositor, as
applicable, bear to the total underwriting discounts and commissions as set
forth on the cover page of the Prospectus Supplement received by such
Underwriter.
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The Depositor, IMC and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 8G. 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
8G. shall be deemed to include, for purposes of this Section 8G, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
For purposes of this Section 8, in no case shall any Underwriter be
responsible for any amount in excess of the amount of the underwriting discounts
and commissions received by such Underwriter in connection with its purchase of
the Notes. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
H. For purposes of this Section 8, as to each Underwriter the term
"Computational Materials" means such portion, if any, of the information
delivered to the Depositor by such Underwriter pursuant to Section 8(D) for
filing with the Commission on Form 8-K as:
(i) is not contained in the Prospectus without taking into account
information incorporated therein by reference through a Form 8-K --
Computational Materials; and
(ii) does not constitute Seller Information.
I. Each Underwriter confirms that the information regarding such
Underwriter set forth in the last paragraph on the cover page of the Prospectus
Supplement, the information regarding such Underwriter set forth under the
caption "Underwriting" in the Prospectus Supplement and the Computational
Materials (other than to the extent such information is based on Seller
Information) furnished by such Underwriter is correct, and the parties hereto
acknowledge that such information constitutes the only information furnished in
writing by or on behalf of any Underwriter for use in connection with the
preparation of the Registration Statement or the Prospectus. For purposes of
this Agreement "Seller Information" means (i) any computer tape (or other
information) furnished to any Underwriter by or on behalf of the Seller and
Servicer concerning the assets comprising the Trust Estate and (ii) the
Prospectus Supplement, other than (x) the information under the caption "The
Depositor" and (y) the information referred to in the preceding sentence. For
purposes of this agreement, "Future Seller Information" means statements to
Noteholders filed on Form 8-K as provided in the Sale and Servicing Agreement.
SECTION 9 Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of IMC or the Depositor
submitted pursuant hereto shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of
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the Underwriters or controlling persons thereof, or by or on behalf of IMC or
the Depositor and shall survive delivery of any Notes to the Underwriters.
SECTION 10 Default by One or More of the Underwriters. If one or more of
the Underwriters participating in the public offering of the Notes shall fail at
the Closing Date to purchase the Notes which it is (or they are) obligated to
purchase hereunder (the "Defaulted Notes"), then the non-defaulting Underwriters
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Notes in such amounts as
may be agreed upon and upon the terms herein set forth. If, however, the
Underwriters have not completed such arrangements within such 24-hour period,
then:
(i) if the aggregate principal amount of Defaulted Notes does not exceed
10% of the aggregate principal amount of the Notes to be purchased
pursuant to this Agreement, the non-defaulting Underwriters named in
this Agreement shall be obligated to purchase the full amount thereof in
the proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all such non-defaulting
Underwriters, or
(ii) if the aggregate principal amount of Defaulted Notes exceeds 10% of
the aggregate principal amount of the Notes to be purchased pursuant to
this Agreement, this Agreement shall terminate, without any liability on
the part of any non-defaulting Underwriters.
No action taken pursuant to this Section 10 shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriter as set forth in this
Section 10, each of the Underwriters and the Depositor shall have the right to
postpone the Closing Date for a period not exceeding five Business Days in order
that any required changes in the Registration Statement or Prospectus or in any
other documents or arrangements may be effected.
SECTION 11 Termination of Agreement. The Underwriters may terminate this
Agreement immediately upon notice to the Depositor and IMC, at any time at or
prior to the Closing Date if any of the events or conditions described in
Section 6(T) of this Agreement shall occur and be continuing. In the event of
any such termination, the covenant set forth in Section 5(G), the provisions of
Section 7, the indemnity agreement set forth in Section 8, and the provisions of
Sections 9 and 15 shall remain in effect.
SECTION 12 [RESERVED]
SECTION 13 Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
32
<PAGE>
A. if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to Bear, Stearns & Co. Inc., 245 Park Avenue, New
York, New York 10167 Attention: General Counsel.
B. if to IMC, shall be delivered or sent by mail, telex or facsimile
transmission to IMC Mortgage Company, 5901 East Fowler Avenue, Tampa,
Florida 33617-2362 Attention: Thomas Middleton (Fax: (813) 935-0227);
and
C. if to the Depositor, shall be delivered or sent by mail, telex or
facsimile transmission to Bear Stearns Asset Backed Securities, Inc. c/o
Bear Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167
Attention: General Counsel
SECTION 14 Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
IMC and the Depositor, and their respective successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that the representations, warranties, indemnities and agreements
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control IMC or any of the Underwriters within the
meaning of Section 15 of the Securities Act, and for the benefit of directors of
the Depositor, officers of the Depositor who have signed the Registration
Statement and any person controlling the Depositor within the meaning of Section
15 of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
14, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
SECTION 15 Survival. The respective indemnities, representations,
warranties and agreements of IMC, the Depositor and the Underwriters contained
in this Agreement, or made by or on behalf of them, respectively, pursuant to
the shall survive the delivery of and payment for the Notes and shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any of them or any person controlling any of them.
SECTION 16 Definition of the Term "Business Day". For purposes of this
Agreement, "Business Day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
SECTION 17 Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without giving effect to the conflict of law rules thereof.
The parties hereto hereby submit to the jurisdiction of the United
States District Court for the Southern District of New York and any court in the
State of New York located in the city and County of New York, and appellate
court from any thereof, in any action, suit or proceeding brought against it or
in connection with this Agreement or any of the related
33
<PAGE>
documents or the transactions contemplated hereunder or for recognition or
enforcement of any judgment, and the parties hereto hereby agree that all claims
in respect of any such action or proceeding may be heard or determined in New
York State court or, to the extent permitted by law, in such federal court.
SECTION 18 Counterparts. This Agreement may be executed in counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.
SECTION 19 Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
34
<PAGE>
If the foregoing correctly sets forth the agreement between the
Depositor, IMC and the Underwriters, please indicate your acceptance in the
space provided for the purpose below.
Very truly yours,
BEAR STEARNS ASSET BACKED
SECURITIES, INC.
By: /s/ Matthew Perkins
------------------------------
Name: Matthew Perkins
Title: Managing Director
IMC MORTGAGE COMPANY
By: /s/ Laurie S. Williams
------------------------------
Name: Laurie S. Williams
Title: Vice President
CONFIRMED AND ACCEPTED, as
of the date first above written:
BEAR, STEARNS & CO INC.
Acting on its own behalf and as
Representative of the several Underwriters
By: /s/ Matthew Perkins
------------------------------
Name: Matthew Perkins
Title: Managing Director
35
<PAGE>
SCHEDULE A
Underwriters Principal Amount
------------ ----------------
Bear, Stearns & Co. Inc. $210,000,000
PaineWebber Incorporated $210,000,000
Deutche Morgan Grenfell Inc. $140,000,000
J.P. Morgan Securities $140,000,000
Total $700,000,000
Purchase Price Percentage
99.75%
Selling Concession Reallowance Discount
------------------ --------------------
0.15% 0.10%
36
<PAGE>
SCHEDULE B
(a) An Issuer Order authorizing the authentication and delivery of
the Notes by the Indenture Trustee.
(b) All of the items of Collateral which shall be delivered to the
Indenture Trustee or its designee.
(c) An executed counterpart of the Trust Agreement.
(d) Opinions of Counsel addressed to the Indenture Trustee and the
Note Insurer to the effect that:
(i) all instruments furnished to the Indenture Trustee as
conditions precedent to the authentication of the Notes
by the Indenture Trustee pursuant to the Indenture
conform to the requirements of the Indenture and
constitute all the documents required to be delivered
thereunder for the Indenture Trustee to authenticate the
Notes;
(ii) all conditions precedent provided for in the Indenture
relating to the authentication of the Notes have been
complied with;
(iii) the Owner Trustee has power and authority to execute,
deliver and perform its obligations under the Trust
Agreement;
(iv) the Issuer has been duly formed, is validly existing as a
business trust under the laws of the State of Delaware,
12 Del. C. Section 3801, et seq., and has power,
authority and legal right to execute and deliver the
Indenture, the Insurance Agreement and the Sale and
Servicing Agreement;
(v) assuming due authorization, execution and delivery
thereof by the Indenture Trustee, the Indenture is the
valid, legal and binding obligation of the Issuer,
enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent or preferential conveyance and
other similar laws of general application affecting the
rights of creditors generally and to general principles
of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(vi) the Notes, when executed and authenticated as provided
herein and delivered against payment therefor, will be
the valid, legal and binding obligations of the Issuer
pursuant to the terms of the Indenture, entitled
37
<PAGE>
to the benefits of the Indenture, and will be enforceable
in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, arrangement, moratorium,
fraudulent or preferential conveyance and other similar
laws of general application affecting the rights of
creditors generally and to general principles of equity
(regardless of whether such enforcement is considered in
a proceeding in equity or at law);
(vii) the Trust Agreement authorizes the Issuer to Grant the
Collateral to the Indenture Trustee as security for the
Notes and the Owner Trustee has taken all necessary
action under the Trust Agreement to Grant the Collateral
to the Indenture Trustee;
(viii) the Indenture has been duly qualified under the Trust
Indenture Act and the Notes have been registered under
the Securities Act;
(ix) the Indenture, together with the Grant of the Collateral
to the Indenture Trustee, creates a valid security
interest in the Collateral in favor of the Indenture
Trustee for the benefit of the Owners;
(x) such action has been taken with respect to delivery of
possession of the Collateral, and with respect to the
execution and filing of the Indenture and any financing
statements as are necessary to make effective and to
perfect a first priority security interest created by the
Indenture in the Collateral in favor of the Indenture
Trustee, except that with respect to the Mortgage Notes,
possession of such Mortgage Notes must be maintained by
the Indenture Trustee or an agent of the Indenture
Trustee (other than the Issuer, an Affiliate of the
Issuer, or a "securities intermediary," as defined in
Section 8.102 of the UCC); and
(xi) no authorization, approval or consent of any governmental
body having jurisdiction in the premises which has not
been obtained by the Issuer is required to be obtained by
the Issuer for the valid issuance and delivery of the
Notes, except that no opinion need be expressed with
respect to any such authorizations, approvals or consents
as may be required under any state securities "blue sky"
laws.
(e) An Officer's Certificate complying with the requirements of
Section 11.1 of the Indenture and stating that:
(i) the Issuer is not in Default under this Indenture and the
issuance of the Notes applied for will not result in any
breach of any of the terms, conditions or provisions of,
or constitute a default under, the Trust Agreement, any
indenture, mortgage, deed of trust or other agreement or
instrument to which the Issuer is a party or by which it
is bound, or any
38
<PAGE>
order of any court or administrative agency entered in
any proceeding to which the Issuer is a party or by which
it may be bound or to which it may be subject, and that
all conditions precedent provided in the Indenture
relating to the authentication and delivery of the Notes
applied for have been complied with;
(ii) the Issuer is the owner of all of the Initial Home Equity
Loans, has not assigned any interest or participation in
the Initial Home Equity Loans (or, if any such interest
or participation has been assigned, it has been released)
and has the right to Grant all of the Home Equity Loans
to the Indenture Trustee;
(iii) the Issuer has Granted to the Indenture Trustee all of
its right, title, and interest in the Collateral, and has
delivered or caused the same to be delivered to the
Indenture Trustee;
(iv) attached thereto are true and correct copies of letters
signed by Moody's and Standard & Poor's confirming that
the Notes have been rated "Aaa" and "AAA" by Moody's and
Standard & Poor's, respectively; and
(v) all conditions precedent provided for in the Indenture
relating to the authentication of the Notes have been
complied with.
39
Exhibit 4.1
INDENTURE
between
IMC HOME EQUITY LOAN OWNER TRUST 1998-2,
as Issuer
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
Dated as of March 1, 1998
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
Adjustable Rate Home Equity Loan Asset Backed Notes, Series 1998-2
<PAGE>
TABLE OF CONTENTS
ARTICLE I
<TABLE>
<S> <C>
DEFINITIONS AND INCORPORATION BY REFERENCE......................................................2
SECTION 1.1 Definitions.....................................................................2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act...............................7
SECTION 1.3 Rules of Construction...........................................................8
ARTICLE II
THE NOTES.......................................................................................8
SECTION 2.1 Form............................................................................8
SECTION 2.2 Execution, Authentication, Delivery and Dating..................................8
SECTION 2.3 Registration; Registration of Transfer and Exchange.............................9
SECTION 2.4 Mutilated, Destroyed, Lost or Stolen Notes.....................................10
SECTION 2.5 Persons Deemed Owners..........................................................11
SECTION 2.6 Payment of Principal and Interest; Defaulted Interest..........................11
SECTION 2.7 Cancellation...................................................................12
SECTION 2.8 Authentication of Notes........................................................12
SECTION 2.9 Release of Collateral..........................................................12
SECTION 2.10 Book-Entry Notes...............................................................13
SECTION 2.11 Notices to Clearing Agency.....................................................13
SECTION 2.12 Definitive Notes...............................................................13
SECTION 2.13 Tax Treatment..................................................................14
ARTICLE III
COVENANTS......................................................................................14
SECTION 3.1 Payment of Principal and Interest..............................................14
SECTION 3.2 Maintenance of Office or Agency................................................14
SECTION 3.3 Money for Payments To Be Held in Trust.........................................15
SECTION 3.4 Existence......................................................................16
SECTION 3.5 Protection of Collateral.......................................................17
SECTION 3.6 Annual Opinions as to Collateral...............................................17
SECTION 3.7 Performance of Obligations; Servicing of Home Equity Loans.....................17
SECTION 3.8 Negative Covenants.............................................................19
SECTION 3.9 Annual Statement as to Compliance..............................................20
SECTION 3.10 Covenants of the Issuer........................................................20
SECTION 3.11 Investment Company Act.........................................................20
SECTION 3.12 Restricted Payments............................................................20
SECTION 3.13 Treatment of Notes as Debt for Tax Purposes....................................20
SECTION 3.14 Notice of Events of Default....................................................20
SECTION 3.15 Further Instruments and Acts...................................................21
SECTION 3.16 No Other Business..............................................................21
SECTION 3.17 No Borrowing...................................................................21
SECTION 3.18 Guarantees, Loans, Advances and Other Liabilities. ...........................21
SECTION 3.19 Capital Expenditures...........................................................21
</TABLE>
<PAGE>
ARTICLE IV
<TABLE>
<S> <C>
SATISFACTION AND DISCHARGE.....................................................................21
SECTION 4.1 Satisfaction and Discharge of Indenture........................................21
SECTION 4.2 Application of Trust Money.....................................................22
SECTION 4.3 Repayment of Moneys Held by Paying Agent.......................................22
ARTICLE V
REMEDIES.......................................................................................23
SECTION 5.1 Events of Default..............................................................23
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.............................24
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee......24
SECTION 5.4 Remedies; Priorities...........................................................26
SECTION 5.5 Optional Preservation of the Collateral........................................28
SECTION 5.6 Limitation of Suits............................................................28
SECTION 5.7 Unconditional Rights of Owners To Receive Principal and Interest...............29
SECTION 5.8 Restoration of Rights and Remedies.............................................29
SECTION 5.9 Rights and Remedies Cumulative.................................................29
SECTION 5.10 Delay or Omission Not a Waiver.................................................29
SECTION 5.11 Control by The Note Insurer....................................................29
SECTION 5.12 Waiver of Past Defaults........................................................30
SECTION 5.13 Undertaking for Costs..........................................................30
SECTION 5.14 Waiver of Stay or Extension Laws...............................................30
SECTION 5.15 Action on Notes................................................................30
SECTION 5.16 Performance and Enforcement of Certain Obligations.............................31
ARTICLE VI
THE INDENTURE TRUSTEE..........................................................................31
SECTION 6.1 Duties of Indenture Trustee....................................................31
SECTION 6.2 Rights of Indenture Trustee....................................................33
SECTION 6.3 Individual Rights of Indenture Trustee.........................................33
SECTION 6.4 Indenture Trustee's Disclaimer.................................................33
SECTION 6.5 Notice of Defaults.............................................................33
SECTION 6.6 Reports by Indenture Trustee to Owners.........................................33
SECTION 6.7 Compensation and Indemnity.....................................................33
SECTION 6.8 Replacement of Indenture Trustee...............................................34
SECTION 6.9 Successor Indenture Trustee by Merger..........................................35
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee..............35
SECTION 6.11 Eligibility; Disqualification..................................................36
SECTION 6.12 Preferential Collection of Claims Against Issuer...............................36
</TABLE>
<PAGE>
ARTICLE VII
<TABLE>
<S> <C>
OWNERS' LISTS AND REPORTS.....................................................................37
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of Owners..............37
SECTION 7.2 Preservation of Information; Communications to Owners..........................37
SECTION 7.3 Reports by Issuer..............................................................37
SECTION 7.4 Reports by Indenture Trustee...................................................37
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES...........................................................38
SECTION 8.1 Collection of Money............................................................38
SECTION 8.2 Accounts; Distributions........................................................38
SECTION 8.3 General Provisions Regarding Accounts..........................................39
SECTION 8.4 Servicer's Monthly Statements..................................................39
SECTION 8.5 Release of Collateral..........................................................40
SECTION 8.6 Opinion of Counsel.............................................................40
ARTICLE IX
SUPPLEMENTAL INDENTURES........................................................................40
SECTION 9.1 Supplemental Indentures Without Consent of Owners..............................40
SECTION 9.2 Supplemental Indentures with Consent of Owners.................................41
SECTION 9.3 Execution of Supplemental Indentures...........................................43
SECTION 9.4 Effect of Supplemental Indenture...............................................43
SECTION 9.5 Conformity with Trust Indenture Act............................................43
SECTION 9.6 Reference in Notes to Supplemental Indentures..................................43
SECTION 9.7 Amendments to Trust Agreement..................................................43
ARTICLE X
REDEMPTION OF NOTES............................................................................43
SECTION 10.1 Redemption. ...................................................................43
SECTION 10.2 Form of Redemption Notice......................................................44
SECTION 10.3 Notes Payable on Redemption Date; Provision for Payment of Indenture
Trustee and Note Insurer.......................................................44
ARTICLE XI
MISCELLANEOUS..................................................................................45
SECTION 11.1 Compliance Certificates and Opinions, etc......................................45
SECTION 11.2 Form of Documents Delivered to Indenture Trustee...............................45
SECTION 11.3 Acts of Owners.................................................................46
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer, Rating Agencies and Note Insurer..46
SECTION 11.5 Notices to Owners; Waiver......................................................47
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 11.6 Conflict with Trust Indenture Act................................................47
SECTION 11.7 Effect of Headings and Table of Contents.........................................47
SECTION 11.8 Successors and Assigns...........................................................47
SECTION 11.9 Separability.....................................................................47
SECTION 11.10 Benefits of Indenture............................................................48
SECTION 11.11 Legal Holidays...................................................................48
SECTION 11.12 Governing Law....................................................................48
SECTION 11.13 Counterparts.....................................................................48
SECTION 11.14 Recording of Indenture...........................................................48
SECTION 11.15 Trust Obligation.................................................................48
SECTION 11.16 No Petition......................................................................48
SECTION 11.17 Inspection.......................................................................49
SECTION 11.18 Grant of Owner Rights to Note Insurer............................................49
SECTION 11.19 Third Party Beneficiary..........................................................49
SECTION 11.20 Suspension and Termination of Note Insurer's Rights..............................49
</TABLE>
EXHIBITS
SCHEDULE A - Schedule of Home Equity Loans
EXHIBIT A - Form of Note
<PAGE>
INDENTURE (this "Indenture" or this "Agreement") dated as of March 1,
1998, between IMC HOME EQUITY LOAN OWNER TRUST 1998-2, a Delaware business trust
(the "Issuer"), and THE CHASE MANHATTAN BANK, a New York banking corporation, as
trustee and not in its individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Owners of the IMC Adjustable Rate Home
Equity Loan Asset Backed Notes, Series 1998-2 and the Note Insurer.
GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants to
the Indenture Trustee on the Closing Date, as Indenture Trustee for the benefit
of the Owners of the Notes and the Note Insurer, all of the Issuer's right,
title and interest whether now existing or hereafter acquired in and to: (i) the
Trust Estate; (ii) all right, title and interest of the Issuer in the Sale and
Servicing Agreement (including the Issuer's right to cause the Seller to
repurchase Home Equity Loans from the Issuer under certain circumstances
described therein); (iii) all present and future claims, demands, causes of
action and choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the conversion
thereof, voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing; (iv) all funds on deposit
from time to time in the Accounts (including the Note Account) and (v) all other
property of the Trust from time to time (collectively, the "Collateral").
The foregoing Grant is made in trust to secure (i) the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, (ii) the
payment of all other amounts payable under this Indenture and (iii) compliance
with the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Owners of
the Notes and the Note Insurer, acknowledges such Grant, accepts the trusts
hereunder and agrees to perform its duties required in this Indenture to the
best of its ability to the end that the interests of the Owners of the Notes and
the Note Insurer may be adequately and effectively protected. The Indenture
Trustee agrees that it will hold the Note Insurance Policy in trust and that it
will hold any proceeds of any claim made upon the Note Insurance Policy solely
for the use and benefit of the Owners of the Notes in accordance with the terms
hereof and the terms of the Note Insurance Policy. The Indenture Trustee agrees
and acknowledges that the Files will be held by the Custodian, as agent of the
Indenture Trustee, in trust, for the use and benefit of the Issuer, the Note
Insurer and all present and future Owners of the Notes in Tampa, Florida. The
Indenture Trustee further agrees and acknowledges that each other item of
Collateral that is physically delivered to the Indenture Trustee will be held by
the Indenture Trustee in New York, New York.
The Indenture Trustee further acknowledges that in the event the
conveyance of the Home Equity Loans by the Depositor to the Issuer pursuant to
the Sale and Servicing Agreement is determined to constitute a financing, the
Indenture Trustee holds the Home Equity Loans as the designee of the Issuer,
subject, however, to a prior lien in favor of the Noteholders and the Note
Insurer.
1
<PAGE>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. Except as otherwise specified herein or as the context
may otherwise require, the following terms have the respective meanings set
forth below for all purposes of this Indenture.
"Act": The meaning specified in Section 11.3(a) hereof.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
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.
"Authorized Officer": With respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"Book-Entry Notes": A beneficial interest in the Notes, the ownership
and transfer of which shall be made through book entries by a Clearing Agency as
described in Section 2.10.
"Book-Entry Owner": With respect to a Book-Entry Note, the Person who
is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Business Day": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in The City of New York, Tampa, Florida, the
city in which the Corporate Trust Office is located or the city in which the
principal office of the Note Insurer is located are authorized or obligated by
law or executive order to be closed.
"Certificate of Trust": The certificate of trust of the Issuer
substantially in the form of Exhibit A to the Trust Agreement.
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant": A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date": On or about March 31, 1998.
"Code": The Internal Revenue Code of 1986, as amended from time to
time, and the Treasury Regulations promulgated thereunder.
2
<PAGE>
"Collateral": The meaning specified in the Granting Clause of this
Indenture.
"Corporate Trust Office": The principal office of the Indenture Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Agreement is located
at 450 West 33rd Street, New York, New York 10001, Attention: Structured
Financial Services, or at such other address as the Indenture Trustee may
designate from time to time by notice to the Owners and the Issuer, or the
principal corporate trust office of any successor Indenture Trustee at the
address designated by such successor Indenture Trustee by notice to the Owners,
the Note Insurer and the Issuer.
"Default": Any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Definitive Notes": The meaning specified in Section 2.12.
"Depositor": Bear Stearns Asset Backed Securities, Inc., a Delaware
corporation.
"Event of Default": The meaning specified in Section 5.1 hereof.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Final Payment Date": April 20, 2029.
"Grant": To mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Indenture Trustee": The Chase Manhattan Bank, a New York banking
corporation, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee under this Indenture.
"Independent": When used with respect to any specified Person, that the
Person (a) is in fact independent of the Issuer, any other obligor on the Notes,
the Depositor, the Seller and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Depositor, the Seller or any
Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Depositor, the Seller or any Affiliate of
any of the foregoing Persons as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
"Independent Certificate": A certificate or opinion to be delivered to
the Indenture Trustee under
3
<PAGE>
the circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1, made by an Independent appraiser or other expert
appointed by an Issuer Order and approved by the Indenture Trustee in the
exercise of reasonable care, and such opinion or certificate shall state that
the signer has read the definition of "Independent" in this Indenture and that
the signer is Independent within the meaning thereof.
"Issuer": IMC Home Equity Loan Owner Trust 1998-2 until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request": A written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
"Moody's": Moody's Investor Service, Inc., or any successor thereto.
"Note": The Issuer's Adjustable Rate Home Equity Loan Asset Backed
Notes, Series 1998-2, substantially in the Form of Exhibit A hereto.
"Note Register" and "Note Registrar": The respective meanings specified
in Section 2.3.
"Officer's Certificate": A certificate signed by any Authorized Officer
of the Issuer, under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.1, and delivered to the
Indenture Trustee.
"Opinion of Counsel": One or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and who shall be satisfactory to the Indenture Trustee and
the Note Insurer, and which opinion or opinions shall be addressed to the
Indenture Trustee, as Indenture Trustee, and the Note Insurer and shall comply
with any applicable requirements of Section 11.1 and shall be in form and
substance satisfactory to the Indenture Trustee and the Note Insurer.
"Outstanding": With respect to any Note and as of the date of
determination, any Note theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Owners of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the Indenture
Trustee);
(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser; provided, that in determining
whether the Owners of the requisite Outstanding Amount of the Notes
have given any request, demand,
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authorization, direction, notice, consent, or waiver hereunder or under
any Operative Document, Notes owned by the Issuer, any other obligor
upon the Notes, the Depositor, the Seller or any Affiliate of any of
the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, or waiver, only Notes that
the Indenture Trustee knows to be so owned shall be so disregarded.
Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Indenture Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon
the Notes, the Depositor, the Seller or any Affiliate of any of the
foregoing Persons;
(iv) Notes alleged to have been destroyed, lost or stolen for
which replacement Notes have been issued as provided for in Section 2.4
thereof; and
(v) Notes as to which the Indenture Trustee has made the final
distribution thereon, whether or not such Notes are ever returned to
the Indenture Trustee.
"Outstanding Amount": The aggregate principal amount of all Notes that
are Outstanding at the date of determination.
"Owner": The Person in whose name a Note is registered on the Note
Register; provided that the exercise of any rights of such Owner under this
Indenture shall at all times be subject to Section 11.18 hereto.
"Owner Trustee": Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, or any successor
Owner Trustee under the Trust Agreement.
"Paying Agent": The Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
and is authorized by the Issuer to make payments to and distributions from the
Note Account, including payment of principal of or interest on the Notes on
behalf of the Issuer.
"Payment Date": The 20th day of any month or if such day is not a
Business Day, the next succeeding Business Day, commencing in April 1998.
"Predecessor Note": With respect to any particular Note, every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purpose of this definition, any Note authenticated
and delivered under Section 2.4 in lieu of a mutilated, lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Note.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency": Either or both of (i) Standard & Poor's or (ii)
Moody's. If no such organization or successor is any longer in existence,
"Rating Agency" shall be a nationally recognized statistical rating organization
or other comparable Person designated by the Note Insurer, notice of which
designation shall be given to the Issuer, the Depositor, the Indenture Trustee,
the Owner Trustee and the Servicer.
"Rating Agency Condition": With respect to any action to which a Rating
Agency Condition applies,
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that each Rating Agency shall have been given 10 days (or such shorter period as
is acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Depositor, the Seller, the Servicer, the
Note Insurer and the Issuer in writing that such action will not result in a
reduction or withdrawal of the then current rating of the Notes.
"Record Date": With respect to any Payment Date, the last Business Day
immediately preceding such Payment Date.
"Redemption Price": In the case of a redemption of the Notes pursuant
to Section 10.1, an amount equal to the sum of (i) the unpaid principal amount
of the Notes redeemed plus accrued and unpaid interest thereon (including any
Available Funds Cap Carry Forward Amounts) at the Note Rate to but excluding the
Redemption Date, (ii) any unpaid Trust Fees and Expenses, (iii) all other
amounts owed to the Note Insurer pursuant to the Insurance Agreement and (iv)
any unreimbursed Delinquency Advances and Servicing Advances.
"Registered Owner": The Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"Responsible Officer": With respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Sale and Servicing Agreement": The Sale and Servicing Agreement dated
as of March 1, 1998, among the Issuer, the Depositor, the Seller, the Servicer,
and the Indenture Trustee.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": IMC Mortgage Company, in its capacity as seller under the
Sale and Servicing Agreement, and its successor in interest.
"Servicer": IMC Mortgage Company, in its capacity as servicer under the
Sale and Servicing Agreement, and any Successor Servicer thereunder.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.
"State": Any one of the 50 States of the United States of America or
the District of Columbia.
"Successor Servicer": The meaning specified in Section 3.7(e).
"Trust Estate": The assets subject to this Agreement, the Sale and
Servicing Agreement and the Trust Agreement and assigned to the Trust, which
assets consist of (a) the Initial Home Equity Loans listed in Schedule I to the
Sale and Servicing Agreement and any Subsequent Home Equity Loans listed in any
schedule or schedules attached to any Subsequent Transfer Agreement, including
the related Files that the
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Seller and the Depositor cause to be delivered to the Indenture Trustee, all
payments of principal received, collected or otherwise recovered after the
Cut-Off Date (or Subsequent Cut-Off Date) for each Home Equity Loan (other than
any principal payments due thereon on or prior to the Cut-Off Date or Subsequent
Cut-Off Date), all payments of interest accruing on each Home Equity Loan after
the Cut-Off Date (or Subsequent Cut-Off Date) therefor (other than any interest
payments due thereon on or prior to the Cut-Off Date or Subsequent Cut-Off Date)
and all other proceeds received in respect of such Home Equity Loans, (b) the
Note Insurance Policy, (c) any Insurance Policies, (d) all cash, instruments or
other property held or required to be deposited in the Principal and Interest
Account, the Note Account, the Pre-Funding Account, the Capitalized Interest
Account and the Available Funds Cap Carry Forward Amount Account, including all
investments made with funds in such accounts (but not including any income on
funds deposited in, or investments made with funds deposited in, the Principal
and Interest Account, which income shall belong to and be for the account of the
Servicer, and not including any income on funds deposited in, or investments
made with funds deposited in, the Note Account or Available Funds Cap
Carry-Forward Amount Account, which income shall belong to and be for the
account of the Issuer), (e) the Issuer's rights under the Sale and Servicing
Agreement, and (f) all proceeds of the conversion, voluntary or involuntary, of
any of the foregoing into cash or other liquid assets, including, without
limitation, all insurance proceeds and condemnation awards.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939, as
amended, as in force on the date hereof, unless otherwise specifically provided.
"UCC": Unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
(b) Except as otherwise specified herein or as the context may
otherwise require, for all purposes of this Indenture capitalized terms used but
not otherwise defined herein have the respective meanings set forth in the Sale
and Servicing Agreement or, if not defined therein, in the Trust Agreement.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security Owner" means an Owner.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the Indenture securities means the Issuer and any other
obligor on the Indenture securities.
All other TIA terms used in this Indenture that are defined in the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
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SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
(vi) any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented (as provided in such agreements)
and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and
assigns.
ARTICLE II
THE NOTES
SECTION 2.1 Form. The Notes shall be designated as the "IMC Adjustable
Rate Home Equity Loan Asset Backed Notes, Series 1998-2" and, together with the
Indenture Trustee's certificate of authentication, shall be in substantially the
form set forth in Exhibit A hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution thereof. Any portion of the text of any Note may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
The terms of the Notes set forth in Exhibit A are part of the terms of
this Indenture.
The Notes may be marked as temporary, and any Note being so marked may
be cancelled and destroyed for substitution by a replacement Note, subject to
the provisions of Section 2.2.
SECTION 2.2 Execution, Authentication, Delivery and Dating. The Notes
shall be executed on behalf of the Issuer by an Authorized Officer. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
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Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Owner Trustee shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
Subject to the satisfaction of the conditions set forth in Section 2.8,
the Indenture Trustee shall authenticate and deliver Notes for original issue in
an aggregate principal amount of $700,000,000. The aggregate principal amount of
Notes Outstanding at any time may not exceed such amount.
The Notes that are authenticated and delivered by the Indenture Trustee
to or upon the order of the Issuer on the Closing Date shall be dated March 31,
1998. All other Notes that are authenticated after the Closing Date for any
other purpose under this Indenture shall be dated the date of their
authentication. The Notes shall be issuable as registered Notes in the minimum
denomination of $25,000 and integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.3 Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee initially shall be the "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar with the consent of the Note Insurer, the Issuer will give the
Indenture Trustee prompt written notice of the appointment of such Note
Registrar and of the location, and any change in the location, of the Note
Register, and the Indenture Trustee shall have the right to inspect the Note
Register at all reasonable times and to obtain copies thereof, and the Indenture
Trustee and the Note Insurer shall have the right to rely upon a certificate
executed on behalf of the Note Registrar by an Authorized Officer thereof as to
the names and addresses of the Owners of the Notes and the principal amounts and
number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Owner shall
obtain from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes in any authorized denominations, of a like
aggregate principal amount.
At the option of any Owner, Notes owned by such Owner may be exchanged
for other Notes in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Owner shall obtain from the
Indenture Trustee, the Notes which the Owner making the exchange is entitled to
receive.
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All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by the
Owner thereof or such Owner's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Exchange Act.
No service charge shall be made to an Owner for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.4 or Section 9.6 not involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to such Note.
SECTION 2.4 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer, the Note Insurer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, and provided that the requirements of 8-405 of the UCC are
met, the Issuer shall execute, and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, or shall have been called
for redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a bona fide purchaser of the original Note in lieu of which
such replacement Note was issued presents for payment such original Note, the
Issuer, the Note Insurer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer, the Note Insurer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Owner of such Note, other than the Note
Insurer, of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other reasonable expenses (including
the fees and expenses of the Indenture Trustee) connected therewith.
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Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.5 Persons Deemed Owners. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Note Insurer, the
Indenture Trustee and any agent of the Issuer, the Note Insurer or the Indenture
Trustee may treat the Person in whose name any Note is registered (as of the day
of determination) as the owner of such Note for the purpose of receiving
payments of principal of and interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and none of the
Issuer, the Note Insurer, the Indenture Trustee or any agent of the Issuer or
the Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.6 Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest at the Note Rate as set forth in
the Sale and Servicing Agreement, and such interest shall be payable on each
Payment Date as specified therein, subject to Section 3.1 hereof. Any
installment of interest or principal, if any, payable on any Note that is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the Record Date by check mailed first-class
postage prepaid to such Person's address as it appears on the Note Register on
such Record Date, except that, unless Definitive Notes have been issued pursuant
to Section 2.12, with respect to Notes registered on the Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payment will be made by wire transfer in immediately available funds to
the account designated by such nominee and except for the final installment of
principal payable with respect to such Note on a Payment Date or on the
applicable Final Payment Date (and except for the Redemption Price for any Note
called for redemption pursuant to Section 10.1), which shall be payable as
provided below. The funds represented by any such checks returned undelivered
shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the Sale and Servicing Agreement and the form of the
Notes set forth in Exhibit A. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable, if not previously paid,
on the earlier of (i) the Final Payment Date, (ii) the Redemption Date or (iii)
the date on which an Event of Default shall have occurred and be continuing, if
the Indenture Trustee or the Owners of Notes representing not less than a
majority of the Outstanding Amount of the Notes have declared the Notes to be
immediately due and payable in the manner provided in Section 5.2. All principal
payments on the Notes shall be made pro rata to the Owners. The Indenture
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. A copy of such form of notice shall be sent to the Note Insurer by
the Indenture Trustee. Notices in connection with redemptions of Notes shall be
mailed to Owners as provided in Section 10.2.
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SECTION 2.7 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes canceled as provided in this Section, except as expressly permitted by
this Indenture. All canceled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time, unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it; provided, that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.8 Authentication of Notes. The Notes may be authenticated by
the Indenture Trustee upon Issuer Request.
SECTION 2.9 Release of Collateral.
(a) Subject to subsections (b) and (c) hereof, Section 11.1 hereof and
the terms of the Operative Documents, the Indenture Trustee shall release
property from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(l) or an Opinion
of Counsel in lieu of such Independent Certificates to the effect that the TIA
does not require any such Independent Certificates.
(b) The Servicer, on behalf of the Issuer, shall be entitled to obtain
a release from the lien of this Indenture for any Home Equity Loan and the
related Property at any time (i) after a payment by the Seller or the Issuer of
the Loan Purchase Price of the Home Equity Loan, (ii) after a Qualified
Replacement Mortgage is substituted for such Home Equity Loan and payment of the
Substitution Amount if any, (iii) after liquidation of the Home Equity Loan in
accordance with Section 4.13 of the Sale and Servicing Agreement and the deposit
of all Liquidation Proceeds thereon in the Principal and Interest Account, or
(iv) upon the termination of a Home Equity Loan (due to, among other causes, a
prepayment in full of the Home Equity Loan and sale or other disposition of the
related Property), if the Issuer delivers to the Indenture Trustee and the Note
Insurer an Issuer Request (A) identifying the Home Equity Loan and the related
Property to be released, (B) requesting the release thereof, (C) setting forth
the amount deposited in the Principal and Interest Account with respect thereto,
and (D) certifying that the amount deposited in the Principal and Interest
Account (x) equals the Loan Purchase Price of the Home Equity Loan, in the event
a Home Equity Loan and the related Property are being released from the lien of
this Indenture pursuant to item (i) above, (y) equals the Substitution Amount
related to the Qualified Replacement Mortgage and the Home Equity Loan being
released from the lien of this Indenture pursuant to item (ii) above, or (z)
equals the entire amount of recoveries received with respect to such Home Equity
Loan and the related Property in the event of a release from the lien of this
Indenture pursuant to items (iii) or (iv) above.
(c) The Indenture Trustee shall, if requested in writing by the
Servicer, temporarily release or cause the Custodian to temporarily release to
the Servicer the File pursuant to the provisions of Section 4.14 of the Sale and
Servicing Agreement upon compliance by the Servicer of the provisions thereof
provided that the Indenture Trustee's File shall have been stamped to signify
the Issuer's pledge to the Indenture Trustee under this Indenture.
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SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to The Depository Trust Company, the initial Clearing Agency, by,
or on behalf of, the Issuer. The Book-Entry Notes shall be registered initially
on the Note Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no Owner of any Note will receive a definitive Note
representing such Book-Entry Owner's interest in such Note, except as provided
in Section 2.12. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to such Book-Entry Owners pursuant to
Section 2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar, the Note Insurer and the Indenture
Trustee shall be entitled to deal with the Clearing Agency for
all purposes of this Indenture (including the payment of
principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole Owner of the
Notes, and shall have no obligation to the Book-Entry Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the
provisions of this Section shall control;
(iv) the rights of Book-Entry Owners shall be exercised only
through the Clearing Agency and shall be limited to those
established by law and agreements between such Book-Entry
Owners and the Clearing Agency and/or the Clearing Agency
Participants. Unless and until Definitive Notes are issued
pursuant to Section 2.12, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest on
the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Owners of Notes
evidencing a specified percentage of the Outstanding Amount of
the Notes, the Clearing Agency shall be deemed to represent
such percentage only to the extent that it has received
instructions to such effect from Book-Entry Owners and/or
Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to
the Indenture Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Owners is required under this Indenture, unless and until
Definitive Notes shall have been issued to such Book-Entry Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Owners of the Notes to the
Clearing Agency, and shall have no obligation to such Book-Entry Owners.
SECTION 2.12 Definitive Notes. If (i) the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Book-Entry Notes and the Issuer is unable to locate a qualified successor, (ii)
the Issuer at its option advises the Indenture Trustee in writing that it elects
to terminate the book-entry system through the Clearing Agency or (iii) after
the occurrence of an Event of Default, Owners of the Book-Entry Notes
representing beneficial interests aggregating at least a majority of the
Outstanding Amount of such Notes advise the Clearing Agency in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of such Book-Entry
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Owners, then the Clearing Agency shall notify all Book-Entry Owners and the
Indenture Trustee of the occurrence of such event and of the availability of
Definitive Notes to Book-Entry Owners requesting the same. Upon surrender to the
Indenture Trustee of the typewritten Notes representing the Book-Entry Notes by
the Clearing Agency, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the Issuer, the
Note Registrar, the Note Insurer or the Indenture 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 Notes, the Indenture Trustee shall recognize the Owners of the
Definitive Notes as Owners.
SECTION 2.13 Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes will qualify
as indebtedness of the Issuer secured by the Collateral. The Issuer, by entering
into this Indenture, and each Owner, by its acceptance of a Note (and each
Book-Entry Owner by its acceptance of an interest in the applicable Book-Entry
Note), agree to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness of the Issuer.
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly and
punctually pay (or will cause to be duly and punctually paid) the principal of
and interest, if any, on the Notes in accordance with the terms of the Notes and
this Indenture. Without limiting the foregoing, subject to and in accordance
with Section 8.2(c), on each Payment Date the Issuer will cause to be
distributed all amounts on deposit in the Note Account deposited or retained
therein pursuant to the Sale and Servicing Agreement for the benefit of the
Notes, to the Owners and the Note Insurer. Amounts properly withheld under the
Code by any Person from a payment to any Owner of interest and/or principal
shall be considered as having been paid by the Issuer to such Owner for all
purposes of this Indenture.
The Notes shall be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Collateral and any
amounts received by the Indenture Trustee under the Note Insurance Policy in
respect of the Notes, as provided in this Indenture and the Sale and Servicing
Agreement. The Issuer shall not otherwise be liable for payments on the Notes.
If any other provision of this Indenture shall be deemed to conflict with the
provisions of this Section 3.1, the provisions of this Section 3.1 shall
control.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. The Issuer will give
prompt written notice to the Indenture Trustee and the Note Insurer of the
location, and of any change in the location, of any such office or agency. If at
any time the Issuer shall fail to maintain any such office or agency or shall
fail to furnish the Indenture Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Issuer hereby appoints the Indenture Trustee as its agent to receive all such
surrenders, notices and demands.
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SECTION 3.3 Money for Payments To Be Held in Trust. As provided in
Section 8.2 (a ) and (b), all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Principal and
Interest Account or retained in the Note Account pursuant to Section 8.2(c)
shall be made on behalf of the Issuer by the Indenture Trustee or by the Paying
Agent, and no amounts so withdrawn from the Principal and Interest Account or
retained in the Note Account for payments of Notes shall be paid over to the
Issuer except as provided in this Section 3.3.
On or before the second Business Day preceding each Payment Date and
Redemption Date, the Indenture Trustee shall cause to be deposited in the Note
Account an aggregate sum sufficient to pay the amounts due on such Payment Date
under the Notes, such sum to be held in trust for the benefit of the Persons
entitled thereto.
Subject to the prior consent of the Note Insurer, any Paying Agent
shall be appointed by Issuer Order with written notice thereof to the Indenture
Trustee and the Note Insurer. Any Paying Agent appointed by the Issuer shall be
a Person who would be eligible to be Indenture Trustee hereunder as provided in
Section 6.11. The Issuer shall not appoint any Paying Agent (other than the
Indenture Trustee) which is not, at the time of such appointment, a Designated
Depository Institution.
The Issuer will cause each Paying Agent to execute and deliver to the
Indenture Trustee an instrument in which such Paying Agent shall agree with the
Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section 3.3, that such Paying
Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such
Owners or otherwise disposed of as herein provided and pay such
sums to such Owners as herein provided;
(ii) give the Indenture Trustee and the Note Insurer notice of
any default by the Issuer (or any other obligor upon the Notes)
of which it has actual knowledge in the making of any payment
required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith
pay to the Indenture Trustee all sums so held in trust by such
Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the
payment of Notes if at any time it ceases to meet the standards
required to be met by a Paying Agent at the time of its
appointment;
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of
any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection
therewith; provided, however, that with respect to withholding
and reporting requirements applicable to original issue
discount (if any) on the Notes, the Issuer shall have first
provided the calculations pertaining thereto to the Indenture
Trustee; and
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(vi) not commence a bankruptcy proceeding against the Issuer in
connection with this Indenture.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds or
abandoned property, any money held by the Indenture Trustee or any Paying Agent
in trust for the payment of any amount due with respect to any Note and
remaining unclaimed for two years after such amount has become due and payable
shall be discharged from such trust and be paid to the Issuer on Issuer Request;
and the Owner of such Note shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment thereof (but only to the extent of the
amounts so paid to the Issuer), and all liability of the Indenture Trustee or
such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee or such Paying Agent, before being
required to make any such repayment, shall at the expense and direction of the
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Indenture Trustee shall also adopt and employ,
at the expense and direction of the Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Owners whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Owner).
SECTION 3.4 Existence.
(a) Subject to subsection (b) of this Section 3.4, the Issuer will keep
in full effect its existence, rights and franchises as a business trust under
the laws of the State of Delaware (unless it becomes, or any successor Issuer
hereunder is or becomes, organized under the laws of any other State or of the
United States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction) and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes and the Collateral.
(b) Any successor to the Owner Trustee appointed pursuant to Section
10.2 of the Trust Agreement shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the
Owner Trustee, the Person succeeding to the Owner Trustee under the Trust
Agreement may exercise every right and power of the Owner Trustee under this
Indenture with the same effect as if such Person had been named as the Owner
Trustee herein.
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SECTION 3.5 Protection of Collateral. The Issuer will from time to time
and upon the direction of the Note Insurer execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) provide further assurance with respect to the Grant of all
or any portion of the Collateral;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to the Collateral; or
(v) preserve and defend title to the Collateral and the rights
of the Indenture Trustee, the Owners and the Note Insurer in
such Collateral against the claims of all persons and parties.
SECTION 3.6 Annual Opinions as to Collateral. On or before March 15 in
each calendar year, beginning in 1999, the Issuer shall furnish to the Indenture
Trustee and the Note Insurer an Opinion of Counsel either stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation statements as
is necessary to maintain the lien and security interest created by this
Indenture and reciting the details of such action or stating that in the opinion
of such counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain the lien and security interest of this
Indenture until March 15 of the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Home Equity Loans.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Collateral or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) Subject to the prior consent of the Note Insurer, the Issuer may
contract with or otherwise obtain the assistance of other Persons to assist it
in performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Indenture Trustee and the Note Insurer in
an Officer's Certificate of the Issuer shall be deemed to be action taken by the
Issuer. Initially, the Issuer has contracted with the Servicer to assist the
Issuer in performing its duties under this Indenture.
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(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Operative Documents
and in the instruments and agreements included in the Collateral, including but
not limited to (i) filing or causing to be filed all UCC financing statements
and continuation statements required to be filed by the terms of this Indenture
and the Sale and Servicing Agreement and (ii) recording or causing to be
recorded all Mortgages, Assignments of Mortgage, all intervening Assignments of
Mortgage and all assumption and modification agreements required to be recorded
by the terms of the Sale and Servicing Agreement, in accordance with and within
the time periods provided for in this Indenture and/or the Sale and Servicing
Agreement, as applicable. Except as otherwise expressly provided therein, the
Issuer shall not waive, amend, modify, supplement or terminate any Operative
Document or any provision thereof without the consent of the Indenture Trustee,
the Note Insurer, and the Owners of at least a majority of the Outstanding
Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Termination Event under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee, the Note Insurer and the Rating Agencies
thereof, and shall specify in such notice the action, if any, the Issuer is
taking with respect of such default. If such Servicer Termination Event shall
arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the Home
Equity Loans, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) As promptly as possible after the giving of notice of termination
to the Servicer of the Servicer's rights and powers pursuant to Section 4.20 of
the Sale and Servicing Agreement, the Issuer, upon the prior written consent of
or upon the direction of the Note Insurer, shall appoint a successor servicer
(the "Successor Servicer") in accordance with the provisions of Section 4.20 of
the Sale and Servicing Agreement.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee and the Note Insurer. As soon as a Successor Servicer is
appointed pursuant to Section 4.20 of the Sale and Servicing Agreement, the
Issuer shall notify the Indenture Trustee of such appointment, specifying in
such notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without the
prior written consent of the Indenture Trustee and the Note Insurer, or, if a
Note Insurer Default has occurred and is continuing, the Owners of at least a
majority in Outstanding Amount of the Notes, amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral (except to the
extent otherwise provided in the Sale and Servicing Agreement) or the Operative
Documents, or waive timely performance or observance by the Servicer or the
Seller under the Sale and Servicing Agreement; and (ii) that any such amendment
shall not (A) increase or reduce in any manner the amount of, or accelerate or
delay the timing of, distributions that are required to be made for the benefit
of the Owners or (B) reduce the aforesaid percentage of the Notes that is
required to consent to any such amendment, without the consent of the Owners of
all the outstanding Notes. If any such amendment, modification, supplement or
waiver shall be so consented to by the Indenture Trustee and the Note Insurer,
the Issuer agrees, promptly following a request by the Indenture Trustee or the
Note Insurer to do so, to execute and deliver, in its own name and at its own
expense, such agreements, instruments, consents and other documents as the
Indenture Trustee or the Note Insurer may deem necessary or appropriate in the
circumstances.
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SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Sale and Servicing Agreement, sell, transfer, exchange
or otherwise dispose of any of the properties or assets
of the Issuer, including those included in the
Collateral, unless directed to do so by the Indenture
Trustee or the Note Insurer;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes
(other than amounts properly withheld from such
payments under the Code) or assert any claim against
any present or former Owner by reason of the payment of
the taxes levied or assessed upon any part of the
Collateral;
(iii) engage in any business or activity other than as
permitted by the Trust Agreement or other than in
connection with, or relating to, the issuance of Notes
pursuant to this Indenture, or amend the Trust
Agreement as in effect on the Closing Date other than
in accordance with Section 11.1 thereof,
(iv) issue debt obligations under any other indenture;
(v) incur or assume any indebtedness or guaranty any
indebtedness of any Person, except for such
indebtedness as may be incurred by the Issuer in
connection with the issuance of the Notes pursuant to
this Indenture;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this
Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect
to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise
arise upon or burden the Collateral or any part thereof
or any interest therein or the proceeds thereof (other
than tax liens, mechanics' liens and other liens that
arise by operation of law, in each case on any of the
Properties and arising solely as a result of an action
or omission of the related Mortgagor) or (C) permit the
lien of this Indenture not to constitute a valid first
priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the
Collateral;
(viii) take any other action or fail to take any action which
may cause the Issuer to be taxable as (a) an
association pursuant to Section 7701 of the Code and
the corresponding regulations or (b) as a taxable
mortgage pool pursuant to Section 7701(i) of the Code
and the corresponding regulations.
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SECTION 3.9 Annual Statement as to Compliance. The Issuer will deliver
to the Indenture Trustee and the Note Insurer, within 120 days after the end of
each fiscal year of the Issuer (commencing with the 1998 fiscal year), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during such
year and of its performance under this Indenture has
been made under such Authorized Officer's supervision;
and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all
conditions and covenants under the Indenture throughout
such year, or, if there has been a default in its
compliance with any such condition or covenant,
specifying each such default known to such Authorized
Officer and the nature and status thereof.
SECTION 3.10 Covenants of the Issuer. All covenants of the Issuer in
the Indenture are covenants of the Issuer and are not covenants of the Owner
Trustee. The Owner Trustee is, and any successor Owner Trustee under the Trust
Agreement will be, entering into this Indenture solely as Owner Trustee under
the Trust Agreement and not in its respective individual capacity, and in no
case whatsoever shall the Owner Trustee or any such successor Owner Trustee be
personally liable on, or for any loss in respect of, any of the statements,
representations, warranties or obligations of the Issuer hereunder, as to all of
which the parties hereto agree to look solely to the property of the Issuer.
SECTION 3.11 Investment Company Act. The Issuer shall not become an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);
provided, however, that the Issuer shall be in compliance with this Section 3.11
if it shall have obtained an order exempting it from regulation as an
"investment company" so long as it is in compliance with the conditions imposed
in such order.
SECTION 3.12 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Indenture Trustee, the Owner Trustee, the Note Insurer, the
Owners and the Certificateholders as contemplated by, and to the extent funds
are available for such purpose under, the Sale and Servicing Agreement or the
Trust Agreement. The Issuer will not, directly or indirectly, make or cause to
be made payments to or distributions from the Principal and Interest Account
except in accordance with this Indenture and the Operative Documents.
SECTION 3.13 Treatment of Notes as Debt for Tax Purposes. The Issuer
shall treat the Notes as indebtedness for all federal, state and local income
and franchise tax purposes.
SECTION 3.14 Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Note Insurer and the Rating Agencies prompt written
notice of each Event of Default hereunder and each default
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on the part of the Servicer, the Depositor or the Seller of its obligations
under the Sale and Servicing Agreement.
SECTION 3.15 Further Instruments and Acts. Upon request of the
Indenture Trustee or the Note Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
SECTION 3.16 No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the Home
Equity Loans and the issuance of the Notes and Certificates in the manner
contemplated by this Indenture and the Operative Documents and all activities
incidental thereto.
SECTION 3.17 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes and amounts due to the Note Insurer under this
Indenture and the Insurance Agreement.
SECTION 3.18 Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by this Indenture or the Operative Documents, the Issuer shall
not make any loan or advance or credit to, or guarantee (directly or indirectly
or by an instrument having the effect of assuring another's payment or
performance on any obligation or capability of so doing or otherwise), endorse
or otherwise become contingently liable, directly or indirectly, in connection
with the obligations, stocks or dividends of, or own, purchase, repurchase or
acquire (or agree contingently to do so) any stock, obligations, assets or
securities of, or any other interest in, or make any capital contribution to,
any other Person.
SECTION 3.19 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes (except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Owners to receive payments of
principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8 and
3.10 hereof, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.7 and
the obligations of the Indenture Trustee under Section 4.2) and (vi) the rights
of Owners as beneficiaries hereof with respect to the property so deposited with
the Indenture Trustee payable to all or any of them), and the Indenture Trustee,
on demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when all of the following have occurred:
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been replaced or
paid as provided in Section 2.4 and (ii) Notes for
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whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or discharged
from such trust, as provided in Section 3.3) have been delivered to the
Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee
for cancellation
a. have become due and payable,
b. are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at the expense, of the
Issuer, and the Issuer, in the case of a. or b. above, has irrevocably deposited
or caused to be irrevocably deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and discharge the entire indebtedness on
such Notes not theretofore delivered to the Indenture Trustee for cancellation
when due to the Final Payment Date or Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.1), as the case may be;
(B) the later of (a) eighteen months after payment in full of all
outstanding obligations under the Notes, (b) the payment in full of all unpaid
Trust Fees and Expenses and all sums owing to the Note Insurer under the
Insurance Agreement and (c) the date on which the Issuer has paid or caused to
be paid all other sums payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture
Trustee) an Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.1 and, subject to Section
11.2, each stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture with respect to the Notes have
been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Sections 3.3 and 4.3 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Owners of the Notes for the payment or
redemption of which such moneys have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest; but such
moneys need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.3 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
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ARTICLE V
REMEDIES
SECTION 5.1 Events of Default. "Event of Default,"wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any Current Interest on any Note when the
same becomes due and payable (it being understood that any Available Funds Cap
Carry Forward Amount does not constitute interest due and payable); or
(b) default in the payment of the principal of or any installment of
the principal of any Note when the same becomes due and payable; or
(c) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section 5.1 specifically dealt with), or any representation or warranty of
the Issuer made in this Indenture, the Insurance Agreement, the Sale and
Servicing Agreement or in any certificate or other writing delivered pursuant
hereto or in connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such default
shall continue or not be cured, or the circumstance or condition in respect of
which such misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days after there shall have
been given, by registered or certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Owners of a majority
of the Outstanding Amount of the Notes, a written notice specifying such default
or incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a notice of Default hereunder; or
(d) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Collateral in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Collateral, or
ordering the winding-up or liquidation of the Issuer's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(e) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Issuer to the entry of an order for
relief in an involuntary case under any such law, or the consent by the Issuer
to the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Collateral, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer generally
to pay its debts as such debts become due, or the taking of any action by the
Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee and the Note Insurer,
within five days after the occurrence thereof, written notice in the form of an
Officer's Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clauses (c) and (d) above, its
status and what action the Issuer is taking or proposes to take with respect
thereto.
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SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, the Indenture Trustee (x)
shall, at the direction or upon the prior written consent of the Note Insurer or
(y) may, if a Note Insurer Default has occured and is continuing, at the
direction of the Owners of Notes representing not less than a majority of the
Outstanding Amount of the Notes declare all the Notes to be immediately due and
payable, by a notice in writing to the Issuer (and to the Indenture Trustee if
given by Owners), and upon any such declaration the unpaid principal amount of
such Notes, together with accrued and unpaid interest thereon through the date
of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity with
respect to an Event of Default has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as
hereinafter in this Article V provided, the Note Insurer or, if a Note Insurer
Default exists, the Owners of Notes representing a majority of the Note
Principal Balances of all Notes, with the prior written consent of the Note
Insurer, by written notice to the Issuer and the Indenture Trustee, may waive
the related Event of Default and rescind and annul such declaration and its
consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay:
(i) all payments of principal of and interest on all Notes
and all other amounts that would then be due hereunder
or upon such Notes if the Event of Default giving rise
to such acceleration had not occurred; and
(ii) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and
its agents and counsel; and
(iii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by
such acceleration, have been cured or waived as
provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Indenture Trustee
and at the direction of the Note Insurer, pay to the Indenture Trustee, for the
benefit of the Owners of the Notes and the Note Insurer, the whole amount then
due and payable on such Notes for principal and interest, with interest upon the
overdue principal and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest at the rate borne by
the Notes and in addition thereto such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee and
the Note Insurer and their respective agents and counsel.
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(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, shall at the direction of the Note Insurer, and if a Note Insurer Default
has occurred and is continuing, the Indenture Trustee may, in its discretion,
and shall at the direction of the Owners of the Notes representing a majority of
the Outstanding Amount of the Notes, institute a Proceeding for the collection
of the sums so due and unpaid, and may prosecute such Proceeding to judgment or
final decree, and may enforce the same against the Issuer or other obligor upon
such Notes and collect in the manner provided by law out of the property of the
Issuer or other obligor upon such Notes, wherever situated, the moneys adjudged
or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee shall, at the direction of the Note Insurer, and if a Note Insurer
Default has occurred and is continuing, the Indenture Trustee may and shall at
the direction of the Owners of the Notes representing a majority of the
Outstanding Amount of the Notes, as more particularly provided in Section 5.4,
proceed to protect and enforce its rights and the rights of the Note Insurer and
the Owners, by such appropriate Proceedings as the Indenture Trustee shall deem
most effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or by
law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Collateral, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, upon the direction of the Note Insurer, by intervention
in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in
respect of the Notes and to file such other papers or
documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any
claim for reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and the
Note Insurer, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture
Trustee (except as a result of negligence or bad
faith), the Note Insurer and of the Owners allowed in
such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Owners of Notes in any election
of a trustee, a standby trustee or Person performing
similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to
distribute all amounts received with respect to the
claims of the Owners, the Note Insurer and the
Indenture Trustee on their behalf; and
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(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee, the Note
Insurer or the Owners of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and
its property; and any trustee, receiver, liquidator,
custodian or other similar official in any such
Proceeding is hereby authorized by each of such Owners
and the Note Insurer to make payments to the Indenture
Trustee and, in the event that the Indenture Trustee
shall consent to the making of payments directly to
such Owners and the Note Insurer, to pay to the
Indenture Trustee such amounts as shall be sufficient
to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their
respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor
Indenture Trustee except as a result of negligence or
bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Owner or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Owner thereof
or the Note Insurer or to authorize the Indenture Trustee to vote in respect of
the claim of any Owner in any such proceeding except, as aforesaid, to vote for
the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Owners of the Notes and the Note Insurer.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Owners, and it shall not be necessary to make any
Owner a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall, at the direction of the Note Insurer, and if a Note
Insurer Default has occurred and is continuing, the Indenture Trustee may and at
the direction of the Owners of the Notes representing a majority of the
Outstanding Amount of the Notes shall, upon receipt of satisfactory indemnity
and assurances, do one or more of the following (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with
respect thereto, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the
Issuer and any other obligor upon such Notes moneys
adjudged due;
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(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with
respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture
Trustee, the Note Insurer or the Owners;
(iv) sell the Collateral or any portion thereof or rights or
interest therein in a commercially reasonable manner,
at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Collateral following an Event of Default, unless (A) the Owners of
100% of the Outstanding Amount of the Notes consent thereto, (B) the proceeds of
such sale or liquidation distributable to the Owners are sufficient to discharge
in full all amounts then due and unpaid upon such Notes for principal and
interest or (C) the Indenture Trustee determines that the Collateral will not
continue to provide sufficient funds for the payment of principal of and
interest on the Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains the consent of
Owners of 66-2/3% of the Outstanding Amount of the Notes. In determining such
sufficiency or insufficiency with respect to clauses (B) and (C), the Indenture
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Collateral
for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order:
FIRST: to the Indenture Trustee for the Indenture Trustee Fee
then due and any costs or expenses incurred by it in connection with the
enforcement of the remedies provided for in this Article V and to the Owner
Trustee for the Owner Trustee Fee then due;
SECOND: to the Note Insurer for the Premium Amount then due and
unpaid;
THIRD: to the Servicer for the Servicing Fee then due and
unpaid;
FOURTH: to Owners for amounts due and unpaid on the Notes for
Current Interest, pro rata, according to the amounts due and payable on the
Notes for interest;
FIFTH: to Owners of the Notes for amounts due and unpaid on
the Notes for principal, pro rata;
SIXTH: to the Note Insurer for any amounts then due and
payable under the Insurance Agreement; and
SEVENTH: to Owners of the Notes for any Available Funds Cap
Carry Forward Amount then unpaid; and
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EIGHTH: to the Trust Paying Agent, for any amounts to be
distributed, pro rata, to the Certificateholders.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Owners pursuant to this Section. At least 15 days
before such record date, the Indenture Trustee shall mail to each Owner, the
Note Insurer and the Issuer a notice that states the record date, the payment
date and the amount to be paid.
SECTION 5.5 Optional Preservation of the Collateral. If the Notes have
been declared to be due and payable under Section 5.2 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Collateral. It is the desire of the parties hereto and the Owners that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Indenture Trustee shall take such desire into
account when determining whether or not to maintain possession of the
Collateral. In determining whether to maintain possession of the Collateral, the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose.
SECTION 5.6 Limitation of Suits. No Owner of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder for so long as a Note Insurer Default has not occurred or is
not continuing and if a Note Insurer Default has occurred and is continuing,
unless:
(a) such Owner has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Owners of a majority of the Outstanding Amount of the Notes
have made written request to the Indenture Trustee to institute such Proceeding
in respect of such Event of Default in its own name as Indenture Trustee
hereunder;
(c) such Owner or Owners have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings; and
(e) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Owners of a majority
of the Outstanding Amount of the Notes.
It is understood and intended that no one or more Owners of Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Owners of Notes or to obtain or to seek to obtain priority or preference
over any other Owners or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Owners of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
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SECTION 5.7 Unconditional Rights of Owners To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Owner of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective Final Payment Date thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Owner.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture
Trustee, the Note Insurer or any Owner has instituted any Proceeding to enforce
any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to the
Indenture Trustee, the Note Insurer or to such Owner, then and in every such
case the Issuer, the Indenture Trustee, the Note Insurer and the Owners shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and the Owners shall continue as though no
such Proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Note Insurer or to the
Owners is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee, the Note Insurer or any Owner of any Note to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
V or by law to the Indenture Trustee, the Note Insurer or to the Owners may be
exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Note Insurer or by the Owners, as the case may be,
subject, in each case, however, to the right of the Note Insurer to control any
such right and remedy, except as provided in Section 11.20.
SECTION 5.11 Control by The Note Insurer. The Note Insurer, or if a
Note Insurer Default exists, the Owners of a majority of the Outstanding Amount
of the Notes shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with
respect to the Notes or exercising any trust or power conferred on the Indenture
Trustee; provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) if a Note Insurer Default exists, subject to the express terms of
Section 5.4, any direction to the Indenture Trustee to sell or liquidate the
Collateral shall be by Owners of Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(c) if the conditions set forth in Section 5.5 have been satisfied and
the Indenture Trustee elects to retain the Collateral pursuant to such Section,
then any direction to the Indenture Trustee by Owners of Notes representing less
than 100% of the Outstanding Amount of the Notes to sell or liquidate the
Collateral shall be of no force and effect; and
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(d) if a Note Insurer Default exists, the Indenture Trustee may take
any other action deemed proper by the Indenture Trustee that is not inconsistent
with such direction.
Notwithstanding the rights of the Note Insurer and the Owners set forth
in this Section, subject to Section 6.1, the Indenture Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Owners not consenting to such action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the Note
Insurer, or if a Note Insurer Default exists, the Owners of Notes representing
not less than a majority of the Outstanding Amount of the Notes may waive any
past Default or Event of Default and its consequences except a Default (a) in
the payment of principal of or interest on any of the Notes or (b) in respect of
a covenant or provision hereof that cannot be modified or amended without the
consent of the Note Insurer or the Owner of each Note, as applicable. In the
case of any such waiver, the Issuer, the Indenture Trustee, the Note Insurer and
the Owners of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Owner of any Note by such Owner's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee or the Note Insurer, (b) any suit instituted by any Owner, or
group of Owners, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Owner for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates expressed in such Note and in this Indenture (or, in
the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Owners shall be impaired by the recovery of any
judgment by the Indenture
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Trustee against the Issuer or by the levy of any execution under such judgment
upon any portion of the Collateral or upon any of the assets of the Issuer. Any
money or property collected by the Indenture Trustee shall be applied in
accordance with Section 5.4(b).
SECTION 5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so,
the Issuer shall take all such lawful action as the Indenture Trustee may
request to compel or secure the performance and observance by the Depositor, the
Seller and the Servicer, as applicable, of each of their obligations to the
Issuer under or in connection with the Sale and Servicing Agreement and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Sale and Servicing Agreement to
the extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Depositor, the Seller or
the Servicer thereunder and the institution of legal or administrative actions
or proceedings to compel or secure performance by the Depositor, the Seller or
the Servicer of each of their obligations under the Sale and Servicing
Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the written direction (which direction shall be in
writing or by telephone, confirmed in writing promptly thereafter) of the Owners
of 66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Depositor, the
Seller or the Servicer under or in connection with the Sale and Servicing
Agreement including the right or power to take any action to compel or secure
performance or observance by the Depositor, the Seller or the Servicer, as the
case may be, of each of their obligations to the Issuer thereunder and to give
any consent, request, notice, direction, approval, extension, or waiver under
the Sale and Servicing Agreement and any right of the Issuer to take such action
shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee.
(a) If an Event of Default of which a Responsible Officer of the
Indenture Trustee shall have actual knowledge has occurred and is continuing,
the Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
(or similar documents) or opinions furnished to the Indenture Trustee
and conforming to the requirements of this Indenture; however, the
Indenture Trustee shall examine the certificates
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(or similar documents) and opinions to determine whether or not they
conform to the requirements of this Indenture; provided that the
Indenture Trustee shall not be responsible for the accuracy or content
of any certificate (or similar document) or opinion furnished to it
pursuant to the terms of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Indenture Trustee shall not be personally liable for
any error of judgment made in good faith by a Responsible Officer
unless it is proved that the Indenture Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be personally liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 5.11 or
for exercising or omitting to exercise any trust or power conferred
upon the Indenture Trustee under this Indenture.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer and except to the extent of income or other gain on investments which are
deposits in or certificates of deposit of the Indenture Trustee in its
commercial capacity.
(f) Money held in trust by the Indenture Trustee shall be segregated
from other funds except to the extent permitted by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it; provided, however, that the Indenture Trustee shall
not refuse or fail to perform any of its duties hereunder solely as a result of
nonpayment of its normal fees and expenses and further provided that nothing in
this Section 6.1(g) shall be construed to limit the exercise by the Indenture
Trustee of any right or remedy permitted under this Indenture or otherwise in
the event of the Issuer's failure to pay the Indenture Trustee's fees and
expenses pursuant to Section 6.7. In determining that such repayment or
indemnity is not reasonably assured to it, the Indenture Trustee must consider
not only the likelihood of repayment or indemnity by or on behalf of the Issuer
but also the likelihood of repayment or indemnity from amounts payable to it
from the Collateral pursuant to Section 6.7.
(h) Every provision of this Indenture relating to the conduct of,
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
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SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel, which shall not be at
the expense of the Indenture Trustee. The Indenture Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on an
Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney or custodian appointed by the Indenture Trustee with due care.
(d) The Indenture Trustee shall not be liable for (i) any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that such action or omission by
the Indenture Trustee does not constitute willful misconduct, negligence or bad
faith; or (ii) any willful misconduct or gross negligence on the part of the
Custodian.
SECTION 6.3 Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, shall not be accountable for the
Issuer's use of the proceeds from the Notes, or responsible for any statement of
the Issuer in this Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than the Indenture Trustee's certificate
of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to the Note Insurer and each Owner notice of the
Default within 90 days after it occurs. Except in the case of a Default in
payment of principal of or interest on any Note (including payments pursuant to
the mandatory redemption provisions of such Note), the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of Owners.
SECTION 6.6 Reports by Indenture Trustee to Owners. The Indenture
Trustee shall deliver to each Owner such information as may be required to
enable such Owner to prepare its federal and state income tax returns.
SECTION 6.7 Compensation and Indemnity. The Indenture Trustee shall
receive compensation for fees and reimbursement for expenses pursuant to Section
3.03(b)(i) and Section 3.03(b)(iv)(D) of the Sale and Servicing Agreement. The
Indenture Trustee and any director, officer, employee or agent of the
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Indenture Trustee shall be indemnified by the Trust and held harmless against
any loss, liability, or "unanticipated out-of-pocket" expense incurred or paid
to third parties (which expenses shall not include salaries paid to employees,
or allocable overhead, of the Indenture Trustee) in connection with the
acceptance or administration of its trusts hereunder or the Notes, other than
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder. All such amounts
described in the preceding sentence shall be payable as provided in (A) Section
3.03(b)(i) of the Sale and Servicing Agreement with respect to such amounts that
are Indenture Trustee Reimbursable Expenses and (B) Section 3.03(b)(iv)(D) with
respect to the remainder of such amounts, subject in the case of clause (B),
subject to Section 6.1(g) of this Indenture. The provisions of this Section 6.7
shall survive the termination of this Indenture.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.1(e) or (f) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.8 Replacement of Indenture Trustee. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section. The Indenture Trustee may resign at
any time by so notifying the Issuer and the Note Insurer. The Owners of a
majority of the Outstanding Amount of the Notes (with the consent of the Note
Insurer) may remove the Indenture Trustee by so notifying the Indenture Trustee
and may appoint a successor Indenture Trustee. The Note Insurer (or the Issuer
upon the prior written consent of the Note Insurer) shall remove the Indenture
Trustee if:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed, or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee acceptable to the Note
Insurer. A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, the Note Insurer and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to the Owners.
The retiring Indenture Trustee shall promptly transfer all property held by it
as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Owners of a majority of the Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
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If the Indenture Trustee fails to comply with Section 6.11, any Owner
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's obligations under Section 6.7 shall continue for the
benefit of the retiring Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Note
Insurer and the Rating Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force provided in the Notes or in this Indenture.
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Indenture
Trustee shall have the power, with the prior written consent of the Note
Insurer, and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person or
Persons, in such capacity and for the benefit of the Owners, such title to the
Collateral, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee may consider necessary or desirable. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 6.11 and no notice to Owners of the appointment of any
co-trustee or separate trustee shall be required under Section 6.8 hereof;
provided that the Indenture Trustee shall deliver notice of any such co-trustee
or separate trustee to the Servicer and the Note Insurer.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be
conferred or imposed upon and exercised or performed by the
Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent
that under any law of any jurisdiction in
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which any particular act or acts are to be performed the
Indenture 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
Collateral or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture 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 Indenture and
the conditions of this Article VI. 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, jointly with the Indenture
Trustee, subject to all the provisions of this Indenture, specifically including
every provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture 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 Indenture 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 Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall
at all times be authorized to exercise corporate trust powers. The Indenture
Trustee shall also satisfy the requirements of TIA Section 310(a) and shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it or its parent shall have a
long-term debt rating of A3 or better by Moody's or shall otherwise be
acceptable to Moody's. The Indenture Trustee shall comply with TIA Section
310(b), including the optional provision permitted by the second sentence of TIA
Section 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b)(1) are met. If at any time the Indenture Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect specified in Section
6.8 hereof.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
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ARTICLE VII
OWNERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of
Owners. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after each Record Date, a list, in such form
as the Indenture Trustee may reasonably require, of the names and addresses of
the Owners as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
10 days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished.
SECTION 7.2 Preservation of Information; Communications to Owners.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Owners contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.1
and the names and addresses of Owners received by the Indenture Trustee in its
capacity as Note Registrar. The Indenture Trustee may destroy any list furnished
to it as provided in such Section 7.1 upon receipt of a new list so furnished.
(b) Owners may communicate pursuant to TIA Section 312(b) with other
Owners with respect to their rights under this Indenture or under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 7.3 Reports by Issuer. The Issuer shall:
(a) file with the Indenture Trustee and the Note Insurer, within 15
days after the Issuer is required to file the same with the Commission, copies
of the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) that the Issuer may be required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(b) file with the Indenture Trustee and the Note Insurer and the
Commission in accordance with the rules and regulations prescribed from time to
time by the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and regulations;
and
(c) supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Owners described in TIA Section 313(c)) such summaries
of any information, documents and reports required to be filed by the Issuer
pursuant to clauses (i) and (ii) of this Section 7.3(a) and by rules and
regulations prescribed from time to time by the Commission.
SECTION 7.4 Reports by Indenture Trustee. If required by TIA Section
313(a), within 60 days after each January 1, beginning with January 1, 1999, the
Indenture Trustee shall mail to the Note Insurer and to each Owner as required
by TIA Section 313(c) a brief report dated as of such date that complies with
TIA Section 313(a). The Indenture Trustee also shall comply with TIA Section
313(b).
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A copy of each report at the time of its mailing to Owners shall be
filed by the Indenture Trustee with the Commission and each securities exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any securities exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money.
(a) General. Except as otherwise expressly provided herein, the
Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Collateral, the Indenture Trustee may, and upon written request of the Note
Insurer shall, take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.
(b) Claims Under Note Insurance Policy. The Notes will be insured by
the Note Insurance Policy pursuant to the terms set forth therein,
notwithstanding any provisions to the contrary contained in this Indenture or
the Sale and Servicing Agreement. All amounts received under the Note Insurance
Policy shall be used solely for the payment to Owners of Insured Payments;
provided, however that the Note Insurance Policy does not insure the payment of
the Available Funds Cap Carry Forward Amount.
SECTION 8.2 Accounts; Distributions.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee for the
benefit of the Owners and the Note Insurer, the Accounts as provided in the Sale
and Servicing Agreement. The Indenture Trustee shall deposit amounts into the
Accounts in accordance with the terms hereof and the Sale and Servicing
Agreement.
(b) On or before the Monthly Remittance Date prior to each Payment
Date, the Servicer shall withdraw from the Principal and Interest Account the
amounts specified in Section 3.03(a) of the Sale and Servicing Agreement and
will deliver such amount to the Indenture Trustee for deposit into the Note
Account. No later than the Business Day prior to each Payment Date, to the
extent funds are available in the Note Account, the Indenture Trustee shall
either retain funds in the Note Account or make the withdrawals from the Note
Account and deposits into the other Accounts for distribution on such Payment
Date as required pursuant to Section 3.03(b) of the Sale and Servicing
Agreement.
(c) On each Payment Date and the Redemption Date, to the extent funds
are available in the Note Account, the Indenture Trustee shall make the
following distributions from the amounts on deposit in the Note Account and the
Available Funds Cap Carry-Forward Amount Account in the following order of
priority (except as otherwise provided in Section 5.4(b)):
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(i) to the Owners of the Notes, the Current Interest for
such Payment Date; provided, that if there are not
sufficient funds in the Note Account to pay the entire
amount of accrued and unpaid interest then due on the
Notes, the amount in the Note Account shall be applied
to the payment of such interest on the Notes pro rata
on the basis of the total such interest due on the
Notes;
(ii) to the Owners of the Notes, the Principal Payment
Amount for such Payment Date; and
(iii) to the Owners, the amount, if any, then on deposit in
the Available Funds Cap Carry-Forward Amount Account.
(d) The Indenture Trustee shall make claims under the Note Insurance
Policy pursuant to Section 7.02 of the Sale and Servicing Agreement and in
accordance with the Note Insurance Policy. The Indenture Trustee shall deposit
any Insured Payment received from the Note Insurer in the Note Account. All
amounts received under the Note Insurance Policy shall be used solely for the
payment to Owners of principal and interest on the Notes.
SECTION 8.3 General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the funds in the Accounts shall be invested
in Eligible Investments and reinvested by the Indenture Trustee at the direction
of the Seller in accordance with the provisions of Section 3.05 of the Sale and
Servicing Agreement. The Issuer will not direct the Indenture Trustee to make
any investment of any funds or to sell any investment held in any of the
Accounts unless the security interest Granted and perfected in such Account will
continue to be perfected in such investment or the proceeds of such sale, in
either case without any further action by any Person, and, in connection with
any direction to the Indenture Trustee to make any such investment or sale.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in any
way be held liable by reason of any insufficiency in any of the Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as trustee, in accordance with their terms.
(c) If (i) the Seller shall have failed to give investment directions
for any funds on deposit in the Accounts to the Indenture Trustee by 11:00 a.m.
Eastern Time (or such other time as may be agreed by the Issuer and Indenture
Trustee) on any Business Day or (ii) a Default or Event of Default shall have
occurred and be continuing with respect to the Notes but the Notes shall not
have been declared due and payable pursuant to Section 5.2 or (iii) if such
Notes shall been declared due and payable following an Event of Default, amounts
collected or receivable from the Collateral are being applied in accordance with
Section 5.5 as if there had not been such a declaration, then the Indenture
Trustee shall, to the fullest extent practicable, invest and reinvest funds in
the Accounts in one or more Eligible Investments.
SECTION 8.4 Servicer's Monthly Statements. On each Payment Date (to the
extent it receives the supporting documentation from the Servicer on a timely
basis), the Indenture Trustee shall deliver the report required by Section 3.09
of the Sale and Servicing Agreement with respect to such Payment Date to the
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Depositor, the Seller, the Servicer, the Rating Agencies, and the Note Insurer.
SECTION 8.5 Release of Collateral.
(a) Subject to the payment of its fees and expenses pursuant to
Section 6.7, the Indenture Trustee may, and when required by the provisions of
this Indenture and the Sale and Servicing Agreement shall, execute instruments
to release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article VIII
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due to the Note Insurer, the Indenture Trustee and the
Owner Trustee have been paid, release any remaining portion of the Collateral
that secured the Notes from the lien of this Indenture and release to the Issuer
or any other Person entitled thereto any funds then on deposit in the Accounts.
The Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Subsection (b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.6 Opinion of Counsel. The Indenture Trustee and the Note
Insurer shall receive at least seven Business Days notice when requested by the
Issuer to take any action pursuant to Section 8.5(a), accompanied by copies of
any instruments involved, and the Indenture Trustee shall also require, as a
condition to such action, an Opinion of Counsel, in form and substance
satisfactory to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding that
all conditions precedent to the taking of such action have been complied with
and such action will not materially and adversely impair the security for the
Notes or the rights of the Owners in contravention of the provisions of this
Indenture; provided, however, that such Opinion of Counsel shall not be required
to express an opinion as to the fair value of the Collateral. Counsel rendering
any such opinion may rely, without independent investigation, on the accuracy
and validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Owners.
(a) Without the consent of the Owners of any Notes but with prior
notice to the Rating Agencies and with the prior written consent of the Note
Insurer, the Issuer and the Indenture Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or
better to assure, convey and confirm unto the Indenture
Trustee
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any property subject or required to be subjected to the
lien of this Indenture, or to subject to the lien of
this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the
Issuer, and the assumption by any such successor of the
covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Owners of the Notes, or to surrender any right
or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that
may be inconsistent with any other provision herein or
in any supplemental indenture or to make any other
provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture;
provided, that such action shall not adversely affect
the interests of the Owners of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with
respect to the Notes and to add to or change any of the
provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder
by more than one trustee, pursuant to the requirements
of Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to
effect the qualification of the Indenture under the TIA
or under any similar federal statute hereafter enacted
and to add to the Indenture such other provisions as
may be expressly required by the TIA; or
(viii) to modify or alter the provisions of the definition of
the term "Outstanding".
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, with the prior written
consent of the Note Insurer, when authorized by an Issuer Order, may, upon
satisfaction of the Rating Agency Condition but without the consent of any of
the Owners , enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Owners of the Notes under this Indenture; provided, however, that
such action shall not, as evidenced by (i) an Opinion of Counsel or (ii)
satisfaction of the Rating Agency Condition, adversely affect in any material
respect the interests of any Owner.
SECTION 9.2 Supplemental Indentures with Consent of Owners. The Issuer
and the Indenture Trustee, when authorized by an Issuer Order, also may, with
the prior consent of the Note Insurer and with the consent of the Owners of not
less than a majority of the Outstanding Amount of the Notes, by Act of such
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Owners delivered to the Issuer and the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Owners of the
Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Owner of each Note affected thereby
and the Note Insurer if affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof or, the Note Rate,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Collateral to payment of
principal of or interest on the Notes, or change any place of payment where, or
the coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or after the
Redemption Date);
(b) reduce the percentage of the Outstanding Amount of the Notes, the
consent of the Owners of which is required for any such supplemental indenture,
or the consent of the Owners of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;
(c) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Collateral pursuant to Section 5.4;
(d) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional provisions of
this Indenture or the Operative Documents cannot be modified or waived without
the consent of the Owner of each Note affected thereby;
(e) modify any of the provisions of this Indenture in such manner as to
affect the calculation of the amount of any payment of interest or principal due
on any Note on any Payment Date (including the calculation of any of the
individual components of such calculation) or to affect the rights of the Owners
of Notes to the benefit of any provisions for the mandatory redemption of the
Notes contained herein; or
(f) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Collateral or,
except as otherwise permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the Owner of any
Note of the security provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Owners of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
In connection with requesting the consent of the Owners pursuant to
this Section, the Indenture Trustee shall mail to the Owners of the Notes to
which such amendment or supplemental indenture relates a notice setting forth in
general terms the substance of such supplemental indenture. It shall not be
necessary for any Act of Owners under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if such
Act shall approve the substance thereof.
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SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Indenture Trustee, the Issuer and the Owners of the Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity with Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Notes.
SECTION 9.7 Amendments to Trust Agreement. Subject to Section 11.1 of
the Trust Agreement, the Indenture Trustee shall, upon Issuer Order, consent to
any proposed amendment to the Trust Agreement or an amendment to or waiver of
any provision of any other document relating to the Trust Agreement, such
consent to be given without the necessity of obtaining the consent of the Owners
of any Notes upon satisfaction of the requirements under Section 11.1 of the
Trust Agreement.
Nothing in this Section shall be construed to require that any Person
obtain the consent of the Indenture Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the subject
of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption. The Owners of a majority of the Outstanding
Amount of Certificates (the "Majority Certificateholders") have the option to
purchase all of the Collateral at the Redemption Price
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on the Redemption Date or any Payment Date thereafter pursuant to Section 5.02
of the Sale and Servicing Agreement. If the Majority Certificateholders decline
to exercise such option to purchase the Collateral, the Note Insurer may do so
as provided in Section 5.02(c) of the Sale and Servicing Agreement. Upon such
purchase by either the Majority Certificateholders or the Note Insurer, the
Issuer shall use the proceeds it receives from the sale of the Home Equity Loans
to redeem the Notes, in whole and not in part, and terminate this Indenture.
Any such redemption by the Majority Certificateholders or the Note
Insurer, as applicable, shall be accomplished by the Majority Certificateholders
or the Note Insurer, as applicable, depositing or causing to be deposited into
the Principal and Interest Account by 10:00 A.M. New York City time on the on
the Monthly Remittance Date prior to the Redemption Date (or such later Payment
Date on which the Collateral is purchased) the amount of the Redemption Price.
On the Payment Date after the date that the Redemption Price is deposited into
the Principal and Interest Account, the Redemption Price shall be transferred to
the Note Account for distribution to the Owners on the Redemption Date; and any
amounts received with respect to the Home Equity Loans and REO Properties
subsequent to such transfer shall belong to the Servicer or the Note Insurer, as
applicable.
The Majority Certificateholders or the Issuer shall furnish the
Depositor, the Indenture Trustee, the Rating Agencies and the Note Insurer
notice of any such redemption in accordance with Section 10.2 no later than 15
days prior to the Redemption Date.
SECTION 10.2 Form of Redemption Notice
(a) Notice of redemption under Section 10.1 shall be given by the
Indenture Trustee by first-class mail, postage prepaid, or by facsimile mailed
or transmitted not later than 10 days prior to the applicable Redemption Date to
each Owner of Notes, as of the close of business on the Record Date preceding
the applicable Redemption Date, at such Owner's address or facsimile number
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the
office or agency of the Issuer to be maintained as
provided in Section 3.2).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name of the Issuer and at the expense of the Servicer. Failure to
give notice of redemption, or any defect therein, to any Owner of any Note shall
not impair or affect the validity of the redemption of any other Note
SECTION 10.3 Notes Payable on Redemption Date; Provision for Payment of
Indenture Trustee and Note Insurer. The Notes or portions thereof to be redeemed
shall, following notice of redemption as required by Section 10.2 (in the case
of redemption pursuant to Section 10.1), on the Redemption Date become due and
payable at the Redemption Price and (unless the Issuer shall default in the
payment of the Redemption
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Price) no interest shall accrue on the Redemption Price for any period after the
date to which accrued interest is calculated for purposes of calculating the
Redemption Price. The Issuer may not redeem the Notes unless, (i) all
outstanding obligations under the Notes have been paid in full and (ii) the
Indenture Trustee and the Owner Trustee have been paid all amounts to which they
are entitled hereunder and the Note Insurer has been paid all Premium Amounts
and Reimbursement Amounts to which it is entitled as of the applicable
Redemption Date.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc.
Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and (ii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants meeting the
applicable requirements of this Section, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; and
(3) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Seller, the Issuer or the Depositor,
stating that the information with respect to such factual matters is in the
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possession of the Servicer, the Seller, the Issuer or the Depositor, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.3 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by Owners
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Owners in person or by agents duly appointed in
writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are delivered in writing to
the Indenture Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Owners
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Notes shall bind the Owner of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer, Rating
Agencies and Note Insurer. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Owners or other documents provided or
permitted by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or act of Owners is to be made
upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Owner or by the Issuer shall be
sufficient for every purpose
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hereunder if made, given, furnished or filed in writing to or with the Indenture
Trustee at its Corporate Trust Office, or
(b) in the case of the Issuer, Rating Agencies or Note Insurer as
provided in Section 6.12 of the Sale and Servicing Agreement.
SECTION 11.5 Notices to Owners; Waiver. Where this Indenture provides
for notice to Owners of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid to each Owner affected by such event, at his
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Owners is given by mail ,neither the failure to mail
such notice nor any defect in any notice so mailed to any particular Owner shall
affect the sufficiency of such notice with respect to other Owners, and any
notice that is mailed in the manner herein provided shall conclusively be
presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Indenture Trustee
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.7 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.8 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
SECTION 11.9 Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
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SECTION 11.10 Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Owners, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Collateral, any benefit or any legal or equitable right, remedy or claim
under this Indenture, except that the Note Insurer is an express third party
beneficiary to this Indenture as provided in Section 11.19.
SECTION 11.11 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.12 Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.14 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Owners or any other Person secured
hereunder or for the enforcement of any right or remedy granted to the Indenture
Trustee under this Indenture.
SECTION 11.15 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any Owner of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement.
SECTION 11.16 No Petition. The Indenture Trustee, by entering into this
Indenture, and each Owner, by accepting a Note, hereby covenant and agree that
they will not at any time institute against the Depositor or the Issuer, or join
in any institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United
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States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Operative
Documents.
SECTION 11.17 Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or the Note
Insurer, during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees, and Independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
SECTION 11.18 Grant of Owner Rights to Note Insurer. In consideration
for the guarantee of the Notes by the Note Insurer pursuant to the Note
Insurance Policy, the Owners hereby grant to the Note Insurer the right to act
as the Owner of 100% of the outstanding Notes for the purpose of exercising the
rights of the Owners of the Notes hereunder, including the voting rights of such
Owners, but excluding those rights requiring the consent of all such Owners
under Section 9.2 and any rights of such Owners to distributions under Section
8.2 hereof; provided that the preceding grant of rights to the Note Insurer by
the Owners shall be subject to Section 11.20 hereof. The rights of the Note
Insurer to direct certain actions and consent to certain actions of the Owners
hereunder will terminate at such time as the Principal Balance has been reduced
to zero and the Note Insurer has been reimbursed for all Insured Payments and
any other amounts owed under the Note Insurance Policy and the Insurance
Agreement and the Note Insurer has no further obligation under the Note
Insurance Policy.
SECTION 11.19 Third Party Beneficiary. The parties hereto acknowledge
that the Note Insurer is an express third party beneficiary hereof entitled to
enforce any rights reserved to it hereunder as if it were actually a party
hereto.
SECTION 11.20 Suspension and Termination of Note Insurer's Rights.
(a) During the continuation of a Note Insurer Default, rights granted
or reserved to the Note Insurer hereunder shall vest instead in the Owners;
provided that the Note Insurer shall be entitled to any distributions in
reimbursement of the Reimbursement Amount, and the Note Insurer shall retain
those rights under Section 9.2 hereof to consent to any supplement to this
Indenture.
(b) At such time as either (i) the Note Principal Balance has been
reduced to zero or (ii) the Note Insurance Policy has been terminated following
a Note Insurer Default, and in either case of (i) or (ii) the Note Insurer has
been reimbursed for all Insured Payments and any other amounts owed under the
Note Insurance Policy and the Insurance Agreement (and the Note Insurer no
longer has any obligation under the Note Insurance Policy, except for breach
thereof by the Note Insurer), then the rights and benefits granted or reserved
to the Note Insurer hereunder (including the rights to direct certain actions
and receive certain notices) shall terminate and the Owners shall be entitled to
the exercise of such rights and to receive such benefits of the Note Insurer
following such termination to the extent that such rights and benefits are
applicable to the Owners.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely as Owner Trustee
By: /s/ Emmett R. Harmon
------------------------------
Name: Emmett R. Harmon
Title: Vice President
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By: /s/ Ann Marie Jose
------------------------------
Name Ann Marie Jose
Title: Trust Officer
50
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STATE OF DELAWARE
COUNTY OF NEW CASTLE
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Emmett R. Harmon, known to me
to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said
WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Owner
Trustee on behalf of IMC HOME EQUITY LOAN OWNER TRUST 1998-2, a Delaware
business trust, and that such person executed the same as the act of said
business trust for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 26th day of March, 1998.
/s/ Patricia Pierce
--------------------------
Notary Public in and for
the State of Delaware
(Seal)
My commission expires:
August 22, 2000
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STATE OF NEW YORK
COUNTY OF NEW YORK
BEFORE ME, the undersigned authority, a Notary Public in and for said county and
state, on this day personally appeared Ann Marie Jose, known to me to be the
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of THE CHASE MANHATTAN BANK, a New
York banking corporation, and that such person executed the same as the act of
said corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 31st day of March, 1998.
/s/ James A. Nash
-----------------------
Notary Public in and for
the State of New York
(Seal)
My commission expires:
March 30, 1999
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SCHEDULE A
Available Upon Request to the Indenture Trustee
<PAGE>
EXHIBIT A
Form of Note
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<TABLE>
<S> <C>
Date of Indenture: As of March 1, 1998 Original Note Principal Balance: $700,000,000.00
First Payment Date: April 20, 1998 CUSIP No.____________________
Denomination: $_________________ Note No: 0001
</TABLE>
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
ADJUSTABLE RATE HOME EQUITY LOAN ASSET-BACKED NOTES, SERIES 1998-2
IMC HOME EQUITY LOAN OWNER TRUST 1998-2, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of _______________________
($_____________) payable on each Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is
$_____________________ and the denominator of which is $__________________ by
(ii) the aggregate amount, if any, payable under this Note pursuant to the
Indenture dated as of March 1, 1998, between the Issuer and The Chase Manhattan
Bank, a New York banking corporation as Indenture Trustee (the "Indenture
Trustee"); provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of (i) the Payment Date occurring
in April 2029 (the "Final Payment Date"), (ii) the Redemption Date, if any,
pursuant to Article X of the Indenture or (iii) the date on which an Event of
Default shall have occurred and be continuing, if the Indenture Trustee, at the
direction or upon prior written consent of the Note Insurer or, if a Note
Insurer Default has occurred and is continuing, the Owners of Notes representing
not less than a majority of the Outstanding Amount of the Notes, have declared
the Notes to be immediately due and payable in the manner provided in Section
5.2 of the Indenture. Capitalized terms used but not defined herein are defined
in Article I of the Indenture.
<PAGE>
Pursuant to the terms of the Indenture, payments will be made on the 20th
day of each month or, if such day is not a Business Day, on the Business Day
immediately following such 20th day (the "Payment Date"), commencing on the
first Payment Date specified above, to the Person in whose name this Note is
registered at the close of business on the applicable Record Date, in an amount
equal to the product of (a) the Percentage Interest evidenced by this Note and
(b) the sum of the Current Interest, Principal Payment Amount and any Insured
Payment with respect to such Payment Date, all as more specifically set forth in
the Indenture and the Sale and Servicing Agreement.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
[Signatures follow]
2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: _______________________________
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
By: WILMINGTON TRUST COMPANY
not in its individual capacity but solely
as Owner Trustee under the Trust Agreement
By: _______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: ______________________________
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By: ______________________________
Authorized Signatory
3
<PAGE>
[Reverse of Note]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Adjustable Rate Home Equity Loan Asset-Backed Notes, Series
1998-2 (herein called the "Notes"), issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Owners of the Notes. To the extent that any provision
of this Note contradicts or is inconsistent with the provisions of the
Indenture, the provisions of the Indenture shall control and supersede such
contradictory or inconsistent provision herein. Terms not defined herein will
have the definitions as provided in the Indenture. The Notes are subject to all
terms of the Indenture.
The Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Payment Date in an amount
described on the face hereof.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Final Payment Date and the Redemption
Date, if any, pursuant to Article X of the Indenture. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable on the date on which an Event of Default shall have occurred and be
continuing and the Indenture Trustee, at the direction or upon the prior written
consent of MBIA Insurance Corporation (the "Note Insurer") or, if a Note Insurer
Default has occured and is continuing, at the direction of the Owners of the
Notes representing not less than a majority of the Outstanding Amount of the
Notes, have declared the Notes to be immediately due and payable in the manner
provided in Section 5.2 of the Indenture. All principal payments on the Notes
shall be made pro rata to the Owners entitled thereto on the basis of their Note
Principal Balance.
The Note Insurer, has issued a Note Insurance Policy in the name of the
Indenture Trustee for the benefit of the Owners. Unless a Note Insurer Default
shall be continuing, subject to Section 11.18 of the Indenture, the Note Insurer
shall be deemed to be the Owner of 100% of the Note Principal Balance of the
Outstanding Notes for the purpose of exercising the rights, including voting
rights, of the Owners under the Indenture. In addition, on each Payment Date,
after the Owners have been paid all amounts to which they are entitled, the Note
Insurer will be entitled to be reimbursed for any unreimbursed Insured Payments
and any other amounts owed under the Note Insurance Policy.
Payments of interest on this Note are due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Owner of the Note (or one or more Predecessor Notes) on the
Note Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Payment Date
shall be binding upon all future Owners of this Note and of any Note issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not noted hereon. If funds are expected to be available, as provided
in the Indenture, for payment
4
<PAGE>
in full of the then remaining unpaid principal amount of this Note on a Payment
Date, then the Indenture Trustee, in the name of and on behalf of the Issuer,
will notify the Person who was the Owner hereof as of the Record Date preceding
such Payment Date by notice mailed or transmitted by facsimile prior to such
Payment Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in The City of New York.
As provided in the Indenture, the Notes may be redeemed if the Majority
Certificateholders, on the Redemption Date or any Payment Date thereafter,
purchase all of the Collateral at the Redemption Price. Upon such purchase, the
Issuer shall use the proceeds it receives from the sale of the Collateral to
redeem the Notes, in whole, but not in part, and terminate the Indenture
pursuant to Article X of the Indenture and Section 5.02 of the Sale and
Servicing Agreement. If such holders of Certificates decline to exercise such
option, the Note Insurer may do so as provided in Section 5.02 of the Sale and
Servicing Agreement.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Owner hereof or such Owner's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one more new Notes of authorized denominations and in the
same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer
or exchange of this Note, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Owner, by acceptance of a Note or, in the case of a Book-Entry Owner,
a beneficial interest in a Note, covenants and agrees that no recourse may be
taken, directly or indirectly, with respect to the obligations of the Issuer,
the Depositor, the Seller, the Servicer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director or employee of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as any
such person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Owner or Book-Entry Owner, by acceptance of a Note or, in the case of
a Book-Entry Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Owner or Book-Entry Owner will
not at any time institute against the Seller, the Servicer, the Depositor, or
the Issuer, or join in any institution against the Seller, the Servicer, the
Depositor or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or similar law in connection with any obligations relating to the
Notes, the Indenture or any of the Operative Documents.
5
<PAGE>
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Owner, by acceptance of a Note (and each
Book-Entry Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Owners of the Notes under the Indenture at any time
by the Issuer with the consent of the Note Insurer and the Owner of Notes
representing a majority of the Outstanding Amount of Notes. The Indenture also
contains provisions permitting the Note Insurer, or if a Note Insurer Default
exists, the Owners of Notes representing the majority of the Outstanding Amount
of the Notes on behalf of the Owners of all the Notes to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Owner of
this Note (or any one or more Predecessor Notes) shall be conclusive and binding
upon such Owners and upon all future Owners of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the amendment thereof, in certain limited circumstances,
or the waiver of certain terms and conditions set forth in the Indenture,
without the consent of Owners of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Operative Documents, none of the Issuer in its individual
capacity, the Owner Trustee in its individual capacity, any owner of a
beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Owner of this Note by its acceptance hereof
agrees that, except as expressly provided in the Operative Documents, in the
case
6
<PAGE>
of an Event of Default under the Indenture, the Owner shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
7
<PAGE>
ASSIGNMENT
Social Security or Taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: __________________*/
Signature Guaranteed:
________________________*/
*/ NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by Note Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
8
Exhibit 4.2
TRUST AGREEMENT
between
BEAR STEARNS ASSET BACKED SECURITIES, INC.,
as Depositor
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of March 1, 1998
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE..................................................................1
SECTION 1.1 Capitalized Terms..............................................................................1
SECTION 1.2 Other Definitional Provisions..................................................................3
ARTICLE II
ORGANIZATION................................................................................................5
SECTION 2.1 Name...........................................................................................5
SECTION 2.2 Office.........................................................................................5
SECTION 2.3 Purpose and Powers.............................................................................5
SECTION 2.4 Appointment of Owner Trustee...................................................................6
SECTION 2.5 Initial Capital Contribution of the Owner Trust Estate.........................................6
SECTION 2.6 Declaration of Trust...........................................................................6
SECTION 2.7 Liability of the Holders.......................................................................6
SECTION 2.8 Title to Trust Property........................................................................6
SECTION 2.9 Situs of Trust.................................................................................7
SECTION 2.10 Representations and Warranties of the Depositor................................................7
SECTION 2.11 Federal Income Tax Allocations.................................................................8
ARTICLE III
THE CERTIFICATES............................................................................................9
SECTION 3.1 Initial Certificate Ownership..................................................................9
SECTION 3.2 Form of the Certificates.......................................................................9
SECTION 3.3 Execution, Authentication and Delivery.........................................................9
SECTION 3.4 Registration; Registration of Transfer and Exchange of Certificates...........................10
SECTION 3.5 Mutilated; Destroyed; Lost or Stolen Certificates.............................................10
SECTION 3.6 Persons Deemed Owners.........................................................................11
SECTION 3.7 Access to List of Holders' Names and Addresses................................................11
SECTION 3.8 Maintenance of Office For Surrenders..........................................................11
SECTION 3.9 Appointment of Trust Paying Agent.............................................................12
SECTION 3.10 Restriction on Transfers of Certificate.......................................................12
SECTION 3.11 Duties of the Certificate Registrar and Trust Paying Agent....................................16
ARTICLE IV
ACTIONS BY OWNER TRUSTEE...................................................................................17
SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters........................................17
SECTION 4.2 Action by Holders with Respect to Certain Matters.............................................18
SECTION 4.3 Action by Holders with Respect to Bankruptcy..................................................18
SECTION 4.4 Restrictions on Holders' Power................................................................19
SECTION 4.5 Majority Control..............................................................................19
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE V
APPLICATION OF OWNER TRUST ESTATE; CERTAIN DUTIES.....................................................20
SECTION 5.1 Establishment of Certificate Distribution Account........................................20
SECTION 5.2 Application of Trust Funds...............................................................20
SECTION 5.3 Method of Payment........................................................................21
SECTION 5.4 Segregation of Moneys; No Interest.......................................................21
SECTION 5.5 Accounting and Reports to the Certificateholders, the Internal
Revenue Service and Others...............................................................21
SECTION 5.6 Signature on Returns; Tax Matters Partner................................................21
ARTICLE VI
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE.............................................................22
SECTION 6.1 General Authority........................................................................22
SECTION 6.2 General Duties...........................................................................22
SECTION 6.3 Action upon Instruction by Owners........................................................22
SECTION 6.4 No Duties Except as Specified in this Agreement, the Operative
Documents or in Instructions.............................................................23
SECTION 6.5 No Action Except Under Specified Documents or Instructions...............................23
SECTION 6.6 Restrictions.............................................................................24
ARTICLE VII
CONCERNING THE OWNER TRUSTEE..........................................................................25
SECTION 7.1 Acceptance of Trusts and Duties..........................................................25
SECTION 7.2 Furnishing of Documents..................................................................26
SECTION 7.3 Representations and Warranties of Owner Trustee..........................................27
SECTION 7.4 Reliance; Advice of Counsel..............................................................27
SECTION 7.5 Owner Trustee May Own Certificates and Notes.............................................28
SECTION 7.6 Licenses.................................................................................28
ARTICLE VIII
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE
AND ITS AGENTS........................................................................................29
SECTION 8.1 Owner Trustee's Fee and Expenses.........................................................29
SECTION 8.2 Indemnification of the Owner Trustee.....................................................29
SECTION 8.3 Payments to the Owner Trustee............................................................30
SECTION 8.4 Indemnification of the Certificate Registrar and Trust Paying Agent......................30
ARTICLE IX
TERMINATION OF TRUST AGREEMENT........................................................................31
SECTION 9.1 Termination of Trust Agreement...........................................................31
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES................................................32
SECTION 10.1 Eligibility Requirements for Owner Trustee..............................................32
SECTION 10.2 Resignation or Removal of Owner Trustee.................................................32
SECTION 10.3 Successor Owner Trustee.................................................................33
SECTION 10.4 Merger or Consolidation of Owner Trustee................................................33
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee...........................................33
ARTICLE XI
MISCELLANEOUS.........................................................................................35
SECTION 11.1 Amendments Without Consent of Certificateholders or Owners
of the Notes............................................................................35
SECTION 11.2 Amendments With Consent of Certificateholders...........................................35
SECTION 11.3 Form of Amendments......................................................................35
SECTION 11.4 No Legal Title to Owner Trust Estate....................................................36
SECTION 11.5 Limitations on Rights of Others.........................................................36
SECTION 11.6 Notices.................................................................................36
SECTION 11.7 Severability............................................................................37
SECTION 11.8 Counterparts............................................................................37
SECTION 11.9 Successors and Assigns..................................................................37
SECTION 11.10 No Petition Covenant....................................................................37
SECTION 11.11 No Recourse.............................................................................37
SECTION 11.12 Headings................................................................................37
SECTION 11.13 Governing Law...........................................................................37
SECTION 11.14 Integration.............................................................................38
SECTION 11.15 Third-Party Beneficiary.................................................................38
SECTION 11.16 Suspension and Termination of Note Insurer's Rights.....................................38
</TABLE>
iii
<PAGE>
TRUST AGREEMENT, dated as of March 1, 1998, between BEAR STEARNS ASSET
BACKED SECURITIES, INC., a Delaware corporation (the "Depositor") and WILMINGTON
TRUST COMPANY, a Delaware banking corporation, not in its individual capacity
but solely as Owner Trustee (the "Owner Trustee").
The Depositor and the Owner Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may
be amended and supplemented from time to time.
"Bankruptcy Action" shall have the meaning assigned to such
term in Section 4.1 hereof.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
I the Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be
amended from time to time.
"Certificate" shall mean a certificate evidencing the
beneficial interest of a Certificateholder in the Trust, substantially in the
form attached hereto as Exhibit B-1.
"Certificate Distribution Account" shall have the meaning
assigned to such term in Section 5.1.
"Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit A to be filed for the Trust pursuant to Section 3810(a) of
the Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean
the register mentioned and the registrar appointed pursuant to Section 3.4.
"Certificateholder" or "Holder" shall mean a Person in whose
name a Certificate is registered.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the
Owner Trustee, the principal corporate trust office of the Owner Trustee located
at Rodney Square North, 1100 N. Market Street, Wilmington, Delaware 19890; or at
such other address in the State of Delaware as the Owner Trustee may designate
by notice to the Owners and the Depositor, or the principal corporate trust
office of
<PAGE>
any successor Owner Trustee (the address (which shall be in the State of
Delaware) of which the successor owner trustee will notify the Owners, the
Holders and the Depositor).
"Depositor" shall mean Bear Stearns Asset Backed Securities,
Inc., a Delaware corporation.
"Expenses" shall have the meaning assigned to such term in
Section 8.2.
"Indenture" shall mean the Indenture, dated as of March 1,
1998, between the Issuer and the Indenture Trustee.
"Indenture Trustee" means The Chase Manhattan Bank, as
Indenture Trustee under the Indenture.
"Insurance Agreement" shall mean the Insurance Agreement,
dated as of March 1, 1998, among the Depositor, the Seller, the Servicer, the
Issuer, the Indenture Trustee and the Note Insurer.
"Issuer" shall mean IMC Home Equity Loan Owner Trust 1998-2,
the Delaware business trust created pursuant to this Agreement.
"Non-permitted Foreign Holder" shall have the meaning set
forth in Section 3.11.
"Non-U.S. Person" shall mean an individual, corporation,
partnership or other person other than 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.
"Note Insurer" shall mean MBIA Insurance Corporation and its
successors and assigns.
"Operative Documents" shall mean this Agreement, the
Custodial Agreement, the Indenture, the Insurance Agreement, the Sale and
Servicing Agreement and the other documents and certificates delivered in
connection therewith.
"Owner" shall mean each holder of a Note.
"Owner Trust Estate" shall mean the Trust Estate (as defined
in the Indenture), including the contribution of $1 referred to in Section 2.5
hereof.
"Owner Trustee" shall mean Wilmington Trust Company, a
Delaware corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor owner trustee hereunder.
2
<PAGE>
"Owner Trustee Fee". The fees payable to the Owner Trustee
for its services as owner trustee of the Trust, as provided in the fee agreement
between the Owner Trustee and the Seller.
"Percentage Interest" shall mean with respect to each
Certificate, the percentage portion of all of the Certificates evidenced thereby
as stated on the face of such Certificate.
"Prospective Holder" shall have the meaning set forth in
Section 3.10(a).
"Rating Agency Condition" means, with respect to any action
to which a Rating Agency Condition applies, that each Rating Agency shall have
been given 10 days (or such shorter period as is acceptable to each Rating
Agency) prior notice thereof and that each of the Rating Agencies shall have
notified the Seller, the Servicer, the Note Insurer, the Owner Trustee and the
Issuer in writing that such action will not result in a reduction or withdrawal
of the then current rating of the Notes, without taking into account the Note
Insurance Policy.
"Record Date" shall mean as to each Payment Date the last
Business Day of the month immediately preceding the month in which such Payment
Date occurs.
"Sale and Servicing Agreement" shall mean the Sale and
Servicing Agreement dated as of the date hereof, among the Issuer, the
Depositor, the Seller, the Servicer and the Indenture Trustee.
"Secretary of State" shall mean the Secretary of State of the
State of Delaware.
"Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Paying Agent" shall mean The Chase Manhattan Bank or
any successor in interest thereto or any other paying agent or co-paying agent
appointed pursuant to Section 3.9 and authorized by the Issuer to make payments
to and distributions from the Certificate Distribution Account, including
payment of principal of or interest on the Certificates on behalf of the Issuer.
SECTION 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Sale and Servicing Agreement
or, if not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
3
<PAGE>
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof", "herein", "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
4
<PAGE>
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust created hereby shall be known as "IMC Home
Equity Loan Owner Trust 1998-2", in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued on behalf of the Trust.
SECTION 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Certificateholders,
the Note Insurer, the Owners and the Depositor.
SECTION 2.3 Purpose and Powers. The purpose of the Trust is to engage
in the following activities:
(i) to issue the Notes pursuant to the Indenture and
the Certificates pursuant to this Agreement;
(ii) with the proceeds of the sale of the Notes and
the Certificates, to pay the organizational, start-up and
transactional expenses of the Trust and to pay the balance to the
Depositor and the Seller, as their interests may appear pursuant to
the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Owner Trust Estate pursuant to the terms of the Indenture
and to hold, manage and distribute to the Certificateholders pursuant
to the terms of the Sale and Servicing Agreement any portion of the
Owner Trust Estate released from the lien of, and remitted to the
Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under
the Operative Documents to which it is to be a party;
(v) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vi) subject to compliance with the Operative
Documents, to engage in such other activities as may be required in
connection with conservation of the assets of the Trust and the making
of distributions to the Certificateholders and the Owners of the
Notes.
The Trust is hereby authorized to engage in the foregoing activities
and shall not engage in any activity other than in connection with the foregoing
or other than as required or authorized by the terms of this Agreement or the
Operative Documents.
5
<PAGE>
SECTION 2.4 Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein. The Owner
Trustee hereby accepts its appointment subject to the terms and conditions
hereof.
SECTION 2.5 Initial Capital Contribution of the Owner Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution which shall constitute the initial Owner Trust Estate and
shall be deposited in the Certificate Distribution Account. The Depositor or the
Seller shall pay the organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
that it shall hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Operative Documents. It is the
intention of the parties hereto that the Trust shall constitute a business trust
under the Business Trust Statute and that this Agreement shall constitute the
governing instrument of such business trust. It is the intention of the parties
hereto that, for federal and state income and state and local franchise tax
purposes, the Trust shall not be treated as (i) an association subject
separately to taxation as a corporation, (ii) a "publicly traded partnership" as
defined in Treasury Regulation Section 1.7704-1 or (iii) a "taxable mortgage
pool" as defined in Section 7701(i) of the Code, and that the Notes shall be
debt, and the provisions of this Trust Agreement shall be interpreted to further
this intention. Except as otherwise provided in this Trust Agreement, the rights
of the Certificateholders will be those of equity owners of the Trust. Effective
as of the date hereof, the Owner Trustee shall have the rights, powers and
duties set forth herein and in the Business Trust Statute with respect to
accomplishing the purposes of the Trust. The Owner Trustee shall file the
Certificate of Trust pursuant to the Business Trust Statute with the Secretary
of State.
SECTION 2.7 Liability of the Holders. No Certificateholder shall have
any personal liability for any liability or obligation of the Trust. The
Certificates shall be fully paid and nonassessable.
SECTION 2.8. Title to Trust Property.
(a) Subject to the Indenture, legal title to all of the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. No transfer by operation of law or otherwise of
any interest of the Certificateholders shall operate to terminate this Agreement
or the trusts hereunder or entitle any transferee to an accounting or to the
transfer to it of any part of the Owner Trust Estate.
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SECTION 2.9 Situs of Trust. The Trust shall be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of New York. The Trust shall not have any employees; provided, however,
that nothing herein shall restrict or prohibit the Owner Trustee from having
employees within or without the State of Delaware. Payments shall be received by
the Trust only in Delaware or New York, and payments will be made by the Trust
only from Delaware or New York. The only office of the Trust shall be the
Corporate Trust Office in Delaware.
SECTION 2.10 Representations and Warranties of the Depositor. The
Depositor hereby represents and warrants to the Owner Trustee and the Note
Insurer that:
(a) The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority to own its properties and to
conduct its business as such properties are presently owned and such
business is presently conducted.
(b) The Depositor is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such
qualifications.
(c) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full power and authority to sell and assign the property to be sold
and assigned to and deposited with the Trust, and the Depositor has
duly authorized such sale and assignment to the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement have been duly authorized by the Depositor by all necessary
corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms of this Agreement do not
conflict with, result in any breach of any of the terms and provisions
of or constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or by-laws of the Depositor,
or any indenture, agreement or other instrument to which the Depositor
is a party or by which it is bound; nor result in the creation or
imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than
pursuant to the Operative Documents); nor violate any law or, to the
best of the Depositor's knowledge, any order, rule or regulation
applicable to the Depositor of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or any of its
properties.
(e) There are no proceedings or investigations pending or
notice of which has been received in writing before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its
properties: (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (iii) seeking any determination or
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ruling that might materially and adversely affect the performance by
the Depositor of its obligations under, or the validity or
enforceability of, this Agreement.
(f) The representations and warranties of the Depositor in
Section 2.01 of the Sale and Servicing Agreement are true and correct.
(g) The Trust is not required to register as an investment
company under the Investment Company Act and is not under the control
of a Person required to so register.
SECTION 2.11 Federal Income Tax Allocations. Net income of the Trust
for any month, as determined for Federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof), shall
be allocated to the Certificateholders, pro rata.
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ARTICLE III
THE CERTIFICATES
SECTION 3.1 Initial Certificate Ownership. Upon the formation of the
Trust by the contribution by the Depositor pursuant to Section 2.5 and until the
issuance of the Certificates, the Depositor shall be the sole owner of the
Trust.
SECTION 3.2 Form of the Certificates.
(a) The Certificates shall be issued without a principal
amount. The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of an authorized signatory of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust shall be valid, notwithstanding that such individuals or any
of them shall have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of
authentication and delivery of such Certificates.
(b) The Certificates shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders) all as determined by the authorized signatory
of the Owner Trustee or the Owner Trustee's authenticating agent executing such
Certificates, as evidenced by their execution of such Certificates.
(c) A transferee of a Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder, upon such transferee's acceptance
of a Certificate duly registered in such transferee's name pursuant to Section
3.4.
SECTION 3.3 Execution, Authentication and Delivery. Concurrently with
the initial sale of the Home Equity Loans by the Depositor to the Trust pursuant
to the Sale and Servicing Agreement, the Owner Trustee shall execute, or cause
its authenticating agent to execute the Certificates representing 100% of the
Percentage Interests of the Trust to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Depositor,
signed by an Authorized Officer of the Depositor, without further corporate
action by the Depositor. The Certificates shall be initially registered in the
name of IMC Mortgage Company. The Trust shall not issue any other Certificate,
except to the Depositor, without the prior written consent of the Note Insurer,
provided, however, that such consent shall not be unreasonably withheld. No
Certificate shall entitle its Holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit
B-1, executed by the Owner Trustee, by manual or facsimile signature. Such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication.
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SECTION 3.4 Registration; Registration of Transfer and Exchange of
Certificates.
The Certificate Registrar shall cause to be kept at its office or
agency in New York, New York, 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. Upon any resignation of a Certificate
Registrar, the Owner Trustee shall promptly appoint a successor or, if it elects
not to make such an appointment, assume the duties of the Certificate Registrar.
The Chase Manhattan Bank shall be the initial Certificate Registrar.
Subject to Section 3.10, upon surrender for registration of transfer
of any Certificate at the office or agency of the Owner Trustee maintained
pursuant to Section 3.8, the Owner Trustee shall execute, and the Certificate
Registrar shall authenticate and deliver in the name of the designated
transferee or transferees, a new Certificate or Certificates of the same
Percentage Interest and dated the date of authentication by the Certificate
Registrar.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates 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 Owner Trustee shall execute and deliver to
the Certificate Registrar who shall authenticate the Certificates which the
Certificateholder making the exchange is entitled to receive.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be marked "canceled" by the Certficate Registrar.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of Certificates for a period of 15 days preceding the due
date for any payment with respect to the Certificates.
SECTION 3.5 Mutilated; Destroyed; Lost or Stolen Certificates.
(a) If (i) any mutilated Certificate is surrendered to the
Certificate Registrar, or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Certificate Registrar, the Owner Trustee and the Trust
such security or indemnity as may be required by them to hold each of them
harmless, then, in the absence of notice to the Certificate Registrar or the
Owner Trustee that such Certificate has been acquired by a bona fide purchaser,
the Owner Trustee shall execute on behalf of the Trust and the Certificate
Registrar shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a replacement Certificate of a
like Percentage Interest; provided, however, that if any such destroyed, lost or
stolen Certificate, but not a mutilated Certificate, shall have become or within
seven days shall be due and payable, then instead of issuing a replacement
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Certificate the Owner Trustee may pay such destroyed, lost or stolen Certificate
when so due or payable.
(b) In connection with the issuance of any replacement
Certificate under this Section 3.5, the Owner Trustee or the Certificate
Registrar may require the payment by the Holder of such Certificate of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Owner Trustee and the Certificate Registrar) connected
therewith.
(c) Any duplicate Certificate issued pursuant to this Section
3.5 in replacement of any mutilated, destroyed, lost or stolen Certificate shall
constitute an original additional contractual obligation of the Trust, whether
or not the mutilated, destroyed, lost or stolen Certificate shall be found at
any time or be enforced by anyone, and shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Certificates
duly issued hereunder.
(d) The provisions of this Section 3.5 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Certificates.
SECTION 3.6 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Owner Trustee, the Certificate
Registrar or any Trust Paying Agent may treat the Person in whose name any
Certificate shall be registered in the Certificate Registrar as the owner of
such Certificate for the purpose of receiving distributions pursuant to Article
V and for all other purposes whatsoever, and neither the Owner Trustee, nor the
Certificate Registrar nor the Trust Paying Agent shall be affected by any notice
to the contrary.
SECTION 3.7 Access to List of Holders' Names and Addresses. The
Certificate Registrar shall furnish or cause to be furnished to the Servicer and
the Depositor, within 15 days after receipt by the Certificate Registrar of a
request therefor from the Servicer or the Depositor in writing, a list, in such
form as the Servicer or the Depositor may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record Date. If three
or more Certificateholders or one or more Holders of Certificates together
evidencing a Percentage Interest totaling not less than 25% apply in writing to
the Certificate Registrar, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Certificate Registrar shall, within five Business Days after
the receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each
Certificateholder, by receiving and holding a Certificate, shall be deemed to
have agreed not to hold any of the Servicer, the Depositor, the Certificate
Registrar or the Owner Trustee accountable by reason of the disclosure of its
name and address, regardless of the source from which information was derived.
SECTION 3.8 Maintenance of Office For Surrenders. The Certificate
Registrar shall maintain an office or offices or agency or agencies where
Certificates may be surrendered for registration of transfer or exchange. The
Certificate Registrar initially designates the Corporate Trust Office as its
principal office for such purposes. The Certificate Registrar shall give prompt
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written notice to the Depositor and to the Certificateholders and Owners of any
change in the location of the Certificate Register or any such office or agency.
SECTION 3.9 Appointment of Trust Paying Agent. The Owner Trustee
hereby appoints The Chase Manhattan Bank as the Trust Paying Agent under this
Agreement. The Trust Paying Agent shall make distributions to Certificateholders
from the Certificate Distribution Account pursuant to Section 5.2 and shall
report the amounts of such distributions to the Owner Trustee and the Servicer.
The Trust Paying Agent shall have the revocable power to withdraw funds from the
Certificate Distribution Account for the purpose of making the distributions
referred to above. The Owner Trustee may revoke such power and remove the Trust
Paying Agent if the Owner Trustee determines in its sole discretion that the
Trust Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. If The Chase Manhattan Bank shall no longer
be the Trust Paying Agent, the Owner Trustee shall appoint a successor to act as
Trust Paying Agent (which shall be a bank or trust company acceptable to the
Depositor, the Seller, the Note Insurer and the Rating Agencies). The Owner
Trustee shall cause such successor Trust Paying Agent or any additional Trust
Paying Agent appointed by the Owner Trustee to execute and deliver to the Owner
Trustee an instrument in which such successor Trust Paying Agent or additional
Trust Paying Agent shall agree with the Owner Trustee that as Trust Paying
Agent, such successor Trust Paying Agent or additional Trust Paying Agent shall
hold all sums, if any, held by it for payment to the Certificateholders in trust
for the benefit of the Certificateholders entitled thereto until such sums shall
be paid to such Holders. The Trust Paying Agent shall return all unclaimed funds
to the Trust and upon removal of a Trust Paying Agent such Trust Paying Agent
shall also return all funds in its possession to the Trust. The provisions of
Article VI shall apply to the Owner Trustee also in its role as Trust Paying
Agent, for so long as the Owner Trustee shall act as Trust Paying Agent and, to
the extent applicable, to any other Trust Paying Agent (including The Chase
Manhattan Bank) appointed hereunder. Any reference in this Agreement to the
Trust Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 3.10 Restriction on Transfers of Certificate.
(a) Each prospective purchaser and any subsequent transferee
of a Certificate (each, a "Prospective Holder"), other than the Depositor or the
Seller, shall represent and warrant, in writing, to the Owner Trustee and the
Certificate Registrar and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional
buyer" as defined in Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"), and is aware that
the seller of the Certificate may be relying on the exemption
from the registration requirements of the Securities Act
provided by Rule 144A and is acquiring such Certificate for
its own account or for the account of one or more qualified
institutional buyers for whom it is authorized to act, or (B)
a Person involved in the organization or operation of the
Trust or an affiliate of such Person within the meaning of
Rule 3a-7 of the Investment Company Act of 1940, as amended
(including, but not limited to, the Seller).
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(ii) Such Person understands that the Certificate
has not been and will not be registered under the Securities
Act and may be offered, sold, pledged or otherwise
transferred only to a person whom the seller reasonably
believes is (A) a qualified institutional buyer or (B) a
Person involved in the organization or operation of the Trust
or an affiliate of such Person, in a transaction meeting the
requirements of Rule 144A under the Securities Act and in
accordance with any applicable securities laws of any state
of the United States.
(iii) Such Person understands that the Certificate
bears a legend to the following effect:
"THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
THIS CERTIFICATE MAY BE DIRECTLY OR INDIRECTLY
OFFERED OR SOLD OR OTHERWISE DISPOSED OF (INCLUDING
PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE ACT, IN A TRANSACTION THAT IS
REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO
RULE 144A OR (II) A PERSON INVOLVED IN THE
ORGANIZATION OR OPERATION OF THE TRUST OR AN
AFFILIATE OF SUCH A PERSON WITHIN THE MEANING OF
RULE 3a-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (INCLUDING, BUT NOT LIMITED TO, IMC MORTGAGE
COMPANY) IN A TRANSACTION THAT IS REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
ACT AND SUCH LAWS. NO PERSON IS OBLIGATED TO
REGISTER THIS CERTIFICATE UNDER THE ACT OR ANY STATE
SECURITIES LAWS."
(b) Each Prospective Holder, other than the Depositor or the
Seller, shall either:
(i) represent and warrant, in writing, to the Owner
Trustee and the Certificate Registrar and any of their
respective successors that (1) the Prospective Holder is not
an "employee benefit plan" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or a "plan" within the meaning of Section
4975(e)(1) of the Code (any such plan or employee benefit
plan, a "Plan") and is not directly or indirectly purchasing
such Certificate on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan,
or (2) either (I) the Prospective Holder is acquiring such
Certificate for its own account and no part of the assets
used to acquire such Certificate constitutes assets of a
Plan, or (II) the source of funds to be used to acquire such
Certificate is an "insurance company general account," within
the
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meaning of Prohibited Transaction Class Exemption 95-60, 60
Fed. Reg. 35925 (July 12, 1995) (the "Exemption"), and there
is no Plan with respect to which the amount of such general
account's reserves for the contract(s) held by or on behalf
of such Plan (determined under Section 807(d) of the Code),
together with the amount of the reserves of the contract(s)
held by or on behalf of any other Plans (determined under
section 807(d) of the Code) maintained by the same employer
(or an affiliate thereof as defined in Section V(a)(1) of the
Exemption) or by the same employee organization, exceed 10%
of the total of all liabilities of such general account; or
(ii) furnish to the Owner Trustee and the
Certificate Registrar and any of their respective successors
an opinion of counsel acceptable to such persons that (A) the
proposed issuance or transfer of the Certificate to such
Prospective Holder will not cause any assets of the Trust to
be deemed assets of a Plan, or (B) the proposed issuance or
transfer of the Certificate will not cause the Owner Trustee
or the Certificate Registrar or any of their respective
successors to be a fiduciary of a Plan within the meaning of
Section 3(21) of ERISA and will not give rise to a
transaction described in Section 406 of ERISA or Section
4975(c)(1) of the Code for which a statutory or
administrative exemption is unavailable.
(c) By its acceptance of a Certificate, each Prospective
Holder agrees and acknowledges that no legal or beneficial interest in all or
any portion of any Certificate may be transferred directly or indirectly to (i)
an entity that holds residual securities as nominee to facilitate the clearance
and settlement of such securities through electronic book-entry changes in
accounts of participating organizations (a "Book-Entry Nominee"), or (ii) an
individual, corporation, partnership or other person unless such transferee is
not a Non-U.S. Person (any such person being referred to herein as a
"Non-permitted Foreign Holder"), and any such purported transfer shall be void
and have no effect.
(d) The Owner Trustee shall not execute, and shall not
countersign and deliver, a Certificate in connection with any transfer thereof
unless the transferor shall have provided to the Owner Trustee an IRS Form W-9
and a certificate, signed by the transferee, that it is not a Book- Entry
Nominee or a Non-permitted Foreign Holder, which certificate shall contain the
consent of the transferee to any amendments of this Agreement as may be required
to effectuate further the foregoing restrictions on transfer of the Certificate
to Book-Entry Nominees or Non-permitted Foreign Holders, and an agreement by the
transferee that it will not transfer a Certificate without providing to the
Owner Trustee a certificate in the form provided above.
(e) The Certificates shall bear an additional legend
referring to the restrictions contained in paragraph (b) above.
(f) No offer, sale, transfer, pledge, hypothecation or other
disposition (including any pledge or transfer under a repurchase transaction or
securities loan) of any Certificate shall be made to any entity unless, prior to
such disposition, (i) the Note Insurer has given its prior written consent to
the offer, sale, transfer, pledge, hypothecation or other disposition; provided,
however, that such consent shall not be unreasonably withheld and (ii) the
Prospective Holder delivers to the Owner Trustee and the Certificate Registrar
an opinion of counsel, rendered by a law firm generally recognized to be
qualified to opine concerning the tax aspects of asset securitization, to the
effect
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that such transfer (including any disposition permitted following any default
under any pledge or repurchase transaction will not cause the Trust to be (i)
treated as an association taxable as a corporation for federal income tax
purposes, (ii) taxable as a taxable mortgage pool as defined in Section 7701(i)
of the Code or (iii) taxable as a "publicly traded partnership" as defined in
Treasury Regulation Section 1.7704-1. Notwithstanding the foregoing, the
provisions of this paragraph shall not apply to the transfer of the Certificates
to the Seller or the Depositor.
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Section 3.11 Duties of the Certificate Registrar and Trust Paying
Agent
The duties and obligations of the Certificate Registrar and Trust
Paying Agent shall be determined solely by the express provisions of this
Agreement. The Certificate Registrar and Trust Paying Agent shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Agreement or as set forth in a written amendment to this
Agreement executed by the parties hereto or their successors or assigns. Without
limiting the generality of the foregoing, the Certificate Registrar and Trust
Paying Agent:
(a) shall use the same degree of care and skill as is
reasonably expected of financial institutions acting in comparable
capacities;
(b) will be regarded as making no representations and having
no responsibilities as to the validity, sufficiency, value,
genuineness, ownership or transferability of any Certificates, the
Notes or Home Equity Loans represented thereby, and will not be
required to and will not make any representations as to the validity,
value or genuineness of the Certificates, the Notes or the Home Equity
Loans;
(c) shall not be obligated to take any legal action hereunder
that might in its judgment involve any expense or liability unless it
has been furnished with reasonable indemnity;
(d) may rely on and shall be protected in acting in good
faith upon any certificate, instrument, opinion, notice, letter,
telegram or other document, or any security, delivered to it and in
good faith believed by it to be genuine and to have been signed by the
proper party or parties;
(e) may rely on and shall be protected in acting in good
faith upon the written instructions of the Owner Trustee, the Seller
and the Issuer, as indicated herein;
(f) may consult counsel satisfactory to it and the opinion of
such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered, or omitted by it hereunder
in good faith and in furtherance of its duties hereunder, in
accordance with the opinion of such counsel;
(g) shall not be liable for any error of judgment, or for any
act done or step taken or omitted by it, in good faith, or for any
mistake of fact or law, or for anything that it may do or refrain from
doing in connection therewith, except in the case of negligent
performance or omission; and
(h) may execute any of the powers hereunder or perform any
duties hereunder either directly or through agents or attorneys.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters.
The Owner Trustee shall not take action with respect to the following matters,
unless (i) the Owner Trustee shall have notified the Certificateholders and the
Note Insurer in writing of the proposed action at least 30 days before the
taking of such action, and (ii) neither the Certificateholders nor the Note
Insurer shall have notified the Owner Trustee in writing prior to the 30th day
after such notice is given that such Certificateholders or the Note Insurer have
withheld consent or provided alternative direction (provided that any directions
by the Certificateholders shall require the prior consent of the Note Insurer):
(a) the initiation of any claim or lawsuit by the Trust
(except claims and law suits brought in connection with the collection of the
Home Equity Loans) or the compromise of any action, claim or lawsuit brought by
or against the Trust (except claims and law suits brought in connection with the
collection of the Home Equity Loans);
(b) the election by the Trust to file an amendment to the
Certificate of Trust, (except to the extent such amendment is required under the
Business Trust Statute);
(c) the amendment or other change to this Agreement or any
Operative Documents in circumstances where the consent of any Owner of a Note or
the Note Insurer is required;
(d) the amendment or other change to this Agreement or any
Operative Documents in circumstances where the consent of any Owner of a Note or
the Note Insurer is not required and such amendment materially adversely affects
the interest of the Certificateholders;
(e) the appointment pursuant to the Indenture of a successor
Note Registrar, Paying Agent or Indenture Trustee or, pursuant to this
Agreement, of a successor Certificate Registrar or Trust Paying Agent, or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee, Certificate Registrar or Trust Paying Agent of its obligations under
the Indenture or this Agreement, as applicable;
(f) the consent to the calling or waiver of any default of
any Operative Document;
(g) the consent to the assignment of the Indenture Trustee or
Servicer of their respective obligations under the Operative Document;
(h) except as provided in Article IX hereof, dissolve,
terminate or liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other
entity, or convey or transfer all or substantially all of the Trust's assets to
any other entity;
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(j) cause the Trust to incur, assume or guaranty any
indebtedness other than as set forth in this Agreement;
(k) do any act that conflicts with any other Operative
Document;
(l) do any act which would make it impossible to carry on the
ordinary business of the Trust as described in Section 2.3 hereof;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to
property, for other than a Trust purpose;
(o) cause the Trust to lend any funds to any entity; or
(p) change the Trust's purpose and powers from those set
forth in this Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness and any operating expenses from its
own funds, and the Trust shall not pay the indebtedness, operating expenses or
liabilities of any other entity. The Trust shall maintain appropriate minutes or
other records of all appropriate actions and shall maintain its office separate
from the offices of the Depositor, the Seller and the Servicer.
The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders with the consent of the Note Insurer, and to the
extent otherwise consistent with the Operative Documents, to (i) remove or
replace the Servicer or the Indenture Trustee, (ii) institute proceedings to
have the Trust declared or adjudicated a bankruptcy or insolvent, (iii) consent
to the institution of bankruptcy or insolvency proceedings against the Trust,
(iv) file a petition or consent to a petition seeking reorganization or relief
on behalf of the Trust under any applicable federal or state law relating to
bankruptcy, (v) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or any similar official) of the Trust or a substantial
portion of the property of the Trust, (vi) make any assignment for the benefit
of the Trust's creditors, (vii) cause the Trust to admit in writing its
inability to pay its debts generally as they become due, (viii) take any action,
or cause the Trust to take any action, in furtherance of any of the foregoing
(any of the above, a "Bankruptcy Action"). So long as the Indenture remains in
effect and no Note Insurer Default exists, no Certificateholder shall have the
power to take, and shall not take, any Bankruptcy Action with respect to the
Trust or direct the Owner Trustee to take any Bankruptcy Action with respect to
the Trust.
SECTION 4.2 Action by Holders with Respect to Certain Matters. The
Owner Trustee shall not have the power to remove the Servicer under the Sale and
Servicing Agreement.
SECTION 4.3 Action by Holders with Respect to Bankruptcy. Neither
Owner Trustee nor any Certificateholder shall have the power to commence a
voluntary proceeding in bankruptcy
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relating to the Trust without the consent and approval of (i) the Note Insurer,
(ii) the unanimous prior approval of all Certificateholders and Owners of the
Notes, (iii) the Owner Trustee and (iv) the Indenture Trustee and the delivery
to the Owner Trustee by each such Certificateholder of a certificate certifying
that such Certificateholder reasonably believes that the Trust is insolvent.
This paragraph shall survive for one year and one day following termination of
this Agreement.
SECTION 4.4 Restrictions on Holders' Power. The Certificateholders
shall not direct the Owner Trustee to take or refrain from taking any action if
such action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the Operative Documents or would be
contrary to Section 2.3, nor shall the Owner Trustee be obligated to follow any
such direction, if given.
SECTION 4.5 Majority Control. Except as expressly provided herein any
action that may be taken or consent that may be given or withheld or written
notice delivered by the Certificateholders under this Agreement may be taken by
Holders of Certificates representing not less than a majority of the
Certificates.
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ARTICLE V
APPLICATION OF OWNER TRUST ESTATE; CERTAIN DUTIES
SECTION 5.1 Establishment of Certificate Distribution Account. The
Owner Trustee shall cause the Servicer, for the benefit of the
Certificateholders, to establish and maintain with The Chase Manhattan Bank for
the benefit of the Owner Trustee a Trust Account which while the Trust Paying
Agent holds such Account shall be entitled "CERTIFICATE DISTRIBUTION ACCOUNT,
THE CHASE MANHATTAN BANK AS TRUST PAYING AGENT, IN TRUST FOR THE IMC ADJUSTABLE
RATE HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 1998-2." Funds shall be
deposited in the Certificate Distribution Account as required by the Indenture,
or following satisfaction or release of the Indenture, by the Sale and Servicing
Agreement.
All of the right, title and interest of the Owner Trustee in all funds
on deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof shall be held for the benefit of the Certificateholders. Except
as otherwise expressly provided herein or in the Sale and Servicing Agreement,
the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee for the benefit of the Certificateholders.
SECTION 5.2 Application of Trust Funds.
(a) On each Payment Date, the Trust Paying Agent shall distribute to
the Certificateholders from amounts on deposit in the Certificate Distribution
Account the distributions as provided in Section 3.03(b)(v) of the Sale and
Servicing Agreement with respect to such Payment Date.
(b) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the amount otherwise distributable to the Certificateholder in accordance with
this Section. The Trust Paying Agent is hereby authorized and directed to retain
from amounts otherwise distributable to the Certificateholders sufficient funds
for the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Trust Paying Agent from contesting any such
tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Certificateholder shall be treated as
cash distributed to such Holder at the time it is withheld by the Trust Paying
Agent and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution (such
as a distribution to a non-U.S. Holder), the Trust Paying Agent may in its sole
discretion withhold such amounts in accordance with this paragraph (b). In the
event that a Certificateholder wishes to apply for a refund of any such
withholding tax, the Trust Paying Agent shall reasonably cooperate with such
Certificateholder in making such claim so long as such Certificateholder agrees
to reimburse the Trust Paying Agent for any out-of-pocket expenses incurred.
(c) Distributions to Certificateholders shall be subordinated to the
creditors of the Trust, including the Noteholders and the Note Insurer.
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SECTION 5.3 Method of Payment. Distributions required to be made to
Certificateholders on any Payment Date shall be made to each Certificateholder
of record on the immediately preceding Record Date either by wire transfer, in
immediately available funds, to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Payment Date, or,
if not, by check mailed to such Certificateholder at the address of such
Certificateholder appearing in the Certificate Register.
SECTION 5.4 Segregation of Moneys; No Interest. Subject to Sections
5.1 and 5.2, moneys received by the Trust Paying Agent hereunder and deposited
into the Certificate Distribution Account will be segregated except to the
extent required otherwise by law and shall be invested in Eligible Investments
maturing no later than one Business Day prior to the related Payment Date at the
direction of the Depositor (with the consent of the Seller). The Trust Paying
Agent shall not be liable for payment of any interest or losses in respect of
such moneys. Investment gains shall be for the account of and paid to the
Certificateholders.
SECTION 5.5 Accounting and Reports to the Certificateholders, the
Internal Revenue Service and Others. The Certificate Registrar shall (a)
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis on the accrual method of accounting, and such books shall be maintained
separately from those of any other entity and reflect the separate interest of
the Trust, (b) deliver to each Certificateholder, as may be required by the Code
and applicable Treasury Regulations, such information as may be required
(including Schedule K-1) to enable such Certificateholder to prepare its federal
and state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, IRS Form 1065), and make such
elections as may from time to time be required or appropriate under any
applicable state or federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax required to be
withheld (as certified by the Seller) with respect to income or distributions to
Certificateholders. The Certificate Registrar shall elect under Section 1278 of
the Code to include in income currently any market discount that accrues with
respect to the Home Equity Loans. The Certificate Registrar shall not make the
election provided under Section 754 of the Code.
SECTION 5.6 Signature on Returns; Tax Matters Partner.
(a) The Certificate Registrar shall sign on behalf of the
Trust the tax returns of the Trust, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents shall be
signed by the Seller.
(b) The Seller shall be designated the "tax matters partner"
of the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable
Treasury Regulations.
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ARTICLE VI
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
SECTION 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the
Certificates and the Operative Documents to which the Trust is to be a party and
each certificate or other document attached as an exhibit to or contemplated by
the Operative Documents to which the Trust is to be a party and any amendment or
other agreement or instrument described in Article III, in each case, in such
form as the Depositor shall approve, as evidenced conclusively by the Owner
Trustee's execution thereof, and, on behalf of the Trust, to direct the
Indenture Trustee to authenticate and deliver the Notes in the aggregate
principal amount of $700,000,000. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all actions required
of the Trust, pursuant to the Operative Documents.
SECTION 6.2. General Duties. It shall be the duty of the Owner
Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Operative
Documents to which the Trust is a party and to administer the Trust in the
interest of the Certificateholders, and in accordance with the provisions of
this Agreement; and
(b) to obtain and preserve, the Trust's qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, and each other instrument and agreement included in the Owner Trust
Estate.
SECTION 6.3 Action upon Instruction by Owners.
(a) Subject to Article IV, the Certificateholders may by
written instruction direct the Owner Trustee in the management of the Trust, but
only to the extent consistent with the limited purposes of the Trust. Such
direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Article IV.
(b) Notwithstanding the foregoing, the Owner Trustee shall
not be required to take any action hereunder or under any Operative Document if
the Owner Trustee shall have reasonably determined, or shall have been advised
by counsel, that such action is likely to result in liability on the part of the
Owner Trustee or is contrary to the terms hereof or of any Operative Document or
is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Operative Document, or is unsure as to the application, intent,
interpretation or meaning of any provision of this agreement or the Operative
Documents, the Owner Trustee shall promptly give notice (in such form as shall
be appropriate under the circumstances) to the Note Insurer and the
Certificateholders requesting instruction as to the course of action to be
adopted, and, to the extent the Owner Trustee acts in good
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faith in accordance with any such instruction received, the Owner Trustee shall
not be liable on account of such action to any Person. If the Owner Trustee
shall not have received appropriate instructions within ten days of such notice
(or within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be under
no duty to, take or refrain from taking such action which is consistent, in its
view, with this Agreement or the Operative Documents, and as it shall deem to be
the best interests of the Certificateholders, and the Owner Trustee shall have
no liability to any Person for any such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Operative Document or any
such provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Operative
Documents, as it shall deem to be in the best interest of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement, the
Operative Documents or in Instructions. The Owner Trustee shall not have any
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
any document contemplated hereby to which the Owner Trustee is a party, except
as expressly provided by the terms of this Agreement, any Operative Document or
in any document or written instruction received by the Owner Trustee pursuant to
Section 6.3; and no implied duties or obligations shall be read into this
Agreement or any Operative Document against the Owner Trustee. The Owner Trustee
shall have no responsibility for filing any financing or continuation statement
in any public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder or to
prepare or file any Securities and Exchange Commission filing for the Trust or
to record this Agreement or any Operative Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Owner Trust
Estate that result from actions by, or claims against, the Owner Trustee that
are not related to the ownership or the administration of the Owner Trust
Estate.
SECTION 6.5 No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Operative
Documents and
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(iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for Federal income tax purposes. The
Certificateholders shall not direct the Owner Trustee to take action that would
violate the provisions of this Section.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 Acceptance of Trusts and Duties. Except as otherwise
provided in this Article VII, in accepting the trusts hereby created Wilmington
Trust Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Operative Document shall
look only to the assets of the Trust for payment or satisfaction thereof. The
Owner Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this Agreement.
The Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the assets of the Trust upon the terms of the Operative
Documents and this Agreement. The Owner Trustee shall not be liable or
accountable hereunder or under any Operative Document under any circumstances,
except (i) for its own gross negligent action, its own gross negligent failure
to act or its own willful misconduct or (ii) in the case of the inaccuracy of
any representation or warranty contained in Section 7.3 and expressly made by
the Owner Trustee. In particular, but not by way of limitation (and subject to
the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Home Equity Loan, or the perfection and priority of any
security interest created by any Home Equity Loan in any Property or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the assets of the Trust or their ability to generate the payments
to be distributed to Certificateholders under this Agreement or the Owners of
the Notes under the Indenture, including, without limitation: the existence,
condition and ownership of any Property; the existence and enforceability of any
insurance thereon; the existence and contents of any Home Equity Loan on any
computer or other record thereof; the validity of the assignment of any Home
Equity Loan to the Trust or of any intervening assignment; the completeness of
any Home Equity Loan; the performance or enforcement of any Home Equity Loan;
the compliance by the Depositor or the Servicer with any warranty or
representation made under any Operative Document or in any related document or
the accuracy of any such warranty or representation or any action of the
Indenture Trustee, the Custodian or the Servicer or any subservicer taken in the
name of the Owner Trustee.
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the Note Insurer or any Certificateholder;
(c) no provision of this Agreement or any Operative Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Operative Document, if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
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(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Operative Documents,
including the Note Principal Balance and the interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of and makes no representation as to the validity or sufficiency of any
provision of this Agreement or for the due execution hereof by the Depositor or
for the form, character, genuineness, sufficiency, value or validity of any of
the Owner Trust Estate or for or in respect of the validity or sufficiency of
the Operative Documents, the Notes, the Certificates (other than the execution
thereof and the certificate of authentication on the Certificates, if executed
by the Owner Trustee) or of any Home Equity Loans or any related documents, and
the Owner Trustee shall in no event assume or incur any liability, duty or
obligation to any Owner of a Note or to any Certificateholder, other than as
expressly provided for herein and in the Operative Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Indenture Trustee, the Custodian, the Depositor, the Seller or
the Servicer under any of the Operative Documents or otherwise and the Owner
Trustee shall have no obligation or liability to perform the obligations of the
Trust under this Agreement or the Operative Documents that are required to be
performed by the Indenture Trustee under the Indenture, the Custodian under the
Custodial Agreement or the Servicer under the Sale and Servicing Agreement;
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or otherwise or
in relation to this Agreement, the Underwriting Agreement or any Operative
Document, at the request, order or direction of any of the Note Insurer or any
of the Certificateholders, unless the Note Insurer or such Certificateholders
have offered to the Owner Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities that may be incurred by the Owner
Trustee therein or thereby. The right of the Owner Trustee to perform any
discretionary act enumerated in this Agreement or in any Operative Document
shall not be construed as a duty, and the Owner Trustee shall not be answerable
for other than its negligence or willful misconduct in the performance of any
such act;
(h) The Owner Trustee shall have no responsibility for filing
any financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare, execute or file any Securities and
Exchange Commission filing or tax return for the Trust or to record this
Agreement or any Operative Document.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish
(a) to the Certificateholders, promptly upon receipt of a written request
therefor, duplicate or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Operative Documents, and (b) to the Note Insurer, copies
of any reports, notices, requests, demands, certificates, financial statements,
and any other instruments relating to the Trust, the Certificates or the Notes
in the possession of the Owner Trustee, that the Note Insurer shall request in
writing.
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SECTION 7.3 Representations and Warranties of Owner Trustee. The
Wilmington Trust Company hereby represents and warrants to the Depositor, for
the benefit of the Certificateholders and the Note Insurer, that:
(a) It is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) It has full power, authority and legal right to execute,
deliver and perform its obligations under this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Agreement.
(c) The execution, delivery and performance by it of this
Agreement (i) shall not violate any provision of any law or regulation governing
the banking and trust powers of the Wilmington Trust Company or any order, writ,
judgment or decree of any court, arbitrator or governmental authority applicable
to the Wilmington Trust Company or any of its assets, (ii) shall not violate any
provision of the corporate charter or by-laws of Wilmington Trust Company, or
(iii) shall not violate any provision of, or constitute, with or without notice
or lapse of time, a default under, or result in the creation or imposition of
any lien on any properties included in the Trust pursuant to the provisions of
any mortgage, indenture, contract, agreement or other undertaking to which it is
a party, which violation, default or lien could reasonably be expected to have a
materially adverse effect on Wilmington Trust Company's performance or ability
to perform its duties as Owner Trustee under this Agreement or on the
transactions contemplated in this Agreement.
(d) This Agreement has been duly executed and delivered by
Wilmington Trust Company and constitutes the legal, valid and binding agreement
of Wilmington Trust Company, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar law affecting the enforcement of creditors' rights in general and
by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) The Wilmington Trust Company 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 Wilmington Trust Company or its
properties or might have consequences that would materially adversely affect its
performance hereunder.
(f) No litigation is pending or, to the best of the
Wilmington Trust Company's knowledge, threatened against the Wilmington Trust
Company which would prohibit its entering into this Trust Agreement or
performing its obligations under this Trust Agreement.
SECTION 7.4 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, note or
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other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or other authorized officers of the relevant party, as to such fact or matter,
and such certificate shall constitute full protection to the Owner Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the Trust hereunder
and in the performance of its duties and obligations under this Agreement or the
Operative Documents, the Owner Trustee: (i) may act directly or through its
agents, attorneys, custodians or nominees, and the Owner Trustee shall not be
liable for the conduct or misconduct of such agents, attorneys, custodians or
nominees if such agents, attorneys, custodians or nominees shall have been
selected by the Owner Trustee with reasonable care and (ii) may consult with
counsel, accountants and other skilled professionals to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
opinion or advice of any such counsel, accountants or other such Persons and not
contrary to this Agreement or any of the Operative Documents.
(c) In providing any certificates required of the Issuer
pursuant to the Indenture, the Owner Trustee may rely on an Officer's
Certificate of the Seller in a form satisfactory to the Owner Trustee.
SECTION 7.5 Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Notes and may deal with the Depositor, the Indenture Trustee
and the Servicer in transactions in the same manner and with the same rights as
it would have if it were not the Owner Trustee.
SECTION 7.6 Licenses. The Owner Trustee shall cause the Trust to use
its best efforts to obtain and maintain the effectiveness of any licenses
required in connection with this Agreement and the Operative Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof.
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ARTICLE VIII
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE AND ITS AGENTS
SECTION 8.1 Owner Trustee's Fee and Expenses. The Owner Trustee shall
receive from the Seller as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Seller and
the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by
the Seller for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, custodians, nominees,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder. The amount of the Owner Trustee Fee shall be paid to the Owner
Trustee pursuant to Section 3.05 of the Indenture.
SECTION 8.2 Indemnification of the Owner Trustee. The Seller shall be
liable as primary obligor pursuant to the Sale and Servicing Agreement for, and
shall indemnify the Owner Trustee and its successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of this Agreement, the Operative Documents, the Owner Trust Estate,
the administration of the Trust or the action or inaction of the Owner Trustee
hereunder, provided that:
(i) the Seller shall not be liable for or required to
indemnify an Indemnified Party from and against Expenses arising or resulting
from the Owner Trustee's willful misconduct, gross negligence or bad faith, as
specified in the fourth sentence of Section 7.1 or as a result of any inaccuracy
of a representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee;
(ii) with respect to any such claim, the Indemnified Party
shall have given the Seller written notice thereof promptly after the
Indemnified Party shall have actual knowledge thereof;
(iii) while maintaining control over its own defense, the
Seller shall consult with the Indemnified Party in preparing such defense; and
(iv) notwithstanding anything in this Agreement to the
contrary, the Seller shall not be liable for settlement of any claim by an
Indemnified Party entered into without the prior consent of the Seller which
consent shall not be unreasonably withheld.
The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement. In the event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section 8.2, the Owner Trustee's choice of legal
counsel, if other than the legal counsel retained by the Owner Trustee in
connection with the execution and delivery of this Agreement, shall be subject
to the approval of the Seller, which approval shall not be unreasonably
withheld. In addition, upon written notice to the Owner Trustee
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and with the consent of the Owner Trustee which consent shall not be
unreasonably withheld, the Seller has the right to assume the defense of any
claim, action or proceeding against the Owner Trustee.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
SECTION 8.4 Indemnification of the Certificate Registrar and Trust
Paying Agent.
(a) Neither the Certificate Registrar, the Trust Paying Agent nor any
of their respective directors, officers, agents or employees, shall be liable
for any action taken or omitted to be taken by it or them hereunder or in
connection herewith in good faith and believed by it or them to be within the
purview of this Agreement, except for its or their own gross negligence, lack of
good faith or willful misconduct. In no event shall the Certificate Registrar,
the Trust Paying Agent nor any of their respective directors, officers, agents
and employees be held liable for any special, indirect or consequential damages
resulting from any action taken or omitted to be taken by it or them hereunder
or in connection herewith even if advised of the possibility of such damages.
(b) The Seller agrees to indemnify and hold the Certificate Registrar,
the Trust Paying Agent and their respective directors, officers, agents and
employees (each, a "Chase Indemnified Party") harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
reasonably attorney's fees, that may be imposed on, incurred by, or asserted
against such Chase Indemnified Party in any action taken or not taken by such
Chase Indemnified Party hereunder unless such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
were imposed on, incurred by or asserted against such Chase Indemnified Party
because of the breach by such Chase Indemnified Party of its obligations
hereunder, which breach was caused by gross negligence, lack of good faith or
willful misconduct on the part of such Chase Indemnified Party. The foregoing
indemnification shall survive any termination of this Agreement and the
resignation or removal of the Certificate Registrar or Trust Paying Agent.
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ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) and the Trust
shall terminate and be of no further force or effect on the earlier of: (i) the
final distribution by the Indenture Trustee of all moneys or other property or
proceeds of the assets of the Trust in accordance with the terms of the
Indenture and (ii) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy (the late ambassador of the
United States to the Court of St. James's). The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder shall not (x) operate
to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or the Owner Trust Estate or (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) The Certificates shall be subject to an early redemption
or termination at the option of the Holders of a majority of the Certificates,
and in certain instances the Note Insurer, in the manner and subject to the
provisions of Section 5.02 of the Sale and Servicing Agreement.
(c) Except as provided in paragraphs (a) and (b) of this
Section 9.1, none of the Depositor, the Servicer, the Note Insurer or any
Certificateholder shall be entitled to revoke or terminate the Trust.
(d) Notice of any termination of the Trust, specifying the
Payment Date upon which the Certificateholders shall surrender their
Certificates to the Owner Trustee for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to the Note Insurer,
the Rating Agencies and the Trust Paying Agent mailed within five Business Days
of receipt of notice of such termination, stating: (i) the Payment Date upon or
with respect to which final payment of the Certificates shall be made upon
presentation and surrender of the Certificates at the office of the Owner
Trustee therein designated; (ii) the amount of any such final payment; and (iii)
that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Owner Trustee therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Trust Paying Agent at the time such notice is given to
Certificateholders. The Owner Trustee will give notice to the Trust Paying Agent
of each presentation and surrender of the Certificates and the Trust Paying
Agent shall cause to be distributed to Certificateholders amounts distributable
on such Payment Date pursuant to Section 5.03 of the Sale and Servicing
Agreement.
(e) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810(d) of the Business Trust Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate powers;
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authorities; and having (or
having a parent which has) a rating of at least "Baa3" by Moody's and "A-1" by
Standard & Poor's and being acceptable to the Note Insurer. If such corporation
shall publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Owner Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.
SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving 30 days prior written notice thereof to the Depositor, the Seller, the
Indenture Trustee and the Note Insurer. Upon receiving such notice of
resignation, the Depositor (with the consent of the Seller) shall promptly
appoint a successor Owner Trustee (acceptable to the Note Insurer) by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Owner Trustee and one copy to the successor Owner Trustee. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee or the Note Insurer may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Indenture Trustee, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Note Insurer, or the Indenture Trustee
with the consent of the Note Insurer, may remove the Owner Trustee. If the
Indenture Trustee or the Note Insurer shall remove the Owner Trustee under the
authority of the immediately preceding sentence, the Note Insurer, or the
Servicer with the consent of the Note Insurer, shall promptly appoint a
successor Owner Trustee by written instrument in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee and payment of all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3, written approval by the Note Insurer and
payment of all fees and expenses owed to the outgoing Owner Trustee. The
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Depositor shall provide notice of such resignation or removal of the Owner
Trustee to each of the Rating Agencies and the Note Insurer.
SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Depositor, the Indenture Trustee, the Note Insurer and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee (if acceptable to the Note
Insurer), without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Depositor and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Depositor shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Owners, the Note
Insurer and the Rating Agencies. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor Owner Trustee,
the successor Owner Trustee shall cause such notice to be mailed at the expense
of the Depositor.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, and without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto; provided, however, that the Owner Trustee shall mail notice
of such merger or consolidation to the Note Insurer and each of the Rating
Agencies.
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement,
at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Owner Trust Estate or any Property may at
the time be located, the Owner Trustee (with the consent of the Note Insurer)
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Owner Trustee and the Note Insurer to act as
co-trustee, jointly with the Owner Trustee, or as separate trustee or trustees,
of all or any part of the assets of the Trust, and to vest in such Person, in
such capacity, such title to the Trust, or any part thereof, and, subject to the
other provisions of this Section, such powers, duties, obligations, rights and
trusts as the Note Insurer
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and the Owner Trustee may consider necessary or desirable. No co-trustee or
separate trustee under this Agreement shall be required to meet the terms of
eligibility as a successor trustee pursuant to Section 10.1 and no notice of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 10.3.
(b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be
conferred upon and exercised or performed by the Owner
Trustee, and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee
joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are
to be performed, the Owner 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 or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction
of the Owner Trustee;
(ii) no trustee under this Agreement shall be
personally liable by reason of any act or omission of any
other trustee under this Agreement; and
(iii) the Owner Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Owner
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. 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 Owner
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 Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Note Insurer.
(d) Any separate trustee or co-trustee may at any time
appoint the Owner Trustee as 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 Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Amendments Without Consent of Certificateholders or
Owners of the Notes. This Agreement may be amended by the Depositor, the Seller
and the Owner Trustee without the consent of any of the Certificateholders (but
with the prior written consent of the Note Insurer and prior notice to each of
the Rating Agencies), to (i) cure any ambiguity, (ii) correct or supplement any
provision in this Agreement that may be defective or inconsistent with any other
provision in this Agreement, (iii) add or supplement any credit enhancement for
the benefit of the Owners of the Notes or the Certificateholders, (iv) add to
the covenants, restrictions or obligations of the Depositor or the Owner Trustee
and (v) add, change or eliminate any other provision of this Agreement in any
manner that shall not, adversely affect in any material respect the interests of
the Owners of the Notes or the Certificateholders. An amendment described above
shall be deemed not to adversely affect in any material respect the interests of
any Certificateholder or Owner of a Note if (i) an opinion of counsel is
obtained to such effect or (ii) the party requesting the amendment satisfies the
Rating Agency Condition with respect to such amendment.
SECTION 11.2 Amendments With Consent of Certificateholders. This
Agreement may be amended from time to time by the Depositor, the Seller and the
Owner Trustee with the consent of the Note Insurer and more than a majority in
Percentage Interests of the 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
Certificateholders; provided, however, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Home Equity Loans or distributions that shall be made
for the benefit of the Certificateholders or (b) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the Holders of
all of the Certificates then outstanding.
SECTION 11.3 Form of Amendments.
(a) Promptly after the execution of any amendment, supplement
or consent pursuant to Section 11.1 or 11.2, the Owner Trustee shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder, the Indenture Trustee, the Note Insurer and each Rating
Agency.
(b) It shall not be necessary for the consent of the
Certificateholders, pursuant to Section 11.2 to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents (and
any other consents of Certificateholders provided for in this Agreement or in
any other Operative Document) and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
(c) Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the filing of such amendment
with the Secretary of State.
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(d) Prior to the execution of any amendment to this Agreement
or the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.4 No Legal Title to Owner Trust Estate. The
Certificateholders shall not have legal title to any part of the assets of the
Owner Trust Estate solely by virtue of their status as Certificateholders. The
Certificateholders shall be entitled to receive distributions with respect to
their undivided ownership interest therein only in accordance with Articles V
and IX. No transfer, by operation of law or otherwise, of any right, title, and
interest of the Certificateholders to and in their ownership interest in the
assets of the Trust shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it of
legal title to any part of the assets of the Trust.
SECTION 11.5 Limitations on Rights of Others. Except for Section 2.7,
the provisions of this Agreement are solely for the benefit of the Note Insurer,
the Owner Trustee, the Depositor, the Certificateholders and, to the extent
expressly provided herein, the Indenture Trustee and the Owners of the Notes,
and nothing in this Agreement (other than Section 2.7), 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.
SECTION 11.6 Notices.
(a) 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, IMC Mortgage Company, 5901
East Fowler Ave., Tampa, Florida 33617-2362, Attention: Laurie Williams, or such
other addresses as may hereafter be furnished to the Certificateholders in
writing by the Servicer, (ii) in the case of the Depositor, Bear Stearns Asset
Backed Securities, Inc. c/o Bear, Stearns & Co. Inc., 245 Park Avenue, New York,
New York 10167, Attention: General Counsel, or such other addresses as may
hereafter be furnished to the Certificateholders in writing by the Depositor,
(iii) in the case of the Owner Trustee, Wilmington Trust Company, Rodney Square
North, 1100 N. Market Street, Wilmington, Delaware 19890, Attention: IMC Home
Equity Loan Owner Trust 1998-2, (iv) in the case of the Certificateholders, as
set forth in the Certificate Register, (v) in the case of the Indenture Trustee,
The Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001,
Attention: IMC Home Equity Loan Owner Trust 1998-2, (vi) in the case of Moody's,
99 Church Street, New York, New York 10007, Attention: Home Equity Monitoring
Group, (vii) in the case of Standard & Poor's, 25 Broadway, New York, New York
10004, Attention: Residential Mortgage Group, and (viii) in the case of the Note
Insurer, MBIA Insurance Corporation 113 King Street, Armonk, N.Y. 10504,
Attention: IMC Home Equity Loan Owner Trust 1998-2. 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.
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(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.7 Severability. 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 provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
SECTION 11.8 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument.
SECTION 11.9 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Owner Trustee, the Note Insurer and each Certificateholder and
their respective successors and permitted assigns, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 11.10 No Petition Covenant. Notwithstanding any prior
termination of this Agreement, the Trust (or the Owner Trustee on behalf of the
Trust), the Depositor, the Seller, each Certificateholder and the Indenture
Trustee shall not acquiesce, petition or otherwise invoke or cause the Trust to
invoke the process of any court or governmental authority for the purpose of
commencing or sustaining a case against the Depositor or the Trust under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Depositor or the Trust or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Depositor or the
Trust.
SECTION 11.11 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Depositor, the Servicer, the Owner Trustee, the Indenture
Trustee or any affiliate thereof and no recourse may be had against such parties
or their assets, except as may be expressly set forth or contemplated in this
Agreement, the Certificates or the Operative Documents.
SECTION 11.12 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.13 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS
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AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
SECTION 11.14 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
SECTION 11.15 Third-Party Beneficiary. The parties hereto acknowledge
that the Note Insurer is an express third party beneficiary hereof entitled to
enforce the provisions hereunder as if it were actually a party hereto. Nothing
in this section, however, shall be construed to mitigate in any way, the
fiduciary responsibilities of the Owner Trustee to the Certificateholders nor to
create a fiduciary responsibility of the Owner Trustee to the Note Insurer.
SECTION 11.16 Suspension and Termination of Note Insurer's Rights.
During the continuation of a Note Insurer Default, rights granted or reserved to
the Note Insurer hereunder shall vest instead in the Certificateholders;
provided that the Note Insurer shall be entitled to any distributions in
reimbursement of the Note Insurer Reimbursement Amount, and the Note Insurer
shall retain those rights under Section 11.1 to consent to any amendment of this
Agreement.
At such time as either (i) the Note Principal Balance has
been reduced to zero or (ii) the Insurance Policy has been terminated and in
either case of (i) or (ii) the Note Insurer has been reimbursed for all Insured
Payments and any other amounts owed under the Insurance Policy and the Insurance
Agreement (and the Note Insurer no longer has any obligation under the Insurance
Policy, except for breach thereof by the Note Insurer), then the rights and
benefits granted or reserved to the Note Insurer hereunder (including the rights
to direct certain actions and receive certain notices) shall terminate and the
Certificateholders shall be entitled to the exercise of such rights and to
receive such benefits of the Note Insurer following such termination to the
extent that such rights and benefits are applicable to the Certificateholders.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
WILMINGTON TRUST COMPANY,
as Owner Trustee
By: /s/ Emmett R. Harmon
---------------------------
Name: Emmett R. Harmon
Title: Vice President
BEAR STEARNS ASSET BACKED SECURITIES, INC.,
as Depositor
By: /s/ Matthew Perkins
---------------------------
Name: Matthew Perkins
Title: Managing Director
Acknowledged and Accepted:
IMC MORTGAGE COMPANY,
as Seller and Servicer
By: /s/ Thomas G. Middleton
---------------------------
Name: Thomas G. Middleton
Title: President
THE CHASE MANHATTAN BANK,
as Trust Paying Agent and Certificate
Registrar
By: /s/ Ann Marie Jose
---------------------------
Name: Ann Marie Jose
Title: Trust Officer
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EXHIBIT A
CERTIFICATE OF TRUST OF
IMC HOME EQUITY LOAN TRUST 1998-2
THIS Certificate of Trust of IMC Home Equity Loan Owner Trust 1998-2
(the "Trust") dated as of March 1, 1998, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, ss.3801 et
seq.).
1. Name. The name of the business trust formed hereby is IMC Home Equity Loan
Owner Trust 1998-2.
2. Delaware Trustee. The name and business address of the trustee of the Trust
in the State of Delaware is Wilmington Trust Company, Rodney Square North, 1100
N. Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration.
3. This Certificate of Trust shall be effective as of its filing. IN WITNESS
WHEREOF, the undersigned, being the sole trustee of the Trust, has executed this
Certificate of Trust as of the date first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: ____________________________
Name:
Title:
<PAGE>
EXHIBIT B-1
TO THE TRUST AGREEMENT
(FORM OF CERTIFICATE)
THE EQUITY INTEREST IN THE TRUST REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS. THIS CERTIFICATE MAY BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OR (INCLUDING PLEDGED) BY THE
HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A PERSON INVOLVED IN THE
ORGANIZATION OR OPERATION OF THE TRUST OR AN AFFILIATE OF SUCH A PERSON WITHIN
THE MEANING OR RULE 3A-7 OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED
(INCLUDING BUT NOT LIMITED TO, IMC MORTGAGE COMPANY) IN A TRANSACTION THAT IS
REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. NO PERSON IS
OBLIGATED TO REGISTER THIS EQUITY INTEREST UNDER THE ACT OR ANY STATE SECURITIES
LAWS.
NO TRANSFER OF THIS CERTIFICATE OR ANY BENEFICIAL INTEREST THEREIN SHALL BE MADE
TO ANY PERSON UNLESS THE OWNER TRUSTEE HAS RECEIVED EITHER
(A) A CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT
SUCH TRANSFEREE (1) IS NOT AN "EMPLOYEE BENEFIT PLAN"
WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR A "PLAN" WITHIN THE MEANING OF SECTION
4975(e)(1) OF THE CODE (ANY SUCH PLAN OR EMPLOYEE BENEFIT
PLAN, A "PLAN") AND IS NOT DIRECTLY OR INDIRECTLY
PURCHASING SUCH CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN, OR (2) EITHER (I) SUCH TRANSFEREE IS
ACQUIRING THE CERTIFICATE FOR ITS OWN ACCOUNT AND NO
PART OF THE ASSETS USED TO ACQUIRE THE CERTIFICATE
CONSTITUTES ASSETS OF A PLAN, OR (II) THE SOURCE OF FUNDS TO
BE USED TO ACQUIRE SUCH CERTIFICATE IS AN "INSURANCE
COMPANY GENERAL ACCOUNT," WITHIN THE MEANING OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, 60 FED. REG.
<PAGE>
35925 (JULY 12, 1995) (THE "EXEMPTION"), AND THERE IS NO PLAN
WITH RESPECT TO WHICH THE AMOUNT OF SUCH GENERAL ACCOUNT'S
RESERVES FOR THE CONTRACT(S) HELD BY OR ON BEHALF OF SUCH
PLAN (DETERMINED UNDER SECTION 807(d) OF THE CODE), TOGETHER
WITH THE AMOUNT OF THE RESERVES OF THE CONTRACT(S) HELD BY OR
ON BEHALF OF ANY OTHER PLANS (DETERMINED UNDER SECTION 807(d)
OF THE CODE) MAINTAINED BY THE SAME EMPLOYER (OR AN AFFILIATE
THEREOF AS DEFINED IN SECTION V(a)(1) OF THE EXEMPTION) OR BY
THE SAME EMPLOYEE ORGANIZATION, EXCEED 10% OF THE TOTAL OF
ALL LIABILITIES OF SUCH GENERAL ACCOUNT; OR
(B) AN OPINION OF COUNSEL ACCEPTABLE TO SUCH PERSONS THAT (A)
THE PROPOSED ISSUANCE OR TRANSFER OF THE CERTIFICATE TO
SUCH TRANSFEREE WILL NOT CAUSE ANY ASSETS OF THE TRUST
TO BE DEEMED ASSETS OF A PLAN, OR (B) THE PROPOSED ISSUANCE
OR TRANSFER OF THE CERTIFICATE WILL NOT CAUSE THE OWNER
TRUSTEE OR THE CERTIFICATE REGISTRAR OR ANY OF THEIR
RESPECTIVE SUCCESSORS TO BE A FIDUCIARY OF A PLAN WITHIN
THE MEANING OF SECTION 3(21) OF ERISA AND WILL NOT GIVE RISE
TO A TRANSACTION DESCRIBED IN SECTION 406 OF ERISA OR
SECTION 4975(c)(1) OF THE CODE FOR WHICH A STATUTORY OR
ADMINISTRATIVE EXEMPTION IS UNAVAILABLE.
THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS,
PRIOR TO SUCH DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE OWNER TRUSTEE
AND THE CERTIFICATE REGISTRAR A CERTIFICATE STATING THAT SUCH TRANSFEREE (A)
AGREES TO BE BOUND BY AND TO ABIDE BY THE TRANSFER RESTRICTIONS APPLICABLE TO
THIS CERTIFICATE; (B) IS NOT AN ENTITY THAT WILL HOLD THIS CERTIFICATE AS
NOMINEE TO FACILITATE THE CLEARANCE AND SETTLEMENT OF SUCH SECURITY THROUGH THIS
CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT IS A
NON-U.S. PERSON. THE TERM "NON- U.S. PERSON" MEANS A PERSON WHO IS NOT ONE OF
THE FOLLOWING: 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, AN ESTATE THAT IS SUBJECT TO
U.S. FEDERAL INCOME TAX REGARDLESS OF THE SOURCE OF ITS INCOME OR A TRUST IF (I)
A COURT IN THE UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER THE
ADMINISTRATION OF THE TRUST AND (II) ONE OR MORE UNITED STATES FIDUCIARIES HAVE
THE AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST.
B-1-2
<PAGE>
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
CERTIFICATE
No. 0001
THIS CERTIFIES THAT IMC Mortgage Company (the "Owner") is the
registered owner of a 100% Percentage Interest in IMC Home Equity Loan Owner
Trust 1998-2 (the "Trust") existing under the laws of the State of Delaware and
created pursuant to the Trust Agreement, dated as of March 1, 1998 (the "Trust
Agreement"), between Bear Stearns Asset Backed Securities, Inc., as Depositor,
and Wilmington Trust Company, in its individual capacity and in its fiduciary
capacity as owner trustee under the Trust Agreement (the "Owner Trustee").
Capitalized terms used but not otherwise defined herein have the meanings
assigned to such terms in the Trust Agreement. The Owner Trustee, on behalf of
the Issuer and not in its individual capacity, has executed this Certificate by
one of its duly authorized signatories as set forth below. This Certificate is
one of the Certificates referred to in the Trust Agreement and is issued under
and is subject to the terms, provisions and conditions of the Trust Agreement to
which the holder of this Certificate by virtue of the acceptance hereof agrees
and by which the holder hereof is bound. Reference is hereby made to the Trust
Agreement for the rights of the holder of this Certificate, as well as for the
terms and conditions of the Trust created by the Trust Agreement.
The holder, by its acceptance hereof, agrees not to transfer this
Certificate except in accordance with terms and provisions of the Agreement.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Owner Trustee under the Trust
Agreement
By: ____________________________________
Authorized Signatory
DATED: March 31, 1998
B-1-3
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
THE CHASE MANHATTAN BANK,
as Certificate Registrar
-----------------------------
Authorized Signatory
B-1-4
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- ------------------------------------------------------------------------------
the within Instrument, and all rights thereunder, hereby irrevocably
constituting and appointing
______________________________________________________________ Attorney to
transfer said Instrument on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated: _____________________
_________________________________________*/
Signature Guaranteed:
_________________________________________*/
NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Instrument in
every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by a
member firm of the New York Stock Exchange or a commercial
bank or trust company.
B-2-5
Exhibit 10.1
SALE AND SERVICING AGREEMENT
Dated as of March 1, 1998
Among
IMC HOME EQUITY LOAN OWNER TRUST 1998-2,
as Issuer,
BEAR STEARNS ASSET BACKED SECURITIES, INC.
as Depositor,
IMC MORTGAGE COMPANY,
as Seller and Servicer
and
THE CHASE MANHATTAN BANK
as Indenture Trustee
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
ADJUSTABLE RATE HOME EQUITY LOAN ASSET BACKED NOTES, SERIES 1998-2
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
Page
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<S> <C> <C>
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION..........................................................................1
Section 1.01 Definitions...............................................................................1
Section 1.02 Use of Words and Phrases.................................................................17
Section 1.03 Captions; Table of Contents..............................................................18
Section 1.04 Opinions.................................................................................18
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR,
THE SERVICER AND THE SELLER; COVENANT OF DEPOSITOR TO
CONVEY HOME EQUITY LOANS...................................................................................19
Section 2.01 Representations and Warranties of the Depositor..........................................19
Section 2.02 Representations and Warranties of the Servicer...........................................21
Section 2.03 Representations and Warranties of the Seller.............................................23
Section 2.04 Covenants of Seller to Take Certain Actions with Respect to the Home
Equity Loans in Certain Situations.......................................................26
Section 2.05 Conveyance of the Initial Home Equity Loans and Qualified
Replacement Mortgages....................................................................32
Section 2.06 Acceptance by Indenture Trustee; Certain Substitutions of Home Equity
Loans; Certification by Indenture Trustee................................................36
Section 2.07 Conveyance of the Subsequent Home Equity Loans...........................................38
Section 2.08 Custodian................................................................................39
Section 2.09 Books and Records........................................................................39
ARTICLE III
ACCOUNTS, DISBURSEMENTS AND RELEASES.......................................................................40
Section 3.01 Reserved.................................................................................40
Section 3.02 Establishment of Accounts................................................................40
Section 3.03 Flow of Funds............................................................................40
Section 3.04 Pre-Funding Account and Capitalized Interest Account.....................................42
Section 3.05 Investment of Accounts...................................................................43
Section 3.06 Payment of Trust Expenses................................................................44
Section 3.07 Eligible Investments.....................................................................44
Section 3.08 Accounting and Directions by Indenture Trustee...........................................45
Section 3.09 Reports by Indenture Trustee to Owners and Note Insurer..................................46
Section 3.10 Reports by Indenture Trustee. ..........................................................48
ARTICLE IV
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS.......................................................................................49
Section 4.01 Servicer and Sub-Servicers...............................................................49
Section 4.02 Collection of Certain Home Equity Loan Payments..........................................50
Section 4.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers..............................50
Section 4.04 Successor Sub-Servicers..................................................................51
Section 4.05 Liability of Servicer; Indemnification...................................................51
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Section 4.06 No Contractual Relationship Between Sub-Servicer, Indenture Trustee or
the Owners...............................................................................51
Section 4.07 Assumption or Termination of Sub-Servicing Agreement by Indenture
Trustee..................................................................................52
Section 4.08 Principal and Interest Account...........................................................52
Section 4.09 Delinquency Advances and Servicing Advances..............................................53
Section 4.10 Compensating Interest; Repurchase of Home Equity Loans...................................54
Section 4.11 Maintenance of Insurance.................................................................55
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution Agreements..............................55
Section 4.13 Realization Upon Defaulted Home Equity Loans; Workout of Home
Equity Loans.............................................................................56
Section 4.14 Indenture Trustee to Cooperate; Release of Files.........................................57
Section 4.15 Servicing Compensation...................................................................58
Section 4.16 Annual Statement as to Compliance........................................................58
Section 4.17 Annual Independent Certified Public Accountants' Reports.................................59
Section 4.18 Access to Certain Documentation and Information Regarding the
Home Equity Loans........................................................................59
Section 4.19 Assignment of Agreement..................................................................59
Section 4.20 Removal of Servicer; Retention of Servicer; Resignation of Servicer......................59
Section 4.21 Inspections by Note Insurer; Errors and Omissions Insurance..............................63
Section 4.22 Reserved.................................................................................63
Section 4.23 Adjustable Rate Home Equity Loans........................................................63
Section 4.24 Administration of the Issuer.............................................................63
ARTICLE V
TERMINATION................................................................................................64
Section 5.01 Termination..............................................................................64
Section 5.02 Termination Upon Option of Holders of Certificates.......................................64
Section 5.03 Redemption of Notes......................................................................64
Section 5.04 Disposition of Proceeds..................................................................65
ARTICLE VI
MISCELLANEOUS..............................................................................................66
Section 6.01 Acts of Owners...........................................................................66
Section 6.02 Recordation of Agreement. ..............................................................66
Section 6.03 Duration of Agreement. .................................................................66
Section 6.04 Successors and Assigns...................................................................66
Section 6.05 Severability. ..........................................................................66
Section 6.06 Governing Law; Submission to Jurisdiction................................................66
Section 6.07 Counterparts. ..........................................................................67
Section 6.08 Amendment................................................................................67
Section 6.09 Specification of Certain Tax Matters. ..................................................68
Section 6.10 The Note Insurer.........................................................................68
Section 6.11 Third Party Rights.......................................................................68
Section 6.12 Notices..................................................................................68
Section 6.13 Benefits of Agreement....................................................................71
Section 6.14 Legal Holidays...........................................................................71
</TABLE>
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<TABLE>
<S> <C> <C>
Section 6.15 Usury....................................................................................71
Section 6.16 No Petition..............................................................................71
Section 6.17 Depositor's Obligations..................................................................71
ARTICLE VII
CERTAIN MATTERS REGARDING THE NOTE INSURER.................................................................72
Section 7.01 Trust Estate and Accounts Held for Benefit of the Note Insurer...........................72
Section 7.02 Claims Upon the Policy; Policy Payments Account..........................................72
Section 7.03 Effect of Payments by the Note Insurer; Subrogation......................................73
Section 7.04 Notices to the Note Insurer..............................................................73
Section 7.05 Rights to the Note Insurer To Exercise Rights of Owners..................................74
SCHEDULE I SCHEDULE OF HOME EQUITY LOANS
EXHIBIT A FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT B-1 FORM OF INDENTURE TRUSTEE'S RECEIPT
EXHIBIT B-2 FORM OF CUSTODIAN'S RECEIPT
EXHIBIT C FORM OF POOL CERTIFICATION
EXHIBIT D HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
EXHIBIT E FORM OF SUBSEQUENT TRANSFER AGREEMENT
</TABLE>
iii
<PAGE>
SALE AND SERVICING AGREEMENT dated as of March 1, 1998 by and among
IMC HOME EQUITY LOAN OWNER TRUST 1998-2, a Delaware business trust (the "Issuer"
or the "Trust"), BEAR STEARNS ASSET BACKED SECURITIES, INC., a Delaware
corporation, in its capacity as Depositor (the "Depositor"), IMC MORTGAGE
COMPANY, a Florida corporation in its capacities as the Seller and the Servicer
(respectively, the "Seller" or the "Servicer") and THE CHASE MANHATTAN BANK, a
New York banking corporation, in its capacity as the indenture trustee on behalf
of the Owners of the Notes (the "Indenture Trustee").
WHEREAS, the Seller is engaged in the business of originating,
purchasing and servicing home equity loans secured by first and second lien
mortgages and deeds of trust on residential property;
WHEREAS, the Seller desires to sell to the Depositor and the Depositor
desires to purchase from the Seller the Initial Home Equity Loans and the
Depositor desires to sell to the Issuer and the Issuer desires to purchase from
the Depositor the Initial Home Equity Loans and all monies due and to become due
thereunder after March 1, 1998;
WHEREAS, the Issuer desires to purchase a pool of Initial Home Equity
Loans which were originated or purchased by the Seller as well as Subsequent
Home Equity Loans which will be transferred to the Issuer pursuant to any
Subsequent Transfer Agreement;
WHEREAS, the Seller is willing to sell such Initial Home Equity Loans
to the Depositor and the Depositor is willing to sell such Initial Home Equity
Loans to the Issuer;
WHEREAS, the Servicer has agreed to service the Home Equity Loans, in
accordance with the terms of this Agreement;
WHEREAS, The Chase Manhattan Bank, is willing to serve in the capacity
of Indenture Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Note Insurer") is intended
to be a third party beneficiary of this Agreement and is hereby recognized by
the parties hereto to be a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Issuer, the Depositor, the Seller, the
Servicer, and the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 3.02 or
4.08 hereof.
"Accrual Period": With respect to any Payment Date, the period
commencing on the immediately preceding Payment Date (or the Closing Date in the
case of the first Payment Date) to and including the day prior to the current
Payment Date. Calculations of interest will be made on the basis of the actual
number of days elapsed in the related Accrual Period and a year of 360 days.
<PAGE>
"Addition Notice": With respect to the transfer of Subsequent Home
Equity Loans to the Issuer pursuant to Section 2.07 hereof, notice given not
less than five Business Days prior to the related Subsequent Transfer Date of
the Seller's designation of Subsequent Home Equity Loans to be sold to the
Issuer and the aggregate Loan Balance of such Subsequent Home Equity Loans.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Sale and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Annual Loss Percentage (Rolling Twelve Month)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses for each of the twelve immediately
preceding Remittance Periods and the denominator of which is the Maximum
Collateral Amount.
"Appraised Value": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Home Equity Loan,
or, in the case of a Home Equity Loan which is a purchase money mortgage, the
sales price of the Property at such time of origination, if such sales price is
less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor and the Servicer, initially including those individuals whose names
appear on the lists of Authorized Officers delivered at the Closing; with
respect to the Indenture Trustee, any officer assigned to the Corporate Trust
Division (or any successor thereto), including any Vice President, Assistant
Vice President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Indenture Trustee customarily performing functions similar
to those performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement.
"Available Funds": As defined in Section 3.02(b) hereof.
"Available Funds Cap Carry-Forward Amortization Amount": As of any
Payment Date, any amount distributed from the Available Funds Cap Carry-Forward
Amount Account on such Payment Date pursuant to Section 3.03(c) hereof.
"Available Funds Cap Carry-Forward Amount": As of any Payment Date, the
sum of (I) the excess, if any, of (A) the sum of (i) the aggregate of the
Available Funds Cap Carry-Forward Amounts for all prior Payment Dates and (ii)
the difference between (a) the amount of interest due on the Notes on the
immediately preceding Payment Date calculated at the Formula Note Rate
applicable on such date and (b) the amount of interest due on the Notes on the
immediately preceding Payment Date calculated at the Note Rate applicable on
such date over (B) all Available Funds Cap Carry-Forward Amortization Amounts
actually paid on all prior Payment Dates and (II) the product of (x) one-twelfth
of the Formula Note Rate on such Payment Date and (y) the amount described in
clause (I) of this definition.
2
<PAGE>
"Available Funds Cap Carry-Forward Amount Account": The Available Funds
Cap Carry-Forward Amount Account established in accordance with Section 3.02
hereof and maintained by the Indenture Trustee.
"Available Funds Cap Rate": On each Payment Date the weighted average
of the Coupon Rates of the Home Equity Loans less 0.64375% per annum.
"Available Funds Shortfall": As defined in Section 3.03(b)(ii)(A).
"Backup Servicer": The Indenture Trustee shall initially serve as
Backup Servicer hereunder in the event of the termination of the Servicer,
subject to the right of the Indenture Trustee to assign such duties to a party
acceptable to the Note Insurer and the Owners of the majority of the Percentage
Interests of the Certificates.
"Business Day": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in The City of New York, Tampa, Florida, the
city in which the Corporate Trust Office is located or the city in which the
principal office of the Note Insurer is located are authorized or obligated by
law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 3.02(b) hereof and maintained by the
Indenture Trustee. Funds on deposit in the Capitalized Interest Account shall be
invested in a trust deposit with the Indenture Trustee from the day following
the Closing Date until the end of the Funding Period.
"Capitalized Interest Requirement": With respect to Payment Dates in
April and May 1998, the excess, if any, of (x) the sum of the interest accruing
at a rate equal to the Note Rate plus the Premium Amount (expressed as a per
annum percentage of the Note Principal Balance) (1) on the aggregate Loan
Balances of the Subsequent Home Equity Loans transferred to the Issuer on each
Subsequent Transfer Date during the month preceding the related Payment Date for
the period from the first day of the related Remittance Period to the Subsequent
Cut-Off Date (provided, however, if the related Subsequent Cut-Off Date begins
on or prior to such Remittance Period, the related Loan Balances will be zero),
plus (2) on the Pre-Funded Amount outstanding as of the end of the Remittance
Period for a period equal to the Remittance Period over (y) any Pre-Funding
Account Earnings to be distributed to the Note Account on the related Payment
Date pursuant to Section 3.04(d).
"Carry-Forward Amount": The sum of (x) the amount, if any, by which (i)
the Current Interest for the immediately preceding Payment Date exceeded (ii)
the amount of the actual distribution made to the Owners on such immediately
preceding Payment Date pursuant to Section 3.03(b)(iv)(B) hereof plus (y) 30
days' interest on such excess at the Note Rate.
"Certificate": Any one of the Certificates issued pursuant to the Trust
Agreement.
"Certificate Distribution Account": The Certificate Distribution
Account established in accordance with the Trust Agreement.
"Civil Relief Interest Shortfalls": With respect to any Remittance
Period, for any Home Equity Loans as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Remittance
Period as a result of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, the amount, if any, by which (i) interest collectible on such Home
Equity Loans during the most recently ended Remittance Period is less than (ii)
the sum of (a) one month's interest on the Loan Balance
3
<PAGE>
of such Home Equity Loans at a rate equal to the Note Rate plus (b) the
Servicing Fee and the Trust Fees and Expenses for such Remittance Period.
"Closing Date": On or about March 31, 1998.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 4.10(a) hereof.
"Corporate Trust Office": The principal office of the Indenture
Trustee at The Chase Manhattan Bank, 450 W. 33rd Street, 15th Floor, New York,
NY 10001, Attention: Corporate Trust Office or the principal office of any
successor Indenture Trustee hereunder.
"Coupon Rate": The rate of interest borne by each Mortgage Note from
time to time.
"Cram Down Loss": With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Home Equity Loan, the
amount of such reduction. A "Cram Down Loss" shall be deemed to have occurred on
the date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof,
the aggregate of all Realized Losses since the Closing Date as a percentage of
the Maximum Collateral Amount.
"Current Interest": With respect to any Payment Date, an amount equal
to the amount of interest accrued on the Note Principal Balance immediately
prior to such Payment Date during the related Accrual Period at the Note Rate
plus the Preference Amount owed to the Owners of the Notes as it relates to
interest previously paid on the Notes plus the Carry-Forward Amount; provided,
however, such amount will be reduced by the amount of any Civil Relief Interest
Shortfalls relating to Home Equity Loans.
"Custodial Agreement": The Custodial Agreement dated as of March 1,
1998 among the Custodian, the Issuer, the Indenture Trustee, the Depositor, the
Seller and the Servicer.
"Custodian": BankBoston N.A., as Custodian on behalf of the Indenture
Trustee pursuant to the Custodial Agreement.
"Cut-Off Date": As of the close of business on March 1, 1998.
"Daily Collections": As defined in Section 4.08(c) hereof.
"Delinquency Advance": As defined in Section 4.09(a) hereof.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related Due
Date. A Home Equity Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
4
<PAGE>
"Depositor": Bear Stearns Asset Backed Securities, Inc., a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 7 Hanover Square, New York,
New York, 10004, and any successor Depository named herein.
"Designated Depository Institution": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Note
Insurer, acting in its fiduciary capacity, having combined capital and surplus
of at least $50,000,000; provided, however, that if the Principal and Interest
Account is not maintained with the Indenture Trustee, (i) such institution shall
have a long-term debt rating of at least "A" by Standard & Poor's and "A2" by
Moody's, (ii) a short-term debt rating of at least "A-1" by Standard & Poor's
and (iii) the Servicer shall provide the Indenture Trustee and the Note Insurer
with a statement, which the Indenture Trustee will send to the Owners,
identifying the location and account information of the Principal and Interest
Account upon a change in the location of such account.
"Determination Date": The 15th day of each month, or if such day is not
a Business Day, the preceding Business Day, commencing in April 1998.
"Due Date": With respect to any Home Equity Loan, the date on which the
Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Mortgage Note exclusive of any days of grace.
"Eligible Investments": Those investments so designated pursuant to
Section 3.07 hereof.
"Excess Overcollateralization Amount": With respect to any Payment
Date, the excess, if any, of (x) the Overcollateralization Amount that would
apply on such Payment Date after taking into account the payment of the
Principal Payment Amount on such Payment Date (except for any distributions of
Overcollateralization Reduction Amounts on such Payment Date), over (y) the
Specified Overcollateralization Amount for such Payment Date.
"Fannie Mae": Fannie Mae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"Fannie Mae Guide": Fannie Mae's Servicing Guide, as the same may be
amended by Fannie Mae from time to time, and the Servicer shall elect to apply
such amendments in accordance with Section 4.01 hereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Indenture Trustee pursuant to
Section 2.05(b) hereof pertaining to a particular Home Equity Loan and any
additional documents required to be added to the File pursuant to this
Agreement.
"Final Certification": As defined in Section 2.06(c) hereof.
5
<PAGE>
"Final Payment Date": April 20, 2029.
"Final Recovery Determination": With respect to any defaulted Home
Equity Loan or REO Property (other than a Home Equity Loan purchased by the
Seller, the Depositor or the Servicer), a determination made by the Servicer
that all Liquidation Proceeds which the Servicer, in its reasonable business
judgment expects to be finally recoverable in respect thereof have been so
recovered or that the Servicer believes in its reasonable business judgment the
cost of obtaining any additional recoveries therefrom would exceed the amount of
such recoveries. The Servicer shall maintain records of each Final Recovery
Determination.
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"Formula Note Rate": For any Payment Date, the rate determined by
clause (i) of the definition of "Note Rate" for such Payment Date.
"Funding Period": The period commencing on the Closing Date and ending
on the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account (exclusive of any investment earnings) is less than
$100,000, (ii) the occurrence of a Servicer Termination Event pursuant to
Section 4.20(a) hereof or an "Event of Default" (as defined in the Indenture)
and (iii) April 30, 1998.
"Highest Lawful Rate": As defined in Section 6.15 hereof.
"Home Equity Loans": Such home equity loans (including Initial Home
Equity Loans and Subsequent Home Equity Loans) transferred and assigned to the
Trust pursuant to Section 2.05(a) and 2.07(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedule of Home Equity
Loans. The term "Home Equity Loan" includes any Home Equity Loan which is
Delinquent, which relates to a foreclosure or which relates to a Property which
is REO Property prior to such Property's disposition by the Trust. Any home
equity loan which, although intended by the parties hereto to have been, and
which purportedly was, transferred and assigned to the Trust by the Depositor,
in fact was not transferred and assigned to the Trust for any reason whatsoever,
including, without limitation, the incorrectness of the statement set forth in
Section 2.04(b)(x) hereof with respect to such home equity loan, shall
nevertheless be considered a "Home Equity Loan" for all purposes of this
Agreement.
"Indemnification Agreement": The Indemnification Agreement dated as of
March 20, 1998 among the Note Insurer, the Depositor, the Seller, the Issuer and
the Underwriters.
"Indenture": The Indenture, dated March 1, 1998, between the Issuer and
the Indenture Trustee.
"Indenture Trustee": The Chase Manhattan Bank, a New York banking
corporation, the Corporate Trust Department of which is located on the date of
execution of this Agreement at 450 W. 33rd Street, 15th Floor, New York, NY
10001, not in its individual capacity but solely as Indenture Trustee under the
Indenture, and any successor hereunder.
"Indenture Trustee Fee": The fee payable monthly to the Indenture
Trustee on each Payment Date in an amount equal to 0.00375% per annum, on the
outstanding aggregate Loan Balances of the Home Equity Loans as of the related
Determination Date.
6
<PAGE>
"Indenture Trustee Reimbursable Expenses": Any amounts payable pursuant
to the second sentence of Section 6.7 of the Indenture provided that the
aggregate amounts payable as Indenture Trustee Reimbursable Expenses shall not
exceed $50,000.
"Initial Home Equity Loans": The Home Equity Loans to be conveyed to
the Depositor by the Seller and to the Issuer by the Depositor on the Closing
Date.
"Insurance Agreement": The Insurance Agreement dated as of March 1,
1998, among the Issuer, the Depositor, the Seller, the Servicer, the Indenture
Trustee and the Note Insurer, as such agreement may be amended from time to
time.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 4.11 hereof.
"Insured Payment": As defined in the Note Insurance Policy.
"Interest Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) all interest due during the related Remittance
Period with respect to the Home Equity Loans, (ii) all Compensating Interest
paid by the Servicer on such Monthly Remittance Date, (iii) the portion of the
Substitution Amount relating to interest on the Home Equity Loans, (iv) the
portion of any Loan Purchase Price relating to interest on any Home Equity Loan
repurchased during the related Remittance Period, (v) any amounts required to be
transferred from the Capitalized Interest Account to the Note Account pursuant
to Section 3.04(e) hereof on the related Payment Date and (vi) the portion of
Net Liquidation Proceeds relating to interest.
"Issuer" or "Trust": IMC Home Equity Loan Owner Trust 1998-2, a
Delaware business trust.
"Late Payment Rate": For any Monthly Remittance Date, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank, N.A.)
plus 3%. The Late Payment Rate shall be computed on the basis of a year of 365
days calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"LIBOR": With respect to any Accrual Period, the rate determined by the
Indenture Trustee on the related LIBOR Determination Date on the basis of the
British Bankers Association's "Interest Settlement Rate" for one-month U.S.
dollar deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m.
(London time) on such date; provided that if such rate does not appear on
Telerate Page 3750, the rate for such date will be determined on the basis of
the rates at which one-month U.S. dollar deposits are offered by the Reference
Banks at approximately 11:00 a.m. (London time) on such date to prime banks in
the London interbank market. In such event, the Indenture Trustee will request
the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
for that date will be the arithmetic mean of the quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If fewer than two quotations
are provided as requested, the rate for that date will be the arithmetic mean of
the rates quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.
"LIBOR Determination Date": With respect to any Accrual Period the
second London Business Day preceding the commencement of such Accrual Period.
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"Liquidated Loan": A Home Equity Loan as to which a Final Recovery
Determination has been made.
"Liquidation Proceeds": With respect to any Liquidated Loan, all
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the actual outstanding principal balance thereof on the
Cut-Off Date with respect to the Initial Home Equity Loans or relevant
Subsequent Cut-Off Date with respect to the Subsequent Home Equity Loans
excluding payments of principal due on or prior to the Cut-Off Date or
Subsequent Cut-Off Date, as the case may be, whether or not received, less any
principal payments relating to such Home Equity Loan included in previous
Monthly Remittance Amounts, provided, however, that the Loan Balance for any
Home Equity Loan that has become a Liquidated Loan shall be zero as of the first
day of the Remittance Period following the Remittance Period in which such Home
Equity Loan becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Home Equity Loan purchased
from the Trust on or prior to a Monthly Remittance Date pursuant to Section
2.03, 2.04, 2.06(b) or 4.10(b) hereof, an amount equal to the Loan Balance of
such Home Equity Loan as of the date of purchase (assuming that the Monthly
Remittance Amount remitted by the Servicer on such Monthly Remittance Date has
already been remitted), plus all accrued and unpaid interest on such Home Equity
Loan at the Coupon Rate to but not including the date of such purchase together
with (without duplication) the aggregate amounts of (i) all unreimbursed
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan, (ii) all Delinquency Advances which the Servicer has
theretofore failed to remit with respect to such Home Equity Loan and (iii) all
reimbursed Delinquency Advances to the extent that reimbursement is not made
from the Mortgagor or from Liquidation Proceeds from the respective Home Equity
Loan.
"Loan-to-Value Ratio": As of any particular date the percentage
obtained by dividing the Appraised Value into the original principal balance of
the Mortgage Note relating to such Home Equity Loan.
"London Business Day": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"Maximum Collateral Amount": The sum of the Original Aggregate Loan
Balance and the Original Aggregate Pre-Funded Amount, which sum is equal to
$700,000,000.
"Monthly Payment Amount": With respect to any Payment Date, the sum of
(x) Current Interest and (y) the Principal Payment Amount for such Payment Date.
"Monthly Payment": With respect to any Home Equity Loan and any
Remittance Period, the payment of principal, if any, and interest due on the Due
Date in such Remittance Period pursuant to the related Mortgage Note.
"Monthly Remittance Amount": As of any Monthly Remittance Date, the sum
of (i) the Interest Remittance Amount for such Monthly Remittance Date and (ii)
the Principal Remittance Amount for such Monthly Remittance Date.
"Monthly Remittance Date": The 18th day of each month, or if such day
is not a Business Day, on the preceding Business Day, commencing in April 1998.
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"Monthly Reporting Date": The Determination Date.
"Moody's": Moody's Investors Service Inc. or any successor thereto.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple interest in real property securing a
Mortgage Note.
"Mortgage Note": The note or other evidence of indebtedness evidencing
the indebtedness of a Mortgagor under a Home Equity Loan.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unreimbursed
Servicing Advances) in connection with the liquidation of any defaulted Home
Equity Loan and unreimbursed Delinquency Advances relating to such Home Equity
Loan. In no event shall Net Liquidation Proceeds with respect to any Liquidated
Loan be less than zero.
"Net Monthly Excess Cashflow": As defined in Section 3.03(b)(iii)
hereof.
"90-Day Delinquent Loan": With respect to any Determination Date, all
REO Properties and each Home Equity Loan, with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, three
months (calculated from Due Date with respect to such Home Equity Loan to Due
Date) or more past due (without giving effect to any grace period).
"90+ Delinquency Percentage (Rolling Six Month)": With respect to any
Determination Date, the average of the percentage equivalents of the fractions
determined for each of the six immediately preceding Remittance Periods the
numerator of each of which is equal to the aggregate Loan Balance of 90-Day
Delinquent Loans as of the end of such Remittance Period and the denominator of
which is the Loan Balance of all of the Home Equity Loans as of the end of such
Remittance Period.
"Note": Any one of the Notes substantially in the form attached to the
Indenture as Exhibit A.
"Note Account": The segregated note account established in accordance
with Section 3.02(a) hereof and maintained at the Corporate Trust Office.
"Note Insurance Policy": The Note Guaranty Insurance Policy (number
_______) dated March 31, 1998 issued by the Note Insurer to the Indenture
Trustee for the benefit of the Owners pursuant to which the Note Insurer
guarantees Insured Payments.
"Note Insurer": MBIA Insurance Corporation, a New York insurance
company and any successor thereto, as issuer of the Note Insurance Policy.
"Note Insurer Default": The existence and continuance of any of the
following:
(a) the Note Insurer fails to make a payment required under the
Note Insurance Policy in accordance with its terms; or
(b)(i) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Note Insurer in an
involuntary case or proceeding under any applicable United States federal or
state bankruptcy, insolvency, rehabilitation, reorganization or other similar
law and the
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continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 90 consecutive days; or (B) a final
and nonappealable decree or order adjudging the Note Insurer as bankrupt or
insolvent, or approving as properly filed a petition seeking reorganizing,
rehabilitation, arrangement, adjustment or composition of or in respect of the
Note Insurer under any applicable United States federal or state law, or
appointing a custodian, receiver, liquidator, rehabilitator, assignee, indenture
trustee, sequestrator or other similar official of the Note Insurer or of any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs or
(ii) the commencement by the Note Insurer of a voluntary case
or proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Note Insurer to the entry of a decree or order for relief in respect of the Note
Insurer in an involuntary case or proceeding under any applicable United States
federal or state bankruptcy, insolvency case or proceeding against the Note
Insurer, or the filing by the Note Insurer to the filing of such petition or to
the appointment of or the taking possession by a custodian, receiver,
liquidator, assignee, indenture trustee, sequestrator or similar official of the
Note Insurer or of any substantial part of its property, or the failure of the
Note Insurer to pay debts generally as they become due, or the admission by the
Note Insurer in writing of its inability to pay its debts generally as they
become due.
"Note Principal Balance": As of any time of determination, the Original
Note Principal Balance less the aggregate of all amounts actually distributed on
account of the Principal Payment Amount pursuant to Section 3.03(b)(iv) hereof
with respect to principal thereon on all prior Payment Dates; provided, however,
that solely for purposes of determining the Note Insurer's rights, as subrogee,
the Note Principal Balance shall not be reduced by any principal amount paid to
the Owner thereof from Insured Payments.
"Note Rate": For any Payment Date, in any month up to and including the
month in which the Redemption Date occurs, the lesser of (i) LIBOR plus 0.19%
per annum and (ii) the Available Funds Cap Rate for such Payment Date and for
any month following the month in which the Redemption Date occurs, the lesser of
(i) LIBOR plus 0.50% per annum and (ii) the Available Funds Cap Rate for such
Payment Date.
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Indenture
Trustee.
"Operative Documents": Collectively, this Agreement, the Indenture, the
Certificate of Trust, the Trust Agreement, the Note Insurance Policy, the Notes,
any Subsequent Transfer Agreement, the Custodial Agreement, the Indemnification
Agreement and the Insurance Agreement.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all
Initial Home Equity Loans as of the Cut-Off Date, which is $525,682,092.25
"Original Aggregate Pre-Funded Amount": The amount deposited in the
Pre-Funding Account on the Closing Date from the proceeds of the sale of the
Notes, which amount is equal to $174,317,907.75
"Original Capitalized Interest Amount" $510,969.37
"Original Note Principal Balance": $700,000,000.
"Overcollateralization Amount": As of any Payment Date, the excess, if
any, of (x) the sum of (i) the aggregate Loan Balances of the Home Equity Loans
as of the close of business on the last day of the related Remittance Period and
(ii) any amount on deposit in the Pre-Funding Account at such time exclusive
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of Pre-Funding Account Earnings over (y) the Note Principal Balance for such
Payment Date (after taking into account the payment of the Principal Payment
Amount thereon (except for any Overcollateralization Deficit and
Overcollateralization Increase Amount) on such Payment Date).
"Overcollateralization Deficiency Amount": With respect to any Payment
Date, the excess, if any, of (i) the Specified Overcollateralization Amount
applicable to such Payment Date over (ii) the Overcollateralization Amount
applicable to such Payment Date prior to taking into account the payment of any
Overcollateralization Increase Amounts on such Payment Date.
"Overcollateralization Deficit": With respect to any Payment Date, the
amount, if any, by which (x) the Note Principal Balance after taking into
account the payment of the Principal Payment Amount on such Payment Date
(without regard to any Insured Payment to be made on such Payment Date and
except for any Overcollateralization Deficit), exceeds (y) the sum of (i) the
aggregate Loan Balances of the Home Equity Loans as of the close of business on
the last day of the related Remittance Period and (ii) any amount on deposit in
the Pre-Funding Account at such time exclusive of the Pre-Funding Account
Earnings.
"Overcollateralization Increase Amount": With respect to any Payment
Date, the lesser of (i) the Overcollateralization Deficiency Amount as of such
Payment Date (after taking into account the payment of the Principal Payment
Amount on such Payment Date (except for any Overcollateralization Increase
Amount)) and (ii) the aggregate amount of Net Monthly Excess Cashflow pursuant
to Section 3.03(b)(iii)(A) on such Payment Date.
"Overcollateralization Reduction Amount": With respect to any Payment
Date, an amount equal to the lesser of (x) the Excess Overcollateralization
Amount for such Payment Date and (y) the Principal Remittance Amount for the
related Remittance Period.
"Overfunded Interest Amount": With respect to each Subsequent Transfer
Date, the excess, if any, of (i) interest accruing from the related Subsequent
Cut-Off Date to April 30, 1998 on the aggregate Loan Balances of the Subsequent
Home Equity Loans acquired by the Issuer on such Subsequent Transfer Date,
calculated at the Note Rate over (ii) interest accruing from the Subsequent
Cut-Off Date to April 30, 1998 on the aggregate Loan Balance of the Subsequent
Home Equity Loans acquired by the Issuer on such Subsequent Transfer Date,
calculated at the rate at which Pre-Funded Amounts are invested as of such
Subsequent Transfer Date.
"Owner": The Person in whose name a Note is registered in the Register,
and the Note Insurer, to the extent described in Sections 7.01 and 7.05.
"Owner Trustee": Wilmington Trust Company, as owner trustee under the
Trust Agreement, and any successor owner trustee under the Trust Agreement.
"Paying Agent": Initially, the Indenture Trustee, and thereafter, the
Indenture Trustee or any other Person that meets the eligibility standards for
the Paying Agent specified in Section 6.11 of the Indenture and is authorized by
the Indenture Trustee and the Depositor to make payments on the Certificates on
behalf of the Indenture Trustee.
"Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Owners, which shall be the 20th day of each month or
if such day is not a Business Day, the next Business Day thereafter, commencing
in the month following the Closing Date. The first Payment Date will be April
20, 1997.
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"Percentage Interest": With respect to the Notes, a fraction, expressed
as a decimal, the numerator of which is the Original Note Principal Balance
represented by such Note and the denominator of which is the aggregate Original
Note Principal Balance represented by all the Notes. With respect to the
Certificates, the portion evidenced thereby, expressed as a percentage, as
stated on the face of such Certificate, all of which shall total 100% with
respect to the Certificates.
"Person": Any individual, corporation, limited partnership,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Policy Payments Account": The policy payments account maintained by
the Indenture Trustee pursuant to Section 7.02(b) hereof.
"Preference Amount": With respect to the Notes means any amounts of
interest and principal included in previous distributions of the Monthly Payment
Amount to the Owners of the Notes which are recoverable and sought to be
recovered as a voidable preference by a indenture trustee in bankruptcy pursuant
to the United States Bankruptcy Code (11 U.S.C.) as amended from time to time in
accordance with a final, nonappealable order of a court having competent
jurisdiction. Such amount will be paid in accordance with the terms of the Note
Insurance Policy.
"Preference Claim": As defined in Section 7.02(d) hereafter.
"Pre-Funded Amount": With respect to any Determination Date, the amount
remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 3.02 hereof and maintained by the Indenture Trustee.
"Pre-Funding Account Earnings": With respect to the April 20, 1998
Payment Date, the actual investment earnings earned during the period from the
Closing Date through April 17, 1998 (inclusive) on the portion of the Pre-Funded
Amount remaining during such period as calculated by the Indenture Trustee
pursuant to Section 2.07(d) hereof; and with respect to the May 20, 1998 Payment
Date, the actual investment earnings earned during the period from April 18,
1998 through May 19, 1998 (inclusive) on the portion of the Pre-Funded Amount,
remaining during such period as calculated by the Indenture Trustee pursuant to
Section 2.07(d) hereof.
"Premium Amount": As determined in the Insurance Agreement.
"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled Due Date for the payment of
such principal and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment, Substitution Amounts, the
portion of the purchase price of any Home Equity Loan purchased from the Trust
pursuant to Section 2.03, 2.04, 2.06(b) or 4.10(b) hereof representing principal
and the proceeds of any Insurance Policy which are to be applied as a payment of
principal on the related Home Equity Loan shall be deemed to be Prepayments for
all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
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"Principal and Interest Account": The principal and interest account
established and maintained by the Servicer pursuant to Section 4.08(a) hereof.
"Principal Payment Amount": With respect to the Notes for any Payment
Date, the lesser of:
(a) the Total Available Funds plus any Insured Payment minus the
Current Interest and Trust Fees and Expenses for such Payment Date; and
(b) the excess, if any, of (i) the sum of (without duplication):
(A) the Preference Amount with respect to principal owed to the
Owners of the Notes that remains unpaid as of such Payment Date,
(B) the principal portion of all scheduled monthly payments on
the Home Equity Loans due on or prior to the related Due Date thereof,
to the extent actually received by the Servicer during the related
Remittance Period and any Prepayments made by the Mortgagors and
actually received by the Servicer during the related Remittance Period,
(C) the Loan Balance of each Home Equity Loan that was
repurchased by the Seller or purchased by the Servicer on or prior to
the related Monthly Remittance Date, to the extent such Loan Balance is
actually received by the Servicer during the related Remittance Period,
(D) any Substitution Amounts delivered by the Seller on the
related Monthly Remittance Date in connection with a substitution of a
Home Equity Loan (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are actually
received by the Servicer on the related Remittance Date,
(E) all Net Liquidation Proceeds actually collected by the
Servicer with respect to the Home Equity Loans during the related
Remittance Period (to the extent such Net Liquidation Proceeds relate
to principal),
(F) the amount of any Overcollateralization Deficit for such
Payment Date,
(G) the principal portion of the proceeds received by the
Indenture Trustee from any termination of the Trust (to the extent such
proceeds related to principal),
(H) on the Payment Date immediately following the actual end of
the Funding Period, all amounts remaining on deposit in the Pre-Funding
Account to the extent not used to purchase Subsequent Home Equity Loans
during the Funding Period; and
(I) the amount of any Overcollateralization Increase Amount for
such Payment Date, to the extent of any Net Monthly Excess Cashflow
available for such purpose,
over
(ii) the amount of any Overcollateralization Reduction Amount for such
Payment Date.
"Principal Remittance Amount": As of any Monthly Remittance Date, the
sum, without duplication, of (i) the principal actually collected by the
Servicer with respect to Home Equity Loans during the related
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Remittance Period, (ii) the Loan Balance of each such Home Equity Loan that was
purchased from the Trust on or prior to such Monthly Remittance Date, to the
extent such Loan Balance was actually received by the Servicer, (iii) any
Substitution Amounts relating to principal delivered by the Seller in connection
with a substitution of a Home Equity Loan, to the extent such Substitution
Amounts were actually received by the Servicer on or prior to such Monthly
Remittance Date, (iv) the principal portion of all Net Liquidation Proceeds
actually collected by the Servicer with respect to such Home Equity Loans during
the related Remittance Period (to the extent such Net Liquidation Proceeds
related to principal), (v) any amounts required to be transferred from the
Pre-Funding Account to the Note Account pursuant to Section 3.04(c) and (vi) the
amount of investment losses required to be deposited pursuant to Sections
3.05(e) and 4.08(b).
"Property": The underlying property securing a Home Equity Loan.
"Prospectus": The Depositor's Prospectus dated January 23, 1998
constituting part of the Registration Statement.
"Prospectus Supplement": The IMC Home Equity Loan Owner Trust 1998-2
Prospectus Supplement dated March 20, 1998 to the Prospectus.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 2.03, 2.04 and 2.06(b) hereof, which (i) has a
Coupon Rate at least equal to the Coupon Rate of the Home Equity Loan being
replaced; (ii) is of the same property type or is a single family dwelling and
the same occupancy status or is a primary residence as the Home Equity Loan
being replaced, (iii) shall mature no later than March 1, 2028 (iv) has a
Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Home Equity Loan at such time, (v) shall be
of the same or higher credit quality classification (determined in accordance
with the Seller's credit underwriting guidelines set forth in the Seller's
underwriting manual) as the Home Equity Loan which such Qualified Replacement
Mortgage replaces, (vi) shall be a First Mortgage Loan, (vii) has a Loan Balance
as of the related Replacement Cut-Off Date equal to or less than the Loan
Balance of the replaced Home Equity Loan as of such Replacement Cut-Off Date,
(viii) shall not provide for a "balloon" payment, (ix) shall be an adjustable
rate Home Equity Loan (x) shall adjust based on the same index, have no lower
margin, have the same interval between adjustment dates and have a maximum
Coupon Rate no lower than, and a minimum Coupon Rate no higher than the Home
Equity Loan being replaced. In the event that one or more home equity loans are
proposed to be substituted for one or more Home Equity Loans, the Note Insurer
may allow the foregoing tests to be met on a weighted average basis or other
aggregate basis acceptable to the Note Insurer, as evidenced by a written
approval delivered to the Indenture Trustee by the Note Insurer, except that the
requirements of clauses (i), (iv) and (ix) hereof must be satisfied as to each
Qualified Replacement Mortgage.
"Rating Agencies": Collectively, Moody's and Standard & Poor's or any
successors thereto.
"Realized Loss": As to any Liquidated Loan (or, in the case of a Cram
Down Loss a Home Equity Loan that is not a Liquidated Loan), the amount (not
less than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as
of the date of liquidation, (y) the amount of accrued but unpaid interest
thereon (to the extent that there are no outstanding advances for such interest
by the Servicer) and (z) the amount of any Cram Down Loss with respect thereto
is in excess of (B) the Net Liquidation Proceeds realized thereon applied in
reduction of such Loan Balance.
"Redemption Date": The first Monthly Remittance Date on which the
aggregate Loan Balances of the Home Equity Loans has declined to less than
$70,000,000.
"Redemption Price": As defined in Section 5.02(a) hereof.
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"Reference Banks": Bankers Trust Company, Barclays Bank PLC, and
National Westminster Bank PLC, provided that if any of the foregoing banks are
not suitable to serve as a Reference Bank, then any leading banks selected by
the Indenture Trustee which are engaged in transactions in Eurodollar deposits
in the international Eurocurrency market (i) with an established place of
business in London, (ii) not controlling, under the control of or under common
control with the Seller or any affiliate thereof, (iii) whose quotations are
included in the calculation of LIBOR appearing on Telerate Page 3750 on the
relevant LIBOR Determination Date and (iv) which have been designated as such by
the Indenture Trustee.
"Register": The note register maintained by the Registrar in accordance
with Section 2.3 of the Indenture, in which the names of the Owners are set
forth.
"Registrar": The Indenture Trustee, acting in its capacity as Registrar
appointed pursuant to the Indenture, or any duly appointed and eligible
successor thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-43091), including all amendments thereto and including the Prospectus
relating to the Notes.
"Reimbursement Amount": As of any Payment Date, the sum of (x)(i) all
Insured Payments previously paid to the Indenture Trustee by the Note Insurer
and not previously repaid to the Note Insurer pursuant to Section 3.03(b)(ii)
hereof plus (ii) interest accrued on each such Insured Payment not previously
repaid calculated at the Late Payment Rate and (y)(i) any amounts then due and
owing to the Note Insurer under the Insurance Agreement (including, without
limitation, any unpaid Premium Amount relating to such Payment Date or an
earlier Payment Date) plus (ii) interest on such amounts at the Late Payment
Rate. The Note Insurer shall notify the Indenture Trustee, the Depositor and the
Seller of the amount of any Reimbursement Amount.
"Remittance Period": With respect to each Monthly Remittance Date, the
period commencing the second day of the calendar month immediately preceding
such Monthly Remittance Date and ending the first day of the calendar month in
which such Monthly Remittance Date occurs.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Residual Net Monthly Excess Cashflow": With respect to any Payment
Date, the aggregate Net Monthly Excess Cashflow, if any, remaining after the
making of all applications, transfers and disbursements described in Sections
3.03(b)(i), (ii), (iii) and (iv) hereof.
"Schedule of Home Equity Loans": The schedule of Home Equity Loans with
respect to the Initial Home Equity Loans listing each Initial Home Equity Loan
to be conveyed on the Closing Date and with respect to Subsequent Home Equity
Loans listing each Subsequent Home Equity Loan conveyed to the Issuer as of each
Subsequent Transfer Date. Such Schedules of Home Equity Loans shall identify
each Home Equity Loan by the Servicer's loan number, borrower's name and address
(including the state and zip code) of the Property and shall set forth as to
each Home Equity Loan the lien status thereof, the Loan-to-Value Ratio and the
Loan Balance as of the Cut-Off Date, the Coupon Rate thereof, the original Loan
Balance thereof, the current scheduled monthly payment of principal and interest
and the maturity date of the related
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Mortgage Note, the property type, occupancy status, Appraised Value and the
original term-to-maturity thereof.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": IMC Mortgage Company, a Florida corporation.
"Servicer": IMC Mortgage Company, a Florida corporation, and its
permitted successors and assigns.
"Servicer Loss Test": The Servicer Loss Test for any period set out
below is satisfied, if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below (provided, that for purposes
of the calculations of the Servicer Loss Test, Realized Losses attributable
solely to Cram Down Losses should be excluded from the calculation of Cumulative
Loss Percentage).
Cumulative Loss
Period Percentage
------ ----------
March 2, 1998 - March 1, 1999 1.00%
March 2, 1999 - March 1, 2000 1.50%
March 2, 2000 - March 1, 2001 2.25%
March 2, 2001 - March 1, 2002 3.00%
March 2, 2002 - and thereafter 3.75%
"Servicer Termination Event": As defined in Section 4.20(a) hereof.
"Servicer Termination Test": The Servicer Termination Test is satisfied
for any date of determination thereof, if (x) the 90+ Delinquency Percentage
(Rolling Six Month) is less than 14.00%, (y) the Servicer Loss Test is satisfied
and (z) the Annual Loss Percentage (Rolling Twelve Month) for the twelve month
period immediately preceding the date of determination thereof is not greater
than 1.75%.
"Servicing Advance": As defined in Section 4.09(b) and Section 4.13(a)
hereof.
"Servicing Fee": With respect to any Home Equity Loan, an amount
retained by the Servicer as compensation for servicing and administration duties
relating to such Home Equity Loan pursuant to Section 4.15 and equal to one
month's interest at 0.50% per annum of the then outstanding principal balance of
such Home Equity Loan as of the first day of each Remittance Period payable on a
monthly basis; provided, however, that if a successor Servicer is appointed
pursuant to Section 4.20 hereof, the Servicing Fee shall be the amount as agreed
upon by the Indenture Trustee, the Note Insurer, the successor Servicer and the
Owners of a majority of the Percentage Interests of the Certificates, such
amount not to exceed 0.50% per annum.
"Specified Overcollateralization Amount": As defined in the Insurance
Agreement.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. or any successor thereto.
"Subsequent Cut-Off Date": The beginning of business on the date
specified in a Subsequent Transfer Agreement with respect to those Subsequent
Home Equity Loans which are sold, transferred and assigned by the Seller to the
Issuer pursuant to the related Subsequent Transfer Agreement.
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"Subsequent Home Equity Loans": The Home Equity Loans sold to the
Issuer pursuant to Section 2.07 hereof, which shall be listed on the Schedule of
Home Equity Loans attached to a Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Indenture Trustee and the
Seller substantially in the form of Exhibit E hereto, by which Subsequent Home
Equity Loans are sold and assigned by the Seller to the Issuer.
"Subsequent Transfer Date": The date specified in each Subsequent
Transfer Agreement.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
4.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 4.03.
"Substitution Amount": As defined in Section 2.03 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying "Interest Settlement Rates" of
major banks).
"Total Available Funds": As defined in Section 3.02(b) hereof.
"Total Monthly Excess Cashflow": As defined in Section 3.03(b)(ii)
hereof.
"Total Monthly Excess Spread": With respect to any Payment Date, the
excess of (i) the aggregate of all interest which is collected on the Home
Equity Loans during the related Remittance Period (net of the Servicing Fee, the
Indenture Trustee Fee and the Indenture Trustee Reimbursable Expenses) plus (x)
any Delinquency Advances and (y) Compensating Interest paid by the Servicer for
such Remittance Period over (ii) the sum of the Current Interest and the Premium
Amount for such Payment Date.
"Trust" or "Issuer": IMC Home Equity Loan Owner Trust 1998-2, a
Delaware business trust.
"Trust Agreement": The Owner Trust Agreement dated as of March 1, 1998
between the Depositor and the Owner Trustee.
"Trust Estate": As defined in the Indenture.
"Trust Fees and Expenses": As of each Payment Date, an amount equal to
the Premium Amount, the Indenture Trustee Fee and any Indenture Trustee
Reimbursable Expenses.
"Underwriters": Bear, Stearns & Co. Inc., PaineWebber Incorporated,
Deutsche Morgan Grenfell Inc. and J. P. Morgan Securities Inc.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any
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such word is used. The definitions set forth in Section 1.01 hereof include both
the singular and the plural. Whenever used in this Agreement, any pronoun shall
be deemed to include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Notes may be qualified to the extent that the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction. Any opinion
delivered hereunder shall be addressed to the Rating Agencies, the Note Insurer
and the Indenture Trustee.
END OF ARTICLE I
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ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICER AND THE SELLER;
COVENANT OF DEPOSITOR TO CONVEY HOME EQUITY LOANS
Section 2.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the
Indenture Trustee, the Owner Trustee, the Issuer, the Seller, the Servicer, the
Note Insurer and the Owners that as of the Closing Date:
(a) The Depositor is a corporation duly organized and validly existing
and in good standing under the laws governing its creation and existence and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it make such
qualification necessary. The Depositor has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Depositor and its performance
and compliance with the terms of this Agreement and the other Operative
Documents to which it is a party have been duly authorized by all necessary
corporate action on the part of the Depositor and will not violate the
Depositor's Certificate of Incorporation, or Bylaws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in a breach of, any material contract, agreement or
other instrument to which the Depositor is a party or by which the Depositor is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Depositor or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Depositor is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
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(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the Home
Equity Loans that has not been set forth in the Registration Statement.
(h) [Reserved].
(i) [Reserved].
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Depositor.
(k) The Depositor has received fair consideration and reasonably
equivalent value in exchange for the sale of its interest in the Home Equity
Loans.
(l) The Depositor did not sell any interest in any Home Equity Loan
with an intent to hinder, delay or defraud any of its creditors.
(m) The Depositor is not insolvent, nor will it be made insolvent by
the sale of the Home Equity Loans, nor is the Depositor aware of any pending
insolvency.
(n) [Reserved].
(o) [Reserved].
(p) The Depositor is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Depositor or legal
documents associated with the transaction contemplated by this Agreement.
(q) [Reserved].
It is understood and agreed that the representations and warranties set
forth in this Section 2.01 shall survive delivery of the respective Home Equity
Loans to the Issuer.
Upon discovery by any of the Depositor, the Issuer, the Seller, the
Servicer, the Custodian, any Sub- Servicer, the Note Insurer, any Owner or the
Indenture Trustee (each, for purposes of this paragraph, a party) of a breach of
any of the representations and warranties set forth in this Section 2.01 which
materially and adversely affects the interests of the Owners or of the Note
Insurer, the party discovering such breach shall
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give prompt written notice to the other parties. As promptly as practicable, but
in any event, within 60 days of its discovery or its receipt of notice of
breach, the Depositor shall cure such breach in all material respects; provided,
however, that if the Depositor can establish to the reasonable satisfaction of
the Note Insurer that it is diligently pursuing remedial action, then the cure
period may be extended for an additional 90 days with the written approval of
the Note Insurer.
Section 2.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the
Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Note
Insurer and the Owners that as of the Closing Date:
(a) The Servicer is a corporation duly organized and validly existing
and in good standing under the laws of the State of Florida, is, and each
Sub-Servicer is, in compliance with the laws of each state in which any Property
is located to the extent necessary to enable it to perform its obligations
hereunder and is in good standing in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Servicer and each Sub-Servicer have all requisite partnership or
corporate, as the case may be, power and authority to own and operate its or
their properties, to carry out its or their business as presently conducted and
as proposed to be conducted and to enter into and discharge its or their
obligations under this Agreement and the other Operative Documents to which the
Servicer is a party.
(b) The execution and delivery of this Agreement and any other
Operative Document to which it is a party by the Servicer and its performance
and compliance with the terms hereof and thereof have been duly authorized by
all necessary action on the part of the Servicer and will not violate the
Servicer's Articles of Incorporation or Bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Servicer is a party or by which the Servicer is bound or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Servicer or any of
its properties.
(c) This Agreement and the Operative Documents to which the Servicer is
a party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which might have consequences that would materially and
adversely affect the condition (financial or otherwise) or operations of the
Servicer or its properties or might have consequences that would materially and
adversely affect its performance hereunder or under the other Operative
Documents to which the Servicer is a party.
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(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Document
or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Servicer or its properties or might have
consequences that would materially and adversely affect the validity or the
enforceability of the Home Equity Loans or its performance hereunder and the
other Operative Documents to which the Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Prospectus Supplement which
describe the Servicer or matters or activities for which the Servicer is
responsible or which are attributed to the Servicer therein are true and correct
in all material respects, and the Prospectus Supplement does not contain any
untrue statement of a material fact with respect to the Servicer or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein with respect to the Servicer, in light of the
circumstances under which they were made, not misleading.
(h) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
(j) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage servicing business and in conformity with relevant
Fannie Mae guidelines.
(k) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
(l) No material adverse change affecting any security for the Notes has
occurred prior to delivery of and payment for the Notes.
(m) The Servicer is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Servicer or legal
documents associated with the transaction contemplated by this Agreement.
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(n) To the best knowledge of the Servicer, there has been no material
adverse change in any information submitted by the Servicer in writing to the
Note Insurer with respect to the transactions contemplated by this Agreement
(unless such information was subsequently supplemented in writing).
It is understood and agreed that the representations and warranties set
forth in this Section 2.02 shall survive delivery of the Home Equity Loans to
the Issuer.
Upon discovery by any of the Depositor, the Seller, the Issuer, the
Custodian, any Sub-Servicer, the Note Insurer, any Owner or the Indenture
Trustee (each, for purposes of this paragraph, a party) of a breach of any of
the representations and warranties set forth in this Section 2.02 which
materially and adversely affects the interests of the Owners or of the Note
Insurer, the party discovering such breach shall give prompt written notice to
the other parties. As promptly as practicable, but in any event, within 60 days
of its discovery or its receipt of notice of breach, the Servicer shall cure
such breach in all material respects and, upon the Servicer's continued failure
to cure such breach, may thereafter be removed by the Note Insurer or by the
Indenture Trustee with the written consent of the Note Insurer pursuant to
Section 4.20 hereof; provided, however, that if the Servicer can establish to
the reasonable satisfaction of the Note Insurer that it is diligently pursuing
remedial action, then the cure period may be extended for an additional 90 days
with the written approval of the Note Insurer.
Section 2.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Issuer, the
Depositor, the Owner Trustee, the Indenture Trustee, the Note Insurer and the
Owners that as of the Closing Date:
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing in each jurisdiction in which the nature of its business, or the
properties owned or leased by it make such qualification necessary. The Seller
has all requisite authority to own and operate its properties, to carry out its
business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under this Agreement and the other Operative
Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Seller and its performance and
compliance with the terms of this Agreement and the other Operative Documents to
which it is a party have been duly authorized by all necessary corporate action
on the part of the Seller and will not violate the Seller's Articles of
Incorporation and Bylaws Partnership or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
result in a breach of, any material contract, agreement or other instrument to
which the Seller is a party or by which the Seller is bound or violate any
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Seller or any of its
properties.
(c) This Agreement and the other Operative Documents to which the
Seller is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Seller, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties
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or the consequences of which would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Seller is a party.
(e) No litigation is pending with respect to which the Seller has
received service of process or, to the best of the Seller's knowledge,
threatened against the Seller which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Seller or its properties
or might have consequences that would materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Seller is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
(g) The statements contained in the Prospectus Supplement which
describe the Seller or matters or activities for which the Seller is responsible
in accordance with the Operative Documents or which are attributable to the
Seller therein are true and correct in all material respects, and the Prospectus
Supplement does not contain any untrue statement of a material fact with respect
to the Seller required to be stated therein or necessary to make the statements
contained therein with respect to the Seller, in light of the circumstances
under which they were made, not misleading. The Prospectus Supplement does not
contain any untrue statement of a material fact required to be stated therein or
omit to state any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Seller that materially adversely
affects or in the future may (so far as the Seller can now reasonably foresee)
materially adversely affect the Seller or the Home Equity Loans that has not
been set forth in the Prospectus Supplement.
(h) Upon the receipt of each Home Equity Loan (including the related
Mortgage Note) and other items of the Trust Estate by the Indenture Trustee, the
Issuer will have good title to such Home Equity Loan (including the related
Mortgage Note) and such other items of the Trust Estate free and clear of any
lien, charge, mortgage, encumbrance or rights of others, except as set forth in
Section 2.04(b)(ix) (other than liens which will be simultaneously released (and
except for the lien of the Indenture)).
(i) Neither the Seller nor any affiliate thereof will report on any
financial statement any part of the Servicing Fee as an adjustment to the sales
price of the Home Equity Loans.
(j) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the Notes
and the execution and delivery by the Seller of the Operative Documents to which
it is a party, have been duly taken, given or obtained, as the case may be, are
in full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Operative Documents on the part of
the Seller and the performance by the Seller of its obligations under this
Agreement and such of the other Operative Documents to which it is a party.
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(k) The origination practices used by the Seller with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage lending business.
(l) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller.
(m) Neither the Owner Trustee nor the Seller has any obligation to
register the Trust as an investment company under the Investment Company Act of
1940, as amended.
(n) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is the Seller aware of any pending
insolvency.
(o) The Seller received fair consideration and reasonably equivalent
value in exchange for the sale of the interests in the Home Equity Loans.
(p) The Seller did not sell any interest in any Home Equity Loan with
any intent to hinder, delay or defraud any of its creditors.
(q) No material adverse change affecting any security for the Notes has
occurred prior to delivery of and payment for the Notes.
(r) The Seller is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Seller or legal
documents associated with the transaction contemplated by this Agreement.
(s) To the best knowledge of the Seller, there has been no material
adverse change in any information submitted by the Seller in writing to the Note
Insurer with respect to the transactions contemplated by this Agreement (unless
such information was subsequently supplemented in writing).
It is understood and agreed that the representations and warranties set
forth in this Section 2.03 shall survive delivery of the respective Home Equity
Loans to the Indenture Trustee.
Upon discovery by any of the Issuer, the Depositor, the Servicer, the
Custodian, any Sub-Servicer, any Owner, the Seller, the Note Insurer or the
Indenture Trustee (each, for purposes of this paragraph, a "party") of a breach
of any of the representations and warranties set forth in this Section 2.03
which materially and adversely affects the interests of the Owners or the
interests of the Note Insurer, the party discovering such breach shall give
prompt written notice to the other parties. The Seller hereby covenants and
agrees that within 60 days of its discovery or its receipt of notice of breach,
it shall cure such breach in all material respects or, with respect to a breach
of clause (h) above, the Seller may (or may cause an affiliate of the Seller to)
on or prior to the second Monthly Remittance Date next succeeding such discovery
or receipt of notice (i) substitute in lieu of any Home Equity Loan not in
compliance with clause (h) a Qualified Replacement Mortgage and, if the
outstanding principal amount of such Qualified Replacement Mortgage as of the
applicable Replacement Cut-Off Date is less than the Loan Balance of such Home
Equity Loan as of such Replacement Cut-Off Date, deliver an amount (a
"Substitution Amount") equal to such difference together with the aggregate
amount of (A) all Delinquency Advances and Servicing Advances theretofore made
with respect to such Home Equity Loan and (B) all Delinquency Advances which the
Servicer has theretofore failed to remit with respect to such Home Equity Loan
to the Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Home Equity Loan from the Issuer at the Loan Purchase Price, which
purchase price shall be delivered to the Servicer for deposit in the Principal
and Interest Account. The Seller shall deliver an Officer's Certificate to the
Indenture Trustee and the Note Insurer concurrently with
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the delivery of a Qualified Replacement Mortgage pursuant to Sections 2.03, 2.04
and 2.06 stating that such Home Equity Loan meets the requirements of the
definition of a Qualified Replacement Mortgage and that all other conditions to
the substitution thereof have been satisfied. Any Home Equity Loan as to which
repurchase or substitution was delayed pursuant to this Section shall be
repurchased or substituted for (subject to compliance with Section 2.03, 2.04 or
2.06, as the case may be) upon the occurrence of a default or imminent default
with respect to such Home Equity Loan.
Section 2.04 Covenants of Seller to Take Certain Actions with
Respect to the Home Equity Loans in Certain Situations.
(a) Upon the discovery by the Issuer, the Depositor, the Seller, the
Servicer, the Note Insurer, any Sub-Servicer, any Owner, the Custodian or the
Indenture Trustee that the representations and warranties set forth in clause
(b) below were untrue in any material respect as of the Closing Date (or in the
case of the Subsequent Home Equity Loans, as of the respective Subsequent
Transfer Date) with the result that the interests of the Owners or of the Note
Insurer are materially and adversely affected, the party discovering such breach
shall give prompt written notice to the other parties. Upon the earliest to
occur of the Seller's discovery, its receipt of notice of breach from any one of
the other parties or such time as a situation resulting from an existing
statement which is untrue materially and adversely affects the interests of the
Owners or of the Note Insurer, the Seller hereby covenants and warrants that it
shall promptly cure such breach in all material respects or subject to the last
three sentences of Section 2.03 it shall on or before the second Monthly
Remittance Date next succeeding such discovery, receipt of notice or such time
(i) substitute in lieu of each Home Equity Loan which has given rise to the
requirement for action by the Seller a Qualified Replacement Mortgage and
deliver the Substitution Amount to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan from the Trust at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account; provided, however, that if the Seller can establish to the reasonable
satisfaction of the Note Insurer that it is diligently pursuing remedial action,
the period of time in which the Seller must substitute a Qualified Replacement
Mortgage or purchase such Home Equity Loan may be extended for an additional 30
days with the written approval of the Note Insurer. It is understood and agreed
that the obligation of the Seller so to substitute or purchase any Home Equity
Loan as to which such a statement set forth below is untrue in any material
respect and has not been remedied shall constitute the sole remedy respecting a
discovery of any such statement which is untrue in any material respect in this
Section 2.04 available to the Owners and the Indenture Trustee.
(b) The Seller hereby represents, warrants and covenants to the
Indenture Trustee, the Issuer, the Servicer, the Note Insurer and the Owners
that as of the Closing Date (with respect to the Initial Home Equity Loans) and
as of the respective Subsequent Transfer Date (with respect to the Subsequent
Home Equity Loans):
(i) The information with respect to each Initial Home Equity
Loan and Subsequent Home Equity Loan set forth in the related
Schedule of Home Equity Loans is true and correct as of the Cut-Off
Date (or in the case of the Subsequent Home Equity Loans, as of the
related Subsequent Transfer Date);
(ii) All the original or certified documentation set forth in
Section 2.05 (including all material documents related thereto) with
respect to each Initial Home Equity Loan has been or will be
delivered to the Custodian on behalf of the Indenture Trustee on the
Closing Date (or in the case of the Subsequent Home Equity Loans, on
the related Subsequent Transfer Date) or as otherwise provided in
Section 2.05;
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(iii) Each Home Equity Loan being transferred to the Trust is
secured by a Mortgage;
(iv) Each Property is improved by a single (one-to-four) family
residential dwelling (except for 2.79% of the Initial Home Equity
Loans in the amount of $14,681,495.00, that are condominiums, planned
unit developments, townhouses, manufactured housing, or multifamily
residential, provided that no more than 0.28% of the Properties are
secured by manufactured homes, each of which is considered to be real
property under the applicable local law;
(v) As of the Cut-Off Date, no Initial Home Equity Loan has a
Loan-to-Value Ratio in excess of 90%, except for 60 Initial Home
Equity Loans in the amount of $6,849,845.06 that had a Loan-to-Value
Ratio not greater than 100%;
(vi) Each Home Equity Loan is being serviced by the Servicer in
accordance with the terms of this Agreement;
(vii) The Mortgage Note related to each Initial Home Equity
Loan bears a current Coupon Rate of at least 5.91% per annum;
(viii) Each Mortgage Note with respect to the Initial Home
Equity Loans will provide for a schedule of substantially level and
equal Monthly Payments which are sufficient to amortize fully the
principal balance of such Mortgage Note on or before its maturity
date except for 72 Initial Home Equity Loans in the amount of
$16,735,146.86 representing 3.18% of the aggregate Loan Balance of
the Initial Home Equity Loans as of the Cut-Off Date, which may
provide for a "balloon" payment due at the end up to the 15th year;
(ix) As of the Closing Date (with respect to the Initial Home
Equity Loans) and any Subsequent Transfer Date (with respect to the
Subsequent Home Equity Loans), each Mortgage is a valid and
subsisting first lien of record (or is in the process of being
recorded) on the Property as noted on Schedule I attached hereto
subject, in all cases, to the exceptions to title set forth in the
title insurance policy or attorney's opinion of title, with respect
to the related Home Equity Loan, which exceptions are generally
acceptable to banking institutions in connection with their regular
mortgage lending activities, and such other exceptions to which
similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect
the benefits of the security intended to be provided by such
Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the Seller to the Depositor herein contemplated,
the Seller held good and indefeasible title to, and was the sole
owner of, each Home Equity Loan (including the related Mortgage Note)
subject to no liens, charges, mortgages, encumbrances or rights of
others except as set forth in clause (ix) or other liens which will
be released simultaneously with such transfer and assignment; and
immediately upon the transfer and assignment herein contemplated, the
Issuer will hold good and indefeasible title to, and be the sole
owner of, each Home Equity Loan subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in
paragraph (ix) or other liens which will be released simultaneously
with such transfer and assignment and except for the lien of the
Indenture;
(xi) As of the opening of business on the Cut-Off Date, no
Initial Home Equity Loan is 30 days or more Delinquent except that
there are 332 Initial Home Equity Loans with an outstanding aggregate
Loan Balance of $32,256,507.29 that are 30 or more days Delinquent
but
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not more than 59 days Delinquent and there are no Initial Home Equity
Loans that are 60 or more days Delinquent but not more than 89 days
Delinquent;
(xii) There is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in
good repair;
(xiii) There is no valid and enforceable offset, defense or
counterclaim to any Mortgage Note or Mortgage, including the
obligation of the related Mortgagor to pay the unpaid principal of or
interest on such Mortgage Note;
(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to,
or equal with, the lien of the related Mortgage except those which
are insured against by any title insurance policy referred to in
paragraph (xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act (as amended by the Riegle Community Development
and Regulatory Improvement Act of 1994) and other consumer protection
laws, usury, equal credit opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) an
attorney's opinion of title has been obtained but no lender's title
insurance policy has been obtained, or (b) a lender's title insurance
policy, issued in standard American Land Title Association form by a
title insurance company authorized to transact business in the state
in which the related Property is situated, in an amount at least
equal to the original balance of such Home Equity Loan, insuring the
mortgagee's interest under the related Home Equity Loan as the holder
of a valid first mortgage lien of record on the real property
described in the related Mortgage, as the case may be, subject only
to exceptions of the character referred to in paragraph (ix) above,
was effective on the date of the origination of such Home Equity
Loan, and, as of the Closing Date, such policy is valid and
thereafter such policy shall continue in full force and effect
(provided that an attorney's opinion of title without a lender's
title insurance policy has been obtained with respect to no more than
2% of the Original Aggregate Loan Balance);
(xvii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Servicer that provides for fire and extended
coverage representing coverage not less than the least of (A) the
outstanding principal balance of the related Home Equity Loan, (B)
the minimum amount required to compensate for damage or loss on a
replacement cost basis or (C) the full insurable value of the
Property;
(xviii) If any Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a
carrier generally acceptable to the Servicer in an amount
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan, (B) the minimum
amount required to compensate for damage or loss on a replacement
cost basis or (C) the maximum amount of insurance that is available
under the Flood Disaster Protection Act of 1973;
(xix) Each Mortgage and Mortgage Note are the legal, valid and
binding obligation of the maker thereof and are enforceable in
accordance with their terms, except only as such
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enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law),
and all parties to each Home Equity Loan had full legal capacity to
execute all documents relating to such Home Equity Loan and convey
the estate therein purported to be conveyed;
(xx) The Seller has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and
remedies of the Indenture Trustee in any Insurance Policies
applicable to any Home Equity Loans delivered by the Seller
including, without limitation, any necessary notifications of
insurers, assignments of policies or interests therein, and
establishments of co-insured, joint loss payee and mortgagee rights
in favor of the Indenture Trustee;
(xxi) As of the Closing Date, no more than 0.25% of the
aggregate Loan Balance of the Initial Home Equity Loans will be
secured by Properties located within any single zip code area;
(xxii) Each original Mortgage was recorded or is in the process
of being recorded, and all subsequent assignments of the original
Mortgage have been delivered for recordation or have been recorded in
the appropriate jurisdictions wherein such recordation is necessary
to perfect the lien thereof as against creditors of or purchasers
from the Seller (or, subject to Section 2.05 hereof, are in the
process of being recorded); each Mortgage and assignment of Mortgage
is in recordable form and is acceptable for recording under the laws
of the jurisdiction in which the property securing such Mortgage is
located;
(xxiii) The terms of each Mortgage Note and each Mortgage have
not been impaired, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary, to protect
the interest of the Owners and the Note Insurer and which has been
delivered to the Indenture Trustee. The substance of any such
alteration or modification is reflected on the related Schedule of
Home Equity Loans;
(xxiv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making or closing or
recording such Home Equity Loans were paid;
(xxv) The related Mortgage Note is not and has not been secured
by any collateral, pledged account or other security except the lien
of the corresponding Mortgage;
(xxvi) No Home Equity Loan has a shared appreciation feature,
or other contingent interest feature;
(xxvii) Each Property is located in the state identified in the
respective Schedule of Home Equity Loans and consists of one or more
parcels of real property with a residential dwelling erected thereon;
(xxviii) Each Mortgage contains a provision for the
acceleration of the payment of the unpaid principal balance of the
related Home Equity Loan in the event the related Property is sold
without the prior consent of the mortgagee thereunder;
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(xxix) Any advances made after the date of origination of a
Home Equity Loan but prior to the Cut-Off Date with respect to the
Initial Home Equity Loans (or the relevant Subsequent Transfer Date
with respect to the Subsequent Home Equity Loans) have been
consolidated with the outstanding principal amount secured by the
related Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on
the Schedule of Home Equity Loans. The consolidated principal amount
does not exceed the original principal amount of the related Home
Equity Loan. No Mortgage Note permits or obligates the Servicer to
make future advances to the related Mortgagor at the option of the
Mortgagor;
(xxx) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a
proceeding currently occurring, and each Property is undamaged by
waste, fire, water, flood, earthquake or earth movement;
(xxxi) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie
wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon
such Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxii) No improvement located on or being part of any Property
is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of each Property and, with
respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Property is lawfully occupied under the
applicable law;
(xxxiii) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is
named in such Mortgage, and no fees or expenses are or will become
payable by the Owners or the Indenture Trust to the trustee under the
deed of trust, except in connection with a trustee's sale after
default by the related Mortgagor;
(xxxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of the
benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. There is no homestead or other exemption other
than any applicable Mortgagor redemption rights available to the
related Mortgagor which would materially interfere with the right to
sell the related Property at a trustee's sale or the right to
foreclose the related Mortgage;
(xxxv) Other than with respect to the Delinquencies noted in
item (xi) hereof, there is no default, breach, violation or event of
acceleration existing under any Mortgage or the related 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 Seller has waived any default, breach, violation or event of
acceleration;
(xxxvi) No instrument of release or waiver has been executed in
connection with any Home Equity Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an
assumption agreement which has been approved by the primary mortgage
guaranty insurer, if any, and which has been delivered to the
Custodian;
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(xxxvii) Reserved;
(xxxviii) Each Home Equity Loan was underwritten in accordance
with the credit underwriting guidelines of the Seller as set forth in
the Seller's Policies and Procedures Manual, as in effect on the date
hereof and such Manual conforms in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject
property;
(xl) The Home Equity Loans were not selected for sale to the
Depositor by the Seller on any basis intended to adversely affect the
Issuer;
(xli) No more than 5.08% of the aggregate Loan Balance of the
Initial Home Equity Loans are secured by Properties that are
non-owner occupied Properties (i.e., investor-owned and vacation);
(xlii) The Seller has no actual knowledge that there exist any
hazardous substances, hazard wastes or solid wastes, as such terms
are defined in the Comprehensive Environmental Response Compensation
and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation on
any Property;
(xliii) The Seller was properly licensed or otherwise
authorized, to the extent required by applicable law, to originate or
purchase each Home Equity Loan and the consummation of the
transactions herein contemplated, including, without limitation, the
receipt of interest by the Owners and the ownership of the Home
Equity Loans by the Issuer will not involve the violation of such
laws;
(xliv) With respect to each Property subject to a ground lease
(i) the current ground lessor has been identified and all ground
rents which have previously become due and owing have been paid; (ii)
the ground lease term extends, or is automatically renewable, for at
least five years beyond the maturity date of the related Home Equity
Loan; (iii) the ground lease has been duly executed and recorded;
(iv) the amount of the ground rent and any increases therein are
clearly identified in the lease and are for predetermined amounts at
predetermined times; (v) the ground rent payment is included in the
borrower's monthly payment as an expense item in determining the
qualification of the borrower for such Home Equity Loan; (vi) the
Issuer has the right to cure defaults on the ground lease; and (vii)
the terms and conditions of the leasehold do not prevent the free and
absolute marketability of the Property. As of the Cut-Off Date, the
Loan Balance of the Initial Home Equity Loans with related Properties
subject to ground leases does not exceed 1% of the Original Aggregate
Loan Balance;
(xlv) As of the Cut-Off Date, no more than 6.63% of the Initial
Home Equity Loans were fixed rate home equity loans;
(xlvi) No Home Equity Loan is subject to a temporary rate
reduction pursuant to a buydown program;
(xlvii) No more than 2.68% of the aggregate Loan Balance of the
Initial Home Equity Loans was originated under the Seller's
non-income verification program;
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(xlviii) The Coupon Rate on each Home Equity Loan is calculated
on the basis of a year of 360 days with twelve 30-day months (except
for 0.86% of the Initial Home Equity Loans on which the Coupon Rate
is calculated based on the number of days elapsed since the last
payment);
(xlix) Neither the operation of any of the terms of each
Mortgage Note and each Mortgage nor the exercise of any right
thereunder will render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, nor subject it to any right of
rescission, set-off, counterclaim or defense, including, without
limitation, the defense of usury;
(l) Any adjustment to the Coupon Rate on a Home Equity Loan has
been legal, proper and in accordance with the terms of the related
Mortgage Note;
(li) No Home Equity Loan is subject to negative amortization;
and
(lii) As of the Cut-Off Date, the FTC holder regulation
provided in 16 C.F.R. Part 433 applies to none of the Home Equity
Loans.
(c) In the event that any Qualified Replacement Mortgage is delivered
by the Seller to the Trust pursuant to Section 2.03, Section 2.04 or Section
2.06 hereof, the Seller shall be obligated to take the actions described in
Section 2.04(a) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Owners, the Seller, the Servicer, the Note Insurer, any
Sub-Servicer, the Custodian or the Indenture Trustee that the statements set
forth in subsection (b) above are untrue in any material respect on the date
such Qualified Replacement Mortgage is conveyed to the Trust such that the
interests of the Owners or the Note Insurer in the related Qualified Replacement
Mortgage are materially and adversely affected; provided, however, that for the
purposes of this subsection (c) the statements in subsection (b) above referring
to items "as of the Cut-Off Date" or "as of the Closing Date" shall be deemed to
refer to such items as of the date such Qualified Replacement Mortgage is
conveyed to the Trust. Notwithstanding the fact that a representation contained
in subsection (b) above may be limited to the Seller's knowledge, such
limitation shall not relieve the Seller of its repurchase obligation under this
Section and Section 2.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 2.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgages) to the Indenture Trustee or the
Custodian.
(e) The Indenture Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article II or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 2.05 Conveyance of the Initial Home Equity Loans and Qualified
Replacement Mortgages.
(a) On the Closing Date, the Seller, concurrently with the execution
and delivery hereof, transfers, assigns, sets over and otherwise conveys without
recourse, to the Depositor and the Depositor, concurrently with the execution
and delivery hereof, transfers, assigns, sets over and otherwise conveys without
recourse, to the Issuer, all of its respective right, title and interest in and
to the Initial Home Equity Loans (other than payments of principal and interest
due on the Initial Home Equity Loans on or before the Cut-Off Date). The
transfer by the Seller to the Depositor and by the Depositor to the Issuer of
the Initial Home Equity Loans set forth on the Schedule of Home Equity Loans to
the Issuer is absolute and is intended by all parties hereto to be treated as a
sale by the Seller to the Depositor and by the Depositor to the Issuer. Pursuant
to the
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Indenture, the Issuer will pledge the Trust Estate to the Indenture Trustee to
be held on behalf of the Owners of the Notes.
In the event that either such conveyance or a conveyance pursuant to
Section 2.07 and any Subsequent Transfer Agreement is deemed to be a loan, the
parties intend that the Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Issuer a security
interest in the Trust Estate, and that this Agreement shall constitute a
security agreement under applicable law.
In connection with the sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the States of Delaware and Florida, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Initial Home Equity Loans, the Subsequent Home Equity Loans, and the
other property described above as collateral. The characterization of the Seller
as the debtor and the Depositor as the secured party in such financing
statements is solely for protective purposes and shall in no way be construed as
being contrary to the intent of the parties that this transaction be treated as
a sale of the Seller's entire right, title and interest in the Trust Estate. In
connection with such filing, the Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Depositor's interest in the Trust Estate.
In connection with the sale, transfer, assignment, and conveyance from
the Depositor to the Issuer, the Depositor has filed, in the appropriate office
or offices in the States of Delaware and Florida a UCC-1 financing statement
executed by the Depositor as debtor, naming the Issuer as secured party and
listing the Initial Home Equity Loans, the Subsequent Home Equity Loans and the
other property described above as collateral. The characterization of the
Depositor as a debtor and the Issuer as the secured party in such financing
statements is solely for protective purposes and shall in no way be construed as
being contrary to the intent of the parties that this transaction be treated as
a sale of the Depositor's entire right, title and interest in the Trust Estate.
In connection with such filing, the Depositor agrees that it shall cause to be
filed all necessary continuation statements thereof and to take or cause to be
taken such actions and execute such documents as are necessary to perfect and
protect the Issuer's, the Owners' and the Note Insurer's interest in the Trust
Estate.
In connection with the pledge of the Trust Estate from the Issuer to
the Indenture Trustee, on behalf of the Owners of the Notes, the Issuer has
filed, in the appropriate office or offices in the State of Delaware, a UCC-1
Financing Statement executed by the Issuer as debtor, naming the Indenture
Trustee, on behalf of the Owners of the Notes, as the secured party and listing
the Initial Home Equity Loans, the Subsequent Home Equity Loans and the other
property described above as collateral. In connection with such filing, the
Issuer agrees that it shall cause to be filed all necessary continuation
statements thereof and to take or cause to be taken such actions and execute
such documents as are necessary to perfect and protect the Indenture Trustee's
interest in the Trust Estate on behalf of the Owners of the Notes.
(b) In connection with the transfer and assignment of the Initial Home
Equity Loans, or on each Subsequent Transfer Date with respect to the Subsequent
Home Equity Loan, the Seller agrees to:
(i) deliver without recourse to the Custodian, on behalf of the
Indenture Trustee, on the Closing Date with respect to each Initial
Home Equity Loan or on each Subsequent Transfer Date with respect to
the Subsequent Home Equity Loans, (A) the original Mortgage Notes (or
in the case of not more than 0.50% of the Initial Home Equity Loans, a
lost note affidavit executed by an Authorized Officer of the Seller)
endorsed in blank or to the order of "The Chase Manhattan Bank, as
Indenture Trustee for the IMC Adjustable Rate Home Equity Loan Asset
Backed Notes, Series
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1998-2 without recourse," (B) (I) the original title insurance
commitment or a copy thereof certified as a true copy by the closing
agent or the Seller, and when available, the original title insurance
policy or a copy certified by the issuer of the title insurance policy
or (II) the attorney's opinion of title, (C) originals or copies of all
intervening assignments certified as true copies by the closing agent
or the Seller, showing a complete chain of title from origination to
the Issuer, if any, including warehousing assignments, if recorded, (D)
originals of all assumption and modification agreements, if any and (E)
either: (1) the original Mortgage, with evidence of recording thereon
(if such original Mortgage has been returned to the Seller from the
applicable recording office) or a copy of the Mortgage certified as a
true copy by the closing agent or the Seller, or (2) a copy of the
Mortgage certified by the public recording office in those instances
where the original recorded Mortgage has been lost or retained by the
recording office;
(ii) cause, within 60 days following the Closing Date with
respect to the Initial Home Equity Loans or on each Subsequent Transfer
Date with respect to the Subsequent Home Equity Loans or assignments of
the Mortgages to "The Chase Manhattan Bank, as Indenture Trustee for
the "The Chase Manhattan Bank, as the Indenture Trustee for the IMC
Adjustable Rate Home Equity Loan Asset Backed Notes, Series 1998-2
without recourse," to be submitted for recording in the appropriate
jurisdictions; provided, however, that the Seller shall not be required
to prepare an assignment for any Mortgage described in subsection
(b)(i)(E)(2) above with respect to which the original recording
information has not yet been received from the recording office until
such information is received; provided, further, that the Seller shall
not be required to record an assignment of a Mortgage if the Seller
furnishes to the Indenture Trustee and the Note Insurer, on or before
the Closing Date, with respect to the Initial Home Equity Loans or on
each Subsequent Transfer Date with respect to the Subsequent Home
Equity Loans, at the Seller's expense, an opinion of counsel with
respect to the relevant jurisdiction that such recording is not
necessary to perfect the Indenture Trustee's interest in the related
Home Equity Loans (in form and substance satisfactory to the Indenture
Trustee, and the Note Insurer and the Rating Agencies); provided
further, however, notwithstanding the delivery of any legal opinions,
each assignment of Mortgage shall be recorded upon the earliest to
occur of: (i) reasonable direction by the Note Insurer or (ii) the
occurrence of a Servicer Termination Event;
(iii) deliver the title insurance policy or title searches, the
original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments
(other than unrecorded warehouse assignments), to the Custodian, on
behalf of the Indenture Trustee, within 15 days of receipt thereof by
the Seller (but in any event, with respect to any Mortgage as to which
original recording information has been made available to the Seller,
within one year after the Closing Date with respect to the Initial Home
Equity Loans or on each Subsequent Transfer Date with respect to the
Subsequent Home Equity Loans); and
(iv) furnish to the Indenture Trustee and the Note Insurer at
the Seller's expense, an opinion of counsel with respect to the sale
and perfection of the Subsequent Home Equity Loans delivered to the
Issuer.
Notwithstanding anything to the contrary contained in this Section
2.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Seller and the Depositor shall be
deemed to have satisfied their obligations hereunder upon delivery to the
Custodian, on behalf of the Indenture Trustee of a copy of such Mortgage, such
assignment or assignments of Mortgage certified by the public recording office
to be a true copy of the recorded original thereof.
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Not later than ten days following the end of the 60-day period referred
in clause (ii) of this subsection (b), the Seller shall deliver to the
Custodian, on behalf of the Indenture Trustee a list of all Mortgages for which
no Mortgage assignment has yet been submitted for recording by the Seller, which
list shall state the reason why the Seller has not yet submitted such Mortgage
assignments for recording. With respect to any Mortgage assignment disclosed on
such list as not yet submitted for recording for a reason other than a lack of
original recording information, the Custodian, on behalf of the Indenture
Trustee shall make an immediate demand on the Seller to prepare such Mortgage
assignments, and shall inform the Note Insurer, in writing, of the Seller's
failure to prepare such Mortgage assignments. Thereafter, the Custodian, on
behalf of the Indenture Trustee shall cooperate in executing any documents
prepared by the Note Insurer and submitted to the Custodian, on behalf of the
Indenture Trustee in connection with this provision. Following the expiration of
each 60-day period referred to in clause (ii) of this subsection (b), the Seller
shall promptly prepare a Mortgage assignment for any Mortgage for which original
recording information is subsequently received by the Seller, and shall promptly
deliver a copy of such Mortgage assignment to the Custodian, on behalf of the
Indenture Trustee. The Seller agrees that it will follow its normal servicing
procedures and attempt to obtain the original recording information necessary to
complete a Mortgage assignment. In the event that the Seller is unable to obtain
such recording information with respect to any Mortgage prior to the end of the
18th calendar month following the Closing Date with respect to the Initial Home
Equity Loans and the relevant Subsequent Transfer Date with respect to the
Subsequent Home Equity Loans and has not provided to the Custodian, on behalf of
the Indenture Trustee a Mortgage assignment with evidence of recording thereon
relating to the assignment of such Mortgage to the Indenture Trustee, the
Custodian, on behalf of the Indenture Trustee shall notify the Seller of the
Seller's obligation to provide a completed assignment (with evidence of
recording thereon) on or before the end of the 20th calendar month following the
Closing Date with respect to the Initial Home Equity Loans and the relevant
Subsequent Transfer Date with respect to the Subsequent Home Equity Loans. A
copy of such notice shall be sent by the Custodian, on behalf of the Indenture
Trustee to the Note Insurer. If no such completed assignment (with evidence of
recording thereon) is provided before the end of such 20th calendar month, the
related Home Equity Loan shall be deemed to have breached the representation
contained in clause (xxii) of Section 2.04(b) hereof; provided, however, that if
as of the end of such 20th calendar month the Seller demonstrates to the
satisfaction of the Note Insurer that it is exercising its best efforts to
obtain such completed assignment and, during each month thereafter until such
completed assignment is delivered to the Custodian, on behalf of the Indenture
Trustee, the Seller continues to demonstrate to the satisfaction of the Note
Insurer that it is exercising its best efforts to obtain such completed
assignment, the related Home Equity Loan will not be deemed to have breached
such representation. The requirement to deliver a completed assignment with
evidence of recording thereon will be deemed satisfied upon delivery of a copy
of the completed assignment certified by the applicable public recording office.
Copies of all Mortgage assignments received by the Custodian, on behalf
of the Indenture Trustee shall be retained in the related File.
All recording required pursuant to this Section 2.05 shall be
accomplished at the expense of the Seller.
(c) In the case of Initial Home Equity Loans which have been prepaid in
full after the Cut-Off Date and prior to the Closing Date, the Seller, in lieu
of the foregoing, will deliver within six (6) days after the Closing Date to the
Indenture Trustee a certification of an Authorized Officer in the form set forth
in Exhibit A.
(d) The Seller shall transfer, assign, set over and otherwise convey
without recourse, to the Issuer all right, title and interest of the Seller in
and to any Qualified Replacement Mortgage delivered to the Custodian, on behalf
of the Indenture Trustee on behalf of the Issuer by the Seller pursuant to
Section 2.03,
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2.04 or 2.06 hereof and all its right, title and interest to principal and
interest due on such Qualified Replacement Mortgage after the applicable
Replacement Cut-Off Date; provided, however, that the Seller shall reserve and
retain all right, title and interest in and to payments of principal and
interest due on such Qualified Replacement Mortgage on or prior to the
applicable Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the lien of the Indenture
in connection with the conveyance of a Qualified Replacement Mortgage therefor,
the Indenture Trustee will transfer, assign, set over and otherwise convey
without recourse or representation, on the Seller's order, all of its and the
Issuer's right, title and interest in and to such released Home Equity Loan and
all the Issuer's right, title and interest to principal and interest due on such
released Home Equity Loan after the applicable Replacement Cut-Off Date;
provided, however, that the Issuer shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such released Home
Equity Loan on or prior to the applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Issuer, the Seller agrees to (i) deliver without
recourse to the Custodian, on behalf of the Indenture Trustee on the date of
delivery of such Qualified Replacement Mortgage the original Mortgage Note
relating thereto, endorsed in blank or to the order of "The Chase Manhattan
Bank, as Indenture Trustee for IMC Adjustable Rate Home Equity Loan Asset Backed
Notes, Series 1998-2 without recourse," (ii) cause promptly to be recorded an
assignment in the appropriate jurisdictions, (iii) deliver the original
Qualified Replacement Mortgage and such recorded assignment, together with
original or duly certified copies of any and all prior assignments, to the
Custodian, on behalf of the Indenture Trustee within 15 days of receipt thereof
by the Seller (but in any event within 60 days after the date of conveyance of
such Qualified Replacement Mortgage) and (iv) deliver the title insurance
policy, or where no such policy is required to be provided under Section
2.05(b)(i)(B), the other evidence of title in same required in Section
2.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Custodian, on behalf
of the Indenture Trustee shall deliver on the date of conveyance of such
Qualified Replacement Mortgage and on the order of the Seller (i) the original
Mortgage Note relating thereto, endorsed without recourse or representation, to
the Seller, (ii) the original Mortgage so released and all assignments relating
thereto and (iii) such other documents as constituted the File with respect
thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller shall prepare a substitute assignment or cure such defect, as the
case may be, and thereafter cause each such assignment to be duly recorded.
Section 2.06 Acceptance by Indenture Trustee; Certain
Substitutions of Home Equity Loans; Certification by
Indenture Trustee.
(a) The Indenture Trustee agrees to execute and deliver and to cause
the Custodian to execute and deliver on the Closing Date an acknowledgment of
receipt of the items delivered by the Seller in the forms attached as Exhibit
B-1 and Exhibit B-2 hereto, and declares through the Custodian that it will hold
such documents and any amendments, replacement or supplements thereto, as well
as any other assets included in the definition of Trust Estate and delivered to
the Custodian, on behalf of the Indenture Trustee, as Indenture Trustee in trust
upon and subject to the conditions set forth herein and in the Indenture for the
benefit of the Owners. The Indenture Trustee agrees, for the benefit of the
Owners, to cause the Custodian to review such items within 45 days after the
Closing Date (or, with respect to any document delivered after the Closing Date,
within 45 days of receipt and with respect to any Subsequent Home Equity Loan or
Qualified Replacement Mortgage, within 45 days after the assignment thereof) and
to deliver to the
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Depositor, the Seller, the Servicer, the Issuer and the Note Insurer a
certification in the form attached hereto as Exhibit C (a "Pool Certification")
to the effect that, as to each Home Equity Loan listed in the Schedule of Home
Equity Loans (other than any Home Equity Loan paid in full or any Home Equity
Loan specifically identified in such Pool Certification as not covered by such
Pool Certification), (i) all documents required to be delivered to it pursuant
to Section 2.05(b)(i) of this Agreement are in its possession, (ii) such
documents have been reviewed by it and have not been mutilated, damaged or torn
and relate to such Home Equity Loan and (iii) based on its examination and only
as to the foregoing documents, the information set forth on the Schedule of Home
Equity Loans accurately reflects the information set forth in the File. Neither
the Custodian on behalf of the Indenture Trustee, nor the Indenture Trustee
shall have any responsibility for reviewing any File except as expressly
provided in this subsection 2.06(a). Without limiting the effect of the
preceding sentence, in reviewing any File, the Custodian or the Indenture
Trustee shall have no responsibility for determining whether any document is
valid and binding, whether the text of any assignment is in proper form (except
to determine if the Indenture Trustee is the assignee), whether any document has
been recorded in accordance with the requirements of any applicable jurisdiction
or whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded. Neither the Custodian on behalf of the Indenture Trustee, nor
the Indenture Trustee shall be under any duty or obligation to inspect, review
or examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose or that they are other than what they purport to be on their face, nor
shall the Custodian or the Indenture Trustee be under any duty to determine
independently whether there are any intervening assignments or assumption or
modification agreements with respect to any Home Equity Loan.
(b) If the Custodian, on behalf of the Indenture Trustee during such
45-day period finds any document constituting a part of a File which is not
executed, has not been received, or is unrelated to the Home Equity Loans
identified in the Schedule of Home Equity Loans, or that any Home Equity Loan
does not conform to the description thereof as set forth in the Schedule of Home
Equity Loans, the Custodian, on behalf of the Indenture Trustee shall promptly
so notify the Depositor, the Seller, the Issuer, the Owners and the Note
Insurer. In performing any such review, the Custodian, on behalf of the
Indenture Trustee may conclusively rely on the Seller as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the review of the items delivered by the Seller pursuant to
Section 2.05(b)(i) is limited solely to confirming that the documents listed in
Section 2.05(b)(i) have been executed and received, relate to the Files
identified in the Schedule of Home Equity Loans and conform to the description
thereof in the Schedule of Home Equity Loans. The Seller agrees to use
reasonable efforts to remedy a material defect in a document constituting part
of a File of which it is so notified by the Custodian, on behalf of the
Indenture Trustee. If, however, within 90 days after such notice to it
respecting such defect the Seller has not remedied the defect and the defect
materially and adversely affects the interest in the related Home Equity Loan of
the Owners or the Note Insurer, the Seller will (or will cause an affiliate of
the Seller to) on the next succeeding Monthly Remittance Date (i) substitute in
lieu of such Home Equity Loan a Qualified Replacement Mortgage and deliver the
Substitution Amount to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account.
(c) In addition to the foregoing, the Indenture Trustee also agrees to
cause the Custodian to make a review during the 12th month after the Closing
Date indicating the current status of the exceptions previously indicated on the
Pool Certification (the "Final Certification"). After delivery of the Final
Certification, the Custodian, on behalf of the Indenture Trustee and the
Servicer shall provide to the Note Insurer no less frequently than monthly
updated certifications indicating the then current status of exceptions, until
all such exceptions have been eliminated.
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Section 2.07 Conveyance of the Subsequent Home Equity Loans.
(a) Subject to the satisfaction of the conditions set forth in Section
2.05 and paragraphs (b), (c) and (d) below (based on the Custodian's review of
such conditions) in consideration of the Issuer's delivery on the relevant
Subsequent Transfer Dates to or upon the order of the Seller of all or a portion
of the balance of funds in the Pre-Funding Account, the Seller shall, on any
Subsequent Transfer Date, sell, transfer, assign, set over and otherwise convey
without recourse, to the Issuer, and the Issuer shall purchase all of the
Seller's right, title and interest in and to any and all benefits accruing to
the Seller from the Subsequent Home Equity Loans (other than any principal and
interest due on or prior to the relevant Subsequent Cut-Off Date) which the
Seller is causing to be delivered to the Custodian, on behalf of the Indenture
Trustee herewith (and all substitutions therefor as provided by Section 2.03,
2.04 and 2.06), together with the related Subsequent Home Equity Loan documents
and the Seller's interest in any Property which secured a Subsequent Home Equity
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing and proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Subsequent Home Equity
Loans, cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing). Notwithstanding anything to the contrary herein, there shall be no
more than three Subsequent Transfer Dates during the Funding Period.
The transfer of the Subsequent Home Equity Loans set forth on the
related Schedule of Home Equity Loans by the Seller to the Issuer shall be
absolute and shall be intended by the Owners and all parties hereto to be
treated as a sale by the Seller to the Issuer. The amount released from the
Pre-Funding Account shall be one-hundred percent (100%) of the aggregate
principal balances of the Subsequent Home Equity Loans so transferred. Upon the
transfer by the Seller of the Subsequent Home Equity Loans hereunder, such
Subsequent Home Equity Loans (and all principal and interest due thereon
subsequent to the Subsequent CutOff Date) and all other rights and interests
with respect to such Subsequent Home Equity Loans transferred pursuant to a
Subsequent Transfer Agreement shall be deemed for all purposes hereunder to be
part of the Trust Estate.
(b) The obligation of the Indenture Trustee to accept the transfer of
the Subsequent Home Equity Loans and the other property and rights related
thereto described in paragraph (a) above is subject to the satisfaction of each
of the following conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Indenture Trustee and the Note
Insurer with an Addition Notice and shall have provided any information
reasonably requested by any of the foregoing with respect to the Subsequent
Home Equity Loans;
(ii) the Seller shall have delivered to the Indenture Trustee a duly
executed written Subsequent Transfer Agreement (including an acceptance by
the Indenture Trustee) in substantially the form of Exhibit E hereto, which
shall include a Schedule of Home Equity Loans, listing the Subsequent Home
Equity Loans and any other exhibits listed thereon;
(iii) the Seller shall have delivered to the Servicer for deposit in the
Principal and Interest Account all principal and interest due in respect of
such Subsequent Home Equity Loans after the related Subsequent Cut-Off
Date;
(iv) as of each Subsequent Transfer Date, the Seller was not insolvent,
nor will it be made insolvent by such transfer, nor is it aware of any
pending insolvency;
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(v) the Funding Period shall not have ended; and
(vi) the Seller shall have delivered to the Indenture Trustee and the
Note Insurer an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and in the related
Subsequent Transfer Agreement and the Note Insurer shall have consented to
such transfer (such consent not to be unreasonably withheld).
(c) The obligation of the Issuer to purchase a Subsequent Home Equity
Loan on any Subsequent Transfer Date is subject to the following requirements:
(i) the rating on the Notes shall not have been downgraded by any Rating Agency;
(ii) such Subsequent Home Equity Loan will not be 30 days or more contractually
Delinquent as of the Subsequent Cut-Off Date (except that Subsequent Home Equity
Loans representing not more than 1% of the aggregate Loan Balance of the
Subsequent Home Equity Loans may be not more than 60 days Delinquent as of the
related Subsequent Cut-Off Date); (iii) the weighted average margin of the
Subsequent Home Equity Loans will be at least 6.80%; (iv) such Subsequent Home
Equity Loan will be an adjustable rate Home Equity Loan; (v) the original term
to maturity of such Subsequent Home Equity Loan may not exceed 30 years; (vi)
such Subsequent Home Equity Loan must be a first lien; and (vii) following the
purchase of such Subsequent Home Equity Loan by the Trust, the Home Equity Loans
(including the Subsequent Home Equity Loans) (a) will have a weighted average
Coupon Rate of at least 10.15%; (b) will have a weighted average Loan-to-Value
Ratio of not more than 77.60%; (c) will have at least 93.00% Home Equity Loans
which are owner occupied; and (d) will have at least 91.00% Home Equity Loans
secured by single family detached properties.
(d) In connection with each Subsequent Transfer Date and, if
applicable, on the Payment Dates occurring during the Funding Period, the
Trustee shall determine: (i) the amount and correct dispositions of the
Capitalized Interest Requirement, Overfunded Interest Amount, Pre-Funding
Account Earnings and the Pre-Funded Amount and (ii) any other necessary matters
in connection with the administration of the Pre- Funding Account and of the
Capitalized Interest Account. In the event that any amounts are released as a
result of an error in calculation to the Owners, the Seller or the Depositor
from the Pre-Funding Account or from the Capitalized Interest Account, such
Owners, the Seller or the Depositor shall immediately repay such amounts to the
Indenture Trustee or the Indenture Trustee shall have the right to withhold such
amounts from future distributions on such Notes.
Section 2.08 Custodian.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Indenture Trustee with respect to
the custody, acceptance, inspection and release of the Files pursuant to
Sections 2.05, 2.06, 2.07 and 4.14 and the related Pool Certification and Final
Certification shall be performed by the Custodian pursuant to the Custodial
Agreement. The fees and expenses of the Custodian will be paid by the Seller.
Section 2.09 Books and Records.
The sale of each Home Equity Loan shall be reflected in the Seller's
balance sheets and other financial statements as a sale of assets by the Seller
under generally accepted accounting principles.
END OF ARTICLE II
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ARTICLE III
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 3.01 Reserved.
Section 3.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Closing Date,
and the Indenture Trustee shall maintain, at the Corporate Trust Office, the
Note Account, the Pre-Funding Account, the Capitalized Interest Account and the
Available Funds Cap Carry-Forward Amount Account each to be held by the
Indenture Trustee in the name of the Indenture Trustee, in trust for the Owners
of the IMC Adjustable Rate Home Equity Loan Asset Backed Notes, Series 1998-2
and the Note Insurer as their interests may appear.
(b) On each Determination Date the Indenture Trustee shall determine
(based solely on information provided to it by the Servicer) with respect to the
immediately following Payment Date, the amounts that are expected to be on
deposit in the Note Account (exclusive of any deposits from the Pre- Funding
Account and Capitalized Interest Account expected to be made and inclusive of
any investment earnings on Eligible Investments held in the Note Account) as of
such date on such Payment Date (disregarding the amounts of any Insured
Payments) and equal to the sum of (x) such amounts excluding the amount of any
Total Monthly Excess Cashflow included in such amounts plus (y) any amounts of
related Total Monthly Excess Cashflow to be applied on such Payment Date
pursuant to Section 3.03(b)(iii) plus (z) any deposit to the Note Account from
the Pre-Funding Account and the Capitalized Interest Account expected to be
made. The amount described in clause (x) of the preceding sentence with respect
to each Payment Date is the "Available Funds" and the sum of the amounts
described in clauses (x), (y) and (z) of the preceding sentence with respect to
each Payment Date is the "Total Available Funds."
Section 3.03 Flow of Funds.
(a) The Indenture Trustee shall deposit in the Note Account without
duplication, upon receipt, (i) any Insured Payments from the Policy Payment
Account pursuant to Section 7.02(b) hereof, (ii) the proceeds of any liquidation
of the assets of the Trust, (iii) all remittances made to the Indenture Trustee
pursuant to Section 4.08(d)(ii) and (iv) the Monthly Remittance Amount.
(b) With respect to funds on deposit in the Note Account, on each
Payment Date, the Indenture Trustee shall make the following allocations,
disbursements and transfers from amounts deposited therein pursuant to
subsection (a) in the following order of priority, and each such allocation,
transfer and disbursement shall be treated as having occurred only after all
preceding allocations, transfers and disbursements have occurred:
(i) first, on each Payment Date from amounts then on deposit in the
Note Account, (A) to itself, the Indenture Trustee Fee and the
Indenture Trustee Reimbursable Expenses, and (B) provided that
no Note Insurer Default has occurred and is continuing the
Premium Amount for such Payment Date shall be paid to the Note
Insurer;
(ii) second, on each Payment Date, the Indenture Trustee shall
allocate an amount equal to the sum of (x) the Total Monthly
Excess Spread with respect to such Payment Date, (y) any
Overcollateralization Reduction Amount with respect to such
Payment Date, and (z) any amounts required to be transferred
pursuant to Section 3.04(e) (such sum being the "Total Monthly
Excess Cashflow" with respect to such Payment Date) in the
following order of priority:
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(A) first, such Total Monthly Excess Cashflow shall be
allocated to the payment of the Principal Payment
Amount pursuant to clause (b)(iv) below (excluding any
Overcollateralization Increase Amount) in an amount
equal to the amount, if any, by which (x) the Principal
Payment Amount (excluding any Overcollateralization
Increase Amount) exceeds (y) the Available Funds (net
of the Current Interest and the Trust Fees and
Expenses) and shall be paid as part of the Principal
Payment Amount pursuant to clause (iv)(C) below (the
amount of such difference being the "Available Funds
Shortfall"); and
(B) second, any portion of the Total Monthly Excess
Cashflow remaining after the allocations described in
clause (A) above shall be allocated to the payment to
the Note Insurer in respect of amounts owed on account
of any Reimbursement Amount pursuant to clause
(b)(iv)(A)(I).
(iii) third, the amount, if any, of the Total Monthly Excess Cashflow
on a Payment Date remaining after the allocations and payments
described in clause (ii) above (the "Net Monthly Excess
Cashflow" for such Payment Date) is required to be applied in
the following order or priority:
(A) first, such Net Monthly Excess Cashflow shall be used
to reduce to zero, through the payment to the Owners of
the Notes of an Overcollateralization Increase Amount
included in the Principal Payment Amount, which shall
be retained pursuant to clause (iv)(C) below, any
Overcollateralization Deficiency Amount as of such
Payment Date;
(B) second, an amount equal to the lesser of (i) any
portion of the Net Monthly Excess Cashflow remaining
after the applications described in clause (A) and (ii)
the excess of (a) the Available Funds Cap Carry-Forward
Amount for such Payment Date over (b) the amount then
on deposit in the Available Funds Cap CarryForward
Amount Account shall be deposited into the Available
Funds Cap CarryForward Amount Account;
(C) third, any Net Monthly Excess Cashflow remaining after
the application described in clauses (A) and (B) above
shall be allocated to the payment to the Servicer
pursuant to clause (iv)(A)(II) below to the extent of
any unreimbursed Delinquency Advances and unreimbursed
Servicing Advances;
(iv) fourth, following the making by the Indenture Trustee of all
allocations, transfers and disbursements described above from
amounts (including any related Insured Payment) then on deposit
in the Note Account, the Indenture Trustee shall:
(A) distribute (I) to the Note Insurer the amounts
described in clause (ii)(B) above and (II) to the
Servicer the amounts described in clause (iii)(C)
above;
(B) retain in the Note Account, the Current Interest
(including the proceeds of any Insured Payments
relating to interest made by the Note Insurer);
(C) retain in the Note Account, the Principal Payment
Amount (including the proceeds of any Insured Payments
relating to principal made by the Note Insurer);
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(D) distribute to the Indenture Trustee, for the
reimbursement of expenses of the Indenture Trustee not
reimbursed pursuant to clause (b)(i) above which
expenses were incurred in connection with its duties
and obligations hereunder; and
(v) fifth, following the making by the Indenture Trustee of all
allocations, transfers and disbursements described above, the
Indenture Trustee shall distribute to the Certificate
Distribution Account, the Residual Net Monthly Excess Cashflow,
if any, for such Payment Date.
(c) On each Payment Date, the Indenture Trustee shall distribute to the
Owners, the amount, if any, then on deposit in the Available Funds Cap
Carry-Forward Amount Account.
(d) Notwithstanding any of the foregoing provisions, the aggregate
amounts distributed on all Payment Dates to the Owners of the Notes on account
of principal pursuant to clause (b)(iv)(C) shall not exceed the original Note
Principal Balance.
(e) Upon receipt of Insured Payments from the Note Insurer on behalf of
Owners of the Notes, the Indenture Trustee shall deposit such Insured Payments
in the Policy Payments Account. On each Payment Date, pursuant to Section
7.02(b) hereof, such amounts will be transferred from the Policy Payment Account
to the Note Account and the Indenture Trustee shall distribute such Insured
Payments, or the proceeds thereof in accordance with Section 3.03(b), to the
Owners of such Notes.
(f) The Indenture Trustee or Paying Agent shall (i) receive for each
Owner of the Notes any Insured Payment from the Note Insurer and (ii) disburse
the same to the Owners of the Notes as set forth in Section 3.03(b). Insured
Payments disbursed by the Indenture Trustee or Paying Agent from proceeds of the
Note Insurance Policy shall not be considered payment by the Trust, nor shall
such payments discharge the obligation of the Trust with respect to such Notes
and the Note Insurer shall be entitled to receive the Reimbursement Amount
pursuant to Section 3.03(b)(ii)(B) hereof. Nothing contained in this paragraph
shall be construed so as to impose duties or obligations on the Indenture
Trustee that are different from or in addition to those expressly set forth in
this Agreement.
Section 3.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Closing Date, the Indenture Trustee will deposit, on behalf
of the Owners of the Notes and the Note Insurer in the Pre-Funding Account the
Original Aggregate Pre-Funded Amount from the proceeds of the sale of the Notes.
(b) On any Subsequent Transfer Date, the Seller shall instruct the
Indenture Trustee to withdraw from the Pre-Funding Account an amount equal to
100% of the aggregate Loan Balances of the Subsequent Home Equity Loans sold to
the Issuer on such Subsequent Transfer Date and pay such amount to or upon the
order of the Seller upon satisfaction of the conditions set forth in Sections
2.05 and 2.07 hereof with respect to such transfer. In no event shall the
Depositor be permitted to instruct the Indenture Trustee to release from the
Pre-Funding Account to the Note Account an amount in excess of the Original
Pre-Funded Amount.
(c) If the Pre-Funded Amount has been reduced to $100,000 or less on or
before the April 1998 Monthly Remittance Date, the Seller shall instruct the
Indenture Trustee to withdraw from the Pre-Funding Account the amount (exclusive
of any related Pre-Funding Account Earnings still on deposit therein) remaining
in the Pre-Funding Account and deposit such amount to the Note Account, on the
April 1998 Monthly Remittance Date and if the Pre-Funded Amount has been reduced
to $100,000 or less by April 30,
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1998, then the Indenture Trustee shall withdraw from the Pre-Funding Account the
amount (exclusive of any related Pre-Funding Account Earnings still on deposit
therein) remaining in the Pre-Funding Account and deposit such amount to the
Note Account, on the May 1998 Monthly Remittance Date, which will be distributed
to the related Owners of the Notes.
(d) On the Payment Dates in April and May 1998, the Indenture Trustee
shall transfer from the Pre-Funding Account to the Capitalized Interest Account
the Pre-Funding Account Earnings, if any, applicable to such Payment Date.
(e) On the Payment Dates in April and May 1998, the Indenture Trustee
shall transfer from the Capitalized Interest Account to the Note Account, the
sum of the Capitalized Interest Requirement, if any, and any Pre-Funding Account
Earnings for such Payment Date.
(f) On each Subsequent Transfer Date the Indenture Trustee shall
distribute the Overfunded Interest Amount, if any (calculated by the Indenture
Trustee on the day prior to such Subsequent Transfer Date) from the Capitalized
Interest Account to the Seller and on the Payment Date immediately following the
Funding Period the Indenture Trustee shall distribute to the Seller any amounts
remaining in the Capitalized Interest Account after taking into account the
transfers on such Payment Date described above. The Capitalized Interest Account
shall be closed at the end of the Funding Period. All amounts, if any, remaining
in the Capitalized Interest Account on such day shall be transferred to the
Seller.
Section 3.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Indenture Trustee for the benefit of the Owners shall be
invested and reinvested by the Indenture Trustee in trust for the benefit of the
Owners and the Note Insurer, as directed in writing by the Seller, in one or
more Eligible Investments bearing interest or sold at a discount. The bank
serving as Indenture Trustee or any affiliate thereof may be the obligor on any
investment which otherwise qualifies as an Eligible Investment. No investment in
any Account shall mature later than the Business Day immediately preceding the
next Payment Date.
(b) If any amounts are needed for disbursement from any Account held by
the Indenture Trustee and sufficient uninvested funds are not available to make
such disbursement, the Indenture Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. No
investments will be liquidated prior to maturity unless the proceeds thereof are
needed for disbursement.
(c) Subject to the terms of the Indenture, the Indenture Trustee shall
not in any way be held liable by reason of any insufficiency in any Account held
by the Indenture Trustee resulting from any loss on any Eligible Investment
included therein (except to the extent that the bank serving as Indenture
Trustee is the obligor thereon).
(d) The Indenture Trustee shall invest and reinvest funds in the
Accounts held by the Indenture Trustee, in accordance with the written
instructions delivered to the Indenture Trustee on the Closing Date, but only in
one or more Eligible Investments bearing interest or sold at a discount.
If the Seller shall have failed to give investment directions to the
Indenture Trustee then the Indenture Trustee shall invest in money market funds
described in Section 3.07(j) to be redeemable without penalty no later than the
Business Day immediately preceding the next Payment Date.
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(e) All income or other gain from investments in any Account held by
the Indenture Trustee shall be deposited in such Account immediately on receipt,
and any loss resulting from such investments shall be charged to such Account,
as appropriate, subject to the requirement of Section 4.08(b) that the Servicer
contribute funds in an amount equal to such loss in the case of the Principal
and Interest Account.
Section 3.06 Payment of Trust Expenses.
(a) The Seller shall pay the amount of the expenses of the Trust (other
than payments of premiums to the Note Insurer) (including the Indenture
Trustee's fees and expenses not covered or paid by Section 3.03(b)(i) and
3.03(b)(iv)(D)), and the Seller shall promptly pay such expenses directly to the
Persons to whom such amounts are due.
(b) The Seller shall pay directly on the Closing Date the reasonable
fees and expenses of counsel to the Indenture Trustee and the Owner Trustee.
(c) The Seller shall pay the fees and expenses (including any
"Expenses" (as defined in the Trust Agreement)) of the Owner Trustee.
Section 3.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States, FHLMC
senior debt obligations, and Fannie Mae senior debt obligations, but excluding
any of such securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) Fannie Mae mortgage-backed securities (other than stripped mortgage
securities which are valued greater than par on the portion of unpaid principal)
and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-1 by
Standard & Poor's and P-1 by Moody's;
(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by Standard &
Poor's) which has combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are insured by the FDIC and held up to the limits
insured by the FDIC;
(h) Repurchase agreements collateralized by securities described in
(a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any
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commercial bank, if such broker/dealer or bank has an uninsured, unsecured and
unguaranteed short-term or long-term obligation rated P-1 or Aa2, respectively,
or better by Moody's and A-1+ or AA, respectively, or better by Standard &
Poor's, provided:
a. A master repurchase agreement or specific written repurchase
agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Indenture Trustee or an independent third party acting solely as agent
for the Indenture Trustee, and such third party is (a) a Federal
Reserve Bank, (b) a bank which is a member of the FDIC and which has
combined capital, surplus and undivided profits of not less than $125
million, or (c) a bank approved in writing for such purpose by the Note
Insurer, and the Indenture Trustee shall have received written
confirmation from such third party that it holds such securities, free
and clear of any lien, as agent for the Indenture Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 C.F.R. 306.1
et seq. or 31 C.F.R. 350.0 et seq., in such securities is created for
the benefit of the Indenture Trustee, and
d. The repurchase agreement has a term of thirty days or less
and the Indenture Trustee will value the collateral securities no less
frequently than weekly and will liquidate the collateral securities if
any deficiency in the required collateral percentage is not restored
within two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106%.
(i) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Moody's;
(j) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act and rated AAAm or AAAm-G by Standard & Poor's and Aaa by Moody's; and
(k) Any other investment permitted by each of the Rating Agencies and
the Note Insurer;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 3.08 Accounting and Directions by Indenture Trustee.
By 12:00 noon, New York time, on each Payment Date (or such earlier
period as shall be agreed by the Seller and the Indenture Trustee), the
Indenture Trustee shall notify (based solely on information provided to the
Indenture Trustee by the Servicer and upon which the Indenture Trustee may rely)
the Seller,
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the Depositor, each Owner and the Note Insurer, of the following information
with respect to such Payment Date (which notification may be given by facsimile,
or by telephone promptly confirmed in writing):
(1) The aggregate amount on deposit in the Note Account as of
the related Determination Date;
(2) The Monthly Payment Amount, on the next Payment Date;
(3) The amount of any Overcollateralization Increase Amount;
(4) The amount of any Insured Payment to be made by the Note
Insurer on such Payment Date;
(5) The application of the amounts described in clauses (1),
(3) and (4) above in respect of the distribution of the Monthly Payment
Amount on such Payment Date in accordance with Section 3.03 hereof;
(6) The Note Principal Balance;
(7) The amount, if any, of any Realized Losses for the related
Remittance Period;
(8) The amount of any Overcollateralization Reduction Amount;
and
(9) For the Payment Dates in April and May 1998, (A) the
Pre-Funded Amount previously used to purchase Subsequent Home Equity
Loans, (B) the Pre-Funded Amount distributed as principal, (C) the
Pre-Funding Account Earnings transferred to the Capitalized Interest
Account and (D) the amounts transferred from the Capitalized Interest
Account to the Note Account and the amount transferred to the Seller,
if any.
Section 3.09 Reports by Indenture Trustee to Owners and Note Insurer.
(a) On the Business Day preceding each Payment Date the Indenture
Trustee shall transmit a report in writing to each Owner, the Owner Trustee, the
Note Insurer, Standard & Poor's and Moody's, which report shall contain the
following:
(i) the amount of the distribution with respect to such Owners'
Notes (based on a Note in the original principal amount of $1,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments in full or other Prepayments or other recoveries of
principal included therein and any Pre-Funded Amounts distributed as a
prepayment and any related Overcollateralization Increase Amount;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Note in the original principal amount of $1,000);
(iv) if the interest portion of the Monthly Payment Amount (net
of any Insured Payment) paid to the Owners of the Notes on such Payment
Date was less than the Current Interest on such Payment Date, the Carry
Forward Amount resulting therefrom;
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(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Notes on such Payment Date;
(vi) the principal amount of the Notes which will be
Outstanding and the aggregate Loan Balance after giving effect to any
payment of principal on such Payment Date;
(vii) the Overcollateralization Amount and
Overcollateralization Deficit, if any, remaining after giving effect to
all distributions and transfers on such Payment Date;
(viii) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in
computing their market discount;
(ix) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution;
(x) the weighted average Coupon Rate of the Home Equity Loans;
(xi) such other information as the Note Insurer or any Owner
may reasonably request with respect to Delinquent Home Equity Loans;
(xii) the weighted average gross margin of the Home Equity
Loan;
(xiii) the Loan Balance of each of the three largest Home
Equity Loans outstanding;
(xiv) the Note Rate;
(xv) the Available Funds Cap Carry Forward Amortization Amount,
if any, and the Available Funds Cap Carry Forward Amount, if any; and
(xvi) for each Payment Date during the Funding Period, the
total remaining Pre-Funded Amount in the Pre-Funding Account.
The Servicer shall provide to the Indenture Trustee the information
described in Section 4.08(d)(iii) and in clause (b) below to enable the
Indenture Trustee to perform its reporting obligations under this Section, and
such obligations of the Indenture Trustee under this Section are conditioned
upon such information being received and the information provided in clauses
(ii), (ix) and (x) shall be based solely upon information contained in the
monthly servicing report provided by the Servicer to the Indenture Trustee
pursuant to Section 4.08 hereof.
(b) In addition, on the Business Day preceding each Payment Date the
Indenture Trustee will distribute to each Owner, the Owner Trustee, the Note
Insurer, Standard & Poor's and Moody's, together with the information described
in Subsection (a) preceding, the following information which is hereby required
to be prepared by the Servicer and furnished to the Indenture Trustee for such
purpose on or prior to the related Monthly Reporting Date:
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(i) the number and aggregate principal balances of
Home Equity Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent
and (c) 90 or more days Delinquent, as of the close of business on the
last Business Day of the calendar month immediately preceding the
Payment Date, (d) the numbers and aggregate Loan Balances of all Home
Equity Loans as of such Payment Date and (e) the percentage that each
of the amounts represented by clauses (a), (b) and (c) represent as a
percentage of the respective amounts in clause (d);
(ii) the status and the number and dollar amounts of
all Home Equity Loans in foreclosure proceedings as of the close of
business on the last Business Day of the calendar month immediately
preceding such Payment Date, separately stating, for this purpose, all
Home Equity Loans with respect to which foreclosure proceedings were
commenced in the immediately preceding calendar month;
(iii) the number of Mortgagors and the Loan Balances
of (a) the related Mortgages involved in bankruptcy proceedings as of
the close of business on the last Business Day of the calendar month
immediately preceding such Payment Date and (b) Home Equity Loans that
are "balloon" loans;
(iv) the existence and status of any REO Properties,
as of the close of business of the last Business Day of the month
immediately preceding the Payment Date;
(v) the book value of any REO Property as of the close
of business on the last Business Day of the calendar month immediately
preceding the Payment Date;
(vi) the Cumulative Loss Percentage, the amount of
cumulative Realized Losses, the current period Realized Losses, and the
Annual Loss Percentage (Rolling Twelve Month); and
(vii) the 90+ Delinquency Percentage (Rolling Six
Month) and the amount of 90- Day Delinquent Loans.
Section 3.10 Reports by Indenture Trustee.
(a) The Indenture Trustee shall report to the Depositor, the Seller,
the Note Insurer and each Owner, with respect to the amount on deposit in the
Note Account and the identity of the investments included therein, as the
Depositor, the Seller, any Owner or the Note Insurer may from time to time
reasonably request. Without limiting the generality of the foregoing, the
Indenture Trustee shall, at the reasonable request of the Issuer, the Seller,
any Owner or the Note Insurer transmit promptly to the Issuer, the Seller, any
Owner and the Note Insurer copies of all accountings of receipts in respect of
the Home Equity Loans furnished to it by the Servicer and shall notify the
Seller and the Note Insurer if any Monthly Remittance Amount has not been
received by the Indenture Trustee when due.
(b) The Indenture Trustee shall report to the Note Insurer and each
Owner with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 2.04(b) hereof are inaccurate.
END OF ARTICLE III
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ARTICLE IV
SERVICING AND ADMINISTRATION
OF HOME EQUITY LOANS
Section 4.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 4.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement, the terms of the respective Home Equity Loans,
and the servicing standards set forth in the Fannie Mae Guide and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which it may deem
necessary or desirable but without regard to: (i) any relationship that the
Servicer, any Sub-Servicer or any Affiliate of the Servicer or any Sub-Servicer
may have with the related Mortgagor; (ii) the ownership of any Note by the
Servicer or any Affiliate of the Servicer; (iii) the Servicer's obligation to
make Delinquency Advances or Servicing Advances; or (iv) the Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction. It is the intent of the parties hereto
that the Servicer shall have all of the servicing obligations hereunder which a
lender would have under the Fannie Mae Guide (as such provisions relate to
second lien mortgages); provided, however, that to the extent that such
standards, such obligations or the Fannie Mae Guide are amended by Fannie Mae
after the date hereof and the effect of such amendment would be to impose upon
the Servicer any material additional costs or other burdens relating to such
servicing obligations, the Servicer may, at its option, in accordance with the
servicing standards set forth herein, determine not to comply with such
amendment.
Subject to Section 4.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have the rights and powers of the Servicer which have been
delegated to such Sub-Servicer with respect to such Home Equity Loans under this
Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 4.13 and 4.14, the Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Indenture Trustee to execute and deliver, and may
be authorized and empowered by the Indenture Trustee, to execute and deliver, on
behalf of itself, the Owners, the Issuer and the Indenture Trustee or any of
them, (i) any and all instruments of satisfaction or cancellation or of partial
or full release or discharge and all other comparable instruments with respect
to the Home Equity Loans and with respect to the Properties, (ii) to institute
foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect
ownership of any Property in the name of the Servicer on behalf of the Issuer
and Indenture Trustee, and (iii) to hold title to any Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the Issuer and Indenture
Trustee; provided, however, that to the extent any instrument described in
clause (i) preceding would be delivered by the Servicer outside of its usual
procedures for home equity loans held in its own portfolio the Servicer shall,
prior to executing and delivering such instrument, obtain the prior written
consent of the Note Insurer, and provided further, however, that Section 4.13(a)
and Section 4.14(a) shall each constitute a revocable power of attorney from the
Issuer and Indenture Trustee to the Servicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Home Equity Loan held by the Indenture Trustee hereunder paid in full or
foreclosed (or with respect to which payment in full has been escrowed).
Revocation of the power of attorney created by the final proviso of the
preceding sentence shall take effect upon (i) the receipt by the Servicer of
written notice thereof from the Indenture Trustee, (ii) a Servicer Termination
Event or (iii) the termination of the Notes. The Indenture
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Trustee shall execute any documentation furnished to it by the Servicer for
recordation by the Servicer in the appropriate jurisdictions, as shall be
necessary to effectuate the foregoing. Subject to Sections 4.13 and 4.14, the
Indenture Trustee shall execute a power of attorney to the Servicer or any
Sub-Servicer and furnish them with any other documents as the Servicer or such
Sub-Servicer shall reasonably request to enable the Servicer and such
Sub-Servicer to carry out their respective servicing and administrative duties
hereunder.
Upon the request of the Indenture Trustee or the Issuer, the Servicer
shall send to the Indenture Trustee or the Issuer, the details concerning the
servicing of the Home Equity Loans on computer generated tape, diskette or other
machine readable format.
The Servicer shall give prompt notice to the Indenture Trustee and the
Issuer of any action, of which the Servicer has actual knowledge, to (i) assert
a claim against the Trust or (ii) assert jurisdiction over the Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 4.09(b) hereof.
Section 4.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans at least as rigorous as those described in
the Fannie Mae Guide. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Mortgage Note, the Servicer shall nonetheless make payment of any required
Delinquency Advance with respect to the payments so extended to the same extent
as if such installment were due, owing and Delinquent and had not been deferred,
and shall be entitled to reimbursement therefor in accordance with Section
4.09(a) hereof.
Section 4.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
The Servicer may, with the prior written consent of the Note Insurer,
enter into Sub-Servicing Agreements for any servicing and administration of Home
Equity Loans with any institution which is acceptable to the Note Insurer and
which, (x) is in compliance with the laws of each state necessary to enable it
to perform its obligations under such Sub-Servicing Agreement, (y) has
experience servicing home equity loans that are similar to the Home Equity Loans
and (z) has equity of not less than $5,000,000 (as determined in accordance with
generally accepted accounting principles). The Servicer shall give notice to the
Indenture Trustee, the Owners, the Note Insurer and the Rating Agencies of the
appointment of any Sub-Servicer (and shall receive the confirmation of the
Rating Agencies that such Sub-Servicer shall not result in a withdrawal or
downgrading by any Rating Agency of the rating or the shadow rating of the
Notes). For purposes of this Agreement, the Servicer shall be deemed to have
received payments on Home Equity Loans when any Sub-Servicer has received such
payments. Each Sub-Servicer shall be required to service the Home Equity Loans
in accordance with this Agreement and any such Sub-Servicing Agreement shall be
consistent with and not violate the provisions of this Agreement. Each
Sub-Servicing Agreement shall provide that the Indenture Trustee (if acting as
successor Servicer) or any other successor Servicer shall have the option to
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terminate such agreement without payment of any fees if the original Servicer is
terminated or resigns. The Servicer shall deliver to the Indenture Trustee and
the Note Insurer copies of all Sub-Servicing Agreements, and any amendments or
modifications thereof promptly upon the Servicer's execution and delivery of
such instrument.
Section 4.04 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement
in accordance with the terms and conditions of such Sub-Servicing Agreement and
to either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 4.03.
Section 4.05 Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer; provided, however, that nothing contained in such
Sub-Servicing Agreement shall be deemed to limit or modify this Agreement.
(b) The Servicer (except The Chase Manhattan Bank if it is required to
succeed the Servicer hereunder) agrees to indemnify and hold the Issuer, the
Indenture Trustee, the Note Insurer, the Depositor and each Owner harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Issuer, the Indenture Trustee, the Note Insurer and any Owner may sustain in any
way related to the failure of the Servicer to perform its duties and service the
Home Equity Loans in compliance with the terms of this Agreement. The Servicer
shall immediately notify the Issuer, the Indenture Trustee, the Depositor, the
Note Insurer and each Owner if a claim is made by a third party with respect to
this Agreement, and the Servicer shall assume (with the consent of the Indenture
Trustee and the Note Insurer) the defense of any such claim and pay all expenses
in connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Issuer, the Servicer, the Indenture Trustee, the Depositor, the Note Insurer
and/or Owner in respect of such claim. The Indenture Trustee shall, in
accordance with instructions received from the Servicer, reimburse the Servicer
only from amounts otherwise distributable on the Certificates for all amounts
advanced by it pursuant to the preceding sentence, except when a final
nonpayable adjudication determines that the claim relates directly to the
failure of the Servicer to perform its duties in compliance with the Agreement.
The provisions of this Section 4.05(b) shall survive the termination of this
Agreement and the payment of the outstanding Notes.
Section 4.06 No Contractual Relationship Between Sub-Servicer,
Indenture Trustee or the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Indenture Trustee and
the Owners shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer except as
set forth in Section 4.07.
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Section 4.07 Assumption or Termination of Sub-Servicing Agreement by
Indenture Trustee. In connection with the assumption of the responsibilities,
duties and liabilities and of the authority, power and rights of the Servicer
hereunder by the Indenture Trustee pursuant to Section 4.20, it is understood
and agreed that the Servicer's rights and obligations under any Sub-Servicing
Agreement then in force between the Servicer and a Sub-Servicer shall be assumed
simultaneously by the Indenture Trustee without act or deed on part of the
Indenture Trustee; provided, however, that the Indenture Trustee (if acting as
successor Servicer) or any other successor Servicer may terminate the
Sub-Servicer as provided in Section 4.03.
The Servicer shall, upon the reasonable request of the Indenture
Trustee, but at the expense of the Servicer, deliver to the assuming party
documents and records relating to each Sub-Servicing Agreement and an accounting
of amounts collected and held by it and otherwise use its best reasonable
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.
Section 4.08 Principal and Interest Account.
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Principal and Interest Account to be held as a trust
account. Each Principal and Interest Account shall be identified on the records
of the Designated Depository Institution as follows: The Chase Manhattan Bank,
as Indenture Trustee in trust for the benefit of the Owners of the IMC
Adjustable Rate Home Equity Loan Asset Backed Notes, Series 1998-2 and the Note
Insurer. If the institution at any time holding the Principal and Interest
Account ceases to be eligible as a Designated Depository Institution hereunder,
then the Servicer shall immediately be required to name a successor institution
meeting the requirements for a Designated Depository Institution hereunder. If
the Servicer fails to name such a successor institution, then the Principal and
Interest Account shall thenceforth be held as a trust account with a qualifying
Designated Depository Institution selected by the Indenture Trustee. The
Servicer shall notify the Indenture Trustee, the Note Insurer and the Owners if
there is a change in the name, account number or institution holding the
Principal and Interest Account.
Subject to subsection (c) below, the Servicer shall deposit all
receipts required pursuant to subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested up to the amount insured by the FDIC or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. Any investment earnings on funds held in the Principal
and Interest Account shall be for the account of the Servicer and may only be
withdrawn from the Principal and Interest Account by the Servicer immediately
following the remittance of the Monthly Remittance Amount (and the Total Monthly
Excess Spread included therein) by the Servicer. Any investment losses on funds
held in the Principal and Interest Account shall be for the account of the
Servicer and promptly upon the realization of such loss shall be contributed by
the Servicer to the Principal and Interest Account. Any references herein to
amounts on deposit in the Principal and Interest Account shall refer to amounts
net of such investment earnings.
(c) The Servicer shall deposit to the Principal and Interest Account on
the Business Day after receipt all principal and interest collections on the
Home Equity Loans due after the Cut-Off Date, including any Prepayments and Net
Liquidation Proceeds, other recoveries or amounts related to the Home Equity
Loans received by the Servicer and any income from REO Properties, but net of
(i) Net Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed
the sum of (I) the Loan Balance of the related Home Equity Loan immediately
prior to liquidation, plus (II) accrued and unpaid interest on such Home Equity
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Loan (net of the related Servicing Fee) to the date of such liquidation and
(III) any Realized Losses incurred during the related Remittance Period, (ii)
principal and interest due (and Prepayments collected) on the Home Equity Loans
on or prior to the Cut-Off Date or related Subsequent Cut-Off Date, (iii)
reimbursements for Delinquency Advances and (iv) reimbursements for amounts
deposited in the Principal and Interest Account representing payments of
principal and/or interest on a Mortgage Note by a Mortgagor which are
subsequently returned by a depository institution as unpaid (all such net amount
herein referred to as "Daily Collections").
(d) (i) The Servicer may make withdrawals for its own account from the
Principal and Interest Account, only in the following priority and for the
following purposes:
(A) on each Monthly Remittance Date, to pay itself
the related Servicing Fees;
(B) to withdraw investment earnings on amounts on
deposit in the Principal and Interest Account;
(C) to withdraw amounts that have been deposited to
the Principal and Interest Account in error;
(D) to reimburse itself pursuant to Section 4.09(a)
for unrecovered Delinquency Advances and for
any excess interest collected from a Mortgagor;
and
(E) to clear and terminate the Principal and
Interest Account following the termination of
the Trust pursuant to Article V.
(ii) The Servicer shall (a) remit to the Indenture Trustee for deposit
in the Note Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication, the Daily Collections
allocable to a Remittance Period not later than the related Monthly Remittance
Date and Loan Purchase Prices and Substitution Amounts two Business Days
following the related purchase or substitution, and (b) on each Monthly
Reporting Date, deliver to the Indenture Trustee and the Note Insurer, a monthly
servicing report containing (without limitation) the following information:
principal and interest collected in respect of the Home Equity Loans, scheduled
principal and interest that was due on the Home Equity Loans, relevant
information with respect to Liquidated Loans, if any, summary and detailed
delinquency reports, Liquidation Proceeds and other similar information
concerning the servicing of the Home Equity Loans. In addition, the Servicer
shall inform the Indenture Trustee and the Note Insurer in writing on each
Monthly Reporting Date, of the amounts of any Loan Purchase Prices or
Substitution Amounts so remitted during the related Remittance Period, and of
the Loan Balance of the Home Equity Loan having the largest Loan Balance as of
such date.
(iii) The Servicer shall provide to the Indenture Trustee in writing
the information described in Section 4.08(d)(ii)(b) and in Section 4.09(b) to
enable the Indenture Trustee to perform its reporting requirements under Section
3.09.
Section 4.09 Delinquency Advances and Servicing Advances.
(a) On each Monthly Remittance Date, the Servicer shall be required to
remit to the Indenture Trustee for deposit to the Note Account out of the
Servicer's own funds any Delinquent payment of interest with respect to each
Delinquent Home Equity Loan, which payment was not received on or prior to the
related Remittance Date and was not theretofore advanced by the Servicer. Such
amounts of the Servicer's own funds so deposited are "Delinquency Advances".
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The Servicer shall be permitted to reimburse itself on any Business Day
for any Delinquency Advances paid from the Servicer's own funds, from
collections on any Home Equity Loans that are not required to be distributed on
the Payment Date occurring during the month in which such reimbursement is made
(all or any portion of such amount to be replaced on future Monthly Remittance
Dates to the extent required for distribution) or as provided in Section
3.03(b)(iii)(C).
Notwithstanding the foregoing, in the event that the Servicer
determines in its reasonable business judgment in accordance with the servicing
standards set out herein that any proposed Delinquency Advance would not be
recoverable, the Servicer shall not be required to make Delinquency Advances
with respect to such Home Equity Loan. To the extent that the Servicer
previously has made Delinquency Advances with respect to a Home Equity Loan that
the Servicer subsequently determines will be nonrecoverable, the Servicer shall
be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances as provided in the prior paragraph. The Servicer shall give written
notice of such determination as to why such amount would not be recoverable to
the Indenture Trustee and the Note Insurer; the Indenture Trustee shall promptly
furnish a copy of such notice to the Owners of the Notes; provided, further,
that the Servicer shall be entitled to recover any unreimbursed Delinquency
Advances from Liquidation Proceeds for the related Home Equity Loan.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, (i) Preservation Expenses, (ii) the cost of any enforcement or
judicial proceedings, including foreclosures, (iii) the cost of the management
and liquidation of REO Property and (iv) advances required by Section 4.13(a),
except to the extent that such amounts are determined by the Servicer in its
reasonable business judgment not to be recoverable. Such costs will constitute
"Servicing Advances". The Servicer may recover a Servicing Advance (x) from the
Mortgagors to the extent permitted by the Home Equity Loans or, if not
theretofore recovered from the Mortgagor on whose behalf such Servicing Advance
was made, from Liquidation Proceeds realized upon the liquidation of the related
Home Equity Loan and (y) as provided in Section 3.03(b)(iii)(C). The Servicer
shall be entitled to recover the Servicing Advances from the aforesaid
Liquidation Proceeds prior to the payment of the Liquidation Proceeds to any
other party to this Agreement. Except as provided in the previous sentence, in
no case may the Servicer recover Servicing Advances from the principal and
interest payments on any other Home Equity Loan except as provided in Section
3.03(b)(iii)(C).
Section 4.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If a Prepayment in full of a Home Equity Loan or a Prepayment of at
least six times a Mortgagor's Monthly Payment occurs during any calendar month,
any difference between (x) the interest collected from the Mortgagor in
connection with such payoff, and (y) the full month's interest at the Coupon
Rate that would be due on the related Due Date for such Home Equity Loan
("Compensating Interest") (but not in excess of the aggregate Servicing Fee for
the related Remittance Period) shall be deposited by the Servicer to the
Principal and Interest Account (or if such difference is an excess, the Servicer
shall retain such excess) on the next succeeding Monthly Remittance Date and
shall be included in the Monthly Remittance Amount to be made available to the
Indenture Trustee on such Monthly Remittance Date.
(b) Subject to the clause (c) below, the Servicer has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which becomes Delinquent, in whole or in part, as to at least three
consecutive monthly installments or any Home Equity Loan as to which enforcement
proceedings have been brought by the Servicer pursuant to Section 4.13. Any such
Home Equity Loan so purchased shall be purchased by the Servicer on or prior to
a Monthly Remittance Date at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be deposited in the Principal and Interest
Account.
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(c) If a Home Equity Loan to be repurchased by the Servicer pursuant to
clause (b) above, is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans, the Servicer may repurchase such Home Equity Loans
without having first notified the Note Insurer of such repurchase. In all other
cases, the Servicer must notify the Note Insurer, in writing, of its intent to
repurchase a Home Equity Loan and the Servicer may not repurchase such Home
Equity Loan without the written consent of the Note Insurer; provided, that the
Note Insurer shall be deemed to have consented to such repurchase unless it
notifies the Servicer, in writing, of its objection to such repurchase within 5
days after its receipt of the notice of proposed repurchase.
(d) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Indenture Trustee as part of the Daily Collections remitted by the
Servicer to the Indenture Trustee.
Section 4.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to each Home
Equity Loan a hazard insurance policy with a carrier generally acceptable to the
Servicer that provides for fire and extended coverage, and which provides for a
recovery by the Trust of insurance proceeds relating to such Home Equity Loan in
an amount not less than the least of (i) the outstanding principal balance of
the Home Equity Loan (plus the related senior lien loan, if any) (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises. The Servicer shall
maintain the insurance policies required hereunder in the name of the mortgagee,
its successors and assigns, as loss payee. The policies shall require the
insurer to provide the mortgagee with 30 days' notice prior to any cancellation
or as otherwise required by law. The Servicer may also maintain a blanket hazard
insurance policy or policies if the insurer or insurers of such policies are
rated investment grade by Moody's and Standard & Poor's.
(b) If the Home Equity Loan at the time of origination (or if required
by federal law, at any time thereafter) relates to a Property in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, the Servicer will cause to be maintained with
respect thereto a flood insurance policy in a form meeting the requirements of
the then current guidelines of the Federal Insurance Administration with a
carrier generally acceptable to the Servicer in an amount representing coverage,
and which provides for a recovery by the Trust of insurance proceeds relating to
such Home Equity Loan of not less than the least of (i) the outstanding
principal balance of the Home Equity Loan (plus the related senior lien loan, if
any), (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. The Servicer shall
indemnify the Trust out of the Servicer's own funds for any loss to the Trust
resulting from the Servicer's failure to advance premiums for such insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or 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. An opinion of counsel,
provided at the expense of the Servicer, to the foregoing effect shall
conclusively establish the reasonableness of such belief. In such event, the
Servicer shall enter into an assumption and modification agreement with the
person to whom such property has been or is about to be conveyed, pursuant to
which
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such person becomes liable under the Mortgage Note and, unless prohibited by
applicable law or the Mortgage documents, the Mortgagor remains liable thereon.
If the foregoing is not permitted under applicable law, the Servicer is
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as Mortgagor and becomes liable under the Mortgage Note;
provided, however, that to the extent any such substitution of liability
agreement would be delivered by the Servicer outside of its usual procedures for
home equity loans held in its own portfolio the Servicer shall, prior to
executing and delivering such agreement, obtain the prior written consent of the
Note Insurer. The Home Equity Loan, as assumed, shall conform in all material
respects to the requirements, representations and warranties of this Agreement.
The Servicer shall notify the Indenture Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Indenture Trustee
or to the Custodian on the Indenture Trustee's behalf the original copy of such
assumption or substitution agreement (indicating the File to which it relates)
which copy shall be added by the Indenture Trustee or by the Custodian on the
Indenture Trustee's behalf to the related File and which shall, for all
purposes, be considered a part of such File to the same extent as all other
documents and instruments constituting a part thereof. The Servicer shall be
responsible for recording any such assumption or substitution agreements. In
connection with any such assumption or substitution agreement, no material term
of the Home Equity Loan (including, without limitation, the required monthly
payment on the related Home Equity Loan, the stated maturity, the outstanding
principal amount or the Coupon Rate) shall be changed nor shall any required
monthly payments of principal or interest be deferred or forgiven. Any fee
collected by the Servicer or the Sub-Servicer for consenting to any such
conveyance or entering into an assumption or substitution agreement shall be
retained by or paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 4.13 Realization Upon Defaulted Home Equity Loans; Workout of
Home Equity Loans.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Indenture Trustee on behalf of the Trust of
Properties relating to defaulted Home Equity Loans as to which no satisfactory
arrangements can be made for collection of Delinquent payments and which the
Servicer has not purchased pursuant to Section 4.10(b). In connection with such
foreclosure or other conversion, the Servicer shall exercise such of the rights
and powers vested in it hereunder, and use the same degree of care and skill in
their exercise or use, as prudent mortgage lenders would exercise or use under
the circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the Fannie Mae Guide, including, but not
limited to, advancing funds for the payment of taxes, amount due with respect to
senior liens loans and insurance premiums. Any amounts so advanced shall
constitute "Servicing Advances" within the meaning of Section 4.09(b) hereof.
The Servicer shall sell any REO Property within 35 months of its acquisition by
the Trust, at such price as the Servicer in good faith deems necessary to comply
with this covenant unless the Servicer obtains for the Note Insurer and the
Indenture Trustee, an opinion of counsel (the expense of which opinion shall be
a Servicing Advance) experienced in federal income tax matters acceptable to the
Note Insurer and the Indenture Trustee, addressed to the Note Insurer, the
Indenture Trustee and the Servicer, to the effect that the holding by the Trust
of such REO Property for any greater period will not result in the imposition of
taxes on the Trust. Pursuant to its efforts to sell such REO Property, the
Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such REO Property in the same manner and to such extent as
is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the Owners, rent
the same, or any part thereof, as the Servicer deems to be in the best interest
of the Owners for
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the period prior to the sale of such REO Property. The Servicer shall take into
account the existence of any hazardous substances, hazardous wastes or solid
wastes, as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation, on a Property
in determining whether to foreclose upon or otherwise comparably convert the
ownership of such Property. The Servicer shall not take any such action with
respect to any Property known by the Servicer to contain such wastes or
substances or to be within one mile of the site of such wastes or substances,
without the prior written consent of the Note Insurer.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan and in accordance with the procedures set forth in the Fannie Mae
Guide, when it has recovered, whether through trustee's sale, foreclosure sale
or otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan" and the Servicer shall promptly submit a Liquidation Report
(as defined in the Insurance Agreement) to the Note Insurer.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a default with respect to such Home Equity Loan or in
the event that a default with respect to such Home Equity Loan is imminent;
provided, however, that no such modification, waiver or amendment shall extend
the maturity date of such Home Equity Loan beyond the Remittance Period related
to the Final Payment Date. Notwithstanding anything set out in this Section
4.13(c) or elsewhere in this Agreement to the contrary, the Servicer shall be
permitted to modify, waive or amend any provision of a Home Equity Loan if
required by statute or a court of competent jurisdiction to do so.
(d) The Servicer shall provide written notice to the Indenture Trustee
and the Note Insurer prior to the execution of any modification, waiver or
amendment of any provision of any Home Equity Loan; provided that if the Note
Insurer does not object in writing to the modification, waiver or amendment
specified in such notice within 5 Business Days after its receipt thereof, the
Servicer may effectuate such modification, waiver or amendment and shall deliver
to the Custodian, on behalf of the Indenture Trustee for deposit in the related
File, an original counterpart of the agreement relating to such modification,
waiver or amendment, promptly following the execution thereof.
(e) The Servicer has no intent to foreclose on any Mortgage based on
the delinquency characteristics as of the Closing Date; provided, that the
foregoing does not prevent the Servicer from initiating foreclosure proceedings
on any date hereafter if the facts and circumstances of such Mortgage including
delinquency characteristics in the Servicer's discretion so warrant such action.
Section 4.14 Indenture Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Custodian, on behalf of the Indenture Trustee the Fannie Mae "Request for
Release of Documents" (Fannie Mae Form 2009). Upon receipt of such Request for
Release of Documents, the Custodian, on behalf of the Indenture Trustee shall
promptly release the related File, in trust, in its reasonable discretion to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Indenture Trustee. Upon any such payment in full, or the receipt of such
notification that such funds have been placed in escrow, the Servicer is
authorized to give, as attorney-in-fact for the Indenture Trustee and the
mortgagee under the Mortgage which secured
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the Mortgage Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Principal and Interest Account or to the Indenture Trustee. In
lieu of executing any such satisfaction or assignment, as the case may be, the
Servicer may prepare and submit to the Custodian, on behalf of the Indenture
Trustee, a satisfaction (or assignment without recourse, if requested by the
Person or Persons entitled thereto) in form for execution by the Indenture
Trustee with all requisite information completed by the Servicer; in such event,
the Custodian, on behalf of the Indenture Trustee shall execute and acknowledge
such satisfaction or assignment, as the case may be, and deliver the same with
the related File, as aforesaid.
(b) The Servicer shall have the right (upon receiving the prior written
consent of the Note Insurer) to accept applications of Mortgagors for consent to
(i) partial releases of Mortgages, (ii) alterations and (iii) removal,
demolition or division of properties subject to Mortgages. No application for
approval shall be considered by the Servicer unless: (x) the provisions of the
related Mortgage Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-to-income ratio after any release does not exceed
the Loan-to-Value Ratio and debt-to-income ratio of such Mortgage Note on the
Cut-Off Date, or Subsequent Cut-Off Date, as applicable, and any increase in the
Loan-to-Value Ratio shall not exceed 5% unless approved in writing by the Note
Insurer; and (z) the lien priority of the related Mortgage is not affected. Upon
receipt by the Indenture Trustee of an Officer's Certificate executed on behalf
of the Servicer setting forth the action proposed to be taken in respect of a
particular Home Equity Loan and certifying that the criteria set forth in the
immediately preceding sentence have been satisfied, the Indenture Trustee shall
execute and deliver to the Servicer the consent or partial release so requested
by the Servicer. A proposed form of consent or partial release, as the case may
be, shall accompany any Officer's Certificate delivered by the Servicer pursuant
to this paragraph. The Servicer shall notify the Note Insurer and the Rating
Agencies if an application is approved under clause (y) above without approval
in writing by the Note Insurer.
Section 4.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the related Servicing Fee with respect to each
Home Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 4.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 4.20 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Indenture Trustee, the
Note Insurer, the successor Servicer and the majority of the Percentage
Interests of the Certificates.
The right to receive the Servicing Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 4.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Indenture
Trustee, the Note Insurer, the Depositor, the Issuer, and the Rating Agencies,
on or before April 30 of each year, commencing in 1999, an Officer's Certificate
stating, as to each signer thereof, that (i) a review of the activities of the
Servicer during such preceding calendar year and of performance under this
Agreement has been made under such officers'
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supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement for
such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officers and the nature
and status thereof including the steps being taken by the Servicer to remedy
such default.
The Servicer shall deliver to the Issuer, the Indenture Trustee, the
Note Insurer and the Rating Agencies, promptly after having obtained knowledge
thereof but in no event later than five Business Days thereafter, written notice
by means of an Officer's Certificate of any event which with the giving of
notice or the lapse of time would become a Servicer Termination Event.
Section 4.17 Annual Independent Certified Public Accountants' Reports.
On or before April 30 of each year, commencing in 1999, the Servicer,
at its own expense (or if the Indenture Trustee is then acting as Servicer, at
the expense of the Seller, which in no event shall exceed $1,000 per annum),
shall cause to be delivered to the Issuer, the Indenture Trustee, the Note
Insurer, the Depositor, and the Rating Agencies a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Note Insurer stating that such firm has examined the
Servicer's overall servicing operations in accordance with the requirements of
the Uniform Single Attestation Procedure for Mortgage Bankers, and stating such
firm's conclusions relating thereto.
Section 4.18 Access to Certain Documentation and Information Regarding
the Home Equity Loans.
The Servicer shall provide to the Depositor, the Indenture Trustee, the
Note Insurer, the Office of Thrift Supervision (the "OTS"), the FDIC and the
supervisory agents and examiners of each of the FDIC and the OTS (which, in the
case of supervisory agents and examiners, may be required by applicable state
and federal regulations) access to the documentation regarding the Home Equity
Loans, such access being afforded without charge but only upon reasonable
request and during normal business hours at the offices of the Servicer
designated by it.
Section 4.19 Assignment of Agreement.
Other than with respect to entering into Sub-Servicing Agreements
pursuant to Section 4.03 hereof, the Servicer may not assign its obligations
under this Agreement, in whole or in part, unless it shall have first obtained
the written consent of the Indenture Trustee and the Note Insurer, which such
consent shall not be unreasonably withheld; provided, however, that any assignee
must meet the eligibility requirements set forth in Section 4.20(h) hereof for a
successor servicer.
Section 4.20 Removal of Servicer; Retention of Servicer; Resignation of
Servicer.
(a) The Note Insurer or the Indenture Trustee (with the prior written
consent of the Note Insurer) (or, except in the case of item (vi) below, the
Owners, with the consent of the Note Insurer) may remove the Servicer upon the
occurrence of any of the following events (each a "Servicer Termination Event"):
(i) The Servicer shall (A) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (B) admit in writing its
inability to pay its debts generally as they become due, (C) make a
general assignment for the benefit of creditors, (D) be adjudicated a
bankrupt or insolvent, (E) commence a voluntary case under the federal
bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with
creditors or an order for relief or seeking to
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take advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (F) take corporate action
for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of
the Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator or custodian or similar entity with
respect to the Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by the
Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of
seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or
more of its material obligations hereunder and shall continue in
default thereof for a period of thirty (30) days (one (1) Business Day
in the case of a delay in making a payment required of the Servicer
under this Agreement) after the earlier of (A) actual knowledge of an
officer of the Servicer or (B) receipt of notice from the Indenture
Trustee or the Note Insurer of said failure; provided, however, that if
the Servicer can demonstrate to the reasonable satisfaction of the Note
Insurer that it is diligently pursuing remedial action, then the cure
period may be extended with the written approval of the Note Insurer;
or
(iv) The Servicer shall fail to cure any breach of any
of its representations and warranties set forth in Section 2.02 which
materially and adversely affects the interests of the Owners or the
Note Insurer for a period of sixty (60) days after the earlier of the
Servicer's discovery or receipt of notice thereof; provided, however,
that if the Servicer can demonstrate to the reasonable satisfaction of
the Note Insurer that it is diligently pursuing remedial action, then
the cure period may be extended with the written approval of the Note
Insurer; or
(v) The merger, consolidation or other combination of
the Servicer with or into any other entity, unless (A) the Servicer or
an Affiliate of the Servicer is the surviving entity of such
combination or (B) the surviving entity (I) is servicing at least
$300,000,000 of home equity loans that are similar to the Home Equity
Loans, (II) has equity of not less than $10,000,000 (as determined in
accordance with generally acceptable account principles), (III) is
consented to by the Note Insurer (such consent not to be unreasonably
withheld) and (IV) agrees to assume the Servicer's obligations
thereunder; or
(vi) The failure of the Servicer (except the Indenture
Trustee in its capacity as successor Servicer) to satisfy the Servicer
Termination Test.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall act as servicer under this Agreement, subject to the right of removal set
forth in subsection (a) hereof, for an initial period commencing on the date on
which such Servicer Termination Event occurred and ending on the last day of the
calendar quarter in which such Servicer Termination Event occurred, which period
shall be extended for a succeeding quarterly period on December 31, March 31,
June 30 and September 30 of each year as provided below (each such quarterly
period for which the Servicer shall be designated to act as servicer hereunder,
a "Term of Service"); provided that nothing in this Section 4.20(b) shall
prohibit the Note Insurer or the Indenture Trustee from removing the Servicer
pursuant to Section 4.20(a). Notwithstanding the foregoing, the Note Insurer
may, in its sole discretion, extend the period for which the Servicer is to act
as
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such for a period in excess of one quarter (provided such extension shall be an
additional one or more quarters), but any such extension shall be revocable at
any time by the Note Insurer upon written notice delivered to the Indenture
Trustee and the Servicer at least fifteen days prior to the expiration of the
related quarterly period.
(c) The Note Insurer agrees to use its best efforts to inform the
Indenture Trustee of any materially adverse information regarding the Servicer's
servicing activities that comes to the attention of the Note Insurer from time
to time.
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel
acceptable to the Indenture Trustee and the Note Insurer at the expense of the
Servicer to such effect which shall be delivered to the Indenture Trustee and
the Note Insurer.
(e) No removal or resignation of the Servicer shall become effective
until the Indenture Trustee or a successor Servicer shall have assumed the
Servicer's responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Indenture Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(g) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, the Indenture Trustee
may (i) solicit bids for a successor servicer as described below or (ii) shall
appoint the Backup Servicer as Servicer. If the Indenture Trustee elects to
solicit bids for a successor Servicer, the Indenture Trustee agrees to act as
Backup Servicer during the solicitation process and shall assume all duties of
the Servicer (except as otherwise provided in this Agreement). The Indenture
Trustee shall, if it is unable to obtain a qualifying bid and is prevented by
law from acting as Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has been designated as an approved
seller-servicer by Fannie Mae or FHLMC for first and second home equity loans
and having equity of not less than $5,000,000 (or such lower level as may be
acceptable to the Note Insurer), as determined in accordance with generally
accepted accounting principles and acceptable to the Note Insurer as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. The
compensation of any successor Servicer (other than the Indenture Trustee in its
capacity as successor Servicer) so appointed shall be the amount agreed to
between the successor Servicer, the Note Insurer and the majority of the
Percentage Interests of the Certificates, (up to a maximum of 0.50% per annum on
each Home Equity Loan) together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 4.08 and 4.15; provided, however, that if the Indenture Trustee becomes
the successor Servicer it shall receive as its compensation the same
compensation paid to the Servicer immediately prior to the Servicer's removal or
resignation; provided, further, however, that if the Indenture Trustee acts as
successor Servicer then the Servicer agrees
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to pay to the Indenture Trustee at such time that the Indenture Trustee becomes
such successor Servicer a set-up fee of twenty-five dollars ($25.00) for each
Home Equity Loan then included in the Trust Estate. The amount payable in excess
of twenty-five dollars ($25.00) per Home Equity Loan, if any, shall be payable
to the successor Servicer and reimbursable pursuant to Section 3.03(b)(iii)(C)
hereof. The Indenture Trustee shall be obligated to serve as successor Servicer
whether or not the fee described in this section is paid by the Servicer, but
shall in any event be entitled to receive, and to enforce payment of, such fee
from the Servicer.
(i) In the event the Indenture Trustee elects to solicit bids as
provided above, the Indenture Trustee shall solicit, by public announcement,
bids from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor Servicer shall be entitled to
servicing compensation in accordance with clause (h) above, together with the
other servicing compensation in the form of assumption fees, late payment
charges or otherwise as provided in Sections 4.08 and 4.15. Within thirty days
after any such public announcement, the Indenture Trustee shall negotiate and
effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
satisfactory bid as to the price it will pay to obtain servicing. The Indenture
Trustee shall deduct from any sum received by the Indenture Trustee from the
successor to the Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder. After such
deductions, the remainder of such sum less any amounts due the Indenture Trustee
or the Trust from the Servicer shall be paid by the Indenture Trustee to the
Servicer at the time of such sale, transfer and assignment to the Servicer's
successor.
(j) The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors of the transfer of
servicing. The Servicer agrees to cooperate with the Indenture Trustee and any
successor Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Indenture
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 Indenture Trustee or such
successor Servicer, as applicable, all amounts which then have been or should
have been deposited in the Principal and Interest Account by the Servicer or
which are thereafter received with respect to the Home Equity Loans. Neither the
Indenture Trustee nor any other successor Servicer shall be held liable by
reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the Servicer to
deliver, or any delay in delivering, cash, documents or records to it, or (ii)
restrictions imposed by any regulatory authority having jurisdiction over the
Servicer. If the Servicer resigns or is replaced hereunder, the Servicer agrees
to reimburse the Trust, the Owners and the Note Insurer for the costs and
expenses associated with the transfer of servicing to the replacement Servicer,
but subject to a maximum reimbursement to all such parties in the amount of
twenty-five dollars ($25.00) for each Home Equity Loan then included in the
Trust Estate. The amount payable in excess of twenty-five dollars ($25.00) per
Home Equity Loan, if any, shall be payable to the successor Servicer and
reimbursable pursuant to Section 3.03(b)(iii)(C) hereof.
(k) The Indenture Trustee or any other successor Servicer, upon
assuming the duties of Servicer hereunder, shall immediately (i) record all
assignments of Home Equity Loans not previously recorded in the name of the
Indenture Trustee pursuant to Section 2.05(b)(ii) as a result of an opinion of
counsel and (ii) make all Delinquency Advances and Compensating Interest
payments and deposit them to the Principal and Interest Account which the
Servicer has theretofore failed to remit with respect to the Home Equity Loans;
provided, however, that if the Indenture Trustee is acting as successor
Servicer, the Indenture Trustee shall only be required to make Delinquency
Advances (including the Delinquency Advances described in this
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clause (k)) if, in the Indenture Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the Home Equity Loans.
(l) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors, to Moody's and to Standard & Poor's of the transfer of
the servicing to the successor.
(m) The Indenture Trustee shall give notice to the Note Insurer, the
Owners, the Owner Trustee, the Seller, Moody's and Standard & Poor's of the
occurrence of any event described in paragraph (a) above of which the Indenture
Trustee is aware.
Section 4.21 Inspections by Note Insurer; Errors and Omissions
Insurance.
(a) At any reasonable time and from time to time upon reasonable
notice, the Indenture Trustee, the Note Insurer, any Owner or the Issuer, or any
agents thereof may inspect the Servicer's servicing operations and discuss the
servicing operations of the Servicer during the Servicer's normal business hours
with any of its officers or directors; provided, however, that the costs and
expenses incurred by the Servicer or its agents or representatives in connection
with any such examinations or discussions shall be paid by the Servicer.
(b) The Servicer (including the Indenture Trustee if it shall become
the Servicer hereunder) agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
Fannie Mae Guide or any successor provision thereof; provided, however, that in
any event that the fidelity bond or the errors and omissions coverage is no
longer in effect, the Indenture Trustee shall promptly give such notice to the
Note Insurer, the Issuer and the Owners.
Section 4.22 Reserved.
Section 4.23 Adjustable Rate Home Equity Loans.
The Servicer shall enforce each Home Equity Loan in accordance with its
terms and shall timely calculate, record, report and apply all interest rate
adjustments in accordance with the related Mortgage Note. The Servicer's records
shall, at all times, reflect the then Coupon Rate and monthly payment and the
Servicer shall timely notify the Mortgagor of any changes to the Coupon Rate or
the Mortgagor's monthly payment. If the Servicer fails to make either a timely
or accurate adjustment to the Coupon Rate or monthly payment or to notify the
Mortgagor of such adjustments, upon the Servicer's discovery of such error and
such continued failure, the Servicer shall pay from its own funds any shortage.
If the Servicer's continued failure after notice thereof to make a scheduled
change affects the Trust's rights to make future adjustments under the terms of
such Home Equity Loan, the Servicer shall repurchase such Home Equity Loan in
accordance with the provisions of Article II hereof. Any amounts paid by the
Servicer pursuant to this Section shall not be an advance and shall not be
reimbursable from the proceeds of any Home Equity Loan.
Section 4.24 Administration of the Issuer. The Servicer agrees to
assist the Issuer in performing its duties hereunder and under the Indenture.
END OF ARTICLE IV
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ARTICLE V
TERMINATION
Section 5.01 Termination.
This Agreement will terminate upon notice to the Indenture Trustee of
either: (a) the later of (i) the satisfaction and discharge of the Indenture
pursuant to Section 4.1 of the Indenture or (ii) the disposition of all funds
with respect to the last Home Equity Loan and the remittance of all funds due
hereunder and the payment of all amounts due and payable to the Indenture
Trustee, the Owner Trustee, the Issuer, the Custodian and the Note Insurer; or
(b) the mutual consent of the Servicer, the Seller, the Depositor, the Note
Insurer and all Owners in writing.
Section 5.02 Termination Upon Option of Holders of Certificates.
(a) On any Monthly Remittance Date after the Redemption Date, the
holders of a majority of the Percentage Interests represented by the
Certificates then Outstanding shall have the option to purchase all of the Trust
Estate by paying the Redemption Price to the Issuer by providing notice thereof
to the Indenture Trustee, Owner Trustee and Note Insurer. Such holders may
purchase the Trust Estate at a price equal to (i) the then outstanding Note
Principal Balance, plus all accrued and unpaid interest thereon (including any
Available Funds Cap Carry-Forward Amounts), (ii) any Trust Fees and Expenses due
and unpaid on such date, (iii) the payment of all amounts owed to the Note
Insurer and (iv) any unreimbursed Delinquency Advances and Servicing Advances
and Delinquency Advances which the Servicer has theretofore failed to remit
(such amount, the "Redemption Price"). In connection with such purchase, the
Servicer shall remit to the Indenture Trustee all amounts then on deposit in the
Principal and Interest Account for deposit to the Note Account, which deposit
shall be deemed to have occurred immediately preceding such purchase. The
proceeds from such sale will be distributed first, to the payment of any
outstanding Trust Fees and Expenses, second, to the Note Insurer, all amounts
owed thereto, third, to the Servicer for unreimbursed Servicing Advances and
Delinquency Advances, fourth, to the Owners of the Notes in an amount equal to
the then outstanding Note Principal Balance plus all accrued and unpaid interest
thereon (plus any Available Funds Cap Carry-Forward Amount) and, fifth, to the
holders of the Certificates, the remainder. Provided, however, that no such
termination shall occur unless the Owners of the Note have received an amount
equal to the then outstanding Note Principal Balance plus all accrued and unpaid
interest on the Notes.
(b) Promptly following any purchase described in this Section 5.02, the
Indenture Trustee will release the Files to the holders of such Certificates or
otherwise upon their order, in a manner similar to that described in Section
4.14 hereof.
(c) If the holders of the Certificates decline to exercise the option
to purchase the Home Equity Loans and REO Properties remaining in the Trust
Estate pursuant to Section 5.02(a), then, provided that IMC Mortgage Company is
not then the Servicer, the Note Insurer may do so subject to terms set out in
Section 5.02.
Section 5.03 Redemption of Notes. Upon any purchase described in
Section 5.02 by either the Majority Certificateholders or the Note Insurer, the
Issuer shall use the proceeds it receives to redeem the Notes, in whole and not
in part, and terminate the Indenture. The Notes will be redeemed upon payment of
the Redemption Price, and the payment of the amount set forth in clause (i) of
the definition of Redemption Price set forth in Section 5.02 to the Owners of
the Notes shall be in lieu of the payment otherwise required to be made to the
Owners on such Payment Date in respect of the Notes.
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Section 5.04 Disposition of Proceeds.
The Indenture Trustee shall, upon receipt thereof, deposit the proceeds
of any liquidation of the Trust Estate pursuant to this Article V to the Note
Account; provided, however, that any amounts representing unreimbursed
Delinquency Advances and Servicing Advances theretofore funded by the Servicer
from the Servicer's own funds shall be paid by the Indenture Trustee to the
Servicer from the proceeds of the Trust Estate.
END OF ARTICLE V
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ARTICLE VI
MISCELLANEOUS
Section 6.01 Acts of Owners.
Except as otherwise specifically provided herein, whenever Owner
action, consent or approval is required under this Agreement, such action,
consent or approval shall be deemed to have been taken or given on behalf of,
and shall be binding upon, all Owners if the Owners of the majority of the
Percentage Interest of the Notes agree to take such action or give such consent
or approval.
Section 6.02 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
are situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Servicer at the Owners' expense on
direction of the Owners of the majority of the Percentage Interest of the Notes
or the Note Insurer, but only when accompanied by an opinion of counsel to the
effect that such recordation materially and beneficially affects the interests
of the Owners or is necessary for the administration or servicing of the Home
Equity Loans.
Section 6.03 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated
as herein provided.
Section 6.04 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 6.05 Severability.
In case any provision in this Agreement or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 6.06 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Note shall be construed in accordance with and governed by
the laws of the State of New York applicable to agreements made and to be
performed therein, without giving effect to the conflicts of law principles
thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
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against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Each of the Depositor, the Issuer, the Seller and the Servicer
hereby irrevocably appoints and designates the Indenture Trustee as its true and
lawful attorney and duly authorized agent for acceptance of service of legal
process with respect to any action, suit or proceeding set forth in paragraph
(b) above. Each of the Issuer, the Seller and the Servicer agrees that service
of such process upon the Indenture Trustee shall constitute personal service of
such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Issuer, the Seller, the Servicer or the Note Insurer or
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Home Equity Loans against any Mortgagor in the courts of any jurisdiction.
Section 6.07 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 6.08 Amendment.
(a) The Indenture Trustee, the Depositor, the Issuer, the Seller and
the Servicer, may at any time and from time to time, with the prior written
approval of the Note Insurer but without the giving of notice to or the receipt
of the consent of the Owners, amend this Agreement, and the Indenture Trustee
shall consent to the amendment for the purposes of (i) curing any ambiguity,
(ii) correcting or supplementing any provisions of this Agreement which are
inconsistent with any other provisions of this Agreement or adding provisions to
this Agreement which are not inconsistent with the provisions of this Agreement,
(iii) adding any other provisions with respect to matters or questions arising
under this Agreement, or (iv) for any other purpose, provided that such
amendment shall not adversely affect in any material respect any Owner. Any such
amendment shall be deemed not to adversely affect in any material respect any
Owner if there is delivered to the Indenture Trustee written notification from
each Rating Agency that such amendment will not cause such Rating Agency to
reduce its then current rating assigned to the Notes without regard to the Note
Insurance Policy. Notwithstanding anything to the contrary, no such amendment
shall (A) change in any manner the amount of, or delay the timing of, payments
which are required to be distributed to any Owner without the consent of the
Owner of such Note, (B) change the percentages of Percentage Interest which are
required to consent to any such amendments, without the consent of the Owners of
all Notes affected then outstanding or (C) which affects in any manner the terms
or provisions of the Note Insurance Policy.
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(b) This Agreement may also be amended from time to time by the Seller,
the Servicer, the Depositor and the Issuer by written agreement, with the prior
written consent of the Owners of the majority of the Percentage Interests in the
Notes and the Note Insurer, 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 Owners; provided, however, that
no such amendment shall (i) reduce in any manner the amount of, or delay the
timing of, collections of payments on Home Equity Loans or distributions which
are required to be made on any Note, without the consent of the holders of 100%
of the Notes, (ii) adversely affect in any material respect the interests of the
holders of the Notes in any manner other than as described in (i), without the
consent of the holders of 100% of the Notes, or (iii) reduce the percentage of
Notes, the holders of which are required to consent to any such amendment,
without the consent of the holders of 100% of the Notes.
(c) The Note Insurer and the Rating Agencies shall be provided by the
Seller with copies of any amendments to this Agreement, together with copies of
any opinions or other documents or instruments executed in connection therewith.
Section 6.09 Specification of Certain Tax Matters.
Each Owner shall provide the Indenture Trustee with a completed and
executed From W-9 prior to purchasing a Note. The Indenture Trustee shall comply
with all requirements of the Code, and applicable state and local law, with
respect to the withholding from any distributions made to any Owner of any
applicable withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
Section 6.10 The Note Insurer.
Any right conferred to the Note Insurer hereunder shall be suspended
and shall run to the benefit of the Owners during any period in which there
exists a Note Insurer Default; provided, that the right of the Note Insurer to
receive the Premium Amount shall not be suspended if such Note Insurer Default
was a default other than a default under clause (a) of the definition thereof.
At such time as the Notes are no longer Outstanding hereunder and the Note
Insurer has received all Reimbursement Amounts, the Note Insurer's rights
hereunder shall terminate.
Section 6.11 Third Party Rights.
The Indenture Trustee, the Seller, the Issuer, the Depositor, the
Servicer, and the Owners agree that the Note Insurer shall be deemed a
third-party beneficiary of this Agreement as if it were a party hereto.
Section 6.12 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
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The Indenture Trustee: The Chase Manhattan Bank
450 W. 33rd Street, 15th Floor
New York, NY 10001
Attention: Structured Finance Services
(212) 946-8600
(212) 946-3240 - Fax
The Depositor: Bear Stearns Asset Backed Securities, Inc.
245 Park Avenue
New York, NY 10167
(212) 272-2000
(212) 272-7294 (fax)
The Issuer: IMC Home Equity Loan Owner Trust 1998-2
c/o Wilmington Trust Company, as Owner Trustee
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Tel: (302) 651-8775
Fax: (302) 651-1576
The Servicer
and Seller: IMC Mortgage Company
5901 East Fowler Avenue
Tampa, FL 33617-2362
(813) 984-8801
(813) 984-2595 - Fax
The Note
Insurer: MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management -
Structured Finance (IPM-SF)
(IMC Adjustable Rate Home Equity Loan
Asset-Backed Notes, Series 1997-8)
Tel: (914) 765-3784
Fax: (914) 765-3810
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The Underwriters: Bear Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
(212) 272-2000
(212) 272-7294 (fax)
PaineWebber Incorporated
1285 Avenue of the Americas
11th Floor
New York, New York 10019
Attention: Barbara Dawson (cc: John Fearey)
Tel: (212) 713-8601
Fax: (212) 713-7999
Deutsche Morgan Grenfell Inc.
31 West 52nd Street
New York, New York 10019
Attention: John Rothman
Tel: (212) 469-8688
Fax: (212) 469-7678
J. P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attention: Peggyann Wallace
Tel: (212) 648-4513
Fax: (212) 648-5251
Moody's: Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: The Residential Mortgage
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-0355
Standard & Poor's: Standard & Poor's Ratings Services, a division
of the McGraw-Hill
Companies
26 Broadway
15th Floor
New York, New York 10004
Attention: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 208-8365
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Section 6.13 Benefits of Agreement.
Nothing in this Agreement or in the Notes, expressed or implied, shall
give to any Person, other than the Owners, the Note Insurer and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 6.14 Legal Holidays.
In any case where the date of any Payment Date, any other date on which
any distribution to any Owner is proposed to be paid, or any date on which a
notice is required to be sent to any Person pursuant to the terms of this
Agreement (with the exception of any Monthly Remittance Date or any Monthly
Reporting Date) shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Agreement) payment or mailing need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made or mailed on the nominal date of any such Payment
Date, or such other date for the payment of any distribution to any Owner or the
mailing of such notice, as the case may be, and no interest shall accrue for the
period from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day. In any case where the date of any
Monthly Remittance Date or any Monthly Reporting Date shall not be a Business
Day, then payment or mailing need not be made on such date, but must be made on
the preceding Business Day.
Section 6.15 Usury.
The amount of interest payable or paid on any Note under the terms of
this Agreement shall be limited to an amount which shall not exceed the maximum
nonusurious rate of interest allowed by the applicable laws of the State of New
York or any applicable law of the United States permitting a higher maximum
nonusurious rate that preempts such applicable New York laws, which could
lawfully be contracted for, charged or received (the "Highest Lawful Rate"). In
the event any payment of interest on any Note exceeds the Highest Lawful Rate,
the Trust stipulates that such excess amount will be deemed to have been paid to
the Owner of such Note as a result of an error on the part of the Indenture
Trustee acting on behalf of the Trust and the Owner receiving such excess
payment shall promptly, upon discovery of such error or upon notice thereof from
the Indenture Trustee on behalf of the Trust, refund the amount of such excess
or, at the option of such Owner, apply the excess to the payment of principal of
such Note, if any, remaining unpaid. In addition, all sums paid or agreed to be
paid to the Indenture Trustee for the benefit of Owners of Notes for the use,
forbearance or detention of money shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such Notes.
Section 6.16 No Petition. The Indenture Trustee, the Depositor, the
Seller and the Servicer, by entering into this Agreement, and each Owner, by
accepting a Note, hereby covenant and agree that they will not at any time
institute against the Seller, the Servicer, the Depositor or the Issuer, or join
in any institution against the Seller, the Servicer, the Depositor or the Issuer
of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Agreement or any of the Operative Documents.
Section 6.17 Depositor's Obligations. The Depositor shall have no
obligations to monitor the performance of, and shall have no liability for any
breach of the obligations of, the other parties hereto.
END OF ARTICLE VI
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ARTICLE VII
CERTAIN MATTERS REGARDING THE NOTE INSURER
Section 7.01 Trust Estate and Accounts Held for Benefit of the Note
Insurer.
The Indenture Trustee shall hold the Trust Estate for the benefit of
the related Owners and the Note Insurer and all references in this Agreement and
in the Notes to the benefit of Owners of the Notes shall be deemed to include
the Note Insurer. The Indenture Trustee shall cooperate in all reasonable
respects with any reasonable request by the Note Insurer for action to preserve
or enforce the Note Insurer's rights or interests under this Agreement and the
Notes.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Properties, and shall maintain the
Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Note Insurer, and all references in this Agreement to the benefit
of or actions on behalf of the Owners shall be deemed to include the Note
Insurer. Unless a Note Insurer Default exists, the Servicer shall not terminate
any Sub-Servicing Agreements without cause without the prior consent of the Note
Insurer.
Section 7.02 Claims Upon the Policy; Policy Payments Account.
(a) In the event that an Insured Payment becomes due pursuant
to the terms of the Note Insurance Policy, the Indenture Trustee shall submit a
Notice (in the form attached to such Note Insurance Policy) in accordance with
the terms of such Note Insurance Policy.
(b) The Indenture Trustee shall establish a separate special
purpose trust account for the benefit of the Owners of the Notes and the Note
Insurer referred to herein as the "Policy Payments Account" over which the
Indenture Trustee shall have exclusive control and sole right of withdrawal. The
Indenture Trustee shall deposit any amount paid under a Note Insurance Policy in
the Policy Payments Account and distribute such amount only for purposes of
payment to the Owners of the Notes of the Insured Payments for which a claim was
made and such amount may not be applied to satisfy any costs, expenses or
liabilities of the Servicer, the Seller, the Depositor, the Custodian, the
Indenture Trustee or the Trust. Amounts paid under the Note Insurance Policy
shall be transferred to the Note Account in accordance with the next succeeding
paragraph and disbursed by the Indenture Trustee to Owners of the Notes in
accordance with Section 3.03. It shall not be necessary for such payments to be
made by checks or wire transfers separate from the checks or wire transfers used
to pay the Insured Payments with other funds available to make such payment.
However, the amount of any payment of principal of or interest on the Notes to
be paid from funds transferred from the Policy Payments Account shall be noted
as provided in paragraph (c) below in the Register and in the statement to be
furnished to Owners of the Notes pursuant to Section 3.08. Funds held in the
Policy Payments Account shall not be invested by the Indenture Trustee.
On any Payment Date with respect to which a claim has been made
under the Note Insurance Policy, the amount of funds received by the Indenture
Trustee as a result of any claim under the Note Insurance Policy, to the extent
required to make the Insured Payment on such Payment Date shall be withdrawn
from the Policy Payments Account and deposited in the Note Account and applied
by the Indenture Trustee, together with the other funds to be withdrawn from the
Note Account, directly to the payment in full of the Insured Payment due on the
Notes. Funds received by the Indenture Trustee as a result of any claim under
the Note Insurance Policy shall be deposited by the Indenture Trustee in the
Policy Payments Account and used solely for payment to the Owners of the Notes
may not be applied to satisfy any costs, expenses or liabilities of the
Servicer, the Seller, the Depositor, the Custodian, the Indenture Trustee
72
<PAGE>
or the Trust. Any funds remaining in the Policy Payments Account on the first
Business Day following a Payment Date shall be remitted to the Note Insurer,
pursuant to the instructions of the Note Insurer, by the end of such Business
Day.
(c) The Indenture Trustee shall keep a complete and accurate
record of the amount of interest and principal paid in respect of any Note from
moneys received under the Note Insurance Policy. The Note Insurer shall have the
right to inspect such records at reasonable times during normal business hours
upon one Business Day's prior notice to the Indenture Trustee.
(d) The Indenture Trustee shall promptly notify the Note
Insurer and the Fiscal Agent (as defined in the Note Insurance Policy) of any
proceeding or the institution of any action, of which an Authorized Officer of
the Indenture Trustee has actual knowledge, seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership or
similar law (a "Preference Claim") of any distribution made with respect to the
Notes. Each Owner of a Note by its purchase of such Note, the Servicer and the
Indenture Trustee hereby agree that, the Note Insurer (so long as no Note
Insurer Default exists) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including without limitation, (i) the direction of any appeal
of any order relating to such Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Note Insurer shall be subrogated to the
rights of the Servicer, the Indenture Trustee and each Owner of a Note in the
conduct of any such Preference Claim, including, without limitation, all rights
of any party to an adversary proceeding action with respect to any court order
issued in connection with any such Preference Claim.
Section 7.03 Effect of Payments by the Note Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment
with respect to principal of or interest on any of the Notes which is made with
moneys received pursuant to the terms of the Note Insurance Policy shall not be
considered payment of such Notes from the Trust and shall not result in the
payment of or the provision for the payment of the principal of or interest on
such Notes within the meaning of Section 3.03. The Depositor, the Servicer and
the Indenture Trustee acknowledge, and each Owner by its acceptance of a Note
agrees, that without the need for any further action on the part of the Note
Insurer, the Depositor, the Servicer, the Indenture Trustee or the Registrar (a)
to the extent the Note Insurer makes payments, directly or indirectly, on
account of principal of or interest on any Notes to the Owners of such Notes,
the Note Insurer will be fully subrogated to the rights of such Owners to
receive such principal and interest from the Trust and (b) the Note Insurer
shall be paid such principal and interest but only from the sources and in the
manner provided herein for the payment of such principal and interest.
The Indenture Trustee, the Seller, the Depositor and the
Servicer shall cooperate in all respects with any reasonable request by the Note
Insurer for action to preserve or enforce the Note Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Owners as otherwise set forth therein.
Section 7.04 Notices to the Note Insurer.
All notices, statements, reports, certificates or opinions
required by this Agreement to be sent to any other party hereto or to any of the
Owners shall also be sent to the Note Insurer.
73
<PAGE>
Section 7.05 Rights to the Note Insurer To Exercise Rights of Owners.
By accepting its Note, each Owner agrees that unless a Note
Insurer Default exists, the Note Insurer shall have the right to exercise all
rights of the Owners as specified under this Agreement without any further
consent of the Owners.
END OF ARTICLE VII
74
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Depositor, the Seller, the Servicer
and the Indenture Trustee have caused this Agreement to be duly executed by
their respective officers thereunto duly authorized, all as of the day and year
first above written.
IMC HOME EQUITY LOAN OWNER TRUST 1998-2
By: WILMINGTON TRUST COMPANY,
as Owner Trustee
By: /s/ Emmett R. Harmon
-----------------------------
Title: Vice President
BEAR STEARNS ASSET BACKED SECURITIES,
INC.
as Depositor
By: /s/ Matthew Perkins
-----------------------------
Title: Managing Director
IMC MORTGAGE COMPANY,
as Servicer and Seller
By: /s/ Thomas G. Middleton
-----------------------------
Title: President
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By: /s/ Ann Marie Jose
-----------------------------
Title: Trust Officer
<PAGE>
STATE OF New York )
: ss.:
COUNTY OF New York )
On the 31st day of March, 1998, before me, a notary public in and for
the State of New York, personally appeared Matthew Perkins to me known to me,
who, being by me duly sworn, did depose and say that he resides at 346 East 59th
Street, New York, NY 10022; that he is the Managing Director of Bear Stearns
Asset Backed Securities, Inc., a Delaware corporation; one of the parties that
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ James A. Nash
--------------------------
Notary Public
<PAGE>
STATE OF FLORIDA )
: ss.:
COUNTY OF HILLSBOROUGH )
On the 31st day of March, 1998, before me personally came Thomas G.
Middleton, to me known, who, being by me duly sworn, did depose and say that
he/she resides at 11508 Orilla del Rio Place, Tampa, FL 33617; that he is a
President of IMC Mortgage Company, a Florida corporation; and that he signed his
name thereto by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Jennifer L. Ellis
----------------------------
Notary Public
<PAGE>
STATE OF DELAWARE )
: ss.:
COUNTY OF NEW CASTLE )
On the 31st day of March, 1998, before me personally came Emmett R.
Harmon, to me known, who, being by me duly sworn did depose and say that he
resides in Delaware; that he/she is a Vice President of Wilmington Trust
Company, a Delaware banking corporation described in and that executed the above
instrument as Owner Trustee; and that he/she signed his/her name thereto by
order of the Board of Directors of said Delaware banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ Patricia Pierce
--------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 31st day of March, 1998, before me personally came Ann Marie
Jose, to me known, who, being by me duly sworn did depose and say that he/she
resides at 208 Roosevelt Ave.; that he/she is a Trust Officer of The Chase
Manhattan Bank, the New York banking corporation described in and that executed
the above instrument as Indenture Trustee; and that he/she signed his/her name
thereto by order of the Board of Directors of said New York banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
/s/ James A. Nash
--------------------------
Notary Public
<PAGE>
SCHEDULE I
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Indenture Trustee at the
Corporate Trust Office and by the Servicer.
<PAGE>
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, _______________ of IMC Mortgage Company
("IMC"), hereby certify that between the "Cut-Off Date" (as defined in the Sale
and Servicing Agreement dated as of March 1, 1998 among Bear Stearns Asset
Backed Securities, Inc., as Depositor, IMC, as Seller and Servicer, IMC Home
Equity Loan Owner Trust 1998-2, as Issuer and The Chase Manhattan Bank, as
Indenture Trustee) and the "Closing Date," the following schedule of "Home
Equity Loans" (each as defined in the Sale and Servicing Agreement) have been
prepaid in full.
Account Original Current Date Paid
Number Name Amount Balance Off
------ ---- ------ ------- ---
Dated: March __, 1998
By:_______________________
Title:____________________
A-1
<PAGE>
EXHIBIT B-1
INDENTURE TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
The Chase Manhattan Bank, in its capacity as Indenture Trustee (the
"Indenture Trustee") under that certain Sale and Servicing Agreement dated as of
March 1, 1998 (the "Sale and Servicing Agreement") among Bear Stearns Asset
Backed Securities, Inc., as Depositor, IMC Mortgage Company, a Florida
corporation, as seller and servicer ("IMC"), IMC Home Equity Loan Owner Trust
1998-2, as Issuer and The Chase Manhattan Bank, as Indenture Trustee, hereby
acknowledges receipt of the Insurance Policy (Policy No. ________) from MBIA
Insurance Corporation and all other assets of the Trust Estate received by the
Indenture Trustee as of the date hereof.
The Indenture Trustee hereby additionally acknowledges that it shall
cause the Custodian (as defined in the Sale and Servicing Agreement) to review
such items as required by Section 2.06(a) of the Sale and Servicing Agreement.
THE CHASE MANHATTAN BANK, as
Indenture Trustee
By:_________________________
Name:_______________________
Title:______________________
Dated: March __, 1998
B-1-1
<PAGE>
EXHIBIT B-2
CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
BankBoston N.A., in its capacity as custodian (the "Custodian") under
the Custodial Agreement dated as of March 1, 1998 among the Custodian, IMC
Mortgage Company, as seller and servicer, Bear Stearns Asset Backed Securities,
Inc., as Depositor, IMC Home Equity Loan Owner Trust 1998-2, as Issuer and The
Chase Manhattan Bank, in its capacity as Indenture Trustee (the "Indenture
Trustee") under that certain Sale and Servicing Agreement dated as of March 1,
1998 ( the "Sale and Servicing Agreement") among Bear Stearns Asset Backed
Securities, Inc., as Depositor, IMC Mortgage Company, a Florida corporation, as
seller and servicer ("IMC"), the Issuer, and the Indenture Trustee hereby
acknowledges receipt (subject to review as required by Section 2.06(a) of the
Sale and Servicing Agreement) of the items delivered to it by IMC with respect
to the Home Equity Loans pursuant to Section 2.05(b)(i) of the Sale and
Servicing Agreement, except such items as are listed on Exhibit D to the Sale
and Servicing Agreement.
The Schedules of Home Equity Loans is attached to this Receipt.
The Custodian hereby additionally acknowledges that it shall review
such items as required by Section 2.06(a) of the Sale and Servicing Agreement
and shall otherwise comply with Section 2.06(b) and 2.06(c) of the Sale and
Servicing Agreement as required thereby.
BANKBOSTON N.A.,
as custodian
By:________________________
Name:______________________
Title:_____________________
Dated: March __, 1998
B-2-1
<PAGE>
EXHIBIT C
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of BankBoston N.A.,
in its capacity as Custodian (the "Custodian") under the Custodial Agreement
dated March 1, 1998 between the Custodian, IMC Mortgage Company, as seller and
servicer, Bear Stearns Asset Backed Securities, Inc., as Depositor, IMC Home
Equity Loan Owner Trust 1998-2, as Issuer and The Chase Manhattan Bank, a New
York banking corporation, acting in its capacity as indenture trustee (the
"Indenture Trustee") of a certain pool of mortgage loans (the "Pool") heretofore
conveyed in trust to the Indenture Trustee, pursuant to that certain Sale and
Servicing Agreement dated as of March 1, 1998 (the "Sale and Servicing
Agreement") among Bear Stearns Asset Backed Securities, Inc., as Depositor, IMC
Mortgage Company, as Seller (the "Seller") and Servicer, IMC Home Equity Loan
Owner Trust 1998-2, as Issuer and the Indenture Trustee; and
WHEREAS, the Custodian is required, pursuant to Section 2.06(a) of the
Sale and Servicing Agreement, to review the Mortgage Files relating to the Pool
within a specified period following the Closing Date and to notify the Seller
promptly of any defects with respect to the Pool, and the Seller is required to
remedy such defects or take certain other action, all as set forth in Section
2.06(b) of the Sale and Servicing Agreement; and
WHEREAS, Section 2.06(a) of the Sale and Servicing Agreement requires
the Custodian to deliver this Pool Certification upon the satisfaction of
certain conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined
that all required documents (or certified copies of documents listed in Section
2.05 of the Sale and Servicing Agreement) have been executed or received, and
that such documents relate to the Home Equity Loans identified in the Schedule
of Home Equity Loans pursuant to Section 2.06(a) of the Sale and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 2.06(b) of the Sale and Servicing Agreement has
been completed. The Custodian makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
BANKBOSTON N.A., as Custodian
By:__________________________
Title:_______________________
Dated: March __, 1998
C-1
<PAGE>
EXHIBIT D TO THE SALE AND SERVICING AGREEMENT
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
Loan Number Borrower Name Original Loan Amount Exception
- ----------- ------------- -------------------- ---------
D-1
<PAGE>
EXHIBIT E
FORM OF SUBSEQUENT TRANSFER AGREEMENT
IMC Mortgage Company (the "Seller"), as Seller, and IMC Home Equity
Loan Owner Trust 1998-2, as Purchaser, pursuant to the Sale and Servicing
Agreement dated as of March 1, 1998 among the Depositor, the Seller, as Seller
and Servicer and The Chase Manhattan Bank, as Indenture Trustee (the "Sale and
Servicing Agreement"), hereby confirm their understanding with respect to the
sale by the Seller and the purchase by the Depositor and the sale by the
Depositor and the purchase by the Purchaser of those Home Equity Loans (the
"Subsequent Home Equity Loans") listed on the attached Schedule of Home Equity
Loans.
Conveyance of Subsequent Home Equity Loans. As of ___________ __, 1998
(the "Subsequent Cut-Off Date"), the Seller does hereby irrevocably transfer,
assign, setover and otherwise convey to the Purchaser, without recourse (except
as otherwise explicitly provided for herein) all right, title and interest in
and to any and all benefits accruing from the Subsequent Home Equity Loans
(other than any principal and interest payments received thereon on or prior to
the Subsequent Cut-Off Date) which are delivered to the Custodian on behalf of
the Indenture Trustee herewith (and all substitutions therefor as provided by
Sections 2.03, 2.04 and 2.06 of the Sale and Servicing Agreement), together with
the related Subsequent Home Equity Loan documents and the interest in any
Property which secured a Subsequent Home Equity Loan but which has been acquired
by foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; and
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Subsequent Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing). The Seller shall deliver the original
Mortgage or mortgage assignment with evidence of recording thereon (except as
otherwise provided by the Pooling and Servicing Agreement) and other required
documentation in accordance with the terms set forth in Sections 2.05 and 2.07
of the Sale and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Sale and Servicing Agreement shall be
borne by the Seller.
Additional terms of the sale, if any, are attached hereto as
Attachment A.
The Seller hereby affirms the representations and warranties set forth
in the Sale and Servicing Agreement that relate to it and the Subsequent Home
Equity Loans as of the date hereof. The Seller hereby delivers notice and
confirms that each of the conditions set forth in Sections 2.07(b), 2.07(c) and
2.07(d) to the Sale and Servicing Agreement are satisfied as of the date hereof.
All terms and conditions of the Sale and Servicing Agreement are
hereby ratified, confirmed and incorporated herein, provided that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Sale and Servicing Agreement.
E-1
<PAGE>
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Sale and Servicing Agreement.
IMC MORTGAGE COMPANY,
as Seller
By: _________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee for IMC Home Equity
Loan Owner Trust 1998-2
By: __________________________
Name:
Title:
Dated:________________________
E-2
Exhibit 99.1
IMC Home Equity Loan Owner Trust 1998-2
Geographic Distribution of Properties
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
State Home Equity Loans Loan Balance Loan Balance
- ----- ----------------- ------------ ------------
<S> <C> <C> <C>
Alaska 1 224,905.46 0.04
Arizona 56 5,869,228.70 1.12
Arkansas 9 794,266.49 0.15
California 319 47,751,931.10 9.08
Colorado 114 14,246,098.75 2.71
Connecticut 132 13,476,404.50 2.56
Delaware 14 1,129,948.46 0.21
District of Columbia 15 2,391,348.74 0.45
Florida 265 28,422,242.89 5.41
Georgia 214 26,129,813.31 4.97
Hawaii 14 2,554,186.66 0.49
Idaho 44 3,169,422.74 0.60
Illinois 406 41,398,643.76 7.88
Indiana 167 10,174,639.22 1.94
Iowa 29 2,060,860.47 0.39
Kansas 18 1,309,130.46 0.25
Kentucky 39 2,444,205.23 0.46
Louisiana 13 1,020,303.80 0.19
Maine 14 1,226,336.44 0.23
Maryland 175 22,136,300.58 4.21
Massachusetts 108 13,310,032.25 2.53
Michigan 597 43,438,914.13 8.26
Minnesota 102 10,020,293.99 1.91
Mississippi 13 850,129.26 0.16
Missouri 104 8,264,453.37 1.57
Montana 7 629,313.41 0.12
Nebraska 6 432,067.15 0.08
Nevada 34 4,177,760.98 0.79
New Hampshire 13 1,300,724.36 0.25
New Jersey 222 28,383,867.10 5.40
New Mexico 112 12,357,720.05 2.35
New York 318 39,655,381.53 7.54
North Carolina 206 18,415,574.37 3.50
Ohio 375 25,382,621.72 4.83
Oklahoma 31 1,794,483.16 0.34
Oregon 70 7,985,144.31 1.52
Pennsylvania 191 17,542,397.08 3.34
Rhode Island 40 3,868,331.17 0.74
South Carolina 41 3,323,668.28 0.63
South Dakota 5 372,197.70 0.07
Tennessee 43 4,979,520.08 0.95
Texas 186 15,615,991.59 2.97
Utah 82 9,619,995.92 1.83
Vermont 2 385,235.98 0.07
Virginia 63 8,004,596.50 1.52
Washington 91 9,469,813.62 1.80
West Virginia 25 1,689,499.32 0.32
Wisconsin 72 6,155,984.85 1.17
Wyoming 5 326,161.26 0.06
----- --------------- ------
Total 5,222 $525,682,092.25 100.00%
</TABLE>
<PAGE>
IMC Home Equity Loan Owner Trust 1998-2
Original Loan-to-Value Ratios
<TABLE>
<CAPTION>
Range of Number of Aggregate % of Aggregate
Original LTV's Home Equity Loans Loan Balance Loan Balance
- -------------- ----------------- ------------ ------------
<S> <C> <C> <C>
Up to 10.00% 1 9,991.37 0.00
10.01 - 15.00 2 108,791.19 0.02
15.01 - 20.00 4 316,291.61 0.06
20.01 - 25.00 10 332,702.79 0.06
25.01 - 30.00 11 512,989.01 0.10
30.01 - 35.00 21 903,164.64 0.17
35.01 - 40.00 26 1,748,791.59 0.33
40.01 - 45.00 50 3,697,818.84 0.70
45.01 - 50.00 77 4,650,223.24 0.88
50.01 - 55.00 91 6,951,071.12 1.32
55.01 - 60.00 169 13,855,372.17 2.64
60.01 - 65.00 390 32,891,992.43 6.26
65.01 - 70.00 553 45,158,949.33 8.59
70.01 - 75.00 953 99,211,214.87 18.87
75.01 - 80.00 1,551 165,586,587.32 31.50
80.01 - 85.00 715 77,144,508.86 14.68
85.01 - 90.00 538 65,751,786.81 12.51
90.01 - 95.00 14 2,065,701.81 0.39
95.01 - 100.00 46 4,784,143.25 0.91
----- --------------- ------
Total 5,222 $525,682,092.25 100.00%
</TABLE>
Cut-Off Date Loan Balances
<TABLE>
<CAPTION>
Cut-Off Date Number of Aggregate % of Aggregate
Loan Balances ($) Home Equity Loans Loan Balance Loan Balance
- ----------------- ----------------- ------------ ------------
<S> <C> <C> <C>
Up to 25,000.00 137 2,871,511.98 0.55
25,000.01 - 50,000.00 988 38,947,249.37 7.41
50,000.01 - 75,000.00 1,293 80,498,416.13 15.31
75,000.01 - 100,000.00 960 83,727,858.31 15.93
100,000.01 - 125,000.00 576 64,285,060.02 12.23
125,000.01 - 150,000.00 424 58,193,656.03 11.07
150,000.01 - 175,000.00 225 36,362,481.92 6.92
175,000.01 - 200,000.00 147 27,519,220.17 5.23
200,000.01 - 250,000.00 216 48,312,131.33 9.19
250,000.01 - 300,000.00 118 32,076,782.66 6.10
300,000.01 - 350,000.00 52 16,911,523.69 3.22
350,000.01 - 400,000.00 42 15,764,239.86 3.00
400,000.01 - 450,000.00 22 9,337,650.34 1.78
450,000.01 - 500,000.00 18 8,620,282.65 1.64
500,000.01 - 550,000.00 3 1,588,547.18 0.30
650,000.01 - 700,000.00 1 665,480.61 0.13
----- --------------- ------
Total 5,222 $525,682,092.25 100.00%
</TABLE>
<PAGE>
IMC Home Equity Loan Owner Trust 1998-2
Types of Mortgaged Properties
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Property Types Home Equity Loans Loan Balance Loan Balance
- -------------- ----------------- ------------ ------------
<S> <C> <C> <C>
Single Family Detached 4,799 485,904,514.80 92.43
Two- to Four-Family 192 20,051,652.20 3.81
Condominium 89 8,108,385.74 1.54
Single Family Attached 60 5,044,430.25 0.96
Townhouse 27 2,010,843.19 0.38
Manufactured Housing 23 1,468,924.09 0.28
Multi-Family 27 2,688,544.22 0.51
Planned Unit Development 5 404,797.76 0.08
----- --------------- ------
5,222 $525,682,092.25 100.00%
</TABLE>
Distribution of Months Since Origination
<TABLE>
<CAPTION>
Number of Months Number of Aggregate % of Aggregate
Since Origination Home Equity Loans Loan Balance Loan Balance
- ----------------- ----------------- ------------ ------------
<S> <C> <C> <C>
0 - 1 432 37,140,312.65 7.07
2 - 12 4,769 485,316,342.32 92.32
13 - 24 17 2,373,852.06 0.45
25 - 36 1 54,466.29 0.01
37 or more 3 797,118.93 0.15
----- --------------- ------
Total 5,222 $525,682,092.25 100.00%
</TABLE>
Distribution of Remaining Term to Maturity
<TABLE>
<CAPTION>
Months Remaining Number of Aggregate % of Aggregate
to Maturity Home Equity Loans Loan Balance Loan Balance
- ----------- ----------------- ------------ ------------
<S> <C> <C> <C>
61 - 120 11 1,983,914.73 0.38
121 - 180 93 17,461,108.23 3.32
181 - 240 22 3,625,699.51 0.69
241 - 300 2 310,693.06 0.06
301 - 360 5,094 502,300,676.72 95.55
----- --------------- ------
Total 5,222 $525,682,092.25 100.00%
</TABLE>
Occupancy Status (1)
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Occupancy Status Home Equity Loans Loan Balance Loan Balance
- ---------------- ----------------- ------------ ------------
<S> <C> <C> <C>
Owner Occupied 4,881 498,968,875.93 94.92
Investor Owned 324 23,908,806.87 4.55
Vacation/Second Home 17 2,804,409.45 0.53
----- --------------- ------
Total 5,222 $525,682,092.25 100.00%
</TABLE>
- -------------------------------
(1) Based on representations by the borrowers at the time of origination of the
Home Equity Loans.
<PAGE>
IMC Home Equity Loan Owner Trust 1998-2
Cut-Off Date Coupon Rates for the Fixed Rate Home Equity Loans
<TABLE>
<CAPTION>
Range of Number of Aggregate % of Aggregate
Coupon Rates Home Equity Loans Loan Balance Loan Balance
- ------------ ----------------- ------------ ------------
<S> <C> <C> <C> <C>
7.001 - 8.000% 1 299,595.26 0.86
8.001 - 9.000 22 5,920,376.40 16.98
9.001 - 10.000 26 8,044,313.76 23.07
10.001 - 11.000 40 10,231,060.31 29.34
11.001 - 12.000 26 7,273,604.65 20.86
12.001 - 13.000 5 1,358,656.83 3.90
13.001 - 14.000 4 946,338.19 2.71
14.001 - 15.000 3 801,795.96 2.30
--- --------------- ------
Total 127 $ 34,875,741.36 100.00%
</TABLE>
Cut-Off Date Coupon Rates for the Adjustable Rate Home Equity Loans
<TABLE>
<CAPTION>
Range of Number of Aggregate % of Aggregate
Coupon Rates Home Equity Loans Loan Balance Loan Balance
- ------------ ----------------- ------------ ------------
<S> <C> <C> <C> <C>
5.001 - 6.000% 2 197,700.60 0.04
6.001 - 7.000 22 3,694,250.03 0.75
7.001 - 8.000 150 20,687,614.02 4.22
8.001 - 9.000 550 69,063,275.25 14.07
9.001 - 10.000 1,312 137,245,575.82 27.96
10.001 - 11.000 1,544 145,076,769.97 29.56
11.001 - 12.000 943 75,482,695.98 15.38
12.001 - 13.000 365 26,309,733.58 5.36
13.001 - 14.000 140 8,651,363.44 1.76
14.001 - 15.000 57 3,687,863.12 0.75
15.001 - 16.000 7 554,297.31 0.11
16.001 - 17.000 3 155,211.77 0.03
----- --------------- ------
Total 5,095 $490,806,350.89 100.00%
</TABLE>
Distribution of Minimum Coupon Rates for the Adjustable Rate Home Equity Loans
<TABLE>
<CAPTION>
Range of Minimum Number of Aggregate % of Aggregate
Coupon Rates Home Equity Loans Loan Balance Loan Balance
- ------------ ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Up to 5.000% 9 1,081,539.54 0.22
5.001 - 6.000 39 5,036,854.98 1.03
6.001 - 7.000 103 13,297,872.01 2.71
7.001 - 8.000 211 26,431,377.91 5.39
8.001 - 9.000 634 76,249,219.64 15.54
9.001 - 10.000 1,355 140,579,382.16 28.64
10.001 - 11.000 1,445 132,729,878.25 27.04
11.001 - 12.000 806 62,246,519.35 12.68
12.001 - 13.000 308 21,334,432.67 4.35
13.001 - 14.000 125 7,982,213.80 1.63
14.001 - 15.000 51 3,169,758.61 0.65
15.001 - 16.000 6 512,090.20 0.10
16.001 - 17.000 3 155,211.77 0.03
----- --------------- ------
Total 5,095 $490,806,350.89 100.00%
</TABLE>
<PAGE>
IMC Home Equity Loan Owner Trust 1998-2
Distribution of Maximum Coupon Rates for the Adjustable Rate Home Equity Loans
<TABLE>
<CAPTION>
Range of Maximum Number of Aggregate % of Aggregate
Coupon Rates Home Equity Loans Loan Balance Loan Balance
- ------------ ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Up to 11.000% 3 287,880.92 0.06
11.001 - 12.000 11 956,518.55 0.19
12.001 - 13.000 52 7,074,872.43 1.44
13.001 - 14.000 106 13,614,559.10 2.77
14.001 - 15.000 402 50,451,335.15 10.28
15.001 - 16.000 924 102,214,528.71 20.83
16.001 - 17.000 1,394 139,839,261.49 28.49
17.001 - 18.000 1,089 95,982,543.01 19.56
18.001 - 19.000 527 39,963,289.03 8.14
19.001 - 20.000 231 15,774,562.83 3.21
20.001 - 21.000 104 6,854,017.32 1.40
21.001 - 22.000 23 1,857,756.23 0.38
22.001 - 23.000 8 782,804.91 0.16
23.001 - 24.000 7 534,125.09 0.11
24.001 - 25.000 9 598,326.81 0.12
25.001 - 26.000 17 1,765,700.70 0.36
26.001 - 27.000 41 3,037,592.14 0.62
27.001 or more 147 9,216,676.47 1.88
----- --------------- ------
Total 5,095 $490,806,350.89 100.00%
</TABLE>
Distribution of Margins for the Adjustable Rate Home Equity Loans
Six-Month LIBOR Loans
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Range of Margins Home Equity Loans Loan Balance Loan Balance
- ---------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Up to 2.000% 3 331,867.61 0.07
2.001 - 3.000 6 582,582.45 0.12
3.001 - 4.000 31 4,289,917.87 0.87
4.001 - 5.000 160 18,345,284.80 3.74
5.001 - 6.000 865 92,137,103.01 18.77
6.001 - 7.000 1,789 175,512,920.13 35.76
7.001 - 8.000 1,081 89,128,236.34 18.16
8.001 - 9.000 470 34,947,707.36 7.12
9.001 - 10.000 171 14,812,751.81 3.02
10.001 - 11.000 100 10,705,838.10 2.18
11.001 - 12.000 63 5,486,101.27 1.12
12.001 - 13.000 18 1,744,180.07 0.36
13.001 - 14.000 3 268,519.20 0.05
----- --------------- -----
Subtotal 4,760 $448,293,010.02 91.34
</TABLE>
<PAGE>
IMC Home Equity Loan Owner Trust 1998-2
CMT Loans
<TABLE>
<CAPTION>
Number of Aggregate % of Aggregate
Range of Margins Home Equity Loans Loan Balance Loan Balance
- ---------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
3.001 - 4.000% 7 868,269.88 0.18
4.001 - 5.000 16 2,503,226.20 0.51
5.001 - 6.000 67 8,236,543.96 1.68
6.001 - 7.000 132 18,389,410.33 3.75
7.001 - 8.000 102 11,383,309.88 2.32
8.001 - 9.000 8 949,306.49 0.19
9.001 - 10.000 3 183,274.13 0.04
----- --------------- ------
Subtotal 335 $ 42,513,340.87 8.66
Total 5,095 $490,806,350.89 100.00%
===== =============== ======
</TABLE>
Distribution of Next Coupon Rate Change for the Adjustable Rate
Home Equity Loans
Six-Month LIBOR Loans
<TABLE>
<CAPTION>
Month of Next Number of Aggregate % of Aggregate
Coupon Rate Change Home Equity Loans Loan Balance Loan Balance
- ------------------ ----------------- ------------ --------------
<S> <C> <C> <C>
April 1998 178 18,811,313.85 3.83
May 1998 249 24,317,199.08 4.95
June 1998 313 27,867,341.46 5.68
July 1998 325 33,915,362.76 6.91
August 1998 227 21,262,534.08 4.33
September 1998 231 26,184,738.89 5.34
November 1998 4 438,757.19 0.09
December 1998 7 1,041,963.46 0.21
January 1999 43 3,844,569.42 0.78
February 1999 37 4,181,424.66 0.85
March 1999 5 820,971.83 0.17
April 1999 7 855,033.76 0.17
May 1999 11 1,133,800.33 0.23
June 1999 64 6,168,002.77 1.26
July 1999 111 9,210,887.10 1.88
August 1999 106 9,480,716.22 1.93
September 1999 201 17,985,695.56 3.66
October 1999 209 17,963,164.59 3.66
November 1999 475 43,297,154.13 8.82
December 1999 655 60,388,894.16 12.30
January 2000 685 63,740,669.89 12.99
February 2000 296 24,828,466.03 5.06
March 2000 16 1,295,497.97 0.26
May 2000 1 54,466.29 0.01
July 2000 1 31,417.11 0.01
August 2000 10 948,743.87 0.19
September 2000 17 1,559,850.17 0.32
October 2000 52 4,818,649.84 0.98
November 2000 100 9,106,958.83 1.86
December 2000 80 7,857,930.79 1.60
January 2001 31 3,208,977.14 0.65
February 2001 5 692,025.35 0.14
March 2001 2 167,700.00 0.03
January 2002 1 64,253.76 0.01
October 2002 1 33,258.88 0.01
November 2002 3 664,689.51 0.14
December 2002 1 49,929.29 0.01
----- --------------- -----
Subtotal 4,760 $448,293,010.02 91.34%
===== =============== =====
</TABLE>
<PAGE>
IMC Home Equity Loan Owner Trust 1998-2
CMT Loans
<TABLE>
<CAPTION>
Month of Next Number of Aggregate % of Aggregate
Coupon Rate Change Home Equity Loans Loan Balance Loan Balance
- ------------------ ----------------- ------------ ------------
<S> <C> <C> <C>
April 1998 14 1,543,178.72 0.31
May 1998 30 4,283,374.48 0.87
June 1998 91 11,545,694.36 2.35
July 1998 65 9,589,260.90 1.95
August 1998 9 2,164,117.30 0.44
September 1998 1 169,501.01 0.03
October 1998 13 1,198,139.27 0.24
November 1998 6 588,021.60 0.12
December 1998 13 966,566.90 0.20
January 1999 14 1,249,301.16 0.25
February 1999 3 396,611.38 0.08
March 1999 1 69,509.35 0.01
July 1999 1 113,899.16 0.02
August 1999 1 113,734.41 0.02
September 1999 1 68,438.06 0.01
November 1999 4 433,295.93 0.09
January 2000 1 46,268.85 0.01
April 2000 6 607,544.62 0.12
May 2000 15 2,085,785.24 0.42
June 2000 33 3,858,531.60 0.79
July 2000 12 1,363,706.20 0.28
August 2000 1 58,860.37 0.01
----- -------------- ------
Subtotal 335 $ 42,513,340.87 8.66%
Total 5,095 $490,806,350.89 100.00%
===== =============== ======
</TABLE>
