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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 20, 1996
Credit Suisse First Boston Mortgage Securities Corp.
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(Exact name of registrant as specified in its charter)
Delaware 333-15833 13-3320910
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
Eleven Madison Avenue
New York, New York 10010
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Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (212) 325-3512
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CS First Boston Mortgage Securities Corp.
55 East 52nd Street
New York, New York 10055
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
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Description of the Certificates and the Mortgage Loans
Credit Suisse First Boston Mortgage Securities Corp. (formerly CS
First Boston Mortgage Securities Corp.) registered issuances of Mortgage Pass-
Through Certificates on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, as amended (the "Act"), by the Registration
Statement on Form S-3 (Registration File No. 333-15833) (as amended, the
"Registration Statement"). Pursuant to the Registration Statement, Wilshire
Funding Corporation Mortgage-Backed Trust 1996-3 (the "Trust") issued
approximately $278,285,923 in aggregate principal amount of its Wilshire Funding
Corporation Mortgage-Backed Certificates, Series 1996-3 (the "Certificates"), on
December 20, 1996. This Current Report on Form 8-K is being filed to satisfy an
undertaking to file copies of certain agreements executed in connection with the
issuance of the Certificates, the forms of which were filed as Exhibits to the
Registration Statement.
The Certificates were issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") attached hereto as Exhibit
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4.1, dated as of December 1, 1996, among CS First Boston Mortgage Securities
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Corp., as depositor (the "Depositor"), Wilshire Servicing Corporation, in its
capacity as servicer (the "Servicer"), Wilshire Mortgage Funding Company IV,
Inc., in its capacity as unaffiliated seller (the "Unaffiliated Seller"), and
Bankers Trust Company of California, N.A., in its capacity as trustee (the
"Trustee"). The Certificates consist of seven classes of senior Certificates,
the Class A-1, Class A-2-A, Class A-2-B, Class A-2-C, Class F-IO, Class A-IO and
Class PO Certificates (collectively, the "Senior Certificates"); six classes of
subordinated Certificates, the Class M-1, Class M-2, Class M-3 (collectively,
the "Class M Certificates"), Class B-1, Class B-2 and Class B-3 Certificates
(collectively, the "Class B Certificates," and collectively with the Class M
Certificates, the "Subordinated Certificates"); and two classes of residual
certificates, the Class RU and Class RL Certificates (together, the "Residual
Certificates"). The only certificates being offered pursuant to the
Registration Statement are the Senior Certificates and the Class M Certificates.
The Certificates initially evidence, in the aggregate, 100% of the
undivided beneficial ownership interests in the Trust.
The assets of the Trust will be primarily fixed- and adjustable-rate,
closed-end, monthly pay, generally fully amortizing, mortgage loans (the
"Mortgage Loans") secured by first or second lien mortgages or deeds of trust
(the
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"Mortgages") on real properties (the "Mortgaged Properties"). The Mortgaged
Properties securing the Mortgage Loans consist primarily of single family
residences (which may be detached, part of a two to four-family dwelling, a
condominium unit or a unit in a planned unit development). The Mortgage Loans
were transferred to the Unaffiliated Seller pursuant to a Loan Sale Agreement
(the "Loan Sale Agreement"), attached hereto as Exhibit 4.2, dated as of
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December 1, 1996 among the Unaffiliated Seller and Wilshire Credit Corporation,
First Bank of Beverly Hills, F.S.B., Girard Savings Bank, F.S.B., and Wilshire
Mortgage Funding Company IV, Inc. The Mortgage Loans were transferred from the
Unaffiliated Seller to the Depositor pursuant to an Unaffiliated Seller's
Agreement (the "Unaffiliated Seller's Agreement"), attached hereto as Exhibit
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4.3, dated as of December 11, 1996, between the Unaffiliated Seller and the
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Depositor. The Mortgage Loans were transferred to the Trust pursuant to the
Pooling and Servicing Agreement.
Interest distributions on the Certificates are based on the
Certificate Principal Balance thereof and the then applicable Pass-Through Rate
thereof. The Pass-Through Rate is 7.0000% per annum for the Class A-1
Certificates, 6.7513% for the Class A-2-A Certificates, 7.5715% for the Class A-
2-B Certificates, 7.5198% for the Class A-2-C Certificates, 1.3582% for the
Class F-IO Certificates, 0.4561% for the Class A-IO Certificates and 8.3582% for
the Class M-1, Class M-2 and Class M-3 Certificates. The Class PO Certificates
are "principal-only" certificates and do not pay interest.
As of the Closing Date, the Mortgage Loans possessed the
characteristics described in the Prospectus dated November 11, 1996 and the
Prospectus Supplement dated December 19, 1996 filed pursuant to Rule 424(b)(2)
of the Act on December 27, 1996.
Item 7. Financial Statements, Pro Forma Financial Information and
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Exhibits.
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(a) Not applicable
(b) Not applicable
(c) Exhibits:
1.1 Underwriting Agreement, dated as of December 19, 1996 between
Credit Suisse First Boston Corporation and CS First Boston Mortgage Securities
Corp.
4.1 Pooling and Servicing Agreement, dated as of December 1, 1996,
among CS First Boston Mortgage Securities Corp., as depositor, Wilshire
Servicing Corporation, as servicer, Wilshire Mortgage Funding Company IV, Inc.,
as
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unaffiliated seller, and Bankers Trust Company of California, N.A., as trustee
and back-up servicer.
4.2 Loan Sale Agreement, dated as of December 1, 1996, among Wilshire
Credit Corporation, First Bank of Beverly Hills, F.S.B., Girard Savings Bank,
F.S.B., and Wilshire Mortgage Funding Company IV, Inc.
4.3 Unaffiliated Seller's Agreement, dated as of December 1, 1996,
between Wilshire Mortgage Funding Company IV, Inc., as unaffiliated seller, and
CS First Boston Mortgage Securities Corp., as depositor.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CREDIT SUISSE FIRST BOSTON MORTGAGE
SECURITIES CORP.
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As Depositor and on behalf of Wilshire Funding
Corporation Mortgage-Backed Trust 1996-3
Registrant
By: /s/ Heidi Davis
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Name: Heidi Davis
Title: Vice President
Dated: February 10, 1997
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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1.1 Underwriting Agreement, dated as of
December 19, 1996 between Credit
Suisse First Boston Corporation and CS
First Boston Mortgage Securities Corp.
4.1 Pooling and Servicing Agreement, dated
as of December 1, 1996, among CS First
Boston Mortgage Securities Corp., as
depositor, Wilshire Servicing
Corporation, as servicer, Wilshire
Mortgage Funding Company IV, Inc., as
unaffiliated seller, and Bankers Trust
Company of California, N.A., as
trustee and back-up servicer.
4.2 Loan Sale Agreement, dated as of
December 1, 1996, among Wilshire
Credit Corporation, First Bank of
Beverly Hills, F.S.B., Girard Savings
Bank, F.S.B., and Wilshire Mortgage
Funding Company IV, Inc.
4.3 Unaffiliated Seller's Agreement, dated
as of December 1, 1996, between
Wilshire Mortgage Funding Company IV,
Inc., as unaffiliated seller and CS
First Boston Mortgage Securities
Corp., as depositor.
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EXHIBIT 1.1
CS FIRST BOSTON MORTGAGE SECURITIES CORP.
Depositor
Wilshire Funding Corporation Mortgage-Backed
Certificates, Series 1996-3
December 19, 1996
UNDERWRITING AGREEMENT
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Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010
Dear Sirs:
1. Introduction. CS First Boston Mortgage Securities Corp., a Delaware
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corporation (the "Depositor"), proposes to form one or more real estate mortgage
investment conduits (each, a "Trust"), which will issue, from time to time,
securities entitled Wilshire Funding Corporation Mortgage-Backed Certificates
(the "Certificates") in one or more series (each, a "Series"). Each Certificate
will evidence a fractional, undivided percentage interest or beneficial interest
in a Trust. The property of each Trust may consist primarily of pools (the
"Mortgage Loan Pools") of loans secured by mortgages on residential properties
(the "Mortgage Loans") and certain related property to be conveyed to the Trust
by the Depositor (the "Trust Fund"). The Mortgage Loans may be sold to the
Depositor pursuant to one or more Unaffiliated Seller's Agreements, dated as set
forth in the applicable Terms Agreement (as hereinafter defined) (each, a "Sale
and Purchase Agreement"), between the Depositor, as purchaser, and a third party
seller (the "Seller"). The Certificates will be issued pursuant to a Pooling
and Servicing Agreement to be dated as set forth in the applicable Terms
Agreement (the "Pooling and Servicing Agreement" and, together with this
Agreement and the related Sale and Purchase Agreement, the "Agreements"), among
the Depositor, a servicer (the "Servicer") named in such Terms Agreement and a
trustee (the "Trustee") named in such Terms Agreement.
The Certificates are more fully described in the Registration Statement (as
such term is defined in Section 2(a)), which the Depositor has furnished to you.
Each Series of Certificates and any classes or subclasses of Certificates (each,
a "Class" or "Subclass", respectively) within such Series may vary, among other
things, as to number and types of Classes or Subclasses, aggregate principal
balance or notional
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amount or aggregate stated principal balance, the pass-through rate with respect
to each Class or Subclass, the percentage interest, if any, evidenced by each
Class or Subclass in payments of principal and interest on, or with respect to,
the Mortgage Loans included in the related Trust Fund, the stated principal
balance and interest rate, if any, priority of payment among Classes or
Subclasses, the method of credit enhancement with respect to the Mortgage Loans
in the Trust Fund for such Series, the Classes or Subclasses of Certificates of
such Series subject to this Agreement, and any other variable terms contemplated
by the Pooling and Servicing Agreement and in the Certificates of such Series.
The Depositor will elect to treat the related Trust Fund as a "real estate
mortgage investment conduit" (a "REMIC") under the Internal Revenue Code of
1986, as amended (the "Code").
Each offering of Certificates will be made through you, through you and
other underwriters from whom you are acting as representative or through an
underwriting syndicate managed by you. Whenever the Depositor determines to
form a Trust and to make such an offering of Certificates, it will enter into an
agreement (the "Terms Agreement") providing for the sale of such Certificates
to, and the purchase and offering thereof by, (i) you, (ii) you and such other
underwriters who execute the Terms Agreement and agree thereby to become
obligated to purchase Certificates from the Depositor, or (iii) you and such
other underwriters, if any, selected by you as have authorized you to enter into
such Terms Agreement on their behalf (in each case, the "Underwriters"). Such
Terms Agreement shall specify the fractional undivided interest, principal or
notional amount, or stated principal balance, of each Class or Subclass of the
Certificates to be issued and their terms not otherwise specified in the Pooling
and Servicing Agreement, the Classes or Subclasses of Certificates subject to
this Agreement, the price at which such Certificates are to be purchased by the
Underwriters from the Depositor, the aggregate amount of Certificates to be
purchased by each Underwriter and any other Underwriter that is a party to such
Terms Agreement and the initial public offering price or the method by which the
price at which such Certificates are to be sold will be determined. The Terms
Agreement, which shall be substantially in the form of Exhibit A hereto, which
may take the form of an exchange of any standard form of written
telecommunication between you and the Depositor. Each offering of Certificates
will be governed by this Agreement, as supplemented by the applicable Terms
Agree ment, and this Agreement and such Terms Agreement shall inure to the
benefit of and be binding upon the related Underwriters. Except as otherwise
required by the context, all references herein to a Terms Agreement, Delivery
Date, Pooling and Servicing Agreement and Underwriters shall refer to the Terms
Agreement, Delivery Date, Pooling and Servicing Agreement and Underwriter or
Underwriters, as the case may be, relating to the related offering of
Certificates.
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2. Representations and Warranties of the Depositor. The Depositor
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represents and warrants to the Underwriters as of the date hereof and as of the
date of the applicable Terms Agreement, as follows:
(a) A registration statement on Form S-3 (No. 333-15833), including a
prospectus and such amendments thereto as may have been required to the
date hereof, relating to the Certificates and the offering of each Series
thereof from time to time in accordance with Rule 415 under the Securities
Act of 1933, as amended (the "Act"), has been filed with the Securities and
Exchange Commission (the "Commission") and such registration statement, as
amended, has become effective. For purposes of this Agreement, "Effective
Time" means the date and time as of which such registration statement, or
the most recent post-effective amendment thereto (if any) filed prior to
the execution and delivery of this Agreement, was declared effective by the
Commission and "Effective Date" means the date of the Effective Time.
Such registration statement, as amended, and the prospectus and related
prospectus supplement that the Depositor has filed with the Commission
pursuant to Rule 424(b) relating to the sale of the Certificates of the
applicable Series offered thereby constituting a part thereof, as from time
to time amended or supplemented (including any prospectus filed with the
Commission pursuant to Rule 424(b) of the rules and regulations of the
Commission promulgated under the Act (the "Rules and Regulations")),
including all documents incorporated therein by reference, are respectively
referred to as the "Registration Statement", the "Prospectus" and the
"Prospectus Supplement"; provided, however, that a supplement to the
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Prospectus prepared pursuant to Section 5(a) shall be deemed to have
supplemented the Prospectus only with respect to the offering of the Series
of Certificates to which it relates. The conditions to the use of a
registration statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, and the conditions of Rule 415 under the
Act, have been satisfied with respect to the Registration Statement.
(b) The Registration Statement, on the Effective Date, and the
Prospectus, as of the date of the related Prospectus Supplement, conformed
in all material respects to the requirements of the Act and the Rules and
Regulations, and did not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and on the date of this
Agreement, at the time of the filing of the Prospectus pursuant to Rule
424(b) and at the Delivery Date (as such terms as defined in Section 3),
the
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Prospectus conforms and will conform in all material respects to the
requirements of the Act and the Rules and Regulations, and does not include
and will not include, any untrue statement of a material fact and does not
omit and will not omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. The Prospectus delivered to the
Underwriters for use in connection with the related offering was identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system,
except to the extent permitted by Regulation S-T. The two immediately
preceding sentences do not apply to statements or omissions from either of
such documents based upon written information (including Computational
Materials (as such term is defined in Section 8(a)) furnished to the
Depositor by any Underwriter specifically for use therein.
(c) The Depositor has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
full corporate power and authority to own its assets and conduct its
business as described in the Prospectus, is duly qualified as a foreign
corporation in good standing in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the Depositor, and is conducting its business so
as to comply in all material respects with the applicable statutes,
ordinances, rules and regulations of the jurisdictions in which it is
conducting business.
(d) The Pooling and Servicing Agreement and the Certificates conform,
or will conform as of the Delivery Date, to the description thereof
contained in the Registration Statement and the Prospectus; and the
Certificates, on the date of the Terms Agreement, will have been duly and
validly authorized and, when such Certificates are duly and validly
executed by the Depositor or the Trustee, authenticated by the Trustee and
delivered in accordance with such Pooling and Servicing Agreement and
delivered and paid for as provided herein, will be validly issued and
outstanding and entitled to the benefits and security afforded by the
Pooling and Servicing Agreement.
(e) The execution and delivery by the Depositor of this Agreement, the
Terms Agreement, the Pooling and Servicing Agreement and the Certificates
are within the corporate power of the Depositor and have been, or will have
been, duly authorized by all necessary corporate
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action on the part of the Depositor; and neither the execution and delivery
by the Depositor of such instruments, nor the consummation by the Depositor
of the transactions herein or therein contemplated, nor the compliance by
the Depositor with the provisions hereof or thereof, will (i) conflict with
or result in a breach of, or constitute a default under, any of the
provisions of the certificate of incorporation or by-laws of the Depositor,
(ii) conflict with any of the provisions of any law, governmental rule,
regulation, judgement, decree or order binding on the Depositor or its
properties, (iii) conflict with any of the provisions of any indenture,
mortgage, contract or other instrument to which the Depositor is a party or
by which it is bound, or (iv) result in the creation or imposition of any
lien, charge or encumbrance upon any of its property pursuant to the terms
of any such indenture, mortgage, contract or other instrument.
(f) At the date thereof, the Pooling and Servicing Agreement will
constitute a legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, subject, as
to enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other similar laws affecting creditors' rights
generally from time to time in effect, and to general principles of equity.
(g) All approvals, authorizations, consents, orders or other actions
of any person, corporation or other organization, or of any court,
governmental agency or body or official (except with respect to the state
securities or Blue Sky laws of various jurisdictions), required in
connection with the valid and proper authorization, issuance and sale of
the Certificates pursuant to this Agreement, the Terms Agreement and the
Pooling and Servicing Agreement, has been or will be taken or obtained on
or prior to the applicable Delivery Date.
(h) The Reserve Fund, if any, will be established in accordance with
the Pooling and Servicing Agreement on or prior to the Delivery Date; and a
UCC-1 financing statement with respect to such Reserve Fund naming the
Trustee, for the benefit of the holders of the Certificates, as the secured
party has been filed in the office of the Secretary of State of the state
in which the principal trust office of the Trustee is located and, upon the
purchase by you of the Certificates subject to this Agreement in the manner
contemplated by this Agreement, and the initial deposit of any amount
required to be deposited therein pursuant to the Pooling and Servicing
Agreement, the Trustee, for the benefit of the holders of the Certificates
will, on the date of such
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deposit, have a first perfected priority security interest in such Reserve
Fund.
(i) At the applicable Delivery Date, each of the Mortgage Loans
included in the Trust Fund will meet the criteria for selection described
in the Prospectus.
(j) Certificates subject to this Agreement and offered by means of the
Registration Statement will, when issued pursuant to the Pooling and
Servicing Agreement, be "mortgage related securities", as such term is
defined in Section 3(a)(41) of the Securities Act of 1934, as amended (the
"Exchange Act"), if, and for so long as, such Certificates are rated in one
of the two highest rating categories assigned by at least one nationally
recognized statistical rating organization.
(k) At the date of its execution and delivery, the Pooling and
Servicing Agreement constituted a legal, valid and binding agreement, and
as of the Delivery Date will be enforceable by the Trustee, in accordance
with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization insolvency or other similar laws affecting
creditors' rights generally from time to time in effect, and to general
principles of equity.
(l) The characteristics of the Trust Fund will not subject the related
Trust to registration as an investment company under the Investment Company
Act of 1940, as amended (the "Investment Company Act").
3. Purchase, Sale and Delivery of Certificates. Delivery of and payment
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for the Certificates to which this Agreement applies will be made at the office
of Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, New
York 10010 or such other place as specified in the Terms Agreement, at such time
as shall be specified in the Terms Agreement, or at such other time thereafter
as set forth in the Terms Agreement, or as you and the Depositor shall agree
upon, each such time being herein referred to as a "Delivery Date". Delivery of
such Certificates shall be made by the Depositor to the Underwriters against
payment of the purchase price specified in the applicable Terms Agreement in
same day funds wired to such bank as may be designated by the Depositor, or by
such other manner of payment as may be agreed upon by the Depositor and you.
Except as otherwise provided in the related Terms Agreement, each Class of
Certificates of a Series sold to the Underwriters pursuant to such Terms
Agreement will be represented initially by one or more certificates registered
in the name of Cede & Co., the nominee of The Depository Trust Company ("DTC")
(the "DTC Certificates"). The interests of the beneficial owners of the DTC
Certificates will be represented by book entries on the
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records of DTC and participating members thereof. Definitive certificates for
the DTC Certificates will be made available only under the limited circumstances
specified in the Pooling and Servicing Agreement. Except as otherwise provided
in the related Terms Agreement, each Class of Certificates of a Series not sold
to the Underwriters pursuant to such Terms Agreement will be in definitive,
fully registered form, in such denominations and registered in such names as the
Underwriter shall request, and will be made available at least 24 hours prior to
the applicable Closing Date, for checking and packaging at the offices of Dewey
Ballantine, 1301 Avenue of the Americas, New York, New York 10019 in such
amounts as determined pursuant to the Terms Agreement.
Except as otherwise provided in the related Terms Agreement, pursuant to
Rule 15c6-1(d) under the Exchange Act, the Depositor and the Underwriters have
agreed that the Delivery Date will not be less than five business days following
the date hereof.
4. Offering by Underwriters. It is understood that the Underwriters
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propose to offer the Certificates subject to this Agreement for sale to the
public as set forth in the Prospectus.
5. Covenants of the Depositor. The Depositor covenants and agrees with
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the Underwriters participating in the applicable offering of the Certificates
that:
(a) Immediately following the execution of the Terms Agreement, the
Depositor will prepare a supplement to the Prospectus setting forth the
amount of Certificates covered thereby and the terms thereof not otherwise
specified in the Prospectus, the price at which such Certificates are to be
purchased by the Underwriters, from the Depositor, either the initial
public offering price or the method by which the price at which such
Certificates are to be sold will be determined, the selling concessions and
reallowances, if any, and such other information as you and the Depositor
deem appropriate in connection with the offering of such Certificates, but
the Depositor will not file, for so long as the delivery of a Prospectus is
required in connection with the offering or sale of such Certificates, any
amendments to the Registration Statement as in effect with respect to such
Certificates, or any amendments or supplements to the Prospectus, unless it
shall first have delivered copies of such amendments or supplements to you,
or if you shall have reasonably objected thereto promptly after receipt
thereof; the Depositor will, during such period, immediately advise you or
your counsel (i) when notice is received from the Commission that any post-
effective amendment to the Registration Statement has become or
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will become effective and (ii) of any order or communications suspending or
preventing, or threatening to suspend or prevent, the offer and sale of the
Certificates or of any proceedings or examinations that may lead to such an
order or communication, whether by or of the Commission or any authority
administering any state securities or Blue Sky law, as soon as the
Depositor is advised thereof, and will use its best efforts to prevent the
issuance of any such order or communication and to obtain as soon as
possible its lifting, if issued. Subject to the Underwriters' compliance
with their obligations set forth in Section 8, the Depositor shall file
with the Commission a current report on Form 8-K including any
Computational Materials provided to it by the Underwriters pursuant to
Section 8 no later than the date that the Prospectus Supplement is filed.
(b) If, at any time when a Prospectus relating to the Certificates is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend or supplement the Prospectus to comply with
the Act or the Rules and Regulations, the Depositor will promptly prepare
and file with the Commission, an amendment or supplement that will correct
such statement or omission or an amendment that will effect such
compliance.
(c) The Depositor will make generally available to the holders of the
Certificates (the "Certificateholders"), and deliver to you, in each case
as soon as practicable, an earning statement which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 of the Commission with
respect to the Certificates; and the Depositor will cause the Trustee to
furnish or make available, within a reasonable time after the end of each
calendar year, to each Certificateholder at any time during such year, such
information as the Depositor deems necessary or desirable to assist
Certificateholders in preparing their federal income tax returns.
(d) The Depositor will furnish to you copies of the Registration
Statement (two of which will be signed and will include all documents and
exhibits thereto or incorporated by reference therein), each related
preliminary prospectus, the Prospectus and all amendments and supplements
to such documents relating to the Certificates, in each case as soon as
available, but in
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no event later than five business days after signing the related Terms
Agreement, and in such quantities as you reasonably request.
(e) The Depositor will arrange for the qualification of the
Certificates for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as you designate and will
continue such qualifications in effect so long as required for the
distribution of the Certificates; provided, however, that neither the
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Depositor nor the Trust shall be required to do business in any
jurisdiction where it is now not qualified or to take any action which
would subject it to general or unlimited service of process in any
jurisdiction in which it is now not subject to service of process.
(f) The Depositor will, while the Certificates of a Series are
outstanding furnish to you, and upon request of each other Underwriter,
other information with respect to the related Trust or its financial
condition or results of operations, as any Underwriter may reasonably
request, including but not limited to information necessary or appropriate
to the maintenance of a secondary market in the Certificates of such
Series.
(g) The Depositor will pay all expenses incident to the performance of
its obligations under this Agreement and the Terms Agreement and will
reimburse the Under writers for any expenses (including fees and
disbursements of its counsel) incurred by them in connection with
qualification of the related Series of Certificates and determination of
their eligibility for investment under the laws of such jurisdictions as
you may designate and the reproduction of memoranda relating thereto, for
any fees charged by investment rating agencies for the rating of the
Certificates and, to the extent previously agreed upon with you, the
expenses incurred in distributing any preliminary prospectuses, the
Prospectus or any amendments or supplements thereto to the Underwriters.
(h) During the period when a prospectus is required by law to be
delivered in connection with the sale of Certificates pursuant to this
Agreement, the Depositor will file, or cause the Trustee to file on behalf
of the related Trust, on a timely and complete basis, all documents that
are required by the related Trust with the Commission pursuant to Sections
13, 14 or 15(d) of the Exchange Act.
(i) The Depositor will prepare, or cause to be prepared, and file, or
cause to be filed, a timely election to treat the Trust as a REMIC for
federal income
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tax purposes and will file, or cause to be filed, such tax returns and take
such actions, all on a timely basis, as are required to elect and maintain
such status.
6. Conditions to the Obligations of the Underwriters. The obligations of
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the Underwriters to purchase and pay for the Certificates subject to this
Agreement will be subject to the accuracy of the representations and warranties
on the part of the Depositor as of the date hereof, the date of the Terms
Agreement and the applicable Delivery Date, to the accuracy of the statements of
the Depositor made pursuant to the provisions thereof, to the performance by the
Depositor in all material respects of its obligations hereunder and to the
following additional conditions precedent:
(a) You shall have received a letter from Arthur Anderson, dated the
date of the Terms Agreement, and, if requested by you, a letter from Arthur
Anderson, dated the Delivery Date, and addressed to you each in the forms
heretofore agreed to.
(b) You shall have received a copy of the Prospectus for the related
Series.
(c) All actions required to be taken and all filings required to be
made by the Depositor under the Act prior to the sale of the Certificates
shall have been duly taken or made; and prior to the applicable Delivery
Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted, or to the knowledge of the Depositor or any
Underwriter, shall be contemplated by the Commission.
(d) The Certificates subject to this Agreement and offered by means of
the Registration Statement shall be rated at the time of issuance as set
forth in the Terms Agreement.
(e) you shall have received an opinion of counsel or counsels for the
Depositor, dated the applicable Delivery Date, substantially to the effect
that:
(i) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
with corporate power and corporate authority to own its assets,
operate its business as described in the Prospectus, and is duly
qualified to do business as a foreign corporation in the State of New
York which the Depositor has advised us in writing are the
jurisdictions in which the Depositor owns or leases real property or
conducts material operations.
10
<PAGE>
(ii) This Agreement and the Terms Agreement have been duly
authorized, executed and delivered by the Depositor.
(iii) The execution, delivery and performance of the
Agreements do not conflict with the Certificate of Incorporation or
the By-laws of the Depositor and, to the knowledge of such counsel and
based solely on its examination of the documents referred to herein,
(A) do not conflict with or violate or constitute a material breach
of, or constitute a default under, any material written contract,
indenture, undertaking or other agreement or instrument by which the
Depositor is now bound or to which it is now a party, or result in the
imposition of any material lien upon any of its material properties,
and (B) do not conflict with or violate any order, write, injunction
or the decree of any court or governmental authority against the
Depositor or by which any of its properties is bound.
(iv) Each of the Sale and Purchase Agreement and the Pooling and
Servicing Agreement has been duly authorized, executed and delivered
by the Depositor and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, constitutes the legal,
valid and binding agreement of the Depositor, enforceable against the
Depositor in accordance with its terms, except as enforcement thereof
may be subject to or limited by bankruptcy, insolvency, moratorium,
reorganization, arrangement, fraudulent conveyance or other laws
relating to or affecting creditors' rights generally or by general
equitable principles.
(v) The Certificates have been duly authorized by the Depositor
and, when executed and authenticated pursuant to the Pooling and
Servicing Agreement and paid for and delivered pursuant to this
Agreement and the Terms Agreement, will be validly issued and
outstanding and will be entitled to the benefits afforded by the
Pooling and Servicing Agreement.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Depositor of the transactions contemplated by the Agreements except
such as may be required under federal or state securities laws in
connection with the purchase by the Underwriters of the Certificates,
filings with respect to the transfer of the Mortgage Loans from the
Seller to the Depositor
11
<PAGE>
pursuant to the Sale and Purchase Agreement and from the Depositor to
the Trustee pursuant to the Pooling and Servicing Agreement and such
other approvals as have been obtained.
(vii) The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939 and the Trust Fund
is not required to be registered under the Investment Company Act.
(viii) The Registration Statement has become effective under
the Act, and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act; the Registration Statement and
the Prospectus, and each amendment or supplement thereto, as of their
respective effective or issue dates complied as to form in all
material respects to the requirements of the Act and the Rules and
Regulations; such counsel has no reason to believe that either the
Registration Statement, at the Effective Time, or any such amendment
or supplement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus, at the date of this
Agreement, or any such amendment or supplement, as of its respective
date, or at the Delivery Date, included or includes an untrue
statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; it
being understood that such counsel need express no opinion as to the
financial statements or other financial or statistical data contained
in the Registration Statement or the Prospectus.
(ix) The statements in the Prospectus under the caption
"Description of Certificates", insofar as such statements constitute a
summary of certain terms of the Certificates, the Sale and Purchase
Agreement and the Pooling and Servicing Agreement, while they do not
purport to discuss all aspects of such documents, constitute a fair
summary of such documents in all material respects; the statements in
the Prospectus and the Prospectus Supplement, as the case may be,
under the captions "Certain Legal Aspects of the Mortgage Loans and
Contracts", "ERISA Considerations" and "Certain Federal Income
12
<PAGE>
Tax Consequences" to the extent that they constitute matters of law or
legal conclusions with respect thereto, have been prepared or reviewed
by us and are correct in all material respects.
(x) Assuming that, and for so long as, each Class of Certificates
offered pursuant to the Registration Statement are rated by a
nationally recognized statistical rating organization in one of its
two highest rating categories, each such Class of Certificates
constitutes "mortgage related securities" within the meaning of
Section 3(a)(41) of the Exchange Act.
(e) You shall have received an opinion of counsel to the Seller,
addressed to the Underwriters and the Depositor, dated the applicable
Delivery Date, substantially to the effect that the statements in the
Prospectus Supplement prepared by the Depositor pursuant to Section 5(a)
under the captions "The Seller" and "The Mortgage Loan Pools" do not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need not render
any opinion with respect to any financial or statistical information
contained therein).
(f) You shall have received an opinion of counsel to the Trustee,
dated the Delivery Date, and in the form agreed to on or prior to the date
of the Terms Agreement.
(g) If applicable, you shall have received an opinion of counsel to
the Servicer, dated the Delivery Date, and in the form agreed to on or
prior to the date of the Terms Agreement.
(h) You shall have received from Dewey Ballantine, special counsel for
the Underwriters, such opinion or opinions, dated the Delivery Date, with
respect to the existence of the Depositor, the Registration Statement, the
Prospectus and other related matters as the Underwriters may require, and
the Depositor shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(i) You shall have received a certificate or certificates signed by
such of the principal executive, financial and accounting officers of the
Depositor as you may request, dated the applicable Delivery Date, in which
such officers, to the best of their knowledge after reasonable
investigation, shall state that (i) the
13
<PAGE>
representations and warranties of the Depositor in this Agreement are true
and correct; (ii) the Depositor has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to the Closing Date; (iii) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are contemplated; (iv) subsequent to the
respective dates as of which information is given in the Prospectus, and
except as otherwise set forth in or contemplated by the Prospectus, there
has not been any material adverse change in the general affairs,
capitalization, financial condition or results of operations of the
Depositor; (v) except as otherwise stated in the Prospectus, there are no
material actions, suits or proceedings pleading before any court or
governmental agency, authority or body or, to their knowledge, threatened,
affecting the Depositor or the transactions contemplated by this Agreement;
(vi) attached thereto are true and correct copies of a letter from the
rating agency or agencies rating the Certificates subject to this Agreement
confirming that the Certificates have been rated in one of the four highest
rating categories established by such agency or agencies as set forth in
the Terms Agreement and such rating has not been lowered since the date of
such letter; and (vii) the Reserve Fund, if any, shall have been
established by the Depositor as contemplated by the Pooling and Servicing
Agreement.
(j) If applicable, you shall have received letters dated the
applicable Delivery Date from counsel rendering opinions to any nationally
recognized statistical rating organization rating the applicable Series of
Certificates, to the effect that you may rely upon their opinion to such
rating organization, as if such opinion were rendered to you.
(k) You shall have received a certificate of the Trustee, signed by
one or more duly authorized officers of the Trustee, dated the applicable
Delivery Date, as to the due acceptance of the Pooling and Servicing
Agreement by the Trustee and the due authorization and delivery of the
Certificates of such Series by the Trustee thereunder.
(l) To the extent, if any, that the ratings provided to the
Certificates by either Moody's, Fitch or DCR is conditional upon the
furnishing of documents or the taking of any other actions by the Depositor
or the Servicer, the Depositor or the Servicer, as the case may be, shall
furnish such documents and take any such other actions.
14
<PAGE>
(m) You shall have received letters from each Rating Agency confirming
the ratings set forth in the related Terms Agreement.
(n) The Reserve Fund and Reserve Accounts, if any, shall have been
established as provided in the Pooling and Servicing Agreement.
The Depositor will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you reasonably request.
7. Indemnification
---------------
(a) The Depositor will indemnify and hold harmless each Underwriter
and each person, if any, who controls such Underwriter within the meaning
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading; and will reimburse each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such
Underwriter and each such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Depositor will not be liable in any
-------- -------
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement in or omission or alleged omission made in any of such documents
in reliance upon and in conformity with written information furnished to
the Depositor by the relevant Underwriter specifically for use therein.
This indemnity agreement will be in addition to any liability which the
Depositor may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Depositor,
each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Depositor within the
meaning of the Act against any losses, claims, damages or liabilities to
which the Depositor or any such director, officer or controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in
15
<PAGE>
respect thereof) arise of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or the Prospectus or any amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Depositor by such Underwriter
specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Depositor or any such director, officer
or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement
will be in addition to any liability that such Underwriter may otherwise
have. The Depositor acknowledges that, for purposes of this Section, the
statements set forth in the Prospectus Supplement on page S-2 regarding
stabilization, in the third paragraph under the heading "Underwriting" and
under the heading "Underwriting", with respect to the Certificates to be
purchased by the Underwriters, constitute the only information furnished to
the Depositor by the Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise in this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will
be entitled to participate therein, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party) and, after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party under
this Section for any legal or other expenses subsequently incurred by such
indemnified party in
16
<PAGE>
connection with the defense thereof other than reasonable costs of
investigation.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Depositor on the one hand and the Underwriters on the other
from the offering of the Offered Certificates or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Depositor on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Depositor on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Depositor bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Depositor or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified in connection with
investigating or defending any action or claim which is the subject to this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Certificates underwritten by
it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters'
17
<PAGE>
obligations in this subsection (d) to contribute are several in proportion
to their respective underwriting obligations and not joint.
8. Computational Materials.
-----------------------
(a) Each Underwriter agrees to provide to the Depositor no less than
two business days prior to the date on which the Prospectus is proposed to
be filed pursuant to Rule 424(b) under the Act, for the purpose of
permitting the Depositor to comply with the filing requirement set forth in
Section 5(a), all information (in such written or electronic format as
required by the Depositor) with respect to the Certificates which
constitutes "Computational Materials", as defined in the Commission's No-
Action Letter, dated May 20, 1994, addressed to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated and Kidder Structured
Asset Corporation (the "Kidder Letter"), and that is required to be filed
as described in the Kidder Letter.
(b) The Underwriters shall provide to the Depositor, together with the
information required to be provided to the Depositor pursuant to Section
8(a) or 8(c)(iii) hereof, a letter, in form and substance acceptable to the
Depositor, of independent certified public accountants acceptable to the
Depositor, stating in effect that such independent certified public
accountants have performed certain specified procedures, all of which have
been agreed to by the Depositor, and that they have verified or confirmed,
as appropriate, the financial, numerical or statistical information to be
filed by the Depositor as part of the Computational Materials and have
found such information to be accurate without exception. Such letter will
be obtained at the sole expense of the Underwriters.
(c) (i) The relevant Underwriter represents and warrants to,
and covenant with, the Depositor that all information provided to the
Depositor pursuant to this Section, as of the date such information is
so provided and as of the date such information is filed by the
Depositor with the Commission will not include any untrue statement of
a material fact and will not omit to state any material facts required
to be stated therein or necessary in order to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading.
(ii) The relevant Underwriter further covenants with the
Depositor that if any Computational Materials required to be provided
to the Depositor pursuant to Section 8(a) are determined to contain
18
<PAGE>
any information that is inaccurate or misleading, the relevant
Underwriter (whether or not such Computational Materials are provided
to the Depositor or filed by the Depositor with the Commission) shall
promptly prepare and deliver to the Depositor and each prospective
investor which received such Computational Materials corrected
Computational Materials. All information provided to the Depositor
pursuant to this Section 8(c)(ii) shall be provided within the time
periods set forth in Section 8(a) hereof.
(iii) The Underwriters represent and warrant to the Depositor
that the Underwriters have taken all necessary and required steps to
ensure that no written material of any kind relating to the
Certificates (or any certificates similar to the Certificates) will be
delivered to potential investors others than Computational Materials
required to be filed pursuant to the Kidder Letter and that all
Computational Materials will be provided to the Depositor and to
ensure that all such Computational Materials are accurate and not
misleading.
(iv) The Underwriters covenant with the Depositor that all
Computational Materials delivered to prospective investors shall
contain a legend substantially to the following effect:
"THIS INFORMATION IS FURNISHED TO YOU SOLELY BY CREDIT SUISSE
FIRST BOSTON CORPORATION AND/OR THE OTHER UNDERWRITERS AND NOT BY
CS FIRST BOSTON MORTGAGE SECURITIES CORP. (THE "DEPOSITOR") OR
ANY OF ITS AFFILIATES (OTHER THAN CREDIT SUISSE FIRST BOSTON
CORPORATION IN ITS CAPACITY AS AN UNDERWRITER). THE UNDERWRITERS
ARE NOT ACTING AS AGENTS FOR THE DEPOSITOR OR ITS AFFILIATES IN
CONNECTION WITH THE PROPOSED TRANSACTION."
(d) The relevant Underwriter agrees to indemnify and hold harmless the
Depositor, each of the Depositor's officers and directors and each person
who controls the Depositor within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they may become subject under the Act, the
Exchange Act, or other Federal or State statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (i) are
19
<PAGE>
based on, result from or arise of: (A) the relevant Underwriter's use or
delivery to any prospective investor in the Certificates of any
Computational Materials; (B) the relevant Underwriter's failure to comply
with Sections 8(a) or 8(c); (C) the filing by the Depositor with the
Commission of any information pursuant to the last sentence of Section
5(a); or (ii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any information
required to be delivered to the Depositor pursuant to a Section 8(a) or
8(c)(ii) hereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each
such indemnified party for any legal or other expenses reasonably incurred
by him, her or it in connection with investigating or defending any such
loss, claim, damage, liability or action. The obligations of such
Underwriter under this Section shall be in addition to any liability which
such Underwriter may otherwise have.
The procedures set forth in Section 7(c) and 7(d) shall be equally
applicable to this Section.
(e) Notwithstanding any other provision herein, (a) the Underwriter
shall not be required to be responsible for any amount in excess of the
amount by which the total re-offering price at which the Certificates
underwritten by it and distributed and offered to the public exceeds the
amount paid hereunder by the Underwriter for the Certificates. For the
purposes of this Section 8(e), each person, if any, who controls the
Underwriter within the meaning of the Securities Act or the Exchange Act
shall have the same rights to contribution as the Underwriter and each
director of the Depositor, each officer of the Depositor who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of the Securities Act or the Exchange Act shall have the
same rights to contribution as the Depositor and (b) the relevant
Underwriter agrees to pay all costs and expenses of the Depositor incurred
in connection with (i) the filing by the Depositor of any Computational
Material with the Commission and (ii) any action by the Depositor against
the relevant Underwriter to enforce any of its rights set forth in this
Section, including, without limitation, legal fees and expenses.
9. Default of Underwriters. If any Underwriter or Underwriters
-----------------------
participating in an offering of Certificates default in their obligations to
purchase Certificates hereunder and under the Terms Agreement and the aggregate
principal amount of such Certificates which such defaulting
20
<PAGE>
Underwriter or Underwriters agreed, but failed, to purchase does not exceed 10%
of the total principal amount of the Certificates set forth in such Terms
Agreement, you may make arrangements satisfactory to the Depositor for the
purchase of such Certificates by other persons, including any of the
Underwriters participating in such offering, but regardless of whether such
arrangements are made the non-defaulting Underwriters shall remain obligated
severally to purchase the Certificates which they committed to purchase in
accordance with the terms hereunder and under the Terms Agreement. If any
Underwriter or Underwriters so default and the aggregate principal amount of
Certificates with respect to which such default or defaults occur is more than
10% of the total principal amount of the Certificates set forth in such Terms
Agreement and arrangements satisfactory to you and the Depositor for the
purchase of such Certificates by other persons are not made, this Agreement will
terminate without liability on the part of any nondefaulting Underwriter, except
as provided in Section 10. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
10. Termination of the Obligations of the Underwriters. The obligations
--------------------------------------------------
of the Underwriters to purchase the Certificates on the Delivery Date shall be
terminable by the Underwriters if (a) at any time on or prior to the Delivery
Date (i) trading in securities generally on the New York Stock Exchange shall
have been suspended or materially limited, or there shall have been any setting
of minimum prices for trading on such exchange, (ii) a general moratorium on
commer cial banking activities in New York shall have been declared by either
Federal or New York State authorities, (iii) there shall have occurred any
material outbreak or escalation of hostilities or other calamity or crisis, the
effect of which on the financial markets of the United States is such as to make
it, in your judgment as representative of the Underwriters, impracticable to
consummate the transactions contemplated herein or is such as would materially
and adversely affect the marketability of or the market price for the
Certificates or (iv) any change or any development involving a prospective
change, materially and adversely affecting (A) the Trust Fund taken as a whole
or (B) the business or properties of the Depositor occurs, which, in your
reasonable judgment as representative of the Underwriters, in the case of either
clause (A) or (B), materially impairs the investment quality of the Certificates
or (b) any representation or warranty of another party shall be incorrect in any
material respect.
11. Survival of Certain Representations and Obligations. The respective
---------------------------------------------------
indemnities, agreements, representations, warranties and other statements by the
Depositor or its officers and of the Underwriters set forth in or made pursuant
21
<PAGE>
to this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriters, the Depositor or any of its officers or directors or any
controlling person, and will survive delivery of and payment of the
Certificates.
If this Agreement is terminated pursuant to Section 9 or if for any reason
the purchase of the Certificates by the Underwriters is not consummated, the
Depositor shall remain responsible for the expenses to be paid or reimbursed by
them pursuant to Section 5(g), and the obligations of the Depositor and the
Underwriters pursuant to Sections 7 and 8 shall remain in effect.
12. Notices. All communications hereunder will be in writing and, if sent
-------
to an Underwriter will be mailed, delivered or telegraphed and confirmed to you
at Eleven Madison Avenue, New York, New York 10010 or if sent the Depositor,
will be mailed, delivered or telegraphed and confirmed to it at Eleven Madison
Avenue, New York, New York 10010 Attention: President; provided, however, that
-------- -------
any notice to an Underwriter pursuant to Section 7 or 8 will be mailed,
delivered or telegraphed to such Underwriter at the addressed furnished by it.
13. Successors. This Agreement and the Terms Agreement will inure to the
----------
benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors and controlling persons referred to in
Sections 7 and 8, and their successors and assigns, and no other person will
have any right or obligations hereunder.
14. Representation of Underwriters. You will act for the several
------------------------------
Underwriters set forth in the applicable Terms Agreement in connection with the
transactions described in this Agreement and such Terms Agreement, and any
action taken by you under this Agreement will be binding upon all the
Underwriters.
15. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
--------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
16. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon, it will become a
binding agreement among the Depositor and the several Underwriters in accordance
with its terms.
22
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon, it will become a
binding agreement among the Depositor and the several Underwriters in accordance
with its terms.
Very truly yours,
CS FIRST BOSTON MORTGAGE
SECURITIES CORP.,
as Depositor
By: /s/ Heidi Davis
-------------------------------
Name: Heidi Davis
Title: Vice President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
CREDIT SUISSE FIRST BOSTON CORPORATION
as Underwriter
By: /s/ Heidi Davis
---------------------------------
Name: Heidi Davis
Title: Vice President
[Signature Page to Underwriting Agreement]
<PAGE>
EXHIBIT A
CS FIRST BOSTON MORTGAGE SECURITIES CORP.
(DEPOSITOR)
WILSHIRE FUNDING CORPORATION MORTGAGE-BACKED CERTIFICATES,
SERIES 1996-3
TERMS AGREEMENT
December 19, 1996
To: CS First Boston Mortgage Securities Corp., as Depositor
under the Pooling and Servicing Agreement dated as of
December 1, 1996.
Re: Underwriting Agreement dated December 19, 1996.
Title: Wilshire Funding Corporation Mortgage-Backed Certificates,
- -----
Series 1996-3, Class A-1, Class A-2-A, Class A-2-B, Class
A-2-C, Class F-IO, Class A-IO, Class PO, Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2, Class B-3, Class RU,
Class RL.
Underwriter: Credit Suisse First Boston Corporation is the sole
- -----------
Underwriter.
Principal Amount: $278,285,932.00
- ----------------
Terms of the Certificates:
- -------------------------
Original
Principal Pass-Through
Class Amount Rate
----- ------------- ---------------
A-1 $ 48,211,248.00 7.0000%
A-2-A $ 90,635,697.00 6.7513%*
A-2-B $ 56,843,117.00 7.5715%*
A-2-C $ 19,098,571.00 7.5198%*
PO $ 2,274,391.00 **
M-1 $ 8,348,577.00 8.3582%*
- ----------
* Adjustable Pass-Through Rates initially equal to the indicated percentages.
** The Class PO Certificates are principal-only Certificates and do not have a
Pass-Through Rate.
<PAGE>
M-2 $ 15,305,726.00 8.3582%*
M-3 $ 13,914,296.00 8.3582%*
Certificate Rating:
- ------------------
Class Moody's Fitch DCR
----- ------- ----- ---
A-1 Aaa AAA AAA
A-2-A Aaa AAA AAA
A-2-B Aaa AAA AAA
A-2-C Aaa AAA AAA
PO Aaa AAA AAA
M-1 Aa2 AA AA
M-2 A2 A A
M-3 Baa2 -- --
Servicer: Wilshire Servicing Corporation (in such capacity, the
--------
"Servicer").
Trustee: Bankers Trust Company of California, N.A. (in such capacity, the
-------
"Trustee").
Terms of Sale: The purchase price payable by the Underwriter for each
-------------
Class of Certificates is: 99.906250% of the principal amount of the Class A-1
Certificates, 99.984375% of the principal amount of the Class A-2-A
Certificates, 102.453125% of the principal amount of the Class A-2-B
Certificates, 102.421875% of the principal amount of the Class A-2-C
Certificates, 74.828125% of the principal amount of the Class PO Certificates,
100.718750% of the principal amount of the Class M-1 Certificates, 99.312500% of
the principal amount of the Class M-2 Certificates, 97.671875% of the principal
amount of the Class M-3 Certificates, in each case plus accrued interest at the
related Pass-Through Rate from the date of initial issuance.
Payment of the purchase price shall be in immediately available Federal
funds wired to such bank as may be designated by the Depositor.
The Class A-IO, Class F-IO, Class B-1, Class B-2, Class B-3, Class RU and
Class RL Certificates issued pursuant to the Pooling and Servicing Agreement are
not subject to this Agreement.
Underwriting Commissions:
------------------------
Notwithstanding anything to the contrary in the Underwriting Agreement, no
additional underwriting commission shall be payable by the Depositor to the
Underwriter in connection with the purchase of the Certificates.
<PAGE>
Public offering price and/or method of determining price at which the
Underwriter will sell the Certificates:
Class A-1: 99.906250%
Class A-2-A: 99.984375%
Class A-2-B: 102.453125%
Class A-2-C: 102.421875%
Class PO: 74.828125%
Class M-1: 100.718750%
Class M-2: 99.312500%
Class M-3: 97.671875%
The Underwriter shall receive an underwriting fee equal to
0.75% of the principal balance of the Certificates.
Mortgage Loans: The mortgage loans (the "Mortgage Loans") sold by
--------------
Wilshire Mortgage Funding Company IV, Inc. (the "Seller") to the Depositor
pursuant to the Unaffiliated Sellers Agreement, dated as of December 1, 1996,
between the Depositor, as purchaser, and the Seller, as seller and conveyed by
the Depositor to the Trust pursuant to the Pooling and Servicing Agreement,
dated as of December 1, 1996 (the "Pooling and Servicing Agreement"), among the
Depositor, the Seller, the Servicer and the Trustee.
Distribution Dates: The 25th day (or, if such day is not a business day,
------------------
the next succeeding business day) of each month, commencing with January 27,
1997.
Delivery Date and Location: 10:00 a.m., New York Time, on or about
--------------------------
December 20, 1996, or at such other time not later than seven full business days
thereafter as may be agreed upon, at the offices of Dewey Ballantine, 1301
Avenue of the Americas, New York, New York 10019.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon, it will
become a binding agreement among the Depositor and the several Underwriters in
accordance with its terms.
CREDIT SUISSE FIRST BOSTON CORPORATION,
as Underwriter
By: /s/ Heidi Davis
------------------------------
Name: Heidi Davis
Title: Vice President
Accepted:
CS FIRST BOSTON MORTGAGE
SECURITIES CORP.,
as Depositor
By: /s/ Heidi Davis
------------------------------
Name: Heidi Davis
Title: Vice President
[Signature Page to Terms Agreement]
<PAGE>
EXHIBIT 4.1
EXECUTION COPY
- --------------------------------------------------------------------------------
POOLING AND SERVICING AGREEMENT
among
WILSHIRE MORTGAGE FUNDING COMPANY IV, INC.,
as Unaffiliated Seller
WILSHIRE SERVICING CORPORATION,
as Servicer
CS FIRST BOSTON MORTGAGE SECURITIES CORP.,
as Depositor
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee and Back-Up Servicer
WILSHIRE FUNDING CORPORATION MORTGAGE BACKED CERTIFICATES, SERIES 1996-3
Dated as of December 1, 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS................................................ 1
Section 1.01. Certain Defined Terms.............................. 1
Section 1.02. Provisions of General Application.................. 48
Section 1.03. Business Day Certificate........................... 48
Section 1.04. Trust Name......................................... 48
ARTICLE II TRANSFER OF TRUST ASSETS................................... 49
Section 2.01. Conveyance of Trust Assets; Establishment of the
Trust.............................................. 49
Section 2.02. Purposes and Powers................................ 49
Section 2.03. Possession of Loan Files; Access to Loan Files..... 50
Section 2.04. Certification...................................... 52
Section 2.05. Further Action Evidencing Assignments.............. 52
Section 2.06. Grant of Security Interest; Intended
Characterization................................... 53
Section 2.07. Transmission of Loan File Documents................ 54
Section 2.08. Miscellaneous REMIC Provisions..................... 54
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS.................. 56
Section 3.01. Representations, Warranties and Covenants of the
Unaffiliated Seller................................ 56
Section 3.02. Representations and Warranties of the Servicer..... 60
Section 3.03. Representations and Warranties of the Depositor.... 62
Section 3.04. [Reserved.......................................... 63
Section 3.05. Representations and Warranties as to each Mortgage
Loan and the other Trust Assets.................... 63
Section 3.06. Repurchases and Remedies........................... 70
ARTICLE IV SERVICING OF TRUST ASSETS.................................. 71
Section 4.01. Servicer and Sub-Servicers......................... 71
Section 4.02. Collection of Certain Mortgage Loan Payments....... 74
Section 4.03. Sub-Servicing Agreements Between Servicer and
Sub-Servicers...................................... 74
Section 4.04. Successor Sub-Servicers............................ 75
Section 4.05. Liability of Servicer.............................. 75
i
<PAGE>
Page
Section 4.06. No Contractual Relationship Between Sub-Servicer
and Persons other than the Servicer................ 75
Section 4.07. Assumption or Termination of Sub- Servicing
Agreements......................................... 76
Section 4.08. Establishment of Lock-Box and Lock-Box Account..... 76
Section 4.09. Deposits into Collection Account................... 77
Section 4.10. [Reserved]......................................... 78
Section 4.11. Servicer Reports................................... 78
Section 4.12. Delinquency Advances, Servicing Advances and
Prepayment Interest................................ 78
Section 4.13. Maintenance of Insurance and Tax Services.......... 79
Section 4.14. Due-on-Sale Clauses; Assumption and Substitution
Agreements......................................... 81
Section 4.15. Realization Upon Defaulted Mortgage Loans.......... 82
Section 4.16. Servicing Compensation............................. 83
Section 4.17. Records, Inspections............................... 83
Section 4.18. Assignment of Agreement............................ 84
Section 4.19. Removal of Servicer; Resignation of Servicer;
Term of Servicing.................................. 84
Section 4.20. Errors and Omissions Insurance; Fidelity Bond...... 88
Section 4.21. Change in Business of the Servicer................. 89
Section 4.22. Servicer Expenses.................................. 89
Section 4.23. The Back-Up Servicer............................... 89
Section 4.24. Escrows for Taxes, Insurance, Assessments and
Similar Items; Taxes and Insurance Accounts........ 90
Section 4.25. Servicer to Give Notice of Certain Events and to
Deliver Certain Information........................ 91
ARTICLE V THE CERTIFICATES........................................... 92
Section 5.01. The Certificates; Denominations.................... 92
Section 5.02. Registration of Transfer and Exchange of
Certificates....................................... 93
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.. 95
Section 5.04. Persons Deemed Owners.............................. 96
ii
<PAGE>
Page
Section 5.05. Limitation on Transfer of Residual Certificates.... 96
ARTICLE VI DEPOSITS AND DISTRIBUTIONS................................. 96
Section 6.01. Rights of the Holders.............................. 96
Section 6.02. Establishment and Administration of the Collection
Account and Certificate Account.................... 97
Section 6.03. Investment of Amounts.............................. 97
Section 6.04. Collections........................................ 97
Section 6.05. Flow of Funds...................................... 98
Section 6.06. Disbursement of Funds..............................103
Section 6.07. Allocation of Realized Losses......................103
Section 6.08. Reports to Certificateholders......................105
Section 6.09. Presentation of Certificates.......................107
ARTICLE VII REMEDIES...................................................108
Section 7.01. Limitation on Suits................................108
Section 7.02. Restoration of Rights and Remedies.................108
Section 7.03. Rights and Remedies Cumulative.....................109
Section 7.04. Delay or Omission Not Waiver.......................109
Section 7.05. Control by Certificateholders......................109
Section 7.06. Waiver of Past Defaults............................110
Section 7.07. Undertaking for Costs..............................110
Section 7.08. Waiver of Stay or Extension Laws...................110
ARTICLE VIII LIMITATION ON LIABILITY; INDEMNITIES.........................111
Section 8.01. Liabilities of Mortgagors..........................111
Section 8.02. Liability of the Unaffiliated Seller, Back-Up
Servicer, Depositor and the Servicer...............111
Section 8.03. Relationship of Servicer..............................111
Section 8.04. Indemnities of the Servicer........................112
ARTICLE IX THE TRUSTEE..................................................112
Section 9.01. Certain Duties.....................................112
Section 9.02. Notice of Defaults.................................115
Section 9.03. Certain Matters Affecting the Trustee..............115
Section 9.04. Trustee Not Liable for Certificates or Mortgages...116
Section 9.05. Trustee May Own Certificates.......................117
iii
<PAGE>
Page
Section 9.06. Eligibility Requirements for Trustee...............117
Section 9.07. Resignation or Removal of Trustee..................117
Section 9.08. Successor Trustee..................................118
Section 9.09. Merger or Consolidation of Trustee.................119
Section 9.10. Appointment of Co-Trustee or Separate Trustee......119
Section 9.11. Tax Matters........................................120
Section 9.12. Trustee's Fees and Expenses........................120
Section 9.13. Reporting; Withholding.............................121
ARTICLE X MISCELLANEOUS................................................122
Section 10.01. Termination of Agreement...........................122
Section 10.02. Optional Purchase of Trust Assets..................122
Section 10.03. Certain Notices upon Final Payment.................123
Section 10.04. Beneficiaries......................................123
Section 10.05. Amendment..........................................123
Section 10.06. Notices............................................124
Section 10.07. Merger and Integration.............................126
Section 10.08. Headings...........................................126
Section 10.09. Certificates Nonassessable and Fully Paid..........126
Section 10.10. Severability of Provisions.........................126
Section 10.11. No Proceedings.....................................127
Section 10.12. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL.........................................127
Section 10.13. Counterparts.......................................127
Section 10.14. Tax Matters........................................128
Section 10.15. REMIC..............................................128
Section 10.16. REMIC Status; Taxes................................128
Section 10.17. Additional Limitation on Action and Imposition of
Tax............................................... 130
Section 10.18. Appointment of Tax Matters Person..................130
Exhibits
- --------
Exhibit A Form of Servicer's Monthly Report
Exhibit B-1 Form of Class A-1 Certificates
Exhibit B-2 Form of Class A-2-A Certificates
Exhibit B-3 Form of Class A-2-B Certificates
Exhibit B-4 Form of Class A-2-C Certificates
Exhibit B-5 Form of Class A-IO Certificates
Exhibit B-6 Form of Class PO Certificates
iv
<PAGE>
Exhibit B-7 Form of Class F-IO Certificates
Exhibit B-8 Form of Class M-1 Certificates
Exhibit B-9 Form of Class M-2 Certificates
Exhibit B-10 Form of Class M-3 Certificates
Exhibit B-11 Form of Class B-1 Certificates
Exhibit B-12 Form of Class B-2 Certificates
Exhibit B-13 Form of Class B-3 Certificates
Exhibit B-14 Form of Class RL Certificates
Exhibit B-15 Form of Class RU Certificates
Exhibit C Loan File Documents
Exhibit D Form of Trustee Certification
Exhibit E Request for Release
Exhibit F Form of Reassignment
Exhibit G Form of FDIC Release
Exhibit H Form of Liquidation Report
Exhibit I Form of Transfer Certification
Exhibit J Form of Residual Transfer Certification
Schedules
- ---------
Schedule I Pool I Loans
Schedule II Pool II Loans
Schedule III Pool III Loans
Schedule IV Pool IV Loans
v
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of December 1, 1996, among
WILSHIRE MORTGAGE FUNDING COMPANY IV, INC., a Delaware corporation, its
successors and permitted assigns, as Unaffiliated Seller (the "Unaffiliated
Seller"), WILSHIRE SERVICING CORPORATION, a Delaware corporation ("WSC"), its
successors and permitted assigns, as Servicer (the "Servicer"), CS FIRST BOSTON
MORTGAGE SECURITIES CORP., a Delaware corporation, as Depositor (the
"Depositor"), and BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking
association chartered under the laws of the United States, its successors and
permitted assigns, as Trustee (the "Trustee") and as Back-Up Servicer (the
"Back-Up Servicer").
W I T N E S S E T H:
-------------------
WHEREAS, the Unaffiliated Seller is a bankruptcy-remote corporation
formed for the sole purpose of transferring certain assets to the Depositor
which will in turn transfer certain assets to the Wilshire Funding Corporation
Mortgage-Backed Trust 1996-3 (the "Trust") established pursuant to this
Agreement;
WHEREAS, the Unaffiliated Seller has entered into the Loan Sale
Agreement, dated as of December 1, 1996, by and between the Unaffiliated Seller,
Wilshire Credit Corporation ("WCC"), First Bank of Beverly Hills, F.S.B. ("First
Bank") and Girard Savings Bank, FSB ("Girard") for the purpose of acquiring a
portfolio of mortgage loans (the "Mortgage Loans");
WHEREAS, the Unaffiliated Seller, pursuant to the Unaffiliated
Seller's Agreement, has conveyed the Mortgage Loans to the Depositor and the
Depositor, pursuant to this Agreement, will deposit the Mortgage Loans to the
Trust;
WHEREAS, WSC is willing to act as the Servicer hereunder and Bankers
Trust Company of California, N.A. is willing to act as Trustee and as the Back-
Up Servicer hereunder; and
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. As used herein, the following
---------------------
terms shall have the following meanings:
"A-2-A POOL II FRACTION" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the lesser of
-------------------------
(x) the Pool II Pool Balance as of the end of the second preceding Collection
Period (or as of the Cut-Off Date, with respect to the first Distribution Date)
and (y) the Class A-2-A Principal Balance immediately prior to such
<PAGE>
Distribution Date and the denominator of which is the Pool II Pool Balance as of
------------------------
the end of the second preceding Collection Period (or as of the Cut-Off Date,
with respect to the first Distribution Date).
"A-2-B POOL III FRACTION" means, with respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
-------------------------
lesser of (x) the Pool III Pool Balance as of the end of the second preceding
Collection Period (or as of the Cut-Off Date, with respect to the first
Distribution Date) and (y) the Class A-2-B Principal Balance immediately prior
to such Distribution Date and the denominator of which is the Pool III Pool
------------------------
Balance as of the end of the second preceding Collection Period (or as of the
Cut-Off Date, with respect to the first Distribution Date).
"A-2-C POOL IV FRACTION" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the lesser of
-------------------------
(x) the Pool IV Pool Balance as of the end of the second preceding Collection
Period (or as of the Cut-Off Date, with respect to the first Distribution Date)
and (y) the Class A-2-C Principal Balance immediately prior to such Distribution
Date and the denominator of which is the Pool IV Pool Balance as of the end of
------------------------
the second preceding Collection Period (or as of the Cut-Off Date, with respect
to the first Distribution Date).
"ADJUSTED ARM GROSS WAC" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the sum of
-------------------------
(i) the product of (x) the Pool II Gross WAC and (y) the excess of (1) the Pool
II Pool Balance as of the end of the second preceding Collection Period (or as
of the Cut-Off Date with respect to the first Distribution Date) over (2) the
Extra Pool II Collateral Amount plus (ii) the product of (x) the Pool III Gross
----
WAC and (y) the excess of (1) the Pool III Pool Balance as of the end of the
second preceding Collection Period (or as of the Cut-Off Date with respect to
the first Distribution Date) over (2) the Extra Pool III Collateral Amount plus
----
(iii) the product of (x) the Pool IV Gross WAC and (y) the excess of (1) the
Pool IV Pool Principal Balance as of the end of the second preceding Collection
Period (or as of the Cut-Off Date with respect to the first Distribution Date)
over (2) the Extra Pool IV Collateral Amount plus (iv) the product of (x) the
----
Cross-Support Gross WAC and (y) the sum of (1) the Pool II Deficit, (2) the Pool
III Deficit and (3) the Pool IV Deficit and the denominator of which is (x) the
---------------------------
sum of the Pool II Pool Balance as of the end of the second preceding Collection
Period (or as of the Cut-Off Date with respect to the first Distribution Date),
the Pool III Pool Balance as of the end of the second preceding Collection
Period (or as of the Cut-Off Date with respect to the first Distribution Date)
and the Pool IV Balance as of the end of the second preceding Collection Period
(or as of the Cut-Off Date with respect to the first Distribution Date) minus
-----
(y) the sum of the Extra Pool II
2
<PAGE>
Collateral Amount, the Extra Pool III Collateral Amount and the Extra Pool IV
Collateral Amount plus (z) the sum of the Pool II Deficit, the Pool III Deficit
----
and the Pool IV Deficit.
"ADJUSTED FIXED UNSCHEDULED PRINCIPAL" means, with respect to any
Distribution Date, the sum of (i) the product of (x) the aggregate of all
Unscheduled Principal Collections with respect to the Pool I Loans (other than
the PO Portion of any Discount Loan) included in the related Servicer Remittance
Amount and (y) a fraction, the numerator of which is the Fixed Supporting Fixed
Amount and the denominator of which is the Pool I Pool Balance as of the end of
the second preceding Collection Period (or as of the Cut-Off Date, with respect
to the first Distribution Date) and (ii) the product of (x) the Cross-Support
Unscheduled Principal Distribution Amount and (y) a fraction, the numerator of
which is the ARM Supporting Fixed Amount and the denominator of which is the
Collateral Amount Available for Cross-Support.
"ADJUSTED GROSS COUPON RATE" means, for any Mortgage Loan as of any
Distribution Date, the percentage equivalent of a fraction, the numerator of
----------------
which is the product of (x) the Principal Balance of such Mortgage Loan
- -----
(exclusive of the amount of any Arrearage) as of the end of the second preceding
Collection Period (or as of the Cut-Off Date with respect to the first
Distribution Date) and (y) the Coupon Rate for such Mortgage Loan (as of the Due
Date in the related Collection Period) and the denominator of which is equal to
------------------------
the Principal Balance (inclusive of the Arrearage) of such Mortgage Loan as of
the end of the second preceding Collection Period (or as of the Cut-Off Date
with respect to the first Distribution Date).
"ADJUSTED NET COUPON RATE" means, with respect to any Mortgage Loan as
of any Distribution Date, the Adjusted Gross Coupon Rate for such Mortgage Loan
and Distribution Date, less 0.395%.
----
"ADJUSTED POOL I GROSS WAC" means, with respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the sum
----------------------
of (i) the product of (x) Pool I Gross WAC and (y) the Fixed Supporting Fixed
Amount and (ii) the product of (x) the Cross-Support Gross WAC and (y) the ARM
Supporting Fixed Amount and the denominator of which is the sum of (A) the Fixed
------------------------
Supporting Fixed Amount and (B) the ARM Supporting Fixed Amount.
"ADJUSTED POOL II GROSS WAC" means, with respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the sum
----------------------
of (i) the product of (x) the Pool II Gross WAC and (y) the Pool II Pool Balance
as of the end of the second preceding Collection Period (or as of the Cut-Off
Date, with respect to the first Distribution Date) and (ii) the product of (x)
the Cross-Support Gross WAC and (y) the Pool II Collateral Deficit and the
---
denominator of which is the sum of (A) the Pool II Pool
- --------------------
3
<PAGE>
Balance as of the end of the second preceding Collection Period (or as of the
Cut-Off Date, with respect to the first Distribution Date) and (B) the Pool II
Collateral Deficit.
"ADJUSTED POOL III GROSS WAC" means, with respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the sum
----------------------
of (i) the product of (x) the Pool III Gross WAC and (y) the Pool III Pool
Balance as of the end of the second preceding Collection Period (or as of the
Cut-Off Date, with respect to the first Distribution Date) and (ii) the product
of (x) the Cross-Support Gross WAC and (y) the Pool III Collateral Deficit and
the denominator of which is the sum of (A) the Pool III Pool Principal Balance
- ------------------------
as of the end of the second preceding Collection Period (or as of the Cut-Off
Date, with respect to the first Distribution Date) and (B) the Pool III
Collateral Deficit.
"ADJUSTED POOL IV GROSS WAC" means, with respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the sum
----------------------
of (i) the product of (x) the Pool IV Gross WAC and (y) the Pool IV Pool Balance
as of the end of the second preceding Collection Period (or as of the Cut-Off
Date, with respect to the first Distribution Date) and (ii) the product of (x)
the Cross-Support Gross WAC and (y) the Pool IV Collateral Deficit and the
---
denominator of which is the sum of (A) the Pool IV Pool Balance as of the end of
- --------------------
the second preceding Collection Period (or as of the Cut-Off Date, with respect
to the first Distribution Date) and (B) the Pool IV Collateral Deficit.
"ADVANCE PAYMENT" means, with respect to any Mortgage Loan, a payment
received from the related Mortgagor and intended as an early payment of one or
more (but not more than three) upcoming Monthly Mortgage payments.
"ADVANCES" means Delinquency Advances and Servicing Advances.
"ADVERSE CLAIM" means any claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect or purpose of creating a lien or
security interest, other than the security interest created under this
Agreement.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
4
<PAGE>
"AGGREGATE CERTIFICATE PRINCIPAL BALANCE" means, as of any date, the
sum of the Class A-1 Principal Balance, the Class PO Principal Balance, the
Class A-2-A Principal Balance, the Class A-2-B Principal Balance, the Class A-2-
C Principal Balance, the Class M-1 Principal Balance, the Class M-2 Principal
Balance, the Class M-3 Principal Balance, the Class B-1 Principal Balance, the
Class B-2 Principal Balance, and the Class B-3 Principal Balance as of such
date.
"AGGREGATE CLASS A-2 PRINCIPAL BALANCE" means, as of any date, the sum
of the Class A-2-A of Principal Balance, the Class A-2-B Principal Balance and
the Class A-2-C Principal Balance as of such date.
"AGGREGATE FIXED RATE CERTIFICATE PRINCIPAL BALANCE" means, as of any
date, the sum of the Class A-1 Principal Balance and the Aggregate Subordinate
Certificate Principal Balance as of such date.
"AGGREGATE PO ARREARAGE AMOUNT" means the aggregate of the Arrearage
on all Fixed Rate Loans having an Adjusted Net Coupon Rate as of the Cut-Off
Date of less than 7.00%. Any principal recovered in reduction of the Aggregate
PO Arrearage Amount is considered Scheduled Principal.
"AGGREGATE REALIZED LOSS AMOUNT" means, with respect to any
Distribution Date, the aggregate amount of Realized Losses posted by the
Servicer with respect to the Mortgage Loans during the related Collection
Period.
"AGGREGATE SUBORDINATE CERTIFICATE PRINCIPAL BALANCE" means, as of any
date, the sum of the Class M-1 Principal Balance, the Class M-2 Principal
Balance, the Class M-3 Principal Balance, the Class B-1 Principal Balance, the
Class B-2 Principal Balance and the Class B-3 Principal Balance as of such date.
"AGREEMENT" means this Pooling and Servicing Agreement, as amended or
supplemented from time to time including all exhibits and schedules hereto and
thereto.
"ANCILLARY SERVICING INCOME" means, as of any Distribution Date, the
amount then on deposit in the Collection Account equal to the sum of amounts
received with respect to, or on account of, the Mortgage Loans representing
penalty interest, late charges, prepayment penalties and premiums, charges of
the Servicer for handling "insufficient funds" checks, modification, assumption,
substitution and other similar fees, together with net investment earnings on
the Collection Account and the Lockbox Account.
"ARM COLLATERAL DEFICIT" means, with respect to any Distribution Date,
the sum of the Pool II Collateral Deficit, the Pool III Collateral Deficit and
the Pool IV Collateral Deficit.
5
<PAGE>
"ARM LOANS" means all Mortgage Loans having an adjustable rate of
interest.
"ARM POOL PRINCIPAL BALANCE" means, as of any date, the sum of the
Pool II Pool Principal Balance, the Pool III Pool Balance and Pool IV Pool
Balance as of such date.
"ARM POOLS" means, collectively, Pool II, Pool III and Pool IV.
"ARM SUPPORTING FIXED AMOUNT" means, with respect to any Distribution
Date, the excess, if any, of (x) the ARM Pool Principal Balance as of the end of
the second preceding Collection Period over (y) the Aggregate Class A-2
Principal Balance immediately prior to such Distribution Date.
"ARM SUPPORTING FLOATING AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Aggregate Class A-2 Principal Balance
immediately prior to such Distribution Date and (y) the ARM Pool Principal
Balance as of the end of the second preceding Collection Period.
"ARREARAGE" means, with respect to any Mortgage Loan, the portion of
the related Mortgagor's prior delinquent payments which have been added to the
principal balance of such Mortgage Loan pursuant to a plan adopted in a Chapter
13 bankruptcy proceeding.
"ARREARAGE LOAN" means Mortgage Loans which have Arrearages which are
not included in the Aggregate PO Arrearage Amount.
"ASSIGNMENT" means with respect to each Mortgage Loan, an assignment
of the Mortgage, notice of transfer or equivalent instrument sufficient under
the laws of the jurisdiction wherein the related Loan Collateral is located to
reflect of record the transfer of the Mortgage to the Trustee for the benefit of
the Certificateholders.
"AUTHORIZED OFFICER" means, with respect to any corpora tion or
limited liability company, the Chairman of the Board, the President, any Vice
President, the Secretary, the Treasurer, any Assistant Secretary, any Assistant
Treasurer and each other officer of such corporation or the members and manager
of such limited liability company specifically authorized in resolutions of the
Board of Directors of such corporation or limited liability company to sign
agreements, instruments or other documents in connection with this Agreement on
behalf of such corporation or limited liability company, as the case may be.
"AVAILABLE FUNDS" means, with respect to any Distribution Date, the
amount of the Servicer Remittance Amount transferred from the Collection Account
to the Certificate Account on the related Servicer Remittance Date.
6
<PAGE>
"BUSINESS DAY" means any day other than a Saturday or a Sunday, or
another day on which banks in the State of New York, the State of California or
the State of Oregon (or such other states in which the Corporate Trust Office,
the principal administrative offices of the Certificate Registrar and Transfer
Agent, the principal offices of the Paying Agent or the principal offices of the
Servicer are subsequently located, as specified in writing by such party to the
other parties hereto) are required, or authorized by law, to close.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
"CERTIFICATE REGISTER" has the meaning set forth in Section 5.02(a)
hereof.
"CERTIFICATE REGISTRAR AND TRANSFER AGENT" means the certificate
registrar and transfer agent appointed pursuant to Section 5.03(a).
"CIVIL RELIEF ACT" means the Soldiers' and Sailors' Civil Relief Act
of 1940, as amended.
"CIVIL RELIEF ACT INTEREST SHORTFALL" means any shortfall in interest
collections on any Mortgage Loan resulting from the application of the Civil
Relief Act.
"CLASS A CERTIFICATEHOLDER" means the Holder of a Class A Certificate.
"CLASS A-1 CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-1 hereto.
"CLASS A-1 FORMULA INTEREST CURRENT AMOUNT" means, with respect to any
Distribution Date, (i) the product of (x) one-twelfth of the Class A-1 Pass-
Through Rate and (y) the Class A-1 Principal Balance immediately prior to such
Distribution Date minus (ii) the pro rata portion (based upon the outstanding
----- --- ----
principal balances of all Certificates (other than the Class PO, Class A-IO and
Class F-IO Certificates) immediately prior to such Distribution Date) of any
Prepayment Interest Shortfall for such Distribution Date.
"CLASS A-1 FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class A-1 Formula Interest Current
Amount and (ii) the Class A-1 Interest Shortfall Amount.
"CLASS A-1 INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class A-1 Formula Interest Distribution
Amount and (y) the product of (i) the Senior Interest Distribution Amount and
(ii) a fraction, the numerator of which is the Class A-1 Formula Interest
Distribution
7
<PAGE>
Amount and the denominator of which is the Senior Formula Interest Distribution
Amount.
"CLASS A-1 INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class A-1 Formula Interest Current Amounts due on all prior Distribution
Dates over (y) the aggregate, cumulative amount distributed to the Class A-1
----
Certificateholders on all prior Distribution Dates pursuant to Section
6.05(a)(i) hereof.
"CLASS A-1 PASS-THROUGH RATE" means 7.00% per annum.
"CLASS A-1 PRINCIPAL BALANCE" means, as of any date, the Original
Class A-1 Principal Balance minus the aggregate cumulative amount of (i) amounts
described in Section 6.05(c)(i) hereof prior to such date, (ii) amounts
described in Section 6.05(d)(i)(A) hereof prior to such date, (iii) amounts
described in Section 6.05(d)(ii)(A) hereof prior to such date and (iv) amounts
described in Section 6.07(h)(i) hereof prior to such date.
"CLASS A-1 SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of
(A) the sum of (i) the product of (x) a fraction, the numerator of
----------------
which is the Fixed Supporting Fixed Amount and the denominator of which is
-----
the Pool I Pool Balance as of the end of the second preceding Collection
Period (or as of the Cut-Off Date with respect to the first Distribution
Date) and (y) the Pool I Scheduled Principal Collections during the related
Collection Period and (ii) the product of (x) a fraction, the numerator of
----------------
which is the ARM Supporting Fixed Amount and the denominator of which is
----- ------------------------
the Collateral Amount Available for Cross-Support and (y) the Cross-Support
Scheduled Principal Distribution Amount; and
(B) a fraction, the numerator of which is the Class A-1 Principal
-------------------------
Balance immediately prior to such Distribution Date and the denominator of
------------------
which is the sum of the Class A-1 Principal Balance, the Class M-1
--------
Principal Balance, the Class M-2 Principal Balance, the Class M-3 Principal
Balance, the Class B-1 Principal Balance, the Class B-2 Principal Balance
and the Class B-3 Principal Balance immediately prior to such Distribution
Date.
"CLASS A-1 UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of
(A) the sum of (i) the product of (x) a fraction, the numerator of
----------------
which is the Fixed Supporting Fixed Amount and the denominator of which is
-----
the Pool I Pool Balance as of the end of the second preceding Collection
Period (or as of the Cut-Off Date with respect to the first Distribution
Date) and
8
<PAGE>
(y) the aggregate Unscheduled Principal Collections with respect to the
Pool I Loans (other than the PO Portion of any Discount Loan) during the
related Collection Period and (ii) the product of (x) a fraction, the
---
numerator of which is the ARM Supporting Fixed Amount and the denominator
------------------ ---------------
of which is the Collateral Amount Available for Cross-Support and (y) the
--------
Cross-Support Unscheduled Principal Distribution Amount; and
(B) a fraction, the numerator of which is the Class A-1 Principal
-------------------------
Balance immediately prior to such Distribution Date and the denominator of
------------------
which is the sum of the Class A-1 Principal Balance, the Class M-1
--------
Principal Balance, the Class M-2 Principal Balance, the Class M-3 Principal
Balance, the Class B-1 Principal Balance, the Class B-2 Principal Balance
and the Class B-3 Principal Balance immediately prior to such Distribution
Date.
"CLASS A-2-A CERTIFICATES" means those Certificates issued by the
Trust in substantially the form of Exhibit B-2 hereto.
"CLASS A-2-B CERTIFICATES" means those Certificates issued by the
Trust in substantially the form of Exhibit B-3 hereto.
"CLASS A-2-C CERTIFICATES" means those Certificates issued by the
Trust in substantially the form of Exhibit B-4 hereto.
"CLASS A-2 PRINCIPAL BALANCE" means, as of any date, the sum of the
Class A-2-A Principal Balance, the Class A-2-B Principal Balance and the Class
A-2-C Principal Balance as of such date.
"CLASS A-2-A FORMULA INTEREST CURRENT AMOUNT" means, with respect to
any Distribution Date, (i) the product of (x) one-twelfth of the Class A-2-A
Pass-Through Rate applicable to such Distribution Date and (y) the Class A-2-A
Principal Balance immediately prior to such Distribution Date minus (ii) the pro
----- ---
rata portion (based upon the outstanding principal balances of all Certificates
- ----
(other than the Class PO, Class A-IO and Class F-IO Certificates) immediately
prior to such Distribution Date) of any Prepayment Interest Shortfall for such
Distribution Date.
"CLASS A-2-A FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class A-2-A Formula Interest
Current Amount and (ii) the Class A-2-A Interest Shortfall Amount.
"CLASS A-2-A INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class A-2-A Formula Interest
Distribution Amount and (y) the product of (i) the Senior Interest Distribution
Amount and (ii) a fraction, the numerator of which is the Class A-2-A Formula
Interest Distribution
9
<PAGE>
Amount and the denominator of which is the Senior Formula Interest Distribution
Amount.
"CLASS A-2-A INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class A-2-A Formula Interest Current Amounts due on all prior
Distribution Dates over (y) the aggregate, cumulative amount distributed to the
----
Class A-2-A Certificateholders on all prior Distribution Dates pursuant to
Section 6.05(a)(ii) hereof.
"CLASS A-2-A PASS-THROUGH RATE" means, with respect to any
Distribution Date, a per annum rate equal to the lesser of (x) the Pool II Gross
WAC for such Distribution Date less 0.25% and (y) the Adjusted Pool II Gross WAC
for such Distribution Date, less 0.395%.
----
"CLASS A-2-A PRINCIPAL BALANCE" means, as of any date, the Original
Class A-2-A Principal Balance minus the aggregate cumulative amount of (i)
amounts described in Section 6.05(c)(ii) hereof prior to such date, (ii) amounts
described in Section 6.05(d)(i)(B) hereof prior to such date, (iii) amounts
described in Section 6.05(d)(ii)(B)(x) hereof prior to such date and (iv)
amounts described in Section 6.07(h)(ii) hereof prior to such date.
"CLASS A-2-A SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of (x) the product of (1) the A-2-A
Pool II Fraction and (2) the aggregate Scheduled Principal Collections with
respect to the Pool II Loans during the related Collection Period and (y) the
product of (1) a fraction, the numerator of which is the Pool II Collateral
----------------------
Deficit and the denominator of which is the Cross-Support and (2) the Cross-
------------------------
Support Scheduled Principal Distribution Amount.
"CLASS A-2-A UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of (x) the product of (i) the A-2-A
Pool II Fraction and (2) the aggregate Unscheduled Principal Collections with
respect to the Pool II Loans during the related Collection Period and (y) the
product of (1) a fraction, the numerator of which is the Pool II Collateral
----------------------
Deficit and the denominator of which is the Collateral Amount Available for
------------------------
Cross-Support and (2) the Cross-Support Unscheduled Principal Distribution
Amount.
"CLASS A-2-A SHIFTED UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means,
with respect to any Distribution Date on which the Class A-1 Principal Balance
is zero, the product of (x) the Shifted Unscheduled Principal Distribution
Amount for such Distribution Date less, on the Distribution Date on which the
Class A-1 Principal Balance is reduced to zero, any portion thereof described in
Section 6.05(d)(ii)(B) hereof on such Distribution Date and (y) a fraction, the
---
numerator of which is an amount equal to the Class A-2-A Principal Balance
- ------------------
immediately prior to such Distribution
10
<PAGE>
Date, less any amount distributed in reduction thereof on such Distribution Date
----
pursuant to Section 6.05(c)(ii) hereof and the denominator of which is the sum
---------------------------
of (i) the Class A-2-A Principal Balance immediately prior to such Distribution
Date, less any amount distributed in reduction thereof on such Distribution Date
pursuant to Section 6.05(c)(ii) hereof, (ii) the Class A-2-B Principal Balance
immediately prior to such Distribution Date, less any amount distributed in
----
reduction thereof on such Distribution Date pursuant to Section 6.05(c)(iii)
hereof, and (iii) the Class A-2-C Principal Balance immediately prior to such
Distribution Date, less any amount distributed in reduction thereof on such
----
Distribution Date pursuant to Section 6.05(c)(iv) hereof.
"CLASS A-2-B FORMULA INTEREST CURRENT AMOUNT" means, with respect to
any Distribution Date, (i) the product of (x) one-twelfth of the Class A-2-B
Pass-Through Rate applicable to such Distribution Date and (y) the Class A-2-B
Principal Balance immediately prior to such Distribution Date minus (ii) the pro
----- ---
rata portion (based upon the outstanding principal balances of all Certificates
- ----
(other than the Class PO, Class A-IO and Class F-IO Certificates) immediately
prior to such Distribution Date) of any Prepayment Interest Shortfall for such
Distribution Date.
"CLASS A-2-B FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class A-2-B Formula Interest
Current Amount and (ii) the Class A-2-B Interest Shortfall Amount.
"CLASS A-2-B INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class A-2-B Formula Interest
Distribution Amount and (y) the product of (i) the Senior Formula Interest
Distribution Amount and (ii) a fraction, the numerator of which is the Class A-
2-B Formula Interest Distribution Amount and the denominator of which is the
Senior Formula Interest Distribution Amount.
"CLASS A-2-B INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class A-2-B Formula Interest Current Amounts due on all prior
Distribution Dates over (y) the aggregate, cumulative amount distributed to the
----
Class A-2-B Certificateholders on all prior Distribution Dates pursuant to
Section 6.05(a)(iii) hereof.
"CLASS A-2-B PASS-THROUGH RATE" means, with respect to any
Distribution Date, a per annum rate equal to the lesser of (x) the Pool III
Gross WAC for such Distribution Date less 0.35% and (y) the Adjusted Pool III
Gross WAC for such Distribution Date, less 0.395%.
----
"CLASS A-2-B PRINCIPAL BALANCE" means, as of any date, the Original
Class A-2-B Principal Balance minus the aggregate cumulative amount of (i)
amounts described in Section 6.05(c)(iii)
11
<PAGE>
hereof prior to such date, (ii) amounts described in Section 6.05(d)(i)(C)
hereof prior to such date, (iii) amounts described in Section 6.05(d)(ii)(B)(y)
hereof prior to such date and (iv) amounts described in Section 6.07(h)(iii)
hereof prior to such date.
"CLASS A-2-B SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of (x) the product of (1) the A-2-B
Pool III Fraction and (2) the aggregate Scheduled Principal Collections with
respect to the Pool III Loans during the related Collection Period and (y) the
product of (1) a fraction, the numerator of which is the Pool III Collateral
----------------------
Deficit and the denominator of which is the Collateral Amount Available for
------------------------
Cross-Support and (2) the Cross-Support Scheduled Principal Distribution Amount.
"CLASS A-2-B SHIFTED UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means,
with respect to any Distribution Date on which the Class A-1 Principal Balance
is zero, the product of (x) the Unscheduled Principal Distribution Amount for
such Distribution Date less, on the Distribution Date on which the Class A-1
Principal Balance is reduced to zero, any portion thereof described in Section
6.05(d)(ii)(B) hereof on such Distribution Date and (y) a fraction, the
---
numerator of which is an amount equal to the Class A-2-B Principal Balance
- ------------------
immediately prior to such Distribution Date, less any amount distributed in
----
reduction thereof on such Distribution Date pursuant to Section 6.05(iii)(c)
hereof and the denominator of which is the sum of (i) the Class A-2-A Principal
---------------------------
Balance immediately prior to such Distribution Date, less any amount distributed
in reduction thereof on such Distribution Date pursuant to Section 6.05(c)(ii)
hereof, (ii) the Class A-2-B Principal Balance immediately prior to such
Distribution Date, less any amount distributed in reduction thereof on such
----
Distribution Date pursuant to Section 6.05(c)(iii) hereof, and (iii) the Class
A-2-C Principal Balance immediately prior to such Distribution Date, less any
----
amount distributed in reduction thereof on such Distribution Date pursuant to
Section 6.05(c)(iv) hereof.
"CLASS A-2-B UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of (x) the product of (1) the A-2-B
Pool III Fraction and (2) the aggregate Unscheduled Principal Collections with
respect to the Pool III Loans during the related Collection Period and (y) the
product of (1) a fraction, the numerator of which is the Pool III Collateral
----------------------
Deficit and the denominator of which is the Collateral Amount Available for
------------------------
Cross-Support and (2) the Cross-Support Unscheduled Principal Distribution
Amount.
"CLASS A-2-C FORMULA INTEREST CURRENT AMOUNT" means, with respect to
any Distribution Date, (i) the product of (x) one-twelfth of the Class A-2-C
Pass-Through Rate applicable to such Distribution Date and (y) the Class A-2-C
Principal Balance immediately prior to such Distribution Date minus (ii) the pro
----- ---
rata
- ----
12
<PAGE>
portion (based upon the outstanding principal balances of all Certificates
(other than the Class PO, Class A-IO and Class F-IO Certificates) immediately
prior to such Distribution Date) of any Prepayment Interest Shortfall for such
Distribution Date.
"CLASS A-2-C FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class A-2-C Formula Interest
Current Amount and (ii) the Class A-2-C Interest Shortfall Amount.
"CLASS A-2-C INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class A-2-C Formula Interest
Distribution Amount and (y) the product of (i) the Senior Interest Distribution
Amount and (ii) a fraction, the numerator of which is the Class A-2-C Formula
Interest Distribution Amount and the denominator of which is the Senior Formula
Interest Distribution Amount.
"CLASS A-2-C INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class A-2-C Formula Interest Current Amounts due on all prior
Distribution Dates over (y) the aggregate, cumulative amount distributed to the
----
Class A-2-C Certificateholders on all prior Distribution Dates pursuant to
Section 6.05(a)(iv) hereof.
"CLASS A-2-C PASS-THROUGH RATE" means, with respect to any
Distribution Date, a per annum rate equal to the lesser of (x) the Pool IV Gross
WAC for such Distribution Date less 1.75% and (y) the Adjusted Pool IV WAC for
such Distribution Date, less 0.395%.
----
"CLASS A-2-C PRINCIPAL BALANCE" means, as of any date, the Original
Class A-2-C Principal Balance minus the aggregate cumulative amount of (i)
amounts described in Section 6.05(c)(iv) hereof prior to such date, (ii) amounts
described in Section 6.05(d)(i)(D) hereof prior to such date, (iii) amounts
described in Section 6.05(d)(ii)(B)(z) hereof prior to such date and (iv)
amounts described in Section 6.07(h)(iv) hereof prior to such date.
"CLASS A-2-C SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of (x) the product of (1) the A-2-C
Pool IV Fraction and (2) the aggregate Scheduled Principal Collections with
respect to the Pool IV Loans during the related Collection Period and (y) the
product of (1) a fraction, the numerator of which is the Pool IV Collateral
----------------------
Deficit and the denominator of which is the Collateral Amount Available for
------------------------
Cross-Support and (2) the Cross-Support Scheduled Principal Distribution Amount.
"CLASS A-2-C SHIFTED UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date on which the Class A-1 Principal Balance is
zero, the product of (x) the
13
<PAGE>
Unscheduled Principal Distribution Amount for such Distribution Date less, on
the Distribution Date on which the Class A-1 Principal Balance is reduced to
zero, any portion thereof described in Section 6.05(d)(ii)(B) hereof on such
Distribution Date and (y) a fraction, the numerator of which is an amount equal
----------------------
to the Class A-2-C Principal Balance immediately prior to such Distribution
Date, less any amount distributed in reduction thereof on such Distribution Date
----
pursuant to Section 6.05(c)(iv) hereof and the denominator of which is the sum
---------------------------
of (i) the Class A-2-A Principal Balance immediately prior to such Distribution
Date, less any amount distributed in reduction thereof on such Distribution Date
pursuant to Section 6.05(c)(iv) hereof, (ii) the Class A-2-B Principal Balance
immediately prior to such Distribution Date, less any amount distributed in
----
reduction thereof on such Distribution Date pursuant to Section 6.05(c)(iii)
hereof, and (iii) the Class A-2-C Principal Balance immediately prior to such
Distribution Date, less any amount distributed in reduction thereof on such
----
Distribution Date pursuant to Section 6.05(c)(iv) hereof.
"CLASS A-2-C SHIFTED UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date on which the Class A-1 Principal Balance is
zero, the product of (x) the Shifted Unscheduled Principal Distribution Amount
for such Distribution Date, less, on the Distribution Date on which the Class A-
1 Principal Balance is reduced to zero, any portion thereof described in Section
6.05(d)(ii)(B) hereof on such Distribution Date and (y) a fraction, the
---
numerator of which is an amount equal to the Class A-2-C Principal Balance
- ------------------
immediately prior to such Distribution Date, less any amount distributed in
----
reduction thereof on such Distribution Date pursuant to Section 6.05(c)(iv)
hereof and the denominator of which is the sum of (i) the Class A-2-A Principal
---------------------------
Balance immediately prior to such Distribution Date, less any amount distributed
in reduction thereof on such Distribution Date pursuant to Section 6.05(c)(iv)
hereof, (ii) the Class A-2-B Principal Balance immediately prior to such
Distribution Date, less any amount distributed in reduction thereof on such
----
Distribution Date pursuant to Section 6.05(c)(iii) hereof, and (iii) the Class
A-2-C Principal Balance immediately prior to such Distribution Date, less any
----
amount distributed in reduction thereof on such Distribution Date pursuant to
Section 6.05(c)(iv) hereof.
"CLASS A-2-C UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of (x) the product of (1) the A-2-C
Pool IV Fraction and (2) the aggregate Unscheduled Principal Collections with
respect to the Pool IV Loans during the related Collection Period and (y) the
product of (1) a fraction, the numerator of which is the Pool IV Collateral
----------------------
Deficit and the denominator of which is the Collateral Amount Available for
------------------------
Cross-Support and (2) the Cross-Support Unscheduled Principal Distribution
Amount.
"CLASS A-IO CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-5 hereto.
14
<PAGE>
"CLASS A-IO FORMULA INTEREST CURRENT AMOUNT" means, with respect to
any Distribution Date, the product of (x) one-twelfth of the Class A-IO Pass-
Through Rate and (y) the Class A-IO Notional Principal Balance.
"CLASS A-IO FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class A-IO Formula Interest Current
Amount and (ii) the Class A-IO Interest Shortfall Amount.
"CLASS A-IO INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class A-IO Formula Interest
Distribution Amount and (y) the product of (i) the Senior Interest Distribution
Amount and (ii) a fraction, the numerator of which is the Class A-IO Formula
Interest Distribution Amount and the denominator of which is the Senior Formula
Interest Distribution Amount.
"CLASS A-IO INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class A-IO Formula Interest Current Amounts due on all prior Distribution
Dates over (y) the aggregate, cumulative amount distributed to the Class A-IO
----
Certificateholders on all prior Distribution Dates pursuant to Section
6.05(a)(vi) hereof.
"CLASS A-IO NOTIONAL PRINCIPAL BALANCE" means, as of any date, the sum
of the Class A-2-A Principal Balance, the Class A-2-B Principal Balance and the
Class A-2-C Principal Balance on such date.
"CLASS A-IO PASS-THROUGH RATE" means, with respect to any Distribution
Date, a per annum rate equal to the Adjusted ARM Gross WAC with respect to such
Distribution Date less the weighted average of the Class A-2-A Pass-Through
----
Rate, the Class A-2-B Pass-Through Rate and the Class A-2-C Pass-Through Rate
for such Distribution Date, less 0.395%.
----
"CLASS B CERTIFICATES" means the Class B-1, Class B-2 and Class B-3
Certificates.
"CLASS B-1 CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-11 hereto.
"CLASS B-1 FORMULA INTEREST CURRENT AMOUNT" means, with respect to any
Distribution Date, the product of (x) one-twelfth of the Class B-1 Pass-Through
Rate applicable to such Distribution Date and (y) the Class B-1 Principal
Balance immediately prior to such Distribution Date.
"CLASS B-1 FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class B-1
15
<PAGE>
Formula Interest Current Amount and (ii) the Class B-1 Interest Shortfall
Amount.
"CLASS B-1 INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class B-1 Formula Interest Distribution
Amount and (y) the excess of (i) the Subordinate Interest Distribution Amount
over (ii) the sum of the Class M-1 Interest Distribution Amount, the Class M-2
Interest Distribution Amount and the Class M-3 Interest Distribution Amount.
"CLASS B-1 INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class B-1 Formula Interest Current Amounts due on all prior Distribution
Dates over (y) the aggregate, cumulative amount distributed to the Class B-1
----
Certificateholders on all prior Distribution Dates pursuant to Section
6.05(e)(iv) hereof.
"CLASS B-1 PASS-THROUGH RATE" means, with respect to any Distribution
Date, a per annum rate equal to the Adjusted Pool I Gross WAC for such
Distribution Date, less 0.395%.
----
"CLASS B-1 PERCENTAGE" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the Class B-1
Principal Balance immediately prior to such Distribution Date and the
denominator of which is the Aggregate Subordinate Certificate Principal Balance
immediately prior to such Distribution Date.
"CLASS B-1 PRINCIPAL BALANCE" means, as of any date, the Original
Class B-1 Principal Balance minus the aggregate cumulative amount of (i) amounts
described in Section 6.05(l) hereof prior to such date, (ii) amounts described
in Section 6.05(m) hereof, prior to such date and (iii) amounts described in
Section 6.07(d) hereof prior to such date.
"CLASS B-1 SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (X) the Class B-1 Percentage
applicable to such Distribution Date and (y) the Subordinate Scheduled Principal
Distribution Amount.
"CLASS B-1 UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means: (x) with
respect to any Distribution Date on which the Class B-1 Certificates are not an
Eligible Subordinate Class, zero; (y) with respect to any Distribution Date on
which the Class B-1 Certificates are an Eligible Subordinate Class, the product
of (i) the Subordinate Unscheduled Principal Distribution Amount and (ii) a
fraction, the numerator of which is the Class B-1 Principal Balance and the
denominator is the Eligible Subordinate Balance.
"CLASS B-2 CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-12 hereto.
16
<PAGE>
"CLASS B-2 FORMULA INTEREST CURRENT AMOUNT" means, with respect to any
Distribution Date, (i) the product of (x) one-twelfth of the Class B-2 Pass-
Through Rate applicable to such Distribution Date and (y) the Class B-2
Principal Balance immediately prior to such Distribution Date minus (ii) the pro
----- ---
rata portion (based upon the outstanding principal balances of all Certificates
- ----
(other than the Class PO, Class A-IO and Class F-IO Certificates) immediately
prior to such Distribution Date) of any Prepayment Interest Shortfall for such
Distribution Date.
"CLASS B-2 FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class B-2 Formula Interest Current
Amount and (ii) the Class B-2 Interest Shortfall Amount.
"CLASS B-2 INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class B-2 Formula Interest Distribution
Amount and (y) the excess of (i) the Subordinate Interest Distribution Amount
over (ii) the sum of the Class M-1 Interest Distribution Amount, the Class M-2
Interest Distribution Amount, the Class M-3 Interest Distribution Amount and the
Class B-1 Interest Distribution Amount.
"CLASS B-2 INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class B-2 Formula Interest Current Amounts due on all prior Distribution
Dates over (y) the aggregate, cumulative amount distributed to the Class B-2
----
Certificateholders on all prior Distribution Dates pursuant to Section
6.05(e)(v) hereof.
"CLASS B-2 PASS-THROUGH RATE" means, with respect to any Distribution
Date, a per annum rate equal to the Adjusted Pool I Gross WAC for such
Distribution Date, less 0.395%.
----
"CLASS B-2 PERCENTAGE" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the Class B-2
Principal Balance immediately prior to such Distribution Date and the
denominator of which is the Aggregate Subordinate Certificate Principal Balance
immediately prior to such Distribution Date.
"CLASS B-2 PRINCIPAL BALANCE" means, as of any date, the Original
Class B-2 Principal Balance minus the aggregate cumulative amount of (i) amounts
described in Section 6.05(n) hereof prior to such date, (ii) amounts described
in Section 6.05(o) hereof, prior to such date and (iii) amounts described in
Section 6.07(c) hereof prior to such date.
"CLASS B-2 SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) the Class B-2 Percentage
applicable to such Distribution Date and (y) the Subordinate Scheduled Principal
Distribution Amount.
17
<PAGE>
"CLASS B-2 UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means: (x) with
respect to any Distribution Date on which the Class B-2 Certificates are not an
Eligible Subordinate Class, zero; (y) with respect to any Distribution Date on
which the Class B-2 Certificates are an Eligible Subordinate Class, the product
of (i) the Subordinate Unscheduled Principal Distribution Amount and (ii) a
fraction, the numerator of which is the Class B-2 Principal Balance and the
denominator is the Eligible Subordinate Balance.
"CLASS B-3 CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-13 hereto.
"CLASS B-3 FORMULA INTEREST CURRENT AMOUNT" means, with respect to any
Distribution Date, (i) the product of (x) one-twelfth of the Class B-3 Pass-
Through Rate and (y) the Class B-3 Principal Balance immediately prior to such
Distribution Date minus (ii) the pro rata portion (based upon the outstanding
----- --- ----
principal balances of all Certificates (other than the Class PO, Class A-IO and
Class F-IO Certificates) immediately prior to such Distribution Date) of any
Prepayment Interest Shortfall for such Distribution Date.
"CLASS B-3 FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class B-3 Formula Interest Current
Amount and (ii) the Class B-3 Interest Shortfall Amount.
"CLASS B-3 INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class B-3 Formula Interest Distribution
Amount and (y) the excess of (i) the Subordinate Interest Distribution Amount
over (ii) the sum of the Class M-1 Interest Distribution Amount, the Class M-2
Interest Distribution Amount, the Class M-3 Interest Distribution Amount, the
Class B-1 Interest Distribution Amount, and the Class B-2 Interest Distribution
Amount.
"CLASS B-3 INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class B-3 Formula Interest Current Amounts due on all prior Distribution
Dates over (y) the aggregate, cumulative amount distributed to the Class B-3
----
Certificateholders on all prior Distribution Dates pursuant to Section
6.05(e)(vi) hereof.
"CLASS B-3 PASS-THROUGH RATE" means, with respect to any Distribution
Date, a per annum rate equal to the Adjusted Pool I Gross WAC for such
Distribution Date, less 0.395%.
----
"CLASS B-3 PERCENTAGE" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the Class B-3
Principal Balance immediately prior to such Distribution Date and the
denominator of which is the
18
<PAGE>
Aggregate Subordinate Certificate Principal Balance immediately prior to such
Distribution Date.
"CLASS B-3 PRINCIPAL BALANCE" means, as of any date, the Original
Class B-3 Principal Balance minus the aggregate cumulative amount of (i) amounts
described in Section 6.05(p) hereof prior to such date, (ii) amounts described
in Section 6.05(q) hereof, prior to such date and (iii) amounts described in
Section 6.07(b) hereof prior to such date.
"CLASS B-3 SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) the Class B-3 Percentage
applicable to such Distribution Date and (y) the Subordinate Scheduled Principal
Distribution Amount.
"CLASS B-3 UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means: (x) with
respect to any Distribution Date on which the Class B-3 Certificates are not an
Eligible Subordinate Class, zero; (y) with respect to any Distribution Date on
which the Class B-3 Certificates are an Eligible Subordinate Class, the product
of (i) the Subordinate Unscheduled Principal Distribution Amount and (ii) a
fraction, the numerator of which is the Class B-3 Principal Balance and the
denominator is the aggregate Eligible Subordinate Balance.
"CLASS F-IO CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-7 hereto.
"CLASS F-IO FORMULA INTEREST CURRENT AMOUNT" means, with respect to
any Distribution Date, the product of (x) one-twelfth of the Class F-IO Pass-
Through Rate and (y) the Class F-IO Notional Balance immediately prior to such
Distribution Date.
"CLASS F-IO FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class F-IO Formula Interest Current
Amount and (ii) the Class F-IO Interest Shortfall Amount.
"CLASS F-IO INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class F-IO Formula Interest
Distribution Amount and (y) the product of (i) the Senior Interest Distribution
Amount and (ii) a fraction, the numerator of which is the Class F-IO Formula
Interest Distribution Amount and the denominator of which is the Senior Formula
Interest Distribution Amount.
"CLASS F-IO INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class F-IO Formula Interest Current Amounts due on all prior Distribution
Dates over (y) the aggregate, cumulative amount distributed to the Class F-IO
----
Certificateholders on all prior Distribution Dates pursuant to Section
6.05(a)(v) hereof.
19
<PAGE>
"CLASS F-IO NOTIONAL BALANCE" means, as of any date, the Class A-1
Principal Balance on such date.
"CLASS F-IO PASS-THROUGH RATE" means with respect to any Distribution
Date, a per annum rate equal to the lesser of (a) the excess of (x) the Pool I
Adjusted Net WAC for such Distribution Date, over (y) the Class A-1 Pass-Through
Rate and (b) zero.
"CLASS M CERTIFICATES" means the Class M-1, Class M-2 and Class M-3
Certificates.
"CLASS M-1 CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-8 hereto.
"CLASS M-1 FORMULA INTEREST CURRENT AMOUNT" means, with respect to any
Distribution Date, (i) the product of (x) one-twelfth of the Class M-1 Pass-
Through Rate applicable to such Distribution Date and (y) the Class M-1
Principal Balance immediately prior to such Distribution Date minus (ii) the pro
----- ---
rata portion (based upon the outstanding principal balances of all Certificates
- ----
(other than the Class PO, Class A-IO and Class F-IO Certificates) immediately
prior to such Distribution Date) of any Prepayment Interest Shortfall for such
Distribution Date.
"CLASS M-1 FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class M-1 Formula Interest Current
Amount and (ii) the Class M-1 Interest Shortfall Amount.
"CLASS M-1 INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class M-1 Formula Interest Distribution
Amount and (y) the Subordinate Interest Distribution Amount.
"CLASS M-1 INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class M-1 Formula Interest Current Amounts due on all prior Distribution
Dates over (y) the aggregate, cumulative amount distributed to the Class M-1
----
Certificateholders on all prior Distribution Dates pursuant to Section
6.05(e)(i) hereof.
"CLASS M-1 PASS-THROUGH RATE" means, with respect to any Distribution
Date, a per annum rate equal to the Adjusted Pool I Gross WAC for such
Distribution Date, less 0.395%.
----
"CLASS M-1 PERCENTAGE" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the Class M-1
Principal Balance immediately prior to such Distribution Date and the
denominator of which is the Aggregate Subordinate Certificate Principal Balance
immediately prior to such Distribution Date.
20
<PAGE>
"CLASS M-1 PRINCIPAL BALANCE" means, as of any date, the Original
Class M-1 Principal Balance minus the aggregate cumulative amount of (i) amounts
described in Section 6.05(f) hereof prior to such date, (ii) amounts described
in Section 6.05(g) hereof, prior to such date and (iii) amounts described in
Section 6.07(g) hereof prior to such date.
"CLASS M-1 SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) the Class M-1 Percentage
applicable to such Distribution Date and (y) the Subordinate Scheduled Principal
Distribution Amount.
"CLASS M-1 UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (i) the Subordinate Unscheduled
Principal Distribution Amount and (ii) a fraction, the numerator of which is the
Class M-1 Principal Balance and the denominator is the Eligible Subordinate
Balance.
"CLASS M-2 CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-9 hereto.
"CLASS M-2 FORMULA INTEREST CURRENT AMOUNT" means, with respect to any
Distribution Date, (i) the product of (x) one-twelfth of the Class M-2 Pass-
Through Rate applicable to such Distribution Date and (y) the Class M-2
Principal Balance immediately prior to such Distribution Date minus (ii) the pro
----- ---
rata portion (based upon the outstanding principal balances of all Certificates
- ----
(other than the Class PO, Class A-IO and Class F-IO Certificates) (immediately
prior to such Distribution Date) of any Prepayment Interest Shortfall for such
Distribution Date.
"CLASS M-2 FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class M-2 Formula Interest Current
Amount and (ii) the Class M-2 Interest Shortfall Amount.
"CLASS M-2 INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class M-2 Formula Interest Distribution
Amount and (y) the excess of (i) the Subordinate Interest Distribution Amount
over (ii) the Class M-1 Interest Distribution Amount.
"CLASS M-2 INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class M-2 Formula Interest Current Amounts due on all prior Distribution
Dates over (y) the aggregate, cumulative amount distributed to the Class M-2
----
Certificateholders on all prior Distribution Dates pursuant to Section
6.05(e)(ii) hereof.
"CLASS M-2 PASS-THROUGH RATE" means, with respect to any Distribution
Date, a per annum rate equal to the Adjusted Pool I Gross WAC for such
Distribution Date, less 0.395%.
----
21
<PAGE>
"CLASS M-2 PERCENTAGE" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the Class M-2
Principal Balance immediately prior to such Distribution Date and the
denominator of which is the Aggregate Subordinate Certificate Principal Balance
immediately prior to such Distribution Date.
"CLASS M-2 PRINCIPAL BALANCE" means, as of any date, the Original
Class M-2 Principal Balance minus the aggregate cumulative amount of (i) amounts
described in Section 6.05(h) hereof prior to such date, (ii) amounts described
in Section 6.05(i) hereof, prior to such date and (iii) amounts described in
Section 6.07(f) hereof prior to such date.
"CLASS M-2 SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) the Class M-2 Percentage
applicable to such Distribution Date and (y) the Subordinate Scheduled Principal
Distribution Amount.
"CLASS M-2 UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means: (x) with
respect to any Distribution Date on which the Class M-2 Certificates are not an
Eligible Subordinate Class, zero; (y) with respect to any Distribution Date on
which the Class M-2 Certificates are an Eligible Subordinate Class, the product
of (i) the Subordinate Unscheduled Principal Distribution Amount and (ii) a
fraction, the numerator of which is the Class M-2 Principal Balance and the
denominator is the Eligible Subordinate Balance.
"CLASS M-3 CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-10 hereto.
"CLASS M-3 FORMULA INTEREST CURRENT AMOUNT" means, with respect to any
Distribution Date, (i) the product of (x) one-twelfth of the Class M-3 Pass-
Through Rate applicable to such Distribution Date and (y) the Class M-3
Principal Balance immediately prior to such Distribution Date minus (ii) the pro
----- ---
rata portion (based upon the outstanding principal balances of all Certificates
- ----
(other than the Class PO, Class A-IO and Class F-IO Certificates) immediately
prior to such Distribution Date) of any Prepayment Interest Shortfall for such
Distribution Date.
"CLASS M-3 FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of (i) the Class M-3 Formula Interest Current
Amount and (ii) the Class M-3 Interest Shortfall Amount.
"CLASS M-3 INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Class M-3 Formula Interest Distribution
Amount and (y) the excess of (i) the Subordinate Interest Distribution Amount
over (ii) the Class M-1 Interest Distribution Amount plus the Class M-2 Interest
Distribution Amount.
22
<PAGE>
"CLASS M-3 INTEREST SHORTFALL AMOUNT" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate, cumulative amount
of the Class M-3 Formula Interest Current Amounts due on all prior Distribution
Dates over (y) the aggregate, cumulative amount distributed to the Class M-3
----
Certificateholders on all prior Distribution Dates pursuant to Section
6.05(e)(iii) hereof.
"CLASS M-3 PASS-THROUGH RATE" means, with respect to any Distribution
Date, a per annum rate equal to the Adjusted Pool I Gross WAC for such
Distribution Date, less 0.395%.
----
"CLASS M-3 PERCENTAGE" means, with respect to any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the Class M-3
Principal Balance immediately prior to such Distribution Date and the
denominator of which is the Aggregate Subordinate Certificate Principal Balance
immediately prior to such Distribution Date.
"CLASS M-3 PRINCIPAL BALANCE" means, as of any date, the Original
Class M-3 Principal Balance minus the aggregate cumulative amount of (i) amounts
described in Section 6.05(j) hereof prior to such date, (ii) amounts described
in Section 6.05(k) hereof, prior to such date and (iii) amounts described in
Section 6.07(e) hereof prior to such date.
"CLASS M-3 SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) the Class M-3 Percentage
applicable to such Distribution Date and (y) the Subordinate Scheduled Principal
Distribution Amount.
"CLASS M-3 UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means: (x) with
respect to any Distribution Date on which the Class M-3 Certificates are not an
Eligible Subordinate Class, zero; (y) with respect to any Distribution Date on
which the Class M-3 Certificates are an Eligible Subordinate Class, the product
of (i) the Subordinate Unscheduled Principal Distribution Amount and (ii) a
fraction, the numerator of which is the Class M-3 Principal Balance and the
denominator is the Eligible Subordinate Balance.
"CLASS PO CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-6 hereto.
"CLASS PO DISTRIBUTION AMOUNT" means, with respect to any Distribution
Date, the excess of (x) the Available Funds over (y) the Senior Interest
Distribution Amount.
"CLASS PO PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of (A) the aggregate for all Discount Loans of the
following amounts with respect to each Discount Loan: the product of (x) a
fraction, the numerator of which is the Discount Percentage for such Discount
Loan and the denominator of which is 7.00% and (y) the sum of (i) any Scheduled
23
<PAGE>
Principal Collection with respect to such Discount Loan included in the related
Servicer Remittance Amount, (ii) any Unscheduled Principal Collection with
respect to such Discount Loan included in the related Servicer Remittance Amount
and (iii) the amount of any Realized Loss experienced by such Discount Loan
during the related Collection Period and (B) the reduction, during the related
Collection Period, in the Aggregate PO Arrearage Amount.
"CLASS R AMOUNT" means, as of any date, the Original Class R Amount
less any reductions therein resulting from the allocation thereto of any
Realized Losses, pursuant to Section 6.07(i) hereof prior to such date.
"CLASS RL CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-14 hereto.
"CLASS RU CERTIFICATES" means those Certificates issued by the Trust
in substantially the form of Exhibit B-15 hereto.
"COLLATERAL AMOUNT AVAILABLE FOR CROSS-SUPPORT" means, with respect to
any Distribution Date, the sum of the Extra Pool II Collateral Amount, the Extra
Pool III Collateral Amount, the Extra Pool IV Collateral Amount and the Fixed
Supporting Floating Amount.
"COLLECTIONS" has the meaning set forth in Section 4.09 hereof.
"COLLECTION PERIOD" means each calendar month.
"CROSS-SUPPORT GROSS WAC" means, with respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the sum
----------------------
of (i) the product of (x) the Extra Pool II Collateral Amount and (y) the Pool
II Gross WAC, (ii) the product of (x) the Extra Pool III Collateral Amount and
(y) the Pool III Gross WAC, (iii) the product of (x) the Extra Pool IV
Collateral Amount and (y) the Pool IV Gross WAC and (iv) the product of (x) the
Fixed Supporting Floating Amount and (y) the Pool I Gross WAC and the
-------
denominator of which is the Collateral Amount Available For Cross-Support.
- --------------------
"CROSS-SUPPORT SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of the Extra Pool II Scheduled
Principal Distribution Amount, the Extra Pool III Scheduled Principal
Distribution Amount, the Extra Pool IV Scheduled Principal Distribution Amount
and the Fixed Supporting Floating Scheduled Principal Distribution Amount.
"CROSS-SUPPORT UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of the Extra Pool II Unscheduled
Principal Distribution Amount, the Extra Pool III Unscheduled Principal
Distribution Amount, the Extra Pool IV Unscheduled Principal Distribution Amount
and the Fixed Supporting Floating Unscheduled Principal Distribution Amount.
24
<PAGE>
"CUT-OFF DATE" means the opening of business on December 1, 1996,
after application of payments due on or before December 1, 1996.
"DCR" means Duff & Phelps Credit Rating Co.
"DEBT" means for any Person, (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obli gations of such Person to pay the
deferred purchase price of property or services, (d) obligations of such Person
as lessee under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (e) obligations secured by any lien or other charge
upon property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations, (f) obligations of
such Person under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (a) through (e) above, and (g)
liabilities in respect of unfunded vested benefits under plans covered by ERISA.
"DEFICIENT VALUATION" means, with respect to any Mortgage Loan, the
dollar amount of any reduction in the principal balance owed by the related
mortgagor, as ordered by a court in connection with a bankruptcy proceeding with
respect to the related Mortgagor.
"DELINQUENCY ADVANCE" means "Delinquency Advance" as that term is
defined in Section 4.12(a) hereof.
"DELINQUENCY RATIO" means, with respect to any Distribution Date, a
fraction expressed as a percentage (a) the numerator of which equals the
aggregate Principal Balances of all Mortgage Loans that are 61 or more days
Delinquent, in foreclosure or converted to REO Properties, as the case may be,
as of the last day of the immediately preceding calendar month and (b) the
denominator of which is the aggregate Principal Balance of all of the Mortgage
Loans as of the last day of such immediately preceding calendar month.
"DELINQUENT" means a Mortgage Loan is "Delinquent" if any payment
contractually due thereon is not made by the close of business on the Due Date
therefor. Such Mortgage Loan is "31 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 first due, or, if
there is no such corresponding day (e.g., as when a 30-day month follows a 31-
---
day month in which a payment was due on the 31st day of such month), then on the
last day of such immediately succeeding month. Similarly for "61 days
Delinquent", "91 days Delinquent", and so on.
25
<PAGE>
"DETERMINATION DATE" has the meaning set forth in Section 4.11 hereof.
"DEPOSITORY" means The Depository Trust Company, 7 Hanover Square, New
York, New York 10004 and any successor Depository hereafter named.
"DIRECT PARTICIPANT" means any broker-dealer, bank or other financial
institution for which the Depository holds the Class A Certificates from time to
time as a securities depository.
"DISCOUNT LOAN" means any Fixed Rate Loan having a Net Coupon Rate
less than 7.00% per annum.
"DISCOUNT PERCENTAGE" means, with respect to any Discount Loan, the
excess of (x) 7.00% over (y) the Net Coupon Rate for such Discount Loan.
"DISQUALIFIED ORGANIZATION" means "Disqualified Organiz ation" 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.
"DISTRIBUTION DATE" means the 25th calendar day of each month (or the
immediately succeeding Business Day if such day is not a Business Day),
commencing in January 27, 1997.
"DOLLAR" and "$" means lawful currency of the United States of
America.
"DUE DATE" means with respect to each Mortgage Loan, the day of the
month on which the Monthly Payment on such Mortgage Loan is due as specified in
the related Note, exclusive of any days of grace.
"ELECTRONIC LEDGER" means the electronic master record of the Mortgage
Loans maintained by the Servicer.
"ELECTRONIC REPORT" means "Electronic Report" as that term is defined
in Section 4.11(a).
"ELIGIBLE ACCOUNT" means a segregated account, which may be an account
maintained with the Trustee or with the Lockbox Bank, which is either (a)
maintained with a depository institution or trust company that is not an
Affiliate of either the Unaffiliated Seller or the Servicer whose long term
unsecured debt obligations are rated at least AA or its equivalent by Standard &
Poor's and Moody's, or (b) a trust account maintained with the trust department
of a federally or state chartered depository institution that is acting in a
fiduciary capacity and that is not an Affiliate of either the Unaffiliated
Seller or the Servicer.
26
<PAGE>
"ELIGIBLE INVESTMENTS" means any of the following (which may be
purchased by or through the Trustee or any of its Affiliates):
(a) obligations of, or guaranteed as to the full and timely payment of
principal and interest by, the United States or obligations of any agency
or instrumentality thereof, when such obligations are backed by the full
faith and credit of the United States;
(b) repurchase agreements on obligations specified in clause (a);
provided, that the short-term debt obligations of the party agreeing to
--------
repurchase are rated no less than A-1+ by Standard & Poor's and P-1 by
Moody's;
(c) federal funds, certificates of deposit, time deposits and bankers'
acceptances (which shall each have an original maturity of not more than 90
days and, in the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days) of any United States depository
institution or trust company incorporated under the laws of the United
States or any state; provided, that the short-term obligations of such
--------
depository institution or trust company are rated no less than A-1 by
Standard & Poor's and P-1 by Moody's;
(d) commercial paper (having original maturities of not more than 30
days) of any corporation incorporated under the laws of the United States
or any state thereof which on the date of acquisition is rated no less than
A-1 by Standard & Poor's and P-1 by Moody's;
(e) securities of money market funds or mutual funds rated AAm or
better by Standard & Poor's and Aa1 by Moody's; and
provided that no instrument described above is permitted to evidence
--------
either the right to receive (a) only interest or only principal with
respect to obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument and
the interest and principal payments with respect to such instrument
provided a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations; and provided, further, that
-------- -------
no instrument described above 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.
"ELIGIBLE SUBORDINATE BALANCE" means, with respect to any Distribution
Date, the sum of the Certificate Principal Balances of all Eligible Subordinate
Classes immediately prior to such Distribution Date.
27
<PAGE>
"ELIGIBLE SUBORDINATE CLASS" means, as of any Distribution Date, any
Subordinate Class as to which the Related Subordination Percentage, calculated
immediately prior to such Distribution Date, equals or exceeds the Related
Original Subordination Percentage.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AMOUNTS" means "Escrow Amounts" as that term is defined in
Section 4.24 hereof.
"EVENT OF SERVICER DEFAULT" means "Event of Servicer Default" as that
term is defined in Section 4.19.
"EXCEPTION REPORT" has the meaning set forth in Section 2.04 hereof.
"EXTRA POOL II COLLATERAL AMOUNT" means, with respect to any
Distribution Date, the greater of (x) the excess of (i) the Pool II Pool Balance
as of the end of the second preceding Collection Period (or as of the Cut-Off
Date, in the case of the first Distribution Date) over (ii) the Class A-2-A
Principal Balance immediately prior to such Distribution Date and (y) zero.
"EXTRA POOL II SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) a fraction, the numerator
-------------
of which is the Extra Pool II Collateral Amount and the denominator of which is
- -------- ------------------------
the Pool II Pool Balance as of the end of the second preceding Collection Period
(or as of the Cut-Off Date, in the case of the first Distribution Date) and (y)
the aggregate Scheduled Principal Collections with respect to the Pool II Loans
during the related Collection Period.
"EXTRA POOL II UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) a fraction, the numerator
-------------
of which is the Extra Pool II Collateral Amount and the denominator of which is
- -------- ------------------------
the Pool II Pool Principal Balance as of the end of the second preceding
Collection Period (or as of the Cut-Off Date, in the case of the first
Distribution Date) and (y) the aggregate Unscheduled Principal Collections with
respect to the Pool II Loans during the related Collection Period.
"EXTRA POOL III COLLATERAL AMOUNT" means, with respect to any
Distribution Date, the greater of (x) the excess of (i) the Pool III Pool
Balance as of the end of the second preceding Collection Period (or as of the
Cut-Off Date, in the case of the first Distribution Date) over (ii) the Class A-
2-B Principal Balance immediately prior to such Distribution Date and (y) zero.
"EXTRA POOL III SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) a fraction, the numerator
-------------
of which is the Extra Pool III Collateral
- --------
28
<PAGE>
Amount and the denominator of which is the Pool III Pool Balance as of the end
------------------------
of the second preceding Collection Period (or as of the Cut-Off Date, in the
case of the first Distribution Date) and (y) the aggregate Scheduled Principal
Collections with respect to the Pool III Loans during the related Collection
Period.
"EXTRA POOL III UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) a fraction, the numerator
-------------
of which is the Extra Pool III Collateral Amount and the denominator of which is
- -------- ------------------------
the Pool III Pool Balance as of the end of the second preceding Collection
Period (or as of the Cut-Off Date, in the case of the first Distribution Date)
and (y) the aggregate Unscheduled Principal Collections with respect to the Pool
III Loans during the related Collection Period.
"EXTRA POOL IV COLLATERAL AMOUNT" means, with respect to any
Distribution Date, the greater of (x) the excess of (i) the Pool IV Principal
Balance as of the end of the second preceding Collection Period (or as of the
Cut-Off Date, in the case of the first Distribution Date) over (ii) the Class A-
2-C Principal Balance immediately prior to such Distribution Date and (y) zero.
"EXTRA POOL IV SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) a fraction, the numerator
-------------
of which is the Extra Pool IV Collateral Amount and the denominator of which is
- -------- ------------------------
the Pool IV Pool Balance as of the end of the second preceding Collection Period
(or as of the Cut-Off Date, in the case of the first Distribution Date) and (y)
the aggregate Scheduled Principal Collections with respect to the Pool IV Loans
during the related Collection Period.
"EXTRA POOL IV UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) a fraction, the numerator
-------------
of which is the Extra Pool IV Collateral Amount and the denominator of which is
- -------- ------------------------
the Pool IV Pool Balance as of the end of the second preceding Collection Period
(or as of the Cut-Off Date, in the case of the first Distribution Date) and (y)
the aggregate Unscheduled Principal Collections with respect to the Pool IV
Loans during the related Collection Period.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"FINAL SCHEDULED DISTRIBUTION DATE" means the August 25, 2032
Scheduled Distribution Date.
"FIRST BANK" means First Bank of Beverly Hills, F.S.B.
"FIRST DISTRIBUTION DATE" means January 27, 1997.
"FITCH" means Fitch Investors Service, L.P.
29
<PAGE>
"FIXED SUPPORTING FIXED AMOUNT" means, with respect to any
Distribution Date, the excess of (x) the Pool I Pool Balance as of the end of
the second preceding Collection Period (or as of the Cut-Off Date with respect
to the first Distribution Date) over (y) the Fixed Supporting Floating Amount.
"FIXED SUPPORTING FLOATING AMOUNT" means, with respect to any
Distribution Date, the excess of (x) the Aggregate Class A-2 Principal Balance
immediately prior to such Distribution Date over (y) the ARM Pool Principal
Balance as of the end of the second preceding Collection Period (or as of the
Cut-Off Date, with respect to the first Distribution Date).
"FIXED SUPPORTING FLOATING SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT"
means, with respect to any Distribution Date, the product of (i) a fraction, the
---
numerator of which is the Fixed Supporting Floating Amount and the denominator
- ------------------ ---------------
of which is the Pool I Pool Principal Balance as of the end of the second
- --------
preceding Collection Period (or as of the Cut-Off Date, with respect to the
first Distribution Date) and (ii) the Pool I Scheduled Principal Collections
during the related Collection Period.
"FIXED SUPPORTING FLOATING UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT"
means, with respect to any Distribution Date, the product of (i) a fraction, the
---
numerator of which is the Fixed Supporting Floating Amount and the denominator
- ------------------ ---------------
of which is the Pool I Pool Principal Balance as of the end of the second
- --------
preceding Collection Period (or as of the Cut-Off Date, with respect to the
first Distribution Date) and (ii) the Pool I Unscheduled Principal Collections
during the related Collection Period.
"FNMA" means the Federal National Mortgage Association.
"GAAP" means generally accepted accounting principles as in effect in
the United States, consistently applied, as of the date of such application.
"GOVERNMENTAL AUTHORITY" means the United States of America, any
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
"GROSS COUPON RATE" means, with respect to any Arrearage Loan and
Distribution Date, the Adjusted Gross Coupon Rate for such Arrearage Loan as of
the Due Date in the related Collection Period and for any Mortgage Loan which is
not an Arrearage Loan, the Gross Coupon Rate is equal to the gross rate of such
Mortgage Loan.
"GIRARD" means Girard Savings Bank F.S.B.
"HOLDER" means a Person in whose name a Certificate is registered in
the Certificate Register.
30
<PAGE>
"INDEPENDENT PUBLIC ACCOUNTANT" means any of (a) Arthur Andersen &
Co., (b) Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst & Young (e) KPMG
Peat Marwick and (f) Price Waterhouse (and any successors of the foregoing);
provided, that such firm is independent with respect to the Servicer or any
- --------
Subservicer, as the case may be, within the meaning of the Securities Act.
"INDIRECT PARTICIPANT" means any financial institution for whom any
Direct Participant holds an interest in a Class A Certificate.
"INSURANCE POLICY" means any hazard, title, flood or primary mortgage
or other insurance policy relating to a Mortgage Loan.
"INSURANCE PROCEEDS" means, for any Distribution Date, all insurance
proceeds (other than Insurance Payments) received by the Servicer during the
related Collection Period (including, without limitation, the proceeds of any
hazard insurance, flood insurance or title insurance policies, and payments made
by the Servicer pursuant hereto in respect of a deductible clause in any blanket
policy) that are not Liquidation Proceeds, that are not applied to the
restoration or repair of the related Property or other servicing expenses or
released to the related Mortgagor in accordance with the normal servicing
procedures of the Servicer, and were applied by the Servicer to reduce the
Principal Balance of the related Mortgage Loan or to pay interest on the related
Mortgage Loan.
"LIQUIDATED MORTGAGE LOAN" means "Liquidated Mortgage Loan" as that
term is defined in Section 4.15(b) hereof.
"LIQUIDATION EXPENSES" means customary and reasonable out-of-pocket
expenses exclusive of overhead which are incurred by the Servicer or by the
Back-Up Servicer in connection with the liquidation of any defaulted Mortgage
Loan, such expenses, including, without limitation, legal fees and expenses, any
unreimbursed Servicing Advances expended by the Servicer with respect to such
Mortgage Loan.
"LIQUIDATION PROCEEDS" means, with respect to any Liquidated Mortgage
Loan, any amounts (including the proceeds of any Insurance Policy) recovered by
the Servicer in connection with such Liquidated Mortgage Loan, whether through
trustee's sale, foreclosure sale or otherwise.
"LIST OF LOANS" means a list containing the Required Information with
respect to each Mortgage Loan and attached to the Sale Agreement and delivered
to the Trustee on computer readable magnetic tape or disk.
"LOAN COLLATERAL" means the personal or real property (if any)
securing the related Mortgage Loan, including any lessor's
31
<PAGE>
interest in the Loan Collateral, whether characterized or recharacterized as an
ownership or security interest.
"LOAN FILE" means, with respect to each Mortgage Loan, the file
containing related Loan File Documents.
"LOAN FILE DOCUMENTS" means those items listed on Exhibit C hereto.
"LOAN PREPAYMENT INTEREST SHORTFALL" means, with respect to any
Mortgage Loan which is not 31 or more days Delinquent and as to which a
Prepayment is received during a Collection Period, the excess of (x) 30 days'
interest at the Coupon Rate on the Principal Balance of such Mortgage Loan as of
the first day of such Collection Period over (y) the interest at the Coupon Rate
paid by the related Mortgagor with respect to such Loan during such Collection
Period; such amount shall exclude any Civil Relief Act Interest Shortfall.
"LOCK-BOX" means "Lock-Box" as that term is defined in Section 4.08(a)
hereof.
"LOCKBOX ACCOUNT" means the account in the name of the Trust at the
Lockbox Bank to which all Collections in respect of the Mortgage Loans shall be
remitted by the Mortgagors and the Servicer, which shall be an Eligible Account.
"LOCKBOX AGREEMENT" means the agreement between the Servicer and the
Lockbox Bank providing that all funds received into a particular lockbox on a
Business Day shall be remitted directly to the Collection Account by the close
of the following Business Day.
"LOCKBOX BANK" means Bank of America Oregon, N.A.
"MONTHLY MORTGAGE PAYMENT" means, with respect to any Mortgage Loan
and Due Date, the scheduled amount due on such Due Date, as calculated in
accordance with the terms of the related Note.
"MONTHLY PAYMENT" means the scheduled monthly payment on a Mortgage
Loan for any month.
"MOODY'S" means Moody's Investors Service, Inc., a nationally
recognized statistical rating organization, and any successor thereto.
"MORTGAGE" means the mortgage, deed of trust or other instrument
creating a lien on the Loan Collateral that is Real Estate.
32
<PAGE>
"MORTGAGE LOAN" means:
(a) either
(i) a fixed rate closed-end (which term includes a revolving line
of credit under which no additional amounts may be drawn) mortgage loan and
promissory note including the right to payment of any interest or finance
charges and other obligations of the Mortgagor with respect thereto, listed
on the List of Loans and conveyed to the Trust by the Depositor as part of
the Trust Assets; or
(ii) an adjustable rate closed-end (which term includes a
revolving line of credit under which no additional amounts may be drawn)
mortgage loan and promissory note including the right to payment of any
interest or finance charges and other obligations of the Mortgagor with
respect thereto, listed on the List of Loans and conveyed to the Trust by
the Depositor as part of the Trust Assets;
(b) all security interests or liens and real and personal property
subject thereto from time to time purporting to secure payment by the
related Mortgagor;
(c) all guarantees, indemnities and warranties and proceeds thereof,
proceeds of insurance policies, Uniform Commercial Code financing
statements, certificates of title or other title documentation and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Mortgage Loan;
(d) all Collections with respect to any of the foregoing;
(e) all Records with respect to any of the foregoing; and
(f) all proceeds of any of the foregoing.
"MORTGAGOR" means, with respect to any Mortgage Loan, the Person or
Persons primarily obligated to make payments in respect thereto.
"NET COUPON RATE" means, with respect to an Arrearage Loan, its
Adjusted Net Coupon Rate as of the Due Date in the related Collection Period.
With respect to all other Mortgage Loans, the "Net Coupon Rate" is equal to such
Mortgage Loan's Coupon Rate, less 0.395%.
----
"NET INSURANCE PROCEEDS" means, as to any Mortgage Loan, any Insurance
Proceeds received with respect thereto net of amounts payable therefrom to the
Servicer in respect of Servicing Advances
33
<PAGE>
and unreimbursed Delinquency Advances relating to such Mortgage Loan.
"NET LIQUIDATION PROCEEDS" means, as to any Liquidated Mortgage Loan,
Liquidation Proceeds net of amounts payable therefrom to the Servicer in respect
of Liquidation Expenses and unreimbursed Delinquency Advances and Servicing
Advances relating to such Mortgage Loan.
"NON-IO CERTIFICATES" means all Certificates other than the Class A-IO
and Class F-IO Certificates.
"NON-RECOVERABLE ADVANCE" means any Delinquency Advance or Servicer
Advance which the Servicer has determined will not ultimately be recovered from
the related Mortgage Loan.
"NOTE" means the original executed promissory note evidencing the
indebtedness of an Mortgagor under a Mortgage Loan or if such Mortgage is not
evidenced by a promissory note, the original executed document or other
instrument primarily evidencing the indebtedness of the Mortgagor under such
Mortgage Loan.
"OFFICER'S CERTIFICATE" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Vice Chairman of the Board, the
President, a Vice President, Member or the Treasurer of such Person.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
counsel to the Unaffiliated Seller or the Servicer), which opinion is reasonably
acceptable to the Trustee.
"ORIGINAL CERTIFICATE PRINCIPAL BALANCE" means the following dollar
amounts with respect to each Class:
Original Certificate
Class Principal Balance
----- -----------------
Class A-1 $ 48,211,248.00
Class A-2-A $ 90,635,697.00
Class A-2-B $ 56,843,117.00
Class A-2-C $ 19,098,571.00
Class PO $ 2,274,391.00
Class A-IO $166,577,385.00(1)
Class F-IO $ 48,211,248.00(2)
Class M-1 $ 8,348,577.00
Class M-2 $ 15,305,726.00
Class M-3 $ 13,914,296.00
Class B-1 $ 6,261,438.27
Class B-2 $ 4,870,003.82
Class B-3 $ 12,522,866.96
Class RL (3)
Class RU (3)
__________________
(1) Shown is the "Original Class A-IO Notional Balance",
(2) Shown is the "Original Class F-IO Notional Balance",
(3) The Class RL and Class RU Certificates do not have a Certificate Principal
Balance".
34
<PAGE>
"ORIGINAL POOL BALANCE" means the aggregate Principal Balance of the
Mortgage Loans held by the Trust as of the Cut-Off Date.
"ORIGINATOR" means the Person that originated the Mortgage Loan
pursuant to a written agreement with the related Mortgagor.
"OTHER SELLERS" means First Bank and Girard.
"OUTSTANDING ADVANCES" means, as of any date with respect to a
Mortgage Loan, the total amount of Delinquency Advances and Servicing Advances
made on such Mortgage Loan for which the Servicer has not been reimbursed.
"PERCENTAGE INTEREST" means the relative interests of all
Certificateholders of a Class in their respective Certificates, all of which
shall total 100% with respect to each Class in and which shall be set forth on
the face of each Certificate.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
association, joint venture, Governmental Authority or any other entity of
whatever nature.
"POOL I GROSS WAC" means, with respect to any Distribution Date, the
weighted gross average Coupon Rate of all Pool I Loans with respect to the
related Collection Period calculated using the Coupon Rates in effect on the
related Due Dates, except in the case of a Discount Loan, in which case the
gross Coupon Rate shall be deemed to be 7.395%).
"POOL I LOAN" means any Mortgage Loan designated by the Seller as
belonging to Pool I, as such Mortgage Loans are listed on Schedule I hereto.
"POOL I NET WAC" means, with respect to any Distribution Date, the
Pool I Gross WAC less 0.395%
----
"POOL I POOL BALANCE" means, as of any date, the sum of the Principal
Balances of all Pool I Loans as of such date.
"POOL I SCHEDULED PRINCIPAL COLLECTIONS" means, with respect to Pool I
and for any Collection Period, the sum of all Scheduled Principal Collections
with respect to the Pool I Loans other than (a) the PO Portion of any Discount
Loan and (b) principal receipts in reduction of the Aggregate PO Arrearage
Amount.
"POOL II COLLATERAL DEFICIT" means, with respect to any Distribution
Date, the excess of (i) the Class A-2-A Principal Balance immediately prior to
such Distribution Date over (ii) the Pool II Pool Balance as of the end of the
second preceding
35
<PAGE>
Collection Period (or as of the Cut-Off Date, in the case of the first
Distribution Date).
"POOL II GROSS WAC" means, with respect to any Distribution Date, the
weighted average gross Coupon Rate of all Pool II Loans with respect to the
related Collection Period calculated using the gross Coupon Rates in effect on
the related Due Dates.
"POOL II LOAN" means any Mortgage Loan designated by the Seller as
belonging to Pool II, as such Mortgage Loans are listed on Schedule II hereto.
"POOL II NET WAC" means, with respect to any Distribution Date, Pool
II Gross WAC less 0.395%.
----
"POOL II POOL BALANCE" means, as of any date, the sum of the Principal
Balances of all Pool II Loans as of such date.
"POOL III COLLATERAL DEFICIT" means, with respect to any Distribution
Date, the excess of (i) the Class A-2-B Principal Balance immediately prior to
such Distribution Date over (ii) the Pool III Pool Principal Balance as of the
end of the second preceding Collection Period (or as of the Cut-Off Date, in the
case of the first Distribution Date).
"POOL III GROSS WAC" means, with respect to any Distribution Date, the
weighted average gross Coupon Rate of all Pool III Loans with respect to the
related Collection Period calculated using the gross Coupon Rates in effect on
the related Due Dates.
"POOL III LOAN" means any Mortgage Loan designated by the Seller as
belonging to Pool III, as such Mortgage Loans are listed on Schedule III hereto.
"POOL III NET WAC" means, with respect to any Distribution Date, the
Pool III Gross WAC less 0.395%.
----
"POOL III POOL BALANCE" means, as of any date, the sum of the
Principal Balances of all Pool III Loans as of such date.
"POOL IV COLLATERAL DEFICIT" means, with respect to any Distribution
Date, the excess of (i) the Class A-2-C Principal Balance immediately prior to
such Distribution Date over (ii) the Pool IV Pool Balance as of the end of the
second preceding Collection Period (or as of the Cut-Off Date, in the case of
the first Distribution Date).
"POOL IV GROSS WAC" means, with respect to any Distribution Date, the
weighted average Coupon Rate of all Pool IV Loans with respect to the related
Collection Period calculated using the Coupon Rates in effect on the related Due
Dates.
36
<PAGE>
"POOL IV LOAN" means any Mortgage Loan designated by the Seller as
being a Pool IV Loan Rate which is, as such Mortgage Loans are listed on
Schedule IV hereto.
"POOL IV NET WAC" means, with respect to any Distribution Date, the
Pool IV Gross WAC less 0.395%.
----
"POOL IV PRINCIPAL BALANCE" means, as of any date, the sum of the
Principal Balances of all Pool IV Loans as of such date.
"PO PERCENTAGE" means, with respect to any Discount Loan, the Discount
Percentage divided by 7.00%.
----------
"PO PORTION" means, with respect to any Discount Loan, the product of
(x) the PO Percentage for such Discount Loan and (y) the Principal Balance of
such Discount Loan.
"POTENTIALLY HAZARDOUS PROPERTY" means "Potentially Hazardous
Property" as that term is defined in Section 4.15(a) hereof.
"PREPAID INSTALLMENT" means, with respect to any Mortgage Loan, any
Monthly Payment received prior to the Due Date for such Monthly Payment,
intended by the Mortgagor as an early payment thereof and not as a Prepayment
with respect to such Mortgage Loan, to be applied in a manner consistent with
the Servicer's standard procedures and applicable law.
"PREPAYMENT" means, with respect to any Mortgage Loan, any payment
made by the related Mortgagor other than (i) Monthly Mortgage Payments, (ii)
amounts to be applied against arrearages in Monthly Mortgage Payments previously
due but delinquent, and (iii) Advance Payments.
"PREPAYMENT INTEREST" means, with respect to any Distribution Date,
the least of (I) the excess of (x) the interest due on the Non-IO Certificates
on such Distribution Date over (y) the Available Funds to be on deposit in the
Certificate Account on such Distribution Date (including, without duplication,
the amount of any Delinquency Advances made by the Servicer pursuant to Section
4.12(a) hereof with respect to such Distribution Date) and (II) the aggregate
Loan Prepayment Interest Shortfalls for the related Collection Period and (III)
the aggregate Servicing Fee for such Distribution Date.
"PREPAYMENT INTEREST SHORTFALL" means, with respect to any
Distribution Date, the excess, if any, of (x) the lesser of (a) the amount
described in clause (I) of the definition of "Prepayment Interest" and (b) the
amount described in clause (II) of the definition of "Prepayment Interest" over
(y) the aggregate Servicing Fee for such Distribution Date.
37
<PAGE>
"PRESERVATION EXPENSES" means reasonable and customary expenditures
made by the Servicer in connection with a foreclosed Mortgage Loan prior to the
liquidation thereof, including, without limitation, expenditures for real estate
property taxes and assessments, payments to senior lienholders or holders of any
ground lease, hazard insurance premiums, property restoration or preservation.
"PRINCIPAL BALANCE" means, as to any Arrearage Loan the unpaid
principal balance thereof, plus the Arrearage. For any Mortgage Loan which is
not an Arrearage Loan, the Arrearage, if any, will not be included in the
"Principal Balance" thereof (which "Principal Balance" will equal the unpaid
principal balance). Notwithstanding any of the foregoing, on and after the date
on which a Mortgage Loan becomes a Liquidated Mortgage Loan its "Principal
Balance" shall be zero. The "Principal Balance" of any Mortgage Loan shall be
reduced by the amount of any applicable Deficient Valuation.
"PRINCIPAL PAYMENT" means, for any Distribution Date, each principal
payment, including Prepayments, curtailments and the principal portion of all
Prepaid Installments received by the Servicer during the related Collection
Period from or on behalf of a Mortgagor applied or required to be applied by the
Servicer to reduce the Principal Balance of such Mortgage Loan during such
Collection Period.
"PROPERTY" means the underlying property securing a Mortgage Loan.
"QUALIFIED LIQUIDATION" means "Qualified Liquidation" shall have 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.
"RATING AGENCY" means any nationally recognized statistical
organization rating the Class A Certificates at the request of the Unaffiliated
Seller; as of the date hereof, Duff & Phelps Credit Rating Company, Fitch
Investors Service, L.P. and Moody's Investors Service, Inc.
"REAL ESTATE" means all Loan Collateral whose perfection is governed
by state real estate statutes or other state real estate law.
"REALIZED LOSS" means, with respect to any Mortgage Loan, the dollar
amount of (a) a Deficient Valuation or (b) if such Mortgage Loan becomes a
Liquidated Mortgage Loan, the excess of (x) the Principal Balance of such
Mortgage Loan immediately prior to such Mortgage Loan's becoming a Liquidated
Mortgage Loan over (y) the related Net Liquidation Proceeds.
38
<PAGE>
"RELATED ORIGINAL SUBORDINATION PERCENTAGE" means:
(a) with respect to and including the Class M-2 Certificates, 19%.
(b) with respect to and including the Class M-3 Certificates, 13.5%.
"RELATED SUBORDINATION PERCENTAGE" means, as of any Distribution Date:
(a) with respect to the Class M-2 Certificates, percentage equivalent of a
fraction, the numerator of which is the sum of the Class M-2 Principal
Balance, the Class M-3 Principal Balance, the Class B-1 Principal
Balance, the Class B-2 Principal Balance, and the Class B-3 Principal
Balance and the denominator of which is the Aggregate Certificate
Principal Balance, all as calculated immediately prior to such
Distribution Date;
(b) with respect to the Class M-3 Certificates, the percentage equivalent
of a fraction, the numerator of which is the sum of the Class M-3
Principal Balance, the Class B-1 Principal Balance, the Class B-2
Principal Balance and the Class B-3 Principal Balance and the
denominator of which is the Aggregate Certificate Principal Balance,
all as calculated immediately prior to such Distribution Date;
(c) with respect to the Class B-1 Certificates, the percentage equivalent
of a fraction, the numerator of which is the sum of the Class B-1
Principal Balance, the Class B-2 Principal Balance, and the Class B-3
Principal Balance and the denominator of which is the Aggregate
Certificate Principal Balance, all as calculated immediately prior to
such Distribution Date;
(d) with respect to the Class B-2 Certificates, the percentage equivalent
of a fraction, the numerator of which is the sum of the Class B-2
Principal Balance, the Class B-3 Principal Balance and the denominator
of which is the Aggregate Certificate Principal Balance, all as
calculated immediately prior to such Distribution Date; and
(e) with respect to the Class B-3 Certificates, the percentage equivalent
of a fraction, the numerator of which is the Class B-3 Principal
Balance and the denominator of which is the Aggregate Certificate
Principal Balance, all as calculated immediately prior to such
Distribution Date.
39
<PAGE>
"RECORD DATE" means, with respect to any Distribution Date the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
"RECORDS" means all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch cards,
data processing software and related property and rights) prepared and
maintained by the Servicer or by or on behalf of the Unaffiliated Seller with
respect to the Mortgage Loans and the related Mortgagors.
"RECOVERIES OF ADVANCES" means, for any Collection Period, all
Collections by the Servicer from or on behalf of Mortgagors during such
Collection Period representing either (a) recoveries of amounts with respect to
which Delinquency Advances or Servicing Advances were made by the Servicer for
prior Collection Periods or (b) recoveries of advances made by the Servicer or
one of its affiliates with respect to the Mortgage Loans made prior to the Cut-
Off Date.
"REGISTERED CERTIFICATES" means, collectively, the Senior
Certificates, the Class M-1, Class M-2 and Class M-3 Certificates.
"RELATED DOCUMENTS" means the Sale Agreement, the Unaffiliated
Seller's Agreement, the Insurance Agreement and all documents and instruments
required to be delivered hereunder and thereunder.
"REMIC" means a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC PROVISIONS" means provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of the Code, and related provisions, and regulations and
rulings promulgated thereunder, as the foregoing may be in effect from time to
time.
"REO PROPERTY" means a Property acquired by the Servicer on behalf of
the Trust through foreclosure or deed-in-lieu of foreclosure in connection with
a defaulted Mortgage Loan.
"REPRESENTATION LETTER" means letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A
Certificates registered in the Certificate Register under the nominee name of
the Depository.
"REPURCHASE PRICE" means, with respect to any Mortgage Loan, the
amount equal to the sum of (i) the Principal Balance of such Mortgage Loan
immediately prior to the repurchase date, (ii) any accrued and unpaid interest
thereon, calculated at the Coupon Rate and (iii) all Outstanding Advances
related to such Mortgage Loan at the time of the repurchase minus any Net
-----
Liquidation Proceeds received with respect thereto and not
40
<PAGE>
previously applied to reduce the Principal Balance of such Mortgage Loan, which
amount has been deposited into the Collection Account pursuant to Section 4 of
the Sale Agreement or Sections 3.06 or 10.02 of this Agreement.
"REQUEST FOR RELEASE" means the form set forth as Exhibit E hereto.
"REQUIRED CERTIFICATEHOLDERS" means Holders who hold Senior
Certificates evidencing at least 51% of the Senior Certificates or, Senior
Certificates are no longer outstanding, Holders who hold at least 51% in
aggregate Percentage Interest in the Subordinate Certificates; provided,
--------
however, that for purposes of Section 10.03(b), such percentage shall be
- -------
increased from 51% to 66 2/3%.
"REQUIRED INFORMATION" means with respect to a Mortgage Loan, (a) the
name and address of the Mortgagor, (b) the outstanding principal balance of the
Mortgage Loan, (c) the maturity date and (d) the interest rate; provided, that
--------
the Servicer's obligation to furnish any portion of the Required Information to
any Person shall not require the Servicer to fail to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors.
"RESIDUAL CERTIFICATES" means, together, the Class RL and the Class RU
Certificates.
"RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice
President, any Assistant Secretary, any Assistant Treasurer, any Corporate Trust
officer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above-designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"RTC" means the Resolution Trust Corporation.
"SALE AGREEMENT" means the Loan Sale Agreement dated as of December 1,
1996, by and between the Unaffiliated Seller, WCC and the Other Sellers,
providing for the transfer of the Mortgage Loans to the Unaffiliated Seller.
"SCHEDULED INTEREST COLLECTION" means, with respect to any Mortgage
Loan and Collection Period, the portion of the Monthly Mortgage Payment due on
the Due Date occurring in such Collection Period which relates to interest, as
calculated in accordance with the terms of the related Note.
"SCHEDULED PRINCIPAL COLLECTION" means, with respect to any Mortgage
Loan and Collection Period, the portion of the Monthly Mortgage Payment due on
the Due Date occurring in such Collection
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Period which relates to principal, as calculated in accordance with the terms of
the related Note.
"SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the aggregate of all Scheduled Principal
Collections included in the related Servicer Remittance Amount and (y) the
amount remaining on deposit in the Certificate Account after the payment of the
amounts described in Sections 6.05(a) and 6.05(b) hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means WCC and each Other Seller in their capacity as "Seller"
under the Sale Agreement.
"SENIOR CERTIFICATES" means, collectively, the Class A-1, Class A-2-A,
Class A-2-B, Class A-2-C, Class PO, Class F-IO and Class A-IO Certificates.
"SENIOR FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect to
any Distribution Date, the sum of the Class A-1 Formula Interest Distribution
Amount, the Class A-2-A Formula Interest Distribution Amount, the Class A-2-B
Formula Interest Distribution Amount, the Class A-2-C Formula Interest
Distribution Amount, the Class A-IO Formula Interest Distribution Amount and the
Class F-IO Formula Interest Distribution Amount.
"SENIOR INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Available Funds as of such Distribution
Date and (y) the Senior Formula Interest Distribution Amount.
"SENIOR PERCENTAGE" means, with respect to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the Senior
Principal Balance immediately prior to such Distribution Date and the
denominator of which is the Aggregate Certificate Principal Balance immediately
prior to such Distribution Date.
"SENIOR PRINCIPAL BALANCE" means, as of any date, the sum of the Class
A-1 Principal Balance, the Class A-2 Principal Balance and the Class PO
Principal Balance as of such date.
"SENIOR SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the excess of (x) the Available Funds over (y) the sum
of (i) the Senior Interest Distribution Amount and (ii) the Class PO Principal
Distribution Amount.
"SENIOR UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the amount of Available
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Funds remaining after application of the Senior Scheduled Principal Distribution
Amount.
"SERVICER REMITTANCE AMOUNT" means, with respect to any Servicer
Remittance Date, the sum of:
(i) all Scheduled Interest Collections due during the related
Collection Period and on deposit in the Collection Account at the
opening of business on the related Servicer Remittance Date,
together, without duplication, with the interest portion of any
Delinquency Advances and Prepayment Interest relating thereto;
(ii) all Scheduled Principal Collections due during the related
Collection Period and on deposit in the Collection Account at the
opening of business on the related Servicer Remittance Date,
together, without duplication, with the principal portion of any
Delinquency Advances relating thereto;
(iii) all Unscheduled Interest Collections on deposit in the
Collection Account at the opening of business on the related
Servicer Remittance Date; and
(iv) all Unscheduled Principal Collections on deposit in the
Collection Account at the opening of business on the related
Servicer Remittance Date.
"SERVICER REMITTANCE DATE" means the date on or prior to which the
Servicer is required to direct the Trustee to transfer the Available Funds to
the Certificate Account which shall be the twenty-fourth (24th) day of each
calendar month, commencing in January, 1997 (or, if such twenty-fourth day is
not a Business Day, the next preceding Business Day).
"SERVICER'S MONTHLY REPORT" means the report in substantially the form
of Exhibit A hereto.
"SERVICING ADVANCE" means "Servicing Advance" as that term is defined
in Section 4.12(b) and Section 4.15(a) hereof.
"SERVICING FEE" means, with respect to each Distribution Date, the
product of (a) Servicing Fee Rate, (b) the Pool Balance as of the beginning of
the related Collection Period (or, in the case of the First Distribution Date,
the Cut-Off Date) and (c) one-twelfth.
"SERVICING FEE RATE" means 0.375%.
"SERVICING OFFICER" means any officer or employee of the Servicer
involved in, or responsible for, the administration and servicing of Mortgage
Loans whose name appears on a list of
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servicing officers attached to Officer's Certificates furnished to the Trustee,
the Back-Up Servicer, as such lists may be amended from time to time.
"SERVICING STANDARD" means servicing, collection and investor
reporting systems and procedures consistent with (i) those systems and
procedures set forth in the WSC Servicing Guide, (ii) this Agreement, (iii)
applicable law and (iv) customary and prudent practices in the residential
mortgage loan servicing industry.
"SHIFTED PERCENTAGE" means, (a) with respect to any Distribution Date
occurring prior to the January 2002 Distribution Date, 100%,; (b) with respect
to any Distribution Date occurring on or after the January 2002 Distribution
Date and prior to the January 2003 Distribution Date, 70%; (c) with respect to
any Distribution Date occurring on or after the January 2003 Distribution Date
and prior to the January 2004 Distribution Date, 60%; (d) with respect to any
Distribution Date occurring on or after the January 2004 Distribution Date and
prior to the January 2005 Distribution Date, 40%; (e) with respect to any
Distribution Date occurring on or after the January 2005 Distribution Date and
prior to the January 2006 Distribution Date, 20%; (f) with respect to any
Distribution Date on or after the January 2006 Distribution Date, 0%.
Notwithstanding the foregoing, the Shifted Percentage shall not, at the
commencement of any such period, be reduced, but shall remain at its prior
level, if the Cumulative Loss Percentage, calculated as of the Distribution Date
on which such period commences, exceeds the Trigger Percentage for such
Distribution Date. Notwithstanding the foregoing:
(I) if the Senior Percentage on any Distribution Date exceeds 78%, the
Shifted Percentage shall be 100% for that Distribution Date; and
(II) no reduction of the Shifted Percentage below the level in effect
for the most recent prior period specified above shall be effective on any
Distribution Date unless, as of the last day of the month preceding such
Distribution Date, either:
(A) (i) the aggregate Principal Balances of Mortgage Loans delinquent
60 days or more (including for this purpose any Mortgaged Loans in
foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust) does not exceed 50% of the
Aggregate Subordinate Certificate Principal Balance as of such date and
(ii) cumulative Realized Losses do not exceed (a) 30% of the Aggregate
Subordinate Certificate Principal Balance as of the date of issuance of the
Certificates (the "Original Subordinate Balance") if such Distribution Date
occurs between and including January 2002 and December 2002, (b) 35% of the
Original Subordinate Principal if such Distribution Date occurs between and
including January 2003 and December 2003,
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(c) 40% of the Original Subordinate Balance if such Distribution Date
occurs between and including January 2004 and December 2004, (d) 45% of the
Original Subordinate Balance if such Distribution Date occurs between and
including January 2005 and December 2005, and (e) 50% of the Original
Subordinate Balance if such Distribution Date occurs during or after
January 2006; or
(B) (i) the aggregate Principal Balances of Mortgage Loans delinquent
60 days or more (including for this purpose any Mortgaged Loans in
foreclosure and Mortgage Loans with respect to which the related Mortgaged
Property has been acquired by the Trust), averaged over the last three
months, as a percentage of the aggregate Principal Balance of all Mortgage
Loans averaged over the last three months, does not exceed 4%, and (ii)
cumulative Realized Losses do not exceed (a) 10% of the Original
Subordinate Balance if such Distribution Date occurs between and including
January 2002 and December 2002, (b) 15% of the Original Subordinate Balance
if such Distribution Date occurs between and including January 2003 and
December 2003, (c) 20% of the Original Subordinate Balance if such
Distribution Date occurs between and including January 2004 and December
2004, (d) 25% of the Original Subordinate Balance if such Distribution Date
occurs between and including January 2005 and December 2005, and (e) 30% of
the Original Subordinate Balance if such Distribution Date occurs during or
after January 2006.
(III) while the Class A-1 Certificates are still outstanding, the
Shifted Percentage may not be below 70%.
"SHIFTED UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the product of (x) the Shifted Percentage, and
(y) a fraction, the numerator of which is the Aggregate Subordinate Certificate
----------------------
Principal Balance and the denominator of which is the Aggregate Fixed Rate
------------------------
Certificate Principal Balance and (z) the Adjusted Fixed Unscheduled Principal.
"SUBORDINATE CERTIFICATES" means the Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2 and Class B-3 Certificates.
"SUBORDINATE FORMULA INTEREST DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the sum of the Class M-1 Formula Interest Distribution
Amount, the Class M-2 Formula Interest Distribution Amount, the Class M-3
Formula Interest Distribution Amount, the Class B-1 Formula Interest
Distribution Amount, the Class B-2 Formula Interest Distribution Amount and the
Class B-3 Formula Interest Distribution Amount.
"SUBORDINATE INTEREST DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the Subordinate Formula Interest
Distribution Amount and (y) the excess of (i) the
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Available Funds as of such Distribution Date over (ii) the sum of the amounts
----
described in clauses (a) through (d) of Section 6.05.
"SUBORDINATE PERCENTAGE" means, with respect to any Distribution Date,
100% minus the Senior Percentage.
-----
"SUBORDINATE SCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the excess of (x) the Scheduled Principal
Distribution Amount with respect to such Distribution Date over (y) amounts
described in Section 6.05(c) hereof on such Distribution Date.
"SUBORDINATE UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the excess of (x) the Unscheduled Principal
Distribution Amount less the PO Portion of such Unscheduled Principal
----
Distribution Amount over (y) amounts described in Section 6.05(d) hereof on such
Distribution Date.
"SUB-SERVICER" means any Person with whom the Servicer has entered
into a Sub-Servicing Agreement as permitted by Section 4.03 hereof.
"SUB-SERVICING AGREEMENT" means any written contract between the
Servicer and any Subservicer, relating to servicing, and collection of the
Mortgage Loans.
"SUBSIDIARY" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"SUCCESSOR SERVICER" means any successor to the Servicer, which may
include the Back-Up Servicer.
"SUCCESSOR SERVICER FEE RATE" means 0.375% per annum.
"T&I ACCOUNT" means "T&I Account" as that term is defined in Section
4.25 hereof.
"TAX" or "TAXES" means all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, profits,
withholding, excise, property, sales, use, occupation and franchise taxes
(including, in each such case, any interest, penalties or additions attributable
to or imposed on or with respect to any such taxes, charges, fees or other
assessments) imposed by the United States, any state or political subdivision
thereof, any foreign government or any other jurisdiction or taxing authority.
"TRUST ASSETS" means the Mortgage Loans and related properly
transferred to the Trust pursuant to Section 2.01 hereof.
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"TRIGGER PERCENTAGE" means (a) with respect to the January 2002
Distribution Date, 30%; (b) with respect to the January 2003 Distribution Date,
35%; (c) with respect to the January 2004 Distribution Date, 40%; (d) with
respect to the January 2005 Distribution Date, 45%; (e) with respect to the
January 2006 Distribution Date, 50%.
"TRUST TERMINATION DATE" means "Trust Termination Date" as that term
is defined in Section 10.01.
"TRUSTEE FEE" means an amount payable to the Trustee on each
Distribution Date pursuant to Section 9.12 hereof and in accordance with Section
6.05 hereof, and equal to one-twelfth of the product of (i) the Trustee's Fee
Rate and (ii) the aggregate Principal Balances of the Mortgage Loans as of the
opening of business on the first day of the related Collection Period (or, in
the case of the first Distribution Date, as of the Cut-Off Date).
"TRUSTEE'S FEE RATE" means 0.020% per annum.
"U.S. PERSON" means a citizen or resident of the United States, a
corporation or partnership organized in or under the laws of the United States
or any state thereof, or an estate or trust, the income of which is subject to
United States Federal income taxation regardless of its source.
"UNAFFILIATED SELLER'S AGREEMENT" means the Unaffiliated Sellers'
Agreement dated as of December 1, 1996 between the Unaffiliated Seller and the
Depositor.
"UNREGISTERED CERTIFICATES" means, collectively, the Class B-1, Class
B-2, Class B-3, Class RL and Class RU Certificates.
"UNSCHEDULED COLLECTION" means, with respect to any Mortgage Loan,
each of the following: the amount of any related Prepayment, the amount of any
related Net Liquidation Proceeds, the amount of any related Net Insurance
Proceeds, the amount of any related Repurchase Price or any related amount
resulting from the early termination of the Trust, in each case to the extent
deposited into the Collection Account with respect to such Mortgage Loan.
"UNSCHEDULED INTEREST COLLECTION" means, with respect to any Mortgage
Loan, the portion, if any, of any Unscheduled Collection relating to such
Mortgage Loan which is applied on account of accrued interest thereon, pursuant
to the terms of the related Note.
"UNSCHEDULED PRINCIPAL COLLECTION" means, with respect to any Mortgage
Loan, the portion, if any, of any Unscheduled Collection relating to such
Mortgage Loan which is applied on
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account of the Principal Balance thereof, pursuant to the terms of the related
Note.
"UNSCHEDULED PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the aggregate of all Unscheduled Principal
Collections included in the related Servicer Remittance Amount and (y) the
amount remaining on deposit in the Certificate Account after the payment of the
amounts described in clauses (a), (b) and (c) of Section 6.05 hereof.
"WSC" means Wilshire Servicing Corporation, a Delaware corporation,
and its successors.
Section 1.02. Provisions of General Application. For all purposes of
---------------------------------
this Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
(b) All terms used in Article 9 of the UCC, and not specifically
defined herein, are used herein as defined in such Article 9.
(c) The terms defined in this Article include the plural as well as
the singular.
(d) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(e) References to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
Section 1.03. Business Day Certificate. On the Closing Date (with
------------------------
respect to the remainder of the calendar year 1996) and thereafter, within 15
days prior to the end of the calendar year while this Agreement remains in
effect (with respect to the succeeding calendar years), the Servicer shall
provide the Trustee and the Back-Up Servicer a certificate of a Servicing
Officer specifying the days other than Saturdays or Sundays on which banks in
the States of Oregon, California and New York are required, or authorized by
law, to close.
Section 1.04. Trust Name. The trust created hereby shall be
----------
designated the "Wilshire Funding Corporation Mortgage Backed Trust 1996-3" and
all legal actions maintained or taken by the Servicer or the Trustee in respect
of the Trust Assets, except as otherwise required by law, shall indicate that
they are taken by
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the Servicer or the Trustee in such capacity on behalf of the Trust.
ARTICLE II
TRANSFER OF TRUST ASSETS
Section 2.01. Conveyance of Trust Assets; Establishment of the Trust.
-------------------------------------------------------
(a) On the Closing Date, the Depositor, with the execution and delivery of this
Agreement and on the terms set forth herein does hereby grant, transfer, assign,
set over and otherwise convey to the Trustee, on behalf of the Trust, for the
benefit of the Holders of the Certificates, without recourse (except to the
extent specified herein), all right, title and interest of the Depositor in, to
and under the Trust Assets including, without limitation, the Mortgage Loans set
forth on the List of Loans. Such property together with all funds on deposit in
the Collection Account, the Lock-Box Account, the Certificate Account and the
Escrow Accounts shall constitute the assets of the Trust (the "Trust Assets").
In connection with such transfer and assignment, the Depositor does
hereby also irrevocably transfer, assign, set over and otherwise convey to the
Trustee all of its rights under the Unaffiliated Seller's Agreement.
In connection with the Depositor's assignment, the Depositor shall
direct, and hereby represents and warrants that it has directed, the
Unaffiliated Seller to deliver to and deposit with, or cause to be delivered to
and deposited with, the Trustee, on or before the Closing Date, the Loan File
Documents for each Mortgage Loan so assigned. Neither the Trustee, the
Depositor nor the Servicer shall be liable for any failure by the Unaffiliated
Seller to comply with the document delivery requirements.
(b) The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "Wilshire Funding Corporation Mortgage-
Backed Trust 1996-3" and does hereby appoint Bankers Trust Company of
California, N.A. as Trustee in accordance with the provisions of this Agreement.
(c) On the Closing Date the Trustee shall issue the Certificates,
registered in such names as the Depositor shall direct, and shall deliver the
Certificates as directed by the Depositor.
Section 2.02. Purposes and Powers. The purpose of the Trust is to
-------------------
engage in the following activities, and only such activities: (i) the issuance
of the Certificates and the acquiring, owning and holding of the Mortgage Loans
and the Trust Assets in connection therewith; (ii) activities that are
necessary,
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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 Assets and distributions to the Holders of the
Certificates.
Section 2.03. Possession of Loan Files; Access to Loan Files. (a)
----------------------------------------------
The Trustee, by its execution of this Agreement, does hereby acknowledge the
conveyance of the Trust Assets and declares that the Trustee will hold such
Trust Assets conveyed by the Depositor and all other Trust Assets in trust, for
the use and benefit of the Holders of the Certificates subject to the terms and
provisions hereof. The Trustee shall act as the custodian with respect to the
Loan File Documents; provided, however, that the Trustee may, upon receipt of a
-------- -------
Request for Release from the Servicer, release any Loan File Document to the
Servicer, for the limited purpose, if necessary, of temporarily assisting the
Servicer to conduct collection and other servicing activities. The Trustee
shall not be under any duty or obligation to inspect, review or examine any
document, instrument, certificate, agreement or other papers to determine that
they are valid, legal, genuine, enforceable, in recordable form, sufficient,
duly authorized or appropriate for the represented purpose or that they are
other than what they purport to be on their face.
(b) The Trustee shall hold and acknowledges that it is holding the
Loan File Documents (except for those noted on the Exception Report given to the
Unaffiliated Seller and the Servicer on the Closing Date) as the Trustee with
respect thereto. The Trustee shall not have any responsibility, duty,
obligation or liability with respect to the Servicer acting as a custodian
hereunder or with respect to any document, agreement, certificate or instrument
held or purported to be held by the Servicer.
(c) The Servicer, upon receipt of any Loan File Documents in
accordance with Section 2.03(a) hereof, shall have and perform the following
powers and duties:
(i) hold such Loan File Documents on behalf of the Trustee for
the benefit of the Trust and the Holders of the Certificates, and maintain
a current inventory thereof;
(ii) implement policies and procedures in accordance with the
Servicer's normal business practices with respect to the handling and
custody of such Loan File Documents so that the integrity and physical
possession of the Loan File Documents will be maintained; and
(iii) attend to all details in connection with maintaining
custody of such Loan File Documents on behalf of the Trustee on behalf of
the Trust, the Holders of the Certificates.
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(d) The Servicer, upon receipt of any Loan File Documents in
accordance with Section 2.03(a) hereof, agrees that it does not and will not
have or assert any beneficial ownership interest in the related Mortgage Loans
or the Loan File Documents or any other Trust Asset. Promptly upon the Trust's
acquisition thereof, the Servicer shall mark conspicuously each original or copy
of a contractual document with an Mortgagor, and its master data processing
records evidencing each Mortgage Loan with a legend, evidencing that each
Mortgage Loan has been assigned to the Trustee for the benefit of the Trust,
together with all right and title thereto and interest therein as provided
herein.
(e) The Servicer, upon receipt of any Loan File Documents in
accordance with Section 2.03(a) hereof, shall maintain such Loan File Documents
in its possession at its office located in Portland, Oregon, or at such other
offices of the Servicer as shall from time to time be identified by prior
written notice to the Trustee. Subject to the foregoing, the Servicer may
temporarily move individual Loan File Documents or any portion thereof without
notice as necessary to conduct collection and other servicing activities.
(f) The Depositor authorizes the Trustee and does hereby make,
constitute and appoints the Trustee, with full power of substitution, as the
true and lawful attorney-in-fact of the Depositor with power, in its own name or
in the name of the Depositor, (i)(A) in the case of an Assignment by the RTC or
the FDIC in blank, to fill in the blank (B) and the case of a Note with an
endorsement by the RTC or the FDIC in blank, to endorse the Note, using a stamp
provided to the Trustee by WSC which reads as follows:
"Pay to the order of Bankers Trust Company of California, N.A., as
Trustee under that certain Pooling and Servicing Agreement dated as of
December 1, 1996 for Wilshire Funding Corporation Mortgage-Backed
Trust 1996-3; without recourse."
The Depositor hereby ratifies all that said attorney shall lawfully do or cause
to be done by virtue hereof. This power of attorney is coupled with an interest
and shall be irrevocable for the term of this Agreement.
(g) WSC will provide to the Trustee the stamps described in Section
2.03(f) hereof within 15 days of the Closing Date. The Trustee will complete
the assignments and endorsements as described above within thirty Business Days
of receipt of such stamps.
(h) If WSC is in possession of such policy, WSC shall deliver to the
Trustee the original lender's title insurance policy with respect to each
Mortgage Loan, together with any endorsements thereto, by the twenty-first
Business Day following the Closing
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Date. Within 30 days following the Closing Date, the Trustee will notify the
Servicer if the Trustee has not yet received all of such title insurance
policies.
(i) The Trustee shall segregate and maintain continuous custody of all
mortgage documents constituting the Loan File Documents in secure and fireproof
facilities in accordance with customary standards for such custody. The Trustee
makes no representations as to and shall not be responsible to verify (i) the
validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of any document in the Loan File Documents or of
any of the Mortgage Loans or (ii) the collectability, insurability,
effectiveness or suitability of any Mortgage Loan.
Section 2.04. Certification. On the Closing Date, the Trustee shall
-------------
ascertain that all documents listed in clause 1 of Exhibit C hereto as a "Loan
File Document" are in its possession, and shall deliver to the Unaffiliated
Seller, the Servicer, and the Depositor a certification in the form of Exhibit D
hereto (the "Exception Report") to the effect that, as to each Mortgage Loan
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), with the
exception of the documents listed on the schedule attached thereto: (i) all
documents required to be delivered pursuant to Section 2.03 hereof are in its
possession and (ii) such documents have been reviewed by it and appear regular
on their face and relate to such Loan.
Section 2.05. Further Action Evidencing Assignments. (a) The
-------------------------------------
Unaffiliated Seller agrees that it shall cooperate with the Servicer and the
Trustee, and the Servicer agrees to cause the Unaffiliated Seller to, from time
to time, at the Unaffiliated Seller's expense, promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or appropriate, or that the Servicer may reasonably request, in order
to perfect, protect or more fully evidence the transfer of the Trust Assets to
the Trust or to enable the Trustee to exercise or enforce any of its rights
hereunder.
(b) The Servicer shall promptly (and in no event later than 180 days
following the Closing Date) submit for recording in the appropriate public
office for real property records, each Assignment. With respect to any
Assignment, as to which the related recording information is unavailable within
such 180-day period following the Closing Date, such Assignment shall be
submitted for recording not later than 60 days after receipt of such information
but in no event later than one year after the Closing Date. The Servicer shall
supply the Trustee with, and the Trustee shall retain, a copy of each Assignment
submitted for recording. In the event that any such Assignment is lost or
returned unrecorded because of a defect therein, the Unaffiliated Seller shall,
pursuant to the Sale Agreement require the related
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Seller promptly to prepare a substitute Assignment or cure such defect, as the
case may be, and thereafter the Servicer shall submit each such Assignment for
recording. Within 210 days of the Closing Date, the Unaffiliated Seller shall
deliver to the Trustee each original Assignment, with evidence of recording
thereon, and a copy of each Assignment which has been submitted for recording
but has not yet been returned from the recording office.
(c) Within 360 days after the Closing Date, the Trustee shall notify
the Servicer in writing indicating the loans for which the Trustee has not
received the original Assignment, or a copy of an Assignment as set forth in
subparagraph (b) above.
(d) The Trustee hereby grants to the Servicer a power of attorney to
execute all documents on behalf of the Trustee as may be necessary or desirable
to effectuate the foregoing.
Section 2.06. Grant of Security Interest; Intended Characterization.
-----------------------------------------------------
(a) The acquisition by the Trust of the Mortgage Loans and the other Trust
Assets constitutes a sale to the Trust of such Property. In the event, however,
that a court of competent jurisdiction were to hold that the transaction
evidenced hereby constitutes a loan, it is the intention of the parties hereto
that this Agreement shall constitute a security agreement under applicable law,
and that the Unaffiliated Seller and the Depositor shall be deemed to have
granted to the Trustee, on behalf of the Trust, a first priority perfected
security interest in all of the Unaffiliated Seller's right, title and interest
in, to and under the Trust Assets and the other Trust Asset. The conveyance by
the Unaffiliated Seller of the Trust Assets to the Depositor and by the
Depositor of the Trust Assets to the Trustee on behalf of the Trust on the
Closing Date shall not constitute and is not intended to result in an assumption
by the Trustee or any Certificateholder of any obligation of the Unaffiliated
Seller to the Mortgagors, the originators of the Mortgages, the insurers under
any insurance policies or any other Person in connection with the Trust Assets.
(b) Neither the Unaffiliated Seller nor the Depositor shall take any
action inconsistent with the sale by the Unaffiliated Seller and the Depositor
of all of their respective right, title and interest in and to the Trust Assets
to the Trust and shall indicate or shall cause to be indicated in their
respective records and records held on their respective behalf that ownership of
each Mortgage Loan and the other Trust Assets is held by the Trustee on behalf
of the Trust. In addition, the Unaffiliated Seller and the Depositor shall
respond to any inquiries from third parties with respect to ownership of a
Mortgage Loan or any other Transferred Asset by stating that it is not the owner
of such Mortgage Loan and that ownership of such Mortgage Loan or other
Transferred Asset is held by the Trustee on behalf of the Trust.
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Section 2.07. Transmission of Loan File Documents. Written
-----------------------------------
instructions as to the method of shipment and shipper(s) the Trustee is directed
to utilize in connection with transmission of files and loan documents in the
performance of the Trustee's duties hereunder shall be delivered by the Servicer
to the Trustee prior to any shipment of any Loan Files and loan documents
hereunder. In the event that the Servicer fails to provide such written
instructions, the Trustee shall be hereby authorized by the Servicer to use a
nationally recognized courier servicer. The Servicer will arrange for the
provision of such services at its sole cost and expense (or, at the Trustee's
option, reimburse the Trustee for all costs and expenses incurred by the Trustee
consistent with such instructions or for having used an overnight courier
service) and will maintain such insurance in connection with shipment of the
Loan Files against loss or damage to files and loan documents as the Servicer
deems appropriate. Without limiting the generality of the provisions of Section
8.04(b) hereof, it is expressly agreed that in no event shall the Trustee have
any liability for any losses or damages to any Person with respect to the Loan
Files arising out of actions of the Trustee consistent with instructions of the
Servicer.
Section 2.08. Miscellaneous REMIC Provisions.
------------------------------
(a) The Trust shall elect that the Upper-Tier REMIC and the Lower-Tier REMIC
shall be treated as REMICs under Section 860D of the Code. Any inconsistencies
or ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such REMIC elections.
(b) The Class A-1, Class F-IO, Class A-IO, Class A-2-A, Class A-2-B,
Class A-2-C, Class PO, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2,
and Class B-3 Certificates are hereby designated as "regular interests" with
respect to the Upper-Tier REMIC and the Class RU Certificates are hereby
designated as the single class of "residual interest" with respect to the Upper-
Tier REMIC. The Class LT-1, LT-2, LT-3, LT-4, LT-5, LT-6, LT-7, LT-8, LT-9, LT-
10 and LT-11 Certificates are hereby designated as "regular interests" with
respect to the Lower-Tier REMIC and the Class RL Certificates are hereby
designated as the single class of "residual interest" with respect to the Lower-
Tier REMIC.
(c) The beneficial ownership interest of the Lower-Tier REMIC shall
be evidenced by the interests (the "Lower-Tier Interests") having the
characteristics and terms as follows:
Original Final
Class Companion Principal Interest Payment
Designation Classes Balance Rate Date
- ----------- ------- ----------- ---- ----
LT-1 A-1, F-IO $48,211,248.00 (1) August 25, 2032
LT-2 A-2-A, A-IO $90,635,697.00 (2) August 25, 2032
LT-3 A-2-B, A-IO $56,843,117.00 (3) August 25, 2032
LT-4 A-2-C, A-IO $19,098,571.00 (4) August 25, 2032
LT-5 PO $ 2,274,391.00 (5) August 25, 2032
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Original Final
Class Companion Principal Interest Payment
Designation Classes Balance Rate Date
- ----------- ------- ----------- ---- ----
LT-6 M-1 $ 8,348,577.00 (6) August 25, 2032
LT-7 M-2 $15,305,726.00 (7) August 25, 2032
LT-8 M-3 $13,914,296.00 (8) August 25, 2032
LT-9 B-1 $ 6,261,438.27 (9) August 25, 2032
LT-10 B-2 $ 4,870,003.82 (10) August 25, 2032
LT-11 B-3 $12,522,866.96 (11) August 25, 2032
(1) Sum of Class A-1 Pass-Through Rate and Class F-IO Pass-Through Rate.
(2) Sum of Class A-2-A Pass-Through Rate and Class A-IO Pass-Through Rate
(3) Sum of Class A-2-B Pass-Through Rate and Class A-IO Pass-Through Rate
(4) Sum of Class A-2-C Pass-Through Rate and Class A-IO Pass-Through Rate.
(5) None.
(6) Class M-1 Pass-Through Rate
(7) Class M-2 Pass-Through Rate
(8) Class M-3 Pass-Through Rate
(9) Class B-1 Pass-Through Rate
(10) Class B-2 Pass-Through Rate
(11) Class B-3 Pass-Through Rate
The Lower-Tier Interests shall be issued as non-certificated interests and
recorded on the records of the Lower-Tier REMIC as being issued to and held by
the Trustee on behalf of the Upper-Tier REMIC.
(d) On each Payment Date, the Available Funds shall be applied as
principal and interest of particular Lower-Tier Interests, other than the RL
Certificate, in amounts corresponding to the aggregate respective amounts
required to be applied as principal and interest of their related Companion
Classes (as set forth above).
(e) The Available Funds shall be applied as interest to particular
Lower-Tier Interests in an amount corresponding to the interest accrued on the
Certificate Principal Balances of such Classes at the interest rate for such
Class as stated above.
No distributions will be made on the Class RL Certificate, except that
any distribution of the proceeds of the final remaining assets of the Lower Tier
REMIC shall be distributed to the holder thereof upon presentation and surrender
of the Class RL Certificate.
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(f) The Startup Day is hereby designated as the "startup day" of each
REMIC within the meaning of Section 860G(a)(9) of the Code.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01. Representations, Warranties and Covenants of the
------------------------------------------------
Unaffiliated Seller. The Unaffiliated Seller represents and warrants to the
- -------------------
Servicer, the Trustee, for its own benefit and for the benefit of the Holders of
the Certificates and the Depositor, as of the Closing Date, as follows:
(i) The Unaffiliated Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
jurisdiction of organization and is duly qualified to do business, and is
in good standing in each jurisdiction in which the nature of its business
requires it to be so qualified;
(ii) The Unaffiliated Seller has the power and authority to own and
convey all of its properties and assets and to execute and deliver this
Agreement and the Related Documents and to perform the transactions
contemplated hereby and thereby;
(iii) The execution, delivery and performance by the Unaffiliated
Seller of this Agreement, the Sale Agreement, the Unaffiliated Seller's
Agreement and the Related Documents to which is a party and the
transactions contemplated hereby and thereby, (A) have been duly authorized
by all necessary action on the part of the Unaffiliated Seller, (B) do not,
in any material respect, contravene or cause the Unaffiliated Seller to be
in default under (x) the Unaffiliated Seller's "Certificate of
Incorporation" or "Bylaws", (y) any contractual restriction contained in
any indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note, or other agreement or instrument binding on or
affecting the Unaffiliated Seller or its property or (z) any law, rule,
regulation, order, writ, judgment, award, injunction, or decree applicable
to, binding on or affecting the Unaffiliated Seller or its property and (C)
do not result in or require the creation of any material Adverse Claim upon
or with respect to any of the property of the Unaffiliated Seller;
(iv) This Agreement, the Certificates and any Related Documents to
which the Unaffiliated Seller is a party have each been duly executed and
delivered on behalf of the Unaffiliated Seller;
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(v) No consent of, or other action by, and no notice to or filing
with, any Governmental Authority or any other party, is required for the
due execution, delivery and performance by the Unaffiliated Seller of this
Agreement, or the Related Documents;
(vi) Each of this Agreement and each of the Related Documents is the
legal, valid and binding obligation of the Unaffiliated Seller enforceable
against the Unaffiliated Seller in accordance with its respective terms,
subject to bankruptcy laws and other similar laws of general application
affecting creditors, and subject to the application of rules of equity,
including those respecting the availability of specific performance;
(vii) There is no pending or, to the best knowledge of the Unaffiliated
Seller, threatened action, suit, proceeding or investigation, against or
affecting the Unaffiliated Seller, its officers or managers, or the
property of the Unaffiliated Seller, in any court or tribunal, or before
any arbitrator of any kind or before or by any Governmental Authority which
may result in a material adverse change in the business, condition
(financial or otherwise) or operations of the Unaffiliated Seller or its
performance hereunder;
(viii) No injunction, writ, restraining order or other order against or
affecting the Unaffiliated Seller, its officers, managers or property has
been issued by a Governmental Authority;
(ix) The Unaffiliated Seller has complied in all material respects
with all applicable laws, rules, regulations, and orders with respect to
it, its business and properties and all Mortgages and all restrictions
contained in any indenture, loan or credit agreement, mortgage, security
agreement, bond, note, or other agreement or instrument binding on or
affecting the Unaffiliated Seller or its property;
(x) The Unaffiliated Seller has filed on a timely basis all tax
returns (federal, state, and local) required to be filed and has paid or
made adequate provisions for the payment of all taxes, assessments, and
other governmental charges due from the Unaffiliated Seller (if any);
(xi) With respect to the Unaffiliated Seller, there has occurred no
event which has a material adverse effect on the Unaffiliated Seller's
operations, including its ability to perform its obligations under this
Agreement;
(xii) The Unaffiliated Seller is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement; the
Unaffiliated Seller has not incurred Debts beyond its ability to pay; the
Unaffiliated
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Seller, after giving effect to the transactions contemplated by this
Agreement, will have an adequate amount of capital to conduct its business
in the foreseeable future; and the transfer of the Mortgage Loans hereunder
is made in good faith and without intent to hinder, delay or defraud
present or future creditors of the Unaffiliated Seller;
(xiii) For federal income tax reporting and accounting purposes, the
Unaffiliated Seller will treat the transfer of each Mortgage Loan pursuant
to the Sale Agreement as an absolute assignment of the Unaffiliated
Seller's right, title and ownership interest in, such Mortgage Loan to the
Unaffiliated Seller and has not in any other manner accounted for or
treated the transactions in the Mortgage Loans by the Unaffiliated Seller
contemplated thereby;
(xiv) The principal place of business and chief executive office of the
Unaffiliated Seller are located at the address of the Unaffiliated Seller
set forth in Section 10.04 and there are currently no, and during the past
four months there have not been any, other locations where the Unaffiliated
Seller is located (as that term is used in the UCC) or keeps Records;
(xv) Each Mortgage Loan was purchased by the Unaffiliated Seller on
the Closing Date pursuant to the Sale Agreement; any amendments or waivers
in respect thereto have been delivered to the Trustee; no such amendment or
waiver is material in any respect; and all conditions precedent for the
purchase under the Sale Agreement were satisfied;
(xvi) The Sale Agreement represents the entire agreement of WCC and the
Unaffiliated Seller with respect to the subject matter thereof;
(xvii) The stock of the Unaffiliated Seller is 100% owned by Wilshire
Funding Corporation;
(xviii) Neither the Unaffiliated Seller nor the Trust is an "investment
company" or "under the control of an investment company" as such terms are
defined in the Investment Company Act of 1940, as amended;
(xix) The Trust will not be treated as an association taxable as a
corporation, and the Unaffiliated Seller will take no action inconsistent
with such treatment;
(xx) Neither the Trust is a "taxable mortgage pool"; the Unaffiliated
Seller will take no action inconsistent with such tax characterization;
(xxi) No certificate of an officer, statement furnished in writing or
report delivered or to be delivered pursuant to the
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terms hereof by the Unaffiliated Seller contains or will contain any untrue
statement of a material fact or omits to state any material fact necessary
to make the certificate, statement or report not misleading.
(xxii) 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
court or any federal, state or other governmental authority or agency that
are required in connection with the execution, delivery and performance by
the Unaffiliated Seller 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 Unaffiliated Seller and the
performance by the Unaffiliated Seller of its obligations under this
Agreement.
(xxiii) The Unaffiliated Seller will not incur, create, assume or
suffer to exist any Adverse Claim on any of its properties, revenues or
assets, whether now owned or hereafter acquired;
(xxiv) The Unaffiliated Seller will not engage in any business
activity other than issuing the Certificates, acquiring and holding
Mortgages securing the Certificates and entering into and performing its
obligations under those agreements contemplated hereby, together with the
Sale Agreement and the other Related Documents and engaging in any
activities incidental thereto;
(xxv) The Unaffiliated Seller will not incur, create, assume or suffer
to exist or otherwise become or be liable in respect of any Debt,
obligation or certificate other than in respect of or relating to (a) the
Certificates, (b) the related placement agent agreement, or (c) taxes,
assessments or governmental charges not yet due and payable;
(xxvi) The Unaffiliated Seller will not make, incur, assume or suffer
to exist any ownership interest or investment in any Person other than the
Trust;
(xxvii) Except for the transactions contemplated hereby, and by the Sale
Agreement, the Unaffiliated Seller will not sell, transfer, release or
otherwise dispose of any of, or grant options, warrants or other rights
with respect to any of, its assets to any Person other than as contemplated
or
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permitted by the Unaffiliated Seller's Agreement. The Unaffiliated Seller
will not merge with or consolidate with or into any other Person;
(xxviii) The Unaffiliated Seller will promptly deliver to the Trustee
any amendment or waiver of any Mortgage Loan;
(xxix) The Unaffiliated Seller will not impede the Servicer or the
Trustee from exercising any right or remedy to which it is entitled under a
Mortgage Loan; and
(xxx) The statistical information regarding the Mortgage Loans set
forth in the Prospectus Supplement dated December 19, 1996 relating to the
Class A Certificates is a fair and accurate presentation of such
statistical information, which is accurate in all material respects as of
its date.
Section 3.02. Representations and Warranties of the Servicer. The
------------------------------------- --------
Servicer hereby represents, warrants and covenants to the Unaffiliated Seller,
the Depositor, the Trustee for its own benefit and for the benefit of the
Holders of the Certificates that, as of the Closing Date:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good standing in each jurisdiction in
which the nature of its business requires it to be so qualified.
(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.
(c) This Agreement, assuming due authorization, execution and delivery
by the other parties hereto, constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the
terms hereof, 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 violation of, and the execution, delivery
and performance of this Agreement by the Servicer and its compliance with
the terms hereof will not constitute a violation with respect to, any
existing law or regulation or any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or
governmental agency, which violation would have consequences that would
materially adversely affect the condition
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(financial or other) or operations of the Servicer or its properties or
would have consequences that would materially adversely affect its
performance hereunder. The execution, delivery and performance of this
Agreement by the Servicer and its compliance with the terms hereof will not
in any material respect conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice, lapse of
time or both) a default under, the charter documents or by-laws of the
Servicer, or any material indenture, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which it is bound,
or result in the creation or imposition of any lien encumbrance upon any of
its material properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument.
(e) No litigation, actions, proceedings or investigations are pending
or, to the best of the Servicer's knowledge, threatened against the
Servicer which would 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 would have consequences that would materially adversely
affect its performance hereunder, or the validity or enforceability of this
Agreement, or prevent the consummation on the part of the Servicer of any
of the transactions contemplated by this Agreement.
(f) No certificate of an officer, statement furnished in writing or
report delivered or to be delivered pursuant to the terms hereof by the
Servicer contains or will contain any untrue statement of a material fact
or omits to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) 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 court or
any federal, state or other governmental authority or agency that are
required in connection with the execution, delivery and performance 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.
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Section 3.03. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor hereby represents and warrants to the Servicer, the Unaffiliated
Seller, the Back-Up Servicer, the Trustee for its own benefit and for the
benefit of the Holders of the Certificates that as of the Closing Date:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is duly
qualified to do business, and is in good standing in each jurisdiction in
which the nature of its business requires it to be so qualified.
(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.
(c) This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of the Depositor, enforceable against it in accordance
with the terms hereof, 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 Depositor is not in violation of, and the execution, delivery
and performance of this Agreement by the Depositor and its compliance with
the terms hereof will not constitute a violation with respect to, any
existing law or regulation or any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or
governmental agency, which violation would have consequences that would
materially adversely affect the condition (financial or other) or
operations of the Depositor or its properties or would have consequences
that would adversely affect its performance hereunder. The execution,
delivery and performance of this Agreement by the Depositor and its
compliance with the terms hereof will not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or
without notice, lapse of time or both) a default under, the charter
documents or by-laws of the Depositor, or any material indenture,
agreement, mortgage, deed of trust or other instrument to which the
Depositor is a party or by which it is bound, or result in the creation or
imposition of any lien encumbrance upon any of its material properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument.
(e) No litigation, actions, proceedings or investigations are pending
or, to the best of the Depositor's knowledge, threatened against the
Depositor which would have
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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 would have
consequences that would adversely affect its performance hereunder, or the
validity or enforceability of this Agreement, or prevent the consummation
on the part of the Depositor of any of the transactions contemplated by
this Agreement.
(f) No certificate of an officer, statement furnished in writing or
report delivered or to be delivered pursuant to the terms hereof by the
Depositor contains or will contain any untrue statement of a material fact.
(g) 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 court or
any federal, state or other governmental authority or agency that are
required in connection with the execution, delivery and performance 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.
(h) The Depositor is conveying to the Trust the entire interest in the
Mortgage Loans which the Depositor has acquired from the Unaffiliated
Seller, free and clear of any Adverse Claims created by, or for the benefit
of, the Depositor.
Section 3.04. [Reserved].
----------
Section 3.05. Representations and Warranties as to each Mortgage Loan
-------------------------------------------------------
and the other Trust Assets. The Unaffiliated Seller represents and warrants to
- --------------------------
the Servicer, the Depositor, the Back-Up Servicer, the Trustee for its own
benefit and for the benefit of the Holders of the Certificates, as to each
Mortgage Loan, that, as of the Closing Date:
(a) it has entered into the Sale Agreement with the Sellers, that
each Mortgage Loan was purchased from a Seller pursuant to the Sale
Agreement, and that WCC has made the following representations and
warranties in respect of the Mortgage Loans conveyed pursuant to the Sale
Agreement, which
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representations and warranties are or will be true and correct as of the
Closing Date:
(i) (A) the information with respect to each Mortgage Loan
set forth in the List of Loans is true and correct; (B) such Mortgage
Loan is denominated and payable in Dollars; (C) each Mortgage Loan
will provide for a schedule of payments which are, if timely paid,
sufficient to fully pay the principal balance of such Mortgage Loan on
or before its maturity date and to pay interest at the applicable
interest rate (without giving effect to any contingent interest or
shared appreciation feature); (D) to the best of its knowledge, the
down payment, if any, described in the Loan File was paid in the
manner stated in the Loan File; (E) to the best of WCC's or the
Unaffiliated Seller's knowledge, the Loan Collateral, if any, the
purchase of which was financed by the seller thereof under the
Mortgage Loan, has been delivered to and accepted by the Mortgagor;
(F) except as otherwise noted on the Exception Report and to the best
of WCC's or the Unaffiliated Seller's knowledge, the related Loan File
is complete and the contractual documents contained therein constitute
the entire agreement with respect to the Mortgage Loan with respect to
the Mortgagor, the Originator and the Unaffiliated Seller; and (G)
each Loan File contains a true and complete original of any (1) Note
and (2) Mortgage;
(ii) no Mortgage Loan was more than 91 days Delinquent, not
more than 9.11% by aggregate Principal Balance were 31-60 days
Delinquent and not more than 1.65% by aggregate Principal Balance were
61-90 days Delinquent, in each case as of the opening of business on
the Cut-Off Date;
(iii) (A) the proceeds of the Mortgage Loan have been fully
disbursed, and there is no obligation on the part of any Person to
make future advances thereunder; (B) any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with;
(C) all costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid;
(iv) (A) such Mortgage Loan has not been satisfied,
subordinated or rescinded, and no provision of the Mortgage Loan has
been waived, altered or modified in any respect, except by instruments
or documents identified in the Loan File; and (B) such Mortgage Loan
is not and will not be subject to any right of rescission, set-off,
recoupment, counterclaim or defense, whether arising out of
transactions concerning the
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Mortgage Loan between the Mortgagor and the originator of the Mortgage
Loan or otherwise, and no such claim has been asserted with respect
thereto;
(v) (A) immediately prior to assigning such Mortgage Loan
to the Unaffiliated Seller, the related Seller was the sole owner and
had full right to transfer the Mortgage Loan to the Unaffiliated
Seller and such Mortgage Loan has not been sold, assigned or pledged
to any other Person; (B) the Sale Agreements constitute valid
transfers, assignments, set-overs and conveyances to the Unaffiliated
Seller of all right, title and interest of each Seller in and to the
Mortgage Loans sold thereunder, free and clear of any Adverse Claim
(except for any Permitted Liens on the related Loan Collateral, as set
forth in the List of Loans); (C) without limiting the generality of
the foregoing, each Seller has duly fulfilled all obligations on its
part to be fulfilled under or in connection with the Mortgage Loan and
has done nothing to impair the rights of the Unaffiliated Seller or
the Trust in the Mortgage Loan or the proceeds with respect thereto,
including, without limitation, paid in full all taxes and other
charges payable in connection with the Mortgage Loan and the transfer
of the Mortgage Loan to the Unaffiliated Seller or the Trust, which
could impair or become an Adverse Claim to the Unaffiliated Seller or
the Trust's interest in such Mortgage Loan; and (D) the transfer,
assignment and conveyance of the related Mortgage Loans by the related
Seller pursuant to the Sale Agreement is not subject to the bulk
transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction;
(vi) to the best knowledge of WCC and of the Unaffiliated
Seller, (A) there is no Adverse Claim in respect of the Loan
Collateral (including any mechanics' lien or claim for work, labor or
material or tax or assessment lien) and (B) either (1) no consent for
the Mortgage Loan is required by the holder of any Permitted Lien or
(2) such consent has been obtained and is contained in the Loan File;
(vii) to the best knowledge of WCC and of the Unaffiliated
Seller, (A) there is no default, breach, violation, or event
permitting acceleration under the Mortgage Loan, and no event has
occurred which, with notice and the expiration of any grace or cure
period or both, would constitute a default, breach, violation, or
event permitting acceleration under such Mortgage Loan; (B) there are
no proceedings or investigations pending or threatened before any
Governmental Authority (1) asserting the invalidity of such Mortgage
Loan, (2) except with respect to any Mortgage Loans having
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Arrearage, asserting the bankruptcy or insolvency of the related
Mortgagor, (3) seeking the payment of such Mortgage Loan or (4)
seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of such Mortgage Loan;
and (C) to the best of WCC's or the Unaffiliated Seller's knowledge,
no Mortgagor on such Mortgage Loan is bankrupt, insolvent, or is
unable to make payment of its obligations when due;
(viii) the Mortgage Loan (1) constitutes the legal, valid
and binding obligation of the Mortgagor thereunder enforceable against
the Mortgagor in accordance with its terms (except as may be limited
by laws affecting creditors' rights generally) and (2) the Mortgage
Loan contains customary enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization
against the Loan Collateral for the benefit of the security afforded
thereby;
(ix) the Mortgage Loan was assigned by the related Seller
to the Unaffiliated Seller without any conduct constituting fraud or
misrepresentation on the part of such Seller, and has no knowledge of
any specific fact which should have led it to expect at the time of
assignment of such Mortgage Loan that the Mortgage Loan would not be
paid in full when due;
(x) (A) all parties which have had any ownership interest
or servicing rights in the Mortgage Loan, including WCC, are (or,
during the period in which they held and disposed of such interest,
were) in compliance in all material respects with any and all
applicable licensing requirements of the laws of the state wherein the
Mortgagor and the Loan Collateral is located; and (B) the Mortgage
Loan was not originated in, nor is subject to the laws of any
jurisdiction, the laws of which would make the transfer of the
Mortgage Loan to the Unaffiliated Seller or the Trust unlawful;
(xi) such Mortgage Loan does not contravene in any material
respect any laws, rules or regulations applicable thereto (including,
without limitation, laws, rules and regulations relating to usury,
consumer protection, truth-in-lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy);
(xii) each Mortgage Loan immediately prior to its sale
pursuant to the Sale Agreement was being serviced by WSC or WCC;
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(xiii) (A) the related Seller has performed any and all acts
required to be performed (if any) to preserve the rights and remedies
of the Trustee in any insurance policies applicable to the Mortgage
Loans; and (B) each insurance policy with respect to the Mortgage Loan
or the Loan Collateral is a valid, binding, enforceable and subsisting
insurance policy of its respective kind and is in full force and
effect;
(xiv) to the best knowledge of WCC and of the Unaffiliated
Seller, the Loan Collateral is in good repair and free and clear of
any damage that would affect materially and adversely the value of the
Mortgage Loan Collateral as security for the Mortgage Loan;
(xv) to the best knowledge of the Unaffiliated Seller and
WCC:
(A) (1) all of the improvements which were included
for the purpose of determining the appraised value of the Loan
Collateral lie wholly within the boundaries and building
restriction lines of such property, and no improvements on
adjoining properties encroach upon the Loan Collateral and (2) no
improvement located on or being part of the Loan Collateral is in
violation of any applicable zoning law or regulation, and all
inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Loan
Collateral and, with respect to the use and occupancy of the
same, including, but not limited to, certificates of occupancy
and fire underwriting certificates, have been made or obtained
from the appropriate authorities and the Loan Collateral is
lawfully occupied under applicable law;
(B) with respect to each Mortgage Loan secured by a
deed of trust, a trustee, duly qualified under applicable law to
serve as such, has been properly designated and currently so
serves and is named in such deed of trust, and no fees or
expenses are or will become payable by the Unaffiliated Seller or
the Trust to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(C) the Mortgage contains a customary provision for
the acceleration of the payment of the unpaid principal balance
of the Mortgage Loan in the event the related security for the
Mortgage Loan is sold without the prior consent of the mortgagee
thereunder;
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(D) the Loan Collateral constituting residential Real
Estate is lawfully occupied under applicable law and the
Unaffiliated Seller has no actual knowledge that such Loan
Collateral is not so occupied;
(E) except as otherwise noted in the Exception Report,
the Mortgage is contained in the Loan File, each such document
was recorded, and all subsequent assignments have been recorded
in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the
Originator;
(F) except as otherwise noted in the Exception Report,
a lender's title insurance policy, issued in standard American
Land Title Association form, or other form acceptable in a
particular jurisdiction, by a title insurance company authorized
to transact business in the state in which the related Loan
Collateral is situated, together with any applicable endorsement,
in an amount at least equal to the original principal balance of
such Mortgage Loan insuring the mortgagee's interest under the
related Mortgage Loan as the holder of a valid first or second
mortgage lien of record on the real property described in the
Mortgage Loan was in full force and effect on the date of the
origination of such Mortgage Loan and as of the Closing Date a
true and complete original copy thereof is in the Loan File;
(G) the improvements relating to any Loan Collateral
are covered by a valid and existing hazard insurance policy with
a generally acceptable carrier that provides for fire and
extended coverage customarily applicable in the mortgage
industry;
(H) a flood insurance policy, if customarily required
in the mortgage industry in the area in which the Loan Collateral
is situated, is in effect with respect to each Loan Collateral
with a generally acceptable carrier in an amount representing
coverage customarily applicable in the mortgage industry;
(I) either (1) any taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges or ground
rents which previously became due and owing have been paid, or
(2) an escrow of funds has been established in an amount
sufficient to pay for every such item which remains
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unpaid and which has been assessed but is not yet due and
payable. Except for payments in the nature of escrow payments,
including, without limitation, taxes and insurance payments, the
Servicer has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the
mortgagor, directly or indirectly, for the payment of any amount
required by the Mortgage Loan, except for interest accruing from
the date of the Mortgage Loan or date of disbursement of the
Mortgage proceeds, whichever is greater, to the day which
precedes by one month the due date of the first installment of
principal and interest; and
(J) there is no proceeding pending or, to the best of
the Unaffiliated Seller's or WCC's knowledge, threatened for the
total or partial condemnation of the Loan Collateral, nor is such
a proceeding currently occurring, and such property is undamaged
by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty, so as to affect materially and
adversely the value of the Loan Collateral as security for the
Mortgage Loan or the use for which the premises were intended;
(xvi) Upon receipt of each Mortgage Loan by the Trust
pursuant to Article II hereof, the Trust has a perfected, first-
priority security interest in each Mortgage Loan and the proceeds
thereof; and
(xvii) each Mortgage is a "Qualified Mortgage" for purposes
of the REMIC Provisions and is a first-lien mortgage which was
originated by a savings and loan association, savings bank, commercial
bank, credit union, insurance company, or similar institution which is
supervised and examined by a federal or state authority, or by a
mortgagee approved by the Secretary of Housing and Urban Development
pursuant to Sections 203 and 211 of the National Housing Act.
(b) The Depositor hereby assigns to the Trustee on behalf of the
Trust its rights under the Sale Agreement (such rights having been assigned
to the Depositor by the Unaffiliated Seller) to cause WCC to repurchase any
Mortgage Loan conveyed by the Sellers as to which there has occurred an
uncured breach of a representation or warranty (without regard to any
qualification as to knowledge) which materially and adversely affects the
value of, or the interests of the Trust in, any Mortgage Loan in respect of
the representations and warranties with respect to the Mortgage Loans set
forth in such Sale Agreement. The Trustee hereby acknowledges such
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assignment, and the Servicer on the Trustee's behalf agrees to exercise
such rights as provided herein.
(c) The representations and warranties described in this Section 3.05
shall survive the assignment of the Mortgage Loans to the Trust.
Section 3.06. Repurchases and Remedies. (a) Upon discovery by any
------------------------
of the Unaffiliated Seller, the Servicer, the Back-Up Servicer, or actual
knowledge of a Responsible Officer of the Trustee, of (i) a breach of any of the
representations and warranties set forth in Section 3.05, without regard to any
limitation set forth in such representation or warranty concerning the knowledge
of the WCC or the Unaffiliated Seller as to the facts stated therein, or, with
respect to the completeness of any Loan File, without regard to any exceptions
set forth on the Exception Report or (ii) a failure to make any filing or take
any action required by Section 2.05 hereof, which materially and adversely
affects the value of, or the interests of the Trust in, any Mortgage Loan, the
party discovering such breach shall give prompt written notice to the others and
the Depositor. Any exception set forth on the Exception Report shall not, in
and of itself be deemed material and adverse to such value or interests unless
otherwise determined to be so.
If, on the Distribution Date in the month following the expiration of
a 60 day period following the date of the notice referred to in the immediately
preceding sentence, such breach or failure shall remain uncured, the Mortgage
Loan as to which the breach or failure relates shall be repurchased or purchased
for the Repurchase Price as follows:
(i) in respect of matters set forth in Section 3.05(a), or due to a
failure to make any filing or take any action required by Section 2.05
hereof, by the Unaffiliated Seller; and
(ii) in respect of matters set forth in Section 3.05(b) the Servicer
on the Trustee's behalf shall enforce the Unaffiliated Seller's right to
effect a repurchase of such Mortgage Loan against WCC.
(b) Following confirmation that the Repurchase Price has been
deposited in the Collection Account and receipt by the Trustee of a written
Request for Release in the form of Exhibit E hereto from the Servicer, the
Trustee on behalf of the Trust shall release such Mortgage Loan and the related
Loan File to the Unaffiliated Seller or WCC, as the case may be, and the Trustee
on behalf of the Trust shall assign to such party or its designee, all of the
Trust's right, title and interest in such purchased or repurchased Mortgage
Loan, and all property and rights conveyed to the Trustee relating thereto,
without recourse, representation or warranty, except as to the absence of liens,
charges or encumbrances created
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by or arising as a result of actions of the Trustee and except as to liens,
charges or encumbrances created or arising out of this Agreement. The Trustee
and the Unaffiliated Seller shall execute and deliver to the Unaffiliated Seller
or WCC, as the case may be, an assignment, prepared and furnished to the Trustee
substantially in the form of Exhibit F to vest ownership of the repurchased
Mortgage Loan in such party. The repurchase and purchase obligations pursuant
to this Section 3.06 constitute the sole remedy available to the Trustee and the
Holders of the Certificates for a breach of a representation or warranty or
agreement of the Unaffiliated Seller or WCC, set forth in this Article III. For
the purposes of this Agreement, a Mortgage Loan has not been "repurchased" or
"purchased" by the Unaffiliated Seller, WCC or the Servicer, as the case may be,
pursuant to this Section 3.06 unless the Repurchase Price therefor has been
deposited into the Collection Account.
ARTICLE IV
SERVICING OF TRUST ASSETS
Section 4.01. Servicer and Sub-Servicers. (a) Acting directly or
--------------------------
through one or more Sub-Servicers as provided in Section 4.03 hereof, the
Servicer shall service and administer the Mortgage Loans in accordance with the
Servicing Standard. Unless otherwise specified herein with respect to specific
obligations of the Servicer, the Servicer shall service and administer the
Mortgage Loans in accordance with the Servicing Standard, and, subject only to
the terms of the respective Mortgage Loans, shall have full power and authority,
acting alone or through Sub-Servicers as provided herein, 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. The Servicer shall promptly notify
the Back-Up Servicer in writing of any event, circumstance or occurrence which
materially adversely affects the ability of the Servicer to service the Mortgage
Loans or to otherwise perform and carry out its duties, responsibilities and
obligations under and in accordance with the Servicing Standard.
(b) The duties of the Servicer shall include, without limitation,
collecting and posting of all payments, responding to inquiries by Mortgagors or
by federal, state or local government authorities with respect to the Mortgage
Loans, investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and all applicable law, accounting for
collections and furnishing monthly and annual statements to the Back-Up Servicer
and the Trustee with respect to distributions and making Delinquency Advances
and Servicing Advances pursuant hereto. The Servicer's duties and obligations
hereunder shall commence on the date hereof, and the Servicer shall have no
obligations or liabilities hereunder with respect to the prior servicing of the
Mortgage Loans. The Servicer shall follow
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the provisions of this Agreement and the Servicing Standard. The Servicer shall
service and administer the Mortgage Loans in accordance with applicable state
and federal law and shall provide to the Mortgagors any reports required to be
provided to them thereby.
(c) Consistent with the Servicing Standard, the Servicer may, on
behalf of itself, the Holders of the Certificates, the Trust and the Trustee,
effect modifications of any Mortgage Loan if, in the Servicer's reasonable
determination made in good faith, such modification is necessary to maximize
collections with respect to such Loan.
The Servicer shall include in each Servicer's Monthly Report the
aggregate Principal Balances of all Mortgage Loans which were subject to such
modifications during the related Collection Period, as well as the aggregate
Principal Balances of all Mortgage Loans which were subject to such
modifications since the Cut-Off Date and through the end of the related
Collection Period.
The Servicer agrees that it will not renew, extend, renegotiate,
compromise, settle or release any Note or Mortgage Loan, except upon payment in
full thereof, unless all Mortgagors on such Note or Mortgage Loan shall first
release and discharge the FDIC, the Depositor, each Seller, the Unaffiliated
Seller, the Trust and the Trustee, the Back-Up Servicer and the Servicer, their
agents and assigns (the "Released Parties"), from and against all claims,
demands and causes of action which any such Mortgagor may have against any such
Released Party arising from or growing out of any act or omission occurring
prior to the date of such release. Such release is to be in the form of Exhibit
G hereto. To the extent the Servicer does not obtain such release, it will not
renew, extend, renegotiate, compromise, settle or release any Note or Mortgage
Loan, except upon payment in full thereof. If the Servicer fails to obtain such
release, and renews, extends, renegotiates, compromises or settles any Note or
Mortgage Loan in violation of this Section, the Servicer agrees to indemnify and
hold the Released Parties harmless from any and all claims, demands, losses,
damages, penalties, fines, forfeitures, judgments, legal fees and other costs,
fees, and expenses suffered by the Released Parties as a result of the
Servicer's failure to obtain a release.
(d) Consistent with the Servicing Standard the Servicer may, on
behalf of itself, the Holders of the Certificates, the Trust and the Trustee,
enter into an assumption agreement whereby a new Mortgagor agrees to assume
liability on a Mortgage Loan, provided, that (i) at the time of such assumption
--------
(x) the related Loan is either a defaulted Mortgage Loan or the Servicer
reasonably believes that such Loan's becoming a defaulted Mortgage Loan is
imminent and (y) the new Mortgagor agrees to repay a principal balance on such
Mortgage Loan which is at least equal to the Servicer's good faith estimate of
the Net Liquidation Proceeds
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which would be recovered with respect to such loan (excluding any potential for
a deficiency judgment against the prior Mortgagor) if the related Loan
Collateral were to be liquidated in a commercially reasonably manner and (ii) no
such assumption shall extend the maturity date of such Mortgage Loan beyond the
latest maturity date of any other Mortgage Loan then held by the Trust. The
ability of the Servicer to effect assumptions pursuant to this Section 4.01(d)
is independent of the Servicer's rights and obligations under Section 4.14
hereof.
(e) Subject to Sections 4.03 through 4.07 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.
(f) Without limiting the generality of the foregoing, but subject to
Section 4.15 hereof, the Servicer on behalf of the Trustee, is authorized and
empowered, pursuant to a special or limited power of attorney hereby granted by
the Trust and the Trustee, to execute and deliver, on behalf of itself, the
Trust and the Trustee, (i) any and all instruments of satisfaction or
cancellation or of partial or full release or discharge and all other comparable
instruments with respect to the 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 on behalf of the Trust
and (iii) to hold title to any Property upon such foreclosure or deed in lieu of
foreclosure in the name of the Servicer on behalf of the Trust. Subject to
Section 4.17 hereof, the Trust and the Trustee shall promptly sign and return to
the Servicer and any Sub-Servicer any special or limited powers of attorney and
other documents as the Servicer or such Sub-Servicer shall reasonably request to
enable the Servicer and such Sub-Servicer to carry out their respective
servicing and administrative duties hereunder as are delivered to the Trustee
accompanied by a certificate of an Authorized Officer to the effect that the
Trustee's signature is required pursuant to this Agreement (and neither the
Trust nor the Trustee shall have any liability for any misuse of any such
special or limited powers of attorney).
(g) The Servicer shall give prompt notice to the Trustee of any
action, of which the Servicer has actual knowledge, to (i) assert a claim
against the Trust or (ii) assert jurisdiction over the Trust.
(h) 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
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recoverable by the Servicer or such Sub-Servicer to the extent described in
Section 4.12(b) hereof.
(i) All accounting and loan servicing records pertaining to the
Mortgage Loans shall be maintained in a manner consistent with the Servicing
Standard, and in such manner as will permit the Trustee, the Back-Up Servicer or
their respective duly authorized representatives and designees to examine and
audit and make legible reproductions of records during reasonable business hours
upon reasonable notice. All such records, including but not limited to all
transaction registers and loan ledger histories, shall be maintained for the
period required under applicable law.
Section 4.02. Collection of Certain Mortgage Loan Payments. (a) The
--------------------------------------------
Servicer shall, as required by the Servicing Standard, make all reasonable
efforts to collect payments called for under the terms and provisions of the
Mortgage Loans, and shall, to the extent such procedures shall be consistent
with this Agreement, follow such collection procedures with respect to the
Mortgage Loans as it follows with respect to comparable mortgage loans in its
own servicing portfolio; provided, that the Servicer shall always at least
--------
follow collection procedures that are consistent with or better than the
Servicing Standard. Consistent with the foregoing, the Servicer may in its
discretion and subject to Section 4.01(c) hereof (i) waive any assumption fees,
late payment charges, charges for checks returned for insufficient funds,
prepayment fees, if any, or other fees which may be collected in the ordinary
course of servicing the Mortgage Loans, (ii) modify payments of monthly
principal and interest on any Mortgage Loan becoming subject to the terms of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended, in accordance with
the Servicer's general policies relating to comparable mortgage loans subject to
such Act.
The Servicer may modify and extend the maturity of a Balloon Loan
which matures, to protect against a Realized Loss and which is not otherwise
paid in full at such maturity date by the related Mortgagor; provided that the
--------
rescheduled final maturity date of such Mortgage Loan is not for a period in
excess of one year, the related Coupon Rate is not decreased, the Mortgagor does
not receive any additional proceeds and that such Mortgage Loan fully amortizes
by such rescheduled final maturity date.
(b) The Servicer shall apply all Prepaid Installments received by it
with respect to any Mortgage Loan as set forth in the related Note, and in a
manner consistent with the Servicer's standard procedures and applicable law.
Section 4.03. Sub-Servicing Agreements Between Servicer and Sub-
-------------------------------------------------
Servicers. The Servicer may enter into Sub-Servicing Agreements for the
- ---------
servicing and administration of Mortgage Loans with any institution which is in
compliance with the laws of each state necessary to enable it to perform its
obligations under any
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such Sub-Servicing Agreement. 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. The Servicer covenants that any such Sub-
Servicing Agreement shall be consistent with and not in violation of the
provisions of this Agreement. The Servicer shall give written notice to the
Back-Up Servicer, the Depositor, the Trustee of the appointment of any Sub-
Servicer, and shall provide to each of them a copy of the related Sub-Servicing
Agreement.
Section 4.04. Successor Sub-Servicers. The Servicer may terminate
-----------------------
any Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement and directly service the related Mortgage Loans itself
or enter into a Sub-Servicing Agreement with a successor Sub-Servicer that
qualifies under Section 4.03 hereof.
In the event of termination of any Sub-Servicer, all servicing
obligations of such Sub-Servicer shall be assumed simultaneously by the Servicer
without any act or deed on the part of such Sub-Servicer or the Servicer, and
the Servicer either shall service directly the related Mortgage Loans or shall
enter into a Sub-Servicing Agreement with a successor Sub-Servicer. The Sub-
Servicer shall give written notice to the Back-Up Servicer of the termination of
any Sub-Servicer.
Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated, without cause and without payment of
any penalty or fee, by (x) the Back-Up Servicer or (y) the Trustee, in either
case in the event that the Servicer shall, for any reason, no longer be the
Servicer (including termination due to a Servicer default), together with a
provision stating that none of the Depositor, the Back-Up Servicer or the
Trustee shall be deemed a party thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer, except as
set forth herein.
Section 4.05. Liability of Servicer. 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 or otherwise,
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. Nothing contained in any such Sub-Servicing Agreement shall be deemed to
limit or modify this Agreement. The Servicer shall be entitled to enter into
any agreement with a Sub-Servicer for indemnification of the Servicer by such
Sub-Servicer.
Section 4.06. No Contractual Relationship Between Sub-Servicer and
----------------------------------------------------
Persons other than the Servicer. Any Sub-Servicing Agreement and any other
- -------------------------------
transactions or services
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relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and none of the Depositor, the
Unaffiliated Seller, the Back-Up Servicer or the Trustee shall be deemed a party
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to any Sub-Servicer, except as set forth in Sections 4.05 and 4.07
hereof. The Servicer shall be solely liable for all fees owed by it to any Sub-
Servicer, irrespective of whether the Servicer's compensation pursuant to this
Agreement is sufficient to pay such fees.
Section 4.07. Assumption or Termination of Sub-Servicing Agreements.
-----------------------------------------------------
Subject to the second paragraph of Section 4.04 hereof, in connection with the
assumption of the responsibilities, duties and liabilities and of the authority,
power and rights of the Servicer hereunder pursuant to Section 4.19 hereof, 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
may be assumed or terminated by the assuming party at its option.
The Servicer shall, upon request of the Trustee or of the Back-Up
Servicer, 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 thereunder and otherwise use its best reasonable
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.
Section 4.08. Establishment of Lock-Box and Lock-Box Account. (a)
----------------------------------------------
Prior to the Closing Date, the Servicer shall (i) establish and maintain the
Lock-Box Account, (ii) enter into the Lock-Box Agreement and (iii) within 30
days of the Closing Date, notify each Mortgagor to remit all payments with
respect to the Mortgage Loans to the Lock-Box Account. If, at any time, the
Lock-Box Account ceases to be maintained at the Lock-Box Bank, the Servicer
shall within ten Business Days of obtaining actual knowledge of such cessation
establish a new lock-box account which shall be an Eligible Account, transfer
any cash and/or any investments from the Lock-Box Account to such new lock-box
account and from the date such new lock-box account is established, it shall be
the "Lock-Box Account", provided that notice of such new lock-box account is
given to each Rating Agency. In the event that a Successor Servicer is
appointed, the Trustee, the Lock-Box Bank and such Successor Servicer will enter
into a new lock-box agreement replacing the Lock-Box Agreement and such new
lock-box agreement shall be the "Lock-Box Agreement" for all purposes hereunder.
(b) The Servicer shall instruct, or to cause any Sub-Servicer to
instruct, all Mortgagors to make payments only to the Lock-Box, unless, due to
special collection circumstances (by way of illustration, a delinquent Mortgagor
who is willing to send
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payment by Federal Express courier, "mailgram" or other manner not in a form
eligible for receipt directly by the Lock-Box Account) such payment must be made
to the Servicer, in which event such amounts shall be deposited by the Servicer
in the Lock-Box Account in accordance with paragraphs (a) and (d) of this
Section 4.08. The Servicer shall instruct the Lock-Box Bank to remit by wire
transfer of immediately available funds (x) Escrow Amounts to the appropriate
T&I Account, as directed by the Servicer and (y) all other Collections in the
Lock-Box Account to the Collection Account, in each case on the next Business
Day following their receipt by the Lock-Box Bank.
(c) For all purposes of this Agreement, no amounts shall be considered
to be on deposit in the Lock-Box Account unless such amounts are available for
withdrawal therefrom in "good funds"; i.e., until any check or "Automated
----
Clearing House" transfer has "cleared". The Servicer shall have the right to
withdraw from the Lock-Box Account the amount of any misapplied payment or other
amount deposited therein in error. The Servicer is not required to deposit any
amounts received by the Servicer to the Lock-Box Account in accordance with the
provisions hereof until the Servicer has determined that such amounts relate to
the Mortgage Loans and such amounts are available as "good funds".
Section 4.09. Deposits into Collection Account. The Servicer shall
--------------------------------
deposit (with respect to any such amounts it receives directly), or cause to be
deposited, to the Collection Account, on a daily basis in accordance with
Section 4.08(b) hereof, the following payments and collections received or made
by it, without duplication, except to the extent that such Collections include
Escrow Amounts, which shall be deposited to the appropriate T&I Account,
together with all Delinquency Advances made, and Prepayment Interest paid, by
the Servicer on the related Servicer Remittance Date, pursuant to Section 4.12
hereof; (such amounts set forth below together with such Delinquency Advances
and Prepayment Interest, "Collections"):
(i) all payments on the Mortgage Loans;
(ii) all payments received as a result of the enforcement of the
Trustee's rights under the Unaffiliated Seller's Agreement or the
Unaffiliated Seller's rights under the Sale Agreement the Servicer shall be
permitted to fund Delinquency Advances from its own funds and from amounts
then on deposit in the Collection Account in excess of the Servicer
Remittance Amount for the related Servicer Remittance Date;
(iii) all Net Liquidation Proceeds or Net Insurance Proceeds
with respect to the Mortgage Loans;
(iv) all amounts required to be deposited by the Servicer
pursuant to Section 4.13(c) hereof;
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(v) any amount required to be deposited by the Servicer in
connection with losses with respect to funds invested pursuant to Section
4.10 hereof; and
(vi) any other amounts required to be deposited in the Collection
Account pursuant to the terms hereof.
Section 4.10. [Reserved].
----------
Section 4.11. Servicer Reports. Not later than 12:00 noon Pacific
----------------
time on the tenth calendar day of each month (or the immediately succeeding
business day if such calendar day falls on a Saturday or a Sunday or a holiday),
the Servicer shall deliver or cause to be delivered to the Back-Up Servicer the
related Servicer's Monthly Report on computer readable magnetic tape or
diskette. This report shall also contain (i) a summary report of Mortgage Loan
payment activity for such month, (ii) exception payment reports for Mortgage
Loans with respect to which scheduled payments due in such month were not made,
(iii) an itemization by category of all amounts to be paid on the Date, and (iv)
a trial balance in the form of a computer tape. Not later than 12:00 noon
Pacific time on the fifteenth calendar day of each month (or the immediately
succeeding business day if such calendar day falls on a Saturday or Sunday or a
holiday) (each a "Determination Date"), the Servicer shall deliver or cause to
be delivered to the Trustee such Servicer's Monthly Report on computer readable
magnetic tape or diskette.
Section 4.12. Delinquency Advances, Servicing Advances and Prepayment
-------------------------------------------------------
Interest. (a) Not later than 10:00 a.m. Pacific time on each Servicer
- --------
Remittance Date, the Servicer shall advance funds (each such advance, a
"Delinquency Advance") to the Collection Account in the amount of any Delinquent
Payment, with respect to the related Collection Period, with respect to each
Mortgage Loan; provided, however, that the Servicer will not be required to make
-------- -------
any such Delinquency Advance if the Servicer determines in reasonable good faith
that such Delinquency Advance will ultimately not be recoverable from subsequent
amounts reasonably expected to be received by the Servicer with respect to such
Mortgage Loan. Each Delinquency Advance shall increase the Outstanding Advances
with respect to the related Mortgage Loan. The Servicer shall be permitted to
fund Delinquency Advances from its own funds, and from amounts then on deposit
in the Collection Account in excess of the Servicer Remittance Amount for the
related Servicer Remittance Date.
The Servicer may recover Delinquency Advances (i) from the Collection
Account out of collections on the Mortgage Loan whose delinquency gave rise to
such Delinquency Advance subsequent to the related Collection Period, from
Liquidation Proceeds and/or Insurance Proceeds recovered on account of such
Mortgage Loan to the extent of the amount of such Delinquency Advance prior to,
or after, the deposit of such Liquidation Proceeds and/or Insurance
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Proceeds in the Collection Account and (ii) from the Collection Account
generally, if such Delinquency Advance has been determined to be a Non-
Recoverable Advance.
(b) The Servicer will advance all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations with respect to
defaulted Mortgage Loans, including, but not limited to, the cost of (i)
Preservation Expenses, (ii) any enforcement or judicial proceedings, including
foreclosures, and any reasonable legal expenses in connection with the assertion
by a Mortgagor of any claim or defense that the Mortgagor may have had against
the originator in connection with the sale, financing or construction of such
Mortgagor's home and which the Mortgagor asserts against the Servicer and (iii)
the management and liquidation of REO Property, but shall only pay such costs
and expenses to the extent the Servicer reasonably believes such costs and
expenses will be recovered from the related Mortgage Loan and will increase Net
Liquidation Proceeds on the related Mortgage Loan. Each such expenditure, if
customary and reasonable, and exclusive of overhead, together with any Servicing
Advance as defined in Section 4.15(a) hereof, will constitute a "Servicing
Advance." The Servicer may recover a Servicing Advance from the Mortgagor to
the extent permitted by the related Mortgage Loan, from the Collection Account
out of collections on the related Mortgage Loan, or from Liquidation Proceeds
realized upon the liquidation of the related Mortgage Loan, from Insurance
Proceeds collected with respect to the related Mortgage Loan prior to, or after,
the deposit of such Liquidation Proceeds and/or Insurance Proceeds in the
Collection Account.
(c) In the event that, on any Servicer Remittance Date, the Servicer
determines that there will not be a sufficient amount of Scheduled Interest
Collections (less the amount of the Servicer's Fee and the Trustee's Fee)
together with the interest portion of Delinquency Advances, solely as a result
of Prepayments, to fund the interest accrued on the Class A-1, Class A-2-A,
Class A-2-B, Class A-2-C, Class M-1, Class M-2 and Class M-3 Certificates, the
Servicer shall, not later than 10:00 a.m. Pacific time on the related Servicer
Remittance Date deposit in the Collection Account the Prepayment Interest, if
any, as required to be deposited in accordance with the definition thereof, for
the related Collection Period.
Section 4.13. Maintenance of Insurance and Tax Services. (a) The
-----------------------------------------
Servicer shall cause to be maintained with respect to each Mortgage Loan with an
unpaid Principal Balance of $2,000 or greater a hazard insurance policy with a
generally acceptable carrier that provides for fire and extended coverage, and
which provides for a recovery by the Servicer on behalf of the Trust and its
assignees of insurance proceeds relating to such Mortgage Loan, 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
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insurable value of the improvements which are a part of the related Property,
but in any case not less than the amount necessary to avoid the application of
any co-insurance clause.
(b) If a Mortgage Loan with an unpaid Principal Balance of $2,000 or
greater relates to a Property in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards, at the
time of origination, and if such loan has been specifically identified as being
in such an area in the List of Loans or other writing delivered to the Servicer
by the FDIC, the Servicer shall 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 that provides for coverage, and which provides for a
recovery by the Servicer on behalf of the Trust of insurance proceeds relating
to such Mortgage Loan, in an amount not less than the least of (i) the
outstanding principal balance of the Mortgage Loan, (ii) the minimum amount
required to fully compensate for damage or loss to the improvements which are a
part of the related Property on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973, the National Flood Insurance Act of 1968 or Flood Insurance Reform Act of
1994, as amended, but in each case in an amount not less than such amount as is
necessary to avoid the application of any co-insurance clause contained in the
related hazard insurance policy. The Servicer shall indemnify the Trust out of
the Servicer's own funds for any loss to the Trust resulting from the Servicer's
failure to maintain such flood and hazard insurance required by this Section.
(c) In the event that the Servicer shall obtain and maintain a
blanket policy insuring against fire, flood and hazards of extended coverage on
all of the Mortgage Loans, then, to the extent such policy names the Servicer as
loss payee and provides coverage in an amount equal to the aggregate Principal
Balance of the Mortgage Loans without co-insurance, and otherwise complies with
the requirements of this Section 4.13, the Servicer shall be deemed conclusively
to have satisfied its obligations with respect to fire, flood and hazard
insurance coverage under this Section 4.13, it being understood and agreed that
such blanket policy may contain a deductible clause, in which case the Servicer
shall, in the event that there shall not have been maintained on the related
Property a policy complying with Sections 4.13(a) and (b) hereof, and there
shall have been a loss which would have been covered by such policy, deposit in
the Collection Account from the Servicer's own funds the difference, if any,
between the amount that would have been payable under a policy complying with
Sections 4.13(a) and (b) and the amount paid under such blanket policy. Upon
the request of the Back-Up Servicer, the Servicer shall cause to be delivered to
the requesting party a copy of such policy.
(d) If any Person asserts that on any Mortgage Loan the borrower has
procured credit, life, accident, health or disability
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insurance or the like, the Servicer's sole obligation shall be to examine the
related file maintained by the Servicer and, if evidence corroborating the
assertion is found, refer such Person to the underwriter of such insurance.
Section 4.14. Due-on-Sale Clauses; Assumption and Substitution
------------------------------------------------
Agreements. When a Property has been or is about to be conveyed by the
- ----------
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains liable under the Note and/or Mortgage), the Servicer
shall, to the extent it has knowledge of such conveyance or prospective
conveyance, exercise the Trust's rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, that the Servicer shall not exercise any such right
--------
if the "due-on-sale" clause is not enforceable under applicable law or under the
related Note or if the Servicer is prohibited by law from doing so or (y) that
the Servicer may not exercise such right if, in the reasonable belief of the
Servicer, determined in accordance with the Servicing Standard the value of the
Mortgage Loan would be enhanced by waiving such provision. In such event, the
Servicer, subject to Section 4.01(d) hereof, 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 documents in the related
File, the Mortgagor remains liable thereon. If the foregoing is not permitted
under applicable law or the documents in the related File, the Servicer is
authorized, subject to Section 4.01(d) hereof, to enter into a substitution of
liability agreement with such person, pursuant to which the original Mortgagor
is released from liability and such person is substituted as Mortgagor and
becomes liable under the Note; provided, that the Mortgage Loan, as assumed,
--------
shall conform in all respects to the requirements, representations and
warranties of the Unaffiliated Seller's Agreement.
The Servicer shall forward to the Trustee the original of such
assumption or substitution agreement, 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. In connection with any such assumption or substitution
agreement, no material term of the Note (including but not limited to the
related Coupon Rate and the Monthly Payment on the related Mortgage Loan) may be
changed and all such terms shall remain as in effect immediately prior to the
assumption or substitution, the stated maturity and the Principal Balance of
such Mortgage Loan shall not be changed nor shall any required Monthly Payments
of principal or interest be deferred or forgiven.
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
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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 4.15. Realization Upon Defaulted Mortgage Loans. (a) The
-----------------------------------------
Servicer shall, consistent with the Servicing Standard, foreclose upon or
otherwise comparably effect the ownership in the name of the Servicer on behalf
of the Trust of Properties relating to defaulted Mortgage Loans as to which no
satisfactory arrangements can be made for collection of Delinquent payments.
The foregoing is subject to the proviso that the Servicer shall not advance its
own funds unless it shall reasonably believe that it can recover such funds from
future payments and doing so will increase Net Liquidation Proceeds on the
Mortgage Loans. Any amounts so advanced, if customary and reasonable, and
exclusive of overhead, shall constitute "Servicing Advances" within the meaning
of Section 4.12.(b) hereof. Notwithstanding the foregoing, with respect to any
Mortgage Loan as to which the Servicer has received notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Property (a "Potentially Hazardous Property"), the Servicer shall not, on behalf
of the Trust, either (i) obtain title to such Property as a result of or in lieu
of foreclosure or otherwise, or (ii) otherwise acquire possession of, or take
any other action with respect to, such Property, if, as a result of any such
action, the Trust would be considered to hold title to, be a "mortgagee-in-
possession" of, or to be an "owner" or "operator" of, such Property within the
meaning of the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA") from time to time, or any comparable law.
The Servicer shall not be required to make Delinquency Advances with respect to
a Mortgage Loan relating to a Potentially Hazardous Property. In the event the
Servicer requires any professional guidance with respect to CERCLA, the Servicer
may, at the expense of the Servicer, obtain an Opinion of Counsel experienced in
CERCLA matters, and shall be fully protected in relying on any such Opinion of
Counsel.
(b) The Servicer shall determine with respect to each defaulted
Mortgage Loan when it has recovered, whether through trustee's sale, foreclosure
sale or otherwise, all amounts (other than from deficiency judgments) it expects
to recover from or on account of such defaulted Mortgage Loan, whereupon such
Mortgage Loan shall become a "Liquidated Mortgage Loan". Any such determination
shall be evidenced by delivery of a Liquidation Report in substantially the form
of Exhibit H hereto to the Back-Up Servicer.
(c) The Servicer shall sell any REO Property within 23 months of its
acquisition by the Trust, unless the Servicer obtains for the Trustee an opinion
of counsel experienced in federal income tax matters, addressed to the Trustee
and the Servicer, to the effect that the holding by the Trust of such REO
Property for a greater specified period will not result in the imposition of
taxes
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on "Prohibited Transactions" of the Lower-Tier REMIC or Upper-Tier REMIC as
defined in Section 860F of the Code or cause the Lower-Tier REMIC or Upper-Tier
REMIC to fail to qualify as a REMIC under the REMIC Provisions at any time that
any Certificates are outstanding.
(d) Notwithstanding the generality of the foregoing provisions, the
Servicer shall manage, conserve, protect and operate each REO Property for the
Holders solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by the Lower-Tier REMIC or Upper-Tier REMIC of any "income from non-
permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or any
"net income from foreclosure property" which is subject to taxation under the
REMIC Provisions. Pursuant to its efforts to sell such REO Property, the
Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such REO Property in the same manner and to such extent as
is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the Holders,
rent the same, or any part thereof, as the Servicer deems to be in the best
interest of the Owners for the period prior to the sale of such REO Property.
The net income from the sale of an REO Property shall be deposited in the
Collection Account.
(e) The Servicer shall file reports of foreclosure and abandonment as
required by Section 6050J of the Code.
Section 4.16. Servicing Compensation. As compensation for its
----------------------
activities hereunder, the Servicer shall be entitled to the Servicing Fee from
amounts available therefor in the Collection Account, as provided in Section
6.04(d) hereof. The right to receive the Servicing Fee may not be transferred
in whole or in part except in connection with the transfer of all of the
Servicer's responsibilities and obligations under this Agreement or except as
otherwise provided herein. Notwithstanding the foregoing, the Servicer may pay
any portion of the Servicing Fee to a Sub-Servicer.
Section 4.17. Records, Inspections. (a) The Servicer, during the
--------------------
period it is servicer hereunder, shall, consistent with standard industry
practices, maintain such books of account and other records as will enable the
Trustee and/or the Back-Up Servicer (if either so elects, in its sole
discretion) to determine the status of each Mortgage Loan.
(b) The Servicer shall provide to representatives of the Trustee and
the Depositor, without charge, reasonable access on reasonable prior notice
during normal business hours and with reasonable frequency to the documentation
regarding the Mortgage Loans. The Servicer will permit, without charge, any
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representative designated by the Depositor or the Trustee to visit and inspect
the servicing operations and its records relating to the Loans on reasonable
prior notice during normal business hours with reasonable frequency during the
term of the Class A Certificates, and make copies thereof or extracts therefrom
and to discuss the affairs, finances, and accounts of the Servicer with its
principal officers, as applicable, and its independent accountants. Any expense
incidental to the exercise by the Depositor of any right under this Section
4.17(b) shall be borne by such Person and, with respect to the Trustee, by the
Person requesting the Trustee to undertake such inspection. Nothing in this
Section 4.17(b) shall derogate from the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Mortgagors, and the failure of the Servicer to provide access as provided in
this Section 4.17(b) as a result of such obligation shall not constitute a
breach of this Section 4.17(b).
To the extent that such information is not otherwise available to the
public, none of the Trustee, the Depositor, the Back-Up Servicer, nor any
representative thereof shall disseminate any information relating to the
Servicer obtained pursuant to this Agreement without the Servicer's written
consent, except to the extent provided for in this Agreement or to the extent
that it is necessary to do so (i) in working with legal counsel, auditors,
rating agencies, liquidity and credit providers, taxing authorities, or other
regulatory bodies or other governmental agencies or (ii) pursuant to any law,
rule, regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Trustee, the Depositor, the
Back-Up Servicer, and the Trustee, and the Back-Up Servicer shall use all
reasonable efforts to assure the confidentiality of any such disseminated non-
public information.
(c) Upon any change in the format of the computer tape maintained by
the Servicer in respect of the Mortgage Loans, the Servicer shall notify the
Back-Up Servicer and the Trustee in advance and shall deliver a copy of such new
format to the Depositor, the Back-Up Servicer and the Trustee; provided, that
--------
the Servicer agrees to co-operate reasonably and in good faith with the Trustee
and the Back-Up Servicer with respect to any and all issues relating to such
format change.
Section 4.18. 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, and the Depositor.
Section 4.19. Removal of Servicer; Resignation of Servicer; Term of
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Servicing. (a) If any of the following events (each, and "Event of Servicer
- ---------
Default") shall occur and be continuing:
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(i) Any failure by the Servicer (x) to deposit to the Collection
Account all Collections received by the Servicer directly within two
Business Days following the Business Day on which such amounts are
deposited by the Servicer to its general account (which shall be within one
Business Day following the Business Day of the Servicer's receipt of such
amount) and are determined by the Servicer to relate to the Mortgage Loans
or (y) to deposit to the Collection Account any amount required to be
deposited thereon pursuant to Section 4.12(a) or 4.12(c) hereof by the
related Servicer Remittance Date; or
(ii) Failure on the part of the Servicer or of the Unaffiliated
Seller to observe or perform any term, covenant or agreement in this
Agreement (other than those covered by clause (i) above) or a failure to
comply with the provisions of the Servicing Standard, which failure
materially adversely affects the rights of the Holders of the Certificates
and which continues unremedied for 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Unaffiliated Seller, the Depositor, the
Trustee, or Certificateholders who, in the aggregate, hold Certificates
evidencing Percentage Interests of 10% or more; or
(iii) Any proceeding shall be instituted against the Servicer
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or any of its Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substan tial part of its property,
or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or
(iv) The commencement by the Servicer of a voluntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Servicer in an
involuntary case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it,
or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
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trustee, sequestrator or similar official of the Servicer or of any
substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admis sion by it in writing of its
inability to pay its Debts generally as they become due, or the taking of
corporate action by the Servicer in furtherance of any such action;
(v) The Servicer shall fail to deliver a report expressly
required by this Agreement, and the continuance of such failure for a
period of three Business Days after the date upon which written notice of
such failure shall have been given to the Servicer by the Seller, the
Depositor, or the Trustee (except that such three Business Day period shall
be deemed not to run as to any portion of such report during such time as
the Servicer's failure to provide such information is for cause or
inability beyond its control and the Servicer provides the Trustee, the
Depositor with an Officer's Certificate of the Servicer to such effect);
then the Trustee at the direction of the Required Certificateholders shall,
in each case by delivery to the Servicer of a written notice specifying the
occurrence of any of the foregoing events terminate the servicing
responsibilities of the Servicer hereunder, without demand, protest or
further notice of any kind, all of which are hereby waived by the Servicer,
at which such time the Back-Up Servicer shall become the Successor
Servicer; provided, that, in the event any of the events described in
--------
subsections (iii) or (iv) shall have occurred, termination of the duties
and responsibilities of the Servicer shall automatically occur, without,
demand, protest, or further notice of any kind, all of which are expressly
waived by the Servicer; provided that in the case of a proceeding described
--------
in subsection (iii) brought by a third party and not consented to by the
Servicer, an Event of Servicer Default shall not be deemed to have occurred
until the earliest to occur of (A) the failure of the relevant court to
grant the Servicer's motion to dismiss such proceeding within 90 days of
the filing of such motion, (B) the denial of the Servicer's motion to
dismiss such proceeding by the relevant court, (C) the failure of the
Servicer to file such a motion within 30 days of the notice of the
proceeding and (D) the subsequent withdrawal by the Servicer of its motion
to dismiss such proceeding.
The Trustee shall give notice of the occurrence of any Event of
Servicer Default to the Seller, the Depositor, the Servicer, the Rating
Agencies, the Trustee, the Back-Up Servicer and each Certificateholder.
In the event that the Back-Up Servicer becomes the Successor Servicer,
the parties hereby agree that there shall no longer be the requirement to have a
Back-Up Servicer.
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(b) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except with the consent of the Required Certificateholders
or upon determination that its duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it, the other activities of the Servicer so
causing such a conflict being of a type and nature carried on by the Servicer at
the date of this Agreement. Any such determination permitting the resignation
of the Servicer shall be evidenced by an Opinion of Counsel to the effect that
such duties are not so permissible (the cost of which shall be borne by the
Servicer) to such effect which shall be delivered to the Trustee and to the
Back-up Servicer. Promptly upon any resignation pursuant to this clause (c),
the Unaffiliated Seller shall notify each Rating Agency, the Depositor and the
Trustee thereof.
(c) Except as may be required by law, no removal or resignation of
the Servicer shall become effective until the Back-Up Servicer or other
Successor Servicer shall have assumed all of the Servicer's responsibilities and
obligations hereunder.
(d) If, at the time the Servicer is removed or resigned there is no
Back-Up Servicer or the Back-Up Servicer is unable to act as Successor Servicer
and the Trustee does not appoint a different Successor Servicer, then the
Trustee shall become the Successor Servicer.
(e) Upon removal or resignation of the Servicer, the Servicer also
shall promptly (and in any event no later than five Business Days subsequent to
such removal or resignation) deliver or cause to be delivered to the Back-Up
Servicer 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. The Servicer may retain copies of any such books and records.
(f) Any collections received by the Servicer after removal or
resignation shall be endorsed by it and remitted directly and immediately to the
Back-Up Servicer. The Servicer shall be entitled to receive the Servicing Fee
through the day on which it is terminated as Servicer (which may be pro rated
for a partial month).
To the extent that the Servicer, at the time of its removal or
resignation, has theretofore expended any amounts as Delinquency Advances or as
Servicing Advances with respect to any Mortgage Loan, which Delinquency Advances
or Servicing Advances remain unreimbursed as of such date ("Unrecovered
Advances") the Servicer shall thereafter be entitled to receive from the Back-Up
Servicer, monthly, such information as may be generated by the Back-Up Servicer
as may be reasonably necessary to enable the
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Servicer to monitor the recovery of, and collection efforts undertaken with
respect to, the Unrecovered Advances, which information will include details of
collection activities, payment records and trial balances. To the extent that
the Back-Up Servicer or other Successor Servicer receives any amounts which
relate to reimbursement for Unrecovered Advances made by the prior Servicer,
such amounts shall be remitted to the prior Servicer on the related Distribution
Date. To the extent that the Servicer, based upon the information supplied by
the Back-Up Servicer, believes that any discrepancies exist between actual
Unrecovered Advances received by the Back-Up Servicer and the amounts forwarded
to the Servicer as recovered Unrecovered Advances, the Servicer and the Back-Up
Servicer shall attempt in good faith to reconcile such discrepancies.
(g) The Back-Up Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any succession to become the
Successor Servicer. The Servicer agrees to cooperate reasonably with the Back-
Up Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide to the Back-Up
Servicer 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 Back-Up Servicer all amounts which then have been or should have been
deposited in the Lock-Box Account, or in the Collection Account, or which are
thereafter received with respect to the Mortgage Loans. The Back-Up Servicer
shall not be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer.
(h) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors of the transfer of the servicing to the Back-Up
Servicer. Said notice shall be a joint notice of servicing transfer in the form
required by applicable law.
Section 4.20. Errors and Omissions Insurance; Fidelity Bond. 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. The Servicer
shall also maintain a fidelity bond in the form and amount that would meet the
requirements of FNMA or FHLMC if it were the purchaser of the Mortgage Loans.
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
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afforded thereunder extends to the Servicer. Any such errors and omissions
policy and fidelity bond shall by its terms not be cancelable (but may be
transferred to a different carrier) without thirty days prior written notice to
the Trustee. Upon the request of the Trustee, the Servicer shall furnish copies
of all binders and policies or certificates evidencing that such bonds and
insurance policies are in full force and effect. The Servicer shall also cause
each Sub-Servicer to maintain a policy of insurance covering errors and
omissions and a fidelity bond which would meet the requirements set forth above.
The Servicer (and any affiliated Sub-Servicer) will be deemed to have satisfied
its obligations under this Section 4.20 if an Affiliate of the Servicer
maintains such insurance, and if the coverage thereunder applies to the
Servicer.
Section 4.21. Change in Business of the Servicer. The Unaffiliated
----------------------------------
Seller has entered into this Agreement with the Servicer in reliance upon its
ability to perform the servicing duties without any delegation thereof; the
adequacy of its plant, personnel, records and procedures; its integrity,
reputation and financial standing and the continuance of each of the foregoing.
The Servicer shall not (a) make any material change in the character of its
servicing business; or (b) merge with or into or consolidate with or into, or
convey, transfer, lease or otherwise dispose of all or substantially all of its
assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership interest of,
any other corporation, unless (x) the Servicer has notified each Rating Agency,
and the Trustee, at least 30 days prior to such action and (y) the Trustee has
consented to such action (such consent not to be unreasonably withheld). It is
acknowledged by all parties hereto that it is the intent of the Servicer
hereafter to assume the business of Wilshire Credit Corporation.
Section 4.22. Servicer Expenses. Unless otherwise provided or
-----------------
contemplated herein, the Servicer shall be required to pay all expenses incurred
by it in connection with its obligations under this Agreement, including fees
and disbursements of independent accountants, taxes imposed on the Servicer,
expenses incurred in connection with distributions and reports to the Depositor,
the Back-Up Servicer and/or to the Trustee, all costs and expenses of filing and
recording, including the costs of any searches deemed necessary or appropriate
by the Servicer from time to time to establish and determine the validity and
the continuing lien priority of the Trustee's security interest in the Trust
Asset, the ongoing fees and reasonable expenses of each Rating Agency, and shall
not be entitled to reimbursement therefor.
Section 4.23. The Back-Up Servicer. (a) Prior to assuming any of the
--------------------
Servicer's rights and obligations hereunder the Back-Up Servicer shall only be
responsible to perform those duties specifically imposed upon it by the
provisions hereof. Such duties generally relate to following procedures which
would permit the
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Back-Up Servicer to assume some or all of the Servicer's rights and obligations
hereunder with reasonable dispatch, following notice.
The Back-Up Servicer, prior to assuming any of the Servicer's duties
hereunder may not resign hereunder unless it arranges for a successor Back-Up
Servicer reasonably acceptable to each Rating Agency, the Servicer and the
Depositor with not less than 60 days' notice delivered to the Servicer and the
Depositor. Prior to its becoming Successor Servicer, the Back-Up Servicer shall
have only those duties and obligations imposed by it under this Agreement, and
shall have no obligations or duties under any agreement to which it is not a
party, including but not limited to the various agreements named herein. In its
capacity as Successor Servicer and as Back-Up Servicer, Bankers Trust Company of
California, N.A. shall in no event be liable for any obligations of the
Unaffiliated Seller or the Servicer to any party, whether hereunder or under any
other agreement, which are not related to servicing functions, including,
without limitation, any repurchase obligations.
(b) The Back-Up Servicer agrees to indemnify the Trust, the Trustee,
the Depositor, each Holder of a Trust Interest, the Servicer and the
Unaffiliated Seller, and any of their respective directors, officers, employees
or agents from, and hold them harmless against, any and all costs, expenses
(including reasonable attorney fees and disbursements), losses, claims, damages
and liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon the Trust, the Trustee, the
Depositor, the Holder of such Trust Interest, the Servicer, or the Unaffiliated
Seller and their respective directors, officers, employees and agents through
the Back-Up Servicer's acts or omissions in violation of this Agreement, except
to the extent such indemnified party's own bad faith, willful misconduct or
negligence contributes to the costs, expense, loss, claim, damage or liability.
(c) The Servicer shall have not liability, direct or indirect, to any
party, for the acts or omissions of the Back-Up Servicer, whenever such acts or
omissions occur whenever such liability is imposed.
(d) The Back-Up Servicer shall not be obligated to maintain the Lock-
Box Account or to follow the WSC Servicing Guide, but may instead follow the
Servicing Standards set forth in clauses (ii) through (iv) of such definition.
Section 4.24. Escrows for Taxes, Insurance, Assessments and Similar
-----------------------------------------------------
Items; Taxes and Insurance Accounts. The Servicer shall establish and maintain
- -----------------------------------
one or more taxes and insurance accounts ("T&I Accounts") as impound accounts
and shall deposit and retain therein all collections from the Mortgagors for the
payment of taxes, assessments, primary mortgage insurance premiums, if
applicable, or comparable items for the account of the Mortgagors
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as required by the terms of the Mortgage Loans (collectively, "Escrow Amounts").
T&I Accounts shall be maintained in banking or savings institutions whose
accounts are insured by the FDIC. Withdrawals of amounts so collected from the
T&I Accounts may be made only to effect timely payment of taxes, assessments,
primary mortgage insurance policy premiums, if applicable, or comparable items,
to reimburse the Servicer out of related collections for any payments made, to
refund to any Mortgagors any sums as may be determined to be overages, to pay
interest to the Mortgagors on balances in the T&I Accounts or to clear and
terminate the T&I Accounts as their respective termination days. As part of its
servicing duties, the Servicer shall pay to the Mortgagors interest on funds in
the T&I Accounts to the extent required by law.
Section 4.25. Servicer to Give Notice of Certain Events and to
------------------------------------------------
Deliver Certain Information. (a) The Servicer shall deliver to the Trustee and
- ---------------------------
the Depositor as soon as available, but in any event within 120 days after the
end of each of its fiscal years, a consolidated balance sheet of its parent
company, as at such last day of the fiscal year, and a statement of income and
retained earnings, for each such fiscal year, each prepared in accordance with
GAAP, in reasonable detail, and certified without qualification by an
Independent Public Accountant, who may also render other services to the
Servicer, or any of its Affiliates and certified by the chief financial officer
of its parent company as fairly presenting the financial position and the
results of operations of its parent company as at and for the year ending on its
date and as having been prepared in accordance with GAAP. For as long as the
Servicer is Wilshire Servicing Corporation, the delivery of the financial
statements of Wilshire Financial Services Group Inc. shall be deemed to satisfy
the Servicer's obligations hereunder.
(b) The Servicer shall, and shall cause any Subservicer (to the
extent such Person is in any manner receiving Collections) hereunder to, deliver
to the Trustee, and the Depositor on or before March 31st of each year,
beginning with March 31, 1998 an Officer's Certificate stating, as to each
signer thereof, that (a) a review of the activities of the Servicer or the
Subservicer, as the case may be, during the preceding calendar year and of
performance under this Agreement has been made under such officer's supervision
and (b) to the best of such officer's knowledge, based on such review, the
Servicer or Subservicer, as the case may be, has fulfilled all its respective
obligations under this Agreement throughout such year in all material respects,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof and remedies therefor being pursued.
(c) The Servicer shall promptly (but in any event within three
Business Days) notify the Trustee and the Depositor upon receiving actual
knowledge of any event which constitutes an Event of Servicer Default.
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(d) The Trustee shall promptly deliver to each Rating Agency a copy
of any report or certificate delivered to the Trustee pursuant to this Section
4.25 and notify each Rating Agency and each Holder of a Certificate upon
obtaining knowledge of any event described in Section 4.25(c).
(e) On or before the last day of June of each year, commencing in
1998, the Servicer, at its own expense, shall cause to be delivered to the
Trustee, the Depositor, and each Rating Agency a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Trustee stating that such firm has, with respect to the
Servicer's or the Sub-Servicer's overall servicing operations examined such
operations in accordance with the requirements of the Uniform Single Audit
Program for Mortgage Bankers, and stating such firm's conclusions relating
thereto.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates; Denominations. All Certificates
-------------------------------
shall be executed by manual or facsimile signature on behalf of the Trustee by
an authorized officer and authenticated by the manual or facsimile signature of
an authorized officer. Certificates bearing the signatures of individuals who
were at the time of the execution of the Certificates the authorized officers of
the Trustee shall bind the Trustee, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the delivery of such
Certificates or did not hold such offices at the date of such Certificates. All
Certificates issued hereunder shall be dated the date of their authentication.
The Certificates shall be in the forms set forth in Exhibit B-1
through B-15 hereto.
The Class A-1, Class A-2-A, Class A-2-B, Class A-IO, Class F-IO, Class
PO, Class A-2-C, Class M-1, Class M-2 and Class M-3 Certificates are issuable in
minimum denominations of $1,000 original principal amount (or original notional
amount) and integral multiples of $1 in excess thereof (with the exception of
one odd-denomination Certificate of each Class).
The Class B-1, Class B-2, and Class B-3 are issuable in minimum
denominations of $250,000 original principal amount (or original notional
amount) and integral multiples of $1 in excess thereof (with the exception of
one odd-denomination Certificate of each Class).
The Class RL and RU Certificates are issuable in minimum denominations
of 10% Percentage Interest.
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Section 5.02. Registration of Transfer and Exchange of Certificates.
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(a) The Trustee, as registrar, shall cause to be kept a register (the
"Certificate 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
appointed registrar for the purpose of registering Certificates and transfers of
Certificates as herein provided.
(b) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement, and shall
represent, in the aggregate, the same Percentage Interests, as the Certificates
surrendered upon such registration of transfer or exchange.
(c) No service charge shall be made to a Holder for any registration
of transfer or exchange of Certificates, but the Trustee may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(d) It is intended that the Registered Certificates be registered so
as to participate in a book-entry system with the Depository, as set forth
herein. The Registered Certificates shall, except as otherwise provided in the
next paragraph, be initially issued in the form of a single fully Registered
Certificate of each class. Upon initial issuance, the ownership of each such
Registered Certificate shall be registered in the Certificate Register in the
name of Cede & Co., or any successor thereto, as nominee for the Depository.
The Servicer and the Trustee are hereby authorized to execute and deliver the
Representation Letter with the Depository. With respect to Registered
Certificates registered in the Certificate Register in the name of Cede & Co.,
as nominee of the Depository, the Depositor, the Unaffiliated Seller, the
Servicer, the Back-Up Servicer and the Trustee shall have no responsibility or
obligation to Direct or Indirect Participants or beneficial owners for which the
Depository holds Registered Certificates from time to time as a Depository.
Without limiting the immediately preceding sentence, the Depositor, the
Unaffiliated Seller, the Servicer, the Back-Up Servicer 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 any Ownership Interest, (ii) the delivery to any Direct or
Indirect Participant or any other Person, other than a Holder of a Trust
Interest, of any notice with respect to the Registered Certificates or (iii) the
payment to any Direct or Indirect Participant or any other Person, of any amount
with respect to any distribution of principal or interest on the Registered
Certificates. Upon delivery by the Depository to the Trustee of written notice
to the
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effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the holder of a Registered
Certificate appearing as holders of Certificates 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.
(e) In the event that (i) the Depository or the Servicer 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
Registered Certificates and the Servicer or the Depositor is unable to locate a
qualified successor or (ii) the Servicer at its sole option elects to terminate
the book-entry system through the Depository, the Registered Certificates shall
no longer be restricted to being registered in the Certificate Register in the
name of Cede & Co. (or a successor nominee) as nominee of the Depository. At
that time, the Servicer may determine that the Registered 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 Servicer, or such
depository's agent or designee but, if the Servicer does not select such
alternative global book-entry system, then the Registered Certificates, upon
surrender to the Trustee of the Registered Certificates registered to Cede &
Co., may be registered in definitive form and in whatever name or names holders
of the Certificates transferring Registered Certificates shall designate, in
accordance with the provisions hereof; provided, however, that any such
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reregistration shall be at the expense of the Servicer.
(f) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Registered Certificate is registered in the name of
Cede & Co., as nominee of the Depository, all distributions of principal or
interest on such Registered Certificates, as the case may be, and all notices
with respect to such Registered Certificates, as the case may be, shall be made
and given, respectively, in the manner provided in the Representation Letter.
(g) No transfer, sale or other disposition of any Unregistered
Certificate shall be made unless such transfer, sale or other disposition is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended and effective registration or qualification under applicable
state securities laws or "Blue Sky" laws, or is made in a transaction that does
not require such registration or qualification as evidenced by delivery to the
Trustee of an Opinion of Counsel. The transferee and the transferor shall in
addition deliver a transfer certificate in the form of Exhibit I hereto. None
of the Servicer, the Depositor, the Unaffiliated Seller, the Back-Up Servicer or
the Trustee is obligated under this Agreement to register any Unregistered
Certificate under the Securities Act of 1933, as
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amended or any other securities law or to take any action not otherwise required
under this Agreement to permit the transfer of any Unregistered Certificate
without such registration or qualification or an exemption therefrom.
(h) No transfer of any portion of any Certificate shall be made to any
employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, that is subject to ERISA, or the Code (each, a "Plan") or to any
entity the assets of which constitute assets of a Plan, unless the prospective
transferee of any Certificate provides the Servicer and the Trustee with a
certification of facts and, at the prospective transferee's expense, an Opinion
of Counsel which establish to the satisfaction of the Servicer and the Trustee
that such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or cause the Servicer or the Trustee to be deemed a
fiduciary of such Plan or result in the imposition of an excise tax under
Section 4975 of the Code.
(i) Subject to the restrictions set forth in this Agreement, upon
surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in New York, New York, the Trustee shall execute,
authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate dated the date of authentication by the Trustee,
and evidencing, in the aggregate the same Percentage Interests. At the option
of the Holders of the Certificates, Certificates may be exchanged for other
Certificates representing in the aggregate the same Percentage Interests upon
surrender of the Certificates to be exchanged at such office. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute,
authenticate and deliver the Certificates which the Holders of the Certificate
making the exchange is entitled to receive. No service charge shall be made for
any transfer or exchange of Certificates, but the Trustee may require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be cancelled by the Trustee.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(a) 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 (b) there is delivered to the Servicer and the Trustee such
security or indemnity as may reasonably be required by each of them to save each
of them harmless, then, in the absence of notice to the Servicer and the Trustee
that such Certificate has been acquired by a bona fide purchaser, the Trustee
shall execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate bearing a
number not contemporaneously outstanding. Upon the issuance of any
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new Certificate under this Section 5.03, the Servicer and the Trustee may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and their fees and expenses
connected therewith. Any duplicate Certificate issued pursuant to this Section
5.03 shall constitute complete and indefeasible evidence of ownership in the
Trust, as if originally issued, whether or not the mutilated, destroyed, lost or
stolen Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer and subject to the provisions of
Section 5.02 hereof, the Servicer, the Depositor, the Unaffiliated Seller, the
Back-Up Servicer and the Trustee may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving remittances pursuant to Section 6.05 hereof and for all other purposes
whatsoever, and the Servicer, the Depositor, the Unaffiliated Seller, the Back-
Up Servicer, and the Trustee shall not be affected by notice to the contrary.
Section 5.05. Limitation on Transfer of Residual Certificates. 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 to a Disqualified
Organization. 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 shall be
deemed to be of no legal force or effect whatsoever and such transferee shall
not be deemed to be an Owner for any purpose hereunder, including, but not
limited to, the receipt of distributions on such 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 J. 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 5.05.
ARTICLE VI
DEPOSITS AND DISTRIBUTIONS
Section 6.01. Rights of the Holders. (a) Amounts held by the
---------------------
Trustee for future distribution to the Certificateholders, including, without
limitation, in the Collection Account, shall not be distributed except in
accordance with the terms of this Agreement.
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Section 6.02. Establishment and Administration of the Collection
--------------------------------------------------
Account and Certificate Account. The Trustee shall cause to be established and
- -------------------------------
maintained at all times the Collection Account and Certificate Account on behalf
of and in the name of the Trustee for the benefit of the Trust. The Collection
Account and Certificate Account shall each be an Eligible Account initially
established at the office of the Trustee, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Trust. The Trustee, in its capacity as Trustee, shall possess all right, title
and interest in all funds on deposit from time to time in the Collection Account
and in the Certificate Account and in all proceeds thereof, and such Accounts
shall be under the sole dominion and control of the Trustee.
If, at any time, the Collection Account or the Certificate Account
ceases to be an Eligible Account, the Trustee shall within 10 Business Days
establish a new Account which shall be an Eligible Account, transfer any cash
and/or any investments to such new Account and from the date such new Account is
established such new Account shall be the "Collection Account" or the
"Certificate Account".
Section 6.03. Investment of Amounts. To the extent there are
---------------------
uninvested amounts in the Collection Account or the Certificate Account prior to
11:00 a.m. New York City time of any Business Day, the Trustee shall, at the
written direction of the Servicer, invest such amounts in Eligible Investments.
All such investments shall be made in the name of the Trustee. The maturity of
such investments shall be no later than the day preceding the next Distribution
Date; provided, that the funds will be available for distribution on such
--------
Distribution Date pursuant to this Agreement. The choice of Eligible
Investments shall be determined by the Servicer; provided, that if the Servicer
--------
does not notify the Trustee of any such choice, the Trustee may invest such
funds, without any liability for losses thereon, in investments within the
meaning of clause (e) of the definition of "Eligible Investment" that are
administered through an affiliate of the Trustee. The Servicer shall be
entitled to any income on such investments and shall be liable for any losses
thereon and shall deposit the amount of losses immediately upon realization
without any right of reimbursement. The Trustee shall, on the fifth Business
Day of the month following each Distribution Date, remit by wire transfer to the
Servicer the net investment income earned with respect to the Collection
Account.
Section 6.04. Collections. (a) The Servicer shall remit or cause to
-----------
be remitted by wire transfer to the Collection Account, as appropriate (i)
within five Business Days after the Closing Date, the aggregate amount of all
Collections received by the Servicer from but excluding the Cut-Off Date through
and including the Closing Date and (ii) beginning from and excluding the Closing
Date, all Collections (other than penalty interest, late charges, prepayment
penalties and premiums, modification fees
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and assumption and substitution fees and Escrow Amounts), including all payments
by or on behalf of the Mortgagors on the Mortgage Loans and all amounts with
respect to the Mortgage Loans, as collected not later than one Business Day
following the Business Day on which such amounts are received by the Lock-Box
Bank (or by the Servicer directly and are identified by the Servicer as relating
to the Mortgage Loans); provided, however, that it shall not be necessary for
-------- -------
the Servicer to remit Collections on any Business Day when the aggregate amount
in the Servicer's possession from the Collections prior to such Business Day is
less than $1,000.
(b) The Servicer shall provide the Lock-box Bank with instructions to
transfer by wire transfer in immediately available funds all amounts on deposit
in the Lock-box Account which constitute Collections to the Collection Account
on each Business Day during the term of this Agreement.
(c) On each Determination Date, the Servicer shall determine the
amount of Collections received by the Servicer with respect to the Mortgage
Loans during the prior Collection Period (including, with respect to the first
Distribution Date, all Collections with respect to the Mortgage Loans received
by the Sellers from the Cut-off Date to the Closing Date), together with the
aggregate Repurchase Price applicable to such Determination Date, which in each
case have been deposited in the Collection Account in accordance with the terms
of this Agreement (the "Gross Available Funds").
(d) On each Servicer Remittance Date, the Servicer shall direct the
Trustee to remit to the Servicer the aggregate Servicing Fees, and to pay to the
Trustee the Trustee's Fee, in each case from the Gross Available Funds then on
deposit in the Collection Account, and to deposit the remainder of the Gross
Available Funds (the "Available Funds") to the Certificate Account.
Section 6.05. Flow of Funds. On each Distribution Date the Trustee
-------------
shall distribute from the Certificate Account the Available Funds in the
following order of priority as follows:
(a) first, from the Available Funds, the Senior Interest
-----
Distribution Amount, pari passu, as follows:
---- -----
(i) to the Class A-1 Certificateholders, the Class A-1 Interest
Distribution Amount;
(ii) to the Class A-2-A Certificateholders, the Class A-2-A
Interest Distribution Amount;
(iii) to the Class A-2-B Certificateholders, the Class A-2-B
Interest Distribution Amount;
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(iv) to the Class A-2-C Certificateholders, the Class A-2-C
Interest Distribution Amount;
(v) to the Class F-IO Certificateholders, the Class F-IO Interest
Distribution Amount;
(vi) to the Class A-IO Certificateholders, the Class A-IO
Interest Distribution Amount;
(b) second, from the Class PO Distribution Amount, the Class PO
------
Principal Distribution Amount;
(c) third, from the Senior Scheduled Principal Distribution
-----
Amount, the following amounts, pari passu:
----------
(i) to the Class A-1 Certificateholders, the lesser of (x) the
Class A-1 Scheduled Principal Distribution Amount and (y) the amount
necessary to reduce the Class A-1 Principal Balance to zero;
(ii) to the Class A-2-A Certificateholders, the lesser of (x) the
Class A-2-A Scheduled Principal Distribution Amount and (y) the amount
necessary to reduce the Class A-2-A Principal Balance to zero;
(iii) to the Class A-2-B Certificateholders, the lesser of (x)
the Class A-2-B Scheduled Principal Distribution Amount and (y) the
amount necessary to reduce the Class A-2-B Principal Balance to zero;
(iv) to the Class A-2-C Certificateholders, the lesser of (x) the
Class A-2-C Scheduled Principal Distribution Amount and (y) the amount
necessary to reduce the Class A-2-C Principal Balance to zero;
(d) fourth, from the Senior Unscheduled Principal Distribution
------
Amount, the following amounts, in the following order of priority:
(i) first, the following amounts, pari passu:
----- ---- -----
(A) to the Class A-1 Certificateholders, the lesser of
(x) the Class A-1 Unscheduled Principal Distribution Amount and
(y) the amount necessary to reduce the Class A-1 Principal
Balance to zero;
(B) to the Class A-2-A Certificate holders, the lesser
of (x) the Class A-2-A Unscheduled Principal Distribution Amount
and (y) the amount necessary to reduce the Class A-2-A Principal
Balance to zero;
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(C) to the Class A-2-B Certificate holders, the lesser
of (x) the Class A-2-B Unscheduled Principal Distribution Amount
and (y) the amount necessary to reduce the Class A-2-B Principal
Balance to zero;
(D) to the Class A-2-C Certificateholders, the lesser
of (x) the Class A-2-C Unscheduled Principal Distribution Amount
and (y) the amount necessary to reduce the Class A-2-C Principal
Balance to zero;
(ii) second, the Shifted Unscheduled Principal Distribution
------
Amount shall be paid in the following order of priority:
(A) if the Class A-1 Principal Balance is greater than
zero (after taking into account any reductions thereof resulting
from the application of amounts described in clauses (c)(i) and
(d)(i)(A) above), to the Class A-1 Certificateholders, the lesser
of (x) the Shifted Unscheduled Principal Distribution Amount and
(y) the amount necessary to reduce the Class A-1 Principal
Balance to zero;
(B) if the Class A-1 Principal Balance is zero (after
taking into account any reductions thereof resulting from the
applications of amounts described in clauses (c)(i) and (d)(i)(A)
preceding), the Unscheduled Principal Distribution Amount (less,
on the Distribution Date on which the Class A-1 Principal Balance
is reduced to zero, any portion thereof described in clause
(d)(ii)(A) preceding) to the Holders of the Class A-2-A, Class A-
2-B and Class A-2-C Certificates, the lesser of (x) the Shifted
Unscheduled Principal Distribution Amount (less, on the
Distribution Date on which the Class A-1 Principal Balance is
reduced to zero, any portion thereof described in clause
(d)(ii)(A) preceding) and (y) the amount necessary to reduce the
sum of the Class A-2-A Principal Balance, the Class A-2-B
Principal Balance and the Class A-2-C Principal Balance to zero,
the following amounts, pro rata:
--- ----
(x) to the Class A-2-A Certificateholders, the lesser
of (i) the Class A-2-A Shifted Unscheduled Principal
Distribution Amount and (ii) the amount necessary to reduce
the Class A-2-A Principal Balance to zero;
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(y) to the Class A-2-B Certificateholders, the lesser
of (i) the Class A-2-B Shifted Unscheduled Principal
Distribution Amount and (ii) the amount necessary to reduce
the Class A-2-B Principal Balance to zero; and
(z) to the Class A-2-C Certificateholders, the lesser
of (i) the Class A-2-C Shifted Unscheduled Principal
Distribution Amount and (ii) the amount necessary to reduce
the Class A-2-C Principal Balance to zero;
(e) fifth, from the Subordinate Interest Distribution Amount, the
-----
following amounts, in the following order of priority:
(i) to the Class M-1 Certificateholders, the Class M-1 Interest
Distribution Amount;
(ii) to the Class M-2 Certificateholders, the Class M-2 Interest
Distribution Amount;
(iii) to the Class M-3 Certificateholders, the Class M-3
Interest Distribution Amount;
(iv) to the Class B-1 Certificateholders, the Class B-1 Interest
Distribution Amount;
(v) to the Class B-2 Certificateholders, the Class B-2 Interest
Distribution Amount;
(vi) to the Class B-3 Certificateholders, the Class B-3 Interest
Distribution Amount;
(f) sixth, to the Class M-1 Certificateholders, the lesser of (x)
-----
the Class M-1 Scheduled Principal Distribution Amount and (y) the amount
necessary to reduce the Class M-1 Principal Balance to zero;
(g) seventh, to the Class M-1 Certificateholders, the lesser of
-------
(I) the Class M-1 Unscheduled Principal Distribution Amount and (II) the
amount necessary to reduce the Class M-1 Principal Balance (after taking
into account any reductions therein resulting from the application of
amounts described in clause (f) above) to zero;
(h) eighth, to the Class M-2 Certificateholders, the lesser of
------
(x) the Class M-2 Scheduled Principal Distribution Amount and (y) the
amount necessary to reduce the Class M-2 Principal Balance to zero;
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(i) ninth, if the Class M-2 Certificates are an Eligible
-----
Subordinate Class as of such Distribution Date,to the Class M-2
Certificateholders, the lesser of (I) the Class M-2 Unscheduled Principal
Distribution Amount and (II) the amount necessary to reduce the Class M-2
Principal Balance (after taking into account any reductions therein
resulting from the application of amounts described in clause (h) above) to
zero;
(j) tenth, to the Class M-3 Certificateholders, the lesser of (x)
-----
the Class M-3 Scheduled Principal Distribution Amount and (y) the amount
necessary to reduce the Class M-3 Principal Balance to zero;
(k) eleventh, if the Class M-3 Certificates are an Eligible
--------
Subordinate Class as of such Distribution Date, to the Class M-3
Certificateholders, the lesser of (I) the Class M-3 Unscheduled Principal
Distribution Amount and (II) the amount necessary to reduce the Class M-3
Principal Balance (after taking into account any reductions therein
resulting from the application of amounts described in clause (j) above) to
zero;
(l) twelfth, to the Class B-1 Certificateholders, the lesser of
-------
(x) the Class B-1 Scheduled Principal Distribution Amount and (y) the
amount necessary to reduce the Class B-1 Principal Balance to zero;
(m) thirteenth, if the Class B-1 Certificates are an Eligible
----------
Subordinate Class as of such Distribution Date, to the Class B-1
Certificateholders, the lesser of (I) the Class B-1 Unscheduled Principal
Distribution Amount and (II) the amount necessary to reduce the Class B-1
Principal Balance (after taking into account any reductions therein
resulting from the application of amounts described in clause (l) above) to
zero;
(n) fourteenth, to the Class B-2 Certificateholders, the lesser
----------
of (x) the Class B-2 Scheduled Principal Distribution Amount and (y) the
amount necessary to reduce the Class B-2 Principal Balance to zero;
(o) fifteenth, if the Class B-2 Certificates are an Eligible
---------
Subordinate Class as of such Distribution Date, to the Class B-2
Certificateholders, the lesser of (I) the Class B-2 Unscheduled Principal
Distribution Amount and (II) the amount necessary to reduce the Class B-2
Principal Balance (after taking into account any reductions therein
resulting from the application of amounts described in clause (n) above) to
zero;
(p) sixteenth, to the Class B-3 Certificateholders, the lesser of
---------
(x) the Class B-3 Scheduled Principal
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Distribution Amount and (y) the amount necessary to reduce the Class B-3
Principal Balance to zero;
(q) seventeenth, if the Class B-3 Certificates are an Eligible
-----------
Subordinate Class as of such Distribution Date, to the Class B-3
Certificateholders, the lesser of (I) the Class B-3 Unscheduled Principal
Distribution Amount and (II) the amount necessary to reduce the Class B-3
Principal Balance (after taking into account any reductions therein
resulting from the application of amounts described in clause (p) above) to
zero; and
(r) eighteenth, to the Class RU Certificateholders, any remaining
----------
amounts.
Section 6.06. Disbursement of Funds. All distributions shall be made
---------------------
pursuant to Section 6.05 by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor if such Person shall have so notified the
Trustee in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date; provided that, a Certificateholder
--------
shall only be entitled to receive distributions by wire transfer if such
Certificateholder is the registered Holder of Certificates having an initial
aggregate principal amount equal to or in excess of $5,000,000 or a Percentage
Interest equal to or in excess of 25%; and in all other cases by check mailed to
each such Class A Certificateholder at such Holder's address appearing in the
Certificate Register.
Section 6.07. Allocation of Realized Losses. On each Distribution
-----------------------------
Date, following the application of the Available Funds as described in Section
6.05 above, and after taking into account such application, the Aggregate
Realized Loss Amount, if any, with respect to the related Collection Period
shall be allocated as a reduction in the Aggregate Certificate Principal
Balance, as follows:
(a) if the Class R Amount is greater than zero, as a reduction in
the Class R Amount, until the Class R Amount has been reduced to zero;
(b) if the Class B-3 Principal Balance is greater than zero, any
remaining amount of the Aggregate Realized Loss Amount, after taking into
account any portion thereof previously allocated on such Distribution Date,
as described in clause (a) preceding, as a reduction in the Class B-3
Principal Balance until the Class B-3 Principal Balance has been reduced to
zero;
(c) if the Class B-2 Principal Balance is greater than zero, any
remaining amount of the Aggregate Realized Loss Amount, after taking into
account any portion thereof
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previously allocated on such Distribution Date, as described in clauses (a)
- (b) preceding, as a reduction in the Class B-2 Principal Balance until
the Class B-2 Principal Balance has been reduced to zero;
(d) if the Class B-1 Principal Balance is greater than zero, any
remaining amount of the Aggregate Realized Loss Amount, after taking into
account any portion thereof previously allocated on such Distribution Date,
as described in clauses (a) - (c) preceding, as a reduction in the Class B-
1 Principal Balance until the Class B-1 Principal Balance has been reduced
to zero;
(e) if the Class M-3 Principal Balance is greater than zero, any
remaining amount of the Aggregate Realized Loss Amount, after taking into
account any portion thereof previously allocated on such Distribution Date,
as described in clauses (a) - (d) preceding, as a reduction in the Class M-
3 Principal Balance until the Class M-3 Principal Balance has been reduced
to zero;
(f) if the Class M-2 Principal Balance is greater than zero, any
remaining amount of the Aggregate Realized Loss Amount, after taking into
account any portion thereof previously allocated on such Distribution Date,
as described in clauses (a) - (e) preceding, as a reduction in the Class M-
2 Principal Balance until the Class M-2 Principal Balance has been reduced
to zero;
(g) if the Class M-1 Principal Balance is greater than zero, any
remaining amount of the Aggregate Realized Loss Amount, after taking into
account any portion thereof previously allocated on such Distribution Date,
as described in clauses (a) - (f) preceding, as a reduction in the Class M-
1 Principal Balance until the Class M-1 Principal Balance has been reduced
to zero; and
(h) if the Senior Principal Balance is greater than zero, any
remaining amount of the Aggregate Realized Loss Amount after taking into
account any portion thereof previously allocated on such Distribution Date,
as described in clauses (a) through (g) preceding, (the "Remaining
Aggregate Realized Loss Amount") as a reduction in the Senior Principal
Balance until the Senior Principal Balance has been reduced to zero, such
reduction to be applied:
(i) as a reduction in the Class A-1 Principal Balance in an
amount equal to the product of (x) the Remaining Aggregate Realized
Loss Amount and (y) a fraction, the numerator of which is the Class A-
1 Principal Balance and the denominator of which is the Senior
Principal Balance;
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(ii) as a reduction in the Class A-2-A Principal Balance in an
amount equal to the product of (x) the Remaining Aggregate Realized
Loss Amount and (y) a fraction, the numerator of which is the Class A-
2-A Principal Balance and the denominator of which is the Senior
Principal Balance;
(iii) as a reduction in the Class A-2-B Principal Balance in an
amount equal to the product of (x) the Remaining Aggregate Realized
Loss Amount and (y) a fraction, the numerator of which is the Class A-
2-B Principal Balance and the denominator of which is the Senior
Principal Balance; and
(iv) as a reduction in the Class A-2-C Principal Balance in an
amount equal to the product of (x) the Remaining Aggregate Realized
Loss Amount and (y) a fraction, the numerator of which is the Class A-
2-C Principal Balance and the denominator of which is the Senior
Principal Balance.
Section 6.08. Reports to Certificateholders. On each Distribution
-----------------------------
Date, concurrently with the distribution to the Certificateholders, the Trustee
shall furnish, or cause to be furnished by the Paying Agent to the
Certificateholders, the Depositor and each Rating Agency, a report, based solely
on information provided to the Trustee by the Servicer in the Servicer's Monthly
Report, containing the following information:
(i) the amount of the distribution with respect to each class of
the Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any prepayments or other
unscheduled recoveries of principal included therein;
(iii) the amount of such distributions allocable to interest;
(iv) the Certificate Principal Balance (or Notional Balance) for
the related Class of Certificates as of such Distribution Date together
with the principal amount of the Certificates of the related Class (based
on a Certificate in the original principal amount or Notional Balance of
$1,000) then outstanding, in each case after giving effect to any payment
of principal on such Distribution Date;
(v) the Pass-Through Rate for the next Distribution Date;
(vi) the amount of any Delinquency Advances for such Distribution
Date, and the amount of any unreimbursed
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Delinquency Advances or unreimbursed Servicing Advances remaining after
such Distribution Date;
(vii) the amount of any Repurchase Prices deposited into the
Collection Account;
(viii) information furnished by the Trustee pursuant to Section
6049(d)(7)(C) of the Code and the regulations promulgated thereunder to
assist the Certificateholders in computing their market discount.
Items (i) through (iii) above shall, with respect to the Certificates
be presented on the basis of a Certificate having an original $1,000
denomination and on an aggregate basis. Each calendar year following any year
during which the Certificates are outstanding, the Trustee shall furnish a
report to each Certificateholder of record at any time during such calendar year
as to the aggregate of amounts reported pursuant to items (i), (ii) and (iii)
above with respect to the related Certificates for such calendar year.
In addition, on each Distribution Date the Trustee, based upon
information provided to it by the Servicer, will distribute to each
Certificateholder (which shall be DTC as long as the Certificates are in book-
entry form), the following information as of the close of business on the last
business day of the prior calendar month:
(i) the total number of Mortgage Loans in the Trust and the
aggregate principal balances thereof, together with the number and
aggregate principal balances of Mortgage Loans in the Trust (a) 31-60 days
delinquent, (b) 61-90 days delinquent and (c) 91 or more days delinquent;
(ii) the number and aggregate principal balance of all Mortgage
Loans in the Trust in foreclosure proceedings (and whether any such
Mortgage Loans are also included in any of the statistics described in the
foregoing clause (i));
(iii) the number and aggregate principal balance of all Mortgage
Loans in the Trust relating to "REO" properties (and whether any such
Mortgage Loans are also included in any of the statistics described in the
foregoing clause (i)); and
(iv) the book value of any "REO" property in the Trust.
Annually, in January of each year, the Trustee shall furnish to each
Person which was a Certificateholder during the prior calendar year a statement
showing the aggregate interest and the aggregate principal received by such
Person with respect to the Certificates during the prior calendar year, together
with any standard federal income tax reporting form for such information.
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The Depositor and the Servicer, on behalf of Certificateholders and
the Trust (the "Trust Parties") hereby authorize the Trustee to include the loan
level information with respect to the Mortgage Loans contained in reports
provided to the Trustee by the Servicer hereunder and, if so directed by an
Authorized Officer of the Servicer in writing to the Trustee, the monthly report
to the Certificateholders prepared by the Trustee (the "Information") on The
Bloomberg, an on-line computer based on-line information network maintained by
Bloomberg L.P. ("Bloomberg") or on any other on-line computer based on-line
information network or service ("Information Network"), or in other electronic
or print information services deemed acceptable by the Servicer as designated in
writing to the Trustee by an Authorized Officer of the Servicer. The Trust
Parties agree not to commence any actions or proceedings, or otherwise assert
any claims, against the Trustee or its affiliates or any of the Trustee's or its
affiliates' respective agents, representatives, directors, officers or employees
(collectively, the "Designated Parties"), arising out of, or related to or in
connection with the dissemination and/or use of any Information by the Trustee,
including, but not limited to, claims based on allegations of inaccurate or
incomplete information by the Trustee to Bloomberg or to any Information Network
or otherwise (other than in connection with the Trustee's negligence or willful
misconduct). The Trust Parties waive their rights to assert any such claims
against the Designated Parties and fully and finally release the Designated
Parties from any and all such claims, demands, obligations, actions and
liabilities (other than in connection with such Designated Parties' negligence
or willful misconduct). The Trustee makes no representations or warranties,
expressed or implied, of any kind whatsoever with respect to the accuracy,
adequacy, timeliness, completeness, merchantability or fitness for any
particular purpose of any Information in any form or manner. The
authorizations, covenants and obligations of the Trust Parties under this
section shall be irrevocable and shall survive the termination of this
Agreement.
Section 6.09. Presentation of Certificates. Upon receipt of notice
----------------------------
of the final Distribution Date with respect to Certificates, the Trustee will
notify each Certificateholder that the next Distribution Date will be the final
Distribution Date. In the event that a Certificateholder fails to deliver its
Certificate(s) for cancellation on the final Distribution Date, by its purchase
of a Certificate it agrees to indemnify the Unaffiliated Seller, each Seller,
the Depositor, the Trustee, and the Trust against all claims with respect to
such Certificate(s) arising following such Distribution Date. Claims against
the Trust for payment on such Certificate shall be void unless made within three
years from the Trust termination date.
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ARTICLE VII
REMEDIES
Section 7.01. Limitation on 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, or for any
other remedy hereunder, unless:
(a) there is a continuing Event of Servicer Default and such
Certificateholder has previously given written notice to the Trustee of a
continuing Event of Servicer Default;
(b) the Required Certificateholders shall have made written request
to the Trustee to institute proceedings in respect of such Event of Servicer
Default in its own name as Trustee hereunder;
(c) such Certificateholders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee, for 30 days after its receipt of such notice,
request and offer of indemnity, has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Required
Certificateholders;
it being understood and intended that no one or more Certificate holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Class A Certificate holders, or to obtain or to seek to obtain priority or
preference over any other Certificateholders or to enforce any right under this
Agreement, except in the manner herein provided and for the ratable benefit of
all the Class A Certificateholders as provided herein.
Section 7.02. Restoration of Rights and Remedies. If the Trustee or
----------------------------------
any Certificateholder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Certificateholder, then and in every such case, subject to any
determination in such proceeding, the Unaffiliated Seller, the Trustee and the
Certificateholders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee, and
the Certificateholders shall continue as though no such proceeding had been
instituted.
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Section 7.03. Rights and Remedies Cumulative. Except as otherwise
------------------------------
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Certificates in Section 5.04, no right or remedy herein conferred
upon or reserved to the Trustee or to 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. 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 7.04. Delay or Omission Not Waiver. No delay or omission of
----------------------------
the Trustee or of any Class A Certificateholder to exercise any right or remedy
accruing upon any Event of Servicer Default shall impair any such right or
remedy or constitute a waiver of any such Event of Servicer Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Certificateholders may be exercised from time to time, and
as often as may be deemed expedient, as permitted under the terms hereof, by the
Trustee or by the Certificate holders, as the case may be.
Section 7.05. Control by Certificateholders. (a) Subject to Section
-----------------------------
7.06 hereof, the Required Certificateholders shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee; provided,
--------
that (i) such direction shall not be in conflict with any rule of law or with
this Agreement, (ii) such direction shall not involve any action for which the
Trustee reasonably believes it may not obtain compensation for hereunder or, if
the Trustee determines that such compensation is not available, such
Certificateholders have not offered the Trustee reasonable indemnity for the
cost of such actions, and (iii) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction.
(b) Prior to the occurrence of an Event of Servicer Default hereunder
and after the curing or waiver of all Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by the Required
Certificateholders; provided, however, that if the payment within a reasonable
-------- -------
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such
expense or liability as a condition to taking any such
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action. The reasonable expense of every such examination shall be paid by the
Servicer if an Event of Servicer Default shall have occurred and be continuing,
and otherwise by the Certificateholders requesting the investigation.
Section 7.06. Waiver of Past Defaults. The Required
-----------------------
Certificateholders may on behalf of the Certificateholders of all the
Certificates waive any past default hereunder and its consequences.
Upon any such waiver, such default shall cease to exist, and any Event
of Servicer Default arising therefrom shall be deemed to have been cured, for
every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 7.07. Undertaking for Costs. All parties to this Agreement
---------------------
agree, and each Certificateholder by the acceptance of a Certificate shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Agreement, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and disbursements, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 7.07 shall not apply to any suit instituted by the Unaffiliated Seller,
by the Depositor, by the Trustee, by any Certificateholder or group of
Certificateholders holding in the aggregate more than 10% in Percentage Interest
of the outstanding Certificates, or to any suit instituted by any
Certificateholder for the enforcement of the payment of any principal of or
interest on any Certificate.
Section 7.08. Waiver of Stay or Extension Laws. The Unaffiliated
--------------------------------
Seller covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Agreement; and the Unaffiliated Seller (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE VIII
LIMITATION ON LIABILITY; INDEMNITIES
Section 8.01. Liabilities of Mortgagors. No obligation or liability
-------------------------
of any Mortgagor under any of the Mortgage Loans is intended to be assumed by
the Unaffiliated Seller, the Depositor, the Servicer, the Trust, the Trustee,
the Back-Up Servicer, the Holder of any Trust Interest 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, the Unaffiliated
Seller, the Servicer, the Back-Up Servicer, the Trustee and the Holders of each
Trust Interest expressly disclaim such assumption.
Section 8.02. Liability of the Unaffiliated Seller, Back-Up Servicer,
-------------------------------------------------------
Depositor and the Servicer. (a) The Back-Up Servicer, the Depositor and the
- --------------------------
Servicer shall each be liable in accordance herewith only to the extent of the
obligations specifically imposed by this Agreement.
(b) None of the Depositor, the Servicer, the Back-Up Servicer, nor
any of the directors, officers, employees or agents of the Depositor or the
Servicer, shall be under any liability to each other, the Trust, or the Holder
of any Trust Interest 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 Servicer, or any
- -------- -------
such Person against any breach of warranties or representations made herein, or
against any specific liability imposed on each such party pursuant to this
Agreement or against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations or duties hereunder. The Servicer,
the Back-Up Servicer, and any director, officer, employee or agent of the Back-
Up Servicer or of the Servicer may rely in good faith on any document of any
kind which, prima facie, is properly executed and submitted by any appropriate
----- -----
Person respecting any matters arising hereunder.
(c) The Unaffiliated Seller shall be generally liable for, and shall
pay, any and all obligations of the Trust, to the extent that the payment of any
such obligations is not the responsibility of any other Person.
Section 8.03. Relationship of Servicer. The relationship of the
------------------------
Servicer (and of any Successor Servicer under this Agreement) to the Trustee,
the Depositor and the Back-Up Servicer under this Agreement is intended by the
parties hereto to be that of an independent contractor and not of a joint
venturer, partner or agent of the Trustee, the Depositor or the Back-Up
Servicer.
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Section 8.04. Indemnities of the Servicer. (a) The Servicer agrees
---------------------------
to indemnify the Trust, the Trustee, the Depositor, each Holder of a
Certificate, the Back-Up Servicer and the Unaffiliated Seller, and any of their
respective directors, officers, employees or agents from, and hold them harmless
against, any and all costs, expenses (including reasonable attorney fees and
disbursements), losses, claims, damages and liabilities to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was imposed
upon the Trust, or with respect to any taxes imposed on the Trust, the Trustee,
the Depositor, the Holder of such Certificate, the Back-Up Servicer, or the
Unaffiliated Seller and their respective directors, officers, employees and
agents through the Servicer's acts or omissions in violation of this Agreement
(other than with respect to recourse on the Mortgage Loans and subject to the
servicing standard set forth in Section 4.01), except to the extent such
indemnified party's own bad faith, willful misconduct or negligence contributes
to the costs, expense, loss, claim, damage or liability.
(b) The Servicer also agrees to indemnify the Trustee, its directors,
officers, employees or agents from, and hold it harmless against, any and all
losses, liabilities, damages, claims, expenses (including attorneys fees and
disbursements), fines or penalties, or judgments arising out of or in connection
with the performance by the Trustee of its duties hereunder, or the issuance of
the Certificates except to the extent such indemnified party's own bad faith,
willful misconduct or negligence contributes to the loss, liability, damage,
claim or expense.
(c) This Section 8.04 shall survive the termination of this
Agreement, the resignation or removal of WSC as Servicer, and the resignation or
removal of the Trustee, with respect to the acts or omissions of WSC while it
acted as Servicer.
(d) This indemnification provision shall apply to and bind each
Successor Servicer (including, without limitation, the Back-Up Servicer) with
respect to its acts and omissions during the period it shall act as Servicer.
ARTICLE IX
THE TRUSTEE
Section 9.01. Certain Duties. (a) Except during the occurrence and
--------------
continuance of an Event of Servicer Default, the Trustee 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.
(b) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
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correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the require ments 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, the Trustee
shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Agreement.
(c) In case an Event of Servicer Default of which a Responsible
Officer of the Trustee has actual knowledge has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs; provided, however, that no provision in this
-------- -------
Agreement shall be construed to limit the obligations of the Trustee to provide
notices under Section 9.02.
(d) No provision of this Agreement shall be construed to require the
Trustee to exercise any of its duties under this Agreement in any case in which
the Trustee has not been offered reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in the exercise of
such duty.
(e) 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 Section shall not be construed to limit the effect of
Section 9.01(a) and (b);
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer;
(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
written direction of the Required Certificateholders or other applicable
percentage of Certificateholders relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement; and
(iv) no provision of this Agreement shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
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(f) 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 9.01.
(g) The Trustee shall have no liability in connection with activities
of the Servicer or compliance of the Servicer or the Unaffiliated Seller with
statutory or regulatory requirements related to the Trust Asset. The Trustee
makes no representations or warranties with respect to the Trust Asset or the
validity or sufficiency of any assignment of the Mortgage Loans to the
Unaffiliated Seller or to the Trustee. Notwithstanding anything in this
Agreement to the contrary, the Trustee shall have no duty or obligation to
supervise, verify or monitor the performance of the Servicer nor recompute,
recalculate or verify an information provided to it by the Servicer.
(h) For all purposes under this Agreement, the Trustee shall not be
deemed to have notice of any Event of Servicer Default hereof or any Event of
Servicer Default hereof unless a Responsible Officer has actual knowledge
thereof or unless written notice of such an Event of Servicer Default or Event
of Servicer Default is received by the Trustee at the Corporate Trust Office,
and such notice references this Agreement.
(i) The Trustee shall be under no obligation to institute any suit,
or to take any remedial proceeding under this Agreement, or to enter any
appearance or in any way defend in any suit in which it may be made defendant,
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 that is adjudicated in connection with any action so taken.
(j) Subject to the other provisions of this Agreement and without
limiting the generality of this Section 9.01, the Trustee shall have no duty (A)
to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust from funds available in the Collection Account,
(D) to confirm or verify the contents of any reports or certificates of the
Servicer delivered to the Trustee pursuant to this Agreement believed by the
Trustee to be genuine and to have been signed or presented by the proper party
or parties;
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(k) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement.
Section 9.02. Notice of Defaults. Within five Business Days after
------------------
the earlier of a Responsible Officer (i) receiving actual knowledge and (ii)
receiving written notice, of an Event of Servicer Default or of any default
hereunder, the Trustee shall transmit to the Depositor and all
Certificateholders, as their names and addresses appear in the Certificate
Register and the Rating Agency, notice of such default hereunder known to the
Trustee, unless such default shall have been cured or waived.
Section 9.03. Certain Matters Affecting the Trustee.
-------------------------------------
Subject to the provisions of Section 9.01:
(a) 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, debenture,
note, other evidence of indebted ness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) Whenever in the performance of its duties hereunder 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 specifical ly prescribed) may, in the absence of bad faith on its
part, rely upon an Officer's Certificate or Opinion of Counsel with respect to
its actions or its inaction;
(c) The Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered, or omitted by it hereunder
in good faith and in reliance thereon;
(d) 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 compli ance with such request or direction;
(e) Prior to the occurrence of an Event of Servicer Default, or after
the curing of all Events of Default which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by the Required Certificate-
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holders; provided, however, that if the payment within a reasonable time to the
-------- -------
Trustee of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the Servicer or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand; and
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian (which may be Affiliates of the Trustee) and the
Trustee shall not be liable for any acts or omissions of the Servicer hereunder
or of such agents, attorneys or custodians appointed with due care by it
hereunder.
Section 9.04. Trustee Not Liable for Certificates or Mortgages. (a)
------------------------------------------------
The Trustee makes no representations as to the validity or sufficiency of this
Agreement or any Related Document, the Certificates (other than the execution
and authentication thereof), the Fixed Rate Transferor's Interest or of any
Mortgage Loan. The Trustee shall not be accountable for the use or application
by the Unaffiliated Seller of funds paid to the Unaffiliated Seller in
consideration of conveyance of the Mortgage Loans to the Trust.
(b) The Trustee shall have no responsibility or liability for or with
respect to: the validity of any security interest in any Loan Collateral; the
perfection of any such security interest (whether as of the date hereof or at
any future time) or the maintenance of or the taking of any action to maintain
such perfection; the existence or validity of any Mortgage, the validity of the
assignment of any Mortgage Loan to the Trust or of any intervening assignment;
the review of any Mortgage Loan, any Loan File or the Electronic Ledger (except
as otherwise specified herein); the completeness of any Loan File, the receipt
by it or its custodian of any Mortgage Loan or Loan File (it being understood
that the Trustee has not reviewed and does not intend to review such matters);
the performance or enforcement of any Mortgage Loan; the performance of the
Servicer; the compliance by the Unaffiliated Seller or the Servicer with any
covenant or the breach by the Unaffiliated Seller or the Servicer of any
warranty or representation made hereunder or in any related document or the
accuracy of any such warranty or representation; any investment of monies in the
Collection Account or any loss resulting therefrom; the acts or omissions of the
Servicer or the Back-Up Servicer or any Mortgagor or originator of the related
Mortgage Loans; any action of the Servicer taken in the name of the Trustee; any
action by the Trustee taken at the instruction of the Servicer, the Unaffiliated
Seller or the Required Certificateholders. No recourse shall be had for any
claim based on any provision of this
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Agreement, the Certificates, the Fixed Rate Transferor's Interest or any
Mortgage Loan against the Trustee in its individual capacity, and the Trustee
shall not have any personal obligation, liability or duty whatsoever to any
Class A Certificateholder, the Holder of the Fixed Rate Transferor's Interest,
or any other Person with respect to any such claim, and any such claim shall be
asserted solely against the Trust or any indemnitor who shall furnish indemnity
as provided herein.
Section 9.05. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times (a) be a corporation, depository institution, or
trust company organized and doing business under the laws of the United States
of America or any state thereof authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $100,000,000,
(b) be subject to supervision or examination by Federal or state authority and
(c) have a long-term unsecured debt rating of not less than A from each Rating
Agency (or to the extent not rated by the Rating Agency, not less than an
equivalent rating from each nationally recognized statistical rating
organization that the Servicer requested to rate such debt) or such other rating
as may be acceptable to the Rating Agency, and the Required Certificateholders.
If such institution publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section 9.06, the combined capital and
surplus of such institution shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. (a) The Trustee
---------------------------------
may at any time resign and be discharged from the Trust hereby created by giving
30 days' written notice thereof to the Servicer, the Back-Up Servicer, the
Depositor, the Unaffiliated Seller, each Certificateholder, and each Rating
Agency. Upon receiving such notice of resignation, the Required
Certificateholders shall promptly appoint a successor Trustee by written
instrument, a counterpart of which instrument shall be delivered to each of the
Unaffiliated Seller, each Certificateholder, the successor Trustee and the
predecessor Trustee. A copy of such instrument shall be delivered to each
Rating Agency. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may
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petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.06 and shall fail to resign after
written request therefor by the Required Certificateholders, or if at any time
the Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation, or the
Required Certificateholders may remove the Trustee. If the Trustee is removed
under the authority of the immediately preceding sentence, the Required
Certificateholders shall promptly appoint a successor Trustee by written
instrument, a counterpart of which instrument shall be delivered to each of the
Unaffiliated Seller, each Certificateholder, the successor Trustee and the
predecessor Trustee. Copies of such instrument shall also be delivered by the
Servicer to each Rating Agency.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provi sions of this Section 9.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Section 9.08. Successor Trustee. (a) Any successor Trustee appointed
-----------------
as provided in Section 9.07 shall execute, acknowledge and deliver to each of
the Unaffiliated Seller, the Servicer, each Certificateholder and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder with like effect as if originally named
a Trustee. The predecessor Trustee shall deliver or cause to be delivered to
the successor Trustee or its custodian any related documents and statements held
by it or its custodian hereunder (provided, that so long as no Event of Servicer
--------
Default shall have occurred, the Servicer shall continue as custodian of the
Loan Files hereunder); and the Unaffiliated Seller, the Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for the full and certain vesting and
confirmation in the successor Trustee of all such rights, powers, duties and
obligations.
(b) No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
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(c) Upon acceptance of appointment by a successor Trustee as provided
in this Section 9.08, the Servicer shall mail notice of the succession of such
Trustee hereunder to each Certificateholder at its address as shown in the
Certificate Register and to each Rating Agency. If the Servicer fails to mail
such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Unaffiliated Seller.
Section 9.09. Merger or Consolidation of Trustee. Any corporation
----------------------------------
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be eligible
--------
under the provisions of Section 9.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 9.10. Appointment of Co-Trustee or Separate Trustee. (a)
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Asset may at the time be located, the Trustee shall have the power
and may execute and deliver all instruments to appoint one or more Persons to
act as a co-trustee or co-trustees, or separate trustee or separate trustees, of
all or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders Interest, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Trustee may
consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 9.06 and no notice to Certificateholders of the appointment of any co-
trustee or separate trustee shall be required under Section 9.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the 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 Servicer) the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers,
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duties and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction
of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer, and to the Back-Up Servicer, the Depositor.
(d) 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 its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 9.11. Tax Matters. (a) The Trustee shall prepare all tax
-----------
returns and any other information, returns or reports, if any, that need to be
filed for the Trust. The Trustee shall execute and file all such tax returns
and other information, returns or reports.
(b) The Trustee shall take all action reasonably necessary to assure
compliance with the provisions of the Code relating to (i) certain withholding
requirements applicable to non-U.S. Person taxpayers; (ii) backup withholding
requirements and (iii) certain taxpayer certification requirements relating to
clauses (i) and (ii) above.
Section 9.12. Trustee's Fees and Expenses. (a) On each Distribution
---------------------------
Date, the Trustee shall be entitled to withdraw from
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the Collection Account, pursuant to Section 6.04, the Trustee's Fee. The
Servicer covenants and agrees to pay from the Certificate Account to the Trustee
and any co-trustee from time to time, and the Trustee and any co-trustee shall
be entitled to, reasonable compensation to be withdrawn from the Collection
Account pursuant to Section 6.05, or directly (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by each of them in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee and any co-trustee. The Servicer will pay or reimburse
the Trustee and any co-trustee upon request, from the Collection Account, or
directly, for all reasonable expenses, disbursements and advances incurred or
made by the Trustee or any co-trustee in accordance with any of the provisions
of this Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ, and
the expenses incurred by the Trustee or any co-trustee in connection with the
appointment of an office or agency pursuant to Section 9.10) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
Section 9.13. Reporting; Withholding. (a) The Trustee shall timely
----------------------
provide to the Owners the Internal Revenue Service's Form 1099 and any other
statement required by applicable Treasury regulations as determined by the
Seller, and shall withhold, as required by applicable law, federal, state or
local taxes, if any, applicable to distributions to the Owners, including but
not limited to backup withholding under Section 3406 of the Code and the
withholding tax on distributions to foreign investors under Sections 1441 and
1442 of the Code.
(b) The Trustee shall timely file all reports required to be filed by
the Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050K of the Code, if applicable. Furthermore, the
Trustee shall report to Owners, if required, with respect to the allocation of
expenses pursuant to Section 212 of the Code in accordance with the specific
instructions to the Trustee by the Seller with respect to such allocation of
expenses. The Trustee shall collect any forms or reports from the Owners
determined by the Seller to be required under applicable federal, state and
local tax laws.
(c) The Trustee shall provide to the Internal Revenue Service and to
persons described in section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation section 1.860D-1(b)(5)(ii), or any successor
regulation thereto. Such information will be provided in the manner described
in Treasury Regulation section 1.860E-2(a)(5), or any successor regulation
thereto.
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ARTICLE X
MISCELLANEOUS
Section 10.01. Termination of Agreement. The respective obligations
------------------------
and responsibilities of the Unaffiliated Seller, the Servicer, the Depositor,
the Back-Up Servicer and the Trustee created hereby (other than obligations
expressly stated to survive the termination of the Trust) shall terminate on the
date (the "Trust Termination Date") which is the earlier to occur of:
(i) the day after the day on which the Certificates are paid in
full (including payment pursuant to Section 10.02 below); and
(ii) the date that is 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of
the United States to the United Kingdom, living on the date hereof; and
(iii) the August 25, 2032 Distribution Date.
Section 10.02. Optional Purchase of Trust Assets. (a) On any
---------------------------------
Distribution Date on or after the Distribution Date on which the then-
outstanding aggregate Principal Balances of the Mortgage Loans in the Trust is
less than or equal to ten percent of $27,828,593, the Holders of the Class RL
Certificates or the Servicer, acting directly or through one or more affiliates,
may determine to purchase and may cause the purchase from the Trust of all (but
not fewer than all) Mortgage Loans in the Trust and all property theretofore
acquired in respect of any such Mortgage Loan by foreclosure, deed in lieu of
foreclosure, or otherwise then remaining in the Trust at a price equal to the
sum of (x) the greater of (i) 100% of the aggregate Principal Balances of the
related Mortgage Loans and related accrued interest as of the day of purchase
minus the amount actually remitted by the Servicer representing the related
Servicer Remittance Amount on the related Servicer Remittance Date for the
related Collection Period and (ii) the fair market value of such Mortgage Loans
(disregarding accrued interest), and (y) the amount of any difference between
the related Servicer Remittance Amount actually remitted by the Servicer on such
Servicer Remittance Date and the Servicer Remittance Amount due on the related
Servicer Remittance Date (such amount, the "Termination Price"). The right of
the Holder of the Class RL Certificates so to exercise such optional purchase
right is superior to such right of the Servicer. The Servicer may only exercise
such optional right if the Holder of the Class RL Certificates decline to do so.
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.
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(b) In connection with any such purchase, the Servicer shall provide
to the Trustee an opinion of counsel, at the expense of the Servicer,
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation of each REMIC held by the Trust.
(c) Promptly following any such purchase, the Trustee will release the
Loan Files to the Servicer, or otherwise upon its order.
Section 10.03. Certain Notices upon Final Payment. The Servicer shall
----------------------------------
give the Trustee, each Rating Agency, each Certificateholder, the Back-Up
Servicer, the Depositor and the Unaffiliated Seller at least 30 days' prior
written notice of the date on which the Trust is expected to terminate in
accordance with Section 10.01, or the date on which the Certificates will be
optionally redeemed in accordance with Section 10.02. Such notice shall be
accompanied by an Officer's Certificate setting forth the information specified
in Section 4.15 covering the period during the then-current calendar year
through the date of such notice. Not later than the fifth Business Day in the
Collection Period in which the final distribution in respect to the Certificates
is payable to the Certificateholders, the Trustee shall mail to the Holders of
the Certificates a notice specifying the procedures with respect to such final
distribution. The Trustee shall give a copy of such notice to each Rating
Agency at the time such notice is given to Certificateholders. Following the
final distribution thereon, the Certificates shall become void, no longer
outstanding and no longer evidence any right or interest in the Mortgage Loans
or the Loan Files or any proceeds of the foregoing.
Section 10.04. Beneficiaries. This Agreement will inure to the
-------------
benefit of and be binding upon the parties hereto, the Holders of the
Certificates, and their respective successors and permitted assigns. No other
Person will have any right or obligation hereunder.
Section 10.05. Amendment. (a) This Agreement may be amended from time
---------
to time by the Unaffiliated Seller, the Back-Up Servicer, the Depositor, the
Servicer and the Trustee, without the consent of any of the Holders of the
Certificates, (i) to cure any ambiguity or defect of, to correct or supplement
any provisions herein which may be inconsistent with any other provisions herein
or to add any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of this
Agreement; (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 or upon the transferor of a Residual Certificate as a result of the
ownership of any Residual Certificate by an Disqualified Organization, removing
the restriction on transfer set forth n Section 5.8(b) hereof or (iii) complying
with the requirements of the Code and the regulations proposed or promulgated
thereunder; provided, however,
-------- -------
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that such action shall not, as evidenced by an Opinion of Counsel delivered to
the Trustee, adversely affect in any material respect the interests of any
Holder.
(b) This Agreement may also be amended from time to time by the
Unaffiliated Seller, the Servicer, the Back-Up Servicer, the Depositor and the
Trustee, with the consent of Required 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
Holders of the Certificates; provided, however, that no such amendment shall (a)
-------- -------
reduce in any manner the amount of, or delay the timing of, collections of
payments on the Mortgage Loans or distributions which are required to be made on
any Certificate then outstanding, (b) reduce the percentage required to consent
to any such amendment or (c) modify this Section 10.04(b) without the consent of
the Holders of all of the Holders of the Certificates. The Servicer may set a
record date for purposes of determining the holders entitled to give a written
consent or waive compliance as authorized or permitted by this Section 10.04(b).
Such record date shall not be more than 30 days prior to the first solicitation
to such consent or waiver.
(c) Promptly after the execution of any amendment or consent pursuant
to this Section 10.04, the Trustee shall furnish a copy of such amendment to
each Holder of a Certificate and, not later than the tenth Business Day
preceding the effectiveness of any such amendment, to each Rating Agency.
(d) The manner of obtaining consents and of evidencing the
authorization of the execution thereof by Holders of the Certificates be subject
to such reasonable requirements as the Trustee may prescribe.
(e) The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's own rights, duties or immunities
under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section 10.03,
the Trustee shall be entitled to receive an Opinion of Counsel to the effect
that such amendment is authorized or permitted by the Agreement.
Section 10.06. Notices. (a) All communications and notices to the
-------
parties hereto shall be in writing and delivered or mailed first class mail,
postage prepaid to it at the following address:
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If to the Unaffiliated
Seller at: Wilshire Mortgage
Funding Company IV, Inc.
1705 S.W. Taylor Street
Portland, Oregon 97205
Attn: Lawrence Mendelsohn
Telephone: (503) 223-5600
Telecopier: (503) 223-8799
with a copy to the Servicer.
If to the Servicer, at: Wilshire Servicing Corporation
1776 S.W. Madison Street
Portland, Oregon 97205
Attn: Andrew Wiederhorn
Telephone: (503) 223-5600
Telecopier: (503) 223-8799
with copies to
James Waddington
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Telephone: (212) 969-3110
Telecopier: (212) 969-2900
If to the Trustee, at: Bankers Trust Company of California, N.A.
3 Park Plaza
16th Floor
Irvine, CA 92714
Attn: Wilshire Funding Corporation Mortgage-
Backed Certificates, Series 1996-3
Telephone: (714) 253-7575
Telecopier: (714) 253-7577
If to the Depositor: CS First Boston Mortgage Securities Corp.
11 Madison Avenue
New York, New York 10010
Attn: Vice President
Mortgage Products Group
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If to the Rating
Agencies: Moody's Investors Service
99 Church Street
New York, New York 10007
Attn: Wilshire Funding 1996-3
Telephone: (212) 553-0300
Telecopier: (212) 553-0881
Duff & Phelps Credit Rating Co.
55 East Monroe Street
Chicago, IL 60603
Attn: ABS Monitoring Group
Telephone: (312) 368-3100
Telecopier: (312) 368-3155
Fitch Investors Service, L.P.
One State Street Plaza
New York, NY 10004
Telephone: (212) 908-0500
Telecopier: (212) 480-4438
or at such other address as the party may designate by notice to the other
parties hereto, which shall be effective when received.
(b) All communications and notices given pursuant hereto shall be in
writing and delivered or mailed first class mail, postage prepaid at the address
shown above, or, in the case of the Class A Certificateholders, at the address
shown in the Certificate Register.
Section 10.07. Merger and Integration. Except as specifically stated
----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
Section 10.08. Headings. The headings herein are for purposes of
--------
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 10.09. Certificates Nonassessable and Fully Paid. The
-----------------------------------------
interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and, upon authentication
thereof by the Trustee, each Certificate shall be deemed fully paid.
Section 10.10. Severability of Provisions. If any one or more of the
--------------------------
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no
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way affect the validity or enforceability of the other provisions of this
Agreement, the rights of the Certificateholders or the rights of the Trustee.
Section 10.11. No Proceedings. The Servicer, the Depositor and the
--------------
Unaffiliated Seller each hereby agrees that it will not, directly or indirectly
institute, or cause to be instituted, against the Unaffiliated Seller or the
Trust any proceeding of the type referred to in Section 7.01(c) so long as there
shall not have elapsed one year plus one day since the Trust Termination Date.
Section 10.12. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
------------------------------------------------------
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
- -----
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.
(b) THE UNAFFILIATED SELLER, THE SERVICER, THE BACK-UP SERVICER, THE
DEPOSITOR, THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE PAYING AGENT, EACH
CUSTODIAN AND THE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN
THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 10.06
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON RECEIPT THEREOF.
THE UNAFFILIATED SELLER, THE SERVICER, THE CERTIFICATE REGISTRAR AND TRANSFER
AGENT, THE PAYING AGENT, THE CUSTODIAN AND THE TRUSTEE EACH HEREBY WAIVE ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
--------------------
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE UNAFFILIATED SELLER, THE SERVICER, THE CERTIFICATE
REGISTRAR AND TRANSFER AGENT, THE PAYING AGENT, THE CUSTODIAN AND THE TRUSTEE TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
ANY SUCH PERSON TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER
JURISDICTION.
(c) THE UNAFFILIATED SELLER, THE SERVICER, THE BACK-UP SERVICER, THE
DEPOSITOR, THE CERTIFICATE REGISTRAR AND TRANSFER AGENT, THE PAYING AGENT, EACH
CUSTODIAN AND THE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
Section 10.13. Counterparts. This Agreement may be executed in
------------
counterparts each of which shall be an original, but all of which together shall
constitute one and the same instrument.
127
<PAGE>
Section 10.14. Tax Matters. (a) The Trustee shall prepare all tax
-----------
returns and any other information, returns or reports, if any, that need to be
filed for the Trust. The Trustee shall execute and file all such tax returns
and other information, returns or reports.
(b) The Servicer shall take all action reasonably necessary to assure
compliance with the provisions of the Code relating to (i) certain withholding
requirements applicable to non-U.S. Person taxpayers; (ii) backup withholding
requirements and (iii) certain taxpayer certification requirements relating to
clauses (i) and (ii) above.
Section 10.15. REMIC. The Servicer covenants and agrees for the
-----
benefit of the Owners (i) to take no action which would result in the
termination of REMIC status for either REMIC, (ii) not to engage in any
"Prohibited Transaction", as such term is defined in Section 860F(a)(2) of the
Code and (iii) not to engage in any other action which may result in the
imposition of any other taxes under the Code.
Section 10.16. REMIC Status; Taxes. (a) The Tax Matters Person
-------------------
shall prepare and file or cause to be filed with the Internal Revenue Service
Federal tax or information returns with respect to each REMIC and the
Certificates containing such information and at the times and in such manner as
may be required by the Code or applicable Treasury regulations, and shall
furnish to Owners such statements or information at the times and in such manner
as may be required thereby. For this purpose, the Tax Matters Person may, but
need not, rely on any proposed regulations of the United States Department of
the Treasury. The Tax Matters Person shall indicate the election to treat each
REMIC as a REMIC (which election shall apply to the taxable period ending
December 31, 1996 and each calendar year thereafter) in such manner as the Code
or applicable Treasury regulations may prescribe. The Trustee, as Tax Matters
Person appointed pursuant to Section 10.18 hereof shall sign all tax information
returns filed pursuant to this Section 10.16. The Tax Matters Person shall
provide information necessary for the computation of tax imposed on the transfer
of a Residual Certificate to a Disqualified Organization, or an agent of a
Disqualified Organization, or a pass-through entity in which a Disqualified
Organization is the record holder of an interest. The Trustee shall not be
required to file a separate tax return for the Supplemental Interest Trust.
(b) The Tax Matters Person shall timely file all reports required to
be filed by the Trust with any federal, state or local governmental authority
having jurisdiction over the Trust, including other reports that must be filed
with the Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q
and the form required under Section 6050K of the Code, if applicable to REMICs.
Furthermore, the Tax Matters Person shall report to Owners, if required, with
respect to the allocation of expenses
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<PAGE>
pursuant to Section 212 of the Code in accordance with the specific instructions
to the Tax Matters Person by the Seller with respect to such allocation of
expenses. The Tax Matters Person shall collect any forms or reports from the
Owners determined by the Seller to be required under applicable federal, state
and local tax laws.
(c) The Tax Matters Person shall provide to the Internal Revenue
Service and to persons described in Section 860E(e)(3) and (6) of the Code the
information described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any
successor regulation thereto. Such information will be provided in the manner
described in Treasury Regulation Section 1.860E-2(a)(5), or any successor
regulation thereto.
(d) The Seller and the Depositor covenant and agree to within ten
Business Days after the Startup Day provide to the Trustee any information
necessary to enable the Trustee to meet its obligations under subsections (b)
and (c) above.
(e) The Trustee, the Seller and the Master Servicer each covenants and
agrees for the benefit of the Owners (i) to take no action which would result in
the termination of "REMIC" status for either REMIC, (ii) not to engage in any
"prohibited transaction", as such term is defined in Section 860F(a)(2) of the
Code and (iii) not to engage in any other action which may result in the
imposition on the Trust of any other taxes under the Code, including, without
limitation, for purposes of this paragraph any alteration, modification,
amendment, extension, waiver or forbearance with respect to any Mortgage Loan.
(f) The Trust shall, for federal income tax purposes, maintain books
on a calendar year basis and report income on an accrual basis.
(g) No Eligible Investment shall be sold prior to its stated maturity
(unless sold pursuant to a plan of liquidation in accordance with Section 10.02
hereof).
(h) Neither the Seller 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, which fee or other compensation is
paid from the Trust Estate, other than as expressly contemplated by this
Agreement.
(i) Notwithstanding the foregoing clauses (g) and (h), the Trustee,
the Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an opinion of counsel experienced
in federal income tax matters to the effect that such transaction does not
result in a tax imposed on the Trustee or cause a termination of REMIC status
for either REMIC; provided, however, that such transaction is otherwise
-------- -------
permitted under this Agreement.
129
<PAGE>
Section 10.17. Additional Limitation on Action and Imposition of Tax.
------------------------------------------------------
(a) 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 to the effect that such transaction does not result
in a tax imposed on the Trust or cause a termination of REMIC status for either
REMIC, (i) sell any assets in the Trust Estate, (ii) accept any contribution of
assets after the Startup Day or (iii) agree to any modification of this
Agreement.
(b) In the event that any tax is imposed on "prohibited transactions"
as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" as defined in Section 860G(c) of the Code, on any
contribution to either REMIC after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax is imposed, such tax shall be paid by (i) the
Trustee, if such tax arises out of or results from the Trustee's negligence or
willful misconduct, (ii) the Master Servicer, if such tax arises out of or
results from a breach by the Master Servicer of any of its obligations under
this Agreement, or otherwise (iii) the Owners of the Residual Certificates in
proportion to their Percentage Interests. To the extent such tax is chargeable
against the Owners of the Residual Certificates, notwithstanding anything to the
contrary contained herein, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Owners of the Residual Certificates on
any Payment Date sufficient funds for the payment of such tax.
Section 10.18. Appointment of Tax Matters Person. A Tax Matters
---------------------------------
Person will be appointed by the Owners of the Residual Certificates 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
Trustee hereby agrees to act as the Tax Matters Person (and the Trustee is
hereby appointed by the Owners of the Residual Certificates as the Tax Matters
Person) for each REMIC held by the Trust.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pooling and
Servicing Agreement to be executed by their respective officers thereunto duly
authorized on the day and year first above written.
CS FIRST BOSTON MORTGAGE SECURITIES CORP., as
Depositor
By /s/ Heidi Davis
-----------------
Name: Heidi Davis
Title: Vice President
WILSHIRE MORTGAGE FUNDING COMPANY IV, INC., as
Unaffiliated Seller
By /s/ Lawrence Mendelsohn
--------------------------
Name: Lawrence Mendelsohn
Title: President
WILSHIRE SERVICING CORPORATION,
as Servicer
By /s/ Lawrence Mendelsohn
--------------------------
Name: Lawrence Mendelsohn
Title: President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee and as Back-Up Servicer
By /s/ Holly Holland
--------------------
Name: Holly Holland
Title: Vice President
[Signature Page to Pooling Servicing Agreement]
131
<PAGE>
EXHIBIT 4.2
- --------------------------------------------------------------------------------
LOAN SALE AGREEMENT
Dated as of December 1, 1996
among
WILSHIRE CREDIT CORPORATION,
FIRST BANK OF BEVERLY HILLS, F.S.B.,
GIRARD SAVINGS BANK, F.S.B.,
and
WILSHIRE MORTGAGE FUNDING COMPANY IV, INC.
- --------------------------------------------------------------------------------
<PAGE>
LOAN SALE AGREEMENT
LOAN SALE AGREEMENT (this "Sale Agreement"), dated as of December 1,
1996, among WILSHIRE CREDIT CORPORATION, a Nevada corporation ("WCC"), FIRST
BANK OF BEVERLY HILLS, F.S.B., a chartered Federal savings bank ("First Bank"),
GIRARD SAVINGS BANK, F.S.B., a chartered Federal savings bank ("Girard") (each a
"Seller" and collectively, the "Sellers"), and WILSHIRE MORTGAGE FUNDING COMPANY
IV, INC., a Delaware corporation (the "Company").
W I T N E S S E T H:
-------------------
WHEREAS, the Company has been formed for the sole purpose of
purchasing and selling certain Mortgage Loans owned by WCC, First Bank and
Girard; and
WHEREAS, WCC, First Bank and Girard intend to sell, and the Company
intends to purchase, such Mortgage Loans;
NOW, THEREFORE, the parties agree as follows:
Section 1. Definitions. Unless otherwise defined herein, all
-----------
capitalized terms shall have the meanings set forth in the Pooling and Servicing
Agreement, dated as of December 1, 1996 (the "Pooling and Servicing Agreement"),
by and among the Company, as Unaffiliated Seller (in such capacity, the
"Unaffiliated Seller"), CS First Boston Mortgage Securities Corp., a Delaware
corporation, as depositor (in such capacity, the "Depositor"), Wilshire
Servicing Corporation, as servicer (in such capacity, the "Servicer"), and
Bankers Trust Company of California, N.A., a national banking association, as
trustee (in such capacity, the "Trustee") and as back-up servicer (in such
capacity, the "Back-Up Servicer").
Section 2. Agreement to Purchase. (a) On the Closing Date, the
---------------------
Company shall purchase, without recourse (except as provided herein and in the
Pooling and Servicing Agreement), all of WCC's, all of First Bank's and all of
Girard's right, title and interest in and to (i) the Mortgage Loans listed on
the List of Loans, attached hereto as Schedule 1 (the "WCC Purchased Loans," the
"First Bank Purchased Loans," and the "Girard Purchased Loans", respectively,
and collectively, the "Purchased Loans"), (ii) the Loan Files with respect to
the Purchased Loans, (iii) all of WCC's, all of First Bank's and all of Girard's
right, title and interest in the Loan Collateral, including, without limitation,
insurance policies and (iv) all monies due or to become due and all amounts
received with respect thereto after the opening of business on December 1, 1996,
including, without limitation, insurance policies (collectively, the "Purchased
Assets"),
<PAGE>
from WCC, First Bank and Girard on the terms and subject to the conditions of
this Sale Agreement, the Unaffiliated Seller's Agreement, dated as of December
1, 1996 (the "Unaffiliated Seller's Agreement"), between the Company and the
Depositor, and of the Pooling and Servicing Agreement. In connection and
simultaneously with such sale, each of WCC, First Bank and Girard will transfer
the Mortgage Loans and the related Loan Files to the Trustee, and the Trustee
will take possession thereof.
(b) On or prior to the Closing Date, WCC will complete and deliver to
the Company the List of Loans, which will contain the Required Information with
respect to the Purchased Loans.
(c) On the Closing Date, the Company shall (i) pay to WCC a purchase
price equal to $_____________ (the "WCC Sale Price") by transferring such amount
to an account designated by WCC and (ii) pay to First Bank a purchase price
equal to $____________ (the "First Bank Sale Price") by transferring such amount
to an account designated by First Bank and (iii) pay to Girard a purchase price
equal to $__________ (the "Girard Sale Price", and together with the WCC Sale
Price and the First Bank Sale Price, the "Sale Price") by transferring such
amount to an account designated by Girard. Following delivery of the List of
Loans and payment of the Sale Price, the ownership of each Purchased Loan,
WCC's, First Bank's and Girard's interest in the related Loan Collateral, all
proceeds thereof and the remainder of the Purchased Assets shall be vested in
the Company, and none of WCC, First Bank and Girard shall take any action
inconsistent with such ownership or claim any ownership interest in any such
Purchased Loan or the other Purchased Assets.
(d) The purchase of the Purchased Assets hereunder (the "Purchase")
shall be subject to the condition precedent that each of WCC, First Bank, Girard
and the Company shall have taken all other required action, including, but not
limited to, the delivery of approvals, consents, opinions, documents and
instruments required by the terms of the Pooling and Servicing Agreement and the
other documents entered into in connection with the transactions contemplated
thereby.
(e) On or prior to the Closing Date, each of WCC, First Bank and
Girard shall indicate in its respective Records that ownership of each Purchased
Loan and the other Purchased Assets is held by the Company. In addition, each
of WCC, First Bank and Girard shall respond to any inquiries with respect to
ownership of a Purchased Loan by stating that it is no longer the owner of such
Purchased Loan and that ownership of such Purchased Loan is held by the Company
or its assignees.
2
<PAGE>
(f) WCC, acting as sub-servicer, shall conduct the servicing,
administration and collection of each Purchased Loan and shall take, or cause to
be taken, all such actions as may be necessary or advisable to service,
administer and collect each Purchased Loan, in accordance with the terms of the
Pooling and Servicing Agreement. Any documents relating to Purchased Loans
held by WCC shall be held in trust for the benefit of the Company and its
assignees, and possession of any document relating to the Purchased Loans is for
the sole purpose of facilitating the servicing of the Purchased Loans. Such
possession thereof is in a custodial capacity for the benefit of the Company and
its assignees.
Section 3. Representations and Warranties and Covenants of the
---------------------------------------------------
Sellers. (a) Pursuant to this Sale Agreement, each of WCC, First Bank and
- -------
Girard, as of the Closing Date, make the following representations and
warranties with respect to itself, to the Company:
(i) It is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, is duly qualified to do
business and is in good standing in every jurisdiction in which the nature
of its business requires it to be so qualified.
(ii) It has the power and authority to own and convey all of its
properties and assets and to execute and deliver this Sale Agreement and to
perform the transactions contemplated hereby.
(iii) The execution, delivery and performance by it of this Sale
Agreement and the transactions contem plated hereby, (A) have been duly
authorized by all necessary corporate or other action on its part, (B) do
not contravene or cause it to be in default under (1) its organizational
documents, (2) any contractual restriction with respect to any of its debt
or contained in any material indenture, loan or credit agreement, lease,
mortgage, security agreement, bond, note, or other agreement or instrument
binding on or affecting it or its property or (3) any law, rule,
regulation, order, writ, judgment, award, injunction or decree applicable
to, binding on or affecting it or its property, and (C) do not result in or
require the creation of any Adverse Claim.
(iv) This Sale Agreement has been duly executed and delivered on
its behalf and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to bankruptcy
laws and other similar laws of general application affecting creditors, and
subject to the application of rules of
3
<PAGE>
equity, including those respecting the availability of specific
performance.
(v) All material 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 Governmental Authority, that are necessary in connection
with the performance by it of its obligations as a seller under this Sale
Agreement and, in the case of WCC only, as the sub-servicer referred to
under the Pooling and Servicing Agreement, have been obtained and are in
full force and effect and are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) which could have a material
adverse impact on its performance of its obligations under this Sale
Agreement.
(vi) There is no action, suit, proceeding or investigation
pending or, to the best of its knowledge, threatened, before any court,
administrative agency or tribunal against it which, either in any one
instance or in the aggregate, may result in any material adverse change in
its business, operations, financial condition, properties or assets or in
any material prohibition or impairment of its right or ability to carry on
its business substantially as now conducted, or which would draw into
question the validity or enforceability of this Sale Agreement or any of
the Purchased Loans or of any material action taken or to be taken in
connection with its obligations contemplated herein, or which would be
likely to impair materially its ability to perform under the terms of this
Sale Agreement or that might prohibit its entering into this Sale Agreement
or the consummation of any of the transactions contemplated hereby.
(vii) It is not in violation of or in default with respect to,
any order or decree of any court or any order or demand of any Governmental
Authority, which violation or default would materially and adversely affect
its condition (financial or other) or operations or its properties or its
performance hereunder.
(viii) No defaulted Debt exists under any instrument or
agreement evidencing, securing or providing for the issuance of its Debt.
(ix) The principal place of business and chief executive office
of each of WCC, First Bank and Girard are located at the address set forth
in the designated space beneath its respective signature line in this Sale
Agreement and, except as set forth in the designated space beneath its
respective signature line in this Sale
4
<PAGE>
Agreement, there are now no, and during the past four months there have not
been any, other locations where any of WCC, First Bank or Girard, as the
case may be, has been located (as that term is used in the Uniform
Commercial Code in the state of such location).
(x) The legal name of each of WCC, First Bank and Girard is as
set forth at the beginning of this Sale Agreement and none of WCC, First
Bank or Girard has changed its name in the last four years, and during such
period, neither First Bank nor Girard did use, nor does First Bank or
Girard now use, any tradenames, fictitious names, assumed names or "doing
business as" names; the only tradename, fictitious name, assumed name or
"doing business as" name used by WCC is Wilshire Mortgage Corporation.
(xi) It is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Sale Agreement; it is
paying its Debts as they mature; it has not sold any Mortgage Loan to the
Company with intent to hinder, delay or defraud any entity to which it was,
or became, after the date that such transfer was made, indebted; its sales
of the Mortgage Loans to the Company have been and will be made for
reasonably equivalent value and fair consideration; it has not incurred
Debts beyond its ability to pay as they mature; and it, after giving effect
to the transactions contemplated by this Sale Agreement, will have an
adequate amount of capital to conduct its business in the foreseeable
future.
(xii) For federal income tax, reporting and ac counting
purposes, it will treat the transfer of each Mortgage Loan pursuant to this
Sale Agreement as a sale, or absolute assignment, of its full right, title
and ownership interest in such Mortgage Loan to the Company, and it has not
in any other respect accounted for or treated the transactions contemplated
by this Sale Agreement.
(xiii) It has and maintains all permits, licenses,
authorizations, registrations, approvals and consents of Governmental
Authorities (including, without limitation, sales finance company licenses,
if any) necessary for (A) its activities and business as currently
conducted and as proposed to be conducted, (B) the ownership, use,
operation and maintenance of its properties, facilities and assets and (C)
the performance by it of this Sale Agreement.
(xiv) It has filed on a timely basis all tax returns (federal,
state, and local) required to be filed
5
<PAGE>
and has paid or made adequate provisions for the payment of all taxes,
assessments and other governmental charges due from it.
(xv) Each pension plan or profit sharing plan to which such
Seller is a party has been fully funded in accordance with its obligations
set forth in such plan.
(xvi) With respect to each Seller, there has occurred no event
which has a material adverse effect on its ability to perform its
obligations under this Sale Agreement.
(xvii) Its balance sheet as of the date of its most recently
completed fiscal year and its related statements of income and
shareholders' equity for the fiscal year then ended together with all
quarterly reports with respect to completed fiscal quarters occurring after
such fiscal year until the date of this representation and warranty, copies
of which have been furnished to the Company, fairly present its financial
condition, business and operations as at such date and the results of its
operations for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied, and since
such date of the most recent financial statements there has been no
material adverse change in any such condition, business or operations.
(xviii) It has valid business reasons for selling its interests
in the Purchased Loans rather than obtaining a loan with the Purchased
Loans as collateral.
(b) With respect to each Purchased Loan sold pursuant to this Sale
Agreement, WCC, as of the Closing Date, makes the representations and warranties
set forth in Section 3.05 of the Pooling and Servicing Agreement for the benefit
of the Company. Such representations and warranties are incorporated by
reference in this Section 3(b), and the Company may rely thereon as if such
representations and warranties were fully set forth herein.
(c) It is understood and agreed that the representations and
warranties in this Section 3 shall survive the sale of the Purchased Loans and
the other Purchased Assets to the Company and any sale or assignment of the
Purchased Loans and the other Purchased Assets by the Company to the Depositor
and by the Depositor to the Trustee for the benefit of the Trust and shall
continue so long as any Purchased Loan shall remain outstanding.
(d) Each of WCC, First Bank and Girard acknowledges that, pursuant to
the Unaffiliated Seller's Agreement, the
6
<PAGE>
Company has assigned all of its right, title and interest in and to the
Purchased Loans and the other Purchased Assets and its right to exercise the
remedies created by Section 4 hereof to the Depositor and that, pursuant to the
Pooling and Servicing Agreement, the Depositor has assigned all of its right,
title and interest in and to the Purchased Loans and the other Purchased Assets
and its right to exercise the remedies created by Section 4 hereof to the
Trustee, on behalf of the holders of the Certificates, as the case may be. Each
of WCC, First Bank and Girard agrees that the Trustee, on behalf of the holders
of the Certificates, may enforce directly, without joinder of the Company, the
repurchase obligations of WCC set forth in Section 4 hereof with respect to
breaches of the representations and warranties made by it set forth in this
Section 3.
(e) Each of WCC, First Bank and Girard covenants and agrees, so long
as any Certificates are outstanding, as follows:
(i) Any change in the location of the principal place of business or
chief executive office (as such terms are used in the Uniform Commercial
Code in the state of such location) of any of WCC, First Bank and Girard
occurring after the Closing Date shall be specifically disclosed to the
Company, the Depositor and the Trustee in writing.
(ii) Any change in the legal name of WCC, First Bank or Girard after
the Closing Date shall be specifically disclosed to the Company, the
Depositor and the Trustee in writing.
Section 4. Breach of Representations and Warranties; Repurchase of
-------------------------------------------------------
Purchased Loans. Upon discovery by WCC, First Bank, Girard or the Company of,
- ---------------
or, upon a Responsible Officer of the Trustee, obtaining actual knowledge of, a
breach by WCC of any of the representations and warranties set forth in Section
3 hereof, without regard to any limitation set forth in such representation or
warranty concerning the knowledge of WCC as to the facts stated therein which
materially and adversely affects the value, or the interest, of the Trust in any
Purchased Loan, the party discovering such breach shall give prompt written
notice to the other parties. Thereafter, WCC shall, if such breach materially
and adversely affects the interests of the Trust or any holder of a Certificate,
as the case may be, in any Purchased Loan, on the Servicer Remittance Date in
the month following the expiration of a 60 day period since the date of notice
of such breach (the "Repurchase Date"), if such breach remains uncured,
repurchase such Purchased Loan by remitting to the Certificate Account, the
related Repurchase Price. Any
7
<PAGE>
such repurchase shall be made without recourse against, or warranty, express or
implied, of such transferring party.
Section 5. Assignment of Repurchased Loans. In the event a Purchased
-------------------------------
Loan is repurchased pursuant to Section 4 hereof, such Purchase Loan shall be
assigned to the related Seller, or its designee, in the manner described in the
Pooling and Servicing Agreement.
Section 6. Grant of Security Interest. It is the intention of the
--------------------------
parties hereto that each transfer of Purchased Loans and the other Purchased
Assets to be made hereunder shall constitute a purchase and sale and not a loan
secured by such Purchased Loans and other Purchased Assets. In the event,
however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale, it
is the intention of the parties hereto that this Sale Agreement shall constitute
a security agreement under applicable law and that each of WCC, First Bank and
Girard shall be deemed to have granted to the Company a first priority security
interest in all of its respective right, title and interest in, to and under the
Purchased Loans, all payments of principal or interest on such Purchased Loans,
the Loan Collateral, subject to such Purchased Loans, any insurance policies
with respect to such Loan Collateral, all other Purchased Assets, and all
proceeds of any Purchased Loans and all other Purchased Assets.
Section 7. Notices, Etc. All notices and other communications
-------------
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telecommunication and express mail) and mailed or telecommunicated,
or delivered as to each party hereto, at its address set forth under its name on
the signature page hereof or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All such notices
and communications shall not be effective until received by the party to whom
such notice or communication is addressed.
Section 8. No Waiver; Remedies. No failure on the part of WCC,
-------------------
First Bank, Girard or the Company to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any other remedies provided by law.
Section 9. Binding Effect; Assignability. This Sale Agreement shall
-----------------------------
be binding upon and inure to the benefit of WCC, First Bank, Girard and the
Company, and their respective successors and permitted assigns. Except as set
forth in Section 3, no party to this Sale Agreement may assign
8
<PAGE>
any of its rights and obligations hereunder or any interest herein without the
prior written consent of each other party. Each of WCC, First Bank and Girard
hereby acknowledges and consents to the assignment by the Company to the
Depositor of all of the Company's rights hereunder and interests herein and by
the Depositor to the Trustee on behalf of the holders of the Certificates, of
all of such rights and interests. This Sale Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until its termination;
provided, that the rights and remedies described in Section 4 hereof with
- --------
respect to any breach of any representation and warranty made by any of WCC,
First Bank and Girard pursuant to Section 3 hereof shall continue so long as any
of the Certificates are outstanding irrespective of any termination of this Sale
Agreement.
Section 10. Amendments; Consents and Waivers. No modification,
--------------------------------
amendment or waiver of, or with respect to, any provision of this Sale
Agreement, and all other agreements, instruments and documents delivered
pursuant hereto, nor consent to any departure by WCC, First Bank, Girard or the
Company from any of the terms or conditions hereof shall be effective unless it
shall be (a) in writing and signed by each of the parties hereto and (b)
consented to in writing by the Trustee. Any waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
consent to or demand by WCC, First Bank, Girard or the Company in any case
shall, in itself, entitle it to any other consent or further notice or demand in
similar or other circumstances. This Sale Agreement, the Unaffiliated Seller's
Agreement and the Pooling and Servicing Agreement and the documents referred to
herein and therein embody the entire agreement of WCC, First Bank, Girard and
the Company with respect to the Purchased Loans and supersede all prior
agreements and understandings relating to the subject hereof.
Section 11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
------------------------------------------------------
TRIAL. (a) THIS SALE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
- -----
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) WCC, FIRST BANK, GIRARD AND THE COMPANY HEREBY SUBMIT TO THE NON-
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND
EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS
SET FORTH ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON RECEIPT THEREOF. WCC, FIRST BANK, GIRARD AND THE COMPANY EACH
HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND
--------------------
9
<PAGE>
ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION 11 SHALL AFFECT THE RIGHT OF WCC, FIRST BANK,
GIRARD OR THE COMPANY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT ANY SUCH PARTY'S RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) WCC, FIRST BANK, GIRARD AND THE COMPANY EACH HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION
WITH THIS SALE AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 12. Execution in Counterparts; Severability. This Sale
---------------------------------------
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and both of which
when taken together shall constitute one and the same agreement. In case any
provision in or obligation under this Sale Agreement shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation,
shall not in any way be affected or impaired thereby in any other jurisdiction.
10
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Sale Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
WILSHIRE CREDIT CORPORATION
By /s/ Lawrence Mendelsohn
-------------------------
Name: Lawrence Mendelsohn
Title: President
Address: 1776 S.W. Madison Street
Portland, Oregon 97205
FIRST BANK OF BEVERLY HILLS, F.S.B.
By /s/ R. Scott Stevenson
------------------------
Name: R. Scott Stevenson
Title: President
Address: 1776 S.W. Madison Street
Portland, Oregon 97205
GIRARD SAVINGS BANK, F.S.B.
By /s/ R. Scott Stevenson
------------------------
Name: R. Scott Stevenson
Title: President
Address: 1776 S.W. Madison Street
Portland, Oregon 97205
WILSHIRE MORTGAGE FUNDING COMPANY
IV, INC.
By /s/ Lawrence Mendelsohn
-------------------------
Name: Lawrence Mendelsohn
Title: President
Address: 1705 S.W. Taylor Street
Portland, Oregon 97205
[Signature Page to the Loan Sale Agreement]
<PAGE>
EXHIBIT 4.3
CS FIRST BOSTON MORTGAGE SECURITIES CORP.
Depositor
and
WILSHIRE MORTGAGE FUNDING COMPANY IV, INC.
Unaffiliated Seller
___________________________
UNAFFILIATED SELLER'S AGREEMENT
Dated as of December 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE ONE DEFINITIONS................................................ 1
Section 1.01. Definitions........................................ 1
ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS............ 3
Section 2.01. Agreement to Purchase.............................. 3
Section 2.02. Purchase Price..................................... 3
Section 2.03. Conveyance of Mortgage Loans; Possession of
Mortgage Files..................................... 3
Section 2.04. Delivery of Mortgage Loan Documents4
Section 2.05. Transfer of Mortgage Loans; Assignment of Agreement 5
Section 2.06. Books and Records.................................. 5
Section 2.07. Cost of Delivery of Documents...................... 5
ARTICLE THREE COVENANTS.................................................. 5
ARTICLE FOUR MISCELLANEOUS.............................................. 6
Section 4.01. Conditions of Depositor's Obligations.............. 6
Section 4.02. Conditions of Unaffiliated Seller's Obligations.... 8
Section 4.03. Termination of Depositor's Obligations............. 8
Section 4.04. Notices............................................ 9
Section 4.05. Severability of Provisions......................... 9
Section 4.06. Agreement of Unaffiliated Seller................... 10
Section 4.07. Survival........................................... 10
Section 4.08. Effect of Headings and Table of Contents........... 10
Section 4.09. Successors and Assigns............................. 10
Section 4.10. Governing Law...................................... 10
Section 4.11. Confirmation of Intent............................. 10
Section 4.12. Execution in Counterparts.......................... 11
Section 4.13. Costs.............................................. 11
Section 4.14. Indemnification.................................... 12
Section 4.15. Miscellaneous...................................... 16
i
<PAGE>
Exhibits
- --------
Exhibit A - List of Mortgage Loans
Exhibit B - Officer's Certificate of the Unaffiliated Seller
Exhibit C - Opinion of Counsel to the Unaffiliated Seller
ii
<PAGE>
This Agreement (the "Unaffiliated Seller's Agreement"), dated as of
December 1, 1996, by and between CS FIRST BOSTON MORTGAGE SECURITIES CORP., a
Delaware corporation (the "Depositor"), and WILSHIRE MORTGAGE FUNDING COMPANY
IV, INC., a Delaware corporation (the "Unaffiliated Seller").
W I T N E S S E T H:
-------------------
WHEREAS, the Unaffiliated Seller entered into a Loan Sale Agreement,
dated as of December 1, 1996 (the "Loan Sale Agreement"), by and among Wilshire
Credit Corporation, First Bank of Beverly Hills, F.S.B. and Girard Savings Bank,
F.S.B., pursuant to which the Unaffiliated Seller acquired all the Mortgage
Loans (as hereinafter defined);
WHEREAS, Exhibit A attached hereto and made a part hereof lists
certain residential mortgage loans (the "Mortgage Loans") owned by the
Unaffiliated Seller that the Unaffiliated Seller desires to sell to the
Depositor and that the Depositor desires to purchase;
WHEREAS, it is the intention of the Unaffiliated Seller and the
Depositor that simultaneously with the Unaffiliated Seller's conveyance of the
Mortgage Loans to Depositor on the Closing Date the Depositor shall deposit the
Mortgage Loans in trust pursuant to a Pooling and Servicing Agreement to be
dated as of December 1, 1996 (the "Pooling and Servicing Agreement"), to be
entered into by and among the Depositor, as depositor, the Unaffiliated Seller,
Bankers Trust Company of California, N.A., as Trustee (the "Trustee") and as
Back-Up Servicer (the "Back-up Servicer"), and Wilshire Servicing Corporation,
as Servicer (the "Servicer");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used herein, the following words
-----------
and phrases, unless the context otherwise requires, shall have the meanings
specified in this Article:
"Agreement" means this Unaffiliated Seller's Agreement, as amended or
---------
supplemented in accordance with the provisions hereof.
"Closing Date" shall have the meaning ascribed thereto in Section
------------
2.01(c).
<PAGE>
"Commission" means the United States Securities and Exchange
----------
Commission.
"Cut-Off Date" means the opening of business, December 1, 1996.
------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"List of Mortgage Loans" shall have the meaning ascribed thereto in
----------------------
Section 2.01(b).
"Prospectus" means the Prospectus, dated November 21, 1996, relating
----------
to the offering by the Depositor from time to time of its Pass-Through
Certificates (Issuable in Series) in the form in which it was or will be filed
with the Securities Exchange Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Offered Certificates.
"Prospectus Supplement" means the Prospectus Supplement, dated
---------------------
December 19, 1996, relating to the offering of the Certificates in the form in
which it was or will be filed with the Commission pursuant to Rule 424(b) under
the Securities Act with respect to the offer and sale of the Offered
Certificates.
"Registration Statement" means that certain registration statement on
----------------------
Form S-3, as amended (Registration No. 333-15833) relating to the offering by
the Depositor from time to time of its Pass-Through Certificates (Issuable in
Series) as heretofore declared effective by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Unaffiliated Seller" means Wilshire Mortgage Funding Company IV,
-------------------
Inc., in its capacity as Unaffiliated Seller of the Mortgage Loans under this
Agreement and any successor thereto, whether through merger, consolidation,
purchase and assumption thereof or by purchase or acquisition all or
substantially all of its assets or otherwise.
Capitalized terms used herein that are not otherwise defined shall
have the respective meanings ascribed thereto in the Pooling and Servicing
Agreement.
2
<PAGE>
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Agreement to Purchase. (a) Subject to the terms and
---------------------
conditions of this Agreement, the Unaffiliated Seller agrees to sell, and the
Depositor agrees to purchase on the Closing Date, the Mortgage Loans.
(b) Subject to Section 2.07, the Depositor and the Unaffiliated Seller
have agreed upon which of the Unaffiliated Seller's loans are to be purchased by
the Depositor on the Closing Date pursuant to this Agreement, and the
Unaffiliated Seller has prepared a schedule (the "List of Mortgage Loans")
setting forth all of the Mortgage Loans to be purchased under this Agreement,
which schedule is attached hereto as Exhibit A.
(c) The closing for the purchase and sale of the Mortgage Loans shall
take place at the offices of Dewey Ballantine, New York, New York, at 10:00
a.m., New York time, on December 20, 1996 or such other place and time as the
parties shall agree (such time being herein referred to as the "Closing Date").
Section 2.02. Purchase Price. On the Closing Date, as full
--------------
consideration for the Unaffiliated Seller's sale of the Mortgage Loans to the
Depositor, the Depositor will deliver to the Unaffiliated Seller (i) an amount
in cash equal to $286,028,340.52, all payable by wire transfer of same day funds
and (ii) the Class RU Certificates and the Class RL Certificates to be issued
pursuant to the Pooling and Servicing Agreement.
Section 2.03. Conveyance of Mortgage Loans; Possession of Mortgage
----------------------------------------------------
Files. On the Closing Date, the Unaffiliated Seller shall sell, transfer,
- -----
assign, set over and convey to the Depositor, without recourse but subject to
the terms of this Agreement, all right, title and interest in and to the
Purchased Loans and the other Purchased Assets (as such terms are defined in the
Loan Sale Agreement) and the Unaffiliated Seller's right to exercise the
remedies created by Section 4 of the Loan Sale Agreement from and after the
Closing Date until such time, if ever, as such Mortgage Loan is repurchased
under the related Pooling and Servicing Agreement or the Certificates are paid
in full. Upon payment of the purchase price for such Mortgage Loans as provided
in Section 2.02 of this Agreement, the Unaffiliated Seller shall have hereby,
and shall be deemed to have, sold, transferred, assigned, set over and conveyed
such Purchased Loans and the other Purchased Assets and the Unaffiliated
Seller's right to exercise the remedies created by Section 4 of the Loan Sale
Agreement from and after the Closing Date until such time as
3
<PAGE>
the Certificates are paid in full such Mortgage Loan is repurchased under the
related Pooling and Servicing Agreement, if ever, to the Depositor. Upon the
sale of such Mortgage Loans, the ownership of each related Note, each related
Mortgage and the contents of the related Loan File shall immediately vest in the
Depositor and the ownership of all related records and documents with respect to
each Mortgage Loan prepared by or which come into the possession of the
Unaffiliated Seller shall immediately vest in the Depositor. The contents of
any Loan File in the possession of the Unaffiliated Seller at any time after
such sale, and any scheduled payments of principal and interest on the Mortgage
Loans due after the Cut-Off Date and received by the Unaffiliated Seller, shall
be held in trust by the Unaffiliated Seller for the benefit of the Depositor as
the owner thereof, and shall be promptly delivered by the Unaffiliated Seller to
or upon the order of the Depositor.
Pursuant to the Pooling and Servicing Agreement, the Depositor shall,
on the Closing Date, assign all of its right, title and interest in and to the
Purchased Loans and the other Purchased Assets and the Unaffiliated Seller's
right to exercise the remedies created by Section 4 of the Loan Sale Agreement
to the Trustee for the benefit of the Holders of the Certificates.
Section 2.04. Delivery of Mortgage Loan Documents. On or prior to
-----------------------------------
the Closing Date, the Unaffiliated Seller shall deliver to the Trustee (as
assignee of the Depositor pursuant to the Pooling and Servicing Agreement), the
Loan File Documents, as described in the related Pooling and Servicing
Agreement.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee (as assignee of the Depositor pursuant to the Pooling
and Servicing Agreement) as required by this Section 2.04 are and shall be held
by the Unaffiliated Seller in trust for the benefit of the Trustee on behalf of
the related Holders of the Certificates. In the event that any such original
document is required pursuant to the terms of this Section 2.04 to be a part of
a Loan File, such document shall be delivered promptly to the Trustee (as
assignee of the Depositor pursuant to the Pooling and Servicing Agreement).
From and after the sale of the Mortgage Loans to the Depositor
pursuant hereto, to the extent that the Unaffiliated Seller retains legal title
of record to any Mortgage Loans prior to the vesting of legal title in the
Trustee (as assignee of the Depositor pursuant to the Pooling and Servicing
Agreement), such title shall be retained in trust for the Depositor as the owner
of the Mortgage Loans and the Trustee, as the Depositor's assignee.
4
<PAGE>
Section 2.05. Transfer of Mortgage Loans; Assignment of Agreement.
---------------------------------------------------
The Depositor has the right to assign its interest under this Agreement to the
Trustee as may be required to effect the purposes of the Pooling and Servicing
Agreement, without further notice to, or consent of, the Unaffiliated Seller,
and the Trustee shall succeed to such of the rights and obligations of the
Depositor hereunder as shall be so assigned. The Depositor shall, pursuant to
the Pooling and Servicing Agreement, assign all of its right, title and interest
in and to the Purchased Loans and the other Purchased Assets and the
Unaffiliated Seller's right to exercise the remedies created by Section 4 of the
Loan Sale Agreement, together with all other rights relating to the foregoing,
to the Trustee for the benefit of the Holders of the Certificates. The
Unaffiliated Seller agrees that, upon such assignment to the Trustee, all rights
of the Depositor with respect to the Purchased Loans and the other Purchased
Assets and the Unaffiliated Seller's right to exercise the remedies created by
Section 4 of the Loan Sale Agreement will run to and be for the benefit of the
Trustee and the Trustee may enforce diligently, without joinder of the
Depositor, any and all of such rights.
Section 2.06. Books and Records. The sale of each Mortgage Loan
-----------------
shall be reflected on the Unaffiliated Seller's balance sheet and other
financial statements as a sale of assets by the Unaffiliated Seller for
accounting purposes and for tax purposes. The Unaffiliated Seller shall be
responsible for maintaining, and shall maintain, a complete set of books and
records for each Mortgage Loan which shall be clearly marked to reflect the
ownership of each Mortgage Loan by the Trustee for the benefit of the Holders of
the Certificates.
Section 2.07. Cost of Delivery of Documents. The costs relating to
-----------------------------
the delivery of the documents specified in this Article Two in connection with
the Mortgage Loans shall be borne by the Unaffiliated Seller.
ARTICLE THREE
COVENANTS
The Unaffiliated Seller covenants with the Depositor as follows:
(a) The Unaffiliated Seller shall cooperate with the Depositor and the
firm of independent certified public accountants retained with respect to the
issuance of the Certificates in making available all information and taking all
steps reasonably necessary to permit the accountants'
5
<PAGE>
letters required hereunder to be delivered within the times set for delivery
herein.
(b) The Unaffiliated Seller hereby agrees to do all acts,
transactions, and things and to execute and deliver all agreements, documents,
instruments, and papers by and on behalf of the Unaffiliated Seller as the
Depositor or its counsel may reasonably request in order to consummate the
transfer of the Mortgage Loans to the Depositor and the subsequent transfer
thereof to the Trustee, and the rating, issuance and sale of the Certificates.
(c) The Unaffiliated Seller hereby agrees to arrange separately to pay
to the Trustee all of the Trustee's fees and expenses in connection with the
transactions contemplated by the Pooling and Servicing Agreement subject to
existing agreements to which the Unaffiliated Seller assented at an earlier
date. For the avoidance of doubt, the parties hereto acknowledge that it is the
intention of the parties that the Depositor shall not pay any of the Trustee's
fees and expenses in connection with the transactions contemplated by the
Pooling and Servicing Agreement.
ARTICLE FOUR
MISCELLANEOUS
Section 4.01. Conditions of Depositor's Obligations. The
-------------------------------------
obligations of the Depositor to purchase the Mortgage Loans will be subject to
the satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.
(a) Each of the obligations of the Unaffiliated Seller required to be
performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement and the Pooling and Servicing Agreement shall have been duly performed
and complied with in all material respects and all of the representations and
warranties of the Unaffiliated Seller under this Agreement and the Pooling and
Servicing Agreement shall be true and correct in all material respects as of the
Closing Date and no event shall have occurred which, with notice or the passage
of time, would constitute a default under this Agreement or the Pooling and
Servicing Agreement, and the Depositor shall have received a certificate to the
effect of the foregoing signed by an authorized officer of the Unaffiliated
Seller.
(b) The Depositor shall have received a letter dated the date of this
Agreement, in form and substance reasonably acceptable to the Depositor and its
counsel,
6
<PAGE>
prepared by Arthur Anderson & Co., independent certified public accountants,
regarding the numerical information contained in the Prospectus Supplement under
the captions "Prepayment and Yield Considerations" and "Description of the
Mortgage Loans."
(c) The Mortgage Loans will be reasonably acceptable to the Depositor,
in its sole discretion.
(d) The Depositor shall have received the following additional closing
documents, in form and substance satisfactory to the Depositor and its counsel:
(i) the List of Mortgage Loans;
(ii) the Pooling and Servicing Agreement, dated as of December 1,
1996, and the Underwriting Agreement, dated as of December 19, 1996 (the
"Underwriting Agreement"), between the Depositor and CS First Boston
Corporation and all documents required thereunder, duly executed and
delivered by each of the parties thereto other than the Depositor;
(iii) an officer's certificate of an officer of the Unaffiliated
Seller, dated as of the Closing Date, in the form of Exhibit B hereto, and
attached thereto resolutions of the board of directors and a copy of the
charter and by-laws;
(iv) a copy of the Unaffiliated Seller's charter and all
amendments, revisions, and supplements thereof, certified by an officer of
such entity;
(v) an opinion of the counsel for the Unaffiliated Seller as to
various corporate matters substantially in the form attached hereto as
Exhibit C (it being agreed that the opinion shall expressly provide that
the Trustee shall be entitled to rely on the opinion);
(vi) letters from the Rating Agencies that they have assigned
ratings to the Certificates as described in the Prospectus Supplement;
(vii) an opinion of counsel for the Trustee in form and substance
acceptable to the Depositor, its counsel, and each Rating Agency (it being
agreed that the opinion shall expressly provide that the Unaffiliated
Seller shall be entitled to rely on the opinion); and
(viii) an opinion or opinions of counsel for the Servicer, in form
and substance acceptable to the Depositor, its counsel, and each Rating
Agency.
7
<PAGE>
(e) All documents contemplated by this Agreement and the Pooling and
Servicing Agreement shall be satisfactory in form and substance to the Depositor
and its counsel.
(f) The Unaffiliated Seller shall have furnished the Depositor with
such other certificates of its officers or others and such other documents or
opinions as the Depositor or its counsel may reasonably request.
Section 4.02. Conditions of Unaffiliated Seller's Obligations. The
-----------------------------------------------
obligations of the Unaffiliated Seller under this Agreement shall be subject to
the satisfaction, on the Closing Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be performed
by it at or prior to the Closing Date pursuant to the terms of this Agreement
and the Pooling and Servicing Agreement shall have been duly performed and
complied with and all of the representations and warranties of the Depositor
contained in this Agreement and the Pooling and Servicing Agreement shall be
true and correct as of the Closing Date and the Unaffiliated Seller shall have
received a certificate to that effect signed by an authorized officer of the
Depositor.
(b) The Unaffiliated Seller shall have received the following
additional documents:
(i) the Pooling and Servicing Agreement, and all documents required
thereunder, in each case executed by the Depositor as applicable;
(ii) an opinion of the counsel for the Depositor as to tax matters;
and
(iii) an opinion of the counsel for the Depositor as to true sale
matters.
(c) The Depositor shall have furnished the Unaffiliated Seller with
such other certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Agreement as the
Unaffiliated Seller may reasonably request, and the Underwriting Agreement shall
have been duly performed and complied with.
Section 4.03. Termination of Depositor's Obligations. The Depositor
--------------------------------------
may terminate its obligations hereunder by notice to the Unaffiliated Seller at
any time before delivery of and payment of the purchase price for the Mortgage
Loans if: (i) any of the conditions described in Section 4.01 are not satisfied
when and as provided therein; (ii) there shall have been the entry of a decree
or order by
8
<PAGE>
a court or agency or supervisory authority having jurisdiction in the premises
for the appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Unaffiliated Seller or the Servicer, or for
the winding up or liquidation of the affairs of the Unaffiliated Seller or the
Servicer; (iii) there shall have been the consent by the Unaffiliated Seller or
the Servicer to the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Unaffiliated Seller or the Servicer or
relating to substantially all of the property of the Unaffiliated Seller or the
Servicer; or (iv) the Underwriter terminates its obligations under the
Underwriting Agreement (except as a result of a failure solely due to a matter
within the reasonable control of the Depositor). The termination of the
Depositor's obligations hereunder shall not terminate the Depositor's rights
hereunder or its right to exercise any remedy available to it at law or in
equity.
Section 4.04. Notices. All demands, notices and communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by facsimile and confirmed by a similar mailed writing, if to the
Depositor, addressed to the Depositor at Eleven Madison Avenue, New York, New
York 10010, or to such other address as the Depositor may designate in writing
to the Unaffiliated Seller and if to the Unaffiliated Seller, addressed to the
Unaffiliated Seller at Wilshire Mortgage Funding Company IV, Inc., 1776 S.W.
Madison Street, Portland, Oregon 97205, Attention: Lawrence Mendelsohn or to
such other address as the Unaffiliated Seller may designate in writing to the
Depositor.
Section 4.05. Severability of Provisions. Any part, provision,
--------------------------
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which
9
<PAGE>
prohibits or renders void or unenforceable any provision hereof.
Section 4.06. Agreement of Unaffiliated Seller. The Unaffiliated
--------------------------------
Seller agrees to execute and deliver such instruments and take such actions as
the Depositor may, from time to time, reasonably request in order to effectuate
the purpose and to carry out the terms of this Agreement.
Section 4.07. Survival. The parties to this Unaffiliated Seller's
--------
Agreement agree that the representations, warranties and agreements made by each
of them herein and in any certificate or other instrument delivered pursuant
hereto shall be deemed to be relied upon by the other party hereto,
notwithstanding any investigation heretofore or hereafter made by such other
party or on such other party's behalf, and that the representations, warranties
and agreements made by the parties hereto in this Agreement or in any such
certificate or other instrument shall survive the delivery of and payment for
the Mortgage Loans.
Section 4.08. Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 4.09. Successors and Assigns. This Unaffiliated Seller's
----------------------
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Except as expressly
permitted by the terms hereof, this Agreement may not be assigned, pledged or
hypothecated by any party hereto to a third party without the written consent of
the other party to this Agreement; provided, however, that the Depositor may
-------- -------
assign its rights hereunder to the Trustee on behalf of the Trust without the
consent of the Unaffiliated Seller.
Section 4.10. Governing Law. This Unaffiliated Seller's Agreement
-------------
shall be construed in accordance with and governed by the laws of the State of
New York (without regard to conflicts of laws principles), and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.
Section 4.11. Confirmation of Intent. It is the express intent of
----------------------
the parties hereto that the conveyance of the Mortgage Loans by the Unaffiliated
Seller to the Depositor as contemplated by this Unaffiliated Seller's Agreement
be, and be treated for all purposes as, a sale by the Unaffiliated Seller to the
Depositor of the Mortgage Loans. It is, further, not the intention of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Unaffiliated Seller to the Depositor to secure a debt or other obligation
10
<PAGE>
of the Unaffiliated Seller. However, in the event that, notwithstanding the
intent of the parties, the Mortgage Loans are held to continue to be property of
the Unaffiliated Seller then: (a) this Unaffiliated Seller's Agreement shall
also be deemed to be a security agreement within the meaning of Articles 8 and 9
of the Uniform Commercial Code; (b) the transfer of the Mortgage Loans provided
for herein shall be deemed to be a grant by the Unaffiliated Seller to the
Depositor of a security interest in all of the Unaffiliated Seller's right,
title and interest in and to the Mortgage Loans and all amounts payable on the
Mortgage Loans in accordance with the terms thereof and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property; (c) the possession by the Depositor of Notes and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section 9-
305 of the Uniform Commercial Code; and (d) notifications to persons holding
such property, and acknowledgments, receipts or confirmations from persons
holding such property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Depositor for the purpose of perfecting such security
interest under applicable law. Any assignment of the interest of the Depositor
pursuant to any provision hereof shall also be deemed to be an assignment of any
security interest created hereby. The Unaffiliated Seller and the Depositor
shall, to the extent consistent with this Unaffiliated Seller's Agreement, take
such actions as may be necessary to ensure that, if this Unaffiliated Seller's
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of this Unaffiliated Seller's Agreement.
Section 4.12. Execution in Counterparts. This Unaffiliated Seller's
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Agreement 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 4.13. Costs. In connection with the transactions
-----
contemplated under this Agreement and the Pooling and Servicing Agreement, the
Unaffiliated Seller shall promptly pay (or shall promptly reimburse the
Depositor to the extent that the Depositor shall have paid or otherwise
incurred): (a) the fees and disbursements of the Depositor's counsel up to
$125,000; (b) the fees of each Rating Agency as separately agreed; (c) any of
the fees of the Trustee as separately agreed and the reasonable fees and
disbursements of
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the Trustee's counsel up to $5,000; (d) reasonable expenses incurred in
connection with printing the Prospectus, the Prospectus Supplement, any
amendment or supplement thereto, any preliminary prospectus and the
Certificates; (e) fees and expenses relating to the filing of documents with the
Commission relating to the Offered Certificates (including without limitation
periodic reports under the Exchange Act); and (f) the shelf registration
amortization fee (which fee shall equal 1/29th of 1% of the amount of the
Offered Certificates) paid in connection with the issuance of Certificates. For
the avoidance of doubt, the parties hereto acknowledge that it is the intention
of the parties that the Depositor shall not pay any of the Trustee's fees and
expenses in connection with the transactions contemplated by the Pooling and
Servicing Agreement. All other costs and expenses in connection with the
transactions contemplated hereunder shall be borne by the party incurring such
expenses.
Section 4.14. Indemnification. (a) (i) The Unaffiliated Seller,
---------------
agrees to indemnify and hold harmless the Depositor, each of its directors,
each of its officers who have signed the Registration Statement, and each
of its directors and each person or entity who controls the Depositor or
any such person, within the meaning of Section 15 of the Securities Act,
against any and all losses, claims, damages or liabilities, joint and
several, to which the Depositor or any such person or entity may become
subject, under the Securities Act or otherwise, and will reimburse the
Depositor and each such controlling person for any legal or other expenses
incurred by the Depositor or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Prospectus
Supplement relating to the Offered Certificates or any amendment or
supplement to the Prospectus Supplement relating to the Offered
Certificates or the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements in the Prospectus Supplement or any amendment or supplement to
the Prospectus Supplement approved in writing by the Unaffiliated Seller,
in light of the circumstances under which they were made, not misleading;
provided, however, that the Unaffiliated Seller will not be liable in any
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such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Term Sheet, dated
December 13, 1996, relating to the Offered Certificates (except to the
extent superseded by the Prospectus Supplement) or in
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the Prospectus Supplement or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Unaffiliated Seller by the Underwriter or the Depositor specifically for
use therein. This indemnity agreement will be in addition to any liability
which the Unaffiliated Seller may otherwise have.
(ii) The Unaffiliated Seller agrees to indemnify and to hold the
Depositor 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 Depositor may sustain in any way related to the
failure of any of the Unaffiliated Seller to perform its duties in
compliance with the terms of this Agreement. The Unaffiliated Seller shall
immediately notify the Depositor if a claim is made by a third party with
respect to this Agreement, and the Unaffiliated Seller shall assume the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy
any judgment or decree which may be entered against the Depositor in
respect of such claim. Pursuant to the Pooling and Servicing Agreement,
the Trustee shall reimburse the Unaffiliated Seller in accordance with the
Pooling and Servicing Agreement for all amounts advanced by the
Unaffiliated Seller pursuant to the preceding sentence except when the
claim relates directly to the failure of the Unaffiliated Seller to perform
its duties in compliance with the terms of this Agreement.
(b) The Depositor agrees to indemnify and hold harmless the
Unaffiliated Seller, each of its directors and each person or entity who
controls the Unaffiliated Seller or any such person, within the meaning of
Section 15 of the Securities Act, against any and all losses, claims, damages or
liabilities, joint and several, to which the Unaffiliated Seller or any such
person or entity may become subject, under the Securities Act or otherwise, and
will reimburse the Unaffiliated Seller and any such director or controlling
person for any legal or other expenses incurred by such party or any such
director or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, the Prospectus
Supplement, any amendment or supplement to the Prospectus or the Prospectus
Supplement or the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the
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circumstances under which they were made, not misleading, but only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission is other than a statement or omission relating to the information set
forth in subsection (a)(i) of this Section 4.14. This indemnity agreement will
be in addition to any liability which the Depositor may otherwise have.
(c) The Unaffiliated Seller shall in addition indemnify and hold
harmless the Depositor for any losses, claim, damages, or liabilities to which
they become subject in connection with the use in connection with the offering
for resale of the Offered Certificates of any materials which would constitute
"computational materials", "collateral term sheets" or "structural term sheets"
(collectively, "Computational Materials") under the Commission's "no-action
letter" definitions of such terms as of the date hereof, except to the extent
that any such losses, claims, damages or liabilities result from the negligence
of Depositor in the preparation of such Computational Materials. The Depositor
shall indemnify and hold harmless the Unaffiliated Seller for any losses,
claims, damages or liabilities which result from the negligence of the Depositor
in the preparation of such Computational Materials, and provided that in no
event shall the Depositor be liable to the Unaffiliated Seller under this
paragraph (c) in an amount in excess of the Depositor's resale profit on its
sale of the Offered Certificates or the underwriter's fee, whichever is greater.
(d) Promptly after receipt by an indemnified party under this Section
4.14 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section 4.14, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent such indemnifying party
has been prejudiced thereby. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party of its election to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 4.14 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
--------
however, if the
- -------
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defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it that are different from or
additional to those available to the indemnifying party and would raise a
potential conflict, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. The indemnifying party shall not be liable for the expenses of more
than one separate counsel.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 4.14 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or
subsection (b) of this Section 4.14 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof); provided, however, that no person guilty of
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fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered (i) the relative benefits received by the Unaffiliated Seller on the
one hand, and the Depositor on the other, from the offering of the Certificates
or (ii) if the allocation provided by clause (i) is not permitted by applicable
law, the relative benefits described in clause (i) as well as the relative
faults of the Unaffiliated Seller and the Depositor, taking into account the
Unaffiliated Seller's and the Depositor's relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission, and any other
equitable considerations appropriate in the circumstances. The Unaffiliated
Seller and the Depositor agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation. For
purposes of this Section 4.14, each director of the Depositor, each officer of
the Depositor who signed the Registration Statement, and each person, if any who
controls the Depositor within the meaning of Section 15 of the Securities Act,
shall have the same rights to contribution as the Depositor, and each director
of Unaffiliated Seller, and each person, if any who controls the Unaffiliated
Seller within the meaning of Section 15 of the Securities Act, shall have the
same rights to contribution as the Unaffiliated Seller.
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Section 4.15. Miscellaneous. (a) (i) This Unaffiliated Seller's
-------------
Agreement supersedes all prior agreements and understandings relating to the
subject matter hereof, (ii) this Unaffiliated Seller's Agreement may be amended
from time to time by the Unaffiliated Seller and the Depositor by written
agreement, without notice to or consent of the related Holders to cure any
ambiguity, to correct or supplement any provisions herein, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Unaffiliated Seller's Agreement which shall not be
inconsistent with the provisions of this Unaffiliated Seller's Agreement;
provided, however, that such action shall not, as evidenced by an Officer's
- -------- -------
Certificate, at the expense of the party requesting the change, delivered to the
Trustee, adversely affect in any material respect the interests of any Holder;
and provided further, that no such amendment shall reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, or change the rights or obligations of any other party
hereto without the consent of such party, (iii) this Unaffiliated Seller's
Agreement may be amended from time to time by the Unaffiliated Seller and the
Depositor with the consent of the Required Certificateholders for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Unaffiliated Seller's Agreement or of modifying in any manner
the rights of the Holders; provided, however, that no such amendment shall be
-------- -------
made unless the Trustee receives an Officer's Certificate, that such change will
not reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, and (iv) it
shall not be necessary for the consent of any Holder under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
(b) The Depositor and the Unaffiliated Seller intend the conveyance by
Unaffiliated Seller to the Depositor of all of its right, title and interest in
and to the Mortgage Loans pursuant to this Unaffiliated Seller's Agreement to
constitute a purchase and sale and not a loan.
[Signatures Commence on Following Page]
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IN WITNESS WHEREOF, the parties hereto have caused their names to be signed by
their respective officers thereunto duly authorized as of the date first above
written.
CS FIRST BOSTON MORTGAGE SECURITIES CORP.
By: /s/ Heidi Davis
-----------------
Name: Heidi Davis
Title: Vice President
WILSHIRE MORTGAGE FUNDING COMPANY IV, INC.
By: /s/ Lawrence Mendelsohn
-------------------------
Name: Lawrence Mendelsohn
Title: President
[Signature Page to Unaffiliated Seller's Agreement]
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