EXHIBIT 4.1
POOLING AND SERVICING AGREEMENT
AMONG
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.,
AS THE DEPOSITOR
WMC MORTGAGE CORP.,
AS THE SERVICER,
THE FIRST NATIONAL BANK OF CHICAGO,
AS THE TRUSTEE
DATED AS OF AUGUST 1, 1997
RELATING TO
WMC MORTGAGE LOAN PASS-THROUGH CERTIFICATES,
SERIES 1997-1
TABLE OF CONTENTS
SECTION PAGE
CONVEYANCE
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01 DEFINITIONS...............................................3
ACCEPTED SERVICING PRACTICES...................................4
ACCOUNT .......................................................4
ACCRUAL PERIOD.................................................4
ADJUSTED PASS-THROUGH RATE.....................................4
AGGREGATE CERTIFICATE PRINCIPAL BALANCE........................4
AGREEMENT......................................................4
APPLIED REALIZED LOSS AMOUNT...................................4
APPRAISED VALUE................................................4
AUTHORIZED OFFICER.............................................4
AVAILABLE FUNDS CAP CARRY FORWARD AMOUNT.......................5
AVAILABLE FUNDS CAP RATE.......................................5
BUSINESS DAY...................................................6
CERTIFICATE....................................................6
CERTIFICATE ACCOUNT............................................6
CERTIFICATEHOLDER..............................................6
CERTIFICATE PRINCIPAL BALANCE..................................6
CLASS .......................................................7
CLASS A CERTIFICATE............................................7
CLASS A CERTIFICATE PRINCIPAL BALANCE..........................7
CLASS A CERTIFICATE TERMINATION DATE...........................7
CLASS A CURRENT INTEREST.......................................7
CLASS A DISTRIBUTION AMOUNT....................................7
CLASS A INTEREST CARRY FORWARD AMOUNT..........................7
CLASS A PASS-THROUGH RATE......................................7
CLASS A PRINCIPAL DISTRIBUTION AMOUNT..........................8
CLASS B APPLIED REALIZED LOSS AMOUNT...........................8
CLASS B CERTIFICATE............................................8
CLASS B CERTIFICATE PRINCIPAL BALANCE..........................8
CLASS B CERTIFICATE TERMINATION DATE...........................8
CLASS B CURRENT INTEREST.......................................8
CLASS B DISTRIBUTION AMOUNT....................................8
CLASS B INTEREST CARRY FORWARD AMOUNT..........................8
CLASS B PASS-THROUGH RATE......................................9
CLASS B PRINCIPAL DISTRIBUTION AMOUNT..........................9
CLASS B REALIZED LOSS AMORTIZATION AMOUNT......................9
CLASS C ALLOCATED LOSS CARRY FORWARD AMOUNT....................9
CLASS C CERTIFICATE............................................9
CLASS C CURRENT INTEREST.......................................10
CLASS C INTEREST CARRY FORWARD AMOUNT..........................10
CLASS C INTEREST DISTRIBUTION AMOUNT...........................10
CLASS C PRINCIPAL DISTRIBUTION AMOUNT..........................10
CLASS M-1 APPLIED REALIZED LOSS AMOUNT.........................10
CLASS M-1 CERTIFICATE..........................................10
CLASS M-1 CERTIFICATE PRINCIPAL BALANCE........................11
CLASS M-1 CERTIFICATE TERMINATION DATE.........................11
CLASS M-1 CURRENT INTEREST.....................................11
CLASS M-1 DISTRIBUTION AMOUNT..................................11
CLASS M-1 INTEREST CARRY FORWARD AMOUNT........................11
CLASS M-1 PASS-THROUGH RATE....................................11
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT........................11
CLASS M-1 REALIZED LOSS AMORTIZATION AMOUNT....................12
CLASS M-2 APPLIED REALIZED LOSS AMOUNT.........................12
CLASS M-2 CERTIFICATE..........................................12
CLASS M-2 CERTIFICATE PRINCIPAL BALANCE........................12
CLASS M-2 CERTIFICATE TERMINATION DATE.........................12
CLASS M-2 CURRENT INTEREST.....................................12
CLASS M-2 DISTRIBUTION AMOUNT..................................12
CLASS M-2 INTEREST CARRY FORWARD AMOUNT........................12
CLASS M-2 PASS-THROUGH RATE....................................13
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT........................13
CLASS M-2 REALIZED LOSS AMORTIZATION AMOUNT....................13
CLASS R-1 CERTIFICATE..........................................13
CLASS R-2 CERTIFICATE..........................................13
CLEAN-UP CALL DATE.............................................13
CLOSING .......................................................14
COLLECTION ACCOUNT.............................................14
CODE .......................................................14
COMPENSATING INTEREST..........................................14
COMPONENT......................................................14
COMPONENT NOTIONAL AMOUNT......................................14
COMPONENT PRINCIPAL BALANCE....................................14
CONTROLLING NON-OFFERED CERTIFICATEHOLDERS.....................14
CORPORATE TRUST OFFICE.........................................15
COUPON RATE....................................................15
CUMULATIVE REALIZED LOSSES.....................................15
CURRENT INTEREST...............................................15
CUT-OFF DATE...................................................15
DAILY COLLECTIONS..............................................15
DELETED MORTGAGE LOAN..........................................15
DELINQUENT.....................................................15
DELINQUENCY INTEREST ADVANCES..................................15
DELIVERY ORDER.................................................15
DEPOSITOR......................................................15
DEPOSITORY.....................................................16
DESIGNATED DEPOSITORY INSTITUTION..............................16
DETERMINATION DATE.............................................16
DIRECT PARTICIPANT.............................................16
DTC PARTICIPANT................................................16
DISQUALIFIED ORGANIZATION......................................16
DISTRIBUTION DATE..............................................16
DUE PERIOD.....................................................16
ELIGIBLE INVESTMENTS...........................................16
ERISA .......................................................16
EXPENSE FEE RATE...............................................16
EXTRA PRINCIPAL DISTRIBUTION AMOUNT............................17
FDIC .......................................................17
FHLMC .......................................................17
FILE .......................................................17
FINAL DETERMINATION............................................17
FITCH .......................................................17
FNMA .......................................................17
FORMULA PASS-THROUGH RATE......................................17
HIGHEST LAWFUL RATE............................................17
INDIRECT PARTICIPANT...........................................17
INSURANCE POLICY...............................................17
INTEREST AMOUNT AVAILABLE......................................17
INTEREST REMITTANCE AMOUNT.....................................17
LIBOR .......................................................18
LIBOR DETERMINATION DATE.......................................18
LIQUIDATED LOAN................................................18
LIQUIDATION EXPENSES...........................................18
LIQUIDATION PROCEEDS...........................................18
LOAN BALANCE...................................................18
LOAN PURCHASE PRICE............................................18
LOAN-TO-VALUE RATIO............................................19
LONDON BUSINESS DAY............................................19
MEZZANINE CERTIFICATES.........................................19
MONTHLY EXCESS CASHFLOW AMOUNT.................................19
MONTHLY EXCESS INTEREST AMOUNT.................................19
MONTHLY REMITTANCE.............................................19
▇▇▇▇▇'▇ .......................................................19
MORTGAGE.......................................................19
MORTGAGE LOANS.................................................19
MORTGAGE LOAN SCHEDULE.........................................20
MORTGAGOR......................................................20
NON-OFFERED CERTIFICATE........................................20
NON-UNITED STATES PERSON.......................................20
NOTE .......................................................20
NOTIONAL AMOUNT................................................20
OFFERED CERTIFICATES...........................................20
OFFICER'S CERTIFICATE..........................................20
ORIGINAL AGGREGATE LOAN BALANCE................................20
OUTSTANDING....................................................20
OVERCOLLATERALIZATION AMOUNT...................................21
OVERCOLLATERALIZATION DEFICIENCY...............................21
OVERCOLLATERALIZATION RELEASE AMOUNT...........................21
PASS-THROUGH RATE..............................................21
PERCENTAGE INTEREST............................................22
PERSON .......................................................22
PLAN .......................................................22
PREPAID INSTALLMENT............................................23
PREPAYMENT.....................................................23
PRESERVATION EXPENSES..........................................23
PRINCIPAL DISTRIBUTION AMOUNT..................................23
PRINCIPAL REMITTANCE AMOUNT....................................23
PROHIBITED TRANSACTION.........................................23
PROPERTY.......................................................23
PURCHASE OPTION PERIOD.........................................23
QUALIFIED LIQUIDATION..........................................23
QUALIFIED MORTGAGE.............................................24
QUALIFIED REPLACEMENT MORTGAGE LOAN............................24
RATING AGENCIES................................................24
REALIZED LOSS..................................................24
RECORD DATE....................................................24
REFERENCE BANKS................................................24
REGISTER.......................................................24
REGISTRAR......................................................24
REGULAR CERTIFICATE............................................24
REMIC .......................................................25
REMIC I .......................................................25
REMIC I REGULAR INTEREST.......................................25
REMIC I REGULAR INTEREST LT-A..................................25
REMIC I REGULAR INTEREST LT-M-1................................25
REMIC I REGULAR INTEREST LT-M-2................................25
REMIC I REGULAR INTEREST LT-B..................................25
REMIC I REGULAR INTEREST LT-OC.................................26
REMIC I REMITTANCE RATE........................................26
REMIC II.......................................................26
REMIC II CERTIFICATE...........................................26
REMIC OPINION..................................................26
REMIC PROVISIONS...............................................26
REO PROPERTY...................................................26
REPLACEMENT CUT-OFF DATE.......................................26
REPRESENTATION LETTER..........................................26
RESIDUAL CERTIFICATE...........................................26
SALE AND PURCHASE AGREEMENT....................................26
S&P .......................................................26
SECURITIES ACT.................................................26
SELLER .......................................................27
SENIOR ENHANCEMENT PERCENTAGE..................................27
SENIOR SPECIFIED ENHANCEMENT PERCENTAGE........................27
SERVICER.......................................................27
SERVICER AFFILIATE.............................................27
SERVICING ADVANCE..............................................27
SERVICING FEE..................................................27
SERVICING OFFICER..............................................27
SERVICING TERMINATION TRIGGER..................................27
60+ DAY DELINQUENT LOAN........................................28
STARTUP DAY....................................................28
STEPDOWN DATE..................................................28
SUBORDINATED TRIGGER EVENT.....................................28
SUB-SERVICER...................................................29
SUB-SERVICING AGREEMENT........................................29
SUBSTITUTION AMOUNT............................................29
TARGETED OVERCOLLATERALIZATION AMOUNT..........................29
TAX MATTERS CERTIFICATE........................................29
TAX MATTERS PERSON.............................................29
TAX MATTERS PERSON RESIDUAL INTEREST...........................29
TELERATE PAGE 3750.............................................29
TERMINATION NOTICE.............................................29
TRIGGER EVENT..................................................29
TRUST FUND.....................................................29
TRUSTEE .......................................................30
TRUSTEE FEE....................................................30
UNCERTIFICATED BALANCE.........................................30
UNCERTIFICATED INTEREST........................................30
UNDERWRITERS...................................................30
UNITED STATES PERSON...........................................30
UNPAID REALIZED LOSS AMOUNT....................................30
SECTION 1.02 USE OF WORDS AND PHRASES...............................30
SECTION 1.03 CAPTIONS; TABLE OF CONTENTS............................31
SECTION 1.04 OPINIONS...............................................31
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
SECTION 2.01 Establishment of the Trust Fund........................32
Section 2.02 Office.................................................32
Section 2.03 Purposes and Powers...................................32
Section 2.04 Appointment of the Trustee; Declaration of Trust.......32
Section 2.05 Acceptance of REMIC I by the Trustee...................32
Section 2.06 Issuance of Class R-1 Certificates.....................33
Section 2.07 Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by the Trustee................................33
Section 2.03 Issuance of REMIC II Certificates.....................33
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR
AND THE SERVICER; ENFORCEMENT OF SALE AND PURCHASE AGREEMENT
Section 3.01 Representations and Warranties of the Depositor........34
Section 3.02 Representations and Warranties of the Servicer.........35
Section 3.03 Cure, Substitution and Repurchase......................37
Section 3.04 [intentionally omitted]................................40
Section 3.05 Assignment and Conveyance of the Mortgage Loans........40
Section 3.06 Acceptance by Trustee; Certification by Trustee........41
ARTICLE IV
[INTENTIONALLY OMITTED]
ARTICLE V
THE CERTIFICATES
Section 5.01 Terms. ................................................44
Section 5.02 Forms..................................................44
Section 5.03 Execution and Delivery of the Certificates.............44
Section 5.04 Registration and Transfer of Certificates..............45
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates......47
Section 5.06 Persons Deemed Certificateholders......................48
Section 5.07 Cancellation...........................................48
Section 5.08 Limitations on Transfer of Ownership Rights............48
Section 5.09 Assignment of Rights...................................49
ARTICLE VI
COVENANTS
Section 6.01 Distributions..........................................50
Section 6.02 Money for Distributions to be Held in Trust;
Withholding............................................50
Section 6.03 Protection of Trust Fund...............................51
Section 6.04 [intentionally omitted]................................52
Section 6.05 Negative Covenants.....................................52
Section 6.06 No Other Powers........................................52
Section 6.07 Limitation of Suits....................................52
Section 6.08 [intentionally omitted] ...............................53
Section 6.09 Rights and Remedies Cumulative.........................53
Section 6.10 Delay or Omission Not Waiver...........................53
Section 6.11 Control by Certificateholders..........................53
Section 6.12 Indemnification of the Depositor.......................54
Section 6.13 Access to Certificateholders' Names
and Addresses..........................................54
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money....................................55
Section 7.02 Establishment of Accounts..............................55
Section 7.03 Distributions..........................................55
Section 7.04 [intentionally omitted]................................60
Section 7.05 Investment of Accounts.................................60
Section 7.06 [intentionally omitted]................................61
Section 7.07 Eligible Investments...................................61
Section 7.08 Accounting and Directions by Trustee. .................64
Section 7.09 Reports by Trustee to Certificateholders...............64
Section 7.10 Reports by Trustee.....................................66
ARTICLE VIII
SERVICING AND ADMINISTRATION OF THE MORTGAGE LOANS
Section 8.01 Servicer and Sub-Servicers.............................68
Section 8.02 Collection of Certain Mortgage Loan Payments. .........69
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers..........................................69
Section 8.04 Successor Sub-Servicers................................70
Section 8.05 Liability of Servicer; Indemnification.................70
Section 8.06 No Contractual Relationship Between Sub-Servicer,
Trustee or the Certificateholders......................70
Section 8.07 Assumption or Termination of Sub-Servicing
Agreement by Trustee...................................71
Section 8.08 Collection Account.....................................71
Section 8.09 Delinquency Interest Advances and Servicing Advances...73
Section 8.10 Compensating Interest; Repurchase of Mortgage Loans....74
Section 8.11 Maintenance of Insurance...............................74
Section 8.12 Due-on-Sale Clauses; Assumption and
Substitution Agreements................................75
Section 8.13 Realization Upon Defaulted Mortgage Loans; Inspection..76
Section 8.14 Trustee to Cooperate; Release of Files.................77
Section 8.15 Servicing Compensation.................................78
Section 8.16 Annual Statement as to Compliance......................78
Section 8.17 Annual Independent Certified Public
Accountants' Reports...................................79
Section 8.18 Access to Certain Documentation and Information
regarding the Mortgage Loans...........................79
Section 8.19 Assignment of Agreement................................79
Section 8.20 Removal of Servicer; Resignation of Servicer...........79
Section 8.21 Inspections; Errors and Omissions Insurance............82
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust Fund..............................84
Section 9.02 Termination Upon Option of the Servicer or
Certificateholders of Non-Offered Certificates.........84
Section 9.03 Termination Upon Loss of REMIC Status..................85
Section 9.04 Disposition of Proceeds................................86
ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities. .................87
Section 10.02 Removal of Trustee for Cause..........................89
Section 10.03 Certain Rights of the Trustee.........................90
Section 10.04 Not Responsible for Recitals or Issuance
of Certificates.......................................91
Section 10.05 May Hold Certificates.................................92
Section 10.06 Money Held in Trust...................................92
Section 10.07 Compensation and Reimbursement; No Lien for Fees......92
Section 10.08 Corporate Trustee Required; Eligibility...............92
Section 10.09 Resignation and Removal; Appointment of Successor.....93
Section 10.10 Acceptance of Appointment by Successor Trustee........94
Section 10.11 Merger, Conversion, Consolidation or Succession
to Business of the Trustee............................95
Section 10.12 Reporting; Withholding................................95
Section 10.13 Liability of the Trustee..............................96
Section 10.14 Appointment of Co-Trustee or Separate Trustee.........96
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions..................98
Section 11.02 Form of Documents Delivered to the Trustee............98
Section 11.03 Acts of Certificateholders............................99
Section 11.04 Notices, etc. to Trustee............................ 100
Section 11.05 Notices and Reports to Certificateholders;
Waiver of Notices....................................100
Section 11.06 Rules by Trustee.....................................101
Section 11.07 Successors and Assigns...............................101
Section 11.08 Severability........................................101
Section 11.09 Benefits of Agreement................................101
Section 11.10 Legal Holidays.......................................101
Section 11.11 Governing Law........................................101
Section 11.12 Counterparts.........................................101
Section 11.13 [Intentionally Omitted]..............................102
Section 11.14 Amendment............................................102
Section 11.15 Paying Agent; Appointment and Acceptance of Duties...102
Section 11.16 REMIC Status.........................................103
Section 11.17 Additional Limitation on Action and Imposition
of Tax...............................................105
Section 11.18 Appointment of Tax Matters Person....................105
Section 11.19 Notices..............................................105
SCHEDULE I MORTGAGE LOAN SCHEDULE
EXHIBIT A-1 FORM OF CLASS A CERTIFICATE
EXHIBIT A-2 FORM OF CLASS M-1 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS M-2 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS B CERTIFICATE
EXHIBIT A-5 FORM OF CLASS C CERTIFICATE
EXHIBIT A-6 FORM OF CLASS R-1 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS R-2 CERTIFICATE
EXHIBIT D FORM OF CERTIFICATE RE: MORTGAGE LOANS
REPAID IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF TRUSTEE'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H [INTENTIONALLY OMITTED]
EXHIBIT I FORM OF RESIDUAL TAX MATTERS TRANSFER CERTIFICATE
POOLING AND SERVICING AGREEMENT, dated as of August 1, 1997 by and among
CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP., a Delaware corporation, in
its capacity as Depositor (the "Depositor"), WMC MORTGAGE CORP., a California
corporation, in its capacity as Servicer (the "Servicer"), and THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association, in its capacity as
Trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively, the
"Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the Mortgage Loans and certain other related assets subject
to this Agreement as a REMIC (as defined herein) for federal income tax
purposes, and such segregated pool of assets will be designated as "REMIC I."
The Class R-1 Certificates will be the sole class of "residual interests" in
REMIC I for purposes of the REMIC Provisions (as defined herein). The following
table irrevocably sets forth the designation, the REMIC I Remittance Rate, the
initial Uncertificated Balance and, solely for purposes of satisfying Treasury
regulation Section 1.860G- 1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC I Regular Interests (as defined herein). None of the REMIC I
Regular Interests will be certificated.
-------------------------------------------------------------------------------------------------------------------
REMIC I INITIAL LATEST POSSIBLE
DESIGNATION REMITTANCE RATE UNCERTIFICATED BALANCE MATURITY DATE(1)
-------------------------------------------------------------------------------------------------------------------
LT-A Variable(2) $156,561,000.00 October 20, 2028
-------------------------------------------------------------------------------------------------------------------
LT-M-1 Variable(2) $ 15,658,000.00 October 20, 2028
-------------------------------------------------------------------------------------------------------------------
LT-M-2 Variable(2) $ 14,143,000.00 October 20, 2028
-------------------------------------------------------------------------------------------------------------------
LT-B Variable(2) $ 13,638,000.00 October 20, 2028
-------------------------------------------------------------------------------------------------------------------
LT-OC Variable(2) $ 2,118,070.35 October 20, 2028
-------------------------------------------------------------------------------------------------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the thirteenth Distribution Date following the maturity
date for the Mortgage Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each REMIC I
Regular Interest.
(2) Calculated in accordance with the definition of "REMIC I Remittance
Rate" herein.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the REMIC I Regular Interests and certain other related
assets subject to this Agreement as a REMIC for federal income tax purposes, and
such segregated pool of assets will be designated as "REMIC II." The Class R-2
Certificates will evidence the sole class of "residual interests" in REMIC II
for purposes of the REMIC Provisions. The following table irrevocably sets forth
the designation, the Pass-Through Rate, the initial Class Certificate Principal
Balance and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the Classes
of Certificates or Components thereof representing the "regular interests" in
REMIC II.
CLASS LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE CERTIFICATE PRINCIPAL BALANCE MATURITY DATE(4)
Class A Variable(2) $156,561,000.00 October 20, 2028
Class M-1 Variable(2) $ 15,658,000.00 October 20, 2028
Class M-2 Variable(2) $ 14,143,000.00 October 20, 2028
Class B Variable(2) $ 13,638,000.00 October 20, 2028
Component A(1) Variable(2) N/A(3) October 20, 2028
Component M-1(1) Variable(2) N/A(3) October 20, 2028
Component M-2(1) Variable(2) N/A(3) October 20, 2028
Component B(1) Variable(2) N/A(3) October 20, 2028
Component OC(1) Variable(2) $ 2,118,070.35(5) October 20, 2028
----------------------------
(1) Constitutes a separate "regular interest" in REMIC II represented by the
Class C Certificates.
(2) Calculated in accordance with the definition of "Pass-Through Rate" herein.
(3) Component A, Component ▇-▇, ▇▇▇▇▇▇▇▇▇ ▇-▇ and Component B will not have
stated amounts. Rather each will accrue interest as provided herein on a
Component Notional Amount equal to: (i) in the case of Component A, the
Uncertificated Balance of REMIC I Regular Interest LT-A outstanding from
time to time; (ii) in the case of Component M-1, the Uncertificated
Balance of REMIC I Regular Interest LT-M-1 outstanding from time to time;
(iii) in the case of Component M-2, the Uncertificated Balance of REMIC I
Regular Interest LT-M-2 outstanding from time to time; and (iv) in the
case of Component B, the Uncertificated Balance of REMIC I Regular
Interest LT-B outstanding from time to time.
(4) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the thirteenth Distribution Date following the maturity date
for the Mortgage Loans with the latest maturity date has been designated
as the "latest possible maturity date" for each Class of Certificates
evidencing a "regular interest" in REMIC II.
(5) Component Principal Balance.
As of the Cut-off Date, the Mortgage Loans had an aggregate Loan Balance
equal to $202,118,070.35.
As of the Startup Day, the REMIC I Regular Interests have an aggregate
Uncertificated Balance equal to $202,118,070.35.
In consideration of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee agree as follows:
CONVEYANCE
To provide for the distribution of the interest on and/or principal of the
Certificates in accordance with their terms, all of the sums distributable under
this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, the Depositor hereby bargains, sells,
conveys, assigns and transfers to the Trust Fund, without recourse and for the
exclusive benefit of the Certificateholders of the Certificates, all of its
respective right, title and interest in and to any and all benefits accruing to
it from (a) the Mortgage Loans (other than any principal payments received
thereon on or prior to the Cut-off Date and any interest payments due thereon on
or prior to August 1, 1997) listed in Schedule I to this Agreement which the
Depositor is causing to be delivered to the Trustee herewith (and all
substitutions therefor as provided by Sections 3.03 and 3.06), together with the
related Mortgage Loan documents and the Depositor's interest in any Property
which secured a Mortgage Loan but which has been acquired by foreclosure or deed
in lieu of foreclosure, and all payments thereon and proceeds of the conversion,
voluntary or involuntary, of the foregoing; (b) such amounts as may be held by
the Trustee in the Certificate Account, and such amounts as may be held in the
name of the Trustee in the Collection Account, if any, in each case exclusive of
investment earnings thereon (except as otherwise provided herein), whether in
the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicer); (c) the rights of the Depositor
under the Sale and Purchase Agreement (other than any rights of the Depositor
under Section 4.04 thereof); and (d) 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 Mortgage Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified herein ((a)-(d) above shall be collectively referred
to herein as the "Trust Fund").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein in
accordance with the terms of this Agreement.
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:
"Accepted Servicing Practices": The servicing standard to be adhered to by
the Servicer under this Agreement in servicing the Mortgage Loans, which is the
same degree of care as the Servicer customarily employs in servicing and
administering mortgage loans of the same type for its own account in accordance
with accepted mortgage loan servicing practices of prudent lending institutions.
"Account": Any account established in accordance with Section 7.02 or 8.08
hereof.
"Accrual Period": With respect to the Offered Certificates and any
Distribution Date, the period commencing on (and including) the preceding
Distribution Date (or, in the case of the first Accrual Period, commencing on
the Startup Day) and ending on (and including) the day immediately preceding the
Distribution Date with respect to which such Accrual Period is being calculated.
All calculations of interest will be made on the basis of the actual number of
days elapsed in the related Accrual Period and in a year of 360 days.
"Adjusted Pass-Through Rate": A rate equal to the sum of (a) the Weighted
Average Pass-Through Rate and (b) any portion of the Trustee Fee (calculated as
a percentage of the outstanding principal amount of the Certificates) then
accrued and outstanding.
"Aggregate Certificate Principal Balance": As of any date of determination
thereof, the sum of the then outstanding Certificate Principal Balance of the
Class A Certificates, the Mezzanine Certificates and the Class B Certificates.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Applied Realized Loss Amount": As of any Distribution Date, the excess of
(x) the aggregate Certificate Principal Balance of the Offered Certificates on
such Distribution Date, after taking into account the distribution of the
Principal Distribution Amount on such Distribution Date but prior to the
application of the Applied Realized Loss Amount, if any, on such Distribution
Date over (y) the aggregate outstanding Loan Balance of the Mortgage Loans as of
the last day of the related Due Period.
"Appraised Value": The appraised value of any Property based upon the
lowest of (i) the appraisal made at the time of the origination of the related
Mortgage Loan, (ii) in the case of a Mortgage Loan which is a purchase money
mortgage, the sales price of the Property at such time of origination, and (iii)
a review appraisal.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to the
Agreement, and whose action is binding upon such Person; with respect to the
Depositor, the Seller and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any Vice President, Assistant Vice President, Trust
Officer or any Officer of the Trustee either located at the Corporate Trust
Office or to whom a matter arising under this Agreement may be referred.
"Available Funds Cap Carry Forward Amount": With respect to any Class of
Offered Certificates and any Distribution Date up to and including (but not
after) the Distribution Date on which the Certificate Principal Balance of such
Class is reduced to zero, the sum of (i) the excess, if any, of (A) interest
accrued during the Accrual Period for the preceding Distribution Date on the
Certificate Principal Balance of such Class immediately prior to such preceding
Distribution Date at the Formula Pass-Through Rate for such Class for such
preceding Distribution Date over (B) interest accrued during the Accrual Period
for the preceding Distribution Date on the Certificate Principal Balance of such
Class immediately prior to such preceding Distribution Date at the Available
Funds Cap Rate for such Class for such preceding Distribution Date, but not to
the extent that all or any portion of such excess was distributed on such Class
on such preceding Distribution Date, (ii) the amount of any Available Funds Cap
Carry Forward Amount for such Class for such preceding Distribution Date to the
extent not distributed on such Class on such preceding Distribution Date and
(iii) interest accrued on the amounts described in clauses (i) and (ii) above
during the Accrual Period for the current Distribution Date at the Formula
Pass-Through Rate for such Class for such current Distribution Date.
"Available Funds Cap Rate": For any Distribution Date, (i) with respect to
the Class A Certificates, the per annum rate equal to the percentage obtained by
dividing (x) the aggregate amount of interest due on the Mortgage Loans during
the related Due Period at the weighted average Coupon Rate of the Mortgage Loans
as of the beginning of the related Due Period minus the Expense Fee Rate, by (y)
the product of (A) the Certificate Principal Balance of such Class of Offered
Certificates as of the first day of the related Accrual Period and (B) the
actual number of days elapsed during such Accrual Period divided by 360; (ii)
with respect to the Class M-1 Certificates, the per annum rate equal to the
percentage obtained by dividing (x) the difference, but not less than zero,
obtained by subtracting (A) the amount of interest payable to the holders of the
Class A Certificates pursuant to clause SECOND of Section 7.03(c) from (B) the
aggregate amount of interest due on the Mortgage Loans during the related Due
Period at the weighted average Coupon Rate of the Mortgage Loans as of the
beginning of the related Due Period minus the Expense Fee Rate, by (y) the
product of (A) the Certificate Principal Balance of such Class of Offered
Certificates as of the first day of the related Accrual Period and (B) the
actual number of days elapsed during such Accrual Period divided by 360; (iii)
with respect to the Class M-2 Certificates, the per annum rate equal to the
percentage obtained by dividing (x) the difference, but not less than zero,
obtained by subtracting (A) the aggregate amount of interest payable to the
holders of the Class A Certificates and the Class M-1 Certificates pursuant to
clauses SECOND and THIRD of Section 7.03(c) from (B) the aggregate amount of
interest due on the Mortgage Loans during the related Due Period at the weighted
average Coupon Rate of the Mortgage Loans as of the beginning of the related Due
Period minus the Expense Fee Rate, by (y) the product of (A) the Certificate
Principal Balance of such Class of Offered Certificates as of the first day of
the related Accrual Period and (B) the actual number of days elapsed during such
Accrual Period divided by 360; (iv) with respect to the Class B Certificates,
the per annum rate equal to the percentage obtained by dividing (x) the
difference, but not less than zero, obtained by subtracting (A) the aggregate
amount of interest payable to the holders of the Class A Certificates, the Class
M-1 Certificates and the Class M-2 Certificates pursuant to clauses SECOND,
THIRD and FOURTH of Section 7.03(c) from (B) the aggregate amount of interest
due on the Mortgage Loans during the related Due Period at the weighted average
Coupon Rate of the Mortgage Loans as of the beginning of the related Due Period
minus the Expense Fee Rate, by (y) the product of (A) the Certificate Principal
Balance of such Class of Offered Certificates as of the first day of the related
Accrual Period and (B) the actual number of days elapsed during such Accrual
Period divided by 360.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in The City of New York, in the city in
which the principal Corporate Trust Office of the Trustee is located or in the
city in which the servicing operations of the Servicer are conducted, are
authorized or obligated by law or executive order to be closed.
"Certificate": Any one of the Class A Certificates, Mezzanine Certificates,
Class B Certificates, Class C Certificates or Residual Certificates, each
representing the interests and the rights described in this Agreement.
"Certificate Account": The certificate account established in accordance
with Section 7.02(a) hereof and maintained in the corporate trust department of
the Trustee; provided that the funds in such account shall not be commingled
with other funds held by the Trustee.
"Certificateholder": The Person in whose name a Certificate is registered
in the Register to the extent described in Section 5.04 and 5.06 hereof;
provided that solely for the purposes of determining the exercise of any voting
rights hereunder, if any Offered Certificates are beneficially owned by the
Seller or any affiliate thereof, the Seller or such affiliate shall not be
considered a Certificateholder of such Offered Certificates hereunder.
"Certificate Principal Balance": As of the Startup Day as to each of the
following Classes of Offered Certificates, the initial Certificate Principal
Balance thereof set forth in the Preliminary Statement hereto. As of the Startup
Day as to the Class C Certificates, the initial Component Principal Balance of
Component OC set forth in the Preliminary Statement hereto. The Residual
Certificates do not have Certificate Principal Balances. As of any date of
determination after the Startup Day as to each Class of Certificates (other than
the Residual Certificates), the Certificate Principal Balance of such
Certificate on the Distribution Date immediately prior to such date of
determination (or, in the case of any date of determination up to and including
the initial Distribution Date, the initial Certificate Principal Balance of such
Certificate, as stated on the face thereof), reduced by the aggregate of (a) all
distributions made thereon in respect of principal on such immediately prior
Distribution Date and (b) without duplication of amounts described in clause (a)
above, any reductions in the Certificate Principal Balance thereof deemed to
have occurred in connection with allocations thereto of Realized Losses on the
Mortgage Loans as provided herein on such immediately prior Distribution Date.
"Class": Collectively, all of the Certificates bearing the same class
designation.
"Class A Certificate": Any one of the Certificates designated on the face
thereof as a Class A Certificate, substantially in the form annexed hereto as
Exhibit A-1, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class A Certificate Principal Balance": As of any date of determination,
the Certificate Principal Balance as of the Startup Day of all Class A
Certificates less any amounts actually distributed on such Class A Certificates
with respect to the Class A Principal Distribution Amount pursuant to Section
7.03(c) hereof with respect to principal thereon on all prior Distribution
Dates.
"Class A Certificate Termination Date": The Distribution Date on which the
Class A Certificate Principal Balance is reduced to zero.
"Class A Current Interest": With respect to any Distribution Date, the
amount of interest accrued on the Class A Certificate Principal Balance
immediately prior to such Distribution Date during the related Accrual Period at
the Class A Pass-Through Rate.
"Class A Distribution Amount": With respect to any Distribution Date, the
sum of (w) the Class A Current Interest, (x) the Class A Interest Carry Forward
Amount, (y) the Class A Principal Distribution Amount payable to the
Certificateholders of the Class A Certificates pursuant to Section 7.03(c)
hereof and (z) for so long as the Certificate Principal Balance of the Class A
Certificates has not been reduced to zero, the Available Funds Cap Carry Forward
Amount for such Class, if any.
"Class A Interest Carry Forward Amount": With respect to any Distribution
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class A
Current Interest as of the immediately preceding Distribution Date and (B) any
unpaid Class A Interest Carry Forward Amount from all previous Distribution
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Certificateholders of the Class A Certificates on such
immediately preceding Distribution Date and (y) 30 days' interest on such amount
at the Class A Pass-Through Rate.
"Class A Pass-Through Rate": For any Distribution Date in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 0.220% per annum and (ii) the Available Funds Cap Rate for such
Distribution Date. For any Distribution Date in any month following the month in
which the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 0.440% per
annum and (ii) the Available Funds Cap Rate for such Distribution Date.
"Class A Principal Distribution Amount": As of any Distribution Date (a)
prior to the Stepdown Date or with respect to which a Trigger Event is in
effect, 100% of the Principal Distribution Amount and (b) on or after the
Stepdown Date and as long as a Trigger Event is not in effect, the excess of (x)
the aggregate Certificate Principal Balance of the Class A Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) the
product of (i) 47% and (ii) the outstanding Loan Balance of the Mortgage Loans
as of the last day of the related Due Period and (B) the aggregate outstanding
Loan Balance of the Mortgage Loans as of the last day of the related Due Period
minus $1,010,074.
"Class B Applied Realized Loss Amount": As to any Distribution Date, the
lesser of (x) the Class B Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such
Distribution Date, but prior to the application of the Class B Applied Realized
Loss Amount, if any, on such Distribution Date) and (y) the Applied Realized
Loss Amount as of such Distribution Date.
"Class B Certificate": Any one of the Certificates designated on the face
thereof as a Class B Certificate, substantially in the form annexed hereto as
Exhibit A-4, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class B Certificate Principal Balance": As of any date of determination,
the Certificate Principal Balance as of the Startup Day of all Class B
Certificates less the sum of (x) any amounts of the Class B Principal
Distribution Amount actually distributed to the Certificateholders of the Class
B Certificates pursuant to Section 7.03(c) hereof on all prior Distribution
Dates and (y) the aggregate, cumulative amount of the Class B Applied Realized
Loss Amounts on all prior Distribution Dates.
"Class B Certificate Termination Date": The Distribution Date on which the
Class B Certificate Principal Balance is reduced to zero.
"Class B Current Interest": With respect to any Distribution Date, the
amount of interest accrued on the Class B Certificate Principal Balance
immediately prior to such Distribution Date during the related Accrual Period at
the Class B Pass-Through Rate.
"Class B Distribution Amount": With respect to any Distribution Date, the
sum of (v) the Class B Current Interest, (w) the Class B Principal Distribution
Amount, if any, (x) the Class B Interest Carry Forward Amount, if any, (y) the
Class B Realized Loss Amortization Amount, if any and (z) for so long as the
Certificate Principal Balance of the Class B Certificates has not been reduced
to zero, the Available Funds Cap Carry Forward Amount for such Class, if any.
"Class B Interest Carry Forward Amount": With respect to any Distribution
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class B
Current Interest as of the immediately preceding Distribution Date and (B) any
unpaid Class B Interest Carry Forward Amount from all previous Distribution
Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Certificateholders of the Class B Certificates on such
immediately preceding Distribution Date and (y) 30 days' interest on such amount
at the Class B Pass-Through Rate.
"Class B Pass-Through Rate": For any Distribution Date in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 1.100% per annum and (ii) the Available Funds Cap Rate for such
Distribution Date. For any Distribution Date in any month following the month in
which the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 1.650% per
annum and (ii) the Available Funds Cap Rate.
"Class B Principal Distribution Amount": As of any Distribution Date on or
after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Class M-1
Certificate Principal Balance (after taking into account the payment of the
Class M-1 Principal Distribution Amount on such Distribution Date), (iii) the
Class M-2 Certificate Principal Balance (after taking into account the payment
of the Class M-2 Principal Distribution Amount on such Distribution Date) and
(iv) the Class B Certificate Principal Balance immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 90% and (ii) the
outstanding aggregate Loan Balance of the Mortgage Loans as of the last day of
the related Due Period and (B) the aggregate outstanding Loan Balance of the
Mortgage Loans as of the last day of the related Due Period minus $1,010,074.
"Class B Realized Loss Amortization Amount": As of any Distribution Date,
the lesser of (x) the Unpaid Realized Loss Amount for the Class B Certificates
as of such Distribution Date and (y) the excess of (i) the Monthly Excess
Cashflow Amount over (ii) the sum of the Class A Interest Carry Forward Amount,
the Extra Principal Distribution Amount, the Class M-1 Realized Loss
Amortization Amount, the Class M-2 Realized Loss Amortization Amount, the Class
M-1 Interest Carry Forward Amount, the Class M-2 Interest Carry Forward Amount
and the Class B Interest Carry Forward Amount in each case for such Distribution
Date.
"Class C Allocated Loss Carry Forward Amount": The aggregate amount, if
any, by which the Certificate Principal Balance of the Class C Certificates was
reduced on previous Distribution Dates pursuant to Section 7.03(e) to the extent
remaining unpaid to the holders of such Class of Certificates.
"Class C Certificate": Any one of the Certificates designated on the face
thereof as a Class C Certificate, substantially in the form annexed hereto as
Exhibit A-5, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class C Current Interest": With respect to the Class C Certificates and
any Distribution Date, the aggregate of the following amounts accrued during the
most recently ended Accrual Period: (i) interest at the Pass-Through Rate
applicable to Component A for such Distribution Date, accrued on the Component
Notional Amount of such Component for such Distribution Date, (ii) interest at
the Pass-Through Rate applicable to Component M-1 for such Distribution Date,
accrued on the Component Notional Amount of such Component for such Distribution
Date, (iii) interest at the Pass-Through Rate applicable to Component M-2 for
such Distribution Date, accrued on the Component Notional Amount of such
Component for such Distribution Date, (iv) interest at the Pass-Through Rate
applicable to Component B for such Distribution Date, accrued on the Component
Notional Amount of such Component for such Distribution Date, and (v) interest
at the Pass-Through Rate applicable to Component OC for such Distribution Date,
accrued on the Component Principal Balance of such Component for such
Distribution Date.
"Class C Interest Carry Forward Amount": With respect to the Class C
Certificates and any Distribution Date subsequent to the first Distribution
Date, the excess, if any, of the Class C Interest Distribution Amount for the
immediately preceding Distribution Date, over the aggregate distributions of
interest made in respect of the Class C Certificates pursuant to Section 7.03 on
such immediately preceding Distribution Date. Class C Interest Carry Forward
Amounts shall not themselves bear interest.
"Class C Interest Distribution Amount": With respect to the Class C
Certificates and any Distribution Date, the sum of (i) Class C Current Interest
for such Distribution Date and (ii) the Class C Interest Carry Forward Amount
for such Distribution Date.
"Class C Principal Distribution Amount": For any Distribution Date, if the
Certificate Principal Balance of the Class C Certificates exceeds the Targeted
Overcollateralization Amount, the amount of such excess.
"Class M-1 Applied Realized Loss Amount": As to any Distribution Date, the
lesser of (x) the Class M-1 Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such
Distribution Date, but prior to the application of the Class M-1 Applied
Realized Loss Amount, if any, on such Distribution Date) and (y) the excess of
(i) the Applied Realized Loss Amount as of such Distribution Date over (ii) the
sum of the Class M-2 Applied Realized Loss Amount and the Class B Applied
Realized Loss Amount, in each case as of such Distribution Date.
"Class M-1 Certificate": Any one of the Certificates designated on the face
thereof as a Class M-1 Certificate, substantially in the form annexed hereto as
Exhibit A-2, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class M-1 Certificate Principal Balance": As of any date of determination,
the Certificate Principal Balance as of the Startup Day of all Class M-1
Certificates less the sum of (x) any amounts of the Class M-1 Principal
Distribution Amount actually distributed to the Certificateholders of the Class
M-1 Certificates pursuant to Section 7.03(c) hereof on all prior Distribution
Dates and (y) the aggregate, cumulative amount of Class M-1 Applied Realized
Loss Amounts on all prior Distribution Dates.
"Class M-1 Certificate Termination Date": The Distribution Date on which
the Class M-1 Certificate Principal Balance is reduced to zero.
"Class M-1 Current Interest": With respect to any Distribution Date, the
amount of interest accrued on the Class M-1 Certificate Principal Balance
immediately prior to such Distribution Date during the related Accrual Period at
the Class M-1 Pass-Through Rate.
"Class M-1 Distribution Amount": With respect to any Distribution Date, the
sum of (v) the Class M-1 Current Interest, (w) the Class M-1 Principal
Distribution Amount, if any, (x) the Class M-1 Interest Carry Forward Amount,
(y) the Class M-1 Realized Loss Amortization Amount and (z) for so long as the
Certificate Principal Balance of the Class M-1 Certificates has not been reduced
to zero, the Available Funds Cap Carry Forward Amount for such Class, if any.
"Class M-1 Interest Carry Forward Amount": With respect to any Distribution
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1 Current Interest as of the immediately preceding Distribution Date and (B)
any unpaid Class M-1 Interest Carry Forward Amount from all previous
Distribution Dates exceeds (ii) the amount of the actual distribution with
respect to interest made to the Certificateholders of the Class M-1 Certificates
on such immediately preceding Distribution Date and (y) 30 days' interest on
such amount at the Class M-1 Pass-Through Rate.
"Class M-1 Pass-Through Rate": For any Distribution Date in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 0.400% per annum and (ii) the Available Funds Cap Rate for such
Distribution Date. For any Distribution Date in any month following the month in
which the Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 0.600% per
annum and (ii) the Available Funds Cap Rate.
"Class M-1 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date) and (ii) the Class M-1
Certificate Principal Balance immediately prior to such Distribution Date over
(y) the lesser of (A) the product of (i) 62.5% and (ii) the aggregate
outstanding Loan Balance of the Mortgage Loans as of the last day of the related
Due Period and (B) the aggregate outstanding Loan Balance of the Mortgage Loans
as of the last day of the related Due Period minus $1,010,074.
"Class M-1 Realized Loss Amortization Amount": As of any Distribution Date,
the lesser of (x) the Unpaid Realized Loss Amount for the Class M-1 Certificates
as of such Distribution Date and (y) the excess of (i) the Monthly Excess
Cashflow Amount over (ii) the sum of the Class A Interest Carry Forward Amount,
the Extra Principal Distribution Amount and the Class M-1 Interest Carry Forward
Amount, in each case for such Distribution Date.
"Class M-2 Applied Realized Loss Amount": As to any Distribution Date, the
lesser of (x) the Class M-2 Certificate Principal Balance (after taking into
account the distribution of the Principal Distribution Amount on such
Distribution Date, but prior to the application of the Class M-2 Applied
Realized Loss Amount, if any, on such Distribution Date) and (y) the excess of
(i) the Applied Realized Loss Amount as of such Distribution Date over (ii) the
Class B Applied Realized Loss Amount as of such Distribution Date.
"Class M-2 Certificate": Any one of the Certificates designated on the face
thereof as a Class M-2 Certificate, substantially in the form annexed hereto as
Exhibit A-3, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein.
"Class M-2 Certificate Principal Balance": As of any date of determination,
the Certificate Principal Balance as of the Startup Day of all Class M-2
Certificates less the sum of (x) any amounts of the Class M-2 Principal
Distribution Amount actually distributed to the Certificateholders of the Class
M-2 Certificates, pursuant to Section 7.03(c) hereof on all prior Distribution
Dates and (y) the aggregate, cumulative amount of Class M-2 Applied Realized
Loss Amounts on all prior Distribution Dates.
"Class M-2 Certificate Termination Date": The Distribution Date on which
the Class M-2 Certificate Principal Balance is reduced to zero.
"Class M-2 Current Interest": With respect to any Distribution Date, the
amount of interest accrued on the Class M-2 Certificate Principal Balance
immediately prior to such Distribution Date during the related Accrual Period at
the Class M-2 Pass-Through Rate.
"Class M-2 Distribution Amount": With respect to any Distribution Date, the
sum of (v) the Class M-2 Current Interest, (w) the Class M-2 Principal
Distribution Amount, if any, (x) the Class M-2 Interest Carry Forward Amount, if
any, (y) the Class M-2 Realized Loss Amortization Amount, if any and (z) for so
long as the Certificate Principal Balance of the Class M-2 Certificates has not
been reduced to zero, the Available Funds Cap Carry Forward Amount for such
Class, if any.
"Class M-2 Interest Carry Forward Amount": With respect to any Distribution
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-2 Current Interest as of the immediately preceding Distribution Date and (B)
any unpaid Class M-2 Interest Carry Forward Amount from all previous
Distribution Dates exceeds (ii) the amount of the actual distribution with
respect to interest made to the Certificateholders of the Class M-2 Certificates
on such immediately preceding Distribution Date and (y) 30 days' interest on
such amount at the Class M-2 Pass-Through Rate.
"Class M-2 Pass-Through Rate": For any Distribution Date in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 0.650% per annum and (ii) the Available Funds Cap Rate for such
Distribution Date. For any month following the month in which the Clean-Up Call
Date occurs, the lesser of (i) LIBOR plus 0.975% per annum and (ii) the
Available Funds Cap Rate.
"Class M-2 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the
Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Class M-1
Certificate Principal Balance (after taking into account the payment of the
Class M-1 Principal Distribution Amount on such Distribution Date) and (iii) the
Class M-2 Certificate Principal Balance immediately prior to such Distribution
Date over (y) the lesser of (A) the product of (i) 76.5% and (ii) the
outstanding aggregate Loan Balance of the Mortgage Loans as of the last day of
the related Due Period and (B) the aggregate outstanding Loan Balance of the
Mortgage Loans as of the last day of the related Due Period minus $1,010,074.
"Class M-2 Realized Loss Amortization Amount": As of any Distribution Date,
the lesser of (x) the Unpaid Realized Loss Amount for the Class M-2 Certificates
as of such Distribution Date and (y) the excess of (i) the Monthly Excess
Cashflow Amount over (ii) the sum of the Class A Interest Carry Forward Amount,
the Extra Principal Distribution Amount, the Class M-1 Realized Loss
Amortization Amount, the Class M-1 Interest Carry Forward Amount and the Class
M-2 Interest Carry Forward Amount, in each case for such Distribution Date.
"Class R-1 Certificate": Any one of the Certificates designated on the face
thereof as a Class R-1 Certificate, substantially in the form annexed hereto as
Exhibit A-6, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as
the "residual interest" in REMIC I for the purposes of the REMIC Provisions.
"Class R-2 Certificate": Any one of the Certificates designated on the face
thereof as a Class R-2 Certificate, substantially in the form annexed hereto as
Exhibit A-7, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as
the "residual interest" in REMIC II for the purposes of the REMIC Provisions.
"Clean-Up Call Date": The first Determination Date immediately following
the date on which the aggregate Loan Balances of the Mortgage Loans has declined
to an amount equal to 10% or less of the aggregate Loan Balances of the Mortgage
Loans as of the Startup Day.
"Closing": The creation of the Trust Fund and simultaneous issuance of the
Certificates, and matters incident thereto, on the Startup Day.
"Collection Account": The Collection Account created by the Servicer
pursuant to Section 8.08(a) hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10 hereof.
"Component": Any of the five components of the partial beneficial ownership
interest evidenced by the Class C Certificates in the Trust Fund, designated as
"Component A", "Component M-1", "Component M-2", "Component B", and "Component
OC", respectively, each such component constituting a separate "regular
interest" in REMIC II.
"Component Notional Amount": The hypothetical or notional principal amount
on which any of the following Components accrues interest equal to: (1) in the
case of Component A, the Uncertificated Balance of REMIC I Regular Interest LT-A
outstanding from time to time; (2) in the case of Component M-1, the
Uncertificated Balance of REMIC I Regular Interest LT-M- 1 outstanding from time
to time; (3) in the case of Component M-2, the Uncertificated Balance of REMIC I
Regular Interest LT-M-2 outstanding from time to time; and (4) in the case of
Component B, the Uncertificated Balance of REMIC I Regular Interest LT-B
outstanding from time to time.
"Component Principal Balance": As of the Startup Day as to Component OC,
the initial Component Principal Balance thereof set forth in the Preliminary
Statement hereto. As of any date of determination after the Startup Day as to
Component OC, the Component Principal Balance of such Certificate on the
Distribution Date immediately prior to such date of determination (or, in the
case of any date of determination up to and including the initial Distribution
Date, the initial Component Principal Balance of such Certificate, as stated on
the face thereof), reduced by the aggregate of (a) all distributions made
thereon in respect of principal on such immediately prior Distribution Date and
(b) without duplication of amounts described in clause (a) above, any reductions
in the Component Principal Balance thereof deemed to have occurred in connection
with allocations thereto of Realized Losses on the Mortgage Loans as provided
herein on such immediately prior Distribution Date.
"Controlling Non-Offered Certificateholders": As of any date of
determination, the holders of a majority in Percentage Interest of the Class C
Certificates (or, if the Certificate Principal Balance of the Class C
Certificates has been reduced to zero and no Class C Allocated Loss Carry
Forward Amounts remain payable to the holders of the Class C Certificates, then
the holders of a majority in Percentage Interest of each Class of the Residual
Certificates).
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which, at any particular time, its corporate trust business shall be
administered, which office at the date hereof is located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Services Division, except that for certain purposes under this Agreement such
term shall mean the office or agency of the Trustee in the Borough of Manhattan,
the City of New York, which office at the date hereof is located at First
Chicago Trust Company of New York, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇.
"Coupon Rate": The rate of interest borne by each Note.
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Mortgage Loans since the
Cut-Off Date.
"Current Interest": With respect to each Class of Offered Certificates and
any Distribution Date, the aggregate amount of interest accrued during the
preceding Accrual Period on the Certificate Principal Balance of such Class of
Offered Certificates at the related Pass-Through Rate in effect with respect to
such Class of Offered Certificates.
"Cut-Off Date": The close of business on July 31, 1997.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by a
Qualified Replacement Mortgage Loan.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due thereon is
not made by the close of business on the day such payment is scheduled to be
due. A Mortgage 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. Similarly for
"60 days Delinquent," "90 days Delinquent" and so on.
"Delinquency Interest Advances": With respect to any Distribution Date, to
the extent required hereunder to be deposited in the Collection Account by the
Servicer, amounts equal to the sum of the interest portions (net of the
Servicing Fees) of scheduled payments with respect to Delinquent Mortgage Loans
due during the related Due Period but not collected prior to the related
Determination Date.
"Delivery Order": The delivery order in the form set forth as Exhibit G
hereto and delivered by the Depositor to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
"Depositor": Credit Suisse First Boston Mortgage Securities Corp., a
Delaware corporation, or any successor thereto.
"Depository": The Depository Trust Company, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the Collection
Account, a trust account maintained by the trust department of a federal or
state chartered depository institution acting in its fiduciary capacity, having
combined capital and surplus of at least $50,000,000; provided, however, that if
the Collection Account is not maintained with the Trustee, (i) such institution
shall have a long-term debt rating of at least "A2" by Moody's and, if rated by
Fitch, at least "A" by Fitch (ii) such institution shall have outstanding
unsecured commercial paper or other short-term unsecured debt obligations that
are rated at least A-1 by S&P and (iii) if such Collection Account is moved to a
new institution, the Servicer shall provide the Trustee and the
Certificateholders with a statement identifying the location of the Collection
Account.
"Determination Date": With respect to any Distribution Date, the second
Business Day preceding such Distribution Date.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or other
financial institution for which the Depository holds Offered Certificates from
time to time as a securities depository.
"Disqualified Organization": Shall have the meaning set forth from time to
time in the definition thereof at Section 860E(e)(5) of the Code (or any
successor statute thereto) and applicable to the Trust Fund.
"Distribution Date": Any date on which the Trustee is required to make
distributions to the Certificateholders, which shall be the 20th day of each
month or if such day is not a Business Day, the next Business Day thereafter,
commencing in the month following the Startup Day.
"Due Period": With respect to the first Distribution Date (i) for
collections of principal, the period from and including August 1, 1997 through
and including September 1, 1997 and (ii) for collections of interest, the period
from and including August 2, 1997 through and including September 1, 1997. With
respect to each Distribution Date thereafter for collections of both interest
and principal, the period from and including the second day of the month
preceding the month of such Distribution Date to and including the first day of
the month of such Distribution Date.
"Eligible Investments": Those investments so designated pursuant to Section
7.07 hereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Expense Fee Rate": 0.5100% per annum.
"Extra Principal Distribution Amount": As of any Distribution Date, the
lesser of (x) the Monthly Excess Interest Amount for such Distribution Date
remaining after application to the Class A Interest Carry Forward Amount and (y)
the Overcollateralization Deficiency for such Distribution Date.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Trustee pursuant to Section 3.05
hereof pertaining to a particular Mortgage Loan and any additional documents
required to be added to the File pursuant to this Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
"Fitch": Fitch Investors Service, L.P.
"FNMA": The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
"Formula Pass-Through Rate": With respect to any Class of Offered
Certificates and any Distribution Date, the Pass-Through Rate for such Class for
such Distribution Date determined with reference to LIBOR that would be in
effect for such Distribution Date assuming the inapplicability to such Class for
such Distribution Date of the Available Funds Cap Rate.
"Highest Lawful Rate": As defined in Section 11.13.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Offered Certificate.
"Insurance Policy": Any hazard, flood, title or primary mortgage insurance
policy relating to a Mortgage Loan.
"Interest Amount Available": As of any Distribution Date, the Interest
Remittance Amount less the amount payable to the Trustee as the Trustee Fee for
such Distribution Date.
"Interest Remittance Amount": As of any Determination Date, the sum,
without duplication, of (i) all interest received during the related Due Period
on the Mortgage Loans (less the Servicing Fee), (ii) all Delinquency Interest
Advances and Compensating Interest paid by the Servicer with respect to such Due
Period and (iii) the portion of any Substitution Amount or Loan Purchase Price
relating to interest; provided, however, that the "Interest Remittance Amount"
shall not include any amounts received as late payments of interest with respect
to which the Servicer has previously made any unreimbursed Delinquency Interest
Advances.
"LIBOR": With respect to any Accrual Period for the Offered Certificates,
the rate determined by the Trustee on the related LIBOR Determination Date on
the basis of the offered rate for one-month U.S. dollar deposits as such rate
appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such date;
provided that if such rate does not appear on Telerate Page 3750, the rate for
such date will be determined on the basis of the rates at which one-month U.S.
dollar deposits are offered by the Reference Banks at approximately 11:00 a.m.
(London time) on such date to prime banks in the London interbank market. In
such event, the Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations (rounded upwards if necessary to the nearest whole multiple of
1/16%). If fewer than two quotations are provided as requested, the rate for
that date will be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Trustee, at approximately 11:00 a.m. (New York City
time) on such date for one-month U.S. dollar loan to leading European banks.
"LIBOR Determination Date": With respect to any Accrual Period for the
Offered Certificates, the second London Business Day preceding the commencement
of such Accrual Period.
"Liquidated Loan": As defined in Section 8.13 hereof.
"Liquidation Expenses": Expenses which are incurred by the Servicer in
connection with the liquidation of any defaulted Mortgage Loan, such expenses
including, without limitation, legal fees and expenses, and any unreimbursed
Servicing Advances expended by the Servicer pursuant to Section 8.09 with
respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any 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 Mortgage Loan and as of any date of
determination, the outstanding principal balance thereof on the Cut-Off Date,
less any principal payments relating to such Mortgage Loan included in previous
Monthly Remittances; provided, however, that the Loan Balance for any Mortgage
Loan that has become a Liquidated Loan shall be zero as of the first day of the
Due Period following the Due Period in which such Mortgage Loan becomes a
Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from the
Trust Fund on a Determination Date pursuant to Section 3.03 or 8.10 hereof, an
amount equal to the Loan Balance of such Mortgage Loan as of the date of
purchase (assuming that the Monthly Remittance remitted by the Servicer on such
Determination Date has already been remitted), plus accrued and unpaid interest
at the Coupon Rate together with the aggregate amount of all Servicing Advances
theretofore made and reimbursed with respect to such Mortgage Loan from amounts
in the Collection Account which did not represent late collections of such
Servicing Advance.
"Loan-to-Value Ratio": As of any particular date with respect to any First
Mortgage Loan, the percentage obtained by dividing the Appraised Value into the
original principal balance of the Note relating to such Mortgage Loan.
"London Business Day": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
"Mezzanine Certificates": Collectively, the Class M-1 Certificates and the
Class M-2 Certificates.
"Monthly Excess Cashflow Amount": For any Distribution Date, the sum of (x)
the Monthly Excess Interest Amount and (y) the Overcollateralization Release
Amount for such Distribution Date.
"Monthly Excess Interest Amount": With respect to any Distribution Date,
the excess, if any, of (i) the Interest Amount Available for the related Due
Period over (ii) the Current Interest on the Offered Certificates and the Class
A Interest Carry Forward Amount on such Distribution Date.
"Monthly Remittance": As of any Determination Date, the sum of (i) the
Interest Remittance Amount and (ii) the Principal Remittance Amount for such
Determination Date.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgage Loans": Such of the mortgage loans transferred and assigned to
the Trust Fund pursuant to Section 3.05(a) hereof, together with any Qualified
Replacement Mortgage Loans substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Fund, the
Mortgage Loans originally so held being identified in the Mortgage Loan
Schedule. The term "Mortgage Loan" includes any Mortgage 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 Fund. Any
mortgage loan which, although intended by the parties hereto to have been, and
which purportedly was, transferred and assigned to the Trust Fund by the
Depositor, in fact was not transferred and assigned to the Trust Fund for any
reason whatsoever shall nevertheless be considered a "Mortgage Loan" for all
purposes of this Agreement.
"Mortgage Loan Schedule": The schedule of Mortgage Loans listing each
Mortgage Loan to be conveyed on the Startup Day. The Mortgage Loan Schedule
shall identify each Mortgage Loan by the Servicer's loan number and the
borrower's name and address of the Property and shall set forth as to each
Mortgage Loan the margin, the Loan-to-Value Ratio, the Coupon Rate and the Loan
Balance thereof as of the Cut-Off Date, the scheduled monthly payment of
principal and interest as of the Cut-off Date, the property type, occupancy
status, Appraised Value, original term-to-maturity thereof, whether or not such
Mortgage Loan (including related Note) has been modified and the aggregate Loan
Balances of all Mortgage Loans..
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation Proceeds
net of Liquidation Expenses and unreimbursed Delinquency Interest Advances and
Servicing Advances relating to such Mortgage Loan. In no event shall Net
Liquidation Proceeds with respect to any Liquidated Loan be less than zero.
"Non-Offered Certificate": Any Class C, Class R-1 or Class R-2 Certificate.
"Non-United States Person": Any Person other than a United States Person.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Notional Amount": With respect to the Class C Certificates and any
Distribution Date, the aggregate of the Component Notional Amounts for such
Distribution Date.
"Offered Certificates": Collectively, the Class A Certificates, the
Mezzanine Certificates and the Class B Certificates.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Trustee.
"Original Aggregate Loan Balance": The aggregate Loan Balances of the
Mortgage Loans as of the Cut-Off Date, i.e., $202,118,070.35.
"Outstanding": With respect to all Certificates of a Class, as of any date
of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Certificateholders
of such Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Overcollateralization Amount": As of any Distribution Date, the difference
between (x) the Loan Balance of the Mortgage Loans as of the last day of the
immediately preceding Due Period and (y) the aggregate Certificate Principal
Balance of the Offered Certificates (after taking into account all distributions
of principal on such Offered Certificates as of such Distribution Date).
"Overcollateralization Deficiency": As of any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking into account the
reduction on such Distribution Date of the aggregate Certificate Principal
Balance of the Certificates resulting from the distribution of the Principal
Remittance Amount (but not the Extra Principal Distribution Amount) on such
Distribution Date, but prior to taking into account any Applied Realized Loss
Amount on such Distribution Date.
"Overcollateralization Release Amount": As of any Distribution Date, the
lesser of (x) the Principal Remittance Amount for such Distribution Date and (y)
the excess of (i) the Overcollateralization Amount for such Distribution Date,
assuming that 100% of the Principal Remittance Amount is applied on such
Distribution Date to the payment of principal on the Certificates and (ii) the
Targeted Overcollateralization Amount for such Distribution Date; provided,
however, that if a Trigger Event has occurred and is continuing as of such
Distribution Date, the Overcollateralization Release Amount for such
Distribution Date shall equal zero.
"Pass-Through Rate": With respect to:
(i) Component A, for any Distribution Date, the excess, if any, of
the REMIC I Remittance Rate for REMIC I Regular Interest LT-A
for such Distribution Date, over the Class A Pass-Through Rate
for such Distribution Date;
(ii) Component M-1, for any Distribution Date, the excess, if any,
of the REMIC I Remittance Rate for REMIC I Regular Interest
LT-M-1 for such Distribution Date, over the Class M-1
Pass-Through Rate for such Distribution Date;
(iii) Component M-2, for any Distribution Date, the excess, if any,
of the REMIC I Remittance Rate for REMIC I Regular Interest
LT-M-2 for such Distribution Date, over the Class M-2
Pass-Through Rate for such Distribution Date;
(iv) Component B, for any Distribution Date, the excess, if any, of
the REMIC I Remittance Rate for REMIC I Regular Interest LT-B
for such Distribution Date, over the Class B Pass-Through Rate
for such Distribution Date;
(v) Component OC, for any Distribution Date, the REMIC I
Remittance Rate for REMIC I Regular Interest LT-OC for such
Distribution Date;
(vi) the Class A Certificates, for any Distribution Date, the
Class A Pass-Through Rate for such Distribution Date;
(vii) the Class M-1 Certificates, for any Distribution Date, the
Class M-1 Pass-Through Rate for such Distribution Date;
(viii) the Class M-2 Certificates, for any Distribution Date, the
Class M-2 Pass-Through Rate for such Distribution Date; and
(ix) the Class B Certificates, for any Distribution Date, the
Class B Pass-Through Rate for such Distribution Date.
"Percentage Interest": With respect to a Class of Certificates (other than
a Class of Residual Certificates), a fraction, expressed as a percentage, the
numerator of which is the initial Certificate Principal Balance represented by
such Certificate and the denominator of which is the aggregate initial
Certificate Principal Balance represented by all the Certificates in such Class.
With respect to a Residual Certificate, the portion of the Class evidenced
thereby, expressed as a percentage, as stated on the face of such Certificate,
all of which shall total 100% with respect to such Class.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Plan": Any employee benefit plan or certain other retirement plans and
arrangements, including individual retirement accounts and annuities, ▇▇▇▇▇
plans and bank collective investment funds and insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to ERISA and Section 4975 of the Code.
"Prepaid Installment": With respect to any Mortgage Loan, any installment
of principal thereof and interest thereon received by the Servicer prior to the
scheduled due date for such installment, intended by the Mortgagor as an early
payment thereof and not as a Prepayment with respect to such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan which is received
by the Servicer in advance of the scheduled due date for the payment of such
principal (other than the principal portion of any Prepaid Installment), the
principal portion of Substitution Amounts, the portion of the Loan Purchase
Price of any Mortgage Loan purchased from the Trust Fund pursuant to Section
3.03 or 8.10 hereof representing principal and the proceeds of any Insurance
Policy which are to be applied as a payment of principal on the related Mortgage
Loan shall be deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in accordance
with this Agreement for real estate property taxes, hazard insurance premiums,
property restoration or preservation.
"Principal Distribution Amount": As of any Distribution Date, the sum of
(i) the Principal Remittance Amount (minus, for Distribution Dates occurring on
and after the Stepdown Date and with respect to which a Trigger Event is not
existing, the Overcollateralization Release Amount, if any) and (ii) the Extra
Principal Distribution Amount, if any.
"Principal Remittance Amount": As of any Determination Date, the sum,
without duplication, of (i) the principal actually collected by the Servicer
with respect to Mortgage Loans during the related Due Period, (ii) the Loan
Balance of each Mortgage Loan that was purchased from the Trustee on or prior to
such Determination Date, to the extent such Loan Balance was actually deposited
in the Collection Account, (iii) any Substitution Amounts relating to principal
delivered by the Seller in connection with a substitution of a Mortgage Loan to
the extent such Substitution Amounts were actually deposited in the Collection
Account on or prior to such Determination Date, and (iv) all Net Liquidation
Proceeds actually collected by the Servicer with respect to the Mortgage Loans
during the related Due Period (to the extent such Net Liquidation Proceeds
related to principal).
"Prohibited Transaction": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(2) of the Code (or any successor statute
thereto) and applicable to the Trust Fund.
"Property": The underlying property (including all building thereon)
securing a Mortgage Loan.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust Fund.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust Fund.
"Qualified Replacement Mortgage Loan": A Mortgage Loan substituted for
another pursuant to Section 3.03 hereof, which (i) has a Coupon Rate at least
equal to the Coupon Rate of the Mortgage Loan being replaced, (ii) is of the
same property type as (or is a single family dwelling) and the same occupancy
status as (or is a primary residence) the replaced Mortgage Loan, (iii) has a
remaining term to maturity not greater than (and not more than one year less
than) that of the Deleted Mortgage Loan, (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 Mortgage 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) as the Mortgage Loan which such Qualified Replacement
Mortgage Loan replaces, (vi) has a Loan Balance as of the related Replacement
Cut-Off Date equal to or less than the Loan Balance of the replaced Mortgage
Loan as of such Replacement Cut-Off Date, (vii) shall be a first lien adjustable
rate Mortgage Loan and (viii) satisfies the criteria set forth from time to time
in the definition thereof at Section 860G(a)(3) of the Code (or any successor
statute thereto) and applicable to the Trust Fund.
"Rating Agencies": Collectively, ▇▇▇▇▇'▇, S&P and Fitch or any successors
thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by which
the Loan Balance thereof as of the date of liquidation is in excess of Net
Liquidation Proceeds realized thereon applied in reduction of such Loan Balance.
"Record Date": With respect to the Certificates and the first Distribution
Date, the Startup Day. With respect to the Certificates and any Distribution
Date thereafter, the last day of the calendar month immediately preceding the
calendar month in which such Distribution Date occurs.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank of
Tokyo and National Westminster Bank PLC, provided that if any of the foregoing
banks are not suitable to serve as a Reference Bank, then any leading banks
selected by the Trustee which are engaged in transactions in Eurodollar deposits
in the international Eurocurrency market (i) with an established place of
business in London, (ii) not controlling, under the control of or under common
control with either Seller or any affiliate thereof, (iii) whose quotations
appear on Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Certificateholders are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Regular Certificate": Any Certificate other than a Residual Certificate.
"REMIC": A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto, constituting the
primary trust created hereby and to be administered hereunder, with respect to
which a REMIC election is to be made, consisting of (i) such Mortgage Loans as
from time to time are subject to this Agreement, together with the Files
relating thereto, and together with all collections thereon and proceeds
thereof; (ii) any REO Property, together with all collections thereon and
proceeds thereof; (iii) the Trustee's rights with respect to the Mortgage Loans
under all insurance policies required to be maintained pursuant to this
Agreement and any proceeds thereof, (iv) the Depositor's rights under the Sale
and Purchase Agreement (including any security interest created thereby) other
than any rights of the Depositor under Section 4.04 thereof; and (v) the
Collection Account, the Certificate Account and such assets that are deposited
therein from time to time and any investments thereof, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, REMIC I specifically excludes all payments and other collections of
any principal payments received on the Mortgage Loans on or prior to the Cut-off
Date and any interest payments due on the Mortgage Loans on or prior to August
1, 1997.
"REMIC I Regular Interest": Any of the five separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
"regular interest" in REMIC I. Each REMIC I Regular Interest shall accrue
interest at the related REMIC I Remittance Rate in effect from time to time and
shall be entitled to distributions of principal, subject to the terms and
conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto. The designations for
the respective REMIC I Regular Interests are set forth in the Preliminary
Statement hereto.
"REMIC I Regular Interest LT-A": One of the five separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I which shall accrue interest during each Accrual
Period at the applicable REMIC I Remittance Rate.
"REMIC I Regular Interest LT-M-1": One of the five separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I which shall accrue interest during
each Accrual Period at the applicable REMIC I Remittance Rate.
"REMIC I Regular Interest LT-M-2": One of the five separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I which shall accrue interest during
each Accrual Period at the applicable REMIC I Remittance Rate.
"REMIC I Regular Interest LT-B": One of the five separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I which shall accrue interest during each Accrual
Period at the applicable REMIC I Remittance Rate.
"REMIC I Regular Interest LT-OC": One of the five separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
Regular Interest in REMIC I which shall accrue interest during each Accrual
Period at the applicable REMIC I Remittance Rate.
"REMIC I Remittance Rate": For any Distribution Date for any REMIC I
Regular Interest, the rate per annum equal to the excess, if any, of (i) the
weighted average Coupon Rate of the Mortgage Loans as of the beginning of the
related Due Period minus (ii) 0.5025%.
"REMIC II": The segregated pool of assets consisting of all of the REMIC I
Regular Interests conveyed in trust to the Trustee for the benefit of the REMIC
II Certificateholders, with respect to which a separate REMIC election is to be
made.
"REMIC II Certificate": Any Regular Certificate or Class R-2 Certificate.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and revenue rulings promulgated thereunder, as the foregoing may be
in effect from time to time.
"REO Property": A Property acquired by the Servicer on behalf of the Trust
Fund through foreclosure or deed in lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage Loan, the first day of the calendar month in which such Qualified
Replacement Mortgage Loan is conveyed to the Trust Fund.
"Representation Letter": Letters to, or agreements with, the Depository to
effectuate a book entry system with respect to the Offered Certificates
registered in the Register under the nominee name of the Depository.
"Residual Certificate": Any one of the Class R-1 or Class R-2 Certificates.
"Sale and Purchase Agreement": The Sale and Purchase Agreement, dated as of
August 21, 1997, between the Seller as seller and the Depositor as purchaser.
"S&P": Standard & Poor's Ratings Services, a division of the ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or its successor in interest.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": WMC Mortgage Corp., a California corporation, and its permitted
successors and assigns, in its capacity as Seller under the Sale and Purchase
Agreement.
"Senior Enhancement Percentage": For any Distribution Date, the percentage
obtained by dividing (x) the sum of (i) the aggregate Certificate Principal
Balance of the Subordinate Certificates (or if the Certificate Principal Balance
of the Class A Certificates has been reduced to zero, the aggregate Certificate
Principal Balance of each Class of Subordinate Certificates other than the most
senior Class of Subordinate Certificates then outstanding) and (ii) the
Overcollateralization Amount, in each case after taking into account the
distribution of the Principal Distribution Amount on such Distribution Date by
(y) the aggregate Loan Balance of the Mortgage Loans as of the last day of the
related Due Period.
"Senior Specified Enhancement Percentage": On any date of determination
thereof means 53%.
"Servicer": WMC Mortgage Corp., a California corporation, and its permitted
successors and assigns, in its capacity as Servicer under this Agreement.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
sub-prime, residential mortgage loans.
"Servicing Advance": As defined in Section 8.09 and Section 8.13 hereof.
"Servicing Fee": With respect to any Mortgage Loan, in accordance with
Section 8.15, an amount retained by the Servicer as compensation for servicing
and administration duties relating to such Mortgage Loan and for REMIC
administration duties relating to REMIC I and REMIC II, equal to 0.5025% per
annum of the then outstanding principal amount of such Mortgage Loan as of the
first day of each Due Period payable on a monthly basis.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans, whose
name and specimen signature appear on a list of servicing officers furnished by
the Servicer to the Trustee on the Startup Day, as such list may from time to
time be amended.
"Servicing Termination Trigger": A Servicing Termination Trigger has
occurred (i) with respect to a Distribution Date occurring between the Cut-Off
Date and the fifth anniversary of the Cut-Off Date if on such Distribution Date
(X) the sum of (a) the product of (1) the percentage obtained by dividing the
balance of 30 day Delinquent Mortgage Loans by the aggregate outstanding Loan
Balance of the Mortgage Loans, (2) 25% and (3) 43.75%; plus (b) the product of
(1) the percentage obtained by dividing the balance of 60 day Delinquent
Mortgage Loans by the aggregate outstanding Loan Balance of the Mortgage Loans,
(2) 50% and (3) 43.75%; plus (c) the product of (1) the percentage obtained by
dividing the balance of 90 day Delinquent Mortgage Loans by the aggregate
outstanding Loan Balance of the Mortgage Loans and (2) 43.75%; plus (d) the
percentage obtained by dividing Cumulative Realized Losses by the aggregate
initial Loan Balance of the Mortgage Loans on the Cut-off Date, in each case as
of the last day of the calendar month preceding such Distribution Date, exceeds
(Y) 14.75% and (ii) with respect to a Distribution Date occurring after the
fifth anniversary of the Cut-Off Date and on or before the tenth anniversary of
the Cut-Off Date if on such Distribution Date the sum set forth in (X) above, in
each case as of the last day of the calendar month preceding such Distribution
Date, exceeds 22.25%.
"60+ Day Delinquent Loan": With respect to any Determination Date, all REO
Properties and each Mortgage Loan with respect to which any portion of a
scheduled monthly payment is, as of the last day of the preceding calendar
month, two or more payments past due (without giving effect to any grace
period).
"Startup Day": August 28, 1997.
"Stepdown Date": The earlier to occur of (i) the later to occur of (x) the
Distribution Date in September 2000 and (y) the first Distribution Date on which
the Senior Enhancement Percentage (after taking into account distributions of
principal on such Distribution Date) is equal to or greater than the Senior
Specified Enhancement Percentage and (ii) the date on which the aggregate
Certificate Principal Balance of the Class A Certificates has been reduced to
zero.
"Subordinated Trigger Event": A Subordinated Trigger Event exists with
respect to each Distribution Date after the Stepdown Date if both:
(a) Realized Losses since the Cut-Off Date with respect to the
Mortgage Loans as a percentage of the Original Aggregate Loan Balance
exceed the percentage set out below with respect to a Distribution
Date:
DISTRIBUTION DATE (INCLUSIVE)
September 1999 - August 2000 2.90%
September 2000 - August 2001 4.90
September 2001 - August 2002 6.10
September 2002 - August 2003 6.90
September 2003 - August 2004 7.50
September 2004 and thereafter 7.90
and
(b) the aggregate Loan Balance of the 60+ Day Delinquent Loans
as a percentage of the aggregate Loan Balance of the Mortgage Loans as
of such Distribution Date exceeds the percentage set out below with
respect to a Distribution Date:
DISTRIBUTION DATE (INCLUSIVE)
September 1999 - August 2000 7.5%
September 2000 - August 2001 7.5
September 2001 - August 2002 10.0
September 2002 - August 2003 10.0
September 2003 - August 2004 15.0
September 2004 and thereafter 15.0
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer and
any Sub- Servicer relating to servicing and/or administration of certain
Mortgage Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Targeted Overcollateralization Amount": On any Distribution Date (i) prior
to the Stepdown Date, $10,101,732 and (ii) on or after the Stepdown Date, the
greater of (x) the lesser of (A) $10,101,732 and (B) 10% of the aggregate
outstanding Loan Balance of the Mortgage Loans as of the last day of the related
Due Period and (y) $1,010,074; provided, however, if as of such Distribution
Date a Trigger Event has occurred and is continuing, the Targeted
Overcollateralization Amount shall equal the Targeted Overcollateralization
Amount immediately prior to such Distribution Date; and provided, further, that
if the Certificate Principal Balance of each Class of Offered Certificates has
been reduced to zero, the Targeted Overcollateralization Amount shall equal
zero.
"Tax Matters Certificate": Together, the Class R-1 Certificate and the
Class R-2 Certificate initially issued to WMC Mortgage Corp. as the initial Tax
Matters Person.
"Tax Matters Person": The Person appointed for the Trust Fund pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": A minimum 0.001% interest in each
Class of the Residual Certificates, which shall be issued to and held by WMC
Mortgage Corp. throughout the term hereof , unless with respect to REMIC I or
REMIC II another Person shall accept an assignment of such interest in the
related REMIC and the designation of Tax Matters Person pursuant to Section
11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
▇▇▇▇▇ Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Trigger Event": A Trigger Event has occurred with respect to a
Distribution Date if (i) the percentage obtained by dividing (x) the amount of
60+ Day Delinquent Loans as of the last day of the preceding calendar month by
(y) the aggregate outstanding Loan Balance of the Mortgage Loans as of the last
day of the preceding calendar month equals or exceeds (ii) 40% of the Senior
Enhancement Percentage for such Distribution Date.
"Trust Fund": As defined in the conveyance clause under this Agreement.
"Trustee": The First National Bank of Chicago, a national banking
association, not in its individual capacity but solely as Trustee under this
Agreement, and any successor hereunder.
"Trustee Fee": The fee payable to the Trustee monthly on each Distribution
Date in an amount equal to 0.0075% per annum of the aggregate principal amount
of the Mortgage Loans as of the first day of the related Due Period.
"Uncertificated Balance": With respect to any REMIC I Regular Interest, the
uncertificated principal amount of such REMIC I Regular Interest outstanding as
of any date of determination. As of the Startup Day, the Uncertificated Balance
of each REMIC I Regular Interest shall equal the amount set forth in the
Preliminary Statement hereto as its initial uncertificated amount. On each
Distribution Date, the Uncertificated Balance of each REMIC I Regular Interest
shall be reduced by all distributions of principal deemed to have been made on
such REMIC I Regular Interest on such Distribution Date pursuant to Section 7.03
and, if and to the extent necessary and appropriate, shall be further reduced on
such Distribution Date by Realized Losses allocated thereto as provided
hereunder.
"Uncertificated Interest": With respect to any REMIC I Regular Interest for
any Distribution Date, interest for the related Accrual Period at the related
REMIC I Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance of such REMIC I Regular
Interest outstanding immediately prior to such Distribution Date.
"Underwriters": Credit Suisse First Boston and Bear, ▇▇▇▇▇▇▇ & Co. Inc.
"United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity treated as a corporation or partnership
for United States federal income tax purposes, created or organized in or under
the laws of, the United States or any political subdivision thereof (unless,
in the case of a partnership, Treasury regulations provide otherwise), an estate
whose income is subject to United States federal income tax regardless of its
source of its income, or a trust other than a "foreign trust" as defined in Code
Section 7701(a)(31).
"Unpaid Realized Loss Amount": For any Class of the Subordinate
Certificates and as to any Distribution Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Distribution Dates over (y) the aggregate, cumulative amount
of related Realized Loss Amortization Amounts with respect to such Class for all
prior Distribution Dates.
Section 1.02 USE OF WORDS AND PHRASES.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore", "hereinafter"
and other equivalent words refer to this Agreement as a whole and not solely to
the particular section of this Agreement in which any such word is used. The
definitions set forth in Section 1.01 hereof include both the singular and the
plural. Whenever used in this Agreement, any pronoun shall be deemed to include
both singular and plural and to cover all genders.
Section 1.03 CAPTIONS; TABLE OF CONTENTS.
The captions or headings in this Agreement and the Table of Contents are
for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 OPINIONS.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust Fund
The parties hereto do hereby create and establish, pursuant to the laws of
the State of New York and this Agreement, the Trust Fund, which, for
convenience, shall be known as "WMC Mortgage Loan Trust 1997-1".
Section 2.02 OFFICE.
The office of the Trust Fund shall be in care of the Trustee, addressed to
the Corporate Trust Office, or at such other address as the Trustee may
designate by notice to the Depositor and the Servicer.
Section 2.03 PURPOSES AND POWERS.
The purpose of the Trust Fund is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Mortgage Loans and other assets of the Trust Fund in
connection therewith; (ii) activities that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Fund and distributions to the Certificateholders; provided, however, that
nothing contained herein shall permit the Trustee to take any action which would
adversely affect the status of REMIC I or REMIC II as a REMIC.
Section 2.04 APPOINTMENT OF THE TRUSTEE; DECLARATION OF TRUST.
The Depositor hereby appoints the Trustee as Trustee of the Trust Fund
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Fund in trust upon and subject to the conditions set forth herein for the
benefit of the Certificateholders.
Section 2.05 ACCEPTANCE OF REMIC I BY THE TRUSTEE.
The Trustee acknowledges receipt, subject to the provisions of Section 3.05
and subject to any exceptions noted on the exception report attached to the
Trustee's acknowledgment of receipt delivered pursuant to Section 3.06(a), the
documents referred to in Section 3.05(b)(i) and (iii) and all other assets
included in the definition of "REMIC I" under clauses (i), (iii), (iv) and (v)
(to the extent of amounts deposited into the Certificate Account) and declares
that it holds and will hold such documents and the other documents delivered to
it constituting a File, and that it holds or will hold all such assets and such
other assets included in the definition of "REMIC I" in trust for the exclusive
use and benefit of all present and future Certificateholders.
Section 2.06 ISSUANCE OF CLASS R-1 CERTIFICATES.
The Trustee acknowledges the assignment to it of the Mortgage Loans and the
delivery to it of the Files, subject to the provisions of Sections 3.05 and
3.06, together with the assignment to it of all other assets included in REMIC
I, receipt of which is hereby acknowledged. Concurrently with such assignment
and delivery and in exchange therefor, the Trustee, pursuant to the written
request of the Depositor executed by an officer of the Depositor, has executed,
authenticated and delivered to or upon the order of the Depositor, the Class R-1
Certificates in authorized denominations. The interests evidenced by the Class
R-1 Certificates, together with the REMIC I Regular Interests, constitute the
entire beneficial ownership interest in REMIC I.
Section 2.07 CONVEYANCE OF REMIC I REGULAR INTERESTS; ACCEPTANCE OF
REMIC II BY THE TRUSTEE
The Depositor, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the REMIC
I Regular Interests for the benefit of the REMIC II Certificateholders. The
Trustee acknowledges receipt of the REMIC I Regular Interests and declares that
it holds and will hold the same in trust for the exclusive use and benefit of
all present and future REMIC II Certificateholders. The rights of the REMIC II
Certificateholders to receive distributions from the proceeds of REMIC II in
respect of the REMIC II Certificates, and all ownership interests of the REMIC
II Certificateholders in and to such distributions, shall be as set forth in
this Agreement.
Section 2.08 ISSUANCE OF REMIC II CERTIFICATES.
The Trustee acknowledges the assignment to it of the REMIC I Regular
Interests and, concurrently therewith and in exchange therefor, pursuant to the
written request of the Depositor executed by an officer of the Depositor, the
Trustee has executed, authenticated and delivered to or upon the order of the
Depositor, the REMIC II Certificates in authorized denominations evidencing the
entire beneficial ownership interest in REMIC II.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR AND THE SERVICER; ENFORCEMENT OF SALE
AND PURCHASE AGREEMENT
Section 3.01 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the Servicer and
to the Trustee for the benefit of the Certificateholders that as of the Startup
Day:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence
and is in good standing as a foreign corporation in each jurisdiction in
which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Depositor has all requisite
corporate power and authority to own and operate its properties, to carry
out its business as presently conducted and as proposed to be conducted and
to enter into and discharge its obligations under this Agreement.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement 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, 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.
(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 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.
(f) [intentionally omitted].
(g) [intentionally omitted].
(h) 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 Depositor makes no such
representation or warranty), that are necessary or advisable in connection
with the purchase and sale of the Certificates and the execution and
delivery by the Depositor of this Agreement, 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 on the part of the Depositor and the performance by the
Depositor of its obligations under this Agreement.
(i) The transactions contemplated by this Agreement are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Mortgage Loans, nor is the Depositor aware of any
pending insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(l) The Depositor is not transferring the Mortgage Loans to the
Trustee with any intent to hinder, delay or defraud its creditors.
(m) It is understood and agreed that the representations and
warranties set forth in this Section 3.01 shall survive delivery of the
respective Mortgage Loans to the Trustee.
Section 3.02 REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer hereby represents, warrants and covenants to the Depositor and
to the Trustee for the benefit of the Certificateholders that as of the Startup
Day:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of California, 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 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 Servicer and
each Sub-Servicer 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. The Servicer is designated as an
approved seller-servicer by FNMA for first mortgage loans and has combined
equity and subordinated debt of at least $1,500,000, as determined in
accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been
duly authorized by all necessary corporate action on the part of the
Servicer and will not violate the Servicer'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 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, 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 default might have consequences
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Servicer or its properties or might have
consequences that would materially and adversely affect its performance
hereunder.
(e) No litigation is pending with respect to which the Servicer has
received service of process or, to the best of the Servicer's knowledge,
threatened against the Servicer which litigation might have consequences
that would prohibit its entering into this Agreement or that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences
that would materially and adversely affect its performance hereunder.
(f) [intentionally omitted]
(g) [intentionally omitted]
(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 Mortgage
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 this Agreement, 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 on the part of the Servicer and
the performance by the Servicer of its obligations under this Agreement.
(j) The collection practices used by the Servicer with respect to the
Mortgage Loans have been, in all material respects, legal, proper, prudent
and customary in the sub- prime mortgage loan servicing business.
(k) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Mortgage Loans to the
Trustee.
Upon discovery by any of the Seller, the Servicer, any Certificateholder or
the Trustee (each, for purposes of this paragraph, a party) of a breach of any
of the representations and warranties set forth in this Section 3.02 which
materially and adversely affects the interests of the Certificateholders, the
party discovering such breach shall give prompt written notice to the other
parties. Within 60 days of its discovery or its receipt of notice of breach, the
Servicer shall cure such breach in all material respects and, upon the
Servicer's continued failure to cure such breach, may thereafter be removed by
the Trustee pursuant to Section 8.20 hereof.
Section 3.03 CURE, SUBSTITUTION AND REPURCHASE.
(a) Upon discovery of any materially defective document in, or that a
document is missing from, a File or of the breach by the Seller of any
representation, warranty or covenant under the Sale and Purchase Agreement in
respect of any Mortgage Loan which materially adversely affects the value of
such Mortgage Loan or the interest therein of the Certificateholders (in the
case of any such representation or warranty made to the knowledge or the best of
knowledge of the Seller as to which the Seller has no knowledge, without regard
to the Seller's lack of knowledge with respect to the substance of such
representation or warranty being inaccurate at the time it was made), the party
discovering such defect, missing document or breach shall promptly give written
notice thereof to the other parties hereto. Except as otherwise provided in
Section 3.03(c), upon discovery or notice of such defect, missing document or
breach, the Trustee shall promptly notify the Seller of such defect, missing
document or breach and request that the Seller deliver such missing document or
cure such defect or breach within 90 days from the date the Seller was notified
of such missing document, defect or breach, and if the Seller does not deliver
such missing document or cure such defect or breach in all material respects
during such period, the Servicer (or, if the Servicer is the Seller, the
Trustee) shall enforce the obligations of the Seller under the Sale and Purchase
Agreement to repurchase such Mortgage Loan from REMIC I at the Loan Purchase
Price within 90 days after the date on which the Seller was notified of such
missing document, defect or breach, in accordance with the Sale and Purchase
Agreement. The Loan Purchase Price for the repurchased Mortgage Loan shall be
deposited in the Collection Account (or held by the Servicer and remitted by the
Servicer to the Trustee as part of the Monthly Remittance), and the Trustee,
upon receipt of written certification from the Servicer of such deposit or
remittance, shall release to the Seller the related File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as the Seller shall furnish to it and as shall be necessary to vest in
the Seller any Mortgage Loan released pursuant hereto, and the Trustee shall
have no further responsibility with regard to such File. In lieu of repurchasing
any such Mortgage Loan as provided above, the Seller may in accordance with the
Sale and Purchase Agreement cause such Mortgage Loan to be removed from REMIC I
(in which case it shall become a Deleted Mortgage Loan) and substitute one or
more Qualified Replacement Mortgage Loans in the manner and subject to the
limitations set forth in Section 3.03(b). It is understood and agreed that the
obligation of the Seller to cure or to repurchase (or to substitute for) any
Mortgage Loan as to which a document is missing, a material defect in a
constituent document exists or as to which such a breach has occurred and is
continuing shall constitute the sole remedy respecting such omission, defect or
breach available to the Trustee on behalf of the Certificateholders.
(b) Any substitution of Qualified Replacement Mortgage Loans for Deleted
Mortgage Loans made pursuant to Section 3.03(a) must be effected prior to the
date which is two years after the Startup Day.
As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Replacement Mortgage Loan or Loans, such substitution shall be
effected by the Seller delivering to the Trustee, for such Qualified Replacement
Mortgage Loan or Loans, the Note, the Mortgage, the Assignment to the Trustee,
and such other documents and agreements, with all necessary endorsements
thereon, as are required by Section 3.05, together with an Officer's Certificate
providing that each such Qualified Replacement Mortgage Loan satisfies the
definition thereof and specifying the Substitution Amount (as described below),
if any, in connection with such substitution. The Trustee shall acknowledge
receipt for such Qualified Replacement Mortgage Loan or Loans and, within ten
Business Days thereafter, review such documents as specified in Section 3.06 and
deliver to the Depositor and the Servicer with respect to such Qualified
Replacement Mortgage Loan or Loans, a certification substantially in the form of
Exhibit E, with any applicable exceptions noted thereon. Within one year of the
date of substitution, the Trustee shall deliver to the Depositor and the
Servicer a Final Certification with respect to such Qualified Replacement
Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly
Payments due with respect to Qualified Replacement Mortgage Loans in the month
of substitution are not part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders will
reflect the Monthly Payment due on such Deleted Mortgage Loan on or before the
Due Date in the month of substitution, and the Seller shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. The Servicer shall amend the Mortgage Loan Schedule to reflect
the removal of such Deleted Mortgage Loan from the terms of this Agreement and
the substitution of the Qualified Replacement Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, such Qualified Replacement Mortgage Loan or Loans shall constitute
part of the Trust Fund and shall be subject in all respects to the terms of this
Agreement and the Sale and Purchase Agreement, including all applicable
representations and warranties thereof included in the Sale and Purchase
Agreement.
For any month in which the Seller substitutes one or more Qualified
Replacement Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
will determine the amount (the "Substitution Amount"), if any, by which the
aggregate Loan Balance of all such Deleted Mortgage Loans exceeds the aggregate
of, as to each such Qualified Replacement Mortgage Loan, the principal balance
thereof as of the date of substitution, together with accrued and unpaid
interest on such principal balance at the applicable Coupon Rate. On the date of
such substitution, the Seller will deliver or cause to be delivered to the
Servicer for deposit in the Collection Account an amount equal to the
Substitution Amount, if any, and the Trustee, upon receipt of the related
Qualified Replacement Mortgage Loan or Loans and certification by the Servicer
of such deposit, shall release to the Seller the related File(s) and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as the Seller shall deliver to it and as shall be necessary to
vest therein any Deleted Mortgage Loan released pursuant hereto.
In addition, the Trustee shall require the Seller, pursuant to the Sale and
Purchase Agreement, to obtain at the Seller's own expense and deliver to the
Trustee an opinion of counsel to the effect that such substitution will not
cause (a) any federal tax to be imposed on REMIC I or REMIC II, including
without limitation, any federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the startup date"
under Section 860G(d)(1) of the Code, or (b) REMIC I or REMIC II to fail to
qualify as a REMIC at any time that any Certificate is outstanding.
(c) Upon discovery by the Depositor, the Servicer or the Trustee that any
Mortgage Loan does not constitute a Qualified Mortgage, the party discovering
such fact shall within two Business Days give written notice thereof to the
other parties, and the Trustee upon discovery of such fact or such notice shall
give written notice thereof to the Seller. In connection therewith the Trustee
shall require the Seller, under the Sale and Purchase Agreement, to repurchase
or, subject to the limitations set forth in Section 3.03(b), substitute one or
more Qualified Replacement Mortgage Loans for the affected Mortgage Loan within
90 days of the earlier of discovery or receipt of such notice with respect to
such affected Mortgage Loan. Such repurchase or substitution shall be required
of the Seller only if the affected Mortgage Loan's status as a non-Qualified
Mortgage is or results from a breach of any representation, warranty or covenant
made by the Seller under the Sale and Purchase Agreement. Any such repurchase or
substitution by the Seller shall be made in accordance with Section 3.03(a) and
(b).
Section 3.04 [INTENTIONALLY OMITTED]
Section 3.05 ASSIGNMENT AND CONVEYANCE OF THE MORTGAGE LOANS.
(a) It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Mortgage Loans conveying good title
thereto free and clear of any liens and encumbrances from the Depositor to the
Trust Fund and not a loan. In the event that such conveyance is deemed to be a
loan, the parties intend that the Depositor shall be deemed to have granted to
the Trustee a first priority perfected security interest in the Trust Fund, and
that this Agreement shall constitute a security agreement under applicable law.
(b) In connection with the transfer and assignment of the Mortgage Loans,
the Depositor agrees to cause the Seller to:
(i) deliver without recourse to the Trustee (A) the original Notes or
certified copies thereof, endorsed in blank or to the order of the Trustee,
(B) the original title insurance policy or a copy certified by the Seller
or the issuer of the title insurance policy, or the attorney's opinion of
title, (C) originals or certified copies of all intervening assignments,
showing a complete chain of title from the originator to the Seller,
including warehousing assignments, if any, with evidence of recording
thereon, (D) original assignments of Mortgage from the Seller to the
Trustee or in blank in recordable form, (E) originals of all assumption and
modification agreements, if any and (F) either: (1) the original Mortgage
with evidence of recording thereon (or a certified copy if such original
Mortgage has not been returned to the Seller from the applicable recording
office) or (2) a copy of the Mortgage certified by the public recording
office in those instances where the original recorded Mortgage has been
lost;
(ii) cause, within 60 days following the Startup Day, assignments of the
Mortgages to "The First National Bank of Chicago, as Trustee of WMC
Mortgage Loan Trust 1997-1 under the Pooling and Servicing Agreement dated
as of August 1, 1997" to be submitted for recording in the appropriate
jurisdictions; provided, however, that the Seller shall not be required to
prepare any assignment of Mortgage for a Mortgage with respect to which the
original recording information is lacking or to record an assignment of a
Mortgage if the Seller furnishes to the Trustee, on or before the Startup
Day, at its expense an opinion of counsel with respect to the relevant
jurisdiction that such recording is not required to effect the transfer of
the Mortgage Loans to the Trustee (in form satisfactory to the Rating
Agencies); and
(iii) deliver the title insurance policy, the original Mortgages and such
recorded assignments, together with originals or duly certified copies of
any and all prior assignments, to the Trustee within 15 days of receipt
thereof by the Seller (but in any event, with respect to any Mortgage as to
which original recording information has been made available to the Seller
within one year after the Startup Day).
Notwithstanding anything to the contrary contained in this Section 3.05, in
those instances where the public recording office retains the original Mortgage,
the assignment of a Mortgage or the intervening assignments of the Mortgage
after it has been recorded, the Depositor shall be deemed to have satisfied its
obligations hereunder upon delivery to the 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.
In the case of any Mortgage Loans which have been prepaid in full after the
Cut-Off Date and prior to the Startup Day, the Depositor, in lieu of the
foregoing, may deliver or cause to be delivered within six (6) days after the
Startup Day to the Trustee a certification of an Authorized Officer in the form
set forth in Exhibit D.
Section 3.06 ACCEPTANCE BY TRUSTEE; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver on the Startup Day an
acknowledgment of receipt of the items delivered by or on behalf of the
Depositor in the form attached as Exhibit E hereto, and declares that it will
hold such documents and any amendments, replacement or supplements thereto, as
well as any other assets included in the definitions of Trust Fund and delivered
to the Trustee, as Trustee in trust upon and subject to the conditions set forth
herein for the benefit of the Certificateholders. The Trustee agrees, for the
benefit of the Certificateholders, to review such items within 45 days after the
Startup Day (or, with respect to any document delivered after the Startup Day,
within 45 days of receipt and with respect to any Qualified Replacement Mortgage
Loan, within 45 days after the assignment thereof) and to deliver to the
Depositor, the Seller and the Servicer a certification in the form attached
hereto as Exhibit F (a "Pool Certification") to the effect that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such Pool
Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it pursuant to Section 3.05(b)(i) of this Agreement
are in its possession, (ii) such documents have been reviewed by it and have not
been mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based
on its examination and only as to the foregoing documents, the information set
forth on the Mortgage Loan Schedule accurately reflects the information set
forth in the File. The Trustee shall have no responsibility for reviewing any
File except as expressly provided in this subsection 3.06(a). Without limiting
the effect of the preceding sentence, in reviewing any File, the Trustee shall
have no responsibility for determining whether any document is valid and
binding, whether the text of any assignment is in proper form (except to
determine if the Trustee is the assignee), whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction or
whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded. The Trustee shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face, nor shall the Trustee be under any duty to determine independently whether
there are any intervening assignments or assumption or modification agreements
with respect to any Mortgage Loan.
(b) If the Trustee during such 45-day period finds any document
constituting a part of a File which is not executed, has not been received, or
is unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule, or
that any Mortgage Loan does not conform to the description thereof as set forth
in the Mortgage Loan Schedule, the Trustee shall promptly so notify the
Depositor, the Servicer and the Seller. In performing any such review, the
Trustee may conclusively rely as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Trustee's review of the items delivered by the Seller pursuant to Section
3.05(b)(i) is limited solely to confirming that the documents listed in Section
3.05(b)(i) have been executed and received, relate to the Files identified in
the Mortgage Loan Schedule and conform to the description thereof in the
Mortgage Loan Schedule.
No liability to any Mortgagor under any of the Mortgage Loans arising out
of any act or omission to act of either the Seller in originating the Mortgages
or the Servicer in servicing the Mortgages prior to the Startup Day is intended
to be assumed by the Trust Fund, the Trustee, or the Certificateholders under or
as a result of this Agreement and the transactions contemplated hereby and, to
the maximum extent permitted and valid under mandatory provisions of law, each
expressly disclaims such assumption.
(c) In addition to the foregoing, the Trustee also agrees to conduct a
review during the 18 months after the Startup Day indicating the current status
of the exceptions previously indicated on the Pool Certification and deliver a
certification with respect thereto (the "Final Certification"). After delivery
of the Final Certification, the Trustee and the Servicer shall monitor no less
frequently than monthly, updated certifications indicating the then current
status of exceptions, until all such exceptions have been eliminated.
ARTICLE IV
[INTENTIONALLY OMITTED]
ARTICLE V
THE CERTIFICATES
Section 5.01 TERMS.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Certificates guaranteed by any Person. The
Certificates are payable solely from payments received on or with respect to the
Mortgage Loans in the manner and to the extent set forth in Section 7.03.
(b) Each Certificateholder is required, and hereby agrees, to return to the
Trustee any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed canceled and shall no longer be
Outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
Section 5.02 FORMS.
The Class A Certificates, the Class M-1 Certificates, the Class M-2
Certificates, the Class B Certificates, the Class C Certificates , the Class R-1
Certificates and the Class R-2 Certificates shall be in substantially the forms
set forth in Exhibits ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, A-6 and A-7 hereof, respectively,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Agreement or as may in the Depositor's
judgment be necessary, appropriate or convenient to comply, or facilitate
compliance, with applicable laws, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may
be required to comply with the rules of any applicable securities laws.
Section 5.03 EXECUTION AND DELIVERY OF THE CERTIFICATES.
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall execute, and the Registrar shall authenticate and deliver the Certificates
to or upon the order of the Depositor. The Certificates shall be executed and
authenticated by manual or facsimile signature on behalf of the Trustee by an
authorized signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates. No Certificate
shall be entitled to any benefit under this Agreement or be valid for any
purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided herein executed by the
Registrar by manual signature, and such certificate of authentication shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
Section 5.04 REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificateholders and the Trustee shall have the right to
inspect the Register during the Trustee's normal hours and to obtain copies
thereof, and the Trustee shall have the right to rely upon a certificate
executed on behalf of the Registrar by an Authorized Officer thereof as to the
names and addresses of the Certificateholders of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Certificateholders of a majority of the aggregate Percentage Interests
represented by the Offered Certificates then Outstanding, or if there are no
longer any Offered Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Residual Certificates, the Trustee will
give the Certificateholders prompt written notice of the appointment of such
Registrar and of the location, and any change in the location, of the Register.
In connection with any such appointment the annual fees of the bank then serving
as Trustee and Registrar shall thenceforth be reduced by the amount to be agreed
upon by the Trustee and the Servicer at such time and the reasonable fees of the
Registrar shall be paid, but only to the extent of the amount by which the
Trustee Fee shall have been correspondingly reduced, as expenses of the Trust
Fund, pursuant to Section 7.05 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender for
registration of transfer of any Certificate at the office designated as the
Corporate Trust Office, upon the direction of the Registrar the Trustee shall
execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or percentage interest of the
Certificate so surrendered.
(c) At the option of any Certificateholder, Certificates of any Class owned
by such Certificateholder may be exchanged for other Certificates authorized of
like Class and tenor and a like aggregate original principal amount or
percentage interest and bearing numbers not contemporaneously outstanding, upon
surrender of the Certificates to be exchanged at the Corporate Trust Office.
Whenever any Certificate is so surrendered for exchange, upon the direction of
the Registrar, the Trustee shall execute, authenticate and deliver the
Certificate or Certificates which the Certificateholder making the exchange is
entitled to receive.
(d) All Certificates issued upon any registration of transfer or exchange
of Certificates shall be valid evidence of the same ownership interests in the
Trust Fund and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the
Certificateholder thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Registrar or
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Certificates.
(g) It is intended that the Offered Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of one or more fully
registered Certificates of such Class. Upon initial issuance, the ownership of
each such Certificate shall be registered in the Register in the name of Cede &
Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, the Class A Certificates shall be issued in
denominations of no less than $1,000 and integral multiples $1 in excess
thereof. On the Startup Day, the Class M-1, Class M-2, Class B Certificates and
Class C Certificates shall be issued in denominations of no less than $25,000
and integral multiples of $1 in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and deliver
the Representation Letter with the Depository.
With respect to the Offered Certificates registered in the Register in the
name of Cede & Co., as nominee of the Depository, the Depositor, the Servicer,
the Seller and the Trustee shall have no responsibility or obligation to Direct
or Indirect Participants or beneficial owners for which the Depository holds
Offered Certificates from time to time as a Depository. Without limiting the
immediately preceding sentence, the Depositor, the Servicer, the Seller and the
Trustee shall have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect
Participant with respect to the ownership interest in the Offered Certificates,
(ii) the delivery to any Direct or Indirect Participant or any other Person,
other than a registered Certificateholder of an Offered Certificate as shown in
the Register, of any notice with respect to the Offered Certificates or (iii)
the payment to any Direct or Indirect Participant or any other Person, other
than a registered Certificateholder of an Offered Certificate as shown in the
Register, of any amount with respect to any distribution of principal or
interest on the Offered Certificates. No Person other than a registered
Certificateholder of an Offered Certificate as shown in the Register shall
receive a certificate evidencing such Offered Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof requiring distributions to
be made only to registered Certificateholders appearing as such in the
registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Offered Certificates and the Depositor or the Trustee is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to terminate
the book-entry system through the Depository, the Offered Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Depositor may determine that the Offered Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Depositor and at the Depositor's expense, or
such depository's agent or designee. If the Depositor does not select such
alternative global book-entry system, then the Offered Certificates may be
registered in such name or names registered Certificateholders of Offered
Certificates transferring the Offered Certificates shall designate, in
accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the contrary,
so long as any of the Offered Certificates is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Offered Certificates and all notices with respect to such Offered
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee harmless, then, in the absence of notice to the Trustee or the
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute and the Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Class, tenor and aggregate principal
amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the Registrar
or Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto.
Every new Certificate issued pursuant to this Section in exchange for or in
lieu of any mutilated, destroyed, lost or stolen Certificate shall constitute
evidence of a substitute interest in the Trust Fund, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Certificates of the same Class duly issued hereunder and such mutilated,
destroyed, lost or stolen Certificate shall not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 PERSONS DEEMED CERTIFICATEHOLDERS.
The Trustee, the Depositor, the Registrar and the Servicer, and any agent
of the Trustee, the Depositor, the Registrar and the Servicer, may treat the
Person in whose name any Certificate is registered as the Certificateholder of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever and the Trustee or any agent
of the Trustee shall not be affected by notice to the contrary.
Section 5.07 CANCELLATION.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy.
Section 5.08 LIMITATIONS ON TRANSFER OF OWNERSHIP RIGHTS.
No sale or other transfer of record or beneficial ownership of a Residual
Certificate (whether pursuant to a purchase, a transfer resulting from a default
under a secured lending agreement or otherwise) shall be made (i) to a
Disqualified Organization or an agent of a Disqualified Organization or (ii) to
a Non-United Stated Person. The transfer, sale or other disposition of a
Residual Certificate (whether pursuant to a purchase, a transfer resulting from
a default under a secured lending agreement or otherwise) to a Disqualified
Organization or to a Non-United States Person shall be deemed to be of no legal
force or effect whatsoever and such transferee shall not be deemed to be a
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Residual Certificate . Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Residual Certificate nor authenticate and make
available any new Residual Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit I.
Each holder of a Residual Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08.
No other sale or other transfer of record or beneficial ownership of a
Class C Certificate or a Residual Certificate shall be made unless such transfer
is exempt from the registration requirements of the Securities Act and any
applicable state securities laws or is made in accordance with said Act and
laws. In the event such a transfer (other than the initial transfer from the
Depositor) is to be made within three years from the Startup Day, (i) the
Trustee or the Depositor shall require a written opinion of counsel acceptable
to and in form and substance satisfactory to the Depositor in the event that
such transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Act and laws or is being made
pursuant to said Act and laws, which opinion of counsel shall be an expense of
the transferor, and (ii) the Trustee shall require the transferee to execute an
investment letter acceptable to and in form and substance reasonably
satisfactory to the Trustee certifying to the Trustee and the Depositor the
facts surrounding such transfer, which investment letter shall be an expense of
the transferee. The Certificateholder of a Class C Certificate or Residual
Certificate, as the case may be, desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Depositor, the Servicer and the
Seller against any liability that may result if the transfer is not so exempt or
is not made in accordance with such federal and state laws.
No other sale or other transfer of record or beneficial ownership of any
Certificate other than a Class A Certificate shall be made to any Plan subject
to ERISA or Section 4975 of the Code, any Person acting, directly or indirectly,
on behalf of any such Plan or any Person acquiring such Certificates with "Plan
Assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. section 2510.3-101. The Certificateholder of a
Certificate other than a Class A Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Servicer and the Seller against any liability that may result if the transfer
does not in fact comply with the preceding sentence.
No sale or other transfer of any Offered Certificate may be made to the
Depositor, the Seller or the Servicer. No sale or other transfer of any Offered
Certificate may be made to an affiliate of the Seller unless the Trustee shall
have been furnished with an opinion of counsel acceptable to the Trustee
experienced in federal bankruptcy matters to the effect that such sale or
transfer would not adversely affect the character of the conveyance of the
Mortgage Loans by the Seller to the Depositor as a sale. No sale or other
transfer of the Residual Certificate issued to the Tax Matters Person on the
Startup Day may be transferred or sold to any Person, except to a person who
accepts the appointment of Tax Matters Person pursuant to Section 11.18 hereof.
Section 5.09 ASSIGNMENT OF RIGHTS.
A Certificateholder may pledge, encumber, hypothecate or assign all or any
part of its right to receive distributions hereunder, but such pledge,
encumbrance, hypothecation or assignment shall not constitute a transfer of an
ownership interest sufficient to render the transferee a Certificateholder of
the Trust Fund without compliance with the provisions of Section 5.04 and
Section 5.08 hereof.
ARTICLE VI
COVENANTS
Section 6.01 DISTRIBUTIONS.
On each Distribution Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Distribution
Date to the address of the Person entitled thereto as it appears in the Register
or (ii) if requested by any Certificateholder in writing not later than five
Business Days prior to the applicable Record Date (which request shall remain in
effect unless it has been withdrawn), to such Certificateholder by wire transfer
to an account within the United States designated by such Certificateholder, on
each Distribution Date, in each case to each Certificateholder of record on the
immediately preceding Record Date.
Section 6.02 MONEY FOR DISTRIBUTIONS TO BE HELD IN TRUST; WITHHOLDING.
(a) All payments of amounts due and payable with respect to any Certificate
are to be made from amounts withdrawn from the Certificate Account, and shall be
made by and on behalf of the Trustee. No amounts so withdrawn from the
Certificate Account shall be applied for purposes other than payments of
Certificates except as provided in this Agreement.
(b) Whenever the Trustee has appointed one or more Paying Agents pursuant
to Section 11.15 hereof, the Trustee shall, on the Business Day immediately
preceding each Distribution Date, deposit with such Paying Agents in immediately
available funds an aggregate sum sufficient to pay the amounts then becoming due
(to the extent funds are then available for such purpose in the Certificate
Account for the Class to which such amounts are due). Such sum shall be held in
trust for the benefit of the Certificateholders entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Trustee shall require each Paying Agent to comply with all
requirements of the Code and applicable state and local law with respect to the
withholding from any distributions made by it to any Certificateholder of any
applicable withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Offered Certificate and remaining
unclaimed by the Certificateholder of such Certificate for the period then
specified in the escheat laws of the State of New York after such amount has
become due and payable shall be discharged from such trust and be paid to the
Certificateholders of the Residual Certificates and all liability of the Trustee
or such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Trustee or such Paying Agent before being required
to make any such payment, may, at the expense of the Trust Fund, cause to be
published once, in the eastern edition of THE WALL STREET JOURNAL, notice that
such money remains unclaimed and that, after a date specified therein, which
shall be not fewer than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be paid to the Certificateholders of
the Residual Certificates. The Trustee shall, at the direction of the Depositor,
also adopt and employ, at the expense of the Trust Fund, any other reasonable
means of notification of such payment (including but not limited to mailing
notice of such payment to Certificateholders whose right to or interest in
moneys due and payable but not claimed is determinable from the records of the
Registrar, the Trustee or any Paying Agent, at the last address of record for
each such Certificateholder).
Section 6.03 PROTECTION OF TRUST FUND.
(a) The Trustee will hold the Trust Fund in trust for the benefit of the
Certificateholders and, at the request of the Depositor, will from time to time
execute and deliver all such supplements and amendments hereto subject to
Section 11.14 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request from the
Depositor, to:
(i) more effectively hold in trust all or any portion of the Trust
Fund;
(ii) perfect, publish notice of, or protect the validity of any grant
made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Fund and the rights of
the Trustee, and the ownership interests of the Certificateholders
represented thereby, in such Trust Fund against the claims of all Persons
and parties.
The Trustee shall send copies of any request received from the Depositor to
take any action pursuant to this Section 6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement or the
Certificateholders, by action, suit or proceeding at law or equity, provided,
however, that nothing in this Section shall require any action by the Trustee
unless the Trustee shall first (i) have been furnished indemnity satisfactory to
it and (ii) when required by this Agreement, have been requested by the
Certificateholders of a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding or, if there are no longer any Offered
Certificates then outstanding, by the Controlling Non-Offered
Certificateholders.
Section 6.04 [INTENTIONALLY OMITTED]
Section 6.05 NEGATIVE COVENANTS.
The Trustee will not permit the Trust Fund to:
(i) sell, transfer, exchange or otherwise dispose of any of the
Trust Fund except as expressly permitted by this Agreement;
(ii) incur, assume or guaranty any indebtedness of any Person except
pursuant to this Agreement;
(iii) dissolve or liquidate in whole or in part, except pursuant to
Article IX hereof; or
(iv)(A) permit the validity or effectiveness of this Agreement to be
impaired, or permit any Person to be released from any covenants or
obligations with respect to the Trust Fund or the Certificates under this
Agreement, except as may be expressly permitted hereby or (B) permit any
lien, charge, adverse claim, security interest, mortgage or other
encumbrance to be created or extend to or otherwise arise upon or burden
the Trust Fund or any part thereof or any interest therein or the proceeds
thereof.
Section 6.06. NO OTHER POWERS.
The Trustee will not permit the Trust Fund to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07. LIMITATION OF SUITS.
No Certificateholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Agreement or for the appointment of
a receiver or Trustee of the Trust Fund, or for any other remedy with respect to
an event of default hereunder, unless:
(i) such Certificateholder has previously given written notice to the
Depositor and the Trustee of such Certificateholder's intention to
institute such proceeding;
(ii) the Certificateholders of not less than 25% of the Percentage
Interests represented by the Offered Certificates then Outstanding or, if
there are no Offered Certificates then Outstanding, the Controlling
Non-Offered Certificateholders, shall have made written request to the
Trustee to institute such proceeding in its own name as Trustee;
(iii) such Certificateholder or Certificateholders have offered to the
Trustee reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(iv) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such proceeding;
(v) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Certificateholders of a
majority of the Percentage Interests represented by the Offered
Certificates or, if there are no Offered Certificates then Outstanding, by
the Controlling Non-Offered Certificateholders;
it being understood and intended that no one or more Certificateholders shall
have any right in any manner by virtue of, or by availing themselves of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Certificateholder of the same Class or to obtain or to seek to obtain
priority or preference over any other Certificateholder of the same Class or to
enforce any right under this Agreement, except in the manner herein provided and
for the equal and ratable benefit of all the Certificateholders of the same
Class.
In the event the Trustee shall receive conflicting or inconsistent requests
and indemnity from two or more groups of Certificateholders, each representing
less than a majority of the applicable Class of Certificates and each conforming
to paragraphs (i)-(v) of this Section 6.07, the Trustee in its sole discretion
may determine what action, if any, shall be taken, notwithstanding any other
provision of this Agreement.
Section 6.08 [INTENTIONALLY OMITTED]
Section 6.09 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided herein, no right or remedy herein conferred
upon or reserved to the Trustee or the Certificateholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. Except as otherwise provided herein, the assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10 DELAY OR OMISSION NOT WAIVER.
No delay of the Trustee or any Certificateholder of any Certificate to
exercise any right or remedy under this Agreement with respect to any event
described in Section 8.20(a) shall impair any such right or remedy or constitute
a waiver of any such event or an acquiescence therein. Every right and remedy
given by this Article VI or by law to the Trustee or the Certificateholders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or the Certificateholders, as the case may be.
Section 6.11 CONTROL BY CERTIFICATEHOLDERS.
The Certificateholders of a majority of the Percentage Interests
represented by the Offered Certificates then Outstanding, or if there are no
longer any Offered Certificates then Outstanding, by the Controlling Non-Offered
Certificateholders, may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee with respect to the
Certificates or exercising any trust or power conferred on the Trustee with
respect to the Certificates or the Trust Fund, including, but not limited to,
those powers set forth in Section 6.03 and Section 8.20 hereof, provided that:
(i) such direction shall not be in conflict with any rule of law or
with this Agreement;
(ii) the Trustee shall have been provided with indemnity satisfactory
to it; and
(iii) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with such direction;
provided, however, that the Trustee need take any action which it
determines might involve it in liability or may be unjustly prejudicial to
the Certificateholders not so directing.
Section 6.12 INDEMNIFICATION OF THE DEPOSITOR.
The Depositor agrees to indemnify and hold the Trustee and each
Certificateholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and other costs, fees and
expenses that the Trustee and any Certificateholder may sustain in any way
related to the breach by the Depositor of its representations and warranties set
forth in this Agreement; provided, however, that in no event shall the Depositor
be liable to the Trustee or the Certificateholders pursuant to this Section 6.12
in an aggregate amount in excess of the proceeds received by the Depositor from
the sale of the Offered Certificates.
Section 6.13 ACCESS TO CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
(a) If any Certificateholder (for purposes of this Section 6.13, an
"Applicant") applies in writing to the Trustee, and such application states that
the Applicant desires to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicant proposes to
transmit, then the Trustee shall, at the expense of such Applicant, within ten
(10) Business Days after the receipt of such application, furnish or cause to be
furnished to such Applicant a list of the names and addresses of the
Certificateholders of record as of the most recent Distribution Date.
(b) Every Certificateholder, by receiving and holding such list, shall be
deemed to have agreed with the Trustee that the Trustee shall not be held
accountable in any way by reason of the disclosure of any information as to the
names and addresses of the Certificateholders hereunder, regardless of the
source from which such information was derived.
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 COLLECTION OF MONEY.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement, including all payments due on the
Mortgage Loans in accordance with the respective terms and conditions of such
Mortgage Loans and required to be paid over to the Trustee by the Servicer or by
any Sub-Servicer. The Trustee shall hold all such money and property received by
it as part of the Trust Fund and shall apply it as provided in this Agreement.
Section 7.02 ESTABLISHMENT OF ACCOUNTS.
The Trustee shall cause to be established on the Startup Day, and shall
maintain, at the Corporate Trust Office, the Certificate Account which shall be
held by the Trustee on behalf of the Certificateholders.
Section 7.03 DISTRIBUTIONS.
(a) The Trustee shall deposit to the Certificate Account, without
duplication, upon receipt, the proceeds of any liquidation of the assets of the
Trust Fund and the Monthly Remittance remitted by the Servicer pursuant to
Section 8.08(d)(ii).
(b) On each Distribution Date, the Trustee shall cause the following
amounts, in the following order of priority, to be distributed by REMIC I to
REMIC II on account of the REMIC I Regular Interests or withdrawn from the
Certificate Account and distributed to the holders of the Class R-1
Certificates, as the case may be:
INTEREST: On each Distribution Date the Interest Remittance Amount will be
distributed in the following order of priority:
FIRST, to REMIC I Regular Interest LT-A, Uncertificated Interest for such
REMIC I Regular Interest for such Distribution Date;
SECOND, to REMIC I Regular Interest LT-M-1, Uncertificated Interest for
such REMIC I Regular Interest for such Distribution Date;
THIRD, to REMIC I Regular Interest LT-M-2, Uncertificated Interest for such
REMIC I Regular Interest for such Distribution Date;
FOURTH, to REMIC I Regular Interest LT-B, Uncertificated Interest for such
REMIC I Regular Interest for such Distribution Date;
FIFTH, to REMIC I Regular Interest LT-OC, Uncertificated Interest for such
REMIC I Regular Interest for such Distribution Date; and
SIXTH, to the holders of the Class R-1 Certificates.
PRINCIPAL: On each Distribution Date the Principal Remittance Amount will
be distributed in the following order of priority:
FIRST, to REMIC I Regular Interest LT-OC, until the Uncertificated Balance
of REMIC I Regular Interest LT-OC has been reduced to zero;
SECOND, to REMIC I Regular Interest LT-B, until the Uncertificated Balance
of REMIC I Regular Interest LT-B has been reduced to zero;
THIRD, to REMIC I Regular Interest LT-M-2, until the Uncertificated Balance
of REMIC I Regular Interest LT-M-2 has been reduced to zero;
FOURTH, to REMIC I Regular Interest LT-M-1, until the Uncertificated
Balance of REMIC I Regular Interest LT-M-1 has been reduced to zero;
FIFTH, to REMIC I Regular Interest LT-A, until the Uncertificated Balance
of REMIC I Regular Interest LT-A has been reduced to zero; and
SIXTH, to the holders of the Class R-1 Certificates.
(c) On each Distribution Date, the Trustee shall cause the following
amounts to be withdrawn from the Certificate Account and distributed, in the
following order of priority, by REMIC II to the holders of the REMIC II Regular
Certificates and the holders of the Class R-2 Certificates, as the case may be:
INTEREST: On each Distribution Date the Interest Remittance Amount will be
distributed to in the following order of priority:
FIRST, to the Trustee, the Trustee Fee;
SECOND, to the Holders of the Class A Certificates, the Class A Current
Interest plus the Interest Carry Forward Amount with respect to the Class A
Certificates; PROVIDED, that if the Interest Remittance Amount less the
amount paid to the Trustee as the Trustee Fee (such amount the "Interest
Amount Available") is not sufficient to make a full distribution of
interest to the Class A Certificates, the amount of the shortfall will be
carried forward with accrued interest;
THIRD, to the extent of the Interest Amount Available then remaining, to
the Holders of the Class M-1 Certificates, the Class M-1 Current Interest;
FOURTH, to the extent of the Interest Amount Available then remaining, to
the Holders of the Class M-2 Certificates, the Class M-2 Current Interest;
FIFTH, to the extent of the Interest Amount Available then remaining, to
the Holders of the Class B Certificates, the Class B Current Interest; and
SIXTH, the Monthly Excess Cashflow Amount shall be applied as described
under Section 7.03(d).
PRINCIPAL: On each Distribution Date (a) before the Stepdown Date or (b)
with respect to which a Trigger Event is in effect, the Trustee shall distribute
to the Holders of the Class A Certificates 100% of the Principal Distribution
Amount until the Certificate Principal Balance of the Class A Certificates has
been reduced to zero.
On each Distribution Date (a) on or after the Stepdown Date and (b) as long
as a Trigger Event is not in effect and is not continuing, the Trustee shall
distribute to the Holders of all Classes of the Offered Certificates principal,
in the order of priority, in the amounts set forth below and to the extent of
the Principal Distribution Amount as follows:
FIRST, the lesser of (x) the Principal Distribution Amount and (y) the
Class A Principal Distribution Amount shall be distributed to the Holders
of the Class A Certificates until the Class A Certificate Principal Balance
has been reduced to zero;
SECOND, the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the amount distributed to the Holders of the Class A
Certificates in clause FIRST above and (y) the Class M-1 Principal
Distribution Amount shall be distributed to the Holders of the Class M-1
Certificates, until the Class M-1 Certificate Principal Balance has been
reduced to zero;
THIRD, the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amount distributed to the Holders of the
Class A Certificates in clause FIRST above and the amount distributed to
the Holders of the Class M-1 Certificates in clause SECOND above and (y)
the Class M-2 Principal Distribution Amount shall be distributed to the
Holders of the Class M-2 Certificates, until the Class M-2 Certificate
Principal Balance has been reduced to zero;
FOURTH, the lesser of (x) the excess of (i) the Principal Distribution
Amount over (ii) the sum of the amount distributed to the Holders of the
Class A Certificates pursuant to clause FIRST above, the amount distributed
to the Holders of the Class M-1 Certificates pursuant to clause SECOND
above and the amount distributed to the Holders of the Class M-2
Certificates pursuant to clause THIRD above and (y) the Class B Principal
Distribution Amount shall be distributed to the Holders of the Class B
Certificates, until the Class B Certificate Principal Balance has been
reduced to zero; and,
FIFTH, any amount of the Principal Distribution Amount remaining after
making all of the distributions in clauses FIRST, SECOND, THIRD and FOURTH
above shall be distributed as part of the Monthly Excess Cashflow Amount as
set forth in Section 7.03(d).
Notwithstanding the foregoing, if a Trigger Event exists after the
Certificate Principal Balance of the Class A Certificates has been reduced to
zero, principal will be distributed exclusively to the Class M-1 Certificates
and, after the Certificate Principal Balance of the Class M-1 Certificates has
been reduced to zero, exclusively to the Class M-2 Certificates and, after the
Certificate Principal Balance of the Class M-2 Certificates has been reduced to
zero, exclusively to the Class B Certificates.
(d) On any Distribution Date, the sum of the Monthly Excess Cashflow Amount
is required to be applied in the following order of priority on such
Distribution Date, without duplication:
(1) to fund the Class A Interest Carry Forward Amount, if any, for such
Distribution Date;
(2) to fund the Extra Principal Distribution Amount for such Distribution
Date;
(3) to fund the Class M-1 Interest Carry Forward Amount, if any, for such
Distribution Date;
(4) to fund the Class M-1 Realized Loss Amortization Amount for such
Distribution Date;
(5) to fund the Class M-2 Interest Carry Forward Amount, if any, for such
Distribution Date;
(6) to fund the Class M-2 Realized Loss Amortization Amount for such
Distribution Date;
(7) to fund the Class B Interest Carry Forward Amount, if any, for such
Distribution Date;
(8) to fund the Class B Realized Loss Amortization Amount for such
Distribution Date;
(9) to the Servicer to the extent of any unreimbursed Delinquency Interest
Advances or Servicing Advances;
(10) if a Subordinated Trigger Event exists, an amount equal to the excess,
if any, of the Principal Remittance Amount over the sum of the Class A
Principal Distribution Amount, the Class M-1 Principal Distribution
Amount, the Class M-2 Principal Distribution Amount and the Class B
Principal Distribution Amount, to the holders of the Class B
Certificates, the Class M-2 Certificates and the Class M-1
Certificates, in that order, in each case until the Certificate
Principal Balance of such Class of Subordinate Certificates has been
reduced to zero;
(11) to the holders of the Class A Certificates, any Available Funds Cap
Carry Forward Amount with respect to such Class;
(12) to the holders of the Class M-1 Certificates, any Available Funds Cap
Carry Forward Amount with respect to such Class;
(13) to the holders of the Class M-2 Certificates, any Available Funds Cap
Carry Forward Amount with respect to such Class;
(14) to the holders of the Class B Certificates, any Available Funds Cap
Carry Forward Amount with respect to such Class;
(15) to the holders of the Class C Certificates, the Class C Interest
Distribution Amount;
(16) to the holders of the Class C Certificates, the Class C Allocated Loss
Carry Forward Amount, if any;
(17) to the holders of the Class C Certificates, the Class C Principal
Distribution Amount, in reduction of the Certificate Principal Balance
thereof, until the Certificate Principal Balance thereof equals the
Targeted Overcollateralization Amount; and
(18) to the Holders of the Class R-2 Certificates.
(e) On each Distribution Date, after taking into account all distributions
of the Interest Remittance Amount and the Principal Remittance Amount, the
Trustee shall allocate the excess, if any, of the aggregate Uncertificated
Balance of the REMIC I Regular Interests over the aggregate Loan Balance of the
Mortgage Loans as of the last day of the related Due Period to reduce the
Uncertificated Balance of the REMIC I Regular Interests in the following order
of priority:
(i) to REMIC I Regular Interest LT-OC until the Uncertificated
Balance thereof is reduced to zero;
(ii) to REMIC I Regular Interest LT-B until the Uncertificated
Balance thereof is reduced to zero;
(iii) to REMIC I Regular Interest LT-M-2 until the Uncertificated
Balance thereof is reduced to zero;
(iv) to REMIC I Regular Interest LT-M-1 until the Uncertificated
Balance thereof is reduced to zero; and
(v) to REMIC I Regular Interest LT-A until the Uncertificated
Balance thereof is reduced to zero.
On each Distribution Date, after taking into account all distributions on
such Distribution Date, the Trustee shall allocate the excess, if any, of the
aggregate Certificate Principal Balance of the Regular Certificates over the
aggregate Loan Balance of the Mortgage Loans as of the last day of the related
Due Period to reduce the Certificate Principal Balance of the Class C
Certificates, until the Certificate Principal Balance of the Class C
Certificates has been reduced to zero. On each Distribution Date, after taking
into account all distributions of the Principal Distribution Amount on such
Distribution Date, the Trustee shall allocate the Applied Realized Loss Amount,
if any, to reduce the Certificate Principal Balance of the Subordinate
Certificates in the following order of priority:
(i) to the Class B Certificates, the Class B Applied Realized
Loss Amount Balance is reduced to zero;
(ii) to the Class M-2 Certificates, the Class M-2 Applied
Realized Loss Amount Balance is reduced to zero; and
(iii) to the Class M-1 Certificates, the Class M-1 Applied
Realized Loss Amount Balance is reduced to zero.
(f) Notwithstanding anything above, the aggregate amounts distributed on
all Distribution Dates to the Certificateholders of the Certificates on account
of principal pursuant to clauses (b) and (c) shall not exceed the original
Certificate Principal Balance of such Certificates.
(g) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund and all ownership interests of the Certificateholders
in such distributions, shall be as set forth in this Agreement. In accordance
with the foregoing, the interests of the Certificateholders of the Class C
Certificates and the Residual Certificates in amounts deposited in the Accounts
from time to time shall not vest unless and until such amounts are distributed
in respect of such Class C Certificates or Residual Certificates, as the case
may be, in accordance with the terms of this Agreement. Notwithstanding anything
contained in this Agreement to the contrary, the Certificateholders of the Class
C Certificates and the Residual Certificates shall not be required to refund any
amount properly distributed on the Class C Certificates or Residual
Certificates, as the case may be, pursuant to this Section 7.03.
Section 7.04 [INTENTIONALLY OMITTED]
Section 7.05 INVESTMENT OF ACCOUNTS.
(a) Consistent with any requirements of the Code, with respect to the
Collection Account and the Certificate Account, all or a portion of either such
Account shall be invested and reinvested by the Trustee as directed in writing
by the Servicer in one or more Eligible Investments bearing interest or sold at
a discount. The bank serving as Trustee or any affiliate thereof may be the
obligor on any investment which otherwise qualifies as an Eligible Investment.
The Servicer hereby directs the Trustee to invest all amounts as may from time
to time be in the Certificate Account in The First National Bank of Chicago's
Corporate Trust Short Term Investment Fund, so long as it is an Eligible
Investment and for so long as such investment direction is not revoked in
writing by the Servicer. No investment in any Account shall mature later than
the Business Day immediately preceding the Business Day on which the funds in
such Account which are so invested are required under this Agreement to be
remitted from such Account. The Trustee shall not be liable for interest or
compensation on uninvested funds except as may be specifically agreed in
writing.
(b) If any amounts are needed for disbursement from any Account held by the
Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) Subject to Section 10.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in the Collection Account held by the
Trustee resulting from any loss on any Eligible Investment included therein
(except to the extent that the bank serving as Trustee is the obligor thereon).
(d) If the Servicer shall have failed to give investment directions to the
Trustee with respect to the investment of amounts in either Account, then the
Trustee shall invest (i) amounts in the Certificate Account in The First
National Bank of Chicago's Corporate Trust Short Term Investment Fund, so long
as it is an Eligible Investment, subject to the maturity requirement set forth
in Section 7.05(a) above and (ii) amounts in the Collection Account in money
market funds described in Section 7.07(h), which shall be redeemable without
penalty no later than the Business Day immediately preceding the next
Determination Date.
(e) All income or other gain from investments in any Account shall be
deposited in such Account immediately on receipt, subject to withdrawal for the
account of the Servicer in accordance with Section 8.08(b), and any loss
resulting from such investments shall be charged to such Account, as
appropriate, subject to the requirement of Section 8.08(b) that the Servicer
contribute funds in an amount equal to such loss. Income from investments in the
Certificate Account shall be payable by the Trustee to the Servicer as realized.
Section 7.06 [INTENTIONALLY OMITTED].
Section 7.07 ELIGIBLE INVESTMENTS.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and unconditionally
guaranteed as to the timely payment of principal and interest by, the United
States or any agency or instrumentality thereof, provided the timely payment of
such obligations are backed by the full faith and credit of the United States;
(b) Federal Housing Administration debentures; FHLMC senior debt
obligations, and FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; and consolidated senior debt obligations of any
Federal Home Loan Banks; provided, that any such investment shall be rated in
one of the two highest ratings categories by ▇▇▇▇▇'▇, S&P and Fitch;
(c) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated F-1+ or
better by Fitch, A-1+ or better by S&P and P-1 by ▇▇▇▇▇'▇;
(d) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by ▇▇▇▇▇'▇, BBB or better by S&P and
BBB by Fitch) which has combined capital, surplus and undivided profits of at
least $50,000,000 which deposits are insured by the FDIC and held up to the
limits insured by the FDIC;
(e) Investment agreements provided:
1. The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations rated Aa2 or
better by ▇▇▇▇▇'▇, ▇▇ or better by S&P and AA or better by Fitch, and
2. Moneys invested thereunder may be withdrawn without any penalty,
premium or charge upon not more than one day's notice (provided such notice
may be amended or canceled at any time prior to the withdrawal date), and
3. The agreement is not subordinated to any other obligations of such
insurance company or bank, and
4. The same guaranteed interest rate will be paid on any future
deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel that such agreement is
an enforceable obligation of such insurance company or bank;
(f) Repurchase agreements collateralized by securities described in (a)
above with any registered broker/dealer subject to the Securities Investors
Protection Corporation's jurisdiction and subject to applicable limits therein
promulgated by Securities Investors Protection Corporation or any commercial
bank, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed
short-term or long-term obligation rated P-1 or Aa2, respectively, or better by
▇▇▇▇▇'▇, A-1+ or AA, respectively, or better by S&P and F-1+ or AA,
respectively, or better by Fitch, provided:
1. A master repurchase agreement or specific written repurchase
agreement governs the transaction, and
2. The securities are held free and clear of any lien by the Trustee
or an independent third party acting solely as agent for the Trustee, and
such third party is (i) a Federal Reserve Bank or (ii) a bank which is a
member of the FDIC and which has combined capital, surplus and undivided
profits of not less than $125 million and the Trustee shall have received
written confirmation from such third party that it holds such securities,
free and clear of any lien, as agent for the Trustee, and
3. A perfected first security interest under the Uniform Commercial
Code, or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31
C.F.R. 350.0 et seq., in such securities is created for the benefit of the
Trustee, and
4. The repurchase agreement has a term of thirty days or less and the
Trustee will value the collateral securities no less frequently than weekly
and will liquidate the collateral securities if any deficiency in the
required collateral percentage is not restored within two business days of
such valuation, and
5. 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% and such collateral securities must be valued
weekly and marked-to-market at current market price plus accrued interest
(g) Commercial paper (having original maturities of not more than 270 days)
rated in the highest short-term rating categories of Fitch, S&P and ▇▇▇▇▇'▇;
(h) Investments in no load money market funds registered under the
Investment Company Act of 1940 whose shares are registered under the Securities
Act or common trust funds in each case rated Aaa by ▇▇▇▇▇'▇, AAA by S&P and AAA
by Fitch if rated by Fitch; and
(i) any other investment approved in writing by each Rating Agency;
provided that no instrument described above shall evidence either the right to
receive (i) only interest with respect to the obligations underlying such
instrument or (ii) 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 Distribution Date unless otherwise provided in this Agreement
and that no instrument described hereunder may be purchased at a price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 ACCOUNTING AND DIRECTIONS BY TRUSTEE.
(a) By 12:00 noon New York time, on the Business Day preceding each
Distribution Date (or such earlier period as shall be agreed by the Depositor
and the Trustee), the Trustee shall notify (subject to the terms of Section
10.03(j) hereof, based solely on information provided to the Trustee by the
Servicer) the Depositor, the Seller and each Certificateholder of the following
information with respect to the next Distribution Date (which notification may
be given by facsimile or by telephone promptly confirmed in writing):
(i) The aggregate amount then on deposit in the Certificate Account;
(ii) The Class A Distribution Amount, the Class M-1 Distribution
Amount, the Class M-2 Distribution Amount and the Class B Distribution
Amount;
(iii) The application of the amounts described in clause (i)
preceding to the allocation and distribution of the related Class A
Distribution Amount, the related Class M-1 Distribution Amount, the
related Class M-2 Distribution Amount and the related Class B
Distribution Amount, on such Distribution Date in accordance with
Section 7.03 hereof;
(iv) The Certificate Principal Balance of each Class of the Offered
Certificates, the aggregate amount of the principal of each such Class
of Certificates to be paid on such Distribution Date and the remaining
Certificate Principal Balance of each such Class of Certificates
following any such payment;
(v) The amount, if any, of any Realized Losses for the related Due
Period; and
(vi) The amount of 60+ Day Delinquent Loans.
Section 7.09 REPORTS BY TRUSTEE TO CERTIFICATEHOLDERS.
(a) On each Distribution Date the Trustee shall report in writing to the
Seller, the Servicer, the Depositor, each Certificateholder, the Underwriters
and the Rating Agencies:
(i) the amount of the distribution with respect to each Class of
Certificates (based on a Certificate in the original principal amount of
$1,000);
(ii) the amount of such distributions to each Class allocable to
principal, separately identifying the aggregate amount of any Prepayments
or other recoveries of principal included therein;
(iii) the amount of such distributions to each Class allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) the Interest Carry Forward Amount for each Class;
(v) the principal amount of each Class of Regular Certificates
(based on a Certificate in the original principal amount of $1,000)
which will be Outstanding after giving effect to any payment of principal
on such Distribution Date;
(vi) the aggregate Loan Balance of all Mortgage Loans after giving
effect to any payment of principal on such Distribution Date;
(vii) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the Code and the
regulations promulgated thereunder to assist the Certificateholders in
computing their market discount;
(viii) the total of any Substitution Amounts and any Loan Purchase
Price amounts included in such distribution;
(ix) the weighted average Coupon Rate of the Mortgage Loans;
(x) whether a Trigger Event or Subordinated Trigger Event has
occurred;
(xi) the Available Funds Cap Carry Forward Amount for each Class of
Offered Certificates;
(xii) the Senior Enhancement Percentage;
(xiii) the Overcollateralization Amount and the Certificate Principal
Balance of each Class of the Offered Certificates then outstanding after
giving effect to any payment of principal on such Distribution Date;
(xiv) the amount of any Applied Realized Loss Amount, Realized Loss
Amortization Amount and Unpaid Realized Loss Amount for each Class as of
the close of such Distribution Date;
(xv) whether a Servicer Termination Trigger has occurred; and
(xvi) LIBOR for the Accrual Period that commences on such
Distribution Date.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section are conditioned upon such information being received
and the information provided in clauses (viii) and (ix) shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.08(d)(ii)(b) hereof.
(b) In addition, on each Distribution Date the Trustee will distribute to
the Depositor, each Certificateholder, the Underwriters and the Rating Agencies,
together with the information described in Subsection (a) preceding, the
following information with respect to the Mortgage Loans which is hereby
required to be prepared by the Servicer and furnished to the Trustee for such
purpose on or prior to the related Determination Date:
(i) the number and aggregate Loan Balances of Mortgage 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 next preceding such Distribution Date,
(ii) the status and the number and dollar amounts of all Mortgage
Loans in foreclosure proceedings as of the close of business on the last
Business Day of the calendar month next preceding such Distribution Date,
separately stating, for this purpose, all Mortgage 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 Mortgage Loans
of the related Mortgages involved in bankruptcy proceedings as of the close
of business on the last Business Day of the calendar month next preceding
such Distribution Date;
(iv) the existence and status of any REO Properties, as of the close
of business of the last Business Day of the month next preceding the
Distribution Date;
(v) the book value of any REO Property as of the close of business
on the last Business Day of the calendar month next preceding the
Distribution Date;
(vi) the amount of Cumulative Realized Losses; and
(vii) the aggregate Loan Balance of 60+ Day Delinquent Loans
(c) The Servicer shall furnish to the Trustee during the term of this
Agreement, such periodic, special, or other reports or information not
specifically provided for herein, as may be necessary, reasonable, or
appropriate with respect to the Trustee, or otherwise with respect to the
purposes of this Agreement, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the
Trustee may reasonably require; provided, that the Servicer shall be entitled to
be reimbursed by the requesting party for the fees and actual expenses
associated with providing such reports, if such reports are not generally
produced in the ordinary course of business.
Section 7.10 REPORTS BY TRUSTEE.
(a) The Trustee shall report to the Depositor, the Seller, the Underwriters
and each Certificateholder, with respect to the amount on deposit in the
Certificate Account and the identity of the investments included therein, as the
Depositor or the Seller may from time to time request. Without limiting the
generality of the foregoing, the Trustee shall, at the request of the Depositor
or the Seller transmit promptly to the Depositor and the Seller copies of all
accountings of receipts in respect of the Mortgage Loans furnished to it by the
Servicer and shall notify the Seller if any Monthly Remittance has not been
received by the Trustee when due.
(b) The Trustee shall, on behalf of the Trust Fund, cause to be filed with
the Securities and Exchange Commission any periodic reports required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder. Upon
the request of the Trustee, each of the Depositor and the Servicer shall
cooperate with the Trustee in the preparation of any such report and shall
provide to the Trustee in a timely manner all such information or documentation
as the Trustee may reasonably request in connection with the performance of its
duties and obligations under this Section 7.10(b).
ARTICLE VIII
SERVICING AND ADMINISTRATION OF THE MORTGAGE LOANS
Section 8.01 SERVICER AND SUB-SERVICERS.
Acting directly or through one or more Sub-Servicers as provided in Section
8.03, the Servicer shall service and administer the Mortgage Loans in accordance
with this Agreement and Accepted Servicing Practices 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.
Subject to Section 8.03 hereof, the Servicer may, and is hereby authorized
to, perform any of its servicing responsibilities with respect to all or certain
of the Mortgage 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 all the rights and powers of the Servicer with respect to such
Mortgage Loans under this Agreement.
Without limiting the generality of the foregoing, but subject to Sections
8.13 and 8.14, the Servicer in its own name or in the name of a Sub-Servicer is
hereby authorized and empowered and this subsection shall constitute a power of
attorney executed and delivered by the Trustee, on behalf of itself, the
Certificateholders and the Trustee or any of them, (i) to execute and deliver,
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
Mortgage Loans and with respect to the Properties, (ii) to institute foreclosure
proceedings or obtain a deed in lieu of foreclosure so as to effect ownership of
any Property in the name of the Servicer on behalf of the Trustee, and (iii) to
hold title to any Property upon such foreclosure or deed in lieu of foreclosure
on behalf of the Trustee; provided, however, that Section 8.14 shall constitute
an authorization from the Trustee to the Servicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Mortgage Loan paid in full (or with respect to which payment in full has been
escrowed). The Trustee shall execute any documentation furnished to it by the
Servicer for recordation by the Servicer in the appropriate jurisdictions as
shall be necessary to effectuate the foregoing. Subject to Sections 8.13 and
8.14, the Trustee shall execute any authorizations and other documents as the
Servicer or such Sub-Servicer shall reasonably request that are furnished to the
Trustee to enable the Servicer and such Sub-Servicer to carry out their
respective servicing and administrative duties hereunder.
The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, to (i) assert a claim against the Trust
Fund or (ii) assert jurisdiction over the Trust Fund.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Mortgage Loans (including any penalties in
connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09 hereof.
The relationship of the Servicer (and of any successor Servicer other than
the Trustee) to the Trustee under this Agreement is intended by the parties to
be that of independent contractor and not that of a joint venturer, partner or
agent of the Trustee, including but not limited to any act of the Servicer
performed in the name of the Trustee.
Section 8.02 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans, and shall follow
collection procedures consistent with this Agreement and the terms and
provisions of any applicable Insurance Policy. Consistent with the foregoing,
the Servicer may in its discretion waive or permit to be waived any late payment
charge, prepayment charge, assumption fee or any penalty interest in connection
with the prepayment of a Mortgage Loan or any other fee or charge which the
Servicer would be entitled to retain hereunder as servicing compensation. In the
event the Servicer shall consent to the deferment of the due dates for payments
due on a Note, the Servicer shall nonetheless make payment of any required
Delinquency Interest Advance with respect to the payments so extended to the
same extent as if such installment were due, owing and Delinquent and had not
been deferred, and shall be entitled to reimbursement therefor in accordance
with Section 8.09 hereof. Consistent with the terms of this Agreement, the
Servicer may also waive, modify or vary any term of any Mortgage Loan or consent
to the postponement of strict compliance with any such term or in any manner
grant indulgence to any Mortgagor if in the Servicer's determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders (taking into account any estimated
Realized Loss that might result absent such action); PROVIDED, HOWEVER, that the
Servicer may not modify materially or permit any Sub-Servicer to modify any
Mortgage Loan, including without limitation any modification that would change
the Mortgage Rate, forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Mortgage Loan or except in
connection with prepayments to the extent that such reamortization is not
inconsistent with the terms of the Mortgage Loan), or extend the final maturity
date of such Mortgage Loan, unless such Mortgage Loan is in default or, in the
judgment of the Servicer, such default is reasonably foreseeable.
Section 8.03 SUB-SERVICING AGREEMENTS BETWEEN SERVICER AND SUB-SERVICERS.
The Servicer may enter into Sub-Servicing Agreements for any servicing and
administration of Mortgage Loans with any institution that is in compliance with
the laws of each state necessary to enable it to perform its obligations under
such Sub-Servicing Agreement and (x) has (i) been designated an approved
seller-servicer by FHLMC or FNMA and (ii) has equity of at least $5,000,000, as
determined in accordance with generally accepted accounting principles or (y) is
a Servicer Affiliate. The Servicer shall give notice to the Trustee and the
Rating Agencies of the appointment of any Sub-Servicer. For purposes of this
Agreement, the Servicer shall be deemed to have received payments on Mortgage
Loans when any Sub-Servicer has received such payments. Each Sub-Servicer shall
be required to service the Mortgage 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 a
successor Servicer shall have the option to terminate such agreement without
payment of any fees if the original Servicer is terminated or resigns.
Section 8.04 SUCCESSOR SUB-SERVICERS.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and to
either itself directly service the related Mortgage Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05 LIABILITY OF SERVICER; INDEMNIFICATION.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Mortgage Loans. The Servicer shall be entitled to enter into
any agreement with a Sub-Servicer for indemnification of the Servicer by such
Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer (except The First National Bank of Chicago if it is
required to succeed the Servicer under this Agreement) agrees to indemnify and
hold the Trustee and each Certificateholder harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Trustee and any
Certificateholder may sustain in any way related to the failure of the Servicer
to perform its duties and service the Mortgage Loans in compliance with the
terms of this Agreement. The Servicer shall immediately notify the Trustee and
each Certificateholder if a claim is made by a third party with respect to this
Agreement, and the Servicer shall assume (with the consent of the Trustee) the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Servicer, the Trustee and/or
Certificateholder in respect of such claim. The Trustee shall reimburse the
Servicer from the Trust Fund for all amounts advanced by it pursuant to the
preceding sentence except when the claim results directly from the failure of
the Servicer to service and administer the Mortgage Loans in compliance with the
terms of this Agreement. The provisions of this Section 8.05 shall survive the
resignation or removal of the Trustee and the termination of this Agreement and
the payment of the outstanding Certificates.
Section 8.06 NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER, TRUSTEE OR
THE CERTIFICATEHOLDERS.
Any Sub-Servicing Agreement and any other transactions or services relating
to the Mortgage Loans involving a Sub-Servicer shall be deemed to be between the
Sub-Servicer and the Servicer alone and the Trustee and the Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer except as
set forth in Section 8.07.
Section 8.07 ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
TRUSTEE.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that the
Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between the Servicer and a Sub-Servicer shall be assumed simultaneously by
the Trustee without act or deed on the part of the Trustee; provided, however,
that the successor Servicer may terminate the Sub-Servicer as provided in
Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at the
expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08 COLLECTION ACCOUNT.
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Collection Account to be held as a trust account.
The Collection Account shall be identified on the records of the Designated
Depository Institution as follows: The First National Bank of Chicago, as
Trustee under the Pooling and Servicing Agreement dated as of August 1, 1997.
The Collection Account shall initially be established at, and the initial
Designated Depository Institution shall be, The First National Bank of Chicago.
If the institution at any time holding the Collection Account ceases to be
eligible as a Designated Depository Institution hereunder, then the Servicer
shall, within 30 days, 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 Collection Account shall
thenceforth be held as a trust account with a qualifying Designated Depository
Institution. The Servicer shall notify the Trustee and the Certificateholders if
there is a change in the name, account number or institution holding the
Collection Account.
Subject to Subsection (c) below, the Servicer shall deposit all receipts
required pursuant to Subsection (c) below and related to the Mortgage Loans in
the Collection Account on a daily basis (but no later than the first Business
Day after receipt).
(b) All funds in the Collection Account shall be held (i) uninvested (up to
the limits insured by the FDIC) or (ii) invested in Eligible Investments. Any
investments of funds in the Collection Account shall mature or be withdrawable
at par on or prior to the immediately succeeding Determination Date. Any
investment earnings on funds held in the Collection Account shall be for the
account of the Servicer and may only be withdrawn from the Collection Account by
the Servicer immediately following the remittance of the Monthly Remittance by
the Servicer. Any investment losses on funds held in the Collection Account
shall be for the account of the Servicer and promptly upon the realization of
such loss shall be deposited by the Servicer in the Collection Account. Any
references herein to amounts on deposit in the Collection Account shall refer to
amounts net of such investment earnings.
(c) The Servicer shall deposit in the Collection Account on the Business
Day after receipt all principal collections on the Mortgage Loans received after
the Cut-off Date including any Prepayments and Net Liquidation Proceeds and any
income from REO Properties and all interest due on the Mortgage Loans after
August 1, 1997, but net of (without duplication), (i) the Servicing Fee with
respect to each Mortgage Loan and other servicing compensation to the Servicer
as permitted by Section 8.15 hereof, (ii) principal collected on any Mortgage
Loan on or prior to the Cut-Off Date and interest due on any Mortgage Loan or
prior to ▇▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇▇) Net Liquidation Proceeds to the extent such Net
Liquidation Proceeds exceed the sum of (I) the Loan Balance of the related
Mortgage Loan immediately prior to liquidation plus (II) accrued and unpaid
interest on such Mortgage Loan (net of the Servicing Fee) to the date of such
liquidation, (iv) reimbursements for Delinquency Interest Advances and Servicing
Advances in accordance with Section 8.09 and (v) reimbursements for amounts
deposited in the Collection Account representing payments of principal and/or
interest on a Note by a Mortgagor which are subsequently returned by a
depository institution as unpaid (all such net amounts herein referred to as
"Daily Collections").
(d)(i) The Servicer may make withdrawals for its own account from the
amounts on deposit in the Collection Account, with respect to the Mortgage
Loans, only for the following purposes:
(A) to withdraw interest paid with respect to any Mortgage Loans that
was due on or prior to August 1, 1997;
(B) to withdraw investment earnings on amounts on deposit in the
Collection Account;
(C) to reimburse itself pursuant to Section 8.09 for unrecovered
Delinquency Interest Advances and Servicing Advances;
(D) to withdraw amounts that have been deposited to the Collection
Account in error; and
(E) to clear and terminate the Collection Account following the
termination of the Trust Fund pursuant to Article IX.
(ii) The Servicer shall (a) remit to the Trustee for deposit in the
Certificate Account by wire transfer, or otherwise make funds available in
immediately available funds, without duplication and only in the aggregate to
the extent of the Monthly Remittance, (i) the Daily Collections allocable to a
Due Period not later than the related Determination Date and Loan Purchase
Prices and Substitution Amounts together with (ii) Compensating Interest and
Delinquency Interest Advances to be paid by the Servicer and allocable to a Due
Period not later than the related Determination Date, and (b) on or before each
Determination Date, deliver to the Trustee a monthly servicing report,
containing the following information: principal and interest collected,
scheduled interest, Liquidated Loans, summary and detailed delinquency reports,
Liquidation Proceeds and other similar information concerning the servicing of
the Mortgage Loans and such other information as the Trustee shall reasonably
request. In addition, the Servicer shall inform the Trustee on each
Determination Date of the amounts of any Loan Purchase Prices or Substitution
Amounts so remitted during the related Due Period.
(iii) The Servicer shall provide to the Trustee the information described
in Section 8.08(d)(ii)(b) and in Section 7.09(b) to enable the Trustee to
perform its reporting requirements under Section 7.09 and the Trustee shall
forward such information to the Underwriters within five Business Days of
receipt thereof.
Section 8.09 DELINQUENCY INTEREST ADVANCES AND SERVICING ADVANCES.
The Servicer will be obligated to make by depositing into the Collection
Account on or prior to each Determination Date (and to remit to the Trustee on
each Determination Date as provided in Section 8.08(d)(ii)) a Delinquency
Interest Advance on each delinquent Mortgage Loan unless it determines in
accordance with Accepted Servicing Practices that the amount of such Delinquency
Interest Advance will ultimately not be recoverable from either payments to be
made by the borrower of such Mortgage Loan (exclusive of any possibility of a
deficiency judgment) or proceeds from the related Mortgaged Property.
Delinquency Interest Advances may be funded by the Servicer from subsequent
collections on the Mortgage Loans generally, and are reimbursable from (i)
future collections and (ii) Net Liquidation Proceeds, in each case with respect
to the related Mortgage Loan. Notwithstanding the Servicer's determination at
the time such Delinquency Interest Advance was made that it would not be a
nonrecoverable Delinquency Interest Advance, in the event such Delinquency
Interest Advance becomes a nonrecoverable Delinquency Interest Advance, the
Servicer will be entitled to reimbursement therefor from the Trust Fund and may
thereupon withdraw the amount of such nonrecoverable Delinquency Interest
Advance from general funds in the Collection Account. Any determination by the
Servicer that a proposed Delinquency Interest Advance, if made would be
nonrecoverable, or that a Delinquency Interest Advance previously made has
become nonrecoverable shall be evidenced by an Officer's Certificate delivered
to the Trustee prior to the close of business on the Determination Date.
Subject to the Servicer's good faith determination that such action would
not be a nonrecoverable Servicing Advance, the Servicer will advance all
"out-of-pocket" costs and expenses incurred in the performance of its servicing
obligations, including, but not limited to, the cost of (i) Preservation
Expenses, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of REO Property and (iv) advances and the
costs of any opinions required by Section 8.13, but the Servicer is only
required to pay such costs and expenses to the extent the Servicer determines in
good faith that such costs and expenses will be recoverable from the related
Mortgage Loan. Each such expenditure will constitute a "Servicing Advance". The
Servicer may recover Servicing Advances (x) from the Mortgagors to the extent
permitted by the Mortgage Loans or, if not recovered from the Mortgagor on whose
behalf such Servicing Advance was made, from Liquidation Proceeds realized upon
the liquidation of the related Mortgage Loan or (y) in the event that,
notwithstanding the Servicer's good faith determination at the time such
Servicing Advance was made that it would not be a nonrecoverable Servicing
Advance, such Servicing Advance becomes a nonrecoverable Servicing Advance, from
the Trust Fund and may thereupon withdraw the amount of such nonrecoverable
Servicing Interest Advance from general funds in the Collection Account. Any
determination by the Servicer that a proposed Servicing Advance, if made would
be nonrecoverable, or that a Servicing Advance previously made has become
nonrecoverable shall be evidenced by an Officer's Certificate delivered to the
Trustee. The Servicer shall be entitled to recover Servicing Advances from the
Liquidation Proceeds prior to the payment or remittance of any portion of such
Liquidation Proceeds to any other party to this Agreement.
Section 8.10 COMPENSATING INTEREST; REPURCHASE OF MORTGAGE LOANS.
If a Prepayment of a Mortgage Loan occurs during any Due Period, any
difference between the interest collected from the Mortgagor in connection with
such Prepayment and the full month's interest at the Coupon Rate less the
Servicing Fee ("Compensating Interest") shall be deposited by the Servicer (but
not in excess of the aggregate Servicing Fee for the related Due Period) to the
Collection Account on the next succeeding Determination Date and shall be
included in the Monthly Remittance to be made available to the Trustee on such
Determination Date.
The Servicer has the right and the option, but not the obligation, for
administrative convenience, to purchase for its own account any Mortgage Loan
which becomes Delinquent, in whole or in part, as to four consecutive monthly
installments or any Mortgage Loan as to which enforcement proceedings have been
brought by the Servicer pursuant to Section 8.13. Any such Loan so purchased
shall be purchased by the Servicer on a Determination Date at a purchase price
equal to the Loan Purchase Price thereof, which purchase price shall be
deposited in the Collection Account.
The Net Liquidation Proceeds from the disposition of any REO Property shall
be deposited in the Collection Account and remitted to the Trustee as part of
the Daily Collections remitted by the Servicer to the Trustee.
Section 8.11 MAINTENANCE OF INSURANCE.
The Servicer shall cause to be maintained with respect to each Mortgage
Loan a hazard insurance policy with a generally acceptable carrier that provides
for fire and extended coverage in an amount not less than the least of (i) the
outstanding principal balance of the Mortgage Loan, (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 ▇▇▇▇▇'▇, S&P and Fitch, it being understood and agreed
that such policy may contain a deductible clause, in which case the Servicer
shall, in the event that there shall not have been maintained on the related
Property a policy complying with the first sentence of this Section 8.11, and
there shall have been one or more losses which would have been covered by such
policy, deposit to the Collection Account from its own funds the amount not
otherwise payable under the blanket policy because of such deductible clause.
If the Mortgage Loan at the time of origination 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 current guidelines of the Federal Insurance Administration with a
generally acceptable carrier in an amount representing coverage of not less than
the least of (i) the outstanding principal balance of the Mortgage Loan, (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 reimburse the Trust
Fund out of the Servicer's own funds for any loss to the Trust Fund resulting
from the Servicer's failure to maintain or cause to be maintained insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
Section 8.12 DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION AGREEMENTS.
When a Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall, to the extent it has knowledge of such conveyance or prospective
conveyance, exercise its rights to accelerate the maturity of the related
Mortgage Loan under any "due-on-sale" clause contained in the related Mortgage
or Note; provided, however, that the Servicer shall not exercise any such right
if the "due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law or not in the best interest of the Trust Fund.
In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, pursuant to which such person becomes liable under the Note and,
unless prohibited by applicable law or the Mortgage Documents, the Mortgagor
remains liable thereon. If the foregoing is not permitted under applicable law,
the Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Note. The Servicer shall notify the Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement (indicating the File
to which it relates) which copy shall be added by the Trustee 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, the required monthly payment on the related Mortgage Loan shall not
be changed but shall remain as in effect immediately prior to the assumption or
substitution, the stated maturity or outstanding principal amount of such
Mortgage Loan shall not 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
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 REALIZATION UPON DEFAULTED MORTGAGE LOANS; INSPECTION.
The Servicer shall foreclose upon or otherwise comparably effect the
ownership in the name of the Servicer on behalf of the Trust Fund of Properties
relating to defaulted Mortgage Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10. In connection with such foreclosure or other
conversion, the Servicer shall exercise such of the rights and powers vested in
it hereunder, consistent with Accepted Servicing Practices including, but not
limited to, advancing funds for the payment of taxes, and insurance premiums.
Any amounts so advanced shall constitute "Servicing Advances" within the meaning
of Section 8.09 hereof. The Servicer shall sell any REO Property within 23
months (or such other period of time as the REMIC Provisions may permit) of its
acquisition by the Trust Fund, at such price as the Servicer deems necessary to
comply with this covenant unless the Seller obtains for the Trustee and the
Servicer an opinion of counsel experienced in federal income tax matters
reasonably acceptable to the Trustee, addressed to the Trustee and the Servicer,
to the effect that the holding by the Trust Fund of such REO Property for any
greater period will not result in the imposition of taxes on "Prohibited
Transactions" of the Trust Fund or REMIC I or REMIC II as defined in Section
860F of the Code or cause REMIC I or REMIC II to fail to qualify as a REMIC
under the REMIC Provisions at any time that any Certificates are outstanding.
Notwithstanding the generality of the foregoing provisions, the Servicer shall
manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by REMIC I or REMIC II of any "income from non-permitted
assets" within the meaning of Section 860F(a)(2)(B) of the Code or any "net
income from foreclosure property" which is subject to taxation under the REMIC
Provisions. Pursuant to its efforts to sell such REO Property, the Servicer
shall either itself or through an agent selected by the Servicer protect and
conserve such REO Property in the same manner and to such extent as is customary
in the locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Servicer deems to be in the best interest of
the Certificateholders for the period prior to the sale of such REO Property.
The Servicer shall take into account the existence of any hazardous substances,
hazardous wastes or solid wastes, as such terms are defined in the Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and Recovery Act of 1976, or other federal, state or local environmental
legislation, on a Property in determining whether to foreclose upon or otherwise
comparably convert the ownership of such Property.
The Servicer shall determine, with respect to each defaulted Mortgage Loan
and in accordance with Accepted Servicing Practices, 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 Mortgage Loan, whereupon
such Mortgage Loan shall become a "Liquidated Loan". After a Mortgage Loan has
become a Liquidated Loan, the Servicer shall promptly prepare and forward to the
Depositor and the Trustee a report detailing the Liquidation Proceeds received
from the Liquidated Loan, expenses incurred with respect thereto, and any loss
incurred in connection therewith.
Section 8.14 TRUSTEE TO COOPERATE; RELEASE OF FILES.
Upon the payment in full of any Mortgage Loan (including any liquidation of
such Mortgage 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 Trustee a
"Request for Release of Documents" (in a form substantially similar to FNMA Form
2009). Upon receipt of such Request for Release of Documents, the Trustee shall
promptly release the related File, in trust, in its reasonable discretion to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Servicer or the Trustee. Upon any such payment in full, or the receipt of
such notification that such funds have been placed in escrow, the Servicer is
authorized to give, as attorney-in-fact for the Trustee and the mortgagee under
the Mortgage which secured the Note, an instrument of satisfaction (or
assignment of Mortgage without recourse) regarding the Property relating to such
Mortgage, which instrument of satisfaction or assignment, as the case may be,
shall be delivered to the Person or Persons entitled thereto against receipt
therefor of payment in full, it being understood and agreed that no expense
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Collection Account. In lieu of
executing any such satisfaction or assignment, as the case may be, the Servicer
may prepare and submit to the Trustee a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto) in form for
execution by the Trustee with all requisite information completed by the
Servicer; in such event, the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with the
related File, as aforesaid.
From time to time and as appropriate in the servicing of any Mortgage Loan,
including, without limitation, foreclosure or other comparable conversion of a
Mortgage Loan or collection under any applicable Insurance Policy, the Trustee
shall (except in the case of the payment or liquidation pursuant to which the
related File is released to an escrow agent or an employee, agent or attorney of
the Trustee), upon request of the Servicer and delivery to the Trustee of a
receipt signed by an Authorized Officer of the Servicer, release the related
File to the Servicer and shall execute such documents as shall be necessary to
the prosecution of any such proceedings, including, without limitation, an
assignment without recourse of the related Mortgage to the Servicer. Such
receipt shall obligate the Servicer to return the File to the Trustee when the
need therefor by the Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a liquidation report, in physical or
electronic form, relating to such liquidation, the receipt shall be released by
the Trustee to the Servicer.
The Servicer shall have the right to accept applications of Mortgagors for
consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (w) the
Mortgagor, at its expense, shall have furnished to the Servicer an opinion of
counsel experienced in federal income tax matters reasonably acceptable to the
Servicer to the effect that such release, alteration, removal, demolition or
division will not cause (a) any federal tax to be imposed on REMIC I or REMIC
II, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b) REMIC I or REMIC
II to fail to qualify as a REMIC at any time that any Certificate is
outstanding, (x) the provisions of the related Note and Mortgage have been
complied with; (y) the Loan-to-Value Ratio after any release does not exceed the
Loan-to-Value Ratio of such Mortgage Loan as of the date of origination thereof;
and (z) the lien priority of the related Mortgage is not affected. Upon receipt
by the Trustee of an Officer's Certificate executed on behalf of the Servicer
setting forth the action proposed to be taken in respect of a particular
Mortgage Loan and certifying that the criteria set forth in the immediately
preceding sentence have been satisfied, the Trustee shall execute and deliver to
the Servicer the consent or partial release so requested by the Servicer. A
proposed form of consent or partial release, as the case may be, shall accompany
any Officer's Certificate delivered by the Servicer pursuant to this paragraph.
Section 8.15 SERVICING COMPENSATION.
As compensation for its activities hereunder, subject to Section 8.10, the
Servicer shall be entitled to retain the amount of the Servicing Fee with
respect to each Mortgage Loan. Additional servicing compensation in the form of
prepayment charges, release fees, bad check charges, assumption fees,
modifications fees, late payment charges, or any other servicing-related fees,
Net Liquidation Proceeds not required to be deposited in the Collection Account
pursuant to Section 8.08(c)(ii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer. No transfer, sale, pledge or other
disposition of the Servicer's right to receive all or any portion of its
Servicing Fees shall be made, and any such attempted transfer, sale, pledge or
other disposition shall be void, unless such transfer is made to a successor
Servicer in connection with the assumption by such successor servicer of the
duties hereunder pursuant to Section 8.20 and all (and not a portion) of such
Servicing Fees are transferred to such successor Servicer.
Section 8.16 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer, at its own expense, will deliver to the Trustee, and the
Rating Agencies, on or before March 31 of each year, commencing in 1998, an
Officer's Certificate stating, as to each signer thereof, that (i) a review of
the activities of the Servicer during such preceding calendar year and of
performance under this Agreement has been made under such officer's supervision,
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement for such year,
or, if there has been a default in the fulfillment of all such obligations,
specifying each such default known to such officers and the nature and status
thereof including the steps being taken by the Servicer to remedy such default.
Section 8.17 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORTS.
On or before June 30 of any year, commencing in 1998, the Servicer, at its
own expense, shall cause to be delivered to the Trustee and the Rating Agencies
a letter or letters of a firm of independent, nationally recognized certified
public accountants, dated as of the date of the Servicer's fiscal audit for
subsequent letters, stating that such firm has examined the Servicer's overall
servicing operations in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.
Section 8.18 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
MORTGAGE LOANS.
The Servicer shall provide to the Trustee, the FDIC and the supervisory
agents and examiners of each of the foregoing (which, in the case of supervisory
agents and examiners, may be required by applicable state and federal
regulations) access to the documentation regarding the Mortgage Loans, such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Servicer designated by it.
Section 8.19 ASSIGNMENT OF AGREEMENT.
The Servicer may not assign its obligations under this Agreement, in whole
or in part, unless it shall have first obtained the written consent of the
Trustee, which consent shall not be unreasonably withheld; provided, however,
that any assignee must meet the eligibility requirements set forth in Section
8.20(h) hereof for a successor servicer.
Section 8.20 REMOVAL OF SERVICER; RESIGNATION OF SERVICER.
(a) The Trustee may (or the Trustee acting upon the request of a majority
of the Percentage Interests of the Offered Certificates then Outstanding shall)
remove the Servicer upon the occurrence of any of the following events:
(i) The Servicer shall (I) apply for or consent to the appointment of
a receiver, Trustee, liquidator or custodian or similar entity with respect
to itself or its property, (II) admit in writing its inability to pay its
debts generally as they become due, (III) make a general assignment for the
benefit of creditors, (IV) be adjudicated a bankrupt or insolvent, (V)
commence a voluntary case under the federal bankruptcy laws of the United
States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or
seeking to take advantage of any insolvency law or file an answer admitting
the material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate action for
the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the Servicer,
a proceeding shall be instituted in any court of competent jurisdiction,
under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking in respect of the Servicer an order for relief or an
adjudication in bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a readjustment of
debts, the appointment of a Trustee, receiver, liquidator or custodian or
similar entity with respect to the Servicer or of all or any substantial
part of its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being contested by
the Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B) continue
undismissed or pending and unstayed for any period of seventy-five (75)
consecutive days; or
(iii) The Servicer shall fail to perform any one or more of its
obligations hereunder and shall continue in default thereof for a period of
thirty (30) days (one (1) Business Day in the case of a delay in making a
required payment to the Trustee under Section 8.08(d)(ii)(a)) after the
earlier of (a) actual knowledge of an officer of the Servicer or (b)
receipt of notice from the Trustee of said failure; or
(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.02 which materially
and adversely affects the interests of the Certificateholders for a period
of sixty (60) days after the earlier of the Servicer's discovery or receipt
of notice thereof; or
(v) The merger, consolidation or other combination of the Servicer
with or into any other entity, if such merger, consolidation or other
combination would result in the reduction of the then current rating on the
outstanding rated Certificates by any Rating Agency; or
(vi) A Servicing Termination Trigger has occurred and is continuing.
(b) Notwithstanding the provisions of Section 8.20(a), if the Servicer
shall fail on any Determination Date to make a Delinquency Interest Advance (to
the extent such Delinquency Advance is required hereunder to be made by the
Servicer) and such failure continues unremedied past 2:00 p.m. on the Business
Day following such Determination Date, then the Trustee shall immediately remove
the Servicer, and the Trustee shall thereupon become obligated, subject to
Section 8.20(k), to make such Delinquency Interest Advance as successor
Servicer.
(c) [intentionally omitted]
(d) The Servicer shall not resign from the obligations and duties hereby
imposed on it, except upon determination that (i) 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 or (ii) confirmation from the
Rating Agencies that the rating on the outstanding rated Certificates will not
be reduced. Any such determination under clause (i) permitting the resignation
of the Servicer shall be evidenced by an opinion of counsel to such effect which
shall be delivered to the Trustee.
(e) No removal or resignation of the Servicer shall become effective until
the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section, nor shall such
removal or resignation relieve the Servicer of any unsatisfied liability or
obligation incurred by it prior to such resignation or removal.
(f) Upon removal or resignation of the Servicer, the Servicer at its own
expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Mortgage Loans, including all tax bills, assessment notices, insurance
premium notices and all other documents as well as all original documents then
in the Servicer's possession.
(g) Any collections then being held by the Servicer prior to its removal
and any collections received by the Servicer after removal or resignation shall
be endorsed by it to the Trustee and remitted directly and immediately to the
Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, the Trustee (x) may
solicit bids for a successor servicer as described below, and (y) pending the
appointment of a successor servicer as a result of soliciting such bids, shall
serve as Servicer. The Trustee shall, if it is unable to obtain a qualifying bid
and is prevented by law from acting as Servicer, appoint, or petition a court of
competent jurisdiction to appoint, any housing and home finance institution,
bank or mortgage servicing institution which has been designated as an approved
seller-servicer by FNMA or FHLMC for first mortgage loans and having equity of
not less than $5,000,000, as determined in accordance with generally accepted
accounting principles and acceptable to the Controlling Non-Offered
Certificateholders 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 (including,
without limitation, the Trustee) so appointed shall be the aggregate Servicing
Fee, together with the other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided in Sections 8.08 and 8.15.
(i) In the event the Trustee solicits bids as provided above, the Trustee
shall solicit, by public announcement, bids from housing and home finance
institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 8.08 and 8.15. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain servicing. The Trustee shall deduct from any sum received by
the Trustee from the successor Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder.
After such deductions, the remainder of such sum less any amounts due the
Trustee or the Trust Fund from the Servicer shall be paid by the Trustee to the
Servicer at the time of such sale, transfer and assignment to the successor
Servicer.
(j) The Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
Servicer agrees to cooperate with the Trustee and any successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the Trustee or such successor
Servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's functions hereunder and shall promptly also
transfer to the Trustee or such successor Servicer, as applicable, all amounts
which then have been or should have been deposited in the Collection Account by
the Servicer or which are thereafter received with respect to the Mortgage
Loans. Neither the Trustee nor any other successor Servicer shall be held liable
by reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the Servicer to
deliver, or any delay in delivering, cash, documents or records to it, including
the monthly servicing report required to be delivered by the Servicer pursuant
to Section 8.08(d)(ii)(b) or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the Servicer.
(k) The Trustee as successor Servicer, or any other successor Servicer,
upon assuming the duties of Servicer hereunder, shall immediately make all
Delinquency Interest Advances and deposit them to the Collection Account which
the Servicer has theretofore failed to remit with respect to the Mortgage Loans;
provided, however, that if the Trustee is acting as successor Servicer, the
Trustee shall only be required to make Delinquency Interest Advances (including
the Delinquency Interest Advances described in this clause (l) if, in the
Trustee's reasonable good faith judgment, such Delinquency Interest Advances
will ultimately be recoverable from the Mortgage Loans. Any Delinquency Interest
Advances and Servicing Advances previously made by the predecessor Servicer and
any unpaid and accrued Servicing Fees shall be recoverable by and paid to it by
the successor Servicer to the extent such amounts would otherwise have been
recoverable had the predecessor Servicer not been terminated.
(l) The Servicer which is being removed or is resigning shall give notice
to the Mortgagors and the Rating Agencies of the transfer of the servicing to
the successor Servicer.
(m) The Trustee shall give notice to the Certificateholders, the Trustee,
the Seller, and the Rating Agencies of the occurrence of any event described in
Section 8.20(a) above of which the Trustee is aware.
Section 8.21 INSPECTIONS; ERRORS AND OMISSIONS INSURANCE.
At any reasonable time and from time to time upon reasonable notice, the
Trustee 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 any out-of-pocket 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 Trustee or such agent;
The Servicer shall keep in force during the term of this Agreement a policy
or policies of insurance covering errors and omissions for failure in the
performance of the Servicer's obligations under this Agreement, which policy or
policies shall be in such form and amount that would meet the requirements of
FNMA or FHLMC if it were the purchaser of the Mortgage Loans, unless the
Servicer has obtained a waiver of such requirements from FNMA or FHLMC. The
Servicer shall also maintain a fidelity bond in the form and amount that would
meet the requirements of FNMA or FHLMC, unless the Servicer has obtained a
waiver of such requirements from FNMA or FHLMC. The Servicer shall be deemed to
have complied with this provision if an affiliate of the Servicer has such
errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends to
the Servicer. Any such errors and omissions policy and fidelity bond shall by
its terms not be cancelable without thirty days' prior written notice to the
Trustee.
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 TERMINATION OF TRUST FUND.
The Trust Fund created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Certificateholders of all
Certificates of all amounts required to be paid to such Certificateholders
pursuant to this Agreement upon the latest to occur of (a) the final payment or
other liquidation (or any advance made with respect thereto) of the last
Mortgage Loan in the Trust Fund, (b) the disposition of all property acquired in
respect of any Mortgage Loan remaining in the Trust Fund and (c) at any time
when a Qualified Liquidation of the Trust Fund is effected as described below.
To effect a termination of this Agreement pursuant to clause (c) above, the
Certificateholders of all Certificates then Outstanding shall (i) unanimously
direct the Trustee on behalf of REMIC I and REMIC II to adopt a plan of complete
liquidation as contemplated by Section 860F(a)(4) of the Code and (ii) provide
to the Trustee an opinion of counsel experienced in federal income tax matters
reasonably acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee either shall sell the
Mortgage Loans and distribute the proceeds of the liquidation of REMIC I and
REMIC II, or shall distribute equitably in kind all of the assets of REMIC I and
REMIC II to the remaining Certificateholders of the Certificates each in
accordance with such plan, so that the liquidation or distribution of any
proceeds of the liquidation and the termination of this Agreement occur no later
than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation. In no
event, however, will the Trust Fund created by this Agreement continue beyond
the expiration of twenty-one (21) years from the death of the last survivor of
the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States
to the Court of Saint ▇▇▇▇▇, living on the date hereof. The Trustee shall give
written notice of termination of the Agreement to each Certificateholder in the
manner set forth in Section 11.05.
Section 9.02 TERMINATION UPON OPTION OF THE SERVICER OR CERTIFICATEHOLDERS
OF NON-OFFERED CERTIFICATES.
On any Determination Date on or after the Clean-Up Call Date, the Servicer,
and on any Determination Date from and after the third Determination Date after
the Clean-Up Call Date, the Controlling Non-Offered Certificateholders (the
Servicer or such Certificateholders, as the case may be, the "Terminator") may
determine to purchase and may cause the purchase from REMIC I of all (but not
fewer than all) Mortgage Loans and all REO Properties theretofore acquired in
respect of any Mortgage Loan by foreclosure, deed in lieu of foreclosure, or
otherwise then remaining in REMIC I at a price equal to (i) the sum (net of
amounts remitted from the Collection Account to the Certificate Account
representing collections of principal on the Mortgage Loans during the current
Due Period) of (A) with respect to each Mortgage Loan that is not an REO
Property, 100% of the Loan Balance of such Mortgage Loan as of the day of
purchase and (B) with respect to each such REO Property, the fair market value
thereof as of the day of purchase, plus (ii) one month's interest on the
aggregate Loan Balance computed at the Adjusted Pass-Through Rate, plus (iii)
all accrued and unpaid Servicing Fees, (iv) plus the aggregate amount of any
unreimbursed Delinquency Interest Advances and Servicing Advances. In connection
with such purchase, the Servicer shall remit to the Trustee all amounts then on
deposit in the Collection Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
In connection with any such purchase, the Terminator shall direct the
Trustee to adopt and the Trustee shall adopt, as to REMIC I and REMIC II, a plan
of complete liquidation as contemplated by Section 860F(a)(4) of the Code and
shall provide to the Trustee an opinion of counsel experienced in federal income
tax matters reasonably acceptable to the Trustee to the effect that such
purchase and liquidations constitutes, as to REMIC I and REMIC II, a Qualified
Liquidation.
Promptly following any purchase described in this Section 9.02, the Trustee
will release the Files and reassign the Mortgage Loans to the Terminator or
otherwise upon its order, in a manner similar to that described in Section 8.14
hereof.
Section 9.03 TERMINATION UPON LOSS OF REMIC STATUS.
Following a final determination by the Internal Revenue Service or by a
court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal or, if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that REMIC I or REMIC II does not and will no longer qualify as a
REMIC pursuant to Section 860D of the Code (the "Final Determination"), at any
time on or after the date which is 30 calendar days following such Final
Determination the Certificateholders of a majority in Percentage Interests
represented by the Offered Certificates then Outstanding may direct the Trustee
on behalf of REMIC I and REMIC II to adopt a plan of complete liquidation, as
contemplated by Section 860F(a)(4) of the Code.
The Trustee shall notify the Certificateholders of the Non-Offered
Certificates of such election to liquidate (the "Termination Notice"). The
Controlling Non-Offered Certificateholders may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from REMIC I all (but not fewer than all) Mortgage Loans and
all property theretofore acquired by foreclosure, deed in lieu of foreclosure,
or otherwise then remaining in REMIC I at a purchase price equal to the purchase
price that would be payable by such Certificateholders if such
Certificateholders were the Terminator pursuant to Section 9.02. If, during the
Purchase Option Period, the Controlling Non-Offered Certificateholders have not
exercised the option described in the immediately preceding paragraph, then upon
the expiration of the Purchase Option Period in the event that the
Certificateholders of the Offered Certificates have given the Trustee the
direction described above in Section 9.03, the Trustee shall sell the Mortgage
Loans and distribute the proceeds of the liquidation of REMIC I and REMIC II,
each in accordance with the plan of complete liquidation, such that, if so
directed, the liquidation of REMIC I and REMIC II, the distribution of the
proceeds of the liquidation and the termination of this Agreement occur no later
than the close of the 60th day, or such later day as the Certificateholders of
the Offered Certificates shall permit or direct in writing, after the expiration
of the Purchase Option Period. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Collection Account
for deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
Section 9.04 DISPOSITION OF PROCEEDS.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Fund pursuant to this Article IX to the Certificate
Account; provided, however, that any amounts representing unreimbursed
Delinquency Interest Advances and Servicing Advances theretofore funded by the
Servicer from the Servicer's own funds shall be paid by the Trustee to the
Servicer from the proceeds of the Trust Fund.
ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
The Trustee (i) undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Trustee and (ii) in
the absence of bad faith on its part, may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, shall be under a duty to examine the same to determine whether
or not they conform on their face to the requirements of this Agreement.
Notwithstanding the appointment of the Servicer hereunder, the Trustee is
hereby empowered to perform the duties of the Servicer it being expressly
understood, however, that the foregoing describes a power and not an obligation
of the Trustee, and that all parties hereto agree that, prior to any termination
of the Servicer, the Servicer and, thereafter, the Trustee or any other
successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicer, and pending the appointment of any other Person as successor
Servicer, have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption and
substitution agreements as permitted by Section 8.12 hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Mortgage Loans; and
(vi) to make Delinquency Interest Advances and Servicing Advances
and to pay Compensating Interest.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that:
(i) this paragraph shall not be construed to limit the effect of the
first paragraph of this Section 10.01;
(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Certificateholders of a majority in Percentage Interest of the
Certificates of the affected Class or Classes relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under
this Agreement relating to the Certificates of such Class.
Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
No provision of this Agreement shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers
hereunder (other than expenses, disbursements and advances incurred or made by
the Trustee, including the compensation and the expenses of its employees,
agents and counsel, in the ordinary course of the Trustee's performance in
accordance with the provisions of this Agreement), if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. None of the provisions
contained in this Agreement shall in any event require the Trustee to perform,
or be responsible for the manner of performance of, any of the obligations of
the Servicer under this Agreement, except during such time, if any, as the
Trustee shall be the successor to, and be vested with the rights, duties, powers
and privileges of, the Servicer in accordance with the terms of this Agreement.
The permissive right of the Trustee to take actions enumerated in this
Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
The Trustee shall be under no obligation to institute any suit, or to take
any remedial proceeding under this Agreement, or to take any steps in the
execution of the trusts hereby created or in the enforcement of any rights and
powers hereunder until it shall be indemnified to its satisfaction against any
and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
Neither the Servicer, the Seller nor the Trustee knowingly shall take any
action that would cause the Class A Certificates or the Class M-1 Certificates
to fail to qualify as "mortgage related securities" within the meaning of the
Securities Exchange Act of 1934, as amended.
Section 10.02 REMOVAL OF TRUSTEE FOR CAUSE.
The Trustee may be removed upon the occurrence of any of the following
events (whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the Trustee shall fail to distribute to the Certificateholders
entitled hereto on any Distribution Date amounts available for distribution
in accordance with the terms hereof; (provided, however, that any such
failure which is due to circumstances beyond the control of the Trustee
shall not be a cause for removal hereunder); or
(ii) the Trustee shall fail in the performance of, or breach, any
covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection
herewith shall prove to be incorrect in any material respect as of the time
when the same shall have been made, and such failure or breach shall
continue or not be cured for a period of 30 days after there shall have
been given, by registered or certified mail, to the Trustee by the Seller
or by the Certificateholders of at least 25% of the aggregate Percentage
Interests in the Trust Fund represented by the Offered Certificates then
Outstanding, or, if there are no Offered Certificates then Outstanding, by
such Percentage Interests represented by the Residual Certificates, a
written notice specifying such failure or breach and requiring it to be
remedied; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Trustee,
and such decree or order shall have remained in force undischarged or
unstayed for a period of 75 days; or
(iv) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Trustee or relating to all or
substantially all of its property;
(v) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of
its creditors, voluntarily suspend payment of its obligations, or take
corporate action for the purpose of any of the foregoing; or
(vi) the Trustee shall fail to perform in accordance with the
requirements of Section 10.08.
The Depositor shall give notice to the Rating Agencies of the occurrence of
any such event of which the Depositor is aware.
If any event described in above occurs and is continuing, then and in every
such case the Depositor and the Certificateholders of a majority of the
Percentage Interests represented by the Offered Certificates or if there are no
Offered Certificates then outstanding by such majority of the Percentage
Interests represented by the Residual Certificates, may, whether or not the
Trustee resigns pursuant to Section 10.09 hereof, immediately, concurrently with
the giving of notice to the Trustee, and without delaying the 30 days required
for notice therein, appoint a successor Trustee pursuant to the terms of Section
10.09 hereof.
The Servicer shall not be liable for any costs relating to the removal of
the Trustee or the appointment of a new Trustee.
Section 10.03 CERTAIN RIGHTS OF THE TRUSTEE.
Except as otherwise provided in Section 10.01 hereof:
(i) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(ii) any request or direction of the Depositor, the Seller or the
Certificateholders of any Class of Certificates mentioned herein shall be
sufficiently evidenced in writing;
(iii) whenever in the administration of this Agreement the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officer's Certificate;
(iv) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) or any opinion of
counsel (whether counsel to the Trustee or any other Person) shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reasonable
reliance thereon;
(v) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction
of any of the Certificateholders pursuant to this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(vi) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, note or other paper or document, but the Trustee in its discretion
may make such further inquiry or investigation into such facts or matters
as it may see fit;
(vii) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
attorneys or custodians;
(viii) the Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized
by the Authorized Officer of any Person or within its rights or powers
under this Agreement other than as to validity and sufficiency of its
authentication of the Certificates;
(ix) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(x) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and to make
various calculations which are relevant to the performance of the Trustee's
duties under this Agreement. The Trustee shall be entitled to rely in good
faith on any such information and calculations in the performance of its
duties hereunder, (i) unless and until an Authorized Officer of the Trustee
has actual knowledge, or is advised by any Certificateholder of a
Certificate (either in writing or orally with prompt written or telecopies
confirmation), that such information or calculations is or are incorrect,
or (ii) unless there is a manifest error in any such information; and
(xi) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Fund created hereby or the powers
granted hereunder.
Section 10.04 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF CERTIFICATES.
The recitals and representations contained herein and in the Certificates,
except any such recitals and representations relating to the Trustee, shall be
taken as the statements of the Depositor and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representation as to
the validity or sufficiency of this Agreement, of the Certificates, or any
Mortgage Loan or document related thereto other than as to validity and
sufficiency of its authentication of the Certificates. The Trustee shall not be
accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Seller or the Servicer in
respect of the Mortgage Loans or deposited into or withdrawn from the Collection
Account by the Servicer, and shall have no responsibility for filing any
financing or continuation statement in any public office at any time or
otherwise to perfect or maintain the perfection of any security interest or lien
or to prepare or file any tax returns or Securities and Exchange Commission
filings for the Trust Fund or to record this Agreement. The Trustee shall not be
required to take notice or be deemed to have notice or knowledge of any default
unless an Authorized Officer of the Trustee shall have received written notice
thereof or an Authorized Officer has actual knowledge thereof. In the absence of
receipt of such notice, the Trustee may conclusively assume that no default has
occurred.
Section 10.05 MAY HOLD CERTIFICATES.
The Trustee, any Paying Agent, Registrar or any other agent of the Trust
Fund, in its individual or any other capacity, may become a Certificateholder or
pledgee of Certificates and may otherwise deal with the Trust Fund and transact
business with the other parties to this Agreement with the same rights it would
have if it were not Trustee, any Paying Agent, Registrar or such other agent.
Section 10.06 MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other Trust Funds except to the extent required herein or required by law. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 COMPENSATION AND REIMBURSEMENT; NO LIEN FOR FEES.
The Trustee shall receive compensation for fees pursuant to Section 7.03
hereof, reimbursement for extraordinary Trust Fund expenses pursuant to Section
10.13 hereof or indemnified by other persons for certain expenses under certain
circumstances to the extent provided herein or pursuant to a separate agreement
with the Seller. The Trustee shall have no lien on the Trust Fund for the
payment of such fees and expenses.
Section 10.08 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, and having a deposit rating of at least A2 by ▇▇▇▇▇'▇ (or such lower
rating as may be acceptable to ▇▇▇▇▇'▇) , of at least A-1 by S&P (or such lower
rating as may be acceptable to S&P) and, if rated by Fitch, of at least A- from
Fitch (or such lower rating as may be acceptable to Fitch). If such Trustee
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
or association shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall, upon the request of the Depositor resign immediately in the
manner and with the effect hereinafter specified in this Article X.
Section 10.09 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article X shall become effective until the acceptance
of appointment by the successor Trustee under Section 10.10 hereof.
The Trustee, or any Trustee or Trustees hereafter appointed, may resign at
any time by giving written notice of resignation to the Servicer and by mailing
notice of resignation by first-class mail, postage prepaid, to the
Certificateholders at their addresses appearing on the Register; provided, that
the Trustee cannot resign solely for the failure to receive the Trustee Fee. A
copy of such notice shall be sent by the resigning Trustee to the Rating
Agencies. Upon receiving notice of resignation, the Servicer shall promptly
appoint a successor Trustee or Trustees by written instrument, in duplicate,
executed on behalf of the Trust Fund by a Servicing Officer, one copy of which
instrument shall be delivered to the Trustee so resigning and one copy to the
successor Trustee or Trustees. If no successor Trustee shall have been appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any
Certificateholder may, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and appropriate,
appoint a successor Trustee.
If at any time the Trustee shall cease to be eligible under Section 10.08
hereof and shall fail to resign after written request therefor by the Servicer,
the Servicer may remove the Trustee and appoint a successor Trustee by written
instrument, in triplicate, signed by a Servicing Officer, one complete set of
which instruments shall be delivered to the Depositor, one complete set to the
Trustee so removed and one complete set to the successor Trustee so appointed.
If the Trustee otherwise fails to perform its duties in accordance with the
terms of this Agreement, the Servicer may remove the Trustee and appoint a
successor Trustee by written instrument, in triplicate, signed by a Servicing
Officer, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor Trustee so appointed.
The Certificateholders of a majority of the Percentage Interests
represented by the Offered Certificates or, if there are no Offered Certificates
then Outstanding, by the Controlling Non- Offered Certificateholders, may at any
time remove the Trustee and appoint a successor Trustee by delivering to the
Trustee to be removed, to the successor Trustee so appointed, to the Depositor
and to the Servicer copies of the record of the act taken by the
Certificateholders, as provided for in Section 11.03 hereof.
If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of the Trustee for any cause, the
Servicer shall promptly appoint a successor Trustee. If within one year after
such resignation, removal or incapability or the occurrence of such vacancy, a
successor Trustee shall be appointed by act of the Servicer or the
Certificateholders of a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding (or by the Controlling Non-Offered
Certificateholders), the successor Trustee so appointed shall forthwith upon its
acceptance of such appointment become the successor Trustee and supersede the
successor Trustee appointed by the Servicer. If no successor Trustee shall have
been so appointed by the Servicer or the Certificateholders and shall have
accepted appointment in the manner hereinafter provided, any Certificateholder
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
The Servicer shall give notice of any removal of the Trustee by mailing
notice of such event by first-class mail, postage prepaid, to the Rating
Agencies and to the Certificateholders as their names and addresses appear in
the Register. Each notice shall include the name of the successor Trustee and
the address of its corporate trust office.
Section 10.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Servicer on behalf of the Trust Fund and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts, duties and obligations of its predecessor
hereunder; but, on request of the Servicer or the successor Trustee, such
predecessor Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor Trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
Trustee, the Servicer on behalf of the Trust Fund shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Servicer shall mail notice thereof by first-class mail, postage
prepaid, to the Certificateholders at their last addresses appearing upon the
Register. The Servicer shall send a copy of such notice to the Rating Agencies.
If the Servicer fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Trust Fund.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
OF THE TRUSTEE
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 REPORTING; WITHHOLDING.
The Trustee shall timely provide to the Certificateholders the Internal
Revenue Service's Form 1099 and any other statement required by applicable
Treasury regulations as determined by the Tax Matters Person, and shall
withhold, as required by applicable law, federal, state or local taxes, if any,
applicable to distributions to the Certificateholders, including but not limited
to backup withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
As required by law or upon request of the Tax Matters Person and except as
otherwise specifically set forth in subsection (a) above, the Trustee shall
timely file all reports prepared by the Servicer and required to be filed by the
Trust Fund with any federal, state or local governmental authority having
jurisdiction over the Trust Fund, including other reports that must be filed
with the Certificateholders, such as the Internal Revenue Service's Form 1066
and Schedule Q and the form required under Section 6050K of the Code, if
applicable to REMICs. Furthermore, the Trustee shall report to
Certificateholders, if required, with respect to the allocation of expenses
pursuant to Section 212 of the Code in accordance with the specific instructions
to the Trustee by the Servicer with respect to such allocation of expenses. The
Trustee shall, upon request of the Servicer, collect any forms or reports from
the Certificateholders determined by the Servicer to be required under
applicable federal, state and local tax laws.
The Servicer covenants and agrees that it shall provide to the Trustee any
information necessary to enable the Trustee to meet its obligations under this
Section.
Except as otherwise provided, the Servicer shall have the responsibility
for preparation of all returns, forms, reports and other documents referred to
in this Section and the Trustee's responsibility shall be to timely execute and
file such documents.
Section 10.13 LIABILITY OF THE TRUSTEE.
The Trustee shall be liable in accordance herewith only to the extent of
the obligations specifically imposed upon and undertaken by the Trustee herein.
Neither the Trustee nor any of the directors, officers, employees or agents of
the Trustee shall be under any liability on any Certificate or otherwise to the
Depositor, the Seller, the Servicer or any Certificateholder for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Trustee, its directors, officers, employees or
agents or any such Person against any liability which would otherwise be imposed
by reason of negligent action, negligent failure to act or willful misconduct in
the performance of duties or by reason of reckless disregard of obligations and
duties hereunder. In addition, the Trustee, and any director, officer, employee
or agent of the Trustee, shall be indemnified by the Trust Fund and held
harmless against any loss, liability or expense (not including expenses,
disbursements and advances incurred or made by the Trustee, including the
compensation and the expenses and disbursements of its agents and counsel, in
the ordinary course of the Trustee's performance in accordance with the
provisions of this Agreement) incurred by the Trustee in connection with any
claim or legal action or any pending or threatened claim or legal action arising
out of or in connection with the acceptance or administration of its obligations
and duties under this Agreement, other than any loss, liability or expense (i)
resulting from the Servicer's actions or omissions in connection with this
Agreement and the Mortgage Loans, (ii) resulting from the Depositor's actions or
omissions in connection with this Agreement and the Mortgage Loans (iii) that
constitutes a specific liability of the Trustee pursuant to this Agreement or
(iv) incurred by reason of negligent action, negligent failure to act or willful
misconduct in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Trustee and any director, officer,
employee or agent of the Trustee may rely and shall be protected in acting or
refraining from acting in good faith on any certificate, notice or other
document of any kind prima facie properly executed and submitted by the
Authorized Officer of any Person respecting any matters arising hereunder. The
provisions of this Section 10.13 shall survive the resignation or removal of the
Trustee and the termination of this Agreement and the payment of the outstanding
Certificates.
Section 10.14 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or Property may at the time be located, the Servicer and
the Trustee acting jointly shall have the power and shall execute and deliver
all instruments to appoint one or more Persons approved by the Trustee to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Fund or separate Trustee or separate Trustees of any part of the Trust
Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 10.14, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in the case any event indicated in Section 8.20(a) shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-Trustee or separate Trustee hereunder shall be required to meet the terms of
eligibility as a successor Trustee under Section 10.08 and no notice to
Certificateholders of the appointment of any co-Trustee or separate Trustee
shall be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted, be
appointed and act subject to the following provisions and conditions:
All rights, powers, duties and obligations conferred or imposed upon
the Trustee shall be conferred or imposed upon and exercised or performed
by the Trustee and such separate Trustee or co-Trustee jointly (it being
understood that such separate Trustee or co-Trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor
to the Servicer hereunder), the Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate Trustee or co-Trustee, but solely at the direction
of the Trustee;
No co-Trustee hereunder shall be held personally liable by reason of
any act or omission of any other co-Trustee hereunder; and (iii) The
Servicer and the Trustee acting jointly may at any time accept the
resignation of or remove any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate Trustees and co-Trustees, as
effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Servicer or the
Certificateholders to the Trustee to take any action under any provision of this
Agreement, the Depositor, the Seller or the Certificateholders, as the case may
be, shall furnish to the Trustee a certificate stating that all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with, except that in the case of any such application
or request as to which the furnishing of such documents is specifically required
by any provision of this Agreement relating to such particular application or
request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
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
a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 11.02 FORM OF DOCUMENTS DELIVERED TO THE TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such Authorized Officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any opinion of counsel may be based, insofar as it
relates to factual matters upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor, the Seller or the
Servicer, stating that the information with respect to such factual matters is
in the possession of the Depositor or the Servicer, unless such Authorized
Officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous. Any opinion of counsel may also be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Trustee, stating that the information with respect to
such matters is in the possession of the Trustee, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous. Any opinion of
counsel may be based on the written opinion of other counsel, in which event
such opinion of counsel shall be accompanied by a copy of such other counsel's
opinion and shall include a statement to the effect that such counsel believes
that such counsel and the Trustee may reasonably rely upon the opinion of such
other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 ACTS OF CERTIFICATEHOLDERS.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"act" of the Certificateholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee and the Trust Fund, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Whenever such execution is
by an officer of a corporation or a member of a partnership on behalf of such
corporation or partnership, such certificate or affidavit shall also constitute
sufficient proof of his authority.
The ownership of Certificates shall be proved by the Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other action by the Certificateholder of any Certificate shall bind the
Certificateholder of every Certificate issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, in respect of anything done,
omitted or suffered to be done by the Trustee or the Trust Fund in reliance
thereon, whether or not notation of such action is made upon such Certificates.
Section 11.04 NOTICES, ETC. TO TRUSTEE.
Any request, demand, authorization, direction, notice, consent, waiver or
act of the Certificateholders or other documents provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with the Trustee by
any Certificateholder the Depositor or the Seller shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to or with and
received by the Trustee at the Corporate Trust Office.
Section 11.05 NOTICES AND REPORTS TO CERTIFICATEHOLDERS; WAIVER OF
NOTICES.
Where this Agreement provides for notice to Certificateholders of any event
or the mailing of any report to Certificateholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if mailed,
first-class postage prepaid, to each Certificateholder affected by such event or
to whom such report is required to be mailed, at the address of such
Certificateholder as it appears on the Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such notice
or the mailing of such report. In any case where a notice or report to
Certificateholders is mailed in the manner provided above, neither the failure
to mail such notice or report nor any defect in any notice or report so mailed
to any particular Certificateholder shall affect the sufficiency of such notice
or report with respect to other Certificateholders, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigns or the Trust Fund is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Certificateholders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Certificateholders when such notice is required to be
given pursuant to any provision of this Agreement, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that rated
any Certificates, failure to give such notice shall not affect any other rights
or obligations created hereunder.
Section 11.06 RULES BY TRUSTEE.
The Trustee may make reasonable rules for any meeting of
Certificateholders.
Section 11.07 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by any party hereto shall
bind its successors and assigns, whether so expressed or not.
Section 11.08 SEVERABILITY.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 11.10 LEGAL HOLIDAYS.
In any case where the date of any Determination Date, any Distribution
Date, any other date on which any distribution to any Certificateholder is
proposed to be paid, or any date on which a notice is required to be sent to any
Person pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Determination Date, such Distribution Date, or such
other date for the payment of any distribution to any Certificateholder or the
mailing of such notice, as the case may be, and no interest shall accrue for the
period from and after any such nominal date, provided such payment is made in
full on such next succeeding Business Day.
Section 11.11 GOVERNING LAW.
This Agreement and each Certificate shall be construed in accordance with
and governed by the laws of the State of New York applicable to agreements made
and to be performed therein.
Section 11.12 COUNTERPARTS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 [INTENTIONALLY OMITTED].
Section 11.14 AMENDMENT.
The Trustee, the Depositor and the Servicer may, at any time and from time
to time, and without notice to or the consent of the Certificateholders amend
this Agreement, subject to the provisions of Section 11.16 and 11.17 and the
Trustee shall consent to such amendment, for the purpose of (i) curing any
ambiguity, correcting or supplementing any provision hereof which may be
inconsistent with any other provision hereof, or adding provisions hereto which
are not inconsistent with the provisions hereof; (ii) upon receipt of an opinion
of counsel experienced in federal income tax matters to the effect that no
entity-level tax will be imposed on the Trust Fund or upon the transferor of a
Residual Certificate as a result of the ownership of any Residual Certificate by
a Disqualified Organization, removing the restriction on transfer set forth in
the first paragraph of Section 5.08 hereof or (iii) complying with the
requirements of the Code and the regulations proposed or promulgated thereunder
including any amendments necessary to maintain REMIC status or (iv) for any
other purpose, provided that in the case of this clause (iv) such amendment
shall not adversely affect in any material respect any Certificateholder. Any
such amendment shall be deemed not to adversely affect in any material respect
any Certificateholder of an Offered Certificate if there is delivered to the
Trustee written notification from each Rating Agency that such amendment will
not cause such Rating Agency to reduce its then current rating assigned to the
Class of the Offered Certificates owned by such Certificateholder. The Trustee,
the Depositor and the Servicer may also amend this Agreement from time to time
with the consent of Certificateholders of 66 2/3% of the Offered Certificates,
by then-outstanding Certificate Principal Balance (or if the Offered
Certificates are no longer outstanding, with the consent of the Controlling
Non-Offered Certificateholders), 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. Notwithstanding
anything to the contrary herein, no such amendment shall change in any manner
the amount of, or change the timing of, payments which are required to be
distributed to any Certificateholder without the consent of the
Certificateholder of such Certificate.
Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder in the manner set forth in Section 11.05, and to the Rating
Agencies.
The Rating Agencies shall be provided by the Servicer with copies of any
amendments to this Agreement, together with copies of any opinions or other
documents or instruments executed in connection therewith.
The Trustee may refuse to execute any amendment that adversely affects its
own interests, and shall, upon request, be provided with an opinion of counsel
that any proposed amendment is authorized or permitted by this Agreement.
Section 11.15 PAYING AGENT; APPOINTMENT AND ACCEPTANCE OF DUTIES.
The Trustee is hereby appointed Paying Agent. The Trustee may, subject to
the eligibility requirements for the Trustee set forth in Section 10.08 hereof,
appoint one or more other Paying Agents or successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the
Certificateholders of Certificates of each Class for which it is acting as
Paying Agent on each Distribution Date among such Certificateholders in the
proportion specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying Agent,
the Trustee shall notify the Certificateholders by mailing notice thereof at
their addresses appearing on the Register.
Section 11.16 REMIC STATUS.
The parties hereto intend that REMIC I and REMIC II shall constitute, and
that the affairs of each such REMIC shall be conducted so as to qualify it as, a
REMIC in accordance with the REMIC Provisions. In furtherance of such intention,
the Servicer or such other person designated pursuant to Section 11.18 hereof
shall act as agent for the Trust Fund and as "tax matters person" (as defined in
the REMIC Provisions) for the Trust Fund and in such capacity it shall: (i)
prepare or cause to be prepared, in a timely manner, annual tax returns and any
other tax return required to be filed by REMIC I and REMIC II established
hereunder using a calendar year as the taxable year for REMIC I and REMIC II
established hereunder; (ii) in the related first such tax return, make (or cause
to be made) an election satisfying the requirements of the REMIC Provisions, on
behalf of REMIC I and REMIC II for each to be treated as a REMIC; (iii) prepare
or cause to be prepared all information, reports or tax returns required with
respect to the REMIC I or REMIC II as, when and in the form required to be
provided to the Certificateholders, and to the Internal Revenue Service and any
other relevant governmental taxing authority in accordance with the REMIC
Provisions and any other applicable federal, state or local laws, including,
without limitation, information reports relating to "original issue discount" as
defined in the Code based upon the prepayment assumption and calculated by using
the "Issue Price" (within the meaning of Section 1273 of the Code) of the
Certificates of the related Class; (iv) represent the Trust Fund and REMIC I and
REMIC II in any administrative or judicial proceedings relating to an
examination or audit by any governmental taxing authority, request an
administrative adjustment as to a taxable year of the Trust Fund or the REMIC I
or REMIC II, enter into settlement agreements with any governmental taxing
agency, extend any statute of limitations relating to any tax item of the Trust
Fund or the REMIC I or REMIC II, and otherwise act on behalf of the Trust Fund
or the REMICs therein in relation to any tax matter involving the Trust Fund or
any REMIC therein; (v) comply with all statutory or regulatory requirements with
regard to its conduct of activities pursuant to the foregoing clauses of this
Section 11.16, including, without limitation, providing all notices and other
information to the Internal Revenue Service and Certificateholders of Residual
Certificates required of a "tax matters person" pursuant to subtitle F of the
Code and the Treasury Regulations thereunder; (vi) make available information
necessary for the computation of any tax imposed (A) on transferors of residual
interests to certain Disqualified Organizations or (B) on pass-through entities,
any interest in which is held by a Disqualified Organization; and (vii) acquire
and hold the Tax Matters Person Residual Interest. The obligations of the
Servicer or such other designated Tax Matters Person pursuant to this Section
11.16 shall survive the termination or discharge of this Agreement.
The Depositor, the Trustee, the Servicer and the Tax Matters Person
covenant and agree for the benefit of the Certificateholders (i) not to take any
action (or omit to take any action) which would result in the termination of
"REMIC" status for REMIC I or REMIC II, (ii) not to engage in, or permit REMIC I
or REMIC II to engage in, any activity that would result in a tax on a
"prohibited transaction", as such term is defined in Section 860F(a)(2) of the
Code, (iii) not to engage in, or permit REMIC I or REMIC II to engage in, any
other action which may result in the imposition on the Trust Fund of any other
taxes under the Code and (iv) to cause the Seller not to take or engage in any
such action, to the extent the Seller are aware of any such proposed action by
the Servicer.
REMIC I and REMIC II shall, for federal income tax purposes, maintain books
on a calendar year basis and report income on an accrual basis.
Except as otherwise permitted by Section 7.05(b), no Eligible Investment
shall be sold prior to its stated maturity (unless sold pursuant to a plan of
liquidation in accordance with Article IX hereof).
Neither the Depositor nor the Trustee shall enter into any arrangement by
which the Trustee will receive a fee or other compensation for services rendered
pursuant to this Agreement, other than as expressly contemplated by this
Agreement.
Each of the Servicer, the Trustee and the Tax Matters Person agree to
indemnify Trust Fund and one another for any tax imposed on the Trust Fund or
REMIC I or REMIC II as a result of their negligence.
Section 11.17 ADDITIONAL LIMITATION ON ACTION AND IMPOSITION OF TAX.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an opinion of counsel experienced in
federal income tax matters reasonably acceptable to the Trustee to the effect
that such transaction does not result in a tax imposed on the Trust Fund or
REMIC I or REMIC II or cause a termination of REMIC status for REMIC I or REMIC
II, (i) sell any assets in the Trust Fund, (ii) accept any contribution of
assets after the Startup Day or (iii) agree to any modification of this
Agreement. In the event that any tax is imposed on "prohibited transactions" of
REMIC I or REMIC II created hereunder as defined in Section 860F(a)(2) of the
Code, on the "net income from foreclosure property" of such REMIC as defined in
Section 860G(c) of the Code, on any contributions to REMIC I or REMIC II after
the Startup Day therefor pursuant to Section 860G(d) of the Code, or any other
tax is imposed by the Code or any applicable provisions of state or local tax
laws, such tax shall be charged (i) to the Servicer, if such tax arises out of
or results from a breach by the Servicer of any of its obligations hereunder,
(ii) by the Trustee, if such tax arises out of or results from a breach by the
Trustee of any of its obligations hereunder, or otherwise (iii) against amounts
on deposit in the Certificate Account and shall be paid by withdrawal therefrom.
Section 11.18 APPOINTMENT OF TAX MATTERS PERSON.
A Tax Matters Person will be appointed for REMIC I and REMIC II for all
purposes of the Code and such Tax Matters Person will perform, or cause to be
performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Tax Matters Person for REMIC I and REMIC II shall be WMC Mortgage Corp. as long
as it owns a Residual Certificate from each such REMIC. If WMC Mortgage Corp.
does not own a Residual Certificate from either such REMIC, the Tax Matters
Person may be any other entity that owns a Residual Certificate from such REMIC
and accepts a designation hereunder as Tax Matters Person by delivering an
affidavit in the form of Exhibit I. The Servicer shall notify the Trustee in
writing of the name and address of another person who accepts a designation as
Tax Matters Person hereunder.
Section 11.19 NOTICES.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: The First National Bank of Chicago
Corporate Trust Services Division
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
The Depositor: [Address]
The Servicer: [Address]
S&P: [Address]
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: The Mortgage Monitoring Department
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Fitch: Fitch Investors Service, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Underwriters: Credit Suisse First Boston
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Asset Finance
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Bear ▇▇▇▇▇▇▇ &
Co. Inc. [Address]
Certificateholders: As set forth in the Register.
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers
thereunto duly authorized, all as of the day and year first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.,
as Depositor
By:
Title:
WMC MORTGAGE CORPORATION,
as Servicer
By:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
Title:
STATE OF NEW YORK ):
ss.:
COUNTY OF NEW YORK )
On the ____ day of _____, 1997, before me personally came ▇▇▇▇ ▇. ▇▇▇▇▇▇,
to me known, who, being by me duly sworn, did depose and say that she is an
Authorized Signatory of Credit Suisse First Boston Mortgage Securities Corp., a
Delaware corporation; and that she signed her name thereto by order of the Board
of Directors of said entity.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
NOTARIAL SEAL
------------------------
Notary Public
STATE OF CALIFORNIA ):
ss.:
COUNTY OF )
On the ____ day of August, 1997, before me personally came
________________, to me known, who, being by me duly sworn, did depose and say
that he resides at ________________; that he is an authorized signatory of WMC
Mortgage Corporation, a California Corporation; and that he signed his name
thereto by order of the Board of Directors of said entity.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the day and year in this certificate first above written. NOTARIAL SEAL
------------------------
Notary Public
STATE OF NEW YORK ):
ss.:
COUNTY OF NEW YORK )
On the 28th day of August, 1997, before me personally came ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
to me known, who, being by me duly sworn, did depose and say that he is an
Authorized Signatory of WMC Mortgage corp., a California corporation; and that
he signed his name thereto by order of the Board of Directors of said entity.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
NOTARIAL SEAL
------------------------
Notary Public
SCHEDULE I
MORTGAGE LOAN SCHEDULE
EXHIBIT A-1
FORM OF CLASS A CERTIFICATE
CLASS A CERTIFICATE
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co. has an interest herein.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
=====================================================================================================================
CLASS A NO. 1
---------------------------------------------------------------------------------------------------------------------
Cut-off Date: July 31, 1997 Class A Pass-Through Rate:1
---------------------------------------------------------------------------------------------------------------------
First Distribution Date: September 22, 1997 Initial Certificate Principal Balance: $156,561,000
---------------------------------------------------------------------------------------------------------------------
Servicer: WMC Mortgage Corp. Aggregate Initial Certificate Principal Balance of All
Class A Certificates: $156,561,000
---------------------------------------------------------------------------------------------------------------------
CUSIP: 22540A BK 3 Maturity Date: October 20, 2028
----------------------------------------------------------------------------------------------------------------------
Issue Date: August 28, 1997
======================================================================================================================
WMC Mortgage Loan
PASS-THROUGH CERTIFICATES, SERIES 1997-1
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN THE
DEPOSITOR, WMC, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE POOLING AND SERVICING AGREEMENT.
This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Certificate Principal Balance of this
Certificate by the aggregate Certificate Principal Balance for all Certificates
of this Class as of the Issue Date) in that certain beneficial ownership
interest evidenced by all the Certificates of this Class in the Trust Fund
relating to WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, which
consists primarily of the Mortgage Loans. The Trust Fund has been created
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of August 1, 1997, among the Depositor, WMC Mortgage
Corp., as Servicer (the "Servicer"), and The First National Bank of Chicago, as
Trustee (the "Trustee"). This Certificate is one of the Certificates described
in the Pooling and Servicing Agreement and is issued pursuant and subject to the
Pooling and Servicing Agreement. By acceptance of this Certificate, the holder
assents to and becomes bound by the Pooling and Servicing Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Pooling and Servicing Agreement.
-----------------
1 On each Distribution Date, the Class A Pass-Through Rate will be equal
to the lesser of (x) with respect to any Distribution Date which occurs on
or prior to the Clean-Up Call Date (as defined herein), LIBOR plus 0.220%
per annum and for any Distribution Date thereafter, LIBOR plus 0.440% per
annum, and (y) the Available Funds Cap Rate.
Issued under the Pooling and Servicing Agreement are Certificates
designated as WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, Class
A (the "Class A Certificates"), Class M-1 (the "Class M-1 Certificates"), Class
M-2 (the "Class M-2 Certificates"), Class B (the "Class B Certificates"), Class
C (the "Class C Certificates"), Class R-1 (the "Class R-1 Certificates") and
Class R-2 (the "Class R-2 Certificates"). The Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, the Class B Certificates are
collectively referred to as the "Offered Certificates." The Class C
Certificates, the Class R-1 Certificates and the Class R-2 Certificates are
collectively referred to as the "Non-Offered Certificates." The Class M-1
Certificates, the Class M-2 Certificates and the Class B Certificates are
collectively referred to as the "Subordinate Certificates" and the Offered
Certificates and the Non-Offered Certificates are collectively referred to
herein as the "Certificates."
The Pooling and Servicing Agreement contemplates, subject to its terms,
payments of interest and principal to be made on the twentieth day (or if such
day is not a Business Day, the next succeeding Business Day) (the "Distribution
Date") of each calendar month commencing in September 1997, so long as the
Pooling and Servicing Agreement has not been terminated, by check (or, if such
Certificateholder so desires, by wire transfer pursuant to instructions
delivered to the Trustee at least five Business Days prior to the applicable
Record Date (as defined below)) to the registered Certificateholder at the
address appearing on the Certificate Register as of the last Business Day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (each a "Record Date"), in an amount, with respect to
each Class of Certificates, as set forth in the Pooling and Servicing Agreement.
The Maturity Date of this Certificate is October 20, 2028.
For each Distribution Date, interest due with respect to the Offered
Certificates will be the interest which has accrued thereon at the applicable
Pass-Through Rate from the preceding Distribution Date (or from the Closing Date
in the case of the first Distribution Date) to and including the day prior to
the current Distribution Date plus certain interest amounts remaining unpaid
from prior Distribution Dates. Each period referred to above relating to the
accrual of interest is the "Accrual Period" for the related Class of Offered
Certificates. All calculations of interest on the Offered Certificates will be
made on the basis of the actual number of days elapsed in the related Accrual
Period and a year of 360 days. A "Business Day" is any day other than a
Saturday, Sunday or a day on which banking institutions in New York City, or in
the city in which the Corporate Trust Office of the Trustee is located, or in
the city in which the servicing operations of the Servicer are conducted, are
authorized or obligated by law or executive order to close.
With respect to each Distribution Date (a) before the Stepdown Date or (b)
with respect to which a Trigger Event is in effect, Holders of the Class A
Certificates will be entitled to receive payment of 100% of the Principal
Distribution Amount for such Distribution Date until the Class A Certificate
Principal Balance has been reduced to zero.
With respect to each Distribution Date (a) on or after the Stepdown Date
and (b) as to which a Trigger Event is not in effect and is not continuing, the
Holders of all Classes of the Offered Certificates will be entitled to receive
payments of principal, in the order of priority, in the amounts set forth in the
Pooling and Servicing Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to assets in the Trust Fund to the extent available for
distribution to the Certificateholder as provided in the Pooling and Servicing
Agreement for payment hereunder and that none of the Depositor, the Seller, the
Servicer, or the Trustee or any of its subsidiaries or affiliates, are
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Pooling and Servicing Agreement or, except as expressly
provided in the Pooling and Servicing Agreement, subject to any liability under
the Pooling and Servicing Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Pooling and
Servicing Agreement.
The Trustee is required to pay distributions with respect to this
Certificate in accordance with the terms hereof and the Pooling and Servicing
Agreement. Amounts properly withheld under the Code or applicable to any
Certificateholder shall be considered as having been paid by the Trustee to such
Certificateholder for all purposes of the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, the
Depositor, the Seller, the Servicer, the Trustee or any of their subsidiaries
and affiliates and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Government National Mortgage Association, or any
other governmental agency. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Mortgage Loans and amounts on
deposit in the Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Certificateholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
The Pooling and Servicing Agreement provides that the Trust Fund will
terminate upon the payment to the Holders of all Certificates of all amounts
required to be paid to such Holders upon the last to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Fund and (c) at any time when a
Qualified Liquidation of the Trust Fund is effected as described in the Pooling
and Servicing Agreement.
The Pooling and Servicing Agreement also provides that the Servicer will
have the right to purchase all the Mortgage Loans (a "Clean-Up Call") on any
Determination Date after the month in which the aggregate Loan Balances of the
Mortgage Loans in the Trust Fund has declined to less than 10% of the Original
Aggregate Loan Balance of the Mortgage Loans as of the Closing Date (the
"Clean-Up Call Date"). In addition, if the Servicer does not exercise its
Clean-Up Call rights within two Distribution Dates after the Clean-Up Call Date,
the Holders of the Non-Offered Certificates shall thereafter have the right to
declare a Clean-Up Call. The party that chooses to exercise its right to declare
a Clean-Up Call shall purchase from the Trust Fund all (but not fewer than all)
remaining Mortgage Loans and other property acquired by foreclosure, deed in
lieu of foreclosure, or otherwise then constituting the Trust Fund at a price
and in the manner set forth in the Pooling and Servicing Agreement.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Certificateholder in the manner set forth therein.
The Trustee is required to furnish certain information on each Distribution
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A Certificates are issuable only as registered Certificates in
denominations of $1,000.00 original principal amount and integral multiples of
$1.00 in excess thereof, the Subordinate Certificates and the Class C
Certificates shall be issued in denominations of no less than $25,000 and
integral multiples of $1.00 in excess thereof, as provided in the Pooling and
Servicing Agreement and subject to certain limitations therein set forth.
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate principal amount.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and immunities of
the Trustee. Copies of the Pooling and Servicing Agreement and all amendments
thereto will be provided to any Certificateholder upon written request to the
Trustee.
As provided in the Pooling and Servicing Agreement and subject to the
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon one or more new Certificates evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Depositor, the Servicer and the Trustee and any agent of any of them
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of them nor any such agent shall be affected
by any notice to the contrary.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust Fund referenced herein and authenticated by the
manual signature of a duly authorized officer of the Trustee.
Dated: August 28, 1997
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By:
--------------------------
Name:
Title:
Trustee Certificate of Authentication:
This is one of the Class A Certificates
described in the above-referenced
Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By:
--------------------------
Name:
Title:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the attached WMC Mortgage Loan Pass-Through
Certificate, Series 1997- 1, and does hereby irrevocably constitute and appoint
____________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: ---------- ---, ---- By: --------------------
Signature
EXHIBIT A-2
FORM OF CLASS M-1 CERTIFICATE
CLASS M-1 CERTIFICATE
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co. has an interest herein.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE
TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE
WITH THE ASSETS OF ANY (A) EMPLOYEE BENEFITS PLANS (AS DEFINED IN SECTION 3(3)
OF ERISA) SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (B) PLANS DESCRIBED IN
SECTION 4975(E) (1) OF THE CODE, INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS OR
▇▇▇▇▇ PLANS, OR (C) ANY ENTITIES WHOSE UNDERLYING ASSETS INCLUDE ASSETS OF A
PLAN DESCRIBED IN (A) OR (B) ABOVE BY REASON OF SUCH A PLAN'S INVESTMENT IN SUCH
ENTITIES.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
=====================================================================================================================
CLASS M-1 NO. 1
---------------------------------------------------------------------------------------------------------------------
Cut-off Date: July 31, 1997 Class M-1 Pass-Through Rate:2
---------------------------------------------------------------------------------------------------------------------
First Distribution Date: September 22, 1997 Initial Certificate Principal Balance: $15,658,000
---------------------------------------------------------------------------------------------------------------------
Servicer: WMC Mortgage Corp. Aggregate Initial Certificate Principal Balance of All
Class M-1 Certificates: $15,658,000
---------------------------------------------------------------------------------------------------------------------
CUSIP: 22540A BL 1 Maturity Date: October 20, 2028
---------------------------------------------------------------------------------------------------------------------
Issue Date: August 28, 1997
=====================================================================================================================
WMC Mortgage Loan
PASS-THROUGH CERTIFICATES, SERIES 1997-1
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN THE
DEPOSITOR, WMC, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE POOLING AND SERVICING AGREEMENT.
This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Certificate Principal Balance of this
Certificate by the aggregate Certificate Principal Balance for all Certificates
of this Class as of the Issue Date) in that certain beneficial ownership
interest evidenced by all the Certificates of this Class in the Trust Fund
relating to WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, which
consists primarily of the Mortgage Loans. The Trust Fund has been created
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of August 1, 1997, among the Depositor, WMC Mortgage
Corp., as Servicer (the "Servicer"), and The First National Bank of Chicago, as
Trustee (the "Trustee"). This Certificate is one of the Certificates described
in the Pooling and Servicing Agreement and is issued pursuant and subject to the
Pooling and Servicing Agreement. By acceptance of this Certificate, the holder
assents to and becomes bound by the Pooling and Servicing Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Pooling and Servicing Agreement.
-------------------------------
2 On each Distribution Date, the Class M-1 Pass-Through Rate will be equal
to the lesser of (x) with respect to any Distribution Date which occurs on
or prior to the Clean-Up Call Date (as defined herein), LIBOR plus 0.400%
per annum and for any Distribution Date thereafter, LIBOR plus 0.600% per
annum, and (y) the Available Funds Cap Rate.
Issued under the Pooling and Servicing Agreement are Certificates
designated as WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, Class
A (the "Class A Certificates"), Class M-1 (the "Class M-1 Certificates"), Class
M-2 (the "Class M-2 Certificates"), Class B (the "Class B Certificates"), Class
C (the "Class C Certificates"), Class R-1 (the "Class R-1 Certificates") and
Class R-2 (the "Class R-2 Certificates"). The Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, the Class B Certificates are
collectively referred to as the "Offered Certificates." The Class C
Certificates, the Class R-1 Certificates and the Class R-2 Certificates are
collectively referred to as the "Non-Offered Certificates." The Class M-1
Certificates, the Class M-2 Certificates and the Class B Certificates are
collectively referred to as the "Subordinate Certificates" and the Offered
Certificates and the Non-Offered Certificates are collectively referred to
herein as the "Certificates."
No transfer of this Certificate, or any interest therein shall be made to
any (a) employee benefit plans (as defined in Section 3(3) of ERISA) subject to
the provisions of Title I of ERISA, (b) plans described in Section 4975(e)(1) of
the Code, including individual retirement accounts or ▇▇▇▇▇ plans, (c) any
entities whose underlying assets include assets of a plan described in (a) or
(b) above by reason of such a plan's investment in such entities (each a
"Plan"). The Certificateholder, by its acceptance of this Certificate,
represents and warrants it is not a Plan.
The Pooling and Servicing Agreement contemplates, subject to its terms,
payments of interest and principal to be made on the twentieth day (or if such
day is not a Business Day, the next succeeding Business Day) (the "Distribution
Date") of each calendar month commencing in September 1997, so long as the
Pooling and Servicing Agreement has not been terminated, by check (or, if such
Certificateholder so desires, by wire transfer pursuant to instructions
delivered to the Trustee at least five Business Days prior to the applicable
Record Date (as defined below)) to the registered Certificateholder at the
address appearing on the Certificate Register as of the last Business Day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (each a "Record Date"), in an amount, with respect to
each Class of Certificates, as set forth in the Pooling and Servicing Agreement.
The Maturity Date of this Certificate is October 20, 2028.
For each Distribution Date, interest due with respect to the Offered
Certificates will be the interest which has accrued thereon at the applicable
Pass-Through Rate from the preceding Distribution Date (or from the Closing Date
in the case of the first Distribution Date) to and including the day prior to
the current Distribution Date plus certain interest amounts remaining unpaid
from prior Distribution Dates. Each period referred to above relating to the
accrual of interest is the "Accrual Period" for the related Class of Offered
Certificates. All calculations of interest on the Offered Certificates will be
made on the basis of the actual number of days elapsed in the related Accrual
Period and a year of 360 days. A "Business Day" is any day other than a
Saturday, Sunday or a day on which banking institutions in New York City, or in
the city in which the Corporate Trust Office of the Trustee is located, or in
the city in which the servicing operations of the Servicer are conducted, are
authorized or obligated by law or executive order to close.
With respect to each Distribution Date (a) before the Stepdown Date or (b)
with respect to which a Trigger Event is in effect, Holders of the Class A
Certificates will be entitled to receive payment of 100% of the Principal
Distribution Amount for such Distribution Date until the Class A Certificate
Principal Balance has been reduced to zero.
With respect to each Distribution Date (a) on or after the Stepdown Date
and (b) as to which a Trigger Event is not in effect and is not continuing, the
Holders of all Classes of the Offered Certificates will be entitled to receive
payments of principal, in the order of priority, in the amounts set forth in the
Pooling and Servicing Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to assets in the Trust Fund to the extent available for
distribution to the Certificateholder as provided in the Pooling and Servicing
Agreement for payment hereunder and that none of the Depositor, the Seller, the
Servicer, or the Trustee or any of its subsidiaries or affiliates, are
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Pooling and Servicing Agreement or, except as expressly
provided in the Pooling and Servicing Agreement, subject to any liability under
the Pooling and Servicing Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Pooling and
Servicing Agreement.
The Trustee is required to pay distributions with respect to this
Certificate in accordance with the terms hereof and the Pooling and Servicing
Agreement. Amounts properly withheld under the Code or applicable to any
Certificateholder shall be considered as having been paid by the Trustee to such
Certificateholder for all purposes of the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, the
Depositor, the Seller, the Servicer, the Trustee or any of their subsidiaries
and affiliates and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Government National Mortgage Association, or any
other governmental agency. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Mortgage Loans and amounts on
deposit in the Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Certificateholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
The Pooling and Servicing Agreement provides that the Trust Fund will
terminate upon the payment to the Holders of all Certificates of all amounts
required to be paid to such Holders upon the last to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Fund and (c) at any time when a
Qualified Liquidation of the Trust Fund is effected as described in the Pooling
and Servicing Agreement.
The Pooling and Servicing Agreement also provides that the Servicer will
have the right to purchase all the Mortgage Loans (a "Clean-Up Call") on any
Determination Date after the month in which the aggregate Loan Balances of the
Mortgage Loans in the Trust Fund has declined to less than 10% of the Original
Aggregate Loan Balance of the Mortgage Loans as of the Closing Date (the
"Clean-Up Call Date"). In addition, if the Servicer does not exercise its
Clean-Up Call rights within two Distribution Dates after the Clean-Up Call Date,
the Holders of the Non-Offered Certificates shall thereafter have the right to
declare a Clean-Up Call. The party that chooses to exercise its right to declare
a Clean-Up Call shall purchase from the Trust Fund all (but not fewer than all)
remaining Mortgage Loans and other property acquired by foreclosure, deed in
lieu of foreclosure, or otherwise then constituting the Trust Fund at a price
and in the manner set forth in the Pooling and Servicing Agreement.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Certificateholder in the manner set forth therein.
The Trustee is required to furnish certain information on each Distribution
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A Certificates are issuable only as registered Certificates in
denominations of $1,000.00 original principal amount and integral multiples of
$1.00 in excess thereof, the Subordinate Certificates and the Class C
Certificates shall be issued in denominations of no less than $25,000 and
integral multiples of $1.00 in excess thereof, as provided in the Pooling and
Servicing Agreement and subject to certain limitations therein set forth.
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate principal amount.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and immunities of
the Trustee. Copies of the Pooling and Servicing Agreement and all amendments
thereto will be provided to any Certificateholder upon written request to the
Trustee.
As provided in the Pooling and Servicing Agreement and subject to the
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon one or more new Certificates evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Depositor, the Servicer and the Trustee and any agent of any of them
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of them nor any such agent shall be affected
by any notice to the contrary.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust Fund referenced herein and authenticated by the
manual signature of a duly authorized officer of the Trustee.
Dated: August 28, 1997
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: --------------------------
Name:
Title:
Trustee Certificate of Authentication:
This is one of the Class M-1 Certificates described
in the above-referenced Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: --------------------------
Name:
Title:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the attached WMC Mortgage Loan Pass-Through
Certificate, Series 1997- 1, and does hereby irrevocably constitute and appoint
____________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: ---------- ---, ----- By: --------------------------
Signature
EXHIBIT A-3
FORM OF CLASS M-2 CERTIFICATE
CLASS M-2 CERTIFICATE
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Trustee or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co. has an interest herein.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE
TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE
WITH THE ASSETS OF ANY (A) EMPLOYEE BENEFITS PLANS (AS DEFINED IN SECTION 3(3)
OF ERISA) SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (B) PLANS DESCRIBED IN
SECTION 4975(E) (1) OF THE CODE, INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS OR
▇▇▇▇▇ PLANS, OR (C) ANY ENTITIES WHOSE UNDERLYING ASSETS INCLUDE ASSETS OF A
PLAN DESCRIBED IN (A) OR (B) ABOVE BY REASON OF SUCH A PLAN'S INVESTMENT IN SUCH
ENTITIES.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
CLASS M-1 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
=====================================================================================================================
CLASS M-2 NO. 1
-----------------------------------------------------------------------------------------------------------------------
Cut-off Date: July 31, 1997 Class M-2 Pass-Through Rate:3
-----------------------------------------------------------------------------------------------------------------------
First Distribution Date: September 22, 1997 Initial Certificate Principal Balance: $14,143,000
-----------------------------------------------------------------------------------------------------------------------
Servicer: WMC Mortgage Corp. Aggregate Initial Certificate Principal Balance of All
Class M-2 Certificates: $14,143,000
-----------------------------------------------------------------------------------------------------------------------
CUSIP: 22540A BM 9 Maturity Date: October 20, 2028
-----------------------------------------------------------------------------------------------------------------------
Issue Date: August 28, 1997
=======================================================================================================================
WMC Mortgage Loan
PASS-THROUGH CERTIFICATES, SERIES 1997-1
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN THE
DEPOSITOR, WMC, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE POOLING AND SERVICING AGREEMENT.
This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Certificate Principal Balance of this
Certificate by the aggregate Certificate Principal Balance for all Certificates
of this Class as of the Issue Date) in that certain beneficial ownership
interest evidenced by all the Certificates of this Class in the Trust Fund
relating to WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, which
consists primarily of the Mortgage Loans. The Trust Fund has been created
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of August 1, 1997, among the Depositor, WMC Mortgage
Corp., as Servicer (the "Servicer"), and The First National Bank of Chicago, as
Trustee (the "Trustee"). This Certificate is one of the Certificates described
in the Pooling and Servicing Agreement and is issued pursuant and subject to the
Pooling and Servicing Agreement. By acceptance of this Certificate, the holder
assents to and becomes bound by the Pooling and Servicing Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Pooling and Servicing Agreement.
-----------------
3 On each Distribution Date, the Class M-2 Pass-Through Rate will be
equal to the lesser of (x) with respect to any Distribution Date which
occurs on or prior to the Clean-Up Call Date (as defined herein), LIBOR
plus 0.650% per annum and for any Distribution Date thereafter, LIBOR plus
0.975% per annum, and (y) the Available Funds Cap Rate.
Issued under the Pooling and Servicing Agreement are Certificates
designated as WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, Class
A (the "Class A Certificates"), Class M-1 (the "Class M-1 Certificates"), Class
M-2 (the "Class M-2 Certificates"), Class B (the "Class B Certificates"), Class
C (the "Class C Certificates"), Class R-1 (the "Class R-1 Certificates") and
Class R-2 (the "Class R-2 Certificates"). The Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, the Class B Certificates are
collectively referred to as the "Offered Certificates." The Class C
Certificates, the Class R-1 Certificates and the Class R-2 Certificates are
collectively referred to as the "Non-Offered Certificates." The Class M-1
Certificates, the Class M-2 Certificates and the Class B Certificates are
collectively referred to as the "Subordinate Certificates" and the Offered
Certificates and the Non-Offered Certificates are collectively referred to
herein as the "Certificates."
No transfer of this Certificate, or any interest therein shall be made to
any (a) employee benefit plans (as defined in Section 3(3) of ERISA) subject to
the provisions of Title I of ERISA, (b) plans described in Section 4975(e)(1) of
the Code, including individual retirement accounts or ▇▇▇▇▇ plans, (c) any
entities whose underlying assets include assets of a plan described in (a) or
(b) above by reason of such a plan's investment in such entities (each a
"Plan"). The Certificateholder, by its acceptance of this Certificate,
represents and warrants it is not a Plan.
The Pooling and Servicing Agreement contemplates, subject to its terms,
payments of interest and principal to be made on the twentieth day (or if such
day is not a Business Day, the next succeeding Business Day) (the "Distribution
Date") of each calendar month commencing in September 1997, so long as the
Pooling and Servicing Agreement has not been terminated, by check (or, if such
Certificateholder so desires, by wire transfer pursuant to instructions
delivered to the Trustee at least five Business Days prior to the applicable
Record Date (as defined below)) to the registered Certificateholder at the
address appearing on the Certificate Register as of the last Business Day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (each a "Record Date"), in an amount, with respect to
each Class of Certificates, as set forth in the Pooling and Servicing Agreement.
The Maturity Date of this Certificate is October 20, 2028.
For each Distribution Date, interest due with respect to the Offered
Certificates will be the interest which has accrued thereon at the applicable
Pass-Through Rate from the preceding Distribution Date (or from the Closing Date
in the case of the first Distribution Date) to and including the day prior to
the current Distribution Date plus certain interest amounts remaining unpaid
from prior Distribution Dates. Each period referred to above relating to the
accrual of interest is the "Accrual Period" for the related Class of Offered
Certificates. All calculations of interest on the Offered Certificates will be
made on the basis of the actual number of days elapsed in the related Accrual
Period and a year of 360 days. A "Business Day" is any day other than a
Saturday, Sunday or a day on which banking institutions in New York City, or in
the city in which the Corporate Trust Office of the Trustee is located, or in
the city in which the servicing operations of the Servicer are conducted, are
authorized or obligated by law or executive order to close.
With respect to each Distribution Date (a) before the Stepdown Date or (b)
with respect to which a Trigger Event is in effect, Holders of the Class A
Certificates will be entitled to receive payment of 100% of the Principal
Distribution Amount for such Distribution Date until the Class A Certificate
Principal Balance has been reduced to zero.
With respect to each Distribution Date (a) on or after the Stepdown Date
and (b) as to which a Trigger Event is not in effect and is not continuing, the
Holders of all Classes of the Offered Certificates will be entitled to receive
payments of principal, in the order of priority, in the amounts set forth in the
Pooling and Servicing Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to assets in the Trust Fund to the extent available for
distribution to the Certificateholder as provided in the Pooling and Servicing
Agreement for payment hereunder and that none of the Depositor, the Seller, the
Servicer, or the Trustee or any of its subsidiaries or affiliates, are
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Pooling and Servicing Agreement or, except as expressly
provided in the Pooling and Servicing Agreement, subject to any liability under
the Pooling and Servicing Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Pooling and
Servicing Agreement.
The Trustee is required to pay distributions with respect to this
Certificate in accordance with the terms hereof and the Pooling and Servicing
Agreement. Amounts properly withheld under the Code or applicable to any
Certificateholder shall be considered as having been paid by the Trustee to such
Certificateholder for all purposes of the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, the
Depositor, the Seller, the Servicer, the Trustee or any of their subsidiaries
and affiliates and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Government National Mortgage Association, or any
other governmental agency. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Mortgage Loans and amounts on
deposit in the Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Certificateholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
The Pooling and Servicing Agreement provides that the Trust Fund will
terminate upon the payment to the Holders of all Certificates of all amounts
required to be paid to such Holders upon the last to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Fund and (c) at any time when a
Qualified Liquidation of the Trust Fund is effected as described in the Pooling
and Servicing Agreement.
The Pooling and Servicing Agreement also provides that the Servicer will
have the right to purchase all the Mortgage Loans (a "Clean-Up Call") on any
Determination Date after the month in which the aggregate Loan Balances of the
Mortgage Loans in the Trust Fund has declined to less than 10% of the Original
Aggregate Loan Balance of the Mortgage Loans as of the Closing Date (the
"Clean-Up Call Date"). In addition, if the Servicer does not exercise its
Clean-Up Call rights within two Distribution Dates after the Clean-Up Call Date,
the Holders of the Non-Offered Certificates shall thereafter have the right to
declare a Clean-Up Call. The party that chooses to exercise its right to declare
a Clean-Up Call shall purchase from the Trust Fund all (but not fewer than all)
remaining Mortgage Loans, in whole only, and other property acquired by
foreclosure, deed in lieu of foreclosure, or otherwise then constituting the
Trust Fund at a price and in the manner set forth in the Pooling and Servicing
Agreement.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Certificateholder in the manner set forth therein.
The Trustee is required to furnish certain information on each Distribution
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A Certificates are issuable only as registered Certificates in
denominations of $1,000.00 original principal amount and integral multiples of
$1.00 in excess thereof, the Subordinate Certificates and the Class C
Certificates shall be issued in denominations of no less than $25,000 and
integral multiples of $1.00 in excess thereof, as provided in the Pooling and
Servicing Agreement and subject to certain limitations therein set forth.
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate principal amount.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and immunities of
the Trustee. Copies of the Pooling and Servicing Agreement and all amendments
thereto will be provided to any Certificateholder upon written request to the
Trustee.
As provided in the Pooling and Servicing Agreement and subject to the
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon one or more new Certificates evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Depositor, the Servicer and the Trustee and any agent of any of them
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of them nor any such agent shall be affected
by any notice to the contrary.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust Fund referenced herein and authenticated by the
manual signature of a duly authorized officer of the Trustee.
Dated: August 28, 1997
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: --------------------------
Name:
Title:
Trustee Certificate of Authentication:
This is one of the Class M-2 Certificates described
in the above-referenced Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: --------------------------
Name:
Title:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the attached WMC Mortgage Loan Pass-Through
Certificate, Series 1997- 1, and does hereby irrevocably constitute and appoint
____________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: ---------- ---, ---- By: --------------------------
Signature
EXHIBIT A-4
FORM OF CLASS B CERTIFICATE
CLASS B CERTIFICATE
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Trustee or its agent for registration of transfer, exchange, or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co. has an interest herein.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE
TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE
WITH THE ASSETS OF ANY (A) EMPLOYEE BENEFITS PLANS (AS DEFINED IN SECTION 3(3)
OF ERISA) SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (B) PLANS DESCRIBED IN
SECTION 4975(E) (1) OF THE CODE, INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS OR
▇▇▇▇▇ PLANS, OR (C) ANY ENTITIES WHOSE UNDERLYING ASSETS INCLUDE ASSETS OF A
PLAN DESCRIBED IN (A) OR (B) ABOVE BY REASON OF SUCH A PLAN'S INVESTMENT IN SUCH
ENTITIES.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
M-1 AND CLASS M-2 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
=====================================================================================================================
CLASS B NO. 1
----------------------------------------------------------------------------------------------------------------------
Cut-off Date: July 31, 1997 Class B Pass-Through Rate:4
-----------------------------------------------------------------------------------------------------------------------
First Distribution Date: September 22, 1997 Initial Certificate Principal Balance: $13,638,000
-----------------------------------------------------------------------------------------------------------------------
Servicer: WMC Mortgage Corp. Aggregate Initial Certificate Principal Balance of All
Class B Certificates: $13,638,000
-----------------------------------------------------------------------------------------------------------------------
CUSIP: 22540A BN 7 Maturity Date: October 20, 2028
-----------------------------------------------------------------------------------------------------------------------
Issue Date: August 28, 1997
=======================================================================================================================
WMC Mortgage Loan
PASS-THROUGH CERTIFICATES, SERIES 1997-1
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN THE
DEPOSITOR, WMC, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE POOLING AND SERVICING AGREEMENT.
This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Certificate Principal Balance of this
Certificate by the aggregate Certificate Principal Balance for all Certificates
of this Class as of the Issue Date) in that certain beneficial ownership
interest evidenced by all the Certificates of this Class in the Trust Fund
relating to WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, which
consists primarily of the Mortgage Loans. The Trust Fund has been created
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of August 1, 1997, among the Depositor, WMC Mortgage
Corp., as Servicer (the "Servicer"), and The First National Bank of Chicago, as
Trustee (the "Trustee"). This Certificate is one of the Certificates described
in the Pooling and Servicing Agreement and is issued pursuant and subject to the
Pooling and Servicing Agreement. By acceptance of this Certificate, the holder
assents to and becomes bound by the Pooling and Servicing Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Pooling and Servicing Agreement.
--------
4 On each Distribution Date, the Class B Pass-Through Rate will be equal
to the lesser of (x) with respect to any Distribution Date which occurs on
or prior to the Clean-Up Call Date (as defined herein), LIBOR plus 1.100%
per annum and for any Distribution Date thereafter, LIBOR plus 1.650% per
annum, and (y) the Available Funds Cap Rate.
Issued under the Pooling and Servicing Agreement are Certificates
designated as WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, Class
A (the "Class A Certificates"), Class M-1 (the "Class M-1 Certificates"), Class
M-2 (the "Class M-2 Certificates"), Class B (the "Class B Certificates"), Class
C (the "Class C Certificates"), Class R-1 (the "Class R-1 Certificates") and
Class R-2 (the "Class R-2 Certificates"). The Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, the Class B Certificates are
collectively referred to as the "Offered Certificates." The Class C
Certificates, the Class R-1 Certificates and the Class R-2 Certificates are
collectively referred to as the "Non-Offered Certificates." The Class M-1
Certificates, the Class M-2 Certificates and the Class B Certificates are
collectively referred to as the "Subordinate Certificates" and the Offered
Certificates and the Non-Offered Certificates are collectively referred to
herein as the "Certificates."
No transfer of this Certificate, or any interest therein shall be made to
any (a) employee benefit plans (as defined in Section 3(3) of ERISA) subject to
the provisions of Title I of ERISA, (b) plans described in Section 4975(e)(1) of
the Code, including individual retirement accounts or ▇▇▇▇▇ plans, (c) any
entities whose underlying assets include assets of a plan described in (a) or
(b) above by reason of such a plan's investment in such entities (each a
"Plan"). The Certificateholder, by its acceptance of this Certificate,
represents and warrants it is not a Plan.
The Pooling and Servicing Agreement contemplates, subject to its terms,
payments of interest and principal to be made on the twentieth day (or if such
day is not a Business Day, the next succeeding Business Day) (the "Distribution
Date") of each calendar month commencing in September 1997, so long as the
Pooling and Servicing Agreement has not been terminated, by check (or, if such
Certificateholder so desires, by wire transfer pursuant to instructions
delivered to the Trustee at least five Business Days prior to the applicable
Record Date (as defined below)) to the registered Certificateholder at the
address appearing on the Certificate Register as of the last Business Day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (each a "Record Date"), in an amount, with respect to
each Class of Certificates, as set forth in the Pooling and Servicing Agreement.
The Maturity Date of this Certificate is October 20, 2028.
For each Distribution Date, interest due with respect to the Offered
Certificates will be the interest which has accrued thereon at the applicable
Pass-Through Rate from the preceding Distribution Date (or from the Closing Date
in the case of the first Distribution Date) to and including the day prior to
the current Distribution Date plus certain interest amounts remaining unpaid
from prior Distribution Dates. Each period referred to above relating to the
accrual of interest is the "Accrual Period" for the related Class of Offered
Certificates. All calculations of interest on the Offered Certificates will be
made on the basis of the actual number of days elapsed in the related Accrual
Period and a year of 360 days. A "Business Day" is any day other than a
Saturday, Sunday or a day on which banking institutions in New York City, or in
the city in which the Corporate Trust Office of the Trustee is located, or in
the city in which the servicing operations of the Servicer are conducted, are
authorized or obligated by law or executive order to close.
With respect to each Distribution Date (a) before the Stepdown Date or (b)
with respect to which a Trigger Event is in effect, Holders of the Class A
Certificates will be entitled to receive payment of 100% of the Principal
Distribution Amount for such Distribution Date until the Class A Certificate
Principal Balance has been reduced to zero.
With respect to each Distribution Date (a) on or after the Stepdown Date
and (b) as to which a Trigger Event is not in effect and is not continuing, the
Holders of all Classes of the Offered Certificates will be entitled to receive
payments of principal, in the order of priority, in the amounts set forth in the
Pooling and Servicing Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to assets in the Trust Fund to the extent available for
distribution to the Certificateholder as provided in the Pooling and Servicing
Agreement for payment hereunder and that none of the Depositor, the Seller, the
Servicer, or the Trustee or any of its subsidiaries or affiliates, are
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Pooling and Servicing Agreement or, except as expressly
provided in the Pooling and Servicing Agreement, subject to any liability under
the Pooling and Servicing Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Pooling and
Servicing Agreement.
The Trustee is required to pay distributions with respect to this
Certificate in accordance with the terms hereof and the Pooling and Servicing
Agreement. Amounts properly withheld under the Code or applicable to any
Certificateholder shall be considered as having been paid by the Trustee to such
Certificateholder for all purposes of the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, the
Depositor, the Seller, the Servicer, the Trustee or any of their subsidiaries
and affiliates and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Government National Mortgage Association, or any
other governmental agency. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Mortgage Loans and amounts on
deposit in the Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Certificateholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
The Pooling and Servicing Agreement provides that the Trust Fund will
terminate upon the payment to the Holders of all Certificates of all amounts
required to be paid to such Holders upon the last to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Fund and (c) at any time when a
Qualified Liquidation of the Trust Fund is effected as described in the Pooling
and Servicing Agreement.
The Pooling and Servicing Agreement also provides that the Servicer will
have the right to purchase all the Mortgage Loans (a "Clean-Up Call") on any
Determination Date after the month in which the aggregate Loan Balances of the
Mortgage Loans in the Trust Fund has declined to less than 10% of the Original
Aggregate Loan Balance of the Mortgage Loans as of the Closing Date (the
"Clean-Up Call Date"). In addition, if the Servicer does not exercise its
Clean-Up Call rights within two Distribution Dates after the Clean-Up Call Date,
the Holders of the Non-Offered Certificates shall thereafter have the right to
declare a Clean-Up Call. The party that chooses to exercise its right to declare
a Clean-Up Call shall purchase from the Trust Fund all (but not fewer than all)
remaining Mortgage Loans and other property acquired by foreclosure, deed in
lieu of foreclosure, or otherwise then constituting the Trust Fund at a price
and in the manner set forth in the Pooling and Servicing Agreement.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Certificateholder in the manner set forth therein.
The Trustee is required to furnish certain information on each Distribution
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A Certificates are issuable only as registered Certificates in
denominations of $1,000.00 original principal amount and integral multiples of
$1.00 in excess thereof, the Subordinate Certificates and the Class C
Certificates shall be issued in denominations of no less than $25,000 and
integral multiples of $1.00 in excess thereof, as provided in the Pooling and
Servicing Agreement and subject to certain limitations therein set forth.
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate principal amount.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and immunities of
the Trustee. Copies of the Pooling and Servicing Agreement and all amendments
thereto will be provided to any Certificateholder upon written request to the
Trustee.
As provided in the Pooling and Servicing Agreement and subject to the
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon one or more new Certificates evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Depositor, the Servicer and the Trustee and any agent of any of them
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of them nor any such agent shall be affected
by any notice to the contrary.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust Fund referenced herein and authenticated by the
manual signature of a duly authorized officer of the Trustee.
Dated: August 28, 1997
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: --------------------------
Name:
Title:
Trustee Certificate of Authentication:
This is one of the Class B Certificates described
in the above-referenced Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: --------------------------
Name:
Title:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the attached WMC Mortgage Loan Pass-Through
Certificate, Series 1997- 1, and does hereby irrevocably constitute and appoint
____________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: ----------- ---, ----- By: --------------------------
Signature
EXHIBIT A-5
FORM OF CLASS C CERTIFICATE
CLASS C CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE
TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE
WITH THE ASSETS OF ANY (A) EMPLOYEE BENEFITS PLANS (AS DEFINED IN SECTION 3(3)
OF ERISA) SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (B) PLANS DESCRIBED IN
SECTION 4975(E) (1) OF THE CODE, INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS OR
▇▇▇▇▇ PLANS, OR (C) ANY ENTITIES WHOSE UNDERLYING ASSETS INCLUDE ASSETS OF A
PLAN DESCRIBED IN (A) OR (B) ABOVE BY REASON OF SUCH A PLAN'S INVESTMENT IN SUCH
ENTITIES.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE OFFERED
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
=====================================================================================================================
CLASS C NO. 1
---------------------------------------------------------------------------------------------------------------------
Cut-off Date: July 31, 1997 Class C Pass-Through Rate:
Specified portion of interest as per Treasury
regulations ss. 1.860G-1(a)(2)(C) and
described in the Pooling and Servicing
Agreement.
----------------------------------------------------------------------------------------------------------------------
First Distribution Date: September 22, 1997 Initial Certificate Principal Balance: 100% Interest
----------------------------------------------------------------------------------------------------------------------
Servicer: WMC Mortgage Corp. Aggregate Initial Certificate Principal Balance of All
Class C Certificates: 100% Interest
----------------------------------------------------------------------------------------------------------------------
Issue Date: August 28, 1997 Maturity Date: October 20, 2028
======================================================================================================================
WMC Mortgage Loan
PASS-THROUGH CERTIFICATES, SERIES 1997-1
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN THE
DEPOSITOR, WMC, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE POOLING AND SERVICING AGREEMENT.
This certifies that WMC MORTGAGE CORP. is the registered owner of a
Percentage Interest (obtained by dividing the Certificate Principal Balance of
this Certificate by the aggregate Certificate Principal Balance for all
Certificates of this Class as of the Issue Date), in that certain beneficial
ownership interest evidenced by all the Certificates of this Class in the Trust
Fund relating to WMC Mortgage Loan Pass-Through Certificates, Series 1997-1,
which consists primarily of the Mortgage Loans. The Trust Fund has been created
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of August 1, 1997, among the Depositor, WMC Mortgage
Corp., as Servicer (the "Servicer"), and The First National Bank of Chicago, as
Trustee (the "Trustee"). This Certificate is one of the Certificates described
in the Pooling and Servicing Agreement and is issued pursuant and subject to the
Pooling and Servicing Agreement. By acceptance of this Certificate, the holder
assents to and becomes bound by the Pooling and Servicing Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Pooling and Servicing Agreement.
Issued under the Pooling and Servicing Agreement are Certificates
designated as WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, Class
A (the "Class A Certificates"), Class M-1 (the "Class M-1 Certificates"), Class
M-2 (the "Class M-2 Certificates"), Class B (the "Class B Certificates"), Class
C (the "Class C Certificates"), Class R-1 (the "Class R-1 Certificates") and
Class R-2 (the "Class R-2 Certificates"). The Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, the Class B Certificates are
collectively referred to as the "Offered Certificates." The Class C
Certificates, the Class R-1 Certificates and the Class R-2 Certificates are
collectively referred to as the "Non-Offered Certificates." The Class M-1
Certificates, the Class M-2 Certificates and the Class B Certificates are
collectively referred to as the "Subordinate Certificates" and the Offered
Certificates and the Non-Offered Certificates are collectively referred to
herein as the "Certificates."
No transfer of this Certificate, or any interest therein shall be made to
any (a) employee benefit plans (as defined in Section 3(3) of ERISA) subject to
the provisions of Title I of ERISA, (b) plans described in Section 4975(e)(1)
of the Code, including individual retirement accounts or ▇▇▇▇▇ plans, (c) any
entities whose underlying assets include assets of a plan described in (a) or
(b) above by reason of such a plan's investment in such entities (each a
"Plan"). The Certificateholder, by its acceptance of this Certificate,
represents and warrants it is not a Plan.
The Pooling and Servicing Agreement contemplates, subject to its terms,
payments of interest and principal to be made on the twentieth day (or if such
day is not a Business Day, the next succeeding Business Day) (the "Distribution
Date") of each calendar month commencing in September 1997, so long as the
Pooling and Servicing Agreement has not been terminated, by check (or, if such
Certificateholder so desires, by wire transfer pursuant to instructions
delivered to the Trustee at least five Business Days prior to the applicable
Record Date (as defined below)) to the registered Certificateholder at the
address appearing on the Certificate Register as of the last Business Day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (each a "Record Date"), in an amount, with respect to
each Class of Certificates, as set forth in the Pooling and Servicing Agreement.
The Maturity Date of this Certificate is October 20, 2028.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to assets in the Trust Fund to the extent available for
distribution to the Certificateholder as provided in the Pooling and Servicing
Agreement for payment hereunder and that none of the Depositor, the Seller, the
Servicer, or the Trustee or any of its subsidiaries or affiliates, are
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Pooling and Servicing Agreement or, except as expressly
provided in the Pooling and Servicing Agreement, subject to any liability under
the Pooling and Servicing Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Pooling and
Servicing Agreement.
The Trustee is required to pay distributions with respect to this
Certificate in accordance with the terms hereof and the Pooling and Servicing
Agreement. Amounts properly withheld under the Code or applicable to any
Certificateholder shall be considered as having been paid by the Trustee to such
Certificateholder for all purposes of the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, the
Depositor, the Seller, the Servicer, the Trustee or any of their subsidiaries
and affiliates and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Government National Mortgage Association, or any
other governmental agency. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Mortgage Loans and amounts on
deposit in the Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Certificateholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
The Pooling and Servicing Agreement provides that the Trust Fund will
terminate upon the payment to the Holders of all Certificates of all amounts
required to be paid to such Holders upon the last to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Fund and (c) at any time when a
Qualified Liquidation of the Trust Fund is effected as described in the Pooling
and Servicing Agreement.
The Pooling and Servicing Agreement also provides that the Servicer will
have the right to purchase all the Mortgage Loans (a "Clean-Up Call") on any
Determination Date after the month in which the aggregate Loan Balances of the
Mortgage Loans in the Trust Fund has declined to less than 10% of the Original
Aggregate Loan Balance of the Mortgage Loans as of the Closing Date (the
"Clean-Up Call Date"). In addition, if the Servicer does not exercise its
Clean-Up Call rights within two Distribution Dates after the Clean-Up Call Date,
the Holders of the Non-Offered Certificates shall thereafter have the right to
declare a Clean-Up Call. The party that chooses to exercise its right to declare
a Clean-Up Call shall purchase from the Trust Fund all (but not fewer than all)
remaining Mortgage Loans and other property acquired by foreclosure, deed in
lieu of foreclosure, or otherwise then constituting the Trust Fund at a price
and in the manner set forth in the Pooling and Servicing Agreement.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Certificateholder in the manner set forth therein.
The Trustee is required to furnish certain information on each Distribution
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A Certificates are issuable only as registered Certificates in
denominations of $1,000.00 original principal amount and integral multiples of
$1.00 in excess thereof, the Subordinate Certificates and the Class C
Certificates shall be issued in denominations of no less than $25,000 and
integral multiples of $1.00 in excess thereof, as provided in the Pooling and
Servicing Agreement and subject to certain limitations therein set forth.
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate principal amount.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and immunities of
the Trustee. Copies of the Pooling and Servicing Agreement and all amendments
thereto will be provided to any Certificateholder upon written request to the
Trustee.
As provided in the Pooling and Servicing Agreement and subject to the
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon one or more new Certificates evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Depositor, the Servicer and the Trustee and any agent of any of them
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of them nor any such agent shall be affected
by any notice to the contrary.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust Fund referenced herein and authenticated by the
manual signature of a duly authorized officer of the Trustee.
Dated: August 28, 1997
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: ----------------------------
Name:
Title:
Trustee Certificate of Authentication:
This is one of the Class C Certificates described
in the above-referenced Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: --------------------------
Name:
Title:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the attached WMC Mortgage Loan Pass-Through
Certificate, Series 1997-1, and does hereby irrevocably constitute and appoint
____________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: --------- ---, ---- By: -------------------------------
Signature
EXHIBIT A-6
FORM OF CLASS R-1 CERTIFICATE
CLASS R-1 CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE
TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE
WITH THE ASSETS OF ANY (A) EMPLOYEE BENEFITS PLANS (AS DEFINED IN SECTION 3(3)
OF ERISA) SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (B) PLANS DESCRIBED IN
SECTION 4975(E)(1) OF THE CODE, INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS OR
▇▇▇▇▇ PLANS, OR (C) ANY ENTITIES WHOSE UNDERLYING ASSETS INCLUDE ASSETS OF A
PLAN DESCRIBED IN (A) OR (B) ABOVE BY REASON OF SUCH A PLAN'S INVESTMENT IN SUCH
ENTITIES.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 86G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 4.2 OF SUCH POOLING
AND SERVICING AGREEMENT.
=====================================================================================================================
CLASS R-1 NO. 1
---------------------------------------------------------------------------------------------------------------------
Cut-off Date: July 31, 1997 Initial Certificate Principal Balance: 100% Interest
---------------------------------------------------------------------------------------------------------------------
First Distribution Date: September 22, 1997 Aggregate Initial Certificate Principal Balance of All
Class R-1 Certificates: 100% Interest
----------------------------------------------------------------------------------------------------------------------
Servicer: WMC Mortgage Corp. Maturity Date: October 20, 2028
----------------------------------------------------------------------------------------------------------------------
Issue Date: August 28, 1997
======================================================================================================================
WMC Mortgage Loan
PASS-THROUGH CERTIFICATES, SERIES 1997-1
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN THE
DEPOSITOR, WMC, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE POOLING AND SERVICING AGREEMENT.
This certifies that WMC MORTGAGE CORP. is the registered owner of a
Percentage Interest (obtained by dividing the Certificate Principal Balance of
this Certificate by the aggregate Certificate Principal Balance for all
Certificates of this Class as of the Issue Date), in that certain beneficial
ownership interest evidenced by all the Certificates of this Class in the Trust
Fund relating to WMC Mortgage Loan Pass-Through Certificates, Series 1997-1,
which consists primarily of the Mortgage Loans. The Trust Fund has been created
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of August 1, 1997, among the Depositor, WMC Mortgage
Corp., as Servicer (the "Servicer"), and The First National Bank of Chicago, as
Trustee (the "Trustee"). This Certificate is one of the Certificates described
in the Pooling and Servicing Agreement and is issued pursuant and subject to the
Pooling and Servicing Agreement. By acceptance of this Certificate, the holder
assents to and becomes bound by the Pooling and Servicing Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Pooling and Servicing Agreement.
Issued under the Pooling and Servicing Agreement are Certificates
designated as WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, Class
A (the "Class A Certificates"), Class M-1 (the "Class M-1 Certificates"), Class
M-2 (the "Class M-2 Certificates"), Class B (the "Class B Certificates"), Class
C (the "Class C Certificates"), Class R-1 (the "Class R-1 Certificates") and
Class R-2 (the "Class R-2 Certificates"). The Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, the Class B Certificates are
collectively referred to as the "Offered Certificates." The Class C
Certificates, the Class R-1 Certificates and the Class R-2 Certificates are
collectively referred to as the "Non-Offered Certificates." The Class M-1
Certificates, the Class M-2 Certificates and the Class B Certificates are
collectively referred to as the "Subordinate Certificates" and the Offered
Certificates and the Non-Offered Certificates are collectively referred to
herein as the "Certificates."
No transfer of this Certificate, or any interest therein shall be made to
any (a) employee benefit plans (as defined in Section 3(3) of ERISA) subject to
the provisions of Title I of ERISA, (b) plans described in Section 4975(e)(1)
of the Code, including individual retirement accounts or ▇▇▇▇▇ plans, (c) any
entities whose underlying assets include assets of a plan described in (a) or
(b) above by reason of such a plan's investment in such entities (each a
"Plan"). The Certificateholder, by its acceptance of this Certificate,
represents and warrants it is not a Plan.
The Pooling and Servicing Agreement contemplates, subject to its terms,
payments of interest and principal to be made on the twentieth day (or if such
day is not a Business Day, the next succeeding Business Day) (the "Distribution
Date") of each calendar month commencing in September 1997, so long as the
Pooling and Servicing Agreement has not been terminated, by check (or, if such
Certificateholder so desires, by wire transfer pursuant to instructions
delivered to the Trustee at least five Business Days prior to the applicable
Record Date (as defined below)) to the registered Certificateholder at the
address appearing on the Certificate Register as of the last Business Day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (each a "Record Date"), in an amount, with respect to
each Class of Certificates, as set forth in the Pooling and Servicing Agreement.
The Maturity Date of this Certificate is October 20, 2028.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to assets in the Trust Fund to the extent available for
distribution to the Certificateholder as provided in the Pooling and Servicing
Agreement for payment hereunder and that none of the Depositor, the Seller, the
Servicer, or the Trustee or any of its subsidiaries or affiliates, are
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Pooling and Servicing Agreement or, except as expressly
provided in the Pooling and Servicing Agreement, subject to any liability under
the Pooling and Servicing Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Pooling and
Servicing Agreement.
The Trustee is required to pay distributions with respect to this
Certificate in accordance with the terms hereof and the Pooling and Servicing
Agreement. Amounts properly withheld under the Code or applicable to any
Certificateholder shall be considered as having been paid by the Trustee to such
Certificateholder for all purposes of the Pooling and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, the
Depositor, the Seller, the Servicer, the Trustee or any of their subsidiaries
and affiliates and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Government National Mortgage Association, or any
other governmental agency. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Mortgage Loans and amounts on
deposit in the Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Certificateholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
The Pooling and Servicing Agreement provides that the Trust Fund will
terminate upon the payment to the Holders of all Certificates of all amounts
required to be paid to such Holders upon the last to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Fund and (c) at any time when a
Qualified Liquidation of the Trust Fund is effected as described in the Pooling
and Servicing Agreement.
The Pooling and Servicing Agreement also provides that the Servicer will
have the right to purchase all the Mortgage Loans (a "Clean-Up Call") on any
Determination Date after the month in which the aggregate Loan Balances of the
Mortgage Loans in the Trust Fund has declined to less than 10% of the Original
Aggregate Loan Balance of the Mortgage Loans as of the Closing Date (the
"Clean-Up Call Date"). In addition, if the Servicer does not exercise its
Clean-Up Call rights within two Distribution Dates after the Clean-Up Call Date,
the Holders of the Non-Offered Certificates shall thereafter have the right to
declare a Clean-Up Call. The party that chooses to exercise its right to declare
a Clean-Up Call shall purchase from the Trust Fund all (but not fewer than all)
remaining Mortgage Loans, in whole only, and other property acquired by
foreclosure, deed in lieu of foreclosure, or otherwise then constituting the
Trust Fund at a price and in the manner set forth in the Pooling and Servicing
Agreement.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Certificateholder in the manner set forth therein.
The Certificateholders of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Fund.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each Distribution
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and immunities of
the Trustee. Copies of the Pooling and Servicing Agreement and all amendments
thereto will be provided to any Certificateholder upon written request to the
Trustee.
As provided in the Pooling and Servicing Agreement and subject to the
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon one or more new Certificates evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Depositor, the Servicer and the Trustee and any agent of any of them
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of them nor any such agent shall be affected
by any notice to the contrary.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust Fund referenced herein and authenticated by the
manual signature of a duly authorized officer of the Trustee.
Dated: August 28, 1997
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: ---------------------------
Name:
Title:
Trustee Certificate of Authentication:
This is one of the Class R-1 Certificates described
in the above-referenced Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: ---------------------------
Name:
Title:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the attached WMC Mortgage Loan Pass-Through
Certificate, Series 1997-1, and does hereby irrevocably constitute and appoint
____________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: ---------- ---, ---- By: ---------------------------
Signature
EXHIBIT A-7
FORM OF CLASS R-2 CERTIFICATE
CLASS R-2 CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT
REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE
TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE WILL NOT ACQUIRE THIS CERTIFICATE
WITH THE ASSETS OF ANY (A) EMPLOYEE BENEFITS PLANS (AS DEFINED IN SECTION 3(3)
OF ERISA) SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (B) PLANS DESCRIBED IN
SECTION 4975(E)(1) OF THE CODE, INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS OR
▇▇▇▇▇ PLANS, OR (C) ANY ENTITIES WHOSE UNDERLYING ASSETS INCLUDE ASSETS OF A
PLAN DESCRIBED IN (A) OR (B) ABOVE BY REASON OF SUCH A PLAN'S INVESTMENT IN SUCH
ENTITIES.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 86G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 4.2 OF SUCH POOLING
AND SERVICING AGREEMENT.
=====================================================================================================================
CLASS R-2 NO. 1
---------------------------------------------------------------------------------------------------------------------
Cut-off Date: July 31, 1997 Initial Certificate Principal Balance: 100% Interest
---------------------------------------------------------------------------------------------------------------------
First Distribution Date: September 22, 1997 Aggregate Initial Certificate Principal Balance of All
Class R-2 Certificates: 100% Interest
---------------------------------------------------------------------------------------------------------------------
Servicer: WMC Mortgage Corp. Maturity Date: October 20, 2028
---------------------------------------------------------------------------------------------------------------------
Issue Date: August 28, 1997
=====================================================================================================================
WMC Mortgage Loan
PASS-THROUGH CERTIFICATES, SERIES 1997-1
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN THE
DEPOSITOR, WMC, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE POOLING AND SERVICING AGREEMENT.
This certifies that WMC MORTGAGE CORP. is the registered owner of a
Percentage Interest (obtained by dividing the Certificate Principal Balance of
this Certificate by the aggregate Certificate Principal Balance for all
Certificates of this Class as of the Issue Date), in that certain beneficial
ownership interest evidenced by all the Certificates of this Class in the Trust
Fund relating to WMC Mortgage Loan Pass-Through Certificates, Series 1997-1,
which consists primarily of the Mortgage Loans. The Trust Fund has been created
pursuant to a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of August 1, 1997, among the Depositor, WMC Mortgage
Corp., as Servicer (the "Servicer"), and The First National Bank of Chicago, as
Trustee (the "Trustee"). This Certificate is one of the Certificates described
in the Pooling and Servicing Agreement and is issued pursuant and subject to the
Pooling and Servicing Agreement. By acceptance of this Certificate, the holder
assents to and becomes bound by the Pooling and Servicing Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Pooling and Servicing Agreement.
Issued under the Pooling and Servicing Agreement are Certificates
designated as WMC Mortgage Loan Pass-Through Certificates, Series 1997-1, Class
A (the "Class A Certificates"), Class M-1 (the "Class M-1 Certificates"), Class
M-2 (the "Class M-2 Certificates"), Class B (the "Class B Certificates"), Class
C (the "Class C Certificates"), Class R-1 (the "Class R-1 Certificates") and
Class R-2 (the "Class R-2 Certificates"). The Class A Certificates, the Class
M-1 Certificates, the Class M-2 Certificates, the Class B Certificates are
collectively referred to as the "Offered Certificates." The Class C
Certificates, the Class R-1 Certificates and the Class R-2 Certificates are
collectively referred to as the "Non-Offered Certificates." The Class M-1
Certificates, the Class M-2 Certificates and the Class B Certificates are
collectively referred to as the "Subordinate Certificates" and the Offered
Certificates and the Non-Offered Certificates are collectively referred to
herein as the "Certificates."
No transfer of this Certificate, or any interest therein shall be made to
any (a) employee benefit plans (as defined in Section 3(3) of ERISA) subject to
the provisions of Title I of ERISA, (b) plans described in Section 4975(e) (1)
of the Code, including individual retirement accounts or ▇▇▇▇▇ plans, (c) any
entities whose underlying assets include assets of a plan described in (a) or
(b) above by reason of such a plan's investment in such entities (each a
"Plan"). The Certificateholder, by its acceptance of this Certificate,
represents and warrants it is not a Plan.
The Pooling and Servicing Agreement contemplates, subject to its terms,
payments of interest and principal to be made on the twentieth day (or if such
day is not a Business Day, the next succeeding Business Day) (the "Distribution
Date") of each calendar month commencing in September 1997, so long as the
Pooling and Servicing Agreement has not been terminated, by check (or, if such
Certificateholder so desires, by wire transfer pursuant to instructions
delivered to the Trustee at least five Business Days prior to the applicable
Record Date (as defined below)) to the registered Certificateholder at the
address appearing on the Certificate Register as of the last Business Day of the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs (each a "Record Date"), in an amount, with respect to
each Class of Certificates, as set forth in the Pooling and Servicing Agreement.
The Maturity Date of this Certificate is October 20, 2028.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to assets in the Trust Fund to the extent available for
distribution to the Certificateholder as provided in the Pooling and Servicing
Agreement for payment hereunder and that none of the Depositor, the Seller, the
Servicer, or the Trustee or any of its subsidiaries or affiliates, are
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Pooling and Servicing Agreement or, except as expressly
provided in the Pooling and Servicing Agreement, subject to any liability under
the Pooling and Servicing Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Pooling and
Servicing Agreement.
The Trustee is required to duly and punctually pay distributions with
respect to this Certificate in accordance with the terms hereof and the Pooling
and Servicing Agreement. Amounts properly withheld under the Code or applicable
to any Certificateholder shall be considered as having been paid by the Trustee
to such Certificateholder for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub- Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, the
Depositor, the Seller, the Servicer, the Trustee or any of their subsidiaries
and affiliates and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Government National Mortgage Association, or any
other governmental agency. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Mortgage Loans and amounts on
deposit in the Accounts (except as otherwise provided in the Pooling and
Servicing Agreement), all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Certificateholder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or trustee, or for any other remedy under the
Pooling and Servicing Agreement except in compliance with the terms thereof.
The Pooling and Servicing Agreement provides that the Trust Fund will
terminate upon the payment to the Holders of all Certificates of all amounts
required to be paid to such Holders upon the last to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Fund and (c) at any time when a
Qualified Liquidation of the Trust Fund is effected as described in the Pooling
and Servicing Agreement.
The Pooling and Servicing Agreement also provides that the Servicer will
have the right to purchase all the Mortgage Loans (a "Clean-Up Call") on any
Determination Date after the month in which the aggregate Loan Balances of the
Mortgage Loans in the Trust Fund has declined to less than 10% of the Original
Aggregate Loan Balance of the Mortgage Loans as of the Closing Date (the
"Clean-Up Call Date"). In addition, if the Servicer does not exercise its
Clean-Up Call rights within two Distribution Dates after the Clean-Up Call Date,
the Holders of the Non-Offered Certificates shall thereafter have the right to
declare a Clean-Up Call. The party that chooses to exercise its right to declare
a Clean-Up Call shall purchase from the Trust Fund all (but not fewer than all)
remaining Mortgage Loans and other property acquired by foreclosure, deed in
lieu of foreclosure, or otherwise then constituting the Trust Fund at a price
and in the manner set forth in the Pooling and Servicing Agreement.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Certificateholder in the manner set forth therein.
The Certificateholders of a majority of the Percentage Interests
represented by the Offered Certificates, upon compliance with the requirements
set forth in the Pooling and Servicing Agreement, have the right to exercise any
trust or power set forth in the Pooling and Servicing Agreement with respect to
the Certificates or the Trust Fund.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register, and thereupon one or more new Certificates of like
Class, tenor and a like Percentage Interest will be issued to the designated
transferee or transferees.
The Trustee is required to furnish certain information on each Distribution
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A Certificates are issuable only as registered Certificates in
denominations of $1,000.00 original principal amount and integral multiples of
$1.00 in excess thereof, the Subordinate Certificates and the Class C
Certificates shall be issued in denominations of no less than $25,000 and
integral multiples of $1.00 in excess thereof, as provided in the Pooling and
Servicing Agreement and subject to certain limitations therein set forth.
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate principal amount.
This Certificate does not purport to summarize the Pooling and Servicing
Agreement and reference is made to the Pooling and Servicing Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and immunities of
the Trustee. Copies of the Pooling and Servicing Agreement and all amendments
thereto will be provided to any Certificateholder upon written request to the
Trustee.
As provided in the Pooling and Servicing Agreement and subject to the
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register of the Certificate Registrar upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Trustee accompanied by a written instrument of transfer in form satisfactory
to the Trustee duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon one or more new Certificates evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
The Depositor, the Servicer and the Trustee and any agent of any of them
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of them nor any such agent shall be affected
by any notice to the contrary.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust Fund referenced herein and authenticated by the
manual signature of a duly authorized officer of the Trustee.
Dated: August 28, 1997
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: ---------------------------
Name:
Title:
Trustee Certificate of Authentication:
This is one of the Class R-2 Certificates described
in the above-referenced Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee
By: -------------------------
Name:
Title:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the attached WMC Mortgage Loan Pass-Through
Certificate, Series 1997- 1, and does hereby irrevocably constitute and appoint
____________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: ---------- ---, ---- By: ---------------------------
Signature
EXHIBIT B
[INTENTIONALLY OMITTED]
EXHIBIT C
[INTENTIONALLY OMITTED]
EXHIBIT D
[NOT APPLICABLE]
EXHIBIT E
FORM OF TRUSTEE'S RECEIPT
August __, 1997
Credit Suisse First Boston Mortgage Securities Corp.
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WMC Mortgage Corporation
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Re: Pooling and Servicing Agreement, dated as of August 1, 1997 among
Credit Suisse First Boston Mortgage Securities Corp., as Depositor,
WMC Mortgage Corporation, as Servicer, and The First National Bank of
Chicago, as Trustee, regarding WMC Mortgage Loan Pass-Through
Certificates, Series 1997-1
Ladies and Gentlemen:
In accordance with the provisions of the above-referenced Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan Listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or any Mortgage Loan listed on the exceptions report
attachment hereto), it has reviewed the documents delivered to it pursuant to
the Pooling and Servicing Agreement and has determined that (i) all Mortgages
Notes required to be delivered to it pursuant to the above referenced Pooling
and Servicing Agreement are in its possession and (ii) each such Mortgage Note
has been reviewed by it and appears regular on its face, appears to bear
original signatures, and has not been mutilated, damaged, torn or otherwise
physically altered and relates to such Mortgage Loan. The Trustee has made no
independent examination of such documents beyond the review specifically
required in the above- referenced Pooling and Servicing Agreement. The Trustee
makes no representations or warranties as to: (i) the validity, legality,
enforceability or genuineness of any such documents contained in each or any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above captioned Pooling and Servicing
Agreement.
THE FIRST NATIONAL BANK OF CHICAGO, as Trustee
By: ---------------------------
Name:
Title:
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is of The First National Bank of Chicago, a
national banking corporation, acting in its capacity as trustee (the "Trustee")
of a certain pool of mortgage loans (the "Pool") heretofore conveyed in trust to
the Trustee, pursuant to that certain Pooling and Servicing Agreement dated as
of August 1, 1997 (the "Pooling and Servicing Agreement") among Credit Suisse
First Boston Mortgage Securities Corp., as Depositor, WMC Mortgage Corp. as
Servicer, and The First National Bank of Chicago, as Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Files relating to the Pool within
a specified period following the Startup Day and to notify the Seller promptly
of any defects with respect to the Pool, and the Seller is required to remedy
such defects or take certain other action, all as contemplated in Section 3.03
of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement requires
the Trustee to deliver this Pool Certification upon the satisfaction of certain
conditions set forth therein.
NOW, THEREFORE, the Trustee hereby certifies that it has determined that
all required documents listed in Section 3.05 of the Pooling and Servicing
Agreement have been executed or received, and that such documents relate to the
Loans identified in the Schedule or, in the event that such documents have not
been executed and received or do not so relate to such Loans, any remedial
action by the Seller as contempated by Section 3.03 of the Pooling and Servicing
Agreement has been completed (except as mandated on a schedule attached hereto).
The Trustee makes no certification hereby, however, with respect to any
intervening assignments or assumption and modification agreements.
THE FIRST NATIONAL BANK OF CHICAGO, as Trustee
By:
Name:
Title:
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
The First National Bank of Chicago, as Trustee
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Attention: Corporate Trustee Department
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement,
dated as of August __, 1997 (the "Pooling and Servicing Agreement") among Credit
Suisse First Boston Mortgage Securities Corp., as Depositor, WMC Mortgage Corp.,
a California Corporation ("WMC"), as a Seller and the Servicer, and The First
National Bank of Chicago, a national banking corporation, as Trustee (the
"Trustee"), WMC HEREBY CERTIFIES that all conditions precedent to the issuance
of the WMC Mortgage Loan Pass-Through Certificate, Series 1997-1, Class A, Class
M-1, Class M-2, Class B, Class C, Class R-1, and Class R-2 (the "Certificates"),
HAVE BEEN SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE AND DELIVER said
Certificates, and to RELEASE said Certificates to the owners thereof, or
otherwise upon their order.
Very truly yours,
WMC Mortgage Corp.,
By:
Title:
Dated: August __, 1997
EXHIBIT H
[INTENTIONALLY OMITTED]
EXHIBIT I
FORM OF RESIDUAL TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION 860E(e) OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the "Investor"), a
[savings institution] [corporation] duly organized and existing under the laws
of [the State of __________] [the United States], on behalf of which he makes
this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will not
be a "disqualified organization" as of [date of transfer] (For this purpose, a
"disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class [R-1] [R-2] Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class
[R-1] [R-2] Certificates will not be owned directly or indirectly by a
disqualified organization; and (iv) it will not transfer such Class [R-1] [R-2]
Certificate unless (a) it has received from the transferee an affidavit in
substantially the same form as this affidavit containing these same four
representations and (b) as of the time of the transfer, it does not have actual
knowledge that such affidavit is false.
3. The Investor is a citizen or resident of the United States, a
corporation, partnership or other entity treated as a corporation or partnership
for United States federal income tax purposes, created or organized in or under
the laws of the United States or any political subdivision thereof (unless, in
the case of a partnership, future Treasury regulations provide otherwise) an
estate that is subject to U.S. federal income tax regardless of the source of
its income, or a trust other than a "foreign trust," as defined in Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended.
IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [Title of
Officer] and its corporate seal to be hereunto attached, attested by its
[Assistant] Secretary, this ____ day of _______, ________.
[NAME OF INVESTOR]
By:---------------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
Attest:
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known or
proved to be the same person who executed the foregoing instrument and to be the
[Title of Officer] of the Investor, and acknowledged to me that he executed the
same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this __________ day of __________, _______.
-----------------
NOTARY PUBLIC
COUNTY OF-----------------
STATE OF------------------
My commission expires the _________ day of ________, _______.