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): May 23, 1996
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
(AS DEPOSITOR UNDER THE POOLING AND SERVICING AGREEMENT, DATED
AS OF MAY 1, 1996, PROVIDING FOR THE ISSUANCE OF MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES 1996-2)
Salomon Brothers Mortgage Securities VII, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 33-84924 13-3439681
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
Seven World Trade Center
New York, New York 10048
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (212) 783-5659
<PAGE>
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Description of the Certificates and the Mortgage Pools
On May 23, 1996, a single series of certificates, entitled Salomon
Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through Certificates,
Series 1996-2 (the "Certificates") were issued pursuant to a pooling and
servicing agreement (the "Agreement") attached hereto as Exhibit 4.1, dated as
of May 1, 1996, among Salomon Brothers Mortgage Securities VII, Inc. as
depositor (the "Depositor"), Norwest Mortgage, Inc. ("Norwest") as master
servicer (in such capacity the "Master Servicer") and The Chase Manhattan Bank,
N.A. as trustee. The Certificates consist of sixteen classes of certificates
(collectively, the "Certificates"), designated as: the "Class A-1 Certificates,"
the "Class A-2 Certificates," the "Class A-3 Certificates," the "Class A-4
Certificates," the "Class A-5 Certificates," the "Class A-6 Certificates," the
"Class A-7 Certificates," the "Class XS Certificates," the "Class PO
Certificates," the "Class B-1 Certificates," the "Class B-2 Certificates," the
"Class B-3 Certificates," the "Class B-4 Certificates," the "Class B-5
Certificates," the "Class B-6 Certificates" and the "Class R Certificates,"
respectively. The Certificates evidence in the aggregate the entire beneficial
ownership interest in a trust fund (the "Trust Fund"), consisting primarily of a
segregated pool (the "Mortgage Pool") of fixed rate first lien mortgage loans
having original terms to maturity of not greater than 30 years (the "Mortgage
Loans") pursuant to the Mortgage Loan Purchase Agreement, dated May 21, 1996,
among Depositor and Norwest, as seller (the "Mortgage Loan Purchase Agreement").
The Mortgage Pool consists of Mortgage Loans with an aggregate principal balance
as of May 1, 1996 (the "Cut-off Date") of $149,700,153. The Certificates were
sold by the Depositor to Salomon Brothers Inc ("Salomon"), an affiliate of the
Depositor, pursuant to an underwriting agreement, dated May 21, 1996, between
the Depositor and Salomon.
The Mortgage Loans had a weighted average remaining term to maturity of
approximately 29 years and 10 months as of the Cut-off Date. As of the Cut-off
Date, the Mortgage Loans had fixed Mortgage Rates ranging from 6.875% per annum
to 9.250% per annum and a weighted average Mortgage Rate of 7.887% per annum.
None of the Mortgage Loans will have a first Due Date prior to April 1994.
The Class A-1 Certificates have an initial Certificate Principal
Balance of $20,000,000. The Class A-2 Certificates have an initial Certificate
Principal Balance of $14,191,000. The Class A-3 Certificates have an initial
Certificate Principal Balance of $33,588,000. The Class A-4 Certificates have an
initial Certificate Principal Balance of $12,215,000. The Class A-5 Certificates
have an initial Certificate Principal Balance of $8,679,000. The Class A-6
Certificates have an initial Certificate Principal Balance of $36,098,800. The
Class A-7 Certificates have an initial Certificate Principal Balance of
$14,970,000. The Class XS Certificates have an initial Notional Amount of
$149,700,153. The Class PO Certificates have an initial Certificate Principal
Balance of $1,724,199. The Class B-1 Certificates have an initial Certificate
Principal Balance of $2,994,000. The Class B-2 Certificates have an initial
Certificate Principal Balance of $2,245,000. The Class B-3 Certificates have an
initial
<PAGE>
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Certificate Principal Balance of $1,422,000. The Class B-4 Certificates have an
initial Certificate Principal Balance of $673,000. The Class B-5 Certificates
have an initial Certificate Principal Balance of $299,000. The Class B-6
Certificates have an initial Certificate Principal Balance of $601,054.05. The
Class R Certificates have an initial Certificate Principal Balance of $100.
The Certificates will generally be entitled to receive on each
Distribution Date payments of interest accrued on the outstanding Certificate
Principal Balance thereof at the Pass-Through Rate, plus any such amounts
remaining unpaid from previous Distribution Dates.
The Servicing Fee Rate with respect to each Mortgage Loan is 0.25% per
annum. With respect to any mortgaged property acquired by the Master Servicer in
respect of a defaulted Mortgage Loan, the Master Servicer is entitled to a
management fee equal to $150 per month in lieu of the servicing fee described
above.
Under the terms of the Pooling and Servicing Agreement, the Trustee may
withdraw the Trustee's Fee from the distribution account created thereunder.
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Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Agreements.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable
(b) Not applicable
(c) Exhibits
EXHIBIT NO. DESCRIPTION
4.1 Pooling and Servicing Agreement,
dated as of May 1, 1996, by and
among Salomon Brothers Mortgage
Securities VII, Inc. as Depositor,
Norwest Mortgage, Inc. as Master
Servicer and The Chase Manhattan
Bank, N.A. as Trustee, relating to
the Series 1996-2 Certificates.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 23, 1996
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By: /s/ Susan S. Woodbury
----------------------------
Name: Susan S. Woodbury
Title: Vice President
<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- ------------
4.1 Pooling and Servicing Agreement, dated as of May 1,
1996, by and among Salomon Brothers Mortgage
Securities VII, Inc. as Depositor, Norwest
Mortgage, Inc. as Master Servicer and The Chase
Manhattan Bank, N.A. as Trustee, relating to the
Series 1996-2 Certificates.
================================================================================
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.,
Depositor
NORWEST MORTGAGE, INC.,
Master Servicer
and
THE CHASE MANHATTAN BANK, N.A.,
Trustee
_______________________________
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 1996
_______________________________
Mortgage Pass-Through Certificates
Series 1996-2
================================================================================
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
ARTICLE I
DEFINITIONS
1.01. Defined Terms............................................. 3
Affiliate .......................................................... 3
Agreement .......................................................... 3
Assignment.......................................................... 3
Available Distribution Amount....................................... 3
Bankruptcy Amount................................................... 4
Bankruptcy Code..................................................... 4
Bankruptcy Loss..................................................... 4
Book-Entry Certificate.............................................. 4
Business Day........................................................ 4
Buydown Account..................................................... 4
Buydown Funds....................................................... 4
Buydown Mortgage Loan............................................... 4
Buydown Period...................................................... 4
Certificate......................................................... 4
Certificate Factor.................................................. 5
Certificateholder" or "Holder....................................... 5
Certificate Owner................................................... 5
Certificate Principal Balance....................................... 5
Certificate Register" and "Certificate Registrar.................... 5
Class .......................................................... 5
Class A Certificate................................................. 6
Class A-1 Certificate............................................... 6
Class A-2 Certificate............................................... 6
Class A-3 Certificate............................................... 6
Class A-4 Certificate............................................... 6
Class A-5 Certificate............................................... 6
Class A-6 Certificate............................................... 6
Class A-7 Certificate............................................... 6
Class A-7 Percentage................................................ 6
Class A-7 Prepayment Percentage..................................... 7
Class A-7 Priority Percentage....................................... 7
Class A-7 Senior Principal Distribution Amount...................... 7
Class B Percentage.................................................. 9
Class B-1 Certificate............................................... 9
Class B-1 Percentage................................................ 9
Class B-2 Certificate............................................... 9
Class B-2 Percentage................................................ 9
Class B-3 Certificate............................................... 9
Class B-3 Percentage................................................ 9
i
<PAGE>
SECTION PAGE
Class B-4 Certificate............................................... 10
Class B-4 Percentage................................................ 10
Class B-5 Certificate............................................... 10
Class B-5 Percentage................................................ 10
Class B-6 Certificate............................................... 10
Class B-6 Percentage................................................ 10
Class PO Certificate................................................ 10
Class R Certificate................................................. 11
Class XS Certificate................................................ 11
Closing Date........................................................ 11
Code .......................................................... 11
Collection Account.................................................. 11
Corporate Trust Office.............................................. 11
Custodial Agreement................................................. 11
Custodian .......................................................... 11
Cut-off Date........................................................ 11
Debt Service Reduction.............................................. 11
Deficient Valuation................................................. 12
Definitive Certificates............................................. 12
Deleted Mortgage Loan............................................... 12
Depositor .......................................................... 12
Depository.......................................................... 12
Depository Institution.............................................. 12
Depository Participant.............................................. 12
Determination Date.................................................. 12
Directly Operate.................................................... 12
Disqualified Organization........................................... 13
Distribution Account................................................ 13
Distribution Date................................................... 13
Due Date .......................................................... 13
Due Period.......................................................... 13
Eligible Account.................................................... 13
Estate in Real Property............................................. 14
Event of Default.................................................... 14
Excess Bankruptcy Loss.............................................. 14
Excess Fraud Loss................................................... 14
Excess Special Hazard Loss.......................................... 14
Extraordinary Loss.................................................. 14
Extraordinary Trust Fund Expenses................................... 15
FDIC .......................................................... 15
FHLMC .......................................................... 15
Final Recovery Determination........................................ 15
Fitch .......................................................... 15
FNMA .......................................................... 15
ii
<PAGE>
SECTION PAGE
Fraud Loss.......................................................... 15
Fraud Loss Amount................................................... 15
Independent......................................................... 16
Independent Contractor.............................................. 16
Insurance Proceeds.................................................. 16
Interest Accrual Period............................................. 16
Interest Distribution Amount........................................ 16
Late Collections.................................................... 17
Liquidation Event................................................... 17
Liquidation Proceeds................................................ 17
Loan-to-Value Ratio................................................. 17
Master Servicer..................................................... 17
Master Servicer Remittance Date..................................... 17
Monthly Payment..................................................... 18
Mortgage .......................................................... 18
Mortgage File....................................................... 18
Mortgage Loan....................................................... 18
Mortgage Loan Purchase Agreement.................................... 18
Mortgage Loan Remittance Rate....................................... 18
Mortgage Loan Schedule.............................................. 18
Mortgage Note....................................................... 19
Mortgage Rate....................................................... 19
Mortgaged Property.................................................. 19
Mortgagor .......................................................... 19
Net Mortgage Rate................................................... 19
New Lease .......................................................... 20
Non-PO Mortgage Loan................................................ 20
Non-PO Percentage................................................... 20
Non-PO Senior Principal Distribution Amount......................... 20
Non-United States Person............................................ 21
Norwest .......................................................... 21
Notional Amount..................................................... 22
Officers' Certificate............................................... 22
Opinion of Counsel.................................................. 22
Original Mortgage Loan.............................................. 22
Ownership Interest.................................................. 22
Pass-Through Rate................................................... 22
Percentage Interest................................................. 22
Permitted Investments............................................... 23
Permitted Transferee................................................ 23
Person .......................................................... 23
P&I Advance......................................................... 24
PO Mortgage Loan.................................................... 24
PO Percentage....................................................... 24
iii
<PAGE>
SECTION PAGE
PO Senior Principal Distribution Amount............................. 24
Prepayment Assumption............................................... 25
Prepayment Interest Shortfall....................................... 25
Prepayment Period................................................... 25
Primary Mortgage Insurance Policy................................... 25
Principal Prepayment................................................ 26
Purchase Price...................................................... 26
Qualified Substitute Mortgage Loan.................................. 26
Rating Agencies..................................................... 27
Realized Loss....................................................... 27
Record Date......................................................... 28
Regular Certificate................................................. 28
Regular Interest.................................................... 28
Relief Act.......................................................... 28
Relief Act Interest Shortfall....................................... 28
REMIC .......................................................... 28
REMIC Provisions.................................................... 28
Remittance Report................................................... 29
Rents from Real Property............................................ 29
REO Disposition..................................................... 29
REO Imputed Interest................................................ 29
REO Principal Amortization.......................................... 29
REO Property........................................................ 29
Request for Release................................................. 29
Residential Dwelling................................................ 29
Residual Certificate................................................ 30
Residual Interest................................................... 30
Responsible Officer................................................. 30
Scheduled Principal Balance......................................... 30
Seller .......................................................... 31
Senior Certificate.................................................. 31
Senior Percentage................................................... 31
Senior Prepayment Percentage........................................ 31
Servicing Account................................................... 32
Servicing Advances.................................................. 32
Servicing Fee....................................................... 32
Servicing Fee Rate.................................................. 32
Servicing Officer................................................... 32
Single Certificate.................................................. 32
Special Hazard Amount............................................... 32
Special Hazard Loss................................................. 33
Standard & Poor's................................................... 33
Startup Day......................................................... 33
Stated Principal Balance............................................ 33
iv
<PAGE>
SECTION PAGE
Stayed Funds........................................................ 34
Stripped Interest Rate.............................................. 34
Subordinate Certificate............................................. 34
Subordinate Percentage.............................................. 34
Subordinate Prepayment Percentage................................... 34
Subordinate Principal Distribution Amount........................... 34
Sub-Servicer........................................................ 35
Sub-Servicing Account............................................... 36
Sub-Servicing Agreement............................................. 36
Tax Returns......................................................... 36
Termination Price................................................... 36
Transfer .......................................................... 36
Transferee.......................................................... 36
Transferor.......................................................... 36
Trust Fund.......................................................... 36
Trustee .......................................................... 36
Trustee's Fee....................................................... 37
Trustee's Fee Rate.................................................. 37
Uninsured Cause..................................................... 37
United States Person................................................ 37
Value .......................................................... 37
Voting Rights....................................................... 37
Weighted Average Stripped Interest Rate............................. 37
1.02. Allocation of Certain Interest Shortfalls.................... 38
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
2.01. Conveyance of Mortgage Loans............................. 39
2.02. Acceptance by Trustee.................................... 41
2.03. Repurchase or Substitution of Mortgage Loans by
the Seller, the Depositor or the Master Servicer......... 42
2.04. Representations and Warranties of the Depositor.......... 45
2.05. Representations, Warranties and Covenants of the
Master Servicer.......................................... 47
2.06. Issuance of Certificates.................................. 49
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
3.01. Master Servicer to Act as Master Servicer................. 50
3.02. Sub-Servicing Agreements Between the
Master Servicer and Sub-Servicers......................... 51
v
<PAGE>
SECTION PAGE
3.03. Successor Sub-Servicers................................... 53
3.04. Liability of the Master Servicer.......................... 53
3.05. No Contractual Relationship Between
Sub-Servicers and Trustee or Certificateholders........... 53
3.06. Assumption or Termination of Sub-Servicing
` Agreements by Trustee..................................... 53
3.07. Collection of Certain Mortgage Loan Payments.............. 54
3.08. Sub-Servicing Accounts.................................... 54
3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts................................. 54
3.10. Collection Account and Distribution Account............... 55
3.11. Withdrawals from the Collection Account and
Distribution Account...................................... 57
3.12. Investment of Funds in the Collection Account
and the Distribution Account.............................. 59
3.13. Maintenance of the Primary Mortgage Insurance
Policies; Collections Thereunder.......................... 61
3.14. Maintenance of Hazard Insurance and Errors
and Omissions and Fidelity Coverage....................... 62
3.15. Enforcement of Due-On-Sale Clauses;
Assumption Agreements.................................... 63
3.16. Realization Upon Defaulted Mortgage Loans................. 64
3.17. Trustee to Cooperate; Release of Mortgage Files........... 66
3.18. Servicing Compensation.................................... 67
3.19. Reports to the Trustee; Collection Account Statements..... 68
3.20. Statement as to Compliance................................ 68
3.21. Independent Public Accountants' Servicing Report.......... 69
3.22. Access to Certain Documentation........................... 69
3.23. Title, Management and Disposition of REO Property......... 70
3.24. Obligations of the Master Servicer in Respect
of Prepayment Interest Shortfalls......................... 72
3.25. Information Reports to be filed by the Master Servicer.... 73
3.26. Administration of Buydown Funds........................... 73
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
4.01. Distributions............................................. 74
4.02. Statements to Certificateholders.......................... 79
4.03. Remittance Reports; P&I Advances.......................... 81
4.04. Allocation of Extraordinary Trust Fund
Expenses and Realized Losses.............................. 83
ARTICLE V
THE CERTIFICATES
5.01. The Certificates.......................................... 85
5.02. Registration of Transfer and Exchange of Certificates..... 87
vi
<PAGE>
SECTION PAGE
5.03. Mutilated, Destroyed, Lost or Stolen Certificates......... 92
5.04. Persons Deemed Owners..................................... 92
5.05. Certain Available Information............................. 92
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
6.01. Liability of the Depositor and the Master Servicer........ 94
6.02. Merger or Consolidation of the Depositor or the
Master Servicer........................................... 94
6.03. Limitation on Liability of the Depositor, the
Master Servicer and Others................................ 94
6.04. Limitation on Resignation of the Master Servicer.......... 95
6.05. Rights of the Depositor in Respect of the Master Servicer. 96
ARTICLE VII
DEFAULT
7.01. Events of Default......................................... 97
7.02. Trustee to Act; Appointment of Successor.................. 99
7.03. Notification to Certificateholders........................100
7.04. Waiver of Events of Default...............................101
ARTICLE VIII
CONCERNING THE TRUSTEE
8.01. Duties of Trustee.........................................102
8.02. Certain Matters Affecting the Trustee.....................103
8.03. Trustee Not Liable for Certificates or Mortgage Loans.....104
8.04. Trustee May Own Certificates..............................104
8.05. Trustee's Fees and Expenses...............................105
8.06. Eligibility Requirements for Trustee......................105
8.07. Resignation and Removal of the Trustee....................105
8.08. Successor Trustee.........................................106
8.09. Merger or Consolidation of Trustee........................107
8.10. Appointment of Co-Trustee or Separate Trustee.............107
8.11. Appointment of Custodians.................................108
8.12. Appointment of Office or Agency...........................108
8.13. Representations and Warranties of the Trustee.............109
ARTICLE IX
TERMINATION
9.01. Termination Upon Repurchase or Liquidation of ............110
9.02. Additional Termination Requirements.......................112
vii
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SECTION PAGE
ARTICLE X
REMIC PROVISIONS
10.01. REMIC Administration......................................113
10.02. Prohibited Transactions and Activities....................115
10.03. Master Servicer and Trustee Indemnification...............116
ARTICLE XI
SPECIAL FORECLOSURE PROCEDURES
11.01. General...................................................117
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. Amendment.................................................118
12.02. Recordation of Agreement; Counterparts....................119
12.03. Limitation on Rights of Certificateholders................119
12.04. Governing Law.............................................120
12.05. Notices...................................................120
12.06. Severability of Provisions................................121
12.07. Notice to Rating Agencies.................................121
12.08. Article and Section References............................122
viii
<PAGE>
EXHIBITS
Exhibit A-1 Form of Class A-1 Certificate
Exhibit A-2 Form of Class A-2 Certificate
Exhibit A-3 Form of Class A-3 Certificate
Exhibit A-4 Form of Class A-4 Certificate
Exhibit A-5 Form of Class A-5 Certificate
Exhibit A-6 Form of Class A-6 Certificate
Exhibit A-7 Form of Class A-7 Certificate
Exhibit A-8 Form of Class XS Certificate
Exhibit A-9 Form of Class PO Certificate
Exhibit A-10 Form of Class B-1 Certificate
Exhibit A-11 Form of Class B-2 Certificate
Exhibit A-12 Form of Class B-3 Certificate
Exhibit A-13 Form of Class B-4 Certificate
Exhibit A-14 Form of Class B-5 Certificate
Exhibit A-15 Form of Class B-6 Certificate
Exhibit A-16 Form of Class R Certificate
Exhibit B [Intentionally Omitted]
Exhibit C-1 Form of Trustee's Preliminary Exception Report
Exhibit C-2 Form of Trustee's Interim Certification
Exhibit C-3 Form of Trustee's Final Certification
Exhibit D Form of Mortgage Loan Purchase Agreement
Exhibit E-1 Request for Release
Exhibit E-2 Request for Release Mortgage Loans paid in full
Exhibit F-1 Form of Transferor Representation Letter and Form of
Transferee Representation Letter in Connection with Transfer
of Class B Certificates Pursuant to Rule 144A Under the 1933
Act
Exhibit F-2 Form of Transfer Affidavit and Agreement and Form of
Transferor Affidavit in Connection with Transfer of Residual
Certificates
Exhibit G Form of Remittance Report
Exhibit H Form of Custodial Agreement
Exhibit I Form of Special Servicing and Collateral Fund Agreement
Schedule I Mortgage Loan Schedule
ix
<PAGE>
This Pooling and Servicing Agreement, is dated and effective
as of May 1, 1996, among SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., as
Depositor, NORWEST MORTGAGE, INC., as Master Servicer, and THE CHASE MANHATTAN
BANK, N.A., as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Trust Fund created hereunder.
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes. The Class A-1 Certificates,
the Class A-2 Certificates, the Class A-3 Certificates, the Class A-4
Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the Class
A-7 Certificates, the Class XS Certificates, the Class PO Certificates, the
Class B-1 Certificates, the Class B-2 Certificates, the Class B-3 Certificates,
the Class B-4 Certificates, the Class B-5 Certificates and the Class B-6
Certificates will be the "regular interests" in the Trust Fund, and the Class R
Certificates will be the sole class of "residual interests" therein.
The following table irrevocably sets forth the designation,
the Pass-Through Rate, initial Certificate Principal Balance and "latest
possible maturity date" for the respective Classes of Certificates comprising
the "regular interests" in the Trust Fund created hereunder.
<TABLE>
<CAPTION>
INITIAL AGGREGATE
CERTIFICATE LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE(1)
----------- ----------------- ----------------- ----------------
<S> <C> <C> <C>
Class A-1 7.50% 20,000,000.00 June 25, 2026
Class A-2 7.50% 14,191,000.00 June 25, 2026
Class A-3 7.50% 33,588,000.00 June 25, 2026
Class A-4 7.50% 12,215,000.00 June 25, 2026
Class A-5 7.50% 8,679,000.00 June 25, 2026
Class A-6 7.50% 36,098,800.00 June 25, 2026
Class A-7 7.50% 14,970,000.00 June 25, 2026
Class XS 0.2159%(2) 149,700,153.14(3) June 25, 2026
Class PO 0.00%(4) 1,724,199.09 June 25, 2026
Class B-1 7.50% 2,994,000.00 June 25, 2026
Class B-2 7.50% 2,245,000.00 June 25, 2026
Class B-3 7.50% 1,422,000.00 June 25, 2026
Class B-4 7.50% 673,000.00 June 25, 2026
Class B-5 7.50% 299,000.00 June 25, 2026
Class B-6 7.50% 601,054.05 June 25, 2026
</TABLE>
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(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity
date for the Mortgage Loans with the latest maturity date in the
Mortgage Pool has been designated as the "latest possible maturity
date" for each Class of Certificates.
(2) Initial variable Pass-Through Rate (approximate) calculated in
accordance with the definition of "Pass-Through Rate" herein.
(3) Notional Amount. As provided herein, the Class XS Certificates entitle
the Holders thereof solely to distributions of interest accrued on the
Notional Amount of such Class XS Certificates.
(4) The Class PO Certificates are not entitled to distributions of
interest.
As of the Cut-off Date, the Original Mortgage Loans had an
aggregate Scheduled Principal Balance equal to $149,700,153.14.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer and the Trustee agree as follows:
<PAGE>
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without limitation, in
the Preliminary Statement hereto, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations described herein shall be made on
the basis of a 360-day year consisting of twelve 30-day months.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law and acceptable for recording.
"Available Distribution Amount": With respect to any Distribution
Date, an amount equal to (1) the sum of (a) the aggregate of the amounts on
deposit in the Collection Account and Distribution Account as of the close of
business on the related Determination Date, (b) the aggregate of any amounts
received in respect of an REO Property withdrawn from the Collection Account and
deposited in the Distribution Account for such Distribution Date, (c) the
aggregate of any amounts deposited in the Distribution Account in respect of
Prepayment Interest Shortfalls for such Distribution Date pursuant to Section
3.24 and (d) the aggregate of any P&I Advances made by the Master Servicer for
such Distribution Date pursuant to Section 4.03, reduced (to not less than zero)
by (2) the sum of (x) the portion of the amount described in clause (1)(a)
hereof that represents (i) Monthly Payments received from a Mortgagor on or
prior to the related Determination Date but due during any Due Period subsequent
to the related Due Period, (ii) Principal Prepayments received after the related
Prepayment Period (together with any interest payments received with such
Principal Prepayments to the extent they represent the payment of interest
accrued on the related Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
after the related Prepayment Period, (iv) amounts reimbursable or payable to the
Depositor, the Master Servicer,
<PAGE>
-4-
the Trustee, the Seller or any Sub-Servicer pursuant to Section 3.11 or Section
3.12 or otherwise payable in respect of Extraordinary Trust Fund Expenses, (v)
Stayed Funds and/or (vi) amounts deposited in either Collection Account or the
Distribution Account, as the case may be, in error, and (y) amounts reimbursable
to the Trustee for an advance made pursuant to Section 7.02(b) which advance the
Trustee has determined to be nonrecoverable from the Stayed Funds in respect of
which it was made.
"Bankruptcy Amount": As of any date of determination, an amount,
equal to the excess, if any, of (A) $100,000, over (B) the aggregate amount of
Bankruptcy Losses allocated solely to one or more specific Classes of
Certificates in accordance with Section 4.04.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of
the United States Code), as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Realized
Loss resulting from a Deficient Valuation or Debt Service Reduction.
"Book-Entry Certificate": Any Certificate registered in the name of
the Depository or its nominee.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking or savings and loan institutions in the State of New York, the
State of Iowa or the State of Minnesota, or in the city in which the Corporate
Trust Office is located, are authorized or obligated by law or executive order
to be closed.
"Buydown Account": The custodial account or accounts created and
maintained pursuant to Section 3.26. The Buydown Account is not part of the
Trust Fund.
"Buydown Funds": Funds contributed by the Mortgagor or another
source in connection with the origination of a Mortgage Loan in order to reduce
by specified amounts the payments of interest to be made by the Mortgagor during
the Buydown Period. Buydown Funds are not part of the Trust Fund prior to the
deposit of such funds in the Collection Account or Distribution Account.
"Buydown Mortgage Loan": Any Mortgage Loan as to which the
Mortgagor pays less than the full monthly payment specified in the Mortgage Note
during the buydown Period and the difference between the amount paid by the
Mortgagor and the amount specified in the Mortgage Note is paid from the related
Buydown Funds.
"Buydown Period": The period during which Buydown Funds are
required to be applied to the related Buydown Mortgage Loan as provided in
Section 3.26.
"Certificate": Any one of the Depositor's Mortgage Pass-Through
Certificates, Series 1996-2, issued under this Agreement.
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"Certificate Factor": With respect to any Class of Certificates, as
of any Distribution Date, a fraction, expressed as a decimal carried to eight
places, the numerator of which is the aggregate Certificate Principal Balance or
Notional Amount of such Class of Certificates on such Distribution Date (after
giving effect to any distributions of principal, and allocations of Realized
Losses and Extraordinary Trust Fund Expenses, in reduction of the Certificate
Principal Balance or Notional Amount of such Class of Certificates to be made on
such Distribution Date), and the denominator of which is the initial aggregate
Certificate Principal Balance or Notional Amount of such Class of Certificates
as of the Closing Date.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that neither a
Disqualified Organization nor a NonUnited States Person shall be a Holder of a
Residual Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Master Servicer or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 12.01. The Trustee may conclusively rely upon a
certificate of the Depositor or the Master Servicer in determining whether a
Certificate is held by an Affiliate thereof. All references herein to "Holders"
or "Certificateholders" shall reflect the rights of Certificate Owners as they
may indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee shall be required to recognize as a "Holder" or "Certificateholder"
only the person in whose name a Certificate is registered in the Certificate
Registrar.
"Certificate Owner": With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the books
of the Depository or on the books of a Depository Participant or on the books of
an indirect participating brokerage firm for which a Depository Participant acts
as agent.
"Certificate Principal Balance": With respect to any Certificate,
other than a Class XS Certificate, as of any date of determination, the
Certificate Principal Balance of such Certificate on the Distribution Date
immediately prior to such date of determination, reduced by all distributions of
principal made thereon and the principal portion of all Realized Losses
allocated thereto on such immediately prior Distribution Date (or, in the case
of any date of determination up to and including the initial Distribution Date,
the initial Certificate Principal Balance of such Certificate, as stated on the
face thereof). The Class XS Certificates shall not have a Certificate Principal
Balance and shall not be entitled to any distributions of principal.
"Certificate Register" and "Certificate Registrar": The register
maintained and the registrar appointed pursuant to Section 5.02.
"Class": Collectively, all of the Certificates bearing the same
class designation.
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"Class A Certificate": Any Class A-1 Certificate, Class A-2
Certificate, Class A-3 Certificate, Class A-4 Certificate, Class A-5
Certificate, Class A-6 Certificate or Class A-7 Certificate.
"Class A-1 Certificate": Any one of the Class A-1 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-1 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class A-2 Certificate": Any one of the Class A-2 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-2 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class A-3 Certificate": Any one of the Class A-3 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-3 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class A-4 Certificate": Any one of the Class A-4 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-4 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class A-5 Certificate": Any one of the Class A-5 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-5 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class A-6 Certificate": Any one of the Class A-6 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-6 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class A-7 Certificate": Any one of the Class A-7 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-7 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class A-7 Percentage": With respect to any Distribution Date, the
lesser of (a) 100% and (b) a fraction, expressed as a percentage, the numerator
of which is the excess, if any, of the aggregate Certificate Principal Balance
of the Class A-7 Certificates for such Distribution Date, over the aggregate
amount, if any, payable to the Holders of the Class A-7 Certificates on such
date under clause Second of Section 4.01(b)(i) (pursuant to clause (d) of the
definition of "Class A-7 Senior Principal Distribution Amount") and under clause
Eighth of
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Section 4.01(b)(i) (pursuant to clause (d) of the definition of "Non-PO Senior
Principal Distribution Amount"), and the denominator of which is the sum of (i)
the aggregate of the NonPO Percentage of the Scheduled Principal Balance of each
of the Mortgage Loans, plus (ii) the aggregate of the Non-PO Percentage of the
Scheduled Principal Balance of each of the REO Properties, in each case before
reduction for any Realized Losses on such Distribution Date.
"Class A-7 Prepayment Percentage": With respect to any Distribution
Date occurring prior to the Distribution Date in June 2001, 0%. With respect to
any Distribution Date occurring on or after June 1, 2001, the Class A-7
Prepayment Percentage will be as follows: for any Distribution Date during the
sixth year after the Closing Date, 30% of the Class A-7 Priority Percentage for
such Distribution Date; for any Distribution Date during the seventh year after
the Closing Date, 40% of the Class A-7 Priority Percentage for such Distribution
Date; for any Distribution Date during the eighth year after the Closing Date,
60% of the Class A-7 Priority Percentage for such Distribution Date; for any
Distribution Date during the ninth year after the Closing Date, 80% of the Class
A-7 Priority Percentage for such Distribution Date; and for any Distribution
Date thereafter, the Class A-7 Priority Percentage for such Distribution Date.
"Class A-7 Priority Percentage": With respect to any Distribution
Date, the Senior Prepayment Percentage for such Distribution Date multiplied by
a fraction, the numerator of which is the Class A-7 Percentage for such
Distribution Date and the denominator of which is the Senior Percentage for such
Distribution Date.
"Class A-7 Senior Principal Distribution Amount": For any
Distribution Date, an amount equal to the sum of:
(a) the product of (x) the then-applicable Class A-7 Percentage and
(y) the sum of the following:
(i) the related Non-PO Percentage of the aggregate of the
principal portions of all Monthly Payments due during the related
Due Period in respect of all the Mortgage Loans whether or not
received on or prior to the related Determination Date;
(ii) the related Non-PO Percentage of the principal portion of
all Insurance Proceeds and Liquidation Proceeds (other than amounts
described in clause (c) below) received in respect of the Mortgage
Loans during the related Prepayment Period (other than any such
Mortgage Loan that was purchased, sold or replaced pursuant to or
as contemplated by Section 2.03, 3.16(c) or 9.01 during the related
Prepayment Period), net of any portion thereof that represents a
recovery of principal for which an advance was made by the Master
Servicer pursuant to Section 4.03 in respect of a preceding
Distribution Date;
(iii) the related Non-PO Percentage of the Stated Principal
Balance (calculated immediately prior to such Distribution Date) of
each Mortgage Loan that was
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purchased, sold or replaced pursuant to or as contemplated by
Section 2.03, 3.16(c) or 9.01 during the related Prepayment Period;
(iv) the related Non-PO Percentage of all REO Principal
Amortization collected in respect of any REO Property during the
related Prepayment Period; and
(v) in connection with the substitution of one or more
Qualified Substitute Mortgage Loans for one or more Deleted
Mortgage Loans pursuant to Section 2.03 during the related
Prepayment Period, the excess, if any, of (i) the aggregate of the
related Non-PO Percentage of the Stated Principal Balances
(calculated as of the respective dates of substitution) of such
Deleted Mortgage Loans, net of the aggregate of the related Non-PO
Percentage of the principal portions of the Monthly Payments due
during the related Prepayment Period (to the extent received from
the related Mortgagor or advanced by the Master Servicer and
distributed pursuant to Section 4.01 on the Distribution Date in
the related Prepayment Period) in respect of each such Deleted
Mortgage Loan that was replaced prior to the Distribution Date in
the related Prepayment Period, over (ii) the aggregate of the
related Non-PO Percentage of the Stated Principal Balances
(calculated as of the respective dates of substitution) of such
Qualified Substitute Mortgage Loans.
(b) the product of (x) the then-applicable Class A-7 Prepayment
Percentage and (y) the related Non-PO Percentage of all Principal
Prepayments received in respect of the Mortgage Loans during the
related Prepayment Period;
(c) with respect to any Mortgage Loan the subject of a Final
Recovery Determination in the related Prepayment Period, the lesser of
(a) the then-applicable Class A-7 Percentage of the Non-PO Percentage
multiplied by the Scheduled Principal Balance of such Mortgage Loan at
the time of such Final Recovery Determination and (b) an amount (but
not less than zero) equal to (I) the amount of net Liquidation Proceeds
and Insurance Proceeds allocable to principal in respect of such
Mortgage Loans minus (II) the product of (x) a percentage equal to the
then applicable Senior Percentage minus the then applicable Class A-7
Percentage multiplied by (y) the Non-PO Percentage multiplied by the
Scheduled Principal Balance of such Mortgage Loan at the time of such
Final Recovery Determination minus (III) the amount distributable to
the Class PO Certificates pursuant to clause (c) of the definition of
"PO Senior Principal Distribution Amount"; and;
(d) in the case of any Distribution Date subsequent to the initial
Distribution Date, an amount equal to the excess, if any, of the Class
A-7 Principal Distribution Amount for the immediately preceding
Distribution Date, over the aggregate distributions of principal made
in respect of the Class A Certificates on such immediately preceding
Distribution Date pursuant to Section 4.01 to the extent that any such
amounts are not attributable to Realized Losses which were allocated to
the Subordinate Certificates pursuant to Section 4.04.
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"Class B Percentage": Any of the Class B-1 Percentage, the Class
B-2 Percentage, the Class B-3 Percentage, the Class B-4 Percentage, the Class
B-5 Percentage or the Class B-6 Percentage.
"Class B-1 Certificate": Any one of the Class B-1 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-10 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class B-1 Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-1
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-1 Certificates on such date pursuant to
Section 4.01(b)(ii)(C), and the denominator of which is the sum of (i) the
aggregate of the NonPO Percentage of the Scheduled Principal Balance of each of
the Mortgage Loans, plus (ii) the aggregate of the Non-PO Percentage of the
Scheduled Principal Balance of each of the REO Properties, in each case before
reduction for any Realized Losses on such Distribution Date.
"Class B-2 Certificate": Any one of the Class B-2 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-11 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class B-2 Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-2
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-2 Certificates on such date pursuant to
Section 4.01(b)(ii)(C), and the denominator of which is the sum of (i) the
aggregate of the NonPO Percentage of the Scheduled Principal Balance of each of
the Mortgage Loans, plus (ii) the aggregate of the Non-PO Percentage of the
Scheduled Principal Balance of each of the REO Properties, in each case before
reduction for any Realized Losses on such Distribution Date.
"Class B-3 Certificate": Any one of the Class B-3 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-12 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class B-3 Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-3
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-3 Certificates on such date pursuant to
Section 4.01(b)(ii)(C), and the denominator of which is the sum of (i) the
aggregate of the NonPO Percentage of the Scheduled Principal Balance of each of
the Mortgage Loans, plus (ii) the aggregate of the Non-PO Percentage of the
Scheduled Principal Balance of each of the REO Properties, in each case before
reduction for any Realized Losses on such Distribution Date.
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"Class B-4 Certificate": Any one of the Class B-4 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-13 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class B-4 Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-4
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-4 Certificates on such date pursuant to
Section 4.01(b)(ii)(C), and the denominator of which is the sum of (i) the
aggregate of the NonPO Percentage of the Scheduled Principal Balance of each of
the Mortgage Loans, plus (ii) the aggregate of the Non-PO Percentage of the
Scheduled Principal Balance of each of the REO Properties, in each case before
reduction for any Realized Losses on such Distribution Date.
"Class B-5 Certificate": Any one of the Class B-5 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-14 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class B-5 Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the excess, if
any, of the aggregate Certificate Principal Balance of the Class B-5
Certificates immediately prior to such date over the aggregate amount, if any,
payable to the Holders of the Class B-5 Certificates on such date pursuant to
Section 4.01(b)(ii)(C), and the denominator of which is the sum of (i) the
aggregate of the NonPO Percentage of the Scheduled Principal Balance of each of
the Mortgage Loans, plus (ii) the aggregate of the Non-PO Percentage of the
Scheduled Principal Balance of each of the REO Properties, in each case before
reduction for any Realized Losses on such Distribution Date.
"Class B-6 Certificate": Any one of the Class B-6 Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-15 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions.
"Class B-6 Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Certificate Principal Balance of the Class B-6 Certificates immediately prior to
such date and the denominator of which is the sum of (i) the aggregate of the
Non-PO Percentage of the Scheduled Principal Balance of each of the Mortgage
Loans, plus (ii) the aggregate of the Non-PO Percentage of the Scheduled
Principal Balance of each of the REO Properties, in each case before reduction
for any Realized Losses on such Distribution Date.
"Class PO Certificate": Any one of the Class PO Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-9 and
evidencing a Regular Interest in the Trust Fund for purposes
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of the REMIC Provisions. The Class PO Certificates shall have a Pass-Through
Rate of 0% per annum and shall not be entitled to any distributions of interest.
"Class R Certificate": Any one of the Class R Certificates executed
by the Trustee, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A-16 and evidencing a
Residual Interest in the Trust Fund for purposes of the REMIC Provisions.
"Class XS Certificate": Any one of the Class XS Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-8 and
evidencing a Regular Interest in the Trust Fund for purposes of the REMIC
Provisions. The Class XS Certificates shall not have a Certificate Principal
Balance and shall not be entitled to any distributions of principal.
"Closing Date": May 23, 1996.
"Code": The Internal Revenue Code of 1986.
"Collection Account": The account or accounts created and
maintained by the Master Servicer pursuant to Section 3.10(a), which shall be
entitled "Norwest Mortgage, Inc., as the Master Servicer for The Chase Manhattan
Bank, N.A., as Trustee, in trust for registered holders of Salomon Brothers
Mortgage Securities VII, Inc., Mortgage Pass-Through Certificates, Series
1996-2", and which must be an Eligible Account.
"Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located at 4 Chase Metrotech Center, 3rd
Floor, Brooklyn, New York 11245, Attention: Global Trust Services or at such
other address as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor and the Master Servicer.
"Custodial Agreement": An agreement that may be entered into among
the Depositor, the Master Servicer, the Trustee and a Custodian in the form of
Exhibit H annexed hereto or an agreement assigned to the Trustee with respect to
the Mortgage Loans.
"Custodian": A Custodian, which shall not be the Depositor, the
Master Servicer, the Seller or any affiliate of any of them, appointed pursuant
to a Custodial Agreement.
"Cut-off Date": With respect to each Original Mortgage Loan, May 1,
1996. With respect to all Qualified Substitute Mortgage Loans, their respective
dates of substitution.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
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"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
by a Qualified Substitute Mortgage Loan.
"Depositor": Salomon Brothers Mortgage Securities VII, Inc., a
Delaware corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations (or,
in the case of a depository institution that is a subsidiary of a holding
company, such holding company has unsecured commercial paper or other short-term
unsecured debt obligations) that are rated A-1 by Standard & Poor's and F-1 by
Fitch, if rated by Fitch (or comparable ratings if Standard & Poor's and Fitch
are not the Rating Agencies).
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to each Distribution Date, the
15th day of the calendar month in which such Distribution Date occurs or, if
such 15th day is not a Business Day, the Business Day immediately preceding such
15th day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by the Trust Fund other
than through an Independent Contractor; provided, however, that the Trustee (or
the Master Servicer on behalf of the Trustee) shall not be considered to
Directly Operate an REO Property solely because the Trustee (or the Master
Servicer on behalf of the Trustee) establishes rental terms, chooses tenants,
enters into or renews leases, deals with taxes
<PAGE>
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and insurance, or makes decisions as to repairs or capital expenditures with
respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the United
States, any State or political subdivision thereof, any possession of the United
States, or any agency or instrumentality of any of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and, except for the FHLMC, a majority of its board of directors is not
selected by such governmental unit), (ii) a foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code and (v) any other
Person so designated by the Trustee based upon an Opinion of Counsel provided to
the Trustee that the holding of an Ownership Interest in a Residual Certificate
by such Person may cause the Trust Fund or any Person having an Ownership
Interest in any Class of Certificates (other than such Person) to incur a
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the Transfer of an Ownership Interest in a Residual Certificate
to such Person. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Section 7701 of the Code or
successor provisions.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled
"The Chase Manhattan Bank, N.A., as Trustee, in trust for registered holders of
Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1996-2", and which must be an Eligible Account.
"Distribution Date": The 25th day of any month, or if such 25th day
is not a Business Day, the Business Day immediately following such 25th day,
commencing on June 25, 1996.
"Due Date": With respect to each Distribution Date, the first day
of the calendar month in which such Distribution Date occurs, which is the day
of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive
of any days of grace.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the calendar month preceding the calendar month
in which such Distribution Date occurs and ending on the related Due Date.
"Eligible Account": Either (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is a subsidiary of a holding company, the
short-term unsecured debt obligations of such holding company) are rated A-1 by
Standard & Poor's and F-1 by Fitch, if rated by Fitch (or comparable ratings if
Standard & Poor's and Fitch are not the Rating Agencies) at the time any amounts
are held on deposit therein, (ii) an account or accounts the deposits in which
are fully insured by the FDIC or (iii)
<PAGE>
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a corporate trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity. Eligible Accounts may bear interest.
"Estate in Real Property": A fee simple estate in a parcel of land.
"Event of Default": One or more of the events described in Section
7.01.
"Excess Bankruptcy Loss": Any Bankruptcy Loss, or portion thereof,
which exceeds the then applicable Bankruptcy Amount.
"Excess Fraud Loss": Any Fraud Loss, or portion thereof, which
exceeds the then applicable Fraud Loss Amount.
"Excess Special Hazard Loss": Any Special Hazard Loss, or portion
thereof, that exceeds the then applicable Special Hazard Amount.
"Extraordinary Loss": Any Realized Loss or portion thereof caused
by or resulting from:
(i) wear and tear, deterioration, rust or corrosion, mold, wet or
dry rot; inherent vice or latent defect; animals, birds,
vermin, insects;
(ii) smog, smoke, vapor, liquid or dust discharge from
agricultural or industrial operations; pollution;
contamination;
(iii) settling, subsidence, cracking, shrinkage, bulging or
expansion of pavements, foundations, walls, floors, roofs or
ceilings;
(iv) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues
and then only for the ensuing loss;
(v) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled
or uncontrolled and whether such loss be direct or indirect,
proximate or remote or be in whole or in part caused by,
contributed to or aggravated by a peril covered by the
definition of the term "Special Hazard Loss";
(vi) hostile or warlike action in time of peace or war, including
action in hindering, combating or defending against an
actual, impending or expected attack by any government or
sovereign power, DE JURE or DE FACTO, or by any authority
maintaining or using military, naval or air forces, or by
military, naval or air forces, or by an agent of any such
government, power, authority or forces;
(vii) any weapon of war employing atomic fission or radioactive
forces whether in time of peace or war, and
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(viii) insurrection, rebellion, revolution, civil war, usurped power
or action taken by governmental authority in hindering,
combating or defending against such an occurrence, seizure or
destruction under quarantine or customs regulations,
confiscation by order of any government or public authority,
or risks of contraband or illegal transactions or trade.
"Extraordinary Trust Fund Expenses": Any amounts reimbursable to
the Master Servicer or the Depositor pursuant to Section 6.03, any amounts
payable from the Distribution Account in respect of taxes pursuant to Section
10.01(g)(iii), any amounts reimbursable to the Trustee from the Trust Fund
pursuant to Section 8.05 and any other costs, expenses, liabilities and losses
borne by the Trust Fund (exclusive of any cost, expense, liability or loss that
is specific to a particular Mortgage Loan or REO Property and is taken into
account in calculating a Realized Loss in respect thereof) for which the Trust
Fund has not and, in the reasonable good faith judgment of the Trustee, shall
not, obtain reimbursement or indemnification from any other Person.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Seller, the Depositor or the Master Servicer pursuant to or as
contemplated by Section 2.03, 3.16(c) or 9.01), a determination made by the
Master Servicer that all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries which the Master Servicer, in its reasonable good faith
judgment, expects to be finally recoverable in respect thereof have been so
recovered. The Master Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination made thereby and give prompt
written notice thereof to the Trustee.
"Fitch": Fitch Investors Service, L.P. or its successor in
interest.
"FNMA": Federal National Mortgage Association or any successor
thereto.
"Fraud Loss": Any Realized Loss or portion thereof sustained by
reason of a default arising from fraud, dishonesty or misrepresentation in
connection with the related Mortgage Loan, including by reason of the denial of
coverage under any related Primary Mortgage Insurance Policy.
"Fraud Loss Amount": An amount initially equal to $2,994,003. As of
any date of determination after the Cut-off Date, an amount equal to: (X) prior
to the first anniversary of the Cut-off Date, an amount equal to $2,994,003
minus the aggregate amount of Fraud Losses allocated solely to the Subordinate
Certificates in accordance with Section 4.04 since the Cut-off Date up to such
date of determination and, (Y) from the first to the fifth anniversary of the
Cutoff Date, an amount equal to (1) the lesser of (a) the Fraud Loss Amount as
of the most recent anniversary of the Cut-off Date and (b) 1.00% of the
aggregate outstanding principal balance
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of all of the Mortgage Loans as of the most recent anniversary of the Cut-off
Date minus (2) the Fraud Losses allocated solely to the Subordinate Certificates
in accordance with Section 4.04 since the most recent anniversary of the Cut-off
Date up to such date of determination. On and after the fifth anniversary of the
Cut-off Date the Fraud Loss Amount shall be zero.
"Independent": When used with respect to any specified Person, any
such Person who (a) is in fact independent of the Depositor, the Master Servicer
and their respective Affiliates, (b) does not have any direct financial interest
in or any material indirect financial interest in the Depositor or the Master
Servicer or any Affiliate thereof, and (c) is not connected with the Depositor
or the Master Servicer or any Affiliate thereof as an officer, employee,
promoter, underwriter, trustee, partner, director or Person performing similar
functions; provided, however, that a Person shall not fail to be Independent of
the Depositor or the Master Servicer or any Affiliate thereof merely because
such Person is the beneficial owner of 1% or less of any class of securities
issued by the Depositor or the Master Servicer or any Affiliate thereof, as the
case may be.
"Independent Contractor": Either (i) any Person (other than the
Master Servicer) that would be an "independent contractor" with respect to the
Trust Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund
were a real estate investment trust (except that the ownership tests set forth
in that section shall be considered to be met by any Person that owns, directly
or indirectly, 35 percent or more of any Class of Certificates), so long as the
Trust Fund does not receive or derive any income from such Person and provided
that the relationship between such Person and the Trust Fund is at arm's length,
all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Master Servicer) if the Trustee has received an
Opinion of Counsel to the effect that the taking of any action in respect of any
REO Property by such Person, subject to any conditions therein specified, that
is otherwise herein contemplated to be taken by an Independent Contractor will
not cause such REO Property to cease to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
"Insurance Proceeds": Proceeds of any Primary Mortgage Insurance
Policy, title policy, hazard policy or other insurance policy covering a
Mortgage Loan, to the extent such proceeds are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with the procedures that the Master Servicer would follow in
servicing mortgage loans held for its own account, subject to the terms and
conditions of the related Mortgage Note and Mortgage.
"Interest Accrual Period": With respect to any Distribution Date,
the one-month period ending on the last day of the calendar month preceding the
month in which such Distribution Date occurs.
"Interest Distribution Amount": With respect to any Class of
Certificates, other than the Class PO Certificates, for any Distribution Date,
an amount equal to (a) one month's interest
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accrued during the most recently ended Interest Accrual Period at the applicable
Pass-Through Rate, based on a 360 day year consisting of twelve 30 day months,
on the Certificate Principal Balance or Notional Amount of such Certificates
immediately prior to such Distribution Date, plus (b) in the case of any
Distribution Date subsequent to the initial Distribution Date, the excess, if
any, of the Interest Distribution Amount in respect of such Certificates for the
immediately preceding Distribution Date, over the aggregate distributions of
interest made in respect of such Certificates pursuant to Section 4.01(a) on
such immediately preceding Distribution Date, less (c) any Prepayment Interest
Shortfalls (to the extent not covered by payments by the Master Servicer
pursuant to Section 3.24) and Relief Act Interest Shortfalls that were allocated
to such Certificates on such Distribution Date pursuant to Section 1.02.
"Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any Due
Period, whether as late payments of Monthly Payments or as Insurance Proceeds,
Liquidation Proceeds or otherwise, which represent late payments or collections
of principal and/or interest due (without regard to any acceleration of payments
under the related Mortgage and Mortgage Note) but delinquent for such Due Period
and not previously recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan; or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01.
With respect to any REO Property, either of the following events: (i) a Final
Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from the Trust Fund by reason of its being purchased
pursuant to Section 9.01.
"Liquidation Proceeds": The amount (other than Insurance Proceeds
or amounts received in respect of the rental of any REO Property prior to REO
Disposition) received by the Master Servicer in connection with (i) the taking
of all or a part of a Mortgaged Property by exercise of the power of eminent
domain or condemnation, (ii) the liquidation of a defaulted Mortgage Loan
through a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section
9.01.
"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date and the denominator of which
is the Value of the related Mortgaged Property.
"Master Servicer": Norwest Mortgage, Inc., a corporation organized
under the laws of California, or any successor master servicer appointed as
herein provided.
"Master Servicer Remittance Date": The 18th day of any month, or if
such 18th day is not a Business Day, the Business Day immediately preceding such
18th day.
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"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by the related Mortgagor from time to time under the related Mortgage Note,
determined: (a) after giving effect to (i) any Principal Prepayment with respect
to such Mortgage Loan applied prior to the Due Date for such Monthly Payment,
(ii) any Deficient Valuation and/or Debt Service Reduction with respect to such
Mortgage Loan and (iii) any reduction in the amount of interest collectible from
the related Mortgagor pursuant to the Relief Act; (b) without giving effect to
any modification, waiver or amendment granted or agreed to by the Master
Servicer pursuant to Section 3.07; and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on, or first priority security interest in, a Mortgaged
Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to time held as
a part of the Trust Fund, the Mortgage Loans so held being identified in the
Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement by and between
the Seller and the Depositor, regarding the transfer of the Mortgage Loans by
the Seller to or at the direction of the Depositor, substantially in the form of
Exhibit D annexed hereto.
"Mortgage Loan Remittance Rate": With respect to any Mortgage Loan
or REO Property, as of any date of determination, the then applicable Net
Mortgage Rate in respect thereof plus the Trustee Fee Rate.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in the Trust Fund on such date, attached hereto as Schedule 1.
The Mortgage Loan Schedule shall set forth the following information with
respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property,
including the city, state and zip code;
(iv) the type of Mortgaged Property and whether the
related Mortgagor represented at the origination of
the Mortgage Loan that such Mortgaged Property would
be occupied as a primary residence or as a secondary
residence or would be owned for investment purposes;
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(v) the Mortgage Rate;
(vi) the original term;
(vii) the remaining number of months to maturity as of the
Cut-off Date;
(viii) the original principal balance;
(ix) the due date of the first Monthly Payment;
(x) the amount of the Monthly Payment;
(xi) the Scheduled Principal Balance as of the Cut-off
Date;
(xii) the Loan-to-Value Ratio at origination;
(xiii) whether the Mortgage Loan is covered by a Primary
Mortgage Insurance Policy as of the Cut-off Date; and
(xiv) whether the Mortgage Loan is a Buydown Mortgage Loan.
The Mortgage Loan Schedule shall also set forth the total of
the amounts described under (xi) above for all of the Mortgage Loans. The
Mortgage Loan Schedule may be in the form of more than one list, collectively
setting forth all of the information required. The Mortgage Loan Schedule shall
be amended from time to time by the Depositor in accordance with the provisions
of this Agreement. With respect to any Qualified Substitute Mortgage Loan, the
items described in clauses (vii), (xi) and (xiii) shall be set forth as of the
date of substitution.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, without regard to
any reduction therein as a result of a Debt Service Reduction or operation of
the Relief Act.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an Estate in Real Property
improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Mortgage Rate": With respect to any Mortgage Loan (or the
related REO Property), as of any date of determination, a per annum rate of
interest equal to the then
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applicable Mortgage Rate for such Mortgage Loan minus the sum of the Servicing
Fee Rate and the Trustee Fee Rate.
"New Lease": Any lease of REO Property entered into on behalf
of the Trust Fund, including any lease renewed or extended on behalf of the
Trust Fund if the Trust Fund has the right to renegotiate the terms of such
lease.
"Non-PO Mortgage Loan": Each Mortgage Loan with a Net Mortgage
Rate equal to or greater than 7.50% per annum.
"Non-PO Percentage": With respect to each Non-PO Mortgage
Loan, 100%. With respect to each Non-PO Mortgage Loan, 100% less the Non-PO
Percentage.
"Non-PO Senior Principal Distribution Amount": For any
Distribution Date, an amount equal to the sum of:
(a) the product of (x) the then-applicable Senior Percentage
and (y) the sum of the following:
(i) the related Non-PO Percentage of the aggregate of
the principal portions of all Monthly Payments due during the
related Due Period in respect of all the Mortgage Loans
whether or not received on or prior to the related
Determination Date;
(ii) the related Non-PO Percentage of the principal
portion of all Insurance Proceeds and Liquidation Proceeds
(other than amounts described in clause (c) below) received in
respect of the Mortgage Loans during the related Prepayment
Period (other than any such Mortgage Loan that was purchased,
sold or replaced pursuant to or as contemplated by Section
2.03, 3.16(c) or 9.01 during the related Prepayment Period),
net of any portion thereof that represents a recovery of
principal for which an advance was made by the Master Servicer
pursuant to Section 4.03 in respect of a preceding
Distribution Date;
(iii) the related Non-PO Percentage of the Stated
Principal Balance (calculated immediately prior to such
Distribution Date) of each Mortgage Loan that was purchased,
sold or replaced pursuant to or as contemplated by Section
2.03, 3.16(c) or 9.01 during the related Prepayment Period;
(iv) the related Non-PO Percentage of all REO Principal
Amortization collected in respect of any REO Property during
the related Prepayment Period; and
(v) in connection with the substitution of one or more
Qualified Substitute Mortgage Loans for one or more Deleted
Mortgage Loans pursuant to Section 2.03 during the related
Prepayment Period, the excess, if any, of (i) the
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aggregate of the related Non-PO Percentage of the Stated
Principal Balances (calculated as of the respective dates of
substitution) of such Deleted Mortgage Loans, net of the
aggregate of the related Non-PO Percentage of the principal
portions of the Monthly Payments due during the related
Prepayment Period (to the extent received from the related
Mortgagor or advanced by the Master Servicer and distributed
pursuant to Section 4.01 on the Distribution Date in the
related Prepayment Period) in respect of each such Deleted
Mortgage Loan that was replaced prior to the Distribution Date
in the related Prepayment Period, over (ii) the aggregate of
the related Non-PO Percentage of the Stated Principal Balances
(calculated as of the respective dates of substitution) of
such Qualified Substitute Mortgage Loans.
(b) the product of (x) the then-applicable Senior Prepayment
Percentage and (y) the related Non-PO Percentage of all Principal
Prepayments received in respect of the Mortgage Loans during the
related Prepayment Period;
(c) with respect to any Mortgage Loan the subject of a Final
Recovery Determination in the related Prepayment Period, the least of
(a) the then-applicable Senior Prepayment Percentage of the Non-PO
Percentage multiplied by the net Liquidation Proceeds and Insurance
Proceeds allocable to principal in respect of such Mortgage Loans; (b)
the then-applicable Senior Percentage of the Non-PO Percentage
multiplied by the Scheduled Principal Balance of such Mortgage Loan at
the time of such Final Recovery Determination; and (c) the principal
portion of all amounts collected in connection with such a Final
Recovery Determination to the extent not distributed to the Class PO
Certificates; and
(d) in the case of any Distribution Date subsequent to the
initial Distribution Date, an amount equal to the excess, if any, of
the Non-PO Senior Principal Distribution Amount for the immediately
preceding Distribution Date, over the aggregate distributions of
principal made in respect of the Class A Certificates on such
immediately preceding Distribution Date pursuant to Section 4.01 to the
extent that any such amounts are not attributable to Realized Losses
which were allocated to the Subordinate Certificates pursuant to
Section 4.04.
"Nonrecoverable P&I Advance": Any P&I Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Master Servicer, will not or, in the
case of a proposed P&I Advance, would not be ultimately recoverable from related
late payments, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan
or REO Property as provided herein.
"Non-United States Person": Any Person other than a United
States Person.
"Norwest": Norwest Mortgage, Inc. or any successor thereto.
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"Notional Amount": With respect to the Class XS Certificates,
for any Distribution Date, the aggregate Stated Principal Balance of all of the
Mortgage Loans and REO Properties for such Distribution Date.
"Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Seller
or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or the Master
Servicer, except that any opinion of counsel relating to (a) the qualification
of any account required to be maintained pursuant to this Agreement as an
Eligible Account, (b) qualification of the Trust Fund as a REMIC or (c)
compliance with the REMIC Provisions must be an opinion of Independent counsel.
"Original Mortgage Loan": Any of the Mortgage Loans included
in the Trust Fund as of the Closing Date.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to any Class of
Certificates, other than the Class XS Certificates and Class PO Certificates,
for any Distribution Date, 7.50% per annum. With respect to the Class XS
Certificates, for any Distribution Date, the Weighted Average Stripped Interest
Rate for such Distribution Date. The Class PO Certificates shall have a
PassThrough Rate of 0% per annum and shall not be entitled to any distributions
of interest.
"Percentage Interest": With respect to any Class of
Certificates, the portion of the respective Class evidenced by such Certificate,
expressed as a percentage, the numerator of which is the initial Certificate
Principal Balance or Notional Amount represented by such Certificate, and the
denominator of which is the initial aggregate Certificate Principal Balance or
Notional Amount of all of the Certificates of such Class. The Book-Entry
Certificates are issuable only in Percentage Interests corresponding to initial
Certificate Principal Balances of $1.00 and integral multiples thereof. The
Class XS Certificates, the Class PO Certificates and the Subordinate
Certificates are issuable only in Percentage Interests corresponding to the
initial Certificate Principal Balances or Notional Amounts of $10,000 and
integral multiples of $1,000 in excess thereof; provided, however, that a single
Certificate of each such Class of Certificates may be issued having a Percentage
Interest corresponding to the remainder of the aggregate initial Certificate
Principal Balance or Notional Amount of such Class or to an otherwise authorized
denomination for such Class plus such remainder. The Class R Certificate are
issuable only in Percentage Interests corresponding to initial Certificate
Principal Balances of $20 and integral multiples thereof.
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"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, the Master Servicer, the Trustee
or any of their respective Affiliates:
(i) direct obligations of, and obligations fully
guaranteed as to timely payment of principal and interest by, the
United States of America, or any agency or instrumentality of the
United States of America the obligations of which are backed by the
full faith and credit of the United States of America;
(ii) demand and time deposits in, certificates of
deposit of, or bankers' acceptances issued by, any Depository
Institution;
(iii) repurchase obligations with respect to any
security described in clause (i) above entered into with a Depository
Institution (acting as principal);
(iv) securities bearing interest or sold at a discount
that are issued by any corporation incorporated under the laws of the
United States of America or any State thereof and that are rated by
each Rating Agency that rates such securities in its highest long-term
unsecured rating category at the time of such investment or contractual
commitment providing for such investment;
(v) commercial paper (including both
non-interest-bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not more than 30
days after the date of acquisition thereof) that is rated by each
Rating Agency that rates such securities in its highest short-term
unsecured debt rating available at the time of such investment; and
(vi) if previously confirmed in writing to the Trustee,
any other demand, money market or time deposit, or any other
obligation, security or investment, as may be acceptable to the Rating
Agencies as a permitted investment of funds backing securities having
ratings equivalent to their highest initial rating of the Senior
Certificates;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
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"P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the Master Servicer in respect of any Distribution Date pursuant
to Section 4.03.
"PO Mortgage Loan": Each Mortgage Loan with a Net Mortgage
Rate below 7.50% per annum.
"PO Percentage": With respect to each PO Mortgage Loan, the
quotient of (i) 7.50% per annum minus the related Net Mortgage Rate divided by
(ii) 7.50% per annum. With respect to each Non-PO Mortgage Loan, 0%.
"PO Senior Principal Distribution Amount": For any
Distribution Date, an amount equal to the aggregate of:
(a) the sum of the following:
(i) the related PO Percentage of the principal portion
of each Monthly Payment due during the related Due Period in
respect of each PO Mortgage Loan, whether or not received on
or prior to the related Determination Date;
(ii) the related PO Percentage of the principal portion
of all Insurance Proceeds and Liquidation Proceeds (other than
amounts described in clause (c) below) received in respect of
each PO Mortgage Loan during the related Prepayment Period
(other than any such PO Mortgage Loan that was purchased, sold
or replaced pursuant to or as contemplated by Section 2.03,
3.16(c) or 9.01 during the related Prepayment Period), net of
any portion thereof that represents a recovery of principal
for which an advance was made by the Master Servicer pursuant
to Section 4.03 in respect of a preceding Distribution Date;
(iii) the related PO Percentage of the Stated Principal
Balance (calculated immediately prior to such Distribution
Date) of each PO Mortgage Loan that was purchased, sold or
replaced pursuant to or as contemplated by Section 2.03,
3.16(c) or 9.01 during the related Prepayment Period;
(iv) the related Class PO Percentage of all REO
Principal Amortization collected in respect of any REO
Property during the related Prepayment Period; and
(v) in connection with the substitution of one or more
Qualified Substitute Mortgage Loans for one or more Deleted
Mortgage Loans pursuant to Section 2.03 during the related
Prepayment Period, the excess, if any, of (A) the related PO
Percentage of the aggregate of the Stated Principal Balances
(calculated as of the respective dates of substitution) of
such Deleted Mortgage Loans, net of the aggregate of the
related PO Percentage of the principal portions of the Monthly
Payments due during the related Prepayment Period (to the
extent received from the related Mortgagor or advanced by the
Master Servicer and
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distributed pursuant to Section 4.01 on the Distribution Date
in the related Prepayment Period) in respect of each such
Deleted Mortgage Loan that was replaced prior to the
Distribution Date in the related Prepayment Period, over (B)
the related PO Percentage of the aggregate of the Stated
Principal Balances (calculated as of the respective dates of
substitution) of such Qualified Substitute Mortgage Loans.
(b) the related PO Percentage of all Principal Prepayments
received in respect of each PO Mortgage Loan during the related
Prepayment Period;
(c) with respect to any PO Mortgage Loan the subject of a
Final Recovery Determination in the related Prepayment Period, the
related PO Percentage of the Stated Principal Balance of such Mortgage
Loan at the time of such Final Recovery Determination (net of the
principal portion of any Realized Loss allocated to the Class PO
Certificates); and
(d) in the case of any Distribution Date subsequent to the
initial Distribution Date, an amount equal to the excess, if any, of
the PO Senior Principal Distribution Amount for the immediately
preceding Distribution Date, over the aggregate distributions of
principal made in respect of the Class PO Certificates on such
immediately preceding Distribution Date pursuant to Section 4.01 to the
extent that any such amounts are not attributable to Realized Losses
which were allocated to the Subordinate Certificates pursuant to
Section 4.04.
"Prepayment Assumption": 200% of the standard prepayment
assumption, used solely for determining the accrual of original issue discount,
premium and market discount on the Certificates for federal income tax purposes.
The standard prepayment assumption assumes a constant rate of prepayment of
mortgage loans of 0.2% per annum of the then outstanding principal balance of
such mortgage loans in the first month of the life of the mortgage loans,
increasing by an additional 0.2% per annum in each succeeding month until the
thirtieth month, and a constant 6% per annum rate of prepayment thereafter for
the life of the mortgage loans.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was during the related Prepayment
Period the subject of a Principal Prepayment in full or in part that was applied
by the Master Servicer to reduce the outstanding principal balance of such loan
on a date preceding the Due Date in the succeeding Prepayment Period, an amount
equal to interest at the applicable Mortgage Loan Remittance Rate on the amount
of such Principal Prepayment for the number of days commencing on the date on
which the prepayment is applied and ending on the last day of the related
Prepayment Period.
"Prepayment Period": With respect to any Distribution Date,
the calendar month preceding the calendar month in which such Distribution Date
occurs.
"Primary Mortgage Insurance Policy": Each primary policy of
mortgage guaranty insurance in effect as represented in Section 2.04(a)(vi) and
as so indicated on the Mortgage
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Loan Schedule, or any replacement policy therefor obtained by the Master
Servicer or any SubServicer pursuant to Section 3.13.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, 3.16(c)
or 9.01, and as confirmed by an Officers' Certificate from the Master Servicer
to the Trustee, an amount equal to the sum of (i) 100% of the Stated Principal
Balance thereof as of the date of purchase, (ii) in the case of (x) a Mortgage
Loan, accrued interest on such Stated Principal Balance at the applicable
Mortgage Loan Remittance Rate in effect from time to time from the Due Date as
to which interest was last covered by a payment by the Mortgagor or an advance
by the Master Servicer, which payment or advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected, and (y) an REO Property, the sum of (1)
accrued interest on such Stated Principal Balance at the applicable Mortgage
Loan Remittance Rate in effect from time to time from the Due Date as to which
interest was last covered by a payment by the Mortgagor or an advance by the
Master Servicer through the end of the calendar month immediately preceding the
calendar month in which such REO Property was acquired, plus (2) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such purchase is to be effected, net of the total of all
net rental income, Insurance Proceeds, Liquidation Proceeds and P&I Advances
that as of the date of purchase been distributed as or to cover REO Imputed
Interest pursuant to Section 4.01, (iii) any unreimbursed Servicing Advances and
P&I Advances and any unpaid Servicing Fees allocable to such Mortgage Loan or
REO Property, (iv) any amounts previously withdrawn from the related Collection
Account in respect of such Mortgage Loan or REO Property pursuant to Sections
3.11(ix) and 3.16(b), and (v) in the case of a Mortgage Loan required to be
purchased pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the Master Servicer or the Trustee in respect of the breach or
defect giving rise to the purchase obligation.
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have an outstanding principal
balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the Scheduled
Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted Mortgage Loan, (iii) have a Net Mortgage Rate equal to the
Net Mortgage Rate of the Deleted Mortgage Loan, (iv) have a remaining term to
maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (v) have the same Due Date as the Due Date on the Deleted
Mortgage Loan, (vi) have a Loan-to-Value Ratio as of the date of substitution
equal to or lower
<PAGE>
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than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (vii)
be covered under a Primary Insurance Policy if such Qualified Substitute
Mortgage Loan has a Loan-toValue Ratio in excess of 80% and (viii) conform to
each representation and warranty set forth in the Mortgage Loan Purchase
Agreement applicable to the Deleted Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the Mortgage Rates described in clause (ii) hereof
shall be determined on the basis of weighted average Mortgage Rates, the Net
Mortgage Rates described in clause (iii) hereof shall be satisfied as to each
such mortgage loan, the terms described in clause (iv) shall be determined on
the basis of weighted average remaining terms to maturity, the Loan-to-Value
Ratios described in clause (vi) hereof shall be satisfied as to each such
mortgage loan and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (viii) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as
the case may be.
"Rating Agencies": Standard & Poor's and Fitch. If such
agencies or their successors are no longer in existence, "Rating Agencies" shall
be such nationally recognized statistical rating agencies, or other comparable
Persons, designated by the Depositor, notice of which designation shall be given
to the Trustee and the Master Servicer.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor through the end of the calendar month in which such Final
Recovery Determination was made, calculated in the case of each calendar month
during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on such Mortgage Loan, net of the Servicing Fee Rate,
and (B) on a principal amount equal to the Stated Principal Balance of such
Mortgage Loan as of the close of business on the Distribution Date during such
calendar month, plus (iii) any amounts previously withdrawn from the related
Collection Account in respect of such Mortgage Loan pursuant to Sections
3.11(ix) and 3.16(b), minus (iv) the proceeds, if any, received in respect of
such Mortgage Loan during the calendar month in which such Final Recovery
Determination was made, net of amounts that are payable therefrom to the Master
Servicer with respect to such Mortgage Loan pursuant to clause (iii) of Section
3.11.
With respect to any REO Property as to which a Final Recovery
Determination has been made, an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of the Trust Fund, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan, net of the Servicing Fee Rate, and (B) on a
principal amount equal to the Stated Principal Balance of the related
<PAGE>
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Mortgage Loan as of the close of business on the Distribution Date during such
calendar month, plus (iii) REO Imputed Interest for such REO Property for each
calendar month commencing with the calendar month in which such REO Property was
acquired and ending with the calendar month in which such Final Recovery
Determination was made, plus (iv) any amounts previously withdrawn from the
related Collection Account in respect of the related Mortgage Loan pursuant to
Sections 3.11(ix) and 3.16(b), minus (v) the aggregate of all P&I Advances made
by the Master Servicer in respect of such REO Property or the related Mortgage
Loan for which the Master Servicer has been or, in connection with such Final
Recovery Determination, will be reimbursed pursuant to Section 3.23 out of
rental income, Insurance Proceeds and Liquidation Proceeds received in respect
of such REO Property, minus (vi) the total of all net rental income, Insurance
Proceeds and Liquidation Proceeds received in respect of such REO Property that
has been, or in connection with such Final Recovery Determination, will be
transferred to the Collection Account pursuant to Section 3.23, less any amounts
reimbursable to the Master Servicer therefrom pursuant to Section 3.23(d).
With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.
"Record Date": With respect to each Distribution Date, the
last Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
"Regular Certificate": Any Senior Certificate or Subordinate
Certificate.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code,
<PAGE>
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and related provisions, and proposed, temporary and final regulations and
published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time.
"Remittance Report": A report on machine readable media as
well as a hard copy prepared by the Master Servicer pursuant to Section 4.03 and
containing the information specified in Exhibit G attached hereto, with such
additions, deletions and modifications as agreed to by the Trustee and the
Master Servicer.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property".
"REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of the Trust
Fund, one month's interest at the applicable Mortgage Loan Remittance Rate on
the Stated Principal Balance of such REO Property (or, in the case of the first
such calendar month, of the related Mortgage Loan if appropriate) as of the
close of business on the Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
9.01 that is allocable to such REO Property) or otherwise, net of any portion of
such amounts (i) payable pursuant to Section 3.23(c) in respect of the proper
operation, management and maintenance of such REO Property or (ii) payable or
reimbursable to the Master Servicer pursuant to Section 3.23(d) for unpaid
Servicing Fees in respect of the related Mortgage Loan and unreimbursed
Servicing Advances and P&I Advances in respect of such REO Property or the
related Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO
Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Master
Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.23.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E-1 or Exhibit E-2 attached hereto.
"Residential Dwelling": Any one of the following: (i) a
detached or semi- detached single-family dwelling, (ii) a two to four-unit
dwelling, (iii) a townhouse or (iv) a unit
<PAGE>
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in a condominium or a planned unit development, none of which is a mobile or
manufactured home.
"Residual Certificate": Any one of the Class R Certificates.
"Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
the Chairman or Vice Chairman of the Board of Directors or Trustees, the
Chairman or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any vice president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the Cashier, any
assistant cashier, any trust officer or assistant trust officer, the Controller
and any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and, with respect to a particular matter, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Scheduled Principal Balance": With respect to any Mortgage
Loan: (a) as of the Cut-off Date, the outstanding principal balance of such
Mortgage Loan as of such date, net of the principal portion of all unpaid
Monthly Payments, if any, due on or before such date; (b) as of any Due Date
subsequent to the Cut-off Date up to and including the Due Date in the calendar
month in which a Liquidation Event occurs with respect to such Mortgage Loan,
the Scheduled Principal Balance of such Mortgage Loan as of the Cut-off Date,
minus the sum of (i) the principal portion of each Monthly Payment due on or
before such Due Date but subsequent to the Cut-off Date, whether or not
received, (ii) all Principal Prepayments received before such Due Date but after
the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and
Insurance Proceeds received before such Due Date but after the Cut-off Date, net
of any portion thereof that represents principal due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) on a Due
Date occurring on or before the date on which such proceeds were received and
(iv) any Realized Loss incurred with respect thereto as a result of a Deficient
Valuation occurring before such Due Date, but only to the extent such Realized
Loss represents a reduction in the portion of principal of such Mortgage Loan
not yet due (without regard to any acceleration of payments under the related
Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such Mortgage Loan, zero. With respect to any REO Property: (a) as of
any Due Date subsequent to the date of its acquisition on behalf of the Trust
Fund up to and including the Due Date in the calendar month in which a
Liquidation Event occurs with respect to such REO Property, an amount (not less
than zero) equal to the Scheduled Principal Balance of the related Mortgage Loan
as of the Due Date in the calendar month in which such REO Property was
acquired, minus the aggregate amount of REO Principal Amortization, if any, in
respect of such REO Property for all previously ended calendar months; and (b)
as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such REO Property, zero.
<PAGE>
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"Seller": Norwest.
"Senior Certificate": Any Class A-1 Certificate, Class A-2
Certificate, Class A-3 Certificate, Class A-4 Certificate, Class A-5
Certificate, Class A-6 Certificate, Class A-7 Certificate, Class XS Certificate
or Class PO Certificate.
"Senior Percentage": With respect to any Distribution Date,
the lesser of (a) 100% and (b) a fraction, expressed as a percentage, the
numerator of which is the excess, if any, of the aggregate Certificate Principal
Balance of the Class A Certificates and Residual Certificates for such
Distribution Date, over the aggregate amount, if any, payable to the Holders of
the Class A Certificates on such date pursuant to clause (d) of the definition
of "NonPO Senior Principal Distribution Amount" and the denominator of which is
the sum of (i) the aggregate of the Non-PO Percentage of the Scheduled Principal
Balance of each of the Mortgage Loans, plus (ii) the aggregate of the Non-PO
Percentage of the Scheduled Principal Balance of each of the REO Properties, in
each case before reduction for any Realized Losses on such Distribution Date.
"Senior Prepayment Percentage": With respect to any
Distribution Date within the range indicated below, the percentage as indicated
below:
<TABLE>
<CAPTION>
Distribution Date Senior Prepayment Percentage
----------------------------------- -----------------------------------------------------------------
<S> <C>
June 1996 through May 100%
2000
June 2001 through May Senior Percentage, plus 70% of the Subordinate
2002 Percentage
June 2002 through May Senior Percentage, plus 60% of the Subordinate
2003 Percentage
June 2003 through May Senior Percentage, plus 40% of the Subordinate
2004 Percentage
June 2004 through May Senior Percentage, plus 20% of the Subordinate
2005 Percentage
June 2005 and thereafter Senior Percentage;
</TABLE>
provided, however, no reduction to the Senior Prepayment Percentage described
above shall be made as of any Distribution Date unless (i) the outstanding
principal balance of Mortgage Loans delinquent 60 days or more (including real
estate owned and Mortgage Loans in foreclosure) averaged over the last six
months does not exceed 50% of the sum of the then current Certificate Principal
Balances of the Subordinate Certificates and (ii) Realized Losses on the
Mortgage Loans to date are less than the then applicable Trigger Amount. The
"Triger Amount" for any Distribution Date occurring after the first five years
will be as follows: for any Distribution Date during the sixth year after the
Closing Date, 30% of the initial sum of the Certificate Principal Balances of
the Subordinate Certificates; for any Distribution Date during the seventh
<PAGE>
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year after the Closing Date, 40% of the initial sum of the Certificate Principal
Balances of the Subordinate Certificates; for any Distribution Date during the
eighth year after the Closing Date, 45% of the initial sum of the Certificate
Principal Balances of the Subordinate Certificates; and for any Distribution
Date during the ninth year after the Closing Date, 50% of the initial sum of the
Certificate Principal Balances of the Subordinate Certificates. Notwithstanding
the foregoing, upon a reduction of the Certificate Principal Balances of the
Senior Certificates to zero, the Senior Prepayment Percentage will equal 0%. In
addition, on any Distribution Date, on which the Senior Percentage exceeds the
initial Senior Percentage, the Senior Prepayment Percentage shall be 100%.
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.
"Servicing Advances": The reasonable "out of pocket" costs and
expenses incurred in connection with a default, delinquency or other
unanticipated event by the Master Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, in respect of a particular
Mortgage Loan, (iii) the management (including reasonable fees in connection
therewith) and liquidation of any REO Property, and (iv) the performance of its
obligations under Sections 3.01, 3.09, 3.13, 3.14, 3.16 and 3.23.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one month's interest (or in the event of
any payment of interest which accompanies a Principal Prepayment in full made by
the Mortgagor during such calendar month, interest for the number of days
covered by such payment of interest) at the Servicing Fee Rate on the same
principal amount on which interest on such Mortgage Loan accrues for such
calendar month.
"Servicing Fee Rate": With respect to each Mortgage Loan,
0.25% per annum.
"Servicing Officer": Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of Mortgage
Loans, whose name and specimen signature appear on a list of servicing officers
furnished by the Master Servicer to the Trustee and the Depositor on the Closing
Date, as such list may from time to time be amended.
"Single Certificate": With respect to any Class of
Certificates (other than the Residual Certificates), a hypothetical Certificate
of such Class evidencing a Percentage Interest for such Class corresponding to
an initial Certificate Principal Balance or Notional Amount of $1,000. With
respect to the Residual Certificates, a hypothetical Certificate of such Class
evidencing a 20% Percentage Interest in such Class.
"Special Hazard Amount": Initially, an amount equal to
$1,984,376. As of each anniversary of the Cut-off Date, an amount equal to the
lesser of (a) the Special Hazard Amount as of the immediately preceding
anniversary of the Cut-off Date minus the aggregate amount of
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Special Hazard Losses allocated solely to the Subordinate Certificates in
accordance with Section 4.04 since such immediately preceding anniversary and
(b) the Adjustment Amount (as defined below) as most recently calculated. For
each anniversary of the Cut-off Date, the Adjustment Amount shall be equal to
the greatest of (i) the product of 1.00% multiplied by the outstanding principal
balance of all the Mortgage Loans on the Distribution Date immediately preceding
such anniversary, (ii) the aggregate outstanding principal balance (as of the
immediately preceding Distribution Date) of Mortgage Loans secured by Mortgaged
Properties located in the same zip code area in the State of California and
(iii) twice the aggregate outstanding principal balance (as of the immediately
preceding Distribution Date) of the largest Mortgage Loan.
"Special Hazard Loss": Any Realized Loss or portion thereof
not in excess of the lesser of the cost of repair or replacement of a Mortgaged
Property suffered by such Mortgaged Property by reason of damage caused by
certain hazards (including earthquakes, mudflows, and, to a limited extent,
floods) not insured against under the hazard insurance policies or fire or flood
insurance policies required to be maintained in respect of such Mortgaged
Property pursuant to Section 3.14, or by reason of the application of any
co-insurance provision, in any event exclusive of any Extraordinary Loss.
"Standard & Poor's": Standard & Poor's Ratings Services, a
division of McGraw-Hill, Inc., or its successors.
"Startup Day": With respect to the Trust Fund, the day
designated as such pursuant to Section 10.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the Scheduled Principal Balance of such
Mortgage Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, to the extent received from the Mortgagor
or advanced by the Master Servicer and distributed pursuant to Section 4.01 on
or before such date of determination, (ii) all Principal Prepayments received
after the Cut-off Date, to the extent distributed pursuant to Section 4.01 on or
before such date of determination, (iii) all Liquidation Proceeds and Insurance
Proceeds applied by the Master Servicer as recoveries of principal in accordance
with the provisions of Section 3.16, to the extent distributed pursuant to
Section 4.01 on or before such date of determination, and (iv) any Realized Loss
incurred with respect thereto as a result of a Deficient Valuation made during
or prior to the Prepayment Period for the most recent Distribution Date
coinciding with or preceding such date of determination; and (b) as of any date
of determination coinciding with or subsequent to the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, zero. With respect to any REO Property: (a) as of any date
of determination up to but not including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property would
be distributed, an amount (not less than zero) equal to the Stated Principal
Balance of the related Mortgage Loan as of the date on which such REO Property
was acquired on behalf of the Trust Fund, minus the sum (i) if such REO Property
was
<PAGE>
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acquired before the Distribution Date in any calendar month, the principal
portion of the Monthly Payment due on the Due Date in the calendar month of
acquisition, to the extent advanced by the Master Servicer and distributed
pursuant to Section 4.01 on or before such date of determination, and (ii) the
aggregate amount of REO Principal Amortization in respect of such REO Property
for all previously ended calendar months, to the extent distributed pursuant to
Section 4.01 on or before such date of determination; and (b) as of any date of
determination coinciding with or subsequent to the Distribution Date on which
the proceeds, if any, of a Liquidation Event with respect to such REO Property
would be distributed, zero.
"Stayed Funds": As defined in Section 7.02(b).
"Stripped Interest Rate": With respect to any Mortgage Loan or
related REO Property, the excess, if any, of the initial Net Mortgage Rate minus
7.50% per annum.
"Subordinate Certificate": Any Class B-1 Certificate, Class
B-2 Certificate, Class B-3 Certificate, Class B-4 Certificate, Class B-5
Certificate or Class B-6 Certificate.
"Subordinate Percentage": With respect to any Distribution
Date, a percentage equal to 100% minus the Senior Percentage for such
Distribution Date.
"Subordinate Prepayment Percentage": With respect to any
Distribution Date, a percentage equal to 100% minus the Senior Prepayment
Percentage.
"Subordinate Principal Distribution Amount": For any
Distribution Date, an amount equal to the sum of:
(a) the product of (x) the then-applicable Subordinate
Percentage and (y) the sum of the following:
(i) the related Non-PO Percentage of the aggregate of
the principal portions of all Monthly Payments due during the
related Due Period in respect of the Mortgage Loans whether or
not received on or prior to the related Determination Date;
(ii) the related Non-PO Percentage of the principal
portion of all Insurance Proceeds and Liquidation Proceeds
(other than amounts described in clause (c) below) received in
respect of the Mortgage Loans during the related Prepayment
Period (other than any such Mortgage Loan that was purchased,
sold or replaced pursuant to or as contemplated by Section
2.03, 3.16(c) or 9.01 during the related Prepayment Period),
net of any portion thereof that represents a recovery of
principal for which an advance was made by the Master Servicer
pursuant to Section 4.03 in respect of a preceding
Distribution Date;
(iii) the related Non-PO Percentage of the Stated
Principal Balance (calculated immediately prior to such
Distribution Date) of each Mortgage Loan
<PAGE>
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that was purchased, sold or replaced pursuant to or as
contemplated by Section 2.03, 3.16(c) or 9.01 during the
related Prepayment Period;
(iv) the related Non-PO Percentage of all REO Principal
Amortization collected in respect of any REO Property during
the related Prepayment Period; and
(v) in connection with the substitution of one or more
Qualified Substitute Mortgage Loans for one or more Deleted
Mortgage Loans pursuant to Section 2.03 during the related
Prepayment Period, the excess, if any, of (i) the aggregate of
the related Non-PO Percentage of the Stated Principal Balances
(calculated as of the respective dates of substitution) of
such Deleted Mortgage Loans, net of the aggregate of the
related Non-PO Percentage of the principal portions of the
Monthly Payments due during the related Prepayment Period (to
the extent received from the related Mortgagor or advanced by
the Master Servicer and distributed pursuant to Section 4.01
on the Distribution Date in the related Prepayment Period) in
respect of each such Deleted Mortgage Loan that was replaced
prior to the Distribution Date in the related Prepayment
Period, over (ii) the aggregate of the related Non-PO
Percentage of the Stated Principal Balances (calculated as of
the respective dates of substitution) of such Qualified
Substitute Mortgage Loans;
(b) the product of (x) the then-applicable Subordinate
Prepayment Percentage and (y) related Non-Class PO Percentage of all
Principal Prepayments received in respect of the Mortgage Loans during
the related Prepayment Period;
(c) with respect to any Mortgage Loans the subject of a Final
Recovery Determination in the related Prepayment Period, the amount, if
any, by which the net Liquidation Proceeds and Insurance Proceeds
allocable to principal in respect of such Mortgage Loans exceed the
amount distributable to the Class A Certificates and the Class PO
Certificates pursuant to clause (c) of the definition of "Non-PO Senior
Principal Distribution Amount" and clause (c) of the definition of "PO
Senior Principal Distribution Amount"; and
(d) in the case of any Distribution Date subsequent to the
initial Distribution Date, an amount equal to the excess, if any, of
the Subordinate Principal Distribution Amount for the immediately
preceding Distribution Date, over the aggregate distributions of
principal made in respect of the Subordinate Certificates on such
immediately preceding Distribution Date pursuant to Section 4.01 to the
extent that any such amounts are not attributable to Realized Losses
which were allocated to the Subordinate Certificates pursuant to
Section 4.04.
"Sub-Servicer": Any Person with which the Master Servicer has
entered into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
<PAGE>
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"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the Master Servicer.
"Sub-Servicing Agreement": The written contract between the
Master Servicer and a Sub-Servicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02.
"Tax Returns": The federal income tax returns on Internal
Revenue Service Form 1066, US Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as a REMIC
under the REMIC Provisions, together with any and all other information reports
or returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto, and together with all collections thereon
and proceeds thereof; (ii) any REO Property, together with all collections
thereon and proceeds thereof; (iii) the Trustee's rights with respect to the
Mortgage Loans under all insurance policies required to be maintained pursuant
to this Agreement and any proceeds thereof; (iv) the Depositor's rights under
the Mortgage Loan Purchase Agreements (including any security interest created
thereby); and (v) the Collection Account, the Distribution Account and such
assets that are deposited therein from time to time and any investments thereof,
together with any and all income, proceeds and payments with respect thereto.
Notwithstanding the foregoing, however, the Trust Fund specifically excludes all
payments and other collections of principal and interest due on the Mortgage
Loans on or before the Cut-off Date.
"Trustee": The Chase Manhattan Bank, N.A., a national banking
association, or its successor in interest, or any successor trustee appointed as
herein provided.
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"Trustee's Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trusts hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal one twelfth of the product of (i) the Trustee's Fee Rate,
multiplied by (ii) the aggregate Scheduled Principal Balance of the Mortgage
Loans and any REO Properties as of the second preceding Due Date (or, in the
case of the initial Distribution Date, as of the Cut-off Date).
"Trustee's Fee Rate": 0.0075% per annum.
"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.14.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States may be
included in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States. The terms "United States" shall have the meaning set forth in
Section 7701 of the Code or successor provisions.
"Value": With respect to any Mortgaged Property securing a
Mortgage Loan the proceeds of which were used to purchase such Mortgaged
Property, the lesser of (i) the value thereof as determined by an appraisal made
for the originator at the time of the origination of the related Mortgage Loan,
and (ii) the sales price of such Mortgaged Property at such time of origination.
With respect to any Mortgaged Property securing a Mortgage Loan the proceeds of
which were used to refinance an existing loan, the appraised value of such
Mortgaged Property at the time of origination of such Mortgage Loan.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. At all times during the
term of this Agreement, (i) 98% of all of the Voting Rights shall be allocated
to the Regular Certificates, other than the Class XS Certificates, in proportion
to their then outstanding Certificate Principal Balances, (ii) 1% of all of the
Voting Rights shall be allocated to the Class XS Certificates, in proportion to
their then outstanding Notional Amounts, and (iii) 1% of all of the Voting
Rights shall be allocated to the Residual Certificates, in proportion to their
Percentage Interests in such Class. All Voting Rights allocated to any Class of
Certificates shall be allocated among such Certificates PRO RATA in accordance
with the respective Percentage Interests evidenced thereby.
"Weighted Average Stripped Interest Rate": With respect to any
Distribution Date, the weighted average of the Stripped Interest Rates in effect
during the most recently ended calendar month for the Mortgage Loans and REO
Properties based on the respective Scheduled Principal Balances thereof as of
the Due Date in such most recently ended calendar month (or, in the case of the
initial Distribution Date, as of the Cut-off Date).
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SECTION 1.02. Allocation of Certain Interest Shortfalls.
The aggregate amount of any Prepayment Interest Shortfalls (to
the extent not covered by payments as provided in Section 3.24 hereof) and
Relief Act Interest Shortfall incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated among the Certificates, PRO RATA in
accordance with, and to the extent of one month's interest at the Pass-Through
Rate on the respective Certificate Principal Balance or Notional Amount of such
Certificate immediately prior to such Distribution Date.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Mortgage Loans
identified on the Mortgage Loan Schedule, the rights of the Depositor under the
Mortgage Loan Purchase Agreement with respect to such Mortgage Loans, and all
other assets included or to be included in the Trust Fund. Such assignment
includes all interest and principal received by the Depositor or the Master
Servicer on or with respect to the Mortgage Loans (other than payments of
principal and interest due on the Mortgage Loans on or before the Cut-off Date).
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trustee, or to one or more
Custodians as the agent or agents of the Trustee, the following documents or
instruments with respect to each Mortgage Loan (a "Mortgage File") so
transferred and assigned:
(i) the original Mortgage Note, endorsed in the
following form: "Pay to the order of The Chase Manhattan Bank,
N.A., as Trustee for the registered holders of Salomon
Brothers Mortgage Securities VII, Inc., Mortgage PassThrough
Certificates, Series 1996-2, without recourse", with all prior
and intervening endorsements showing a complete chain of
endorsement from the originator to the Person so endorsing to
the Trustee;
(ii) the original Mortgage with evidence of recording
thereon;
(iii) an original Assignment of the Mortgage executed in
the following form: "The Chase Manhattan Bank, N.A., as
Trustee for the registered holders of Salomon Brothers
Mortgage Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1996-2";
(iv) the original Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the
originator to the Person assigning the Mortgage to the Trustee
as contemplated by the immediately preceding clause (iii);
(v) the original or copies of each assumption,
modification, written assurance or substitution agreement, if
any;
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(vi) the original lender's title insurance policy, or
with respect to Mortgaged Properties located in the State of
Iowa an attorney's title opinion together with all
endorsements or riders which were issued with or subsequent to
the issuance of such policy, insuring the priority of the
Mortgage as a first lien on the Mortgaged Property represented
therein as a fee interest vested in the Mortgagor;
(vii) if such Mortgage Loan has a Loan-to-Value Ratio at
origination in excess of 80% (as shown in the related Mortgage
Loan Schedule), the original Primary Mortgage Insurance
Policy; and
(viii) if such Mortgage Loan is a Buydown Mortgage Loan
(as shown in the Mortgage Loan Schedule), the original buydown
agreement.
The Depositor shall promptly (and in no event later than five
Business Days following the Closing Date) submit for recording, at no expense to
the Trust Fund, the Master Servicer or the Trustee, in the appropriate public
office for real property records, each Assignment referred to in Section
2.01(iii) and (iv) above. In the event that any such Assignment is lost or
returned unrecorded because of a defect therein, the Depositor shall promptly
prepare or cause to be prepared a substitute Assignment or cure or cause to be
cured such defect, as the case may be, and thereafter cause each such Assignment
to be duly recorded.
If any of the documents referred to in Section 2.01(ii), (iii)
or (iv) above has as of the Closing Date been submitted for recording but either
(x) has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Depositor to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Trustee, or to the appropriate
Custodian on behalf of the Trustee, of a copy of each such document certified by
the originator in the case of (x) above or the applicable public recording
office in the case of (y) above to be a true and complete copy of the original
that was submitted for recording and (2) if such copy is certified by the
originator, delivery to the Trustee, or to the appropriate Custodian on behalf
of the Trustee, promptly upon receipt thereof of either the original or a copy
of such document certified by the applicable public recording office to be a
true and complete copy of the original. If the original lender's title insurance
policy was not delivered pursuant to Section 2.01(vi) above, the Depositor shall
deliver or cause to be delivered to the Trustee, or to the appropriate Custodian
on behalf of the Trustee, a written commitment or interim binder or preliminary
report of title issued by the title insurance or escrow company, with the
original to be delivered to the Trustee, or to the appropriate Custodian on
behalf of the Trustee, promptly upon receipt thereof. If the original Primary
Mortgage Insurance Policy (if applicable) was not delivered pursuant to Section
2.01(vii) above, the Depositor shall deliver or cause to be delivered to the
Trustee, or to the appropriate Custodian on behalf of the Trustee, a written
commitment from the mortgage insurer to issue such policy, with the original to
be delivered to the Trustee, or to the appropriate Custodian on behalf of the
Trustee, promptly upon receipt thereof. The Depositor shall deliver or cause to
be delivered to the Trustee promptly upon receipt thereof any other original
documents constituting a part of a Mortgage File received with respect to any
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Mortgage Loan, including, but not limited to, any original documents evidencing
an assumption or modification of any Mortgage Loan.
All original documents relating to the Mortgage Loans that are
not delivered to the Trustee, or to the appropriate Custodian on behalf of the
Trustee, are and shall be held by the Seller, the Depositor or the Master
Servicer, as the case may be, in trust for the benefit of the Trustee on behalf
of the Certificateholders. In the event that any such original document is
required pursuant to the terms of this Section to be a part of a Mortgage File,
such document shall be delivered promptly to the Trustee, or to the appropriate
Custodian on behalf of the Trustee. Any such original document delivered to or
held by the Depositor that is not required pursuant to the terms of this Section
to be a part of a Mortgage File, shall be delivered promptly to the Master
Servicer.
The Depositor herewith delivers to the Trustee an executed
copy of the Mortgage Loan Purchase Agreement.
SECTION 2.02. Acceptance by Trustee.
The Trustee acknowledges receipt (or, with respect to Mortgage
Loans subject to a Custodial Agreement, receipt by the respective Custodian as
the duly appointed agent of the Trustee), subject to the provisions of Section
2.01 (and, in the case of the documents referred to in Section 2.01, subject to
any exceptions previously noted on the Trustee's preliminary exception report in
the form annexed hereto as Exhibit C-1 delivered to the Depositor and the Master
Servicer on the Closing Date), of the documents referred to in Section 2.01
above and all other assets included in the definition of the "Trust Fund" under
clauses (i), (iv) and (v) (to the extent of amounts deposited into the
Distribution Account) and declares that it, or such Custodian as its agent,
holds and will hold such documents and the other documents delivered to it
constituting the Mortgage Files, and that it holds or will hold all such assets
and such other assets included in the definition of "Trust Fund", in trust for
the exclusive use and benefit of all present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders,
to review or cause to be reviewed on its behalf, each Mortgage File within 30
days after receipt of such Mortgage File and to certify in substantially the
form attached hereto as Exhibit C-2 that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in the exception report annexed thereto as
not being covered by such certification), (i) all documents constituting part of
such Mortgage File (other than such documents described in Section 2.01(v))
required to be delivered to it pursuant to this Agreement are in its possession,
(ii) such documents have been reviewed by it or such Custodian and appear
regular on their face and relate to such Mortgage Loan, (iii) based on its or
the Custodian's examination and only as to the foregoing, the information set
forth in the applicable Mortgage Loan Schedule that corresponds to items (i),
(ii), (iii), (v), (vi), (viii), (ix) and (x) of the definition of "Mortgage Loan
Schedule" accurately reflects information set forth in the Mortgage File. It is
herein acknowledged that, in conducting such review, the Trustee or such
Custodian was under no duty or obligation (i) to inspect, review or examine any
such
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documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face, or (ii) to determine whether any Mortgage File should include any
of the documents specified in clause (v) of Section 2.01.
Prior to the first anniversary date of this Agreement the
Trustee shall deliver to the Depositor and the Master Servicer a final
certification in the form annexed hereto as Exhibit C-3 (or shall cause the
Custodian to deliver to the Trustee, the Depositor and the Master Servicer a
Final Certification in the form attached to the Custodial Agreement) evidencing
the completeness of the Mortgage Files, with any applicable exceptions noted
thereon.
If in the process of reviewing the Mortgage Files and making
or preparing, as the case may be, the certifications referred to above, the
Trustee or any Custodian finds any document or documents constituting a part of
a Mortgage File to be missing or defective in any material respect, at the
conclusion of its review, the Trustee shall so notify the Depositor and the
Master Servicer. In addition, upon the discovery by the Depositor, the Master
Servicer or the Trustee of a breach of any of the representations and warranties
made by the Seller in the Mortgage Loan Purchase Agreement in respect of any
Mortgage Loan which materially adversely affects such Mortgage Loan or the
interests of the Certificateholders in such Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties.
The Trustee shall, at the expense of any Certificateholder,
provide a written report to such Certificateholder of all Mortgage Files
released to the Master Servicer for servicing purposes.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by
the Seller, the Depositor or the Master
Servicer.
(a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement which materially adversely affects the value of
such Mortgage Loan or the interest therein of the Certificateholders (in the
case of any such representation or warranty made to the knowledge or the best of
knowledge of the Seller or as to which the Seller has no knowledge, without
regard to the Seller's lack of knowledge with respect to the substance of such
representation or warranty being inaccurate at the time it was made), the
Trustee shall promptly notify the Seller and the Master Servicer of such defect,
missing document or breach and request that the Seller deliver such missing
document or cure such defect or breach within 60 days from the date the Seller
was notified of such missing document, defect or breach, and if such party does
not deliver such missing document or cure such defect or breach in all material
respects during such period, the Trustee shall enforce the Seller's obligation
to repurchase such Mortgage Loan from the Trust Fund at the Purchase Price
within 90 days after the date on which the Seller was notified (subject to
Section 2.03(e)) of such missing document, defect or breach, if and to the
extent that the Seller is obligated to do so under the Mortgage Loan Purchase
Agreement. The Purchase Price for the repurchased Mortgage Loan shall be
deposited in the related Collection Account
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and the Trustee, upon receipt of written certification from the Master Servicer
of such deposit, shall release to the Seller the related Mortgage File and shall
execute and deliver such instruments of transfer or assignment, without recourse
as the Seller shall furnish to it and as shall be necessary to vest in the
Seller any Mortgage Loan released pursuant hereto and the Trustee shall have no
further responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, if so provided in the
Mortgage Loan Purchase Agreement, the Seller may cause such Mortgage Loan to be
removed from the Trust Fund (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner and subject to the limitations set forth in Section 2.03(d). It is
understood and agreed that the obligation of the Seller to cure or to repurchase
(or to substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a breach
has occurred and is continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Trustee on behalf of the
Certificateholders.
(b) Subject to Section 2.03(e), within 90 days of the earlier
of discovery by the Depositor or receipt of notice by the Depositor of the
breach of any representation or warranty of the Depositor set forth in Section
2.04 with respect to any Mortgage Loan, which materially adversely affects the
value of such Mortgage Loan or the interest therein of the Certificateholders,
the Depositor shall (i) cure such breach in all material respects, (ii)
repurchase the Mortgage Loan from the Trust Fund at the Purchase Price or (iii)
remove such Mortgage Loan from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans in the manner and subject to the limitations set forth in Section 2.03(d).
If any such breach is a breach of any of the representations and warranties
included in Section 2.04(a)(iv), and the Depositor is unable to cure such
breach, the Depositor shall repurchase or substitute the smallest number of
Mortgage Loans as shall be required to make such representation or warranty true
and correct. The Purchase Price for any repurchased Mortgage Loan shall be
delivered to the Master Servicer for deposit in the Collection Account, and the
Trustee, upon receipt of written the Master Servicer of such deposit, shall at
the Depositor's direction release to the Depositor the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment furnished
by the Depositor, in each case without recourse, as the Depositor shall furnish
to it and as shall be necessary to vest in the Depositor any Mortgage Loan
released pursuant hereto.
(c) Within 90 days of the earlier of discovery by the Master
Servicer or receipt of notice by the Master Servicer of the breach of any
representation, warranty or covenant of the Master Servicer set forth in Section
2.05 which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the Master Servicer shall cure such
breach in all material respects or purchase such affected Mortgage Loan from the
Trust Fund at the Purchase Price. The Purchase Price for the purchased Mortgage
Loan shall be deposited in the Collection Account maintained by the Master
Servicer, and the Trustee, upon receipt of written certification from the Master
Servicer of such deposit, shall release to the Master Servicer the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Master Servicer shall furnish
to it and as shall be necessary to vest in the Master Servicer any Mortgage Loan
released pursuant hereto.
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(d) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a), in the case of the
Seller, or Section 2.03(b), in the case of the Depositor, must be effected prior
to the date which is two years after the Startup Day for the Trust Fund.
As to any Deleted Mortgage Loan for which the Seller or the
Depositor substitutes a Qualified Substitute Mortgage Loan or Loans, such
substitution shall be effected by the Seller or the Depositor, as the case may
be, delivering to the Trustee, for such Qualified Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Shortfall Amount (as described below), if any,
in connection with such substitution. The Trustee shall acknowledge receipt for
such Qualified Substitute Mortgage Loan or Loans and, within five Business Days
thereafter, review such documents as specified in Section 2.02 and deliver to
the Depositor and the Master Servicer, with respect to such Qualified Substitute
Mortgage Loan or Loans, a certification substantially in the form attached
hereto as Exhibit C-2, with any applicable exceptions noted thereon. Within one
year of the date of substitution, the Trustee shall deliver to the Depositor and
the Master Servicer a certification substantially in the form of Exhibit C-3
hereto with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable exceptions noted thereon. Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of
the Trust Fund and will be retained by the Depositor or the Seller. For the
month of substitution, distributions to Certificateholders will reflect the
Monthly Payment due on such Deleted Mortgage Loan on or before the Due Date in
the month of substitution, and the Depositor or the Seller, as the case may be,
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Mortgage Loan. The Depositor shall give or cause to be
given written notice to the Certificateholders that such substitution has taken
place, shall amend the appropriate Mortgage Loan Schedule to reflect the removal
of such Deleted Mortgage Loan from the terms of this Agreement and the
substitution of the Qualified Substitute Mortgage Loan or Loans and shall
deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, such Qualified Substitute Mortgage Loan or Loans shall be subject
to the terms of this Agreement and the Mortgage Loan Purchase Agreement in all
respects, including, in the case of a substitution effected by the Seller, all
applicable representations and warranties thereof included in the Mortgage Loan
Purchase Agreement or the related sale documents, and in the case of a
substitution effected by the Depositor, all applicable representations and
warranties thereof set forth in Section 2.04, in each case as of the date of
substitution.
For any month in which the Depositor or the Seller substitutes
one or more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage
Loans, the Master Servicer will determine the amount (the "Substitution
Shortfall Amount"), if any, by which the aggregate Purchase Price of all such
Deleted Mortgage Loans exceeds the aggregate of, as to each such Qualified
Substitute Mortgage Loan, the Scheduled Principal Balance thereof as of the date
of substitution, together with one month's interest on such Scheduled Principal
Balance at the applicable Mortgage Loan Remittance Rate. On the date of such
substitution, the Depositor
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or the Seller, as the case may be, will deliver or cause to be delivered to the
Master Servicer for deposit in such Collection Account an amount equal to the
Substitution Shortfall Amount, if any, and the Trustee, upon receipt of the
related Qualified Substitute Mortgage Loan or Loans and certification by the
Master Servicer of such deposit, shall release to the Depositor or the Seller,
as the case may be, the related Mortgage File or Files and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as the Depositor or the Seller, as the case may be, the related
Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Depositor or the
Seller, as the case may be, shall deliver to it and as shall be necessary to
vest therein any Deleted Mortgage Loan released pursuant hereto.
In addition, the Depositor or the Seller, as the case may be,
shall obtain at its own expense and deliver to the Trustee an Opinion of Counsel
to the effect that such substitution will not cause (a) any federal tax to be
imposed on the Trust Fund, including without limitation, any federal tax imposed
on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code, or
(b) the Trust Fund to fail to qualify as a REMIC at any time that any
Certificate is outstanding.
(e) Upon discovery by the Seller, the Depositor, the Master
Servicer or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties. In connection therewith, the Seller or the Depositor shall
repurchase or, subject to the limitations set forth in Section 2.03(d),
substitute one or more Qualified Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier of discovery or receipt of notice by
the Master Servicer or the Trustee. Such repurchase or substitution shall be
made by (i) the Seller, if the affected Mortgage Loan's status as a
non-qualified mortgage is a breach of any representation, warranty or covenant
made by the Seller under the Mortgage Loan Purchase Agreement, or (ii) the
Depositor, if the affected Mortgage Loan's status as a non-qualified mortgage is
a breach of any representation or warranty of the Depositor set forth in Section
2.04. Any such repurchase or substitution shall be made in the same manner as
set forth in Section 2.03(b), if made by the Depositor. The Trustee shall
reconvey to the applicable party the Mortgage Loan to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would a
Mortgage Loan repurchased for breach of a representation or warranty.
SECTION 2.04. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the
Trustee for the benefit of the Certificateholders that as of the Closing Date or
as of such other date specifically provided herein:
(i) The information set forth in the Mortgage Loan
Schedule for the Original Mortgage Loans is complete, true and
correct in all material respects at the date or dates
respecting which such information is furnished;
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(ii) As of the Cut-off Date, the Monthly Payment due
under each Original Mortgage Loan is not 30 or more days
delinquent in payment and has not been 30 or more days
delinquent in payment more than once in the twelve month
period prior to the Cut-off Date;
(iii) Each Original Mortgage Loan is a fully amortizing,
fixed rate mortgage loan with monthly payments due on the
first day of each month. Each Original Mortgage Loan had an
original term to maturity of not more than 30 years;
(iv) No more than approximately 35.53% of the Original
Mortgage Loans, by outstanding principal balance as of the
Cut-off Date, will be secured by Mortgaged Properties located
in California; and no more than approximately 6.38% of the
Original Mortgage Loans, by outstanding principal balance as
of the Cut-off Date, will be secured by Mortgaged Properties
located in any other single state. As of the Cut-off Date, no
more than approximately 0.99% of the Original Mortgage Loans,
by outstanding principal balance, are secured by Mortgaged
Properties located in any one California zip code area, no
more than approximately 26.07% of the Original Mortgage Loans,
by outstanding principal balance as of the Cut-off Date, are
secured by units in condominiums or DE MINIMIS planned unit
developments or planned unit developments, and no more than
approximately 0.38% of the Original Mortgage Loans are secured
by twoto four-family dwellings. At least approximately 73.56%
of the Original Mortgage Loans, measured by outstanding
principal balance as of the Cut-off Date, are secured by real
property with a single family residence erected thereon;
(v) If the Mortgaged Property securing an Original
Mortgage Loan is located at the time of origination of such
Mortgage Loan in a federally designated special flood hazard
area, flood insurance (either under the federal flood
insurance program or from private insurers) in the amount
required under Section 3.14 covers such Mortgaged Property at
the Closing Date;
(vi) With respect to at least approximately 74.09% of
the Original Mortgage Loans, by outstanding principal balance
as of the Cut-off Date, the Loan-to-Value Ratio was not more
than 80.00% at the origination of such Original Mortgage Loan.
With respect to approximately 25.91% of the Original Mortgage
Loans, by outstanding principal balance as of the Cut-off
Date, the Loan-to-Value Ratio was between 80.01% and 95.00%
and each such Mortgage Loan is subject to a Primary Mortgage
Insurance Policy, issued by a FNMA or FHLMC approved insurer
with a claims paying ability satisfactory to the Rating
Agencies in respect of mortgage pass-through certificates
rated in one of the two highest categories, and which provides
coverage in an amount determined in accordance with the
requirements of FNMA in effect at the time of the origination
of such Mortgage Loan; and
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(vii) With respect to approximately 98.17% of the
Original Mortgage Loans, measured by outstanding principal
balance as of the Cut-off Date, at the time that the Mortgage
Loan was made, the Mortgagor represented that the Mortgagor
would occupy the Mortgaged Property as the Mortgagor's primary
residence. With respect to approximately 1.83% of the Original
Mortgage Loans, measured by outstanding principal balance as
of the Cut-off Date, at the time that the Mortgage Loan was
made, the Mortgagor represented that the Mortgagor would
occupy the Mortgaged Property as the Mortgagor's secondary
residence.
(h) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the
respective Mortgage Files to the Trustee or to a Custodian, as the case may be,
and shall inure to the benefit of the Certificateholders notwithstanding any
restrictive or qualified endorsement or assignment. Upon discovery by any of the
Depositor, the Master Servicer or the Trustee of a breach of any of the
foregoing representations and warranties which materially and adversely affects
the value of any Mortgage Loan or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice to the other parties, and in no event later than two Business Days from
the date of such discovery. It is understood and agreed that the obligations of
the Depositor set forth in Section 2.03(b) to cure, substitute for or repurchase
a Mortgage Loan constitute the sole remedies available to the Certificateholders
or to the Trustee on their behalf respecting a breach of the representations and
warranties contained in this Section 2.04.
SECTION 2.05. Representations, Warranties and Covenants of the
Master Servicer.
The Master Servicer hereby represents, warrants and covenants
to the Trustee, for the benefit of both the Trustee and the Certificateholders,
and to the Depositor that as of the Closing Date:
(i) The Master Servicer is a corporation duly
organized, validly existing and in good standing under the
laws of California and is and will remain in compliance with
the laws of each State in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability
of each Mortgage Loan in accordance with the terms of this
Agreement;
(ii) The execution and delivery of this Agreement by the
Master Servicer and its performance of and compliance with the
terms of this Agreement will not violate the Master Servicer's
articles of incorporation or by-laws or constitute a default
(or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other
instrument to which the Master Servicer is a party or which
may be applicable to the Master Servicer or any of its assets;
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(iii) The Master Servicer has the full power and
authority to enter into and consummate all transactions
contemplated by this Agreement, has duly authorized the
execution, delivery and performance of this Agreement, and has
duly executed and delivered this Agreement. This Agreement,
assuming due authorization, execution and delivery by the
Trustee and the Depositor, constitutes a valid, legal and
binding obligation of the Master Servicer, enforceable against
it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws
relating to or affecting the rights of creditors generally,
and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at
law);
(iv) The Master Servicer is not in violation of, and the
execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of
this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or
regulation of any federal, state, municipal or governmental
agency having jurisdiction over the Master Servicer or its
properties, which violation might have consequences that would
materially and adversely affect the condition (financial or
other) or operations of the Master Servicer or its properties
or might have consequences that would materially affect the
performance of its duties hereunder;
(v) There are no actions or proceedings against, or
investigations of, the Master Servicer pending, or, to the
knowledge of the Master Servicer, threatened, before any
court, administrative agency or other tribunal (A) that might
prohibit its entering into this Agreement, (B) seeking to
prevent the consummation of any of the transactions
contemplated by this Agreement or (C) that might prohibit or
materially and adversely affect the performance by the Master
Servicer of its obligations under, or the validity or
enforceability of, this Agreement;
(vi) The Master Servicer is an approved seller/servicer
of conventional mortgage loans for FNMA and FHLMC in good
standing; and
(vii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Master Servicer of,
or compliance by the Master Servicer with, this Agreement, or
for the consummation of the transactions contemplated by this
Agreement, except for such consents, approvals, authorizations
and orders, if any, that have been obtained prior to the
Closing Date.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the respective Mortgage Files to the Trustee or to a Custodian, as the case
may be, and shall inure to the benefit of the Trustee, the Depositor and the
Certificateholders. Upon discovery by any of the Depositor, the Master
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Servicer or the Trustee of a breach of any of the foregoing representations,
warranties and covenants which materially and adversely affects the value of any
Mortgage Loan or the interests therein of the Certificateholders, the party
discovering such breach shall give prompt written notice (but in no event later
than two Business Days following such discovery) to the other parties. The
obligation of the Master Servicer set forth in Section 2.03(c) to cure breaches
or purchase Mortgage Loans shall constitute the sole remedies available to the
Certificateholders, the Depositor or the Trustee on behalf of the
Certificateholders respecting a breach of the representations, warranties and
covenants contained in this Section 2.05.
SECTION 2.06. Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it, or any Custodian on its behalf, of the Mortgage
Files, subject to the provisions of Sections 2.01 and 2.02, together with the
assignment to it of all other assets included in the Trust Fund, receipt of
which is hereby acknowledged. Concurrently with such assignment and delivery and
in exchange therefor, the Trustee, pursuant to the written request of the
Depositor executed by an officer of the Depositor, has executed, authenticated
and delivered to or upon the order of the Depositor, the Certificates in
authorized denominations. The interests evidenced by the Certificates constitute
the entire beneficial ownership interest in the Trust Fund.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Master Servicer.
The Master Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and in the best interests of and for the benefit
of the Certificateholders (as determined by the Master Servicer in its
reasonable judgment) in accordance with the terms of this Agreement and the
respective Mortgage Loans and, to the extent consistent with such terms, in the
same manner in which it services and administers similar mortgage loans for its
own portfolio, giving due consideration to customary and usual standards of
practice of prudent mortgage lenders and loan servicers but without regard to:
(i) any relationship that the Master Servicer, any
Sub-Servicer or any Affiliate of the Master Servicer or any
Sub-Servicer may have with the related Mortgagor;
(ii) the ownership of any Certificate by the Master
Servicer or any Affiliate of the Master Servicer;
(iii) the Master Servicer's obligation to make P&I
Advances or Servicing Advances; or
(iv) the Master Servicer's or any Sub-Servicer's right
to receive compensation for its services hereunder or with
respect to any particular transaction.
To the extent consistent with the foregoing, the Master Servicer shall also seek
to maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Master
Servicer shall have full power and authority, acting alone or through
Sub-Servicers as provided in Section 3.02, 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. Without limiting the generality of the foregoing, the
Master Servicer in its own name or in the name of a Sub-Servicer is hereby
authorized and empowered by the Trustee when the Master Servicer believes it
appropriate in its best judgment, to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them, and upon notice to the
Trustee, 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 the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trustee and Certificateholders. The Master Servicer
shall service and administer the Mortgage Loans in accordance with applicable
state and federal law and shall provide to the
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Mortgagors any reports required to be provided to them thereby. The Master
Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under each Primary Mortgage
Insurance Policy and any standard hazard insurance policy. Subject to Section
3.17, the Trustee shall execute, at the direction of the Master Servicer or any
Sub-Servicer, any powers of attorney and other documents necessary or
appropriate to enable the Master Servicer or any Sub-Servicer to carry out their
servicing and administrative duties hereunder and the Trustee shall not be
accountable for the actions of the Master Servicer or any Sub-Servicers under
such powers of attorney.
In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the timely payment of taxes and assessments on the
Mortgaged Properties, which advances shall be reimbursable in the first instance
from related collections from the Mortgagors pursuant to Section 3.09, and
further as provided in Section 3.11. Any cost incurred by the Master Servicer or
by Sub-Servicers in effecting the timely payment of taxes and assessments on a
Mortgaged Property shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary,
the Master Servicer shall not (unless the Mortgagor is in default with respect
to the Mortgage Loan or such default is, in the judgment of the Master Servicer,
reasonably foreseeable) make or permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (i) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or final,
temporary or proposed Treasury regulations promulgated thereunder) and cause the
Trust Fund to fail to qualify as a REMIC under the Code or (ii) cause the
imposition of any tax on "prohibited transactions" or "contributions" after the
Startup Day under the REMIC Provisions.
The Master Servicer may delegate its responsibilities under
this Agreement; provided, however, that no such delegation shall release the
Master Servicer from the responsibilities or liabilities arising under this
Agreement.
SECTION 3.02. Sub-Servicing Agreements Between the Master
Servicer and Sub-Servicers.
(a) The Master Servicer may enter into Sub-Servicing
Agreements (provided such agreements would not result in a withdrawal or a
downgrading by the Rating Agencies of the rating on any Class of Certificates)
with Sub-Servicers, for the servicing and administration of the Mortgage Loans.
Each Sub-Servicer shall be (i) authorized to transact business in the state or
states where the related Mortgaged Properties it is to service are situated, if
and to the extent required by applicable law to enable the Sub-Servicer to
perform its obligations hereunder and under the Sub-Servicing Agreement, (ii) an
institution approved as a mortgage loan originator by the Federal Housing
Administration or an institution the deposit accounts in which are insured by
the FDIC and (iii) a FHLMC or FNMA approved mortgage servicer. Each SubServicing
Agreement must impose on the Sub-Servicer requirements conforming to the
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provisions set forth in Section 3.08 and provide for servicing of the Mortgage
Loans consistent with the terms of this Agreement. The Master Servicer will
examine each Sub-Servicing Agreement and will be familiar with the terms
thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with
any of the provisions of this Agreement. The Master Servicer and the
Sub-Servicers may enter into and make amendments to the Sub-Servicing Agreements
or enter into different forms of Sub-Servicing Agreements; provided, however,
that any such amendments or different forms shall be consistent with and not
violate the provisions of this Agreement, and that no such amendment or
different form shall be made or entered into which could be reasonably expected
to be materially adverse to the interests of the Certificateholders, without the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights. Any variation without the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights from the provisions set forth in
Section 3.08 relating to insurance or priority requirements of Sub-Servicing
Accounts, or credits and charges to the SubServicing Accounts or the timing and
amount of remittances by the Sub-Servicers to the Master Servicer, are
conclusively deemed to be inconsistent with this Agreement and therefore
prohibited. The Master Servicer shall deliver to the Trustee copies of all
Sub-Servicing Agreements, and any amendments or modifications thereof, promptly
upon the Master Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each SubServicer under the related Sub-Servicing
Agreement and of the Seller under the Mortgage Loan Purchase Agreement
including, without limitation, any obligation to make advances in respect of
delinquent payments as required by a Sub-Servicing Agreement, or to purchase a
Mortgage Loan on account of missing or defective documentation or on account of
a breach of a representation, warranty or covenant, as described in Section
2.03(a). Such enforcement, including, without limitation, the legal prosecution
of claims, termination of Sub-Servicing Agreements, and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent
and at such time as the Master Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Master
Servicer shall pay the costs of such enforcement at its own expense, and shall
be reimbursed therefor only (i) from a general recovery resulting from such
enforcement, to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loans, or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Enforcement of the Mortgage Loan Purchase Agreement
against the Seller shall be effected by the Trustee in accordance with the
foregoing provisions of this paragraph.
(c) Any Sub-Servicing Agreement shall be immediately
terminable by the Trustee without fee in the event that the Master Servicer
shall no longer be the Master Servicer due to a Master Servicer Event of
Default. The payment of termination fees, if any, in connection with any such
termination, shall be the responsibility of the Master Servicer in its own
capacity without right to reimbursement, and the payment of any such fees shall
not be a condition precedent to any such termination.
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SECTION 3.03. Successor Sub-Servicers.
The Master Servicer shall be entitled to terminate any
Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer
pursuant to any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement. In the event of termination of any
Sub-Servicer, all servicing obligations of such Sub-Servicer shall be assumed
simultaneously by the Master Servicer without any act or deed on the part of
such Sub-Servicer or the Master Servicer, and the Master Servicer either shall
service directly the related Mortgage Loans or shall enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02.
SECTION 3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a SubServicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Trustee and Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Master Servicer alone were servicing and administering the Mortgage
Loans. The Master Servicer shall be entitled to enter into any agreement with a
Sub-Servicer for indemnification of the Master Servicer by such Sub-Servicer and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
SECTION 3.05. No Contractual Relationship Between
Sub-Servicers and Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such shall be deemed to be between the Sub-Servicer and the
Master Servicer alone, and the Trustee and Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer except as set forth in Section
3.06. The Master Servicer shall be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Master Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.
SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee.
In the event the Master Servicer shall for any reason no
longer be the master servicer (including by reason of an Event of Default), the
Trustee or its designee may thereupon assume all of the rights and obligations
of the Master Servicer under each Sub-Servicing Agreement that the Master
Servicer may have entered into, unless the Trustee elects to terminate
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any Sub-Servicing Agreement in accordance with Section 3.02(c) above. Upon such
assumption, the Trustee, its designee or the successor servicer for the Trustee
appointed pursuant to Section 7.02 shall be deemed to have assumed all of the
Master Servicer's interest therein and to have replaced the Master Servicer as a
party to each Sub-Servicing Agreement to the same extent as if each
Sub-Servicing Agreement had been assigned to the assuming party, except that the
Master Servicer shall not thereby be relieved of any liability or obligations
under any SubServicing Agreement.
The Master Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by or on behalf of it or the Trustee,
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Sub-Servicing Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Master Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any related Primary Mortgage Insurance Policy,
follow such collection procedures as it would follow with respect to mortgage
loans comparable to the Mortgage Loans and held for its own account. Consistent
with the foregoing, the Master Servicer may in its discretion waive any late
payment charge or penalty interest, only upon determining that the coverage of
such Mortgage Loan by the related Primary Mortgage Insurance Policy, if any,
will not be affected, and extend the due dates for the Monthly Payments due on a
Mortgage Note for a period of not greater than 150 days, provided that any such
extension shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
comply with all requirements of this Agreement relating to the Collection
Account. The Sub-Servicer will be required to deposit into the Sub-Servicing
Account on a daily basis no later than the first Business Day after receipt all
proceeds of Mortgage Loans received by the Sub-Servicer, less its servicing
compensation to the extent permitted by the Sub-Servicing Agreement, and to
remit such proceeds to the Master Servicer for deposit in the Collection Account
not later than the first Business Day thereafter. For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on the
Mortgage Loans when the Sub-Servicer is required to remit such payments to the
Master Servicer pursuant to the Sub-Servicing Agreement.
SECTION 3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
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The Master Servicer shall, establish and maintain or cause to
be established and maintained one or more accounts (the "Servicing Accounts"),
into which all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, hazard insurance premiums,
and comparable items for the account of the Mortgagors ("Escrow Payments") shall
be deposited and retained. Servicing Accounts shall be Eligible Accounts. The
Master Servicer shall deposit or cause to be deposited in the Servicing Accounts
on a daily basis within two Business Days of receipt and retain therein, all
Escrow Payments collected on account of the Mortgage Loans, for the purpose of
effecting the timely payment of any such items as required under the terms of
this Agreement. Withdrawals of amounts from a Servicing Account may be made only
to (i) effect timely payment of taxes, assessments, hazard insurance premiums,
and comparable items; (ii) reimburse the Master Servicer (or a Sub-Servicer to
the extent provided in the related Sub-Servicing Agreement) out of related
collections for any advances made pursuant to Section 3.01 (with respect to
taxes and assessments) and Section 3.14 (with respect to hazard insurance);
(iii) refund to Mortgagors any sums as may be determined to be overages; (iv)
pay interest, if required and as described below, to Mortgagors on balances in
the Servicing Account; (v) withdraw therefrom any amounts that were not required
to be deposited therein; or (vi) clear and terminate the Servicing Account at
the termination of the Master Servicer's obligations and responsibilities in
respect of the Mortgage Loans under this Agreement in accordance with Article
IX. As part of its servicing duties, the Master Servicer or Sub-Servicers shall
pay to the Mortgagors interest on funds in Servicing Accounts, to the extent
required by law and, to the extent that interest earned on funds in the
Servicing Accounts is insufficient, to pay such interest from its or their own
funds, without any reimbursement therefor.
SECTION 3.10. Collection Account and Distribution Account.
(a) The Master Servicer shall establish and maintain one or
more accounts (collectively, the "Collection Account"), held in trust for the
benefit of the Trustee and the Certificateholders. The Master Servicer shall
deposit or cause to be deposited in the Collection Account on a daily basis
within two Business Days of receipt, as and when received or as otherwise
required hereunder, the following payments and collections received or made by
it subsequent to the Cut-off Date (other than in respect of principal or
interest on the Mortgage Loans due on or before the Cut-off Date), or payments
(other than Principal Prepayments) received by it on or prior to the Cut-off
Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest (net of the
related Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds
(other than amounts paid by the Master Servicer in connection
with a purchase of Mortgage Loans and REO Properties pursuant
to Section 9.01);
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(iv) any amounts required to be deposited pursuant to
Section 3.12 in connection with any losses realized on
Permitted Investments with respect to funds held in the
Collection Account;
(v) any amounts required to be deposited by the Master
Servicer pursuant to the second paragraph of Section 3.14(a)
in respect of any blanket policy deductibles;
(vi) any amounts required to be deposited pursuant to
Section 3.23(c) or (f) in connection with any REO Property;
and
(vii) any amounts required to be transferred from any
Buydown Account pursuant to Section 3.26.
For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the date
of substitution.
The foregoing requirements for deposit in the Collection
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of prepayment
or late payment charges, penalty interest or assumption fees need not be
deposited by the Master Servicer in the Collection Account. In the event the
Master Servicer shall deposit in the Collection Account any amount not required
to be deposited therein, it may at any time withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding.
(b) The Trustee shall establish and maintain one or more
accounts (collectively, the "Distribution Account"), held in trust for the
benefit of the Certificateholders. The Master Servicer shall deliver to the
Trustee in immediately available funds for deposit in the Distribution Account
on or before 4:00 p.m. New York time (i) on each Master Servicer Remittance
Date, that portion of the Available Distribution Amount (calculated without
regard to the references in clause (2) of the definition thereof to amounts that
may be withdrawn from the Distribution Account) for the related Distribution
Date then on deposit in the Collection Account, and (ii) on each Business Day as
of the commencement of which the balance on deposit in the Collection Account
exceeds $75,000 following any withdrawals pursuant to the next succeeding
sentence, the amount of such excess, but only if the Collection Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible Account". If the balance on deposit in the Collection Account
exceeds $75,000 as of the commencement of business on any Business Day and the
Collection Account constitutes an Eligible Account solely pursuant to clause
(ii) of the definition of "Eligible Account", the Master Servicer shall, on or
before 4:00 p.m. New York time on such Business Day, withdraw from the
Collection Account any and all amounts payable or reimbursable to the Depositor,
the Master Servicer, the Trustee, the Seller or any Sub-Servicer pursuant to
Section 3.11 and shall pay such amounts to the Persons entitled thereto.
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(c) Funds in the Collection Account and the Distribution
Account may be invested in Permitted Investments in accordance with the
provisions set forth in Section 3.12. The Master Servicer shall give notice to
the Trustee of the location of the Collection Account maintained by it when
established and prior to any change thereof. The Trustee shall give notice to
the Master Servicer and the Depositor of the location of the Distribution
Account when established and prior to any change thereof.
(d) Funds held in the Collection Account at any time may be
delivered by the Master Servicer to the Trustee for deposit in an account (which
may be the Distribution Account and must satisfy the standards for the
Distribution Account as set forth in the definition thereof) and for all
purposes of this Agreement shall be deemed to be a part of the Collection
Account; provided, however, that the Trustee shall have the sole authority to
withdraw any funds held pursuant to this subsection (d). In the event the Master
Servicer shall deliver to the Trustee for deposit in the Distribution Account
any amount not required to be deposited therein, it may at any time request that
the Trustee withdraw such amount from the Distribution Account and remit to it
any such amount, any provision herein to the contrary notwithstanding. In
addition, the Master Servicer shall deliver to the Trustee from time to time for
deposit, and the Trustee shall so deposit, in the Distribution Account:
(i) any P&I Advances, as required pursuant to Section
4.03;
(ii) any amounts to be paid by the Master Servicer in
connection with a purchase of Mortgage Loans and REO
Properties pursuant to Section 9.01;
(iii) any amounts required to be deposited pursuant to
Section 3.24 in connection with any Prepayment Interest
Shortfalls; and
(iv) any Stayed Funds, as soon as permitted by the
federal bankruptcy court having jurisdiction in such matters.
(e) Promptly upon receipt of any Stayed Funds, whether from
the Master Servicer, a trustee in bankruptcy, or federal bankruptcy court or
other source, the Trustee shall deposit such funds in the Distribution Account,
subject to withdrawal thereof pursuant to Section 7.02(b) or as otherwise
permitted hereunder. In addition, the Trustee shall deposit in the Distribution
Account any amounts required to be deposited pursuant to Section 3.12 in
connection with losses realized on Permitted Investments with respect to funds
held in the Distribution Account.
SECTION 3.11. Withdrawals from the Collection Account and
Distribution Account.
The Master Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described in
Section 4.03:
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(i) to remit to the Trustee for deposit in the
Distribution Account the amounts required to be so remitted
pursuant to Section 3.10(b) or permitted to be so remitted
pursuant to the first sentence of Section 3.10(d);
(ii) subject to Section 3.16(d), to reimburse the Master
Servicer for P&I Advances, but only to the extent of amounts
received which represent Late Collections (net of the related
Servicing Fees) of Monthly Payments on Mortgage Loans with
respect to which such P&I Advances were made in accordance
with the provisions of Section 4.03;
(iii) subject to Section 3.16(d), to reimburse the Master
Servicer or any Sub-Servicer for unpaid Servicing Fees
(including any management fee payable pursuant to Section
3.23(d)) and unreimbursed Servicing Advances with respect to
each Mortgage Loan, but only to the extent of any Liquidation
Proceeds and Insurance Proceeds received with respect to such
Mortgage Loan;
(iv) to pay to the Master Servicer as servicing
compensation (in addition to the Servicing Fee) on each Master
Servicer Remittance Date any interest or investment income
earned on funds deposited in the Collection Account;
(v) to pay to the Master Servicer, the Depositor or the
Seller, as the case may be, with respect to each Mortgage Loan
that has previously been purchased or replaced pursuant to
Section 2.03 or Section 3.16(c), all amounts received thereon
subsequent to the date of purchase or substitution, as the
case may be;
(vi) to reimburse the Master Servicer for any P&I
Advance previously made which the Master Servicer has
determined to be a Nonrecoverable P&I Advance and for any
Servicing Advances after liquidation of the Mortgaged Property
not otherwise reimbursed under (iii) above;
(vii) to reimburse the Master Servicer or the Depositor
for expenses incurred by or reimbursable to the Master
Servicer or the Depositor, as the case may be, pursuant to
Section 6.03;
(viii) to reimburse the Master Servicer or the Trustee, as
the case may be, for expenses reasonably incurred in respect
of the breach or defect giving rise to the purchase obligation
under Section 2.03 of this Agreement that were included in the
Purchase Price of the Mortgage Loan, including any expenses
arising out of the enforcement of the purchase obligation;
(ix) to pay or to reimburse the Master Servicer for
advances in respect of expenses incurred in connection with
any Mortgage Loan pursuant to Section 3.16(b);
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(x) to reimburse the Master Servicer for costs and
expenses incurred in connection with the prosecution of any
claim, which costs and expenses were not reimbursed out of
amounts collected on account of such claim; and
(xi) to clear and terminate the Collection Account
pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Collection Account, to the extent held by or
on behalf of it, pursuant to subclauses (ii), (iii), (v), (vi), (viii), (ix) and
(x) above. The Master Servicer shall provide written notification in the form of
an Officers' Certificate to the Trustee, on or prior to the next succeeding
Master Servicer Remittance Date, upon making any withdrawals from the Collection
Account pursuant to subclauses (vi) and (vii) above.
The Trustee shall, from time to time, make withdrawals from
the Distribution Account for any of the following purposes:
(i) to make payments to Certificateholders
pursuant to Section 4.01;
(ii) to pay to the Trustee as compensation (in
addition to the Trustee's Fee) any interest or investment
income earned on funds deposited in the Distribution Account;
(iii) to reimburse the Trustee for expenses
incurred by or reimbursable hereunder to the Trustee by the
Trust Fund;
(iv) to pay to the Trustee the Trustee's Fee;
(v) to taxes due pursuant to Section 10.01(g);
and
(vi) to clear and terminate the Distribution
Account pursuant to Section 9.01.
SECTION 3.12. Investment of Funds in the Collection Account
and the Distribution Account.
(a) The Master Servicer may direct any depository institution
maintaining the Collection Account established by the Master Servicer, and the
Trustee, in its individual capacity, may direct any depository institution
maintaining the Distribution Account (each, for the purposes of this Section
3.12, an "Investment Account") to invest the funds in one or more Permitted
Investments bearing interest or sold at a discount, and maturing, unless payable
on demand, (i) no later than the Business Day immediately preceding the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if a Person other
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than the Trustee is the obligor thereon, and (ii) no later than the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if the Trustee is the obligor thereon. All such Permitted Investments
shall be held to maturity, unless payable on demand. Any investment of funds in
an Investment Account shall be made in the name of the Trustee (in its capacity
as such) or in the name of a nominee of the Trustee. The Trustee shall have sole
control (except with respect to the investment direction of funds held in such
account) over each such investment and the income thereon, and any certificate
or other instrument evidencing any such investment shall be delivered directly
to the Trustee or its agent, together with any document of transfer necessary to
transfer title to such investment to the Trustee or its nominee. In the event
amounts on deposit in an Investment Account are at any time invested in a
Permitted Investment payable on demand, the Trustee shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on
the last day such Permitted Investment may otherwise
mature hereunder in an amount equal to the lesser of
(1) all amounts then payable thereunder and (2) the
amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly
upon determination by the Trustee that such Permitted
Investment would not constitute a Permitted
Investment in respect of funds thereafter on deposit
in the Investment Account.
(b) All income and gain realized from the investment of funds
deposited in the Collection Account shall be for the benefit of the Master
Servicer and shall be subject to its withdrawal in accordance with Section 3.11.
The Master Servicer shall deposit in the Collection Account the amount of any
loss incurred in respect of any such Permitted Investment made with funds in the
Collection Account immediately upon realization of such loss. All income and
gain realized from the investment of funds deposited in the Distribution Account
shall be for the benefit of the Trustee, in its individual capacity, and shall
be distributed to the Trustee, in its individual capacity, on the first day of
the month following the month in which such income or gain is received. The
Trustee, in its individual capacity, shall deposit in the Distribution Account
the amount of any loss incurred in respect of any such Permitted Investment
immediately upon realization of such loss.
(c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 8.01, upon the
request of Holders of Certificates representing more than 50% of the Voting
Rights allocated to any Class of Certificates, shall take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate proceedings.
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SECTION 3.13. Maintenance of the Primary Mortgage Insurance
Policies; Collections Thereunder.
The Master Servicer will maintain or cause the related
Sub-Servicer, if any, to maintain in full force and effect, if required under
Section 2.04(a)(vi) and to the extent available, a Primary Mortgage Insurance
Policy conforming in all respects to the description set forth in such Section
with respect to each Mortgage Loan so insured as of the Closing Date (or, in the
case of a Qualified Substitute Mortgage Loan, on the date of substitution). Such
coverage will be maintained with respect to each such Mortgage Loan for so long
as it is outstanding, subject to any applicable laws or until the related
Loan-to-Value Ratio is reduced to less than or equal to 80% based on Mortgagor
payments or until maintenance of such coverage is otherwise no longer required
under FNMA guidelines. The Master Servicer shall cause the premium for each
Primary Mortgage Insurance Policy to be paid on a timely basis and shall pay
such premium out of its own funds if the related Mortgagor fails to do so. The
Master Servicer or the related SubServicer, if any, will not cancel or refuse to
renew any such Primary Mortgage Insurance Policy in effect on the Closing Date
(or, in the case of a Qualified Substitute Mortgage Loan, on the date of
substitution) that is required to be kept in force under this Agreement unless a
replacement Primary Mortgage Insurance Policy for such canceled or non-renewed
policy is obtained from and maintained with an insurer that satisfies the
standards set forth in Section 2.04(a)(vi).
The Master Servicer shall not take, or permit any Sub-Servicer
to take, any action which would result in non-coverage under any applicable
Primary Mortgage Insurance Policy of any loss which, but for the actions of the
Master Servicer or Sub-Servicer, would have been covered thereunder. The Master
Servicer will comply in the performance of this Agreement with all reasonable
rules and requirements of each insurer under each Primary Mortgage Insurance
Policy. In connection with any assumption and modification agreement or
substitution of liability agreement entered into or to be entered into pursuant
to Section 3.15, the Master Servicer shall promptly notify the insurer under the
related Primary Mortgage Insurance Policy, if any, of such assumption in
accordance with the terms of such policies and shall take all actions which may
be required by such insurer as a condition to the continuation of coverage under
the Primary Mortgage Insurance Policy. If any such Primary Mortgage Insurance
Policy is terminated as a result of such assumption, the Master Servicer or the
related Sub-Servicer shall obtain a replacement Primary Mortgage Insurance
Policy as provided above.
In connection with its activities as administrator and
servicer of the Mortgage Loans, the Master Servicer agrees to prepare and
present, on behalf of itself, the Trustee and the Certificateholders, claims to
the insurer under any Primary Mortgage Insurance Policy in a timely fashion in
accordance with the terms of such policies and, in this regard, to take such
action as shall be necessary to permit recovery under any Primary Mortgage
Insurance Policy respecting a defaulted Mortgage Loan. Any amounts collected by
the Master Servicer under any Primary Mortgage Insurance Policy shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.11; and any amounts collected by the Master Servicer under any Primary
Mortgage Insurance Policy in respect of any REO Property shall be deposited in
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the Collection Account, subject to withdrawal pursuant to Section 3.23. In those
cases in which a Mortgage Loan is serviced by a Sub-Servicer, the Sub-Servicer,
on behalf of itself, the Trustee, and the Certificateholders, will present
claims to the insurer under any Primary Mortgage Insurance Policy and all
collections thereunder shall be deposited initially in the SubServicing Account.
SECTION 3.14. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each
Mortgage Loan fire insurance with extended coverage on the related Mortgaged
Property in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the amount necessary to fully
compensate for any damage or loss to the improvements which are a part of such
property on a replacement cost basis, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Master Servicer shall also
cause to be maintained fire insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding principal balance of the related Mortgage Loan at the time it
became an REO Property, plus accrued interest at the Mortgage Rate and related
Servicing Advances. The Master Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Master Servicer under
any such policies (other than amounts to be applied to the restoration or repair
of the property subject to the related Mortgage or amounts to be released to the
Mortgagor in accordance with the procedures that the Master Servicer would
follow in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11, if received
in respect of a Mortgage Loan, or subject to withdrawal pursuant to Section
3.23, if received in respect of an REO Property. Any cost incurred by the Master
Servicer in maintaining any such insurance shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
principal balance of the related Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
or REO Property is located at the time of origination of the related Mortgage
Loan in a federally designated special flood hazard area, the Master Servicer
will cause to be maintained flood insurance in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (i) the unpaid principal
balance of the related Mortgage Loan and (ii) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).
In the event that the Master Servicer shall obtain and
maintain a blanket policy with an insurer having a General Policy Rating
acceptable under the FNMA Seller/Servicer Guide insuring against hazard losses
on all of the Mortgage Loans, it shall conclusively be
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deemed to have satisfied its obligations as set forth in the first two sentences
of this Section 3.14, it being understood and agreed that such policy may
contain a deductible clause, in which case the Master Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy complying with the first two sentences of this
Section 3.14 and there shall have been one or more losses which would have been
covered by such policy, deposit to the Collection Account from its own funds the
amount not otherwise payable under the blanket policy because of such deductible
clause. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to prepare and present, on behalf of
itself, the Trustee and the Certificateholders, claims under any such blanket
policy in a timely fashion in accordance with the terms of such policy.
(b) The Master 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 Master Servicer's obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of FNMA or FHLMC if it were the purchaser of the Mortgage
Loans, unless the Master Servicer has obtained a waiver of such requirements
from FNMA or FHLMC. The Master Servicer shall also maintain a fidelity bond in
the form and amount that would meet the requirements of FNMA or FHLMC, unless
the Master Servicer has obtained a waiver of such requirements from FNMA or
FHLMC. The Master Servicer shall be deemed to have complied with this provision
if an Affiliate of the Master Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Master Servicer. Any such
errors and omissions policy and fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee. The Master
Servicer shall also cause each Sub-Servicer to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements.
SECTION 3.15. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
The Master Servicer will, to the extent it has knowledge of
any conveyance or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note and/or
the Mortgage), exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due-on-sale" clause, if any, applicable thereto; provided,
however, that the Master Servicer shall not exercise any such rights if
prohibited by law from doing so or if the exercise of such rights would impair
or threaten to impair any recovery under the related Primary Mortgage Insurance
Policy, if any. If the Master Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause, or if any of the other
conditions set forth in the proviso to the preceding sentence apply, the Master
Servicer will enter into an assumption and modification agreement from or with
the person to whom such property has been conveyed or is proposed to be
conveyed, pursuant to which such person becomes liable under the Mortgage Note
and, to the extent permitted by applicable state law, the Mortgagor remains
liable thereon. The Master Servicer is also authorized to enter into a
substitution of liability agreement with such person, pursuant to which the
original Mortgagor
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is released from liability and such person is substituted as the Mortgagor and
becomes liable under the Mortgage Note, provided that no such substitution shall
be effective unless such person satisfies the underwriting criteria of the
Master Servicer. In connection with any assumption or substitution, the Master
Servicer shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. The
Master Servicer shall not take or enter into any assumption and modification
agreement, however, unless (i) none of the terms or requirements thereof shall
both constitute a "significant modification" effecting an exchange or reissuance
of such Mortgage Loan under the Code (or final, temporary or proposed Treasury
Regulations promulgated thereunder) and cause the Trust Fund to fail to qualify
as a REMIC under the Code and (ii) (to the extent practicable in the
circumstances) it shall have received confirmation, in writing, of the continued
effectiveness of any applicable Primary Mortgage Insurance Policy and the hazard
insurance policy. Any fee collected by the Master Servicer in respect of an
assumption or substitution of liability agreement will be retained by the Master
Servicer as additional servicing compensation. In connection with any such
assumption, no material term of the Mortgage Note (including but not limited to
the related Mortgage Rate and the amount of the Monthly Payment) may be amended
or modified, except as otherwise required pursuant to the terms thereof. The
Master Servicer shall notify the Trustee and any respective Custodian that any
such substitution or assumption agreement has been completed by forwarding to
the Trustee or to such Custodian, as the case may be, the executed original of
such substitution or assumption agreement, which document shall be added to the
related Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or by the terms of the
Mortgage Note or any assumption which the Master Servicer may be restricted by
law from preventing, for any reason whatever. For purposes of this Section 3.15,
the term "assumption" is deemed to also include a sale (of the Mortgaged
Property) subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.
SECTION 3.16. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall use its best efforts, consistent
with the servicing standard set forth in Section 3.01, to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. The Master Servicer shall be responsible for all costs
and expenses incurred by it in any such proceedings; provided, however, that
such costs and expenses will be recoverable as Servicing Advances by the Master
Servicer as contemplated in Section 3.11 and 3.23. The foregoing is subject to
the provision that, in any case in which Mortgaged Property shall have suffered
damage from an Uninsured Cause, the Master Servicer shall not be required to
expend its own funds toward the restoration of such property unless it
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shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the related Mortgage Loan after reimbursement to
itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section
3.16, with respect to any Mortgage Loan as to which the Master Servicer has
received actual notice of, or has actual knowledge of, the presence of any toxic
or hazardous substance on the related Mortgaged Property, the Master Servicer
shall not, on behalf of the Trustee, either (i) obtain title to such Mortgaged
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
Mortgaged Property, if, as a result of any such action, the Trustee or the
Certificateholders would be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Master Servicer has also previously
determined, based on its reasonable judgment and a prudent report prepared by a
Person that regularly conducts environmental audits using customary industry
standards, that:
(1) such Mortgaged Property is in compliance with
applicable environmental laws or, if not, that it would be in
the best economic interest of the Trust Fund to take such
actions as are necessary to bring the Mortgaged Property into
compliance therewith; and
(2) there are no circumstances present at such
Mortgaged Property relating to the use, management or disposal
of any hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials for which investigation,
testing, monitoring, containment, clean-up or remediation
could be required under any federal, state or local law or
regulation, or that if any such materials are present for
which such action could be required, that it would be in the
best economic interest of the Trust Fund to take such actions
with respect to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by
this Section 3.23 shall be advanced by the Master Servicer, subject to the
Master Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(ix), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.
If the Master Servicer determines, as described above, that it
is in the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to
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be reimbursed therefor from the Collection Account as provided in Section
3.11(ix), such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
(c) The Master Servicer may at its option purchase from the
Trust Fund any Mortgage Loan which is 90 days or more delinquent and which the
Master Servicer determines in good faith will otherwise become subject to
foreclosure proceedings (evidence of such determination to be delivered in
writing to the Trustee prior to purchase), at a price equal to the Purchase
Price. The Purchase Price for any Mortgage Loan purchased hereunder shall be
deposited in the Collection Account, and the Trustee, upon receipt of written
certification from the Master Servicer of such deposit, shall release or cause
to be released to the Master Servicer the related Mortgage File and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as the Master Servicer shall furnish and as shall be necessary
to vest in the Master Servicer title to any Mortgage Loan released pursuant
hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: FIRST, to reimburse the
Master Servicer or any Sub-Servicer for any related unreimbursed Servicing
Advances pursuant to Section 3.11(iii); SECOND, to accrued and unpaid interest
on the Mortgage Loan, to the date of the Final Recovery Determination, or to the
Due Date prior to the Distribution Date on which such amounts are to be
distributed if not in connection with a Final Recovery Determination; and THIRD,
as a recovery of principal of the Mortgage Loan. If the amount of the recovery
so allocated to interest is less than the full amount of accrued and unpaid
interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Master Servicer as follows: FIRST, to unpaid Servicing Fees;
and SECOND, to the balance of the interest then due and owing. The portion of
the recovery so allocated to unpaid Servicing Fees shall be reimbursed to the
Master Servicer or any Sub-Servicer pursuant to Section 3.11(iii). The portion
of the recovery allocated to interest (net of unpaid Servicing Fees) and the
portion of the recovery allocated to principal of the Mortgage Loan shall be
applied as follows: FIRST, to reimburse the Master Servicer for any related
unreimbursed P&I Advances in accordance with Section 3.11(ii); and SECOND, as
part of the amounts to be transferred to the Distribution Account in accordance
with Section 3.10(b).
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Master Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Master Servicer will immediately
notify the Trustee and any related Custodian by a certification of a Servicing
Officer in the form of Exhibit E-2 (which certification may be given
electronically and shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 3.10 have been or
will be so deposited) and shall request delivery to it of the Mortgage File.
Upon receipt of such certification and request, the Trustee or such Custodian,
as the case may be, shall promptly release the related Mortgage File to the
Master
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Servicer. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to the Collection Account or the
Distribution Account.
From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Mortgage Insurance Policy or any other insurance policy relating to
the Mortgage Loans, the Trustee or such Custodian, as the case may be, shall,
upon request of the Master Servicer and delivery to the Trustee or such
Custodian of a Request for Release in the form of Exhibit E-1 (which may be
electronically transmitted), release the related Mortgage File to the Master
Servicer, and the Trustee shall, at the direction of the Master Servicer,
execute such documents as shall be necessary to the prosecution of any such
proceedings. Such Request for Release shall obligate the Master Servicer to
return each and every document previously requested from the Mortgage File to
the Trustee or to such Custodian when the need therefor by the Master Servicer
no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or the Mortgage File or such document has been delivered to
an attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered to the Trustee a certificate of a Servicing
Officer certifying as to the name and address of the Person to which such
Mortgage File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a Servicing Officer stating that such
Mortgage Loan was liquidated and that all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
Collection Account have been so deposited, or that such Mortgage Loan has become
an REO Property, the Request for Release shall be released by the Trustee or
such Custodian to the Master Servicer.
Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the Master Servicer any court pleadings, requests
for trustee's sale or other documents necessary to the foreclosure or trustee's
sale in respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
SECTION 3.18. Servicing Compensation.
As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Servicing Fee with
respect to each Mortgage Loan payable solely from payments of interest and
Buydown Funds in respect of such Mortgage Loan, subject to Section 3.24;
provided that once a Mortgage Loan becomes an REO Property, the Master Servicer
shall not be entitled to any Servicing Fee in respect thereof other than as
provided in Section 3.23(d) herein. In addition, the Master Servicer shall be
entitled to recover unpaid
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Servicing Fees out of Insurance Proceeds or Liquidation Proceeds to the extent
permitted by Section 3.11(iii) and out of amounts derived from the operation and
sale of an REO Property to the extent permitted by Section 3.23. 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 Master Servicer's responsibilities
and obligations under this Agreement.
Additional servicing compensation in the form of prepayment
charges, assumption fees, late payment charges or otherwise shall be retained by
the Master Servicer (subject to Section 3.24) only to the extent such fees or
charges are received by the Master Servicer. The Master Servicer shall also be
entitled pursuant to Section 3.11(iv) to withdraw from the Collection Account
and pursuant to Section 3.23(b) to withdraw from the Collection Account, as
additional servicing compensation, interest or other income earned on deposits
therein, subject to Section 3.12 and Section 3.24. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including servicing compensation of any Sub-Servicer, and
to the extent provided herein in Section 8.05, any advances made by the Trustee
and any payments in respect of indemnification to the Trustee) and shall not be
entitled to reimbursement therefor except as specifically provided herein.
SECTION 3.19. Reports to the Trustee; Collection Account
Statements.
Not later than fifteen days after each Distribution Date, the
Master Servicer shall forward to the Trustee and the Depositor a statement
prepared by the Master Servicer setting forth the status of the Collection
Account as of the close of business on the last day of the month of such
Distribution Date and showing, for the period covered by such statement, the
aggregate amount of deposits into and withdrawals from the Collection Account of
each category of deposit specified in Section 3.10(a) and each category of
withdrawal specified in Section 3.11. Such statement may be in the form of the
then current FNMA Monthly Accounting Report for its Guaranteed Mortgage
Pass-Through Program with appropriate additions and changes, and shall also
include information as to the aggregate of the outstanding principal balances of
all of the Mortgage Loans as of the last day of the calendar month immediately
preceding such Distribution Date. Copies of such statement shall be provided by
the Trustee to any Certificateholder and to any Person identified to the Trustee
as a prospective transferee of a Certificate, upon request at the expense of the
requesting party, provided such statement is delivered by the Master Servicer to
the Trustee.
SECTION 3.20. Statement as to Compliance.
The Master Servicer will deliver to the Trustee and the
Depositor not later than 90 days following the end of each fiscal year of the
Master Servicer, which as of the Closing Date ends on the last day in December
in each calendar year, an Officers' Certificate stating, as to each signatory
thereof, that (i) a review of the activities of the Master Servicer during the
preceding year and of its performance under this Agreement has been made under
such officers' supervision and (ii) to the best of such officers' knowledge
based on such review, the Master Servicer has fulfilled all of its obligations
under this Agreement throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default
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known to such officer and the nature and status thereof. Copies of any such
statement shall be provided by the Trustee to any Certificateholder and to any
Person identified to the Trustee as a prospective transferee of a Certificate,
upon request at the expense of the requesting party, provided that such
statement is delivered by the Master Servicer to the Trustee.
SECTION 3.21. Independent Public Accountants' Servicing
Report.
On or before April 30 of each year, beginning with April 30,
1997, the Master Servicer at its expense shall furnish to the Depositor, the
Trustee and the Seller (i) an opinion by a firm of independent certified public
accountants on the financial position of the Master Servicer at the end of its
fiscal year and the results of operations and changes in financial position of
the Master Servicer for such year then ended on the basis of an examination
conducted in accordance with generally accepted auditing standards, and (ii) a
report from such independent certified public accountants to the effect that,
based on an examination conducted substantially in accordance with standards
established by the American Institute of Certified Public Accountants, such firm
is of the opinion that the assertion made pursuant to Section 3.19 regarding
compliance with the minimum servicing standards set forth in the Uniform Single
Attestation Program for Mortgage Bankers during the preceding fiscal year is
fairly stated in all material respects, subject to such exceptions and other
qualifications that, in the opinion of such firm, such accounting standards
require it to report. In rendering such statement, such firm may rely, as to
matters relating to direct servicing of mortgage loans by Sub-Servicers, upon
comparable reports for examinations conducted substantially in accordance with
such accounting standards (rendered within one year of such statement) of
independent public accountants with respect to the related Sub-Servicer. Copies
of any such statement shall be provided by the Trustee to any Certificateholder
and to any Person identified to the Trustee as a prospective transferee of a
Certificate, upon request at the Master Servicer's expense, provided that such
statement is delivered by the Master Servicer to the Trustee.
SECTION 3.22. Access to Certain Documentation.
The Master Servicer shall provide to the Office of Thrift
Supervision, the FDIC, and any other federal or state banking or insurance
regulatory authority that may exercise authority over any Certificateholder,
access to the documentation regarding the Mortgage Loans serviced by the Master
Servicer required by applicable laws and regulations. Such access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the Master Servicer designated by it. In
addition, access to the documentation regarding the Mortgage Loans serviced by
the Master Servicer will be provided to any Certificateholder and to any Person
identified to the Master Servicer by any Certificateholder as a prospective
transferee of a Certificate, upon reasonable request during normal business
hours at the offices of the Master Servicer designated by it at the expense of
the Person requesting such access.
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SECTION 3.23. Title, Management and Disposition of REO
Property.
(a) The deed or certificate of sale of any REO Property shall
be taken in the name of the Trustee, or its nominee, on behalf of the
Certificateholders. The Master Servicer, on behalf of the Trust Fund, shall
either sell any REO Property within two years after the Trust Fund acquires
ownership of such REO Property for purposes of Section 860G(a)(8) of the Code
or, at the expense of the Trust Fund, request, more than 60 days before the day
on which the two-year grace period would otherwise expire, an extension of the
two-year grace period, unless the Master Servicer has delivered to the Trustee
an Opinion of Counsel, addressed to the Trustee and the Master Servicer, to the
effect that the holding by the Trust Fund of such REO Property subsequent to two
years after its acquisition will not result in the imposition on the Trust Fund
of taxes on "prohibited transactions" thereof, as defined in Section 860F of the
Code, or cause the Trust Fund to fail to qualify as a REMIC under federal laws
at any time that any Certificates are outstanding. The Master Servicer shall
manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by the Trust Fund 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" that is subject to taxation under the REMIC
Provisions.
(b) The Master Servicer shall segregate and hold all funds
collected and received in connection with the operation of any REO Property in
the Collection Account.
(c) The Master Servicer shall have full power and authority,
subject only to the specific requirements and prohibitions of this Agreement, to
do any and all things in connection with any REO Property as are consistent with
the manner in which the Master Servicer manages and operates similar property
owned by the Master Servicer or any of its Affiliates, all on such terms and for
such period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited, on a daily basis in the Collection Account all
revenues received by it with respect to an REO Property and shall withdraw
therefrom funds necessary for the proper operation, management and maintenance
of any REO Property including, without limitation:
(i) all insurance premiums due and payable in respect
of any REO Property;
(ii) all real estate taxes and assessments in respect
of any REO Property that may result in the imposition of a
lien thereon; and
(iii) all costs and expenses necessary to maintain any
REO Property.
To the extent that amounts on deposit in the Collection Account are insufficient
for the purposes set forth in clauses (i) through (iii) above, the Master
Servicer shall advance from its own funds
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such amount as is necessary for such purposes if, but only if, the Master
Servicer would make such advances if the Master Servicer owned the REO Property
and if in the Master Servicer's judgment, the payment of such amounts will be
recoverable from the rental or sale of the REO Property.
Notwithstanding the foregoing, the Master Servicer shall not:
(i) permit the Trust Fund to enter into, renew or
extend any New Lease with respect to any REO Property, if the
New Lease by its terms will give rise to any income that does
not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under
any New Lease other than amounts that will constitute Rents
from Real Property;
(iii) authorize or permit any construction on any REO
Property, other than the completion of a building or other
improvement thereon, and then only if more than ten percent of
the construction of such building or other improvement was
completed before default on the related Mortgage Loan became
imminent, all within the meaning of Section 856(e)(4)(B) of
the Code; or
(iv) allow any Person to Directly Operate any REO
Property on any date more than 90 days after its date of
acquisition by the Trust Fund;
unless, in any such case, the Master Servicer has obtained an Opinion of Counsel
to the effect that such action will not cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code at any time that it is held by the Trust Fund, in which case the Master
Servicer may take such actions as are specified in such Opinion of Counsel.
The Master Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall
not be inconsistent herewith;
(ii) any such contract shall require, or shall be
administered to require, that the Independent Contractor pay
all costs and expenses incurred in connection with the
operation and management of such REO Property, including those
listed above and remit all related revenues (net of such costs
and expenses) to the Master Servicer as soon as practicable,
but in no event later than thirty days following the receipt
thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c)
relating to any such contract or to actions taken through any
such Independent Contractor shall be deemed to relieve the
Master Servicer of any of its duties and obligations to the
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Trustee on behalf of the Certificateholders with respect to
the operation and management of any such REO Property; and
(iv) the Master Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing all
duties and obligations in connection with the operation and
management of such REO Property.
The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.18 is sufficient to pay
such fees.
(d) In addition to the withdrawals permitted under Section
3.23(c), the Master Servicer may from time to time make withdrawals from the
Collection Account for any REO Property: (i) to reimburse itself or any
Sub-Servicer for unreimbursed Servicing Advances and P&I Advances made in
respect of such REO Property or the related Mortgage Loan; and (ii) to pay
itself a management fee which shall equal $150 per month per REO Property in
lieu of any Servicing Fees in respect thereof.
(e) Subject to the time constraints set forth in Section
3.23(a), and further subject to obtaining the approval of the insurer under any
related Primary Mortgage Insurance Policy (if and to the extent that such
approvals are necessary to make claims under such policies in respect of the
affected REO Property), each REO Disposition shall be carried out by the Master
Servicer at such price and upon such terms and conditions as the Master Servicer
shall deem necessary or advisable, as shall be normal and usual in its general
servicing activities and as are in accordance with general FNMA guidelines. Any
REO disposition shall be for cash only (unless changes in the REMIC Provisions
made subsequent to the Startup Day allow a sale for other consideration).
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Master Servicer or any
Sub-Servicer as provided above, shall be deposited in the Collection Account in
accordance with Section 3.10(a)(vi).
SECTION 3.24. Obligations of the Master Servicer in Respect of
Prepayment Interest Shortfalls.
The Master Servicer shall deliver to the Trustee for deposit
into the Distribution Account on or before 4:00 p.m. New York time on the Master
Servicer Remittance Date from its own funds an amount equal to the lesser of (i)
the aggregate of the Prepayment Interest Shortfalls for the related Distribution
Date resulting solely from Principal Prepayments during the related Prepayment
Period and (ii) the aggregate amount of its Servicing Fees for all of the
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Mortgage Loans for the most recently ended calendar month (which amount does not
include any management fees with respect to REO Properties or other compensation
to the Servicer hereunder).
SECTION 3.25. Information Reports to be filed by the Master
Servicer.
The Master Servicer shall file information reports with
respect to the receipt of mortgage interest received in a trade or business,
foreclosures and abandonments of any Mortgaged Property and the information
returns relating to cancellation of indebtedness income with respect to any
Mortgaged Property required by Sections 6050H, 6050J and 6050P of the Code,
respectively, and deliver to the Trustee an Officers' Certificate stating that
such reports have been timely filed. Such reports shall be in form and substance
sufficient to meet the reporting requirements imposed by such Sections 6050H,
6050J and 6050P of the Code.
SECTION 3.26. Administration of Buydown Funds.
The Buydown Account established and maintained by the Master
Servicer with respect to each Buydown Mortgage Loan shall be an Eligible
Account. Upon receipt from the Mortgagor of the amount due on a Due Date for
each Buydown Mortgage Loan, the Master Servicer will withdraw from the related
Buydown Account the predetermined amount that, when added to the amount due on
such date from the Mortgagor, equals the Monthly Payment and will deposit that
amount (net of the Servicing Fee) together with the related payment made by the
Mortgagor in the Collection Account.
If any Mortgagor on a Buydown Mortgage Loan prepays such
Mortgage Loan in its entirety during the Buydown Period, the Master Servicer
will withdraw from the related Buydown Account and remit to such Mortgagor in
accordance with the related buydown agreement any Buydown Funds remaining in the
Buydown Account. If a Principal Prepayment by a Mortgagor during the Buydown
Period, together with any Buydown Funds in the related Buydown Account, will
result in a Principal Prepayment in full, the Master Servicer will withdraw from
the related Buydown Account for deposit in the Collection Account the Buydown
Funds, which together with such Principal Prepayment, will result in a Principal
Prepayment in full. If a Mortgagor defaults during the Buydown Period with
respect to a Buydown Mortgage Loan and the Mortgaged Property is sold at
foreclosure or title thereto is acquired on behalf of the Certificateholders,
the Master Servicer will withdraw from the Buydown Account the Buydown Funds
(which shall thereupon constitute "Liquidation Proceeds" for purposes of this
Agreement) for deposit in the Collection Account.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a)(i) On each Distribution Date, the Trustee shall withdraw
from the Distribution Account, but only to the extent necessary to make the
distributions described in clauses FIRST through FIFTH below, the Available
Distribution Amount for such Distribution Date, less any amounts permitted to be
withdrawn from the Distribution Account pursuant to this Agreement, and shall
apply such amount for the following purposes and in the following order of
priority, in each case to the extent of remaining available funds:
FIRST, to distributions of interest in respect of the Class A
Certificates, the Class XS Certificates and the Residual
Certificates, in an amount (allocable among such Certificates
PRO RATA in accordance with the respective amounts payable as
to each pursuant to this clause FIRST) equal to the aggregate
of the Interest Distribution Amounts in respect of such
Certificates for such Distribution Date;
SECOND, to the extent of the PO Senior Principal Distribution
Amount, to distributions of principal to the Class PO
Certificates (applied to reduce the Certificate Principal
Balance of such Certificates);
THIRD, to the extent of the Non-PO Senior Principal
Distribution Amount, to distributions of principal to the
Class A Certificates and the Residual Certificates (applied to
reduce the Certificate Principal Balance of such Certificates)
in the priorities and amounts set forth in Section 4.01(b)(i);
FOURTH, to distributions of interest in respect of the
Subordinate Certificates, in an amount (allocable among such
Certificates PRO RATA in accordance with the respective
amounts payable as to each pursuant to this clause FOURTH, in
an order of priority from the Class of Subordinate
Certificates with the lowest numerical designation to the
Class of Subordinate Certificates with the highest numerical
designation) equal to the aggregate of the Interest
Distribution Amounts in respect of such Certificates for such
Distribution Date;
FIFTH, to the Holders of the Subordinate Certificates, an
aggregate amount equal to the Subordinate Principal
Distribution Amount for such Distribution Date (applied to
reduce the Certificate Principal Balance of such
Certificates), allocable among the Classes of Subordinate
Certificates PRO RATA in accordance with the respective
amounts payable as to each such Class pursuant to the
priorities and amounts set forth in Section 4.01(b)(ii); and
SIXTH, to the Holders of the Residual Certificates, any
remaining amounts.
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(ii) All references above to the Certificate Principal Balance of
any Class of Certificates shall be to the Certificate Principal Balance
of such Class immediately prior to the relevant Distribution Date,
reduced (to not less than zero) by any Extraordinary Trust Fund
Expenses and Realized Losses, in each case allocated to such Class of
Certificates, on such Distribution Date pursuant to Section 4.04.
(b)(i) On each Distribution Date, the aggregate distributions
of principal made on such date in respect of the Class A Certificates
and the Residual Certificates pursuant to Section 4.01(a)(i) THIRD
above shall be applied among the various Classes thereof in the
following order of priority, in each case to the extent of remaining
available funds:
FIRST, in the case of the Residual
Certificates on the Distribution Date in June 1996,
an amount equal to the entire Certificate Principal
Balance thereof;
SECOND, to the Class A-7 Certificates in an
amount equal to the Class A-7 Senior Principal
Distribution Amount;
THIRD, concurrently, to the Class A-1
Certificates and the Class A- 2 Certificates in the
proportions of 25.0018751406% and 74.9981248594%,
respectively, until the Certificate Principal Balance
of the Class A-2 Certificates has been reduced to
zero;
FOURTH, concurrently, to the Class A-1
Certificates and the Class A-3 Certificates in the
proportions of 25.0018751406% and 74.9981248594%,
respectively, until the Certificate Principal Balance
of the Class A-3 Certificates has been reduced to
zero;
FIFTH, concurrently, to the Class A-1
Certificates and the Class A-4 Certificates in the
proportions of 25.0018751406% and 74.9981248594%,
respectively, until the Certificate Principal Balance
of each such class of Certificates has been reduced
to zero;
SIXTH, to the Class A-5 Certificates, until
the Certificate Principal Balance of such class of
Certificates has been reduced to zero;
SEVENTH, to the Class A-6 Certificates,
until the Certificate Principal Balance of such class
of Certificates has been reduced to zero; and
EIGHTH, to the Class A-7 Certificates, until
the Certificate Principal Balance of such class of
Certificates has been reduced to zero.
Notwithstanding the foregoing priorities, if the Certificate Principal
Balances of the Subordinate Certificates are reduced to zero prior to
reduction of the Certificate Principal
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Balances of the Class A Certificates to zero, the sequential nature of
distributions of principal among the Class A Certificates will be
disregarded and distributions allocable to principal will be paid on
each succeeding Distribution Date to holders of the Class A
Certificates, on a PRO RATA basis, based on the Certificate Principal
Balances thereof.
(ii) On each Distribution Date, the aggregate distributions of
principal made on such date in respect of the Subordinate Certificates
pursuant to Section 4.01(a)(i) FIFTH above shall be applied among the
various Classes thereof, in an order of priority from the Class of
Subordinate Certificates with the lowest numerical designation to the
Class of Subordinate Certificates with the highest numerical
designation, in each case to the extent of remaining available funds up
to the amount allocable to such Class for such Distribution Date and in
each case until the Certificate Principal Balance of each such Class is
reduced to zero, in an amount with respect to each such Class equal to
the sum of (A) the related Class B Percentage of the amounts described
in clauses (i) through (v) of clause (a) of the definition of
Subordinate Principal Distribution Amount, (B) the portion of the
amounts described in clauses (b) and (c) of the definition of
Subordinate Principal Distribution Amount allocable to the such Class
pursuant to Section 4.01(b)(iii) below and (C) the excess, if any, of
the amount required to be distributed to such Class pursuant to this
Section 4.01(b)(ii) for the immediately preceding Distribution Date,
over the aggregate distributions of principal made in respect of such
Class of Certificates on such immediately preceding Distribution Date
pursuant to Section 4.01 to the extent that any such excess is not
attributable to Realized Losses which were allocated to Subordinate
Certificates with a lower priority pursuant to Section 4.04.
(iii) On any Distribution Date, the portion of (a) all net
Liquidation Proceeds and Insurance Proceeds with respect to any
Mortgage Loans the subject of a Final Recovery Determination in the
related Prepayment Period and (b) all Principal Prepayments received in
respect of the Mortgage Loans in the related Prepayment Period,
allocable to principal and not included in the Non-PO Senior Principal
Distribution Amount and the PO Senior Principal Distribution Amount,
will be allocated on a PRO RATA basis among the following Classes of
Subordinate Certificates (each, an "Eligible Class") in proportion to
the respective outstanding Certificate Principal Balances thereof: (i)
the Class B-1 Certificates, (ii) the Class B-2 Certificates, if on such
Distribution Date the aggregate percentage interest in the Trust Fund
evidenced by the Class B-2 Certificates, the Class B-3 Certificates,
the Class B-4 Certificates, the Class B-5 Certificates and the Class
B-6 Certificates equals or exceeds 3.50% before giving effect to
distributions on such Distribution Date, (iii) the Class B-3
Certificates, if on such Distribution Date the aggregate percentage
interest in the Trust Fund evidenced by the Class B-3 Certificates, the
Class B-4 Certificates, the Class B-5 Certificates and the Class B-6
Certificates equals or exceeds 2.00% before giving effect to
distributions on such Distribution Date, (iv) the Class B-4
Certificates, if on such Distribution Date the aggregate percentage
interest in the Trust Fund evidenced by the Class B-4 Certificates, the
Class B-5 Certificates and the Class B-6 Certificates equals or exceeds
1.05% before giving effect to distributions on such Distribution Date,
(v) the Class B-5 Certificates, if on such Distribution Date the
aggregate percentage interest in the Trust Fund
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evidenced by the Class B-5 Certificates and the Class B-6 Certificates
equals or exceeds 0.60% before giving effect to distributions on such
Distribution Date and (vi) the Class B-6 Certificates, if on such
Distribution Date the percentage interest in the Trust Fund evidenced
by the Class B-6 Certificates equals or exceeds 0.40% before giving
effect to distributions on such Distribution Date. Notwithstanding the
foregoing, if the application of the foregoing on any Distribution Date
as provided in Section 4.01 would result in a distribution in respect
of principal to any Class or Classes of Subordinate Certificates in an
amount greater than the remaining Certificate Principal Balance thereof
(any such Class, a "Maturing Class") then: (a) the amount to be
allocated to each Maturing Class shall be reduced to a level that, when
applied as described above, would exactly reduce the Certificate
Principal Balance of such Class to zero and (b) the total amount of the
reductions pursuant to clause (a) above in the amount to be allocated
to the Maturing Class or Classes shall be allocated among the remaining
Eligible Classes on a PRO RATA basis in proportion to the respective
outstanding Certificate Principal Balances thereof prior to the
allocation thereto of any of the amounts described in the preceding
sentence.
(c) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Certificates having an initial
aggregate Certificate Principal Balance or Notional Amount that is in excess of
the lesser of (i) $5,000,000 or (ii) two-thirds of the initial Certificate
Principal Balance or Notional Amount of such Class of Certificates, or otherwise
by check mailed by first class mail to the address of such Holder appearing in
the Certificate Register. The final distribution on each Certificate will be
made in like manner, but only upon presentment and surrender of such Certificate
at the Corporate Trust Office or such other location specified in the notice to
Certificateholders of such final distribution.
Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the Depositor
or the Master Servicer shall have any responsibility therefor except as
otherwise provided by this Agreement or applicable law.
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(d) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. Neither the Holders of any Class of Certificates nor the Trustee nor
the Master Servicer shall in any way be responsible or liable to the Holders of
any other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.
(e) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than the related Record Date, mail to each Holder on such date of such
Class of Certificates a notice to the effect that:
(i) the Trustee expects that the final distribution with respect
to such Class of Certificates will be made on such Distribution Date,
but only upon presentation and surrender of such Certificates at the
office of the Trustee therein specified, and
(ii) no interest shall accrue on such Certificates from and after
the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust
and credited to the account of the appropriate non-tendering Holder or Holders.
If any Certificates as to which notice has been given pursuant to this Section
4.01(e) shall not have been surrendered for cancellation within six months after
the time specified in such notice, the Trustee shall mail a second notice to the
remaining nontendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trustee shall, directly or through an
agent, contact the remaining non-tendering Certificateholders concerning
surrender of their Certificates in the manner reasonably specified to the
Trustee by the Master Servicer in writing. The costs and expenses of maintaining
the funds in trust and of contacting such Certificateholders shall be paid out
of the assets remaining in the trust funds. If within two years after the second
notice, any such Certificates shall not have been surrendered for cancellation,
the Trustee shall pay to the Master Servicer all amounts distributable to the
Holders thereof and the Master Servicer shall thereafter hold such amounts for
the benefit of such Holders, subject to any applicable escheat statutes. No
interest shall accrue or be payable to any Certificateholder on any amount held
in trust or by the Trustee or the Master Servicer as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 4.01(e).
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SECTION 4.02. Statements to Certificateholders.
On each Distribution Date, the Trustee shall prepare (based on
information provided to it by the Master Servicer pursuant to Section 4.03(a))
and forward by mail to each Holder of the respective Classes of Regular
Certificates and to the Master Servicer, a statement as to the distributions
made on such Distribution Date setting forth:
(i) the amount of the distribution made on such
Distribution Date to the Holders of Certificates of each such
Class allocable to principal;
(ii) the amount of the distribution made on such
Distribution Date to the Holders of Certificates of each such
Class allocable to interest;
(iii) the aggregate amount of servicing compensation
received by the Master Servicer during the related Due Period
and such other customary information as the Trustee deems
necessary or desirable, or which a Certificateholder
reasonably requests, to enable Certificateholders to prepare
their tax returns;
(iv) the aggregate amount of P&I Advances included in
such distributions;
(v) the aggregate Stated Principal Balance of the
Mortgage Loans and any REO Properties at the close of business
on such Distribution Date;
(vi) the number, aggregate principal balance, weighted
average remaining term to maturity and weighted average
Mortgage Rate of the Mortgage Loans as of the related Due
Date;
(vii) the number and aggregate unpaid principal balance
of Mortgage Loans (a) delinquent 30 days, (b) delinquent 60
days, (c) delinquent 90 or more days and (d) as to which
foreclosure proceedings have been commenced;
(viii) with respect to any Mortgage Loan that became an
REO Property during the preceding calendar month, the loan
number of such Mortgage Loan, the unpaid principal balance and
the Stated Principal Balance of such Mortgage Loan as of the
date it became an REO Property;
(ix) the book value of any REO Property as of the close
of business on the last Business Day of the calendar month
preceding the Distribution Date;
(x) the aggregate amount of Principal Prepayments made
during the related Prepayment Period;
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(xi) the aggregate amount of Realized Losses incurred
during the related Prepayment Period (or, in the case of
Bankruptcy Losses allocable to interest, during the related
Due Period), separately identifying whether such Realized
Losses constituted Extraordinary Losses, Fraud Losses, Special
Hazard
Losses or Bankruptcy Losses;
(xii) the aggregate amount of Extraordinary Trust Fund
Expenses withdrawn from the Collection Account or the
Distribution Account and consequently resulting in a reduction
in the Available Distribution Amount for such Distribution
Date;
(xiii) the aggregate Certificate Principal Balance or
Notional Amount of each such Class of Certificates, after
giving effect to the distributions, and allocations of
Realized Losses and Extraordinary Trust Fund Expenses, made on
such Distribution Date, separately identifying any reduction
thereof due to allocations of Realized Losses and
Extraordinary Trust Fund Expenses;
(xiv) the Certificate Factor for each such Class of
Certificates applicable to such Distribution Date;
(xv) the Interest Distribution Amount in respect of each
such Class of Certificates (other than the Class PO
Certificates) for such Distribution Date (separately
identifying any reductions resulting from the allocation of
Realized Losses allocable to interest and Extraordinary Trust
Fund Expenses on such Distribution Date) and the respective
portions thereof, if any, remaining unpaid following the
distributions made in respect of such Certificates on such
Distribution Date;
(xvi) the aggregate amount of any Prepayment Interest
Shortfalls for such Distribution Date, to the extent not
covered by payments by the Master Servicer pursuant to Section
3.24;
(xvii) the aggregate amount of Relief Act Interest
Shortfall for such Distribution Date;
(xviii) the then-applicable Fraud Loss Amount,
Bankruptcy Amount and Special Hazard Amount;
(xix) with respect to any Mortgage Loan as to which
foreclosure proceedings have been concluded, the loan number
and unpaid principal balance of such Mortgage Loan as of the
date of such conclusion of foreclosure proceedings; and
(xx) with respect to Mortgage Loans as to which a Final
Liquidation has occurred, the number of Mortgage Loans, the
unpaid principal balance of such
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Mortgage Loans as of the date of such Final Liquidation and
the amount of proceeds (including Liquidation Proceeds and
Insurance Proceeds) collected in respect of such Mortgage
Loans.
In the case of information furnished pursuant to subclauses
(i) through (iii) above, the amounts shall be expressed as a dollar amount per
Single Certificate of the relevant Class.
Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Regular Certificate a statement containing
the information set forth in subclauses (i) through (iii) above, aggregated for
such calendar year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.
On each Distribution Date, the Trustee shall forward to the
Depositor, to each Holder of a Residual Certificate, to the Trepp Group (at 477
Madison Avenue, 18th Floor, New York, New York 10022, or such other address as
the Trepp Group may hereafter designate to the Trustee), and to the Master
Servicer, a copy of the reports forwarded to the Regular Certificateholders on
such Distribution Date and a statement setting forth the amounts, if any,
actually distributed with respect to the Residual Certificates on such
Distribution Date.
Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Residual Certificate a statement setting
forth the amount, if any, actually distributed with respect to the Residual
Certificates, as appropriate, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder.
The Trustee shall, upon request, furnish to each
Certificateholder and the Master Servicer, during the term of this Agreement,
such periodic, special, or other reports or information, whether or not provided
for herein, as shall be reasonable with respect to the Certificateholder, or
otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided at the expense of the Certificateholder in accordance
with such reasonable and explicit instructions and directions as the
Certificateholder may provide. For purposes of this Section 4.02, the Trustee's
duties are limited to the extent that the Trustee receives timely reports as
required from the Master Servicer.
On each Distribution Date, the Trustee shall provide Bloomberg
Financial Markets, L.P. ("Bloomberg") Certificate Factors for each class of
Certificates as of such Distribution Date, using a format and media mutually
acceptable to the Trustee and Bloomberg.
SECTION 4.03. Remittance Reports; P&I Advances.
(a) On the 10th day of each month (or if such day is not a
Business Day, the Business Day immediately preceding such 10th day) the Master
Servicer shall provide to the
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Trustee on magnetic tape a CPI Form S5OY, as well as the following hard copy CPI
generated reports: (i) Form 62C, Monthly Accounting Report; (ii) Form S50Y,
Private Pool Detail Report; (iii) Form S213, Summary of Curtailments Made
Remittance Report; (iv) Form S214, Summary of Paid in Full Remittance Report;
and (v) Form P139, Monthly Statement of Mortgage Accounts. In addition, on the
Business Day following each Determination Date, the Master Servicer shall
deliver to the Trustee by facsimile (or by such other means as the Master
Servicer and the Trustee may agree from time to time) a Remittance Report with
respect to the related Distribution Date, which Remittance Report shall be in a
form substantially similar to Exhibit G hereto.
(b) The amount of P&I Advances to be made by the Master
Servicer for any Distribution Date shall equal, subject to Section 4.03(d), the
sum of (i) the aggregate amount of Monthly Payments (with each interest portion
thereof net of the related Servicing Fee), due on the related Due Date, which
Monthly Payments were delinquent as of the close of business on the related
Determination Date and (ii) with respect to each REO Property, which REO
Property was acquired during or prior to the related Prepayment Period and as to
which REO Property an REO Disposition did not occur during the related
Prepayment Period, an amount equal to the excess, if any, of the REO Imputed
Interest on such REO Property for the most recently ended calendar month, over
the net income from such REO Property transferred to the Distribution Account
pursuant to Section 3.23 for distribution on such Distribution Date.
On or before 4:00 p.m. New York time on each Master Servicer
Remittance Date, the Master Servicer shall remit in immediately available funds
to the Trustee for deposit in the Distribution Account an amount equal to the
aggregate amount of P&I Advances, if any, to be made in respect of the Mortgage
Loans and REO Properties for the related Distribution Date either (i) from its
own funds or (ii) from the Collection Account held by or on behalf of it, to the
extent of funds held therein for future distribution (in which case it will
cause to be made an appropriate entry in the records of such Collection Account
that amounts held for future distribution have been, as permitted by this
Section 4.03, used by the Master Servicer in discharge of any such P&I Advance)
or (iii) in the form of any combination of (i) and (ii) aggregating the total
amount of P&I Advances to be made by the Master Servicer with respect to the
Mortgage Loans and REO Properties serviced by it. Any amounts held for future
distribution and so used shall be appropriately reflected in the Master
Servicer's records and replaced by the Master Servicer by deposit in the
Collection Account held by or on behalf of it on or before any future Master
Servicer Remittance Date to the extent that the Available Distribution Amount
for the related Distribution Date (determined without regard to P&I Advances to
be made on the Master Servicer Remittance Date) shall be less than the total
amount that would be distributed to the related Classes of Certificateholders
pursuant to Section 4.01 on such Distribution Date if such amounts held for
future distributions had not been so used to make P&I Advances. The Trustee will
provide notice to the Master Servicer by facsimile by the close of business on
any Master Servicer Remittance Date in the event that the amount remitted by the
Master Servicer to the Trustee on such date is less than the P&I Advances
required to be made by the Master Servicer for the related Distribution Date.
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(c) The obligation of the Master Servicer to make such P&I
Advances is mandatory, notwithstanding any other provision of this Agreement,
and, with respect to any Mortgage Loan or REO Property, shall continue until a
Final Recovery Determination in connection therewith or the removal thereof from
the Trust Fund pursuant to any applicable provision of this Agreement, except as
otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no P&I
Advance shall be required to be made hereunder by the Master Servicer if such
P&I Advance would, if made, constitute a Nonrecoverable P&I Advance. The
determination by the Master Servicer that it has made a Nonrecoverable P&I
Advance or that any proposed P&I Advance, if made, would constitute a
Nonrecoverable P&I Advance, shall be evidenced by an Officers' Certificate of
the Master Servicer delivered to the Depositor and the Trustee.
SECTION 4.04. Allocation of Extraordinary Trust Fund Expenses
and Realized Losses.
(a) Prior to each Determination Date, the Master Servicer
shall determine as to each Mortgage Loan and REO Property, and the Trustee shall
determine in the aggregate: (i) the total amount of Realized Losses, if any,
incurred in connection with any Final Recovery Determinations made during the
related Prepayment Period; (ii) whether and the extent to which such Realized
Losses constituted Fraud Losses, Special Hazard Losses or Extraordinary Losses;
and (iii) the respective portions of such Realized Losses allocable to interest
and allocable to principal. Prior to each Determination Date, the Master
Servicer shall also determine as to each Mortgage Loan, and the Trustee shall
determine in the aggregate: (i) the total amount of Realized Losses, if any,
incurred in connection with any Deficient Valuations made during the related
Prepayment Period; and (ii) the total amount of Realized Losses, if any,
incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Due Period. The information described in the two
preceding sentences that is to be supplied by the Master Servicer shall be
evidenced by an Officers' Certificate delivered to the Trustee by the Master
Servicer prior to the Determination Date immediately following the end of (i) in
the case of Bankruptcy Losses allocable to interest, the Due Period during which
any such Realized Loss was incurred, and (ii) in the case of all other Realized
Losses, the Prepayment Period during which any such Realized Loss was incurred.
(b) All Realized Losses, other than Excess Special Hazard
Losses, Extraordinary Losses, Excess Bankruptcy Losses, Excess Fraud Losses and
all Extraordinary Trust Fund Expenses, shall be allocated as follows: first, to
the Class B-6 Certificates; second, to the Class B-5 Certificates; third, to the
Class B-4 Certificates; fourth, to the Class B-3 Certificates; fifth, to the
Class B-2 Certificates; sixth, to the Class B-1 Certificates, in each case until
the Certificate Principal Balance thereof has been reduced to zero; and seventh,
upon the reduction of the Certificate Principal Balances of the Subordinate
Certificates to zero, to the Senior Certificates. Any Realized Losses
attributable to any Mortgage Loan and allocable to the Senior Certificates shall
be allocated among the Senior Certificates as follows: the related PO Percentage
of such Realized Losses shall be allocated to the Class PO Certificates and the
related Non-PO Percentage of such Realized Losses shall be allocated among the
Class A Certificates
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on a PRO RATA basis. Any Excess Special Hazard Losses, Extraordinary Losses,
Excess Bankruptcy Losses and Excess Fraud Losses attributable to any Mortgage
Loan Expenses shall be allocated among the Senior Certificates and Subordinate
Certificates as follows: the related PO Percentage of such Realized Losses shall
be allocated to the Class PO Certificates and the related Non-PO Percentage of
such Realized Losses shall be allocated among the Class A Certificates and
Subordinate Certificates on a PRO RATA basis. Extraordinary Trust Fund Expenses
shall be among all Classes of Certificates on a PRO RATA basis. Any allocation
of a Realized Loss to a Certificate will be made by reducing the Certificate
Principal Balance thereof by the amount so allocated as of the Distribution Date
in the month following the calendar month in which such Realized Loss was
incurred.
As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among two or more specified Classes of Certificates means an
allocation on a PRO RATA basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates collectively constitute the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in the Trust Fund. At the Closing Date, the aggregate Certificate
Principal Balance of the Certificates will equal the aggregate Stated Principal
Balance of the Mortgage Loans.
The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-13. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.
Upon original issue, the Certificates shall be executed and
delivered by the Trustee and the Trustee shall cause the Certificates to be
authenticated by the Certificate Registrar to or upon the order of the
Depositor. The Certificates shall be executed and attested by manual or
facsimile signature on behalf of the Trustee by an authorized signatory under
its seal imprinted thereon. Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Trustee shall bind the Trustee, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificates. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided herein
executed by the Certificate Registrar by manual signature, and such certificate
of authentication shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
(b) The Class A Certificates shall initially be issued as one
or more Certificates registered in the name of the Depository or its nominee
(Certificates so registered, "Book-Entry Certificates") and, except as provided
below, registration of such Certificates may not be transferred by the
Certificate Registrar except to another Depository that agrees to hold such
Certificates for the respective Certificate Owners with Ownership Interests
therein. The Certificate Owners shall hold their respective Ownership Interests
in and to such Certificates through the book-entry facilities of the Depository
and, except as provided below, shall not be entitled to definitive, fully
registered Certificates ("Definitive Certificates") in respect of such Ownership
Interests. All transfers by Certificate Owners of their respective Ownership
Interests in the Book-Entry Certificates shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures.
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The Trustee, the Certificate Registrar, the Master Servicer
and the Depositor may for all purposes (including the making of payments due on
the respective Classes of Book-Entry Certificates) deal with the Depository as
the authorized representative of the Certificate Owners with respect to the
respective Classes of Book-Entry Certificates for the purposes of exercising the
rights of Certificateholders hereunder. The rights of Certificate Owners with
respect to respective Classes of Book-Entry Certificates shall be limited to
those established by law and agreements between such Certificate Owners.
Multiple requests and directions from, and votes of, the Depository as Holder of
any Class of Book-Entry Certificates with respect to any particular matter shall
not be deemed inconsistent if they are made with respect to different
Certificate Owners. The Certificate Registrar may establish a reasonable record
date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
With respect to any Class of Book-Entry Certificates, if(i)(A)
the Depositor advises the Certificate Registrar and the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository with respect to such Class of Book-Entry
Certificates, and (B) the Depositor is unable to locate a qualified successor,
(ii) the Depositor at its option advises the Certificate Registrar and the
Trustee in writing that it elects to terminate the book-entry system through the
Depository for such Class of Book-Entry Certificates or (iii) after the
occurrence of an Event Default, Certificate Owners representing in the aggregate
not less than 51% of the Ownership Interests of any such Class of the Book-Entry
Certificates advise the Certificate Registrar and the Trustee through the
Depository, in writing, that the continuation of a book-entry system through the
Depository is no longer in the best interests of such Certificate Owners, the
Certificate Registrar shall notify all Certificate Owners representing Ownership
Interests in such Class of Book-Entry Certificates, through the Depository, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners of such Class of Book-Entry Certificates
requesting the same upon surrender to the Certificate Registrar of the related
Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration of transfer, the Certificate
Registrar shall cause the Trustee to issue the Definitive Certificates for such
Class. Such Definitive Certificates will be issued in minimum denominations of
$1,000, except that any beneficial Ownership Interest in an amount less than
$1,000 immediately prior to the issuance of a Definitive Certificate that was
represented by a Book-Entry Certificate immediately prior to the issuance of a
Definitive Certificate shall be issued in a minimum denomination equal to the
amount represented by such beneficial Ownership Interest. None of the
Certificate Registrar, the Depositor, the Master Servicer or the Trustee shall
be liable for any delay in the delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates of any Class, all references herein
to obligations imposed upon or to be performed by the Depository with respect to
such Class shall be deemed to be imposed upon and performed by the Certificate
Registrar, to the extent applicable with respect to such Definitive
Certificates, and the Certificate Registrar and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders of such Class
hereunder.
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SECTION 5.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.12 a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided. The Trustee will initially serve as Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates
as herein provided. The Certificate Registrar may appoint, by a written
instrument delivered to the Master Servicer and the Depositor, any other bank or
trust company to act as Certificate Registrar under such conditions as the
predecessor Certificate Registrar may prescribe, provided that the predecessor
Certificate Registrar shall not be relieved of any of its duties or
responsibilities hereunder by reason of such appointment. If the Trustee shall
at any time not be the Certificate Registrar, the Trustee shall have and
maintain the right to inspect the Certificate Register or to obtain a copy
thereof at all reasonable times, and to rely conclusively upon a certificate of
the Certificate Registrar as to the information set forth in the Certificate
Register. In order to facilitate compliance with the provisions of Article XI
hereof, the Trustee (i) shall, at the written request of the Master Servicer,
verify that the information contained in the Affirmation (as defined in Article
XI) is correct and (ii) for so long as the provisions of Article XI remain
operative, shall deliver to the Master Servicer a notification of the transfer
of any Class B-6 Certificate by the Directing Holder which results in the
Directing Holder not being the Holder of a majority in Percentage Interest in
the Class B-6 Certificates.
(b) No transfer of any Class B-4 Certificate, B-5 Certificate
or B-6 Certificate shall be made unless that transfer is made pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), and effective registration or qualification under applicable
state securities laws, or is made in a transaction which does not require such
registration or qualification. In the event that such a transfer of a Class B-4
Certificate, B-5 Certificate or B-6 Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
each require, in order to assure compliance with such laws, receipt of: (i) if
such transfer is purportedly being made in reliance upon Rule 144A under the
1933 Act, written certifications from the Certificateholder desiring to effect
the transfer, and from such Certificateholder's prospective transferee,
substantially in the forms attached hereto as Exhibit F-1; and (ii) in all other
cases, an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Trust Fund or of the Depositor, the Trustee or the Master
Servicer in its capacity as such), together with copies of the written
certification(s) of the Certificateholder desiring to effect the transfer and/or
such Certificateholder's prospective transferee upon which such Opinion of
Counsel is based. None of the Depositor, the Certificate Registrar or the
Trustee is obligated to register or qualify the Class B-4 Certificate, B-5
Certificate or B-6 Certificates under the 1933 Act or any other securities laws
or to take any action not otherwise required under this Agreement to permit the
transfer of such Certificates without registration or qualification. Any
Certificateholder desiring to effect the transfer of a Class B-4 Certificate,
B-5 Certificate or B-6 Certificate shall, and does hereby agree to,
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indemnify the Trustee, the Depositor, the Certificate Registrar and the Master
Servicer against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
(c) No transfer of a Subordinate Certificate or Residual
Certificate or any interest therein shall be made to (i) 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
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the Code (each, a "Plan") or (ii) any Person who is directly or indirectly
purchasing the Subordinate Certificate or Residual Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the Trustee and the Certificate Registrar are provided with a
certification of facts or an Opinion of Counsel which establishes to the
satisfaction of each that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or cause any of the Trustee,
the Certificate Registrar or the Master Servicer to be deemed a fiduciary of
such Plan or result in the imposition of an excise tax under Section 4975 of the
Code. In the absence of its having received the certification of facts or
Opinion of Counsel contemplated by the preceding sentence, the Trustee and the
Certificate Registrar shall require the prospective transferee of any
Subordinate Certificate or Residual Certificate to certify either (a) that it is
neither (i) a Plan nor (ii) a Person who is directly or indirectly purchasing
the Subordinate or Residual Certificate on behalf of, as named fiduciary of, as
trustee of, or with assets of a Plan (including any insurance company using
funds in its general or separate accounts that may constitute "plan assets") or
(b) that (i) it is an insurance company and (ii) all of the funds to be used by
it to purchase the Certificates to be purchased by it are held in its general
account and virtually all of the assets in such general account are from the
receipt of premiums for the purchase of annuity contracts that provide in part:
(A) for a benefit that is guaranteed throughout the term of the contract, and
(B) for a benefit that is guaranteed for successive periods of at least twelve
months; however, benefits from premiums received during any twelve month period
may be guaranteed only to the end of such twelve month period, and thereafter
for periods of twelve months or more.
(d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to have irrevocably authorized the Trustee to negotiate the
terms of any mandatory sale under clause (iii)(B) below and to execute all
instruments of Transfer and to do all other things necessary in connection with
any such sale. The rights of each Person acquiring any Ownership Interest in a
Residual Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall be
a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its
status as a Permitted Transferee.
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(B) In connection with any proposed Transfer
of any Ownership Interest in a Residual Certificate,
the Trustee in its capacity as Certificate Registrar
shall require delivery to it, and shall not register
the Transfer of any Residual Certificate until its
receipt of, an affidavit and agreement (a "Transfer
Affidavit and Agreement" attached hereto as Exhibit
F-2) from the proposed Transferee, in form and
substance satisfactory to the Trustee in its capacity
as Certificate Registrar, representing and
warranting, among other things, that such Transferee
is a Permitted Transferee, that it is not acquiring
its Ownership Interest in the Residual Certificates
that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person that is not
a Permitted Transferee, that for so long as it
retains its Ownership Interest in a Residual
Certificate, it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions
of this Section 5.02(d) and agrees to be bound by
them.
(C) Notwithstanding the delivery of a
Transfer Affidavit and Agreement by a proposed
Transferee under clause (B) above, if a Responsible
Officer of the Trustee in its capacity as Certificate
Registrar has actual knowledge that the proposed
Transferee is not a Permitted Transferee, no Transfer
of an Ownership Interest in a Residual Certificate to
such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall
agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person
attempts to transfer its Ownership Interest in a
Residual Certificate and (y) not to transfer its
Ownership Interest unless it provides a certificate
(attached hereto as Exhibit F-2) to the Trustee in
its capacity as Certificate Registrar stating that,
among other things, it has no actual knowledge that
such other Person is not a Permitted Transferee.
(E) Each Person holding or acquiring an
Ownership Interest in a Residual Certificate, by
purchasing an Ownership Interest in such Certificate,
agrees to give the Trustee in its capacity as
Certificate Registrar written notice that it is a
"pass-through interest holder" within the meaning of
temporary Treasury regulation Section
1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Residual Certificate, if it
is, or is holding an Ownership Interest in a Residual
Certificate on behalf of, a "pass-through interest
holder".
(ii) The Trustee in its capacity as Certificate
Registrar will register the Transfer of any Residual
Certificate only if it shall have received the Transfer
Affidavit and Agreement and all of such other documents as
shall have been reasonably required by the Trustee as a
condition to such registration. In addition, no Transfer of a
Residual Certificate shall be made unless the Trustee
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in its capacity as Certificate Registrar shall have received a
representation letter from the Transferee of such Certificate
to the effect that such Transferee is not a Non-United States
Person or a Disqualified Organization.
(iii) (A) If any purported Transferee shall become a
Holder of a Residual Certificate in violation of the provisions of this
Section 5.02(d), then the last preceding Permitted Transferee shall be
restored, to the extent permitted by law, to all rights as holder
thereof retroactive to the date of registration of such Transfer of
such Residual Certificate. Neither the Trustee nor the Certificate
Registrar shall be under any liability to any Person for any
registration of a Transfer of a Residual Certificate that is in fact
not permitted by this Section 5.02(d) or for making any payments due on
such Certificate to the holder thereof or for taking any other action
with respect to such holder under the provisions of this Agreement.
(B) If any purported Transferee shall become
a holder of a Residual Certificate in violation of
the restrictions in this Section 5.02(d) and to the
extent that the retroactive restoration of the rights
of the holder of such Residual Certificate as
described in clause (iii)(A) above shall be invalid,
illegal or unenforceable, then the Trustee shall have
the right, without notice to the holder or any prior
holder of such Residual Certificate, to sell such
Residual Certificate to a purchaser selected by the
Trustee on such terms as the Trustee may choose. Such
purported Transferee shall promptly endorse and
deliver each Residual Certificate in accordance with
the instructions of the Trustee. Such purchaser may
be the Trustee itself or any Affiliate of the
Trustee. The proceeds of such sale, net of the
commissions (which may include commissions payable to
the Trustee or its Affiliates), expenses and taxes
due, if any, will be remitted by the Trustee to such
purported Transferee. The terms and conditions of any
sale under this clause (iii)(B) shall be determined
in the sole discretion of the Trustee, and the
Trustee shall not be liable to any Person having an
Ownership Interest in a Residual Certificate as a
result of its exercise of such discretion.
(iv) The Trustee shall make available to the Internal
Revenue Service and those Persons specified by the REMIC
Provisions all information necessary to compute any tax
imposed (A) as a result of the Transfer of an Ownership
Interest in a Residual Certificate to any Person who is not a
Disqualified Organization, including the information described
in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5) with respect to the "excess inclusions" of such
Residual Certificate and (B) as a result of any regulated
investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a
Residual Certificate having as among its record holders at any
time
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any Person which is a Disqualified Organization. Reasonable
compensation for providing such information may be accepted by
the Trustee.
(v) The provisions of this Section 5.02(d) set forth
prior to this subsection (v) may be modified, added to or
eliminated, provided that there shall have been delivered to
the Trustee the following:
(A) written notification from the Rating
Agencies to the effect that the modification,
addition to or elimination of such provisions will
not cause such Rating Agencies to downgrade their
then-current ratings of any Class of Certificates;
and
(B) an Opinion of Counsel (which shall be
provided at the expense of the party seeking such
modification, addition or elimination), in form and
substance satisfactory to the Trustee, to the effect
that such modification of, addition to or elimination
of such provisions will not cause the Trust Fund to
cease to qualify as a REMIC and will not cause (x)
the Trust Fund to be subject to an entity-level tax
caused by the Transfer of any Residual Certificate to
a Person that is not a Permitted Transferee or (y) a
Person other than the prospective transferee to be
subject to a REMIC-related tax caused by the Transfer
of a Residual Certificate to a Person that is not a
Permitted Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.12, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in the
name of the designated Transferee or Transferees, one or more new Certificates
of the same Class of a like aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.12. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute and cause the Certificate
Registrar to authenticate and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trustee) be duly endorsed by, or be accompanied by a written instrument of
transfer in the form satisfactory to the Trustee and the Certificate Registrar
duly executed by, the Holder thereof or his attorney duly authorized in writing.
(g) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trustee in its capacity as
Certificate Registrar 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.
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(h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Certificate Registrar in accordance with
its customary procedures.
(i) The Trustee will cause the Certificate Registrar (unless
the Trustee is acting as Certificate Registrar) to provide notice to the Trustee
of each transfer of a Certificate and to provide the Trustee with an updated
copy of the Certificate Register on the first Business Day in January and June
of each year, commencing January, 1997.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee
or the Certificate Registrar, or the Trustee and the Certificate Registrar
receive evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of actual knowledge by the Trustee or the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
the same Class and of like denomination and Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Certificate Registrar) connected therewith. Any replacement
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust Fund created hereunder, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Depositor, the Master Servicer, the Trustee, the
Certificate Registrar and any agent of any of them may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 4.01 and for all other
purposes whatsoever, and none of the Depositor, the Master Servicer, the
Trustee, the Certificate Registrar or any agent of any of them shall be affected
by notice to the contrary.
SECTION 5.05. Certain Available Information.
On or prior to the date of the first sale of any Class B-4
Certificate, B-5 Certificate or B-6 Certificate to an Independent third party,
the Depositor shall provide to the Trustee 10 copies of any private placement
memorandum or other disclosure document used by the Depositor in connection with
the offer and sale of the Class B-4 Certificate, B-5 Certificate or B-6
Certificates. In addition, if any such private placement memorandum or
disclosure document is revised, amended or supplemented at any time following
the delivery thereof to the Trustee, the Depositor promptly shall inform the
Trustee of such event and shall deliver to the Trustee 10 copies of the private
placement memorandum or disclosure document, as revised, amended or
supplemented. The Trustee shall maintain at its Corporate Trust Office and shall
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make available free of charge during normal business hours for review by any
Holder of a Certificate or any Person identified to the Trustee as a prospective
transferee of a Certificate, originals or copies of the following items: (i) in
the case of a Holder or prospective transferee of a Class B-4 Certificate, B-5
Certificate or B-6 Certificate, the private placement memorandum or other
disclosure document relating to the Class B-4 Certificate, B-5 Certificate or
B-6 Certificates, in the form most recently provided to the Trustee; and (ii) in
all cases, (A) this Agreement and any amendments hereof entered into pursuant to
Section 12.01, (B) all monthly statements required to be delivered to
Certificateholders of the relevant Class pursuant to Section 4.02 since the
Closing Date, and all other notices, reports, statements and written
communications delivered to the Certificateholders of the relevant Class as a
Class pursuant to this Agreement since the Closing Date, (C) all certifications
delivered by a Responsible Officer of the Trustee since the Closing Date
pursuant to Section 10.01(h), (D) any and all Officers' Certificates delivered
to the Trustee by the Master Servicer since the Closing Date to evidence the
Master Servicer's determination that any P&I Advance was, or if made, would be a
Nonrecoverable P&I Advance and (E) any and all Officers' Certificates delivered
to the Trustee by the Master Servicer since the Closing Date pursuant to Section
4.04(a). Copies of any and all of the foregoing items will be available from the
Trustee upon request at the expense of the person requesting the same.
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ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Liability of the Depositor and the Master
Servicer.
The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement and undertaken hereunder by the Depositor and the Master
Servicer herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the
Master Servicer.
Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. The Master Servicer will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation and its qualification as an approved
conventional seller/servicer for FNMA or FHLMC in good standing. The Depositor
and the Master Servicer each will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
The Depositor or the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Master Servicer shall be qualified to service mortgage loans on behalf of
FNMA or FHLMC; and provided further that the Rating Agencies' ratings of the
Senior, Subordinate and Residual Certificates in effect immediately prior to
such merger or consolidation will not be qualified, reduced or withdrawn as a
result thereof (as evidenced by a letter to such effect from the Rating
Agencies).
SECTION 6.03. Limitation on Liability of the Depositor, the
Master Servicer and Others.
None of the Depositor, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor or the Master Servicer
shall be under any liability to the Trust Fund or the Certificateholders 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 Depositor, the Master Servicer or any such
person against any breach of warranties, representations or covenants made
herein, or against any specific
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liability imposed on the Master Servicer pursuant hereto, or against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Master
Servicer and any director, officer, employee or agent of the Depositor or the
Master Servicer may rely in good faith on any document of any kind which, PRIMA
FACIE, is properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Master Servicer and any director, officer,
employee or agent of the Depositor or the Master Servicer shall be indemnified
and held harmless by the Certificateholders against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement) or any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. Neither the Depositor nor the
Master Servicer shall be under any obligation to appear in, prosecute or defend
any legal action unless such action is related to its respective duties under
this Agreement and, in its opinion, does not involve it in any expense or
liability; provided, however, that each of the Depositor and the Master Servicer
may in its discretion undertake any such action which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom (except any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder) shall be the expenses, costs and liabilities of the Trust Fund, and
the Depositor and the Master Servicer shall be entitled to be reimbursed
therefor from the Collection Account or the Distribution Account as and to the
extent provided in Section 3.11, any such right of reimbursement being prior to
the rights of the related Class(es) of Certificateholders to receive any portion
of the amounts from which such cost, expense or liability is reimbursable
pursuant to Section 3.11.
SECTION 6.04. Limitation on Resignation of the Master
Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on them except upon determination that its duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by
them, the other activities of the Master Servicer so causing such a conflict
being of a type and nature carried on by the Master Servicer at the date of this
Agreement. Any such determination pursuant to the preceding sentence permitting
the resignation of the Master Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee. No resignation of the Master
Servicer shall become effective until the Trustee or a successor servicer shall
have assumed the Master Servicer's responsibilities, duties, liabilities (other
than those liabilities arising prior to the appointment of such successor) and
obligations under this Agreement.
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Except as expressly provided herein, the Master Servicer shall
not assign or transfer any of its rights, benefits or privileges hereunder to
any other Person, or delegate to or subcontract with, or authorize or appoint
any other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. If, pursuant to any provision
hereof, the duties of the Master Servicer are transferred to a successor Master
Servicer, the entire amount of the Servicing Fee and other compensation payable
to the Master Servicer pursuant hereto shall thereafter be payable to such
successor Master Servicer.
SECTION 6.05. Rights of the Depositor in Respect of the Master
Servicer.
The Master Servicer shall afford the Depositor and the
Trustee, upon reasonable notice, during normal business hours, access to all
records maintained by the Master Servicer in respect of its rights and
obligations hereunder and access to officers of the Master Servicer responsible
for such obligations. Upon request, the Master Servicer shall furnish to the
Depositor and the Trustee its most recent financial statements and such other
information relating to its capacity to perform its obligations under this
Agreement as the Master Servicer possesses. To the extent such information is
not otherwise available to the public, the Depositor and the Trustee shall not
disseminate any information obtained pursuant to the preceding two sentences
without the Master Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities 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
Depositor, the Trustee or the Trust Fund, and in either case, the Depositor or
the Trustee, as the case may be, shall use its best efforts to assure the
confidentiality of any such disseminated non-public information. The Depositor
may, but is not obligated to, enforce the obligations of the Master Servicer
under this Agreement and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer under this
Agreement or exercise the rights of the Master Servicer under this Agreement;
provided that the Master Servicer shall be relieved of any of its obligations
under this Agreement by virtue of such performance by the Depositor or its
designee. The Depositor shall not have any responsibility or liability for any
action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events; provided:
(i) any failure by the Master Servicer to remit to the
Trustee for distribution to the Certificateholders any payment
(other than a P&I Advance required to be made from its own
funds on any Master Servicer Remittance Date pursuant to
Section 4.03 or any other remittance required to be made to
the Trustee on the Master Servicer Remittance Date) required
to be made under the terms of the Certificates and this
Agreement which continues unremedied for a period of five days
after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to
the Master Servicer by the Depositor or the Trustee (in which
case, notice shall be provided by facsimile), or to the Master
Servicer, the Depositor and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights; or
(ii) any failure on the part of the Master Servicer duly
to observe or perform in any material respect any other of the
covenants or agreements on the part of the Master Servicer
contained in the Certificates or in this Agreement which
continues unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the
Depositor or the Trustee, or to the Master Servicer, the
Depositor and the Trustee by the Holders of Certificates
entitled to at least 25% of the Voting Rights; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in
an involuntary case under any present or future federal or
state bankruptcy, insolvency or similar law or the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceeding, or for the winding-up or liquidation of
its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 30 days; or
(iv) the Master Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the
Master Servicer or of or relating to all or substantially all
of its property;
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(v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file
a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of
its creditors, voluntarily suspend payment of its obligations
or, except as provided in Section 6.02 hereof, cease
operations of its business; or
(vi) any failure of the Master Servicer to make any P&I
Advance on any Master Servicer Remittance Date required to be
made from its own funds pursuant to Section 4.03, or any
failure of the Master Servicer to make any other remittance
required to be made to the Trustee on the Master Servicer
Remittance Date, which, in each case, continues unremedied for
a period of one Business Day immediately following the Master
Servicer Remittance Date.
If an Event of Default described in clauses (ii) through (v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Depositor or the Trustee may, and at
the written direction of the Holders of Certificates entitled to at least 51% of
Voting Rights, the Trustee shall, by notice in writing to the Master Servicer
(and to the other parties to this Agreement), terminate all of the rights and
obligations of the Master Servicer in its capacity as Master Servicer under this
Agreement, to the extent permitted by law, and in and to the Mortgage Loans
serviced by it and the proceeds thereof. If an Event of Default described in
clause (vi) hereof shall occur, the Trustee shall, by notice in writing to the
Master Servicer and the Depositor, terminate all of the rights and obligations
of the Master Servicer in its capacity as Master Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof. On or after the
receipt by the Master Servicer of such written notice, all authority and power
of the Master Servicer under this Agreement, whether with respect to the
Certificates (other than as a Holder of any Certificate) or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section, and, without limitation, the Trustee is hereby authorized and
empowered, as attorney-in-fact or otherwise, to execute and deliver, on behalf
of and at the expense of the Master Servicer, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees promptly (and in any
event no later than ten Business Days subsequent to such notice) to provide the
Trustee with all documents and records requested by it to enable it to assume
the Master Servicer's functions under this Agreement, and to cooperate with the
Trustee in effecting the termination of the Master Servicer's responsibilities
and rights under this Agreement, including, without limitation, the transfer
within one Business Day to the Trustee for administration by it of all cash
amounts which at the time shall be or should have been credited by the Master
Servicer to the Collection Account, the Distribution Account, or any Servicing
Account held by or on behalf of the Master Servicer or thereafter be received
with respect to the Mortgage Loans or any REO Property (provided, however, that
the Master Servicer shall continue to be entitled to receive all amounts accrued
or owing to it under this Agreement on or prior to the date of such termination,
whether in respect of P&I Advances or otherwise, and shall continue to be
entitled to the benefits of
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Section 6.03 notwithstanding any such termination). For purposes of this Section
7.01, the Trustee shall not be deemed to have knowledge of an Event of Default
unless a Responsible Officer of the Trustee assigned to and working in the
Trustee's Corporate Trust Office has actual knowledge thereof or unless written
notice of any event which is in fact such an Event of Default is received by the
Trustee and such notice references the Certificates, the Trust Fund or this
Agreement.
SECTION 7.02. Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a
notice of termination pursuant to Section 7.01, the Trustee shall be the
successor in all respects to the Master Servicer in its capacity as Master
Servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto and arising thereafter placed on the Master Servicer (except
for any representations or warranties of the Master Servicer under this
Agreement, the responsibilities, duties and liabilities contained in Section
2.03(c) and its obligation to deposit amounts in respect of losses pursuant to
Section 3.12) by the terms and provisions hereof including, without limitation,
the Master Servicer's obligations to make P&I Advances pursuant to Section 4.03;
provided, however, that if the Trustee is prohibited by law or regulation from
obligating itself to make advances regarding delinquent mortgage loans, then the
Trustee shall not be obligated to make P&I Advances pursuant to Section 4.03;
and provided further, that any failure to perform such duties or
responsibilities caused by the Master Servicer's failure to provide information
required by Section 7.01 shall not be considered a default by the Trustee as
successor to the Master Servicer hereunder. As compensation therefor, the
Trustee shall be entitled to the Servicing Fees and all funds relating to the
Mortgage Loans to which the Master Servicer would have been entitled if the
Master Servicer had continued to act hereunder. Notwithstanding the above, the
Trustee may, if it shall be unwilling to so act, or shall, if it is unable to so
act or if it is prohibited by law from making advances regarding delinquent
mortgage loans or if the Holders of Certificates entitled to at least 51% of the
Voting Rights so request in writing to the Trustee, promptly appoint, or
petition a court of competent jurisdiction to appoint, an established mortgage
loan servicing institution acceptable to the Rating Agencies and having a net
worth of not less than $15,000,000, as the successor to the Master Servicer
under this Agreement in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer under this
Agreement. No appointment of a successor to the Master Servicer under this
Agreement shall be effective until the assumption by the successor of all of the
Master Servicer's responsibilities, duties and liabilities hereunder. In
connection with such appointment and assumption described herein, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Master Servicer as such hereunder. The Depositor, the Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Pending appointment of a successor to the Master
Servicer under this Agreement, the Trustee shall act in such capacity as
hereinabove provided. If during such time as the Trustee may be acting as Master
Servicer hereunder, it is prohibited by law from making advances regarding
delinquent mortgage loans or is otherwise unable to make such advances for
reasons beyond its control, the Trustee is
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hereby authorized and directed to make for the benefit of the Certificateholders
timely claims under the related P&I Advance Endorsement, to the extent permitted
thereby, to cover any P&I Advances required to be made hereunder with the same
effects as set forth in the last paragraph of Section 3.13.
(b) If the Master Servicer fails to remit to the Trustee for
distribution to the Certificateholders any payment required to be made under the
terms of the Certificates and this Agreement (for purposes of this Section
7.02(b), a "Remittance") because the Master Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of such Remittance
is prohibited by Section 362 of the federal Bankruptcy Code, the Trustee shall
upon notice of such prohibition, regardless of whether it has received a notice
of termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trustee shall be obligated to make such advance only if (i) such
advance, in the good faith judgment of the Trustee, can reasonably be expected
to be ultimately recoverable from funds which are in the custody of the Master
Servicer, a trustee in bankruptcy or a federal bankruptcy court and should have
been the subject of such Remittance absent such prohibition (the "Stayed Funds")
and (ii) the Trustee is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trustee
or the deposit thereof in the Distribution Account by the Master Servicer, a
trustee in bankruptcy or a federal bankruptcy court, the Trustee may recover the
amount so advanced, without interest, by withdrawing such amount from such
Distribution Account; however, nothing in this Agreement shall be deemed to
affect the Trustee's rights to recover from the Master Servicer's own funds
interest on the amount of any such advance. If the Trustee at any time makes an
advance under this Subsection which it later determines in its good faith
judgment will not be ultimately recoverable from the Stayed Funds with respect
to which such advance was made, the Trustee shall be entitled to reimburse
itself for such advance, without interest, by withdrawing from the Distribution
Account, out of amounts on deposit therein, an amount equal to the portion of
such advance attributable to the Stayed Funds.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of the Master Servicer pursuant to
Section 7.01 above or any appointment of a successor to the Master Servicer
pursuant to Section 7.02 above, the Trustee shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register.
(b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute an Event of Default or five days after a Responsible Officer of
the Trustee becomes aware of the occurrence of such an event, the Trustee shall
transmit by mail to all Holders of Certificates notice of each such occurrence,
unless such default or Event of Default shall have been cured or waived.
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SECTION 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Event of
Default hereunder, may waive such default or Event of Default; PROVIDED,
HOWEVER, that a default or Event of Default under clause (i) or (vi) of Section
7.01 may be waived only by all of the Holders of the Regular Certificates. Upon
any such waiver of a default or Event of Default, such default or Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon except to the
extent expressly so waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, undertakes
to perform such duties and only such duties as are specifically set forth in
this Agreement. During an Event of Default, 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. Any permissive
right of the Trustee enumerated in this Agreement shall not be construed as a
duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders.
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 misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement,
the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in
this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee and, in the
absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee that conform
to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer
or Responsible Officers of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the
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direction of Holders of Certificates entitled to at least 25%
of the Voting Rights 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.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any
resolution, Officers' Certificate, certificate of auditors or
any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other
paper or document reasonably believed by it to be genuine and
to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel, and any
Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with
such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this
Agreement or to institute, conduct or defend any litigation
hereunder or in relation hereto at the request, order or
direction of any of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby; nothing contained herein
shall, however, relieve the Trustee of the obligation, upon
the occurrence of an Event of Default (which has not been
cured or waived), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such
person's own affairs;
(iv) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(v) Prior to the occurrence of an Event of Default
hereunder and 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 to do so
by Holders of Certificates entitled to at least 25% of the
Voting Rights; provided, however, that if the payment within a
reasonable time to the
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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 such Certificateholders, the Trustee may require reasonable
indemnity against such expense, or liability from such
Certificateholders as a condition to taking any such action;
(vi) 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; and
(vii) The Trustee shall not be personally liable for any
loss resulting from the investment of funds held in either the
Collection Account at the direction of the Master Servicer
pursuant to Section 3.12.
(b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates (other
than the signature of the Trustee, the authentication of the Certificate
Registrar on the Certificates, the acknowledgments of the Trustee contained in
Article II and the representations and warranties of the Trustee in Section
8.12) shall be taken as the statements of the Depositor and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth in Section 8.12) or of the Certificates (other than the
signature of the Trustee and authentication of the Certificate Registrar on the
Certificates) or of any Mortgage Loan or related document. The Trustee shall not
be accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Accounts
by the Master Servicer, other than any funds held by or on behalf of the Trustee
in accordance with Section 3.10.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Certificates with the same rights it would
have if it were not Trustee.
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SECTION 8.05. Trustee's Fees and Expenses.
The Trustee shall withdraw from the Distribution Account on
each Distribution Date and pay to itself the Trustee Fee and, to the extent that
the funds therein are at anytime insufficient for such purpose, the Depositor
shall pay such fees. The Trustee shall also be entitled pursuant to Section 3.12
to receive from the Distribution Account, as additional compensation, interest
or other income earned on deposits therein. The Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Trust Fund
and held harmless against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates or relating
the performance of any of the Trustee's duties hereunder, other than any loss,
liability or expense (i) resulting from the Master Servicer's actions or
omissions in connection with this Agreement and the Mortgage Loans, (ii) that
constitutes a specific liability of the Trustee pursuant to Section 10.01(c), or
(iii) any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder or as a result of a
breach of the Trustee's obligations under Article X hereof. The Master Servicer
agrees to indemnify the Trustee from, and hold it harmless against, any loss,
liability or expense arising in respect of the Master Servicer's acts or
omissions in violation of its standard of care as set forth herein in connection
with this Agreement and the Mortgage Loans. Such indemnities shall survive the
termination or discharge of this Agreement and the resignation or removal of the
Trustee. Any payment hereunder made by the Depositor or the Master Servicer to
the Trustee shall be from the Depositor's or the Master Servicer's own funds,
without reimbursement from the Trust Fund therefor.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or
an association (other than the Depositor, the Seller, the Master Servicer or any
Affiliate of the foregoing) organized and doing business under the laws of any
state or the United States of America, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
conditions so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.07.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor, the
Master Servicer and to all Certificateholders. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by written
instrument, in duplicate, which instrument shall be
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delivered to the resigning Trustee and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders and the Master Servicer
by the Depositor. 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 petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders and the Master Servicer by the Depositor.
The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders and the Master Servicer by the
Depositor.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and related documents and statements, as well as all moneys, held
by it hereunder (other than any Mortgage Files at the time held by a Custodian,
which shall become the agent of any successor trustee hereunder), and the
Depositor and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for a more full and
certain vesting and confirming in the successor trustee of all such rights,
powers, duties and obligations.
No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06.
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Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor 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
Depositor.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to the
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation or association shall be eligible under the provisions
of Section 8.06, 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 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing the same may at the time be located,
the Master Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity, such title
to the Trust Fund, or any part thereof, and, subject to the other provisions of
this Section 8.10, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in case an Event of Default shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 8.06
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the Master Servicer hereunder), the Trustee
shall be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of title to
the Trust Fund or any portion thereof in any such jurisdiction) shall be
exercised and performed by such separate trustee or co-trustee at the direction
of the Trustee.
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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 VIII. 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.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Depositor and the
Master Servicer, appoint one or more Custodians to hold all or a portion of the
Mortgage Files as agent for the Trustee, by entering into a Custodial Agreement.
The appointment of any Custodian may at any time be terminated and a substitute
Custodian appointed therefor upon the reasonable request of the Master Servicer
to the Trustee, the consent to which shall not be unreasonably withheld. The
Depositor shall pay any and all fees and expenses of any Custodian to whose
appointment it consents as provided above. The Trustee initially appoints
Norwest Bank Minnesota, N.A. as Custodian, and the Depositor and the Master
Servicer consent to such appointment. Subject to this Article VIII, the Trustee
agrees to comply with the terms of each Custodial Agreement and to enforce the
terms and provisions thereof against the Custodian for the benefit of the
Certificateholders having an interest in any Mortgage File held by such
Custodian. Each Custodian shall be a depository institution or trust company
subject to supervision by federal or state authority, shall have combined
capital and surplus of at least $10,000,000 and shall be qualified to do
business in the jurisdiction in which it holds any Mortgage File. Each Custodial
Agreement may be amended only as provided in Section 10.01.
SECTION 8.12. Appointment of Office or Agency.
The Trustee will appoint an office or agency in the City of
New York where the Certificates may be surrendered for registration of transfer
or exchange, and presented for final distribution, and where notices and demands
to or upon the Trustee in respect of the Certificates and this Agreement may be
served.
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SECTION 8.13. Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants to the Master
Servicer and the Depositor, as of the Closing Date, that:
(i) The Trustee is a national banking association duly
organized, validly existing and in good standing under the laws of the
United States.
(ii) The execution and delivery of this Agreement by the
Trustee, and the performance and compliance with the terms of this
Agreement by the Trustee, will not violate the Trustee's charter or
bylaws or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or result in the
breach of, any material agreement or other instrument to which it is a
party or which is applicable to it or any of its assets.
(iii) The Trustee has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement,
has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the Master Servicer and the Depositor, constitutes a valid,
legal and binding obligation of the Trustee, enforceable against the
Trustee in accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, receivership, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally,
and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(v) The Trustee is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law,
any order or decree of any court or arbiter, or any order, regulation
or demand of any federal, state or local governmental or regulatory
authority, which violation, in the Trustee's good faith and reasonable
judgment, is likely to affect materially and adversely either the
ability of the Trustee to perform its obligations under this Agreement
or the financial condition of the Trustee.
(vi) No litigation is pending or, to the best of the Trustee's
knowledge, threatened against the Trustee which would prohibit the
Trustee from entering into this Agreement or, in the Trustee's good
faith reasonable judgment, is likely to materially and adversely affect
either the ability of the Trustee to perform its obligations under this
Agreement or the financial condition of the Trustee.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of
all Mortgage Loans
The respective obligations and responsibilities under this
Agreement of the Depositor, the Master Servicer and the Trustee (other than the
obligations of the Master Servicer to the Trustee pursuant to Section 8.05 and
of the Master Servicer to provide for and the Trustee to make payments to the
Certificateholders as hereinafter set forth) shall terminate upon payment to the
Certificateholders and the deposit of all amounts held by or on behalf of the
Trustee and required hereunder to be so paid or deposited on the Distribution
Date coinciding with or following the earlier to occur of (i) the purchase by
the Master Servicer of each related Mortgage Loan and each related REO Property
remaining in the Trust Fund at a price (the "Termination Price") equal to the
aggregate Purchase Price of all such Mortgage Loans, plus the appraised value of
each such REO Property, if any (such appraisal to be conducted by an appraiser
mutually agreed upon by the Master Servicer and the Trustee), minus the
aggregate amount of unreimbursed P&I Advances and Servicing Advances and unpaid
Servicing Fees remaining outstanding, and (ii) the final payment (or any advance
with respect thereto) on or other liquidation of the last related Mortgage Loan
or related REO Property remaining in the Trust Fund; provided that in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James, living on the date
hereof.
The Master Servicer shall make an election to purchase all of
the related Mortgage Loans and each related REO Property remaining in the Trust
Fund pursuant to clause (i) of the preceding paragraph by giving written notice
to the Trustee and the Depositor no later than the Determination Date in the
month immediately preceding the month in which such distribution will be made;
provided, however, that the Master Servicer may elect to purchase all of the
related Mortgage Loans and each related REO Property remaining in the Trust Fund
pursuant to clause (i) above only if the aggregate Stated Principal Balance of
the Mortgage Loans and each REO Property remaining in the Trust Fund is at the
time of such election less than 5% of the aggregate Stated Principal Balance of
the Original Mortgage Loans. For federal income tax purposes, the purchase by
the Master Servicer of all the Mortgage Loans and any REO Properties underlying
the Trust Fund is intended to facilitate a redemption of the related Regular
Interest pursuant to a "cleanup call" within the meaning of Treasury regulation
section 1.860G- 2(j).
Notice of any termination shall be given promptly by the
Trustee by letter to Certificateholders mailed (a) in the event such notice is
given in connection with the purchase by the Master Servicer of all the Mortgage
Loans and each REO Property underlying the Trust Fund, not earlier than the 15th
day and not later than the 25th day of the month next preceding the month in
which such distribution will be made or (b) otherwise during the month of such
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final distribution on or before the Determination Date in such month, in each
case specifying (i) the Distribution Date upon which the Trust Fund will
terminate and final payment of the Certificates will be made upon presentation
and surrender of the Certificates at the office of the Trustee therein
designated, (ii) the amount of any such final payment, (iii) that no interest
shall accrue in respect of the Certificates from and after the Interest Accrual
Period relating to the final Distribution Date therefor and (iv) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Certificates at the
office of the Trustee therein designated. The Trustee shall give such notice to
the Certificate Registrar at the time such notice is given to the
Certificateholders. In the event such notice is given in connection with the
Master Servicer's purchase of all of the Mortgage Loans and each REO Property
remaining in the Trust Fund, the Master Servicer shall deliver to the Trustee
for deposit in the Distribution Account not later than the last Business Day of
the month next preceding the month in which such distribution will be made an
amount in immediately available funds equal to the Termination Price. Upon
certification to the Trustee by a Servicing Officer of the making of such final
deposit by the Master Servicer, the Trustee and any Custodian shall promptly
release to the Master Servicer the Mortgage Files for the remaining Mortgage
Loans purchased thereby, and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.
Upon presentation of the Certificates on the final
Distribution Date, the Trustee shall distribute to each such Certificateholder
so presenting and surrendering its Certificates the amount otherwise
distributable on such Distribution Date in accordance with Section 4.01 in
respect of the Certificates so presented and surrendered. Any funds not
distributed to any Holder or Holders of Certificates being retired on such
Distribution Date because of the failure of such Holder or Holders to tender
their Certificates shall, on such date, be set aside and held in trust and
credited to the account of the appropriate non-tendering Holder or Holders. If
any Certificates as to which notice has been given pursuant to this Section 9.01
shall not have been surrendered for cancellation within six months after the
time specified in such notice, the Trustee shall mail a second notice to the
remaining non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trustee shall, directly or through an
agent, contact the remaining non-tendering Certificateholders concerning
surrender of their Certificates in the manner reasonably specified to the
Trustee by the Master Servicer in writing. The costs and expenses of maintaining
the funds in trust and of contacting such Certificateholders shall be paid to
the Trustee out of the assets remaining in the trust funds. If within two years
after the second notice any such Certificates shall not have been surrendered
for cancellation, the Trustee shall pay to the Master Servicer all amounts
distributable to the Holders thereof and the Master Servicer shall thereafter
hold such amounts for the benefit of such Holders. No interest shall accrue or
be payable to any Certificateholder on any amount held in trust or by the Master
Servicer as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section 9.01.
Immediately following the deposit of funds in trust hereunder
in respect of the last remaining Certificate, the Trust Fund shall terminate.
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SECTION 9.02. Additional Termination Requirements.
(a) In the event that the Master Servicer purchases all the
Mortgage Loans and each REO Property remaining in the Trust Fund pursuant to
Section 9.01, the Trust Fund shall be terminated in accordance with the
following additional requirements:
(i) The Trustee shall specify the first day in the
90-day liquidation period in a statement attached to the Trust
Fund's final Tax Return pursuant to Treasury regulation
Section 1.860F-1 and shall satisfy all requirements of a
qualified liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Opinion of Counsel
obtained at the expense of the Master Servicer;
(ii) During such 90-day liquidation period, and at or
prior to the time of making of the final payment on the
Certificates, the Trustee shall sell all of the assets of the
Trust Fund to the Master Servicer for cash; and
(iii) At the time of the making of the final payment on
the Certificates, the Trustee shall distribute or credit, or
cause to be distributed or credited, to the Holders of the
Class R Certificates all cash on hand in the Trust Fund (other
than cash retained to meet claims), and the Trust Fund shall
terminate at that time.
(b) The Master Servicer shall prepare and the Trustee shall
execute and deliver as necessary the documentation required in connection with
the adoption of a plan of complete liquidation of the Trust Fund pursuant to
this Section 9.02.
(c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to adopt a plan of complete liquidation of
the Trust Fund, which authorization shall be binding upon all successor
Certificateholders.
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ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall elect to treat the Trust Fund as a REMIC
under the Code and, if necessary, under applicable state law. Such election will
be made on Form 1066 or other appropriate federal tax or information return or
any necessary state return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. For purposes of such
election the Senior Certificates and Subordinate Certificates shall be
designated as the Regular Interests in the REMIC and the Residual Certificates
shall be designated as the Residual Interest in the REMIC. The Trustee shall not
permit the creation of any "interests" in the Trust Fund (within the meaning of
Section 860G of the Code) other than the interests represented by the
Certificates.
(b) The Closing Date is hereby designated as the "Startup Day"
of the REMIC within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any
right of reimbursement, any and all tax related expenses of the Trust Fund
(including, but not limited to, any professional fees or expenses related to
audits or any administrative or judicial proceedings with respect to the Trust
Fund that involve the Internal Revenue Service or state tax authorities), other
than the expense of obtaining any tax related Opinion of Counsel and other than
taxes, except as specified herein. The Trustee, as agent for the Trust Fund's
tax matters person, shall (i) act on behalf of the Trust Fund in relation to any
tax matter or controversy involving the Trust Fund and (ii) represent the Trust
Fund in any administrative or judicial proceeding relating to an examination or
audit by any governmental taxing authority. The holder of the largest Percentage
Interest of the Residual Certificates during the taxable year in question shall
be designated, in the manner provided under Treasury regulations section
1.860F-4(d) and temporary Treasury regulation section 301.6231(a)(7)-1T, as the
tax matters person of the Trust Fund. By their acceptance thereof, the holders
of the largest Percentage Interest of the Residual Certificates hereby agrees to
irrevocably appoint the Trustee as their agent to perform all of the duties of
the tax matters person for the Trust Fund.
(d) The Trustee shall prepare, sign and file all of the Tax
Returns in respect of the Trust Fund. The expenses of preparing and filing such
returns shall be borne by the Trustee without any right of reimbursement
therefor. The Master Servicer shall provide on a timely basis to the Trustee or
its designee such information with respect to the assets of the Trust Fund as is
in its possession and reasonably required by the Trustee to enable it to perform
its obligations under this Article.
(e) The Trustee shall perform on behalf of the Trust Fund all
reporting and other tax compliance duties that are the responsibility of the
Trust Fund under the Code, the REMIC Provisions or other compliance guidance
issued by the Internal Revenue Service or any
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state or local taxing authority. Among its other duties, as required by the
Code, the REMIC Provisions or other such compliance guidance, the Trustee shall
provide (i) to any Transferor of a Residual Certificate such information as is
necessary for the application of any tax relating to the transfer of a Residual
Certificate to any Person who is not a Permitted Transferee, (ii) to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service on form 8811 (or its
successor) the name, title, address and telephone number of the person who will
serve as the representative of the Trust Fund. The Master Servicer shall provide
on a timely basis to the Trustee such information with respect to the assets of
the Trust Fund, including, without limitation, the Mortgage Loans serviced by
it, as is in its possession and reasonably requested by the Trustee to enable it
to perform its obligations under this subsection. In addition, the Depositor
shall provide or cause to be provided to the Trustee, within ten (10) days after
the Closing Date, all information or data that the Trustee reasonably determines
to be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.
(f) The Trustee shall take such action and shall cause the
Trust Fund to take such action as shall be necessary to create or maintain the
status of the Trust Fund as a REMIC under the REMIC Provisions (and the Master
Servicer shall assist it, to the extent reasonably requested by it). The Trustee
shall not take any action, cause the Trust Fund to take any action or fail to
take (or fail to cause to be taken) any action that, under the REMIC Provisions,
if taken or not taken, as the case may be, could (i) endanger the status of the
Trust Fund as a REMIC or (ii) result in the imposition of a tax upon the Trust
Fund (including but not limited to the tax on prohibited transactions as defined
in Section 860F(a)(2) of the Code and the tax on contributions to the Trust Fund
set forth in Section 860G(d) of the Code) (either such event, an "Adverse REMIC
Event") unless the Trustee has received an Opinion of Counsel (at the expense of
the party seeking to take such action) to the effect that the contemplated
action will not, with respect to the REMIC created hereunder, endanger such
status or result in the imposition of such a tax, nor shall the Master Servicer
take or fail to take any action (whether or not authorized hereunder) as to
which the Trustee has advised it in writing that it has received an Opinion of
Counsel to the effect that an Adverse REMIC Event could occur with respect to
such action. In addition, prior to taking any action with respect to the Trust
Fund or the assets therein, or causing the Trust Fund to take any action, which
is not expressly permitted under the terms of this Agreement, the Master
Servicer will consult with the Trustee or its designee, in writing, with respect
to whether such action could cause an Adverse REMIC Event to occur with respect
to the Trust Fund, and the Master Servicer shall not take any such action or
cause the Trust Fund to take any such action as to which the Trustee has advised
it in writing that an Adverse REMIC Event could occur. The Trustee may consult
with counsel to make such written advice, and the cost of same shall be borne by
the party seeking to take the action not permitted by this Agreement. At all
times as may be required by the Code, the Trustee will ensure that substantially
all of the assets of the Trust Fund created hereunder will consist of "qualified
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code.
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(g) In the event that any tax is imposed on "prohibited
transactions" of the Trust Fund created hereunder as defined in Section
860F(a)(2) of the Code, on the "net income from foreclosure property" of the
Trust Fund as defined in Section 860G(c) of the Code, on any contributions to
the Trust Fund after the Startup Day pursuant to Section 860G(d) of the Code, or
any other tax is imposed by the Code or any applicable provisions of state or
local tax laws, such tax shall be charged (i) to the Trustee pursuant to Section
10.03 hereof, if such tax arises out of or results from a breach by the Trustee
of any of its obligations under this Article X, (ii) to the Master Servicer
pursuant to Section 10.03 hereof, if such tax arises out of or results from a
breach by the Master Servicer of any of its obligations under Article III or
this Article X, or otherwise (iii) against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing
April 15, 1997, the Trustee shall deliver to the Master Servicer and the Rating
Agencies a Certificate from a Responsible Officer of the Trustee stating the
Trustee's compliance with this Article X (after giving effect to any applicable
extensions of time granted by any applicable state or federal taxing authority).
(i) The Trustee and, to the extent that records are maintained
by the Master Servicer in the normal course of its business, the Master Servicer
shall, for federal income tax purposes, maintain books and records with respect
to the Trust Fund on a calendar year and on an accrual basis.
(j) Following the Startup Day, the Trustee shall not accept
any contributions of assets to the Trust Fund other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the Trust Fund will not cause the Trust Fund to fail
to qualify as a REMIC at any time that any Certificates are outstanding or
subject the Trust Fund to any tax under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor the Master Servicer shall enter
into any arrangement by which the Trust Fund will receive a fee or other
compensation for services nor permit the Trust Fund to receive any income from
assets other than "qualified mortgages" as defined in Section 860G(a)(3) of the
Code or "permitted investments" as defined in Section 860G(a)(5) of the Code.
SECTION 10.02. Prohibited Transactions and Activities.
None of the Depositor, the Master Servicer or the Trustee
shall sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of the Trust Fund pursuant to Article IX of this Agreement, (iv) a
substitution pursuant to Article II of this Agreement or (v) a purchase of
Mortgage Loans pursuant to Article
<PAGE>
-116-
II or III of this Agreement), nor acquire any assets for the Trust Fund (other
than REO Property acquired in respect of a defaulted Mortgage Loan), nor sell or
dispose of any investments in the Collection Account or the Distribution Account
for gain, nor accept any contributions to the Trust Fund after the Closing Date
(other than a Qualified Substitute Mortgage Loan delivered in accordance with
Section 2.03), unless it has received an Opinion of Counsel (at the expense of
the party seeking to cause such sale, disposition, substitution, acquisition or
contribution) that such sale, disposition, substitution, acquisition or
contribution will not (a) affect adversely the status of the Trust Fund as a
REMIC or (b) cause the Trust Fund to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
SECTION 10.03. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Depositor and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor or the Master Servicer, as a result of a breach of the
Trustee's covenants set forth in this Article X.
(b) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor and the Trustee for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of a breach of the Master
Servicer's covenants set forth in Article III or this Article X.
(c) These indemnity provisions shall survive the termination
of this Agreement and shall survive until the statute of limitations has run on
any causes of actions which arise from one of these reasons and until all suits
filed as a result thereof have been finally concluded.
<PAGE>
-117-
ARTICLE XI
SPECIAL FORECLOSURE PROCEDURES
SECTION 11.01. General.
The terms and provisions of a Special Servicing and Collateral
Fund Agreement relating to the Class B-6 Certificates substantially in the form
attached hereto as Exhibit I shall become operative only upon the execution and
delivery of such an agreement in such form by the Master Servicer and a
Purchaser (as defined therein) that acquires a majority in Percentage Interest
in the Class B-6 Certificates, with notice to the Trustee of such agreement by
such parties.
<PAGE>
-118-
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Amendment.
This Agreement or any Custodial Agreement may be amended from
time to time by the Depositor, the Master Servicer and the Trustee without the
consent of any of the Certificateholders, (i) to cure any ambiguity, (ii) to
correct, modify or supplement any provisions herein or in any Custodial
Agreement, or (iii) to make any other provisions with respect to matters or
questions arising under this Agreement or in any Custodial Agreement which shall
not be inconsistent with the provisions of this Agreement or such Custodial
Agreement, provided 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 Certificateholder.
This Agreement or any Custodial Agreement may also be amended
from time to time by the Depositor, the Master Servicer and the Trustee with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or any Custodial Agreement
or of modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) 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, (ii) adversely affect in any material respect the interests
of the Holders of any Class of Certificates in a manner other than as described
in (i), without the consent of the Holders of Certificates of such Class
evidencing at least 66% of the Voting Rights allocated to such Class, or (iii)
modify the consents required by the immediately preceding clauses (i) and (ii)
without the consent of the Holders of all Certificates then outstanding.
Notwithstanding any other provision of this Agreement, for purposes of the
giving or withholding of consents pursuant to this Section 12.01, Certificates
registered in the name of the Depositor or the Master Servicer or any Affiliate
thereof shall be entitled to Voting Rights with respect to matters affecting
such Certificates.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment will
not result in the imposition of any tax on the Trust Fund pursuant to the REMIC
Provisions or cause the Trust Fund to fail to qualify as a REMIC at any time
that any Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.
It shall not be necessary for the consent of
Certificateholders under this Section 12.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if
<PAGE>
-119-
such consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable regulations as the
Trustee may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to
this Section 12.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee.
SECTION 12.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer and at the expense of the Certificateholders,
but only upon direction of the Trustee accompanied by an Opinion of Counsel to
the effect that such recordation materially and beneficially affects the
interests of the Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 12.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates entitled to at least 25% of the Voting Rights shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as
<PAGE>
-120-
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 15 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding. It is understood and intended,
and expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatsoever by virtue of any provision of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of such Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section, each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
SECTION 12.04. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
SECTION 12.05. Notices.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified herein, to (a) in
the case of the Depositor, Seven World Trade Center, New York, New York 10048,
Attention: Mortgage Finance Group (facsimile number (212) 783-3895), or such
other address or facsimile number as may hereafter be furnished to the Master
Servicer and the Trustee in writing by the Depositor, (b) in the case of
Norwest, 405 S.W. 5th Street, Des Moines, Iowa 50309, Attention: General Counsel
(facsimile number (515) 221-5192)) or such other address or facsimile number as
hereafter may be furnished to the Trustee and the Depositor in writing by the
Master Servicer and (c) in the case of the Trustee, The Chase Manhattan Bank,
N.A., 4 Chase Metrotech Center, 3rd Floor, Brooklyn, New York 11245, Attention:
Mr. Tom Provenzano, Corporate Trust Department (facsimile number (718)
946-3905), or such other address or facsimile number as may hereafter be
furnished to the Master Servicer and the Depositor in writing by the Trustee.
Any notice required or permitted to be given to a Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given when mailed, whether or not the Certificateholder receives such notice. A
copy of any notice required to be delivered by facsimile hereunder also shall be
mailed to the appropriate party in the manner set forth above.
<PAGE>
-121-
SECTION 12.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 12.07. Notice to Rating Agencies.
The Trustee shall use its best efforts promptly to provide
notice to the Rating Agencies with respect to each of the following of which it
has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not
been cured or waived;
3. The resignation or termination of the Master Servicer
or the Trustee;
4. The repurchase or substitution of Mortgage Loans
pursuant to or as contemplated by Section 2.03;
5. The final payment to the Holders of any Class of
Certificates;
6. Any change in the location of either of the
Collection Account or the Distribution Account; and
7. Any event that would result in the inability of the
Trustee to make advances regarding delinquent
mortgage loans.
In addition, the Trustee shall promptly furnish to the Rating
Agencies copies of each report to Certificateholders described in Section 4.02
and the Master Servicer shall promptly furnish to the Rating Agencies copies of
the following:
1. Each annual statement as to compliance described in
Section 3.20; and
2. Each annual independent public accountants' servicing
report described in Section 3.21.
Any such notice pursuant to this Section 12.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Standard & Poor's Ratings Services, 25 Broadway,
<PAGE>
-122-
New York, New York 10004, and Fitch Investors Service, L.P. One State Street
Plaza, New York, New York 10004, or such other addresses as the Rating Agencies
may designate in writing to the parties hereto.
SECTION 12.08. Article and Section References.
All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Master Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized, in each case as of the day and year first above
written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.,
as Depositor
By: /s/ Susan S. Woodbury
----------------------------
Name: Susan S. Woodbury
Title: Vice President
NORWEST MORTGAGE, INC.
as Master Servicer
By: /s/ Trisha Ruseski
----------------------------
Name: Trisha Ruseski
Title: Trader
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By: /s/ Thomas J. Provenzano
----------------------------
Name: Thomas J. Provenzano
Title: Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the 23rd day of May, 1996 before me, a notary public in and
for said State, personally appeared Susan S. Woodbury, known to me to be a Vice
President of Salomon Brothers Mortgage Securities VII, Inc., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
By: /s/ Clark Huang
--------------------------
Clark Huang
Notary Public, State of New York
No. 02HU5044168
Qualified in New York County
Commission Expires May 22, 1997
[Notarial Seal]
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the 22nd day of May, 1996 before me, a notary public in and
for said State, personally appeared Trisha Ruseski, known to me to be a Trader
of Norwest Mortgage, Inc., one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
By: /s/ Sylvia L. Fisher
--------------------
Sylvia L. Fisher
Notary Public
My Commission Expires 08-03-96
[Notarial Seal]
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF )
On the ____ day of May, 1996 before me, a notary public in and
for said State, personally appeared Thomas J. Provenzano, known to me to be a
_________________________ of The Chase Manhattan Bank, N.A., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
By: /s/ Carlos R. Luciano
--------------------------
Carlos R. Luciano
Notary Public, State of New York
No. 41-4765897
Qualified in Queens County
Commission Expires April 39, 1998
[Notarial Seal]
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1996-2, Class A-1
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class A-1 Certificates as of the
Issue Date: $20,000,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-1
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-1 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class A-1 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class A-1 Certificates, or otherwise by check mailed by
first class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register. Notwithstanding the above, the
2
<PAGE>
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon the presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
3
<PAGE>
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust)(Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _____________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
________________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
_______________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ,------------------------------------------------
for the account of ------------------------, account number ------------, or, if
mailed by check, to -------------------------------------. Applicable statements
should be mailed to------------------------------------------------------------.
This information is provided by---------------------------------------,
the assignee named above, or-------------------------------------, as its agent.
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1996-2, Class A-2
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class A-2 Certificates as of the
Issue Date: $14,191,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY,
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
1
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-2
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-2 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class A-2 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class A-2 Certificates, or otherwise by check mailed by
first class mail to the address
2
<PAGE>
of the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon the presentation and surrender of this Certificate at
the office or agency appointed by the Trustee for that purpose as provided in
the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
3
<PAGE>
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
-------------------------------------
Signature by or on behalf of assignor
-------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of ______________________, account number ______________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to____________________________________________________________.
This information is provided by _____________________________________,
the assignee named above, or _______________________________, as its agent.
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
Series 1996-2, Class A-3
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class A-3 Certificates as of the
Issue Date: $33,588,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-3
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-3 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-3 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class A-3 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance of the Class A-3 Certificates, or otherwise by check mailed by
first class mail to the address
2
<PAGE>
of the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon the presentation and surrender of this Certificate at
the office or agency appointed by the Trustee for that purpose as provided in
the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
3
<PAGE>
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
4
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-3 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _____________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
----------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _____________________, account number _______________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or __________________________, as its agent.
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $465 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 7.69% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.42 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
Series 1996-2, Class A-4
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class A-4 Certificates as of the
Issue Date: $12,215,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
1
<PAGE>
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-4
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-4 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-4 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class A-4 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class A-4 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-4 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _________________________, account number ___________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or _________________________________, as its agent.
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $599 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 7.95% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.43 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
Series 1996-2, Class A-5
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class A-5 Certificates as of the
Issue Date: $8,679,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
1
<PAGE>
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-5
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-5 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-5 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class A-5 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class A-5 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-5 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _________________________, account number ___________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ________________________________, as its agent.
<PAGE>
EXHIBIT A-6
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $1,112 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 8.02% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.43 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
Series 1996-2, Class A-6
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class A-6 Certificates as of the
Issue Date: $36,098,800.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
1
<PAGE>
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-6
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-6 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-6 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class A-6 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class A-6 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-6 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of ______________________, account number ______________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ________________________, as its agent.
<PAGE>
EXHIBIT A-7
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $949 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 7.97% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.43 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
Series 1996-2, Class A-7
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class A-7 Certificates as of the
Issue Date: $14,970,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
1
<PAGE>
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class A-7
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-7 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class A-7 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class A-7 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class A-7 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-7 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
-------------------------------------
Signature by or on behalf of assignor
-------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of ___________________, account number _________________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to __________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ____________________________, as its agent.
<PAGE>
EXHIBIT A-8
FORM OF CLASS XS CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $865 OF OID PER $100,000 OF INITIAL NOTIONAL AMOUNT, THE YIELD TO
MATURITY IS 15.00% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $0.71 PER $100,000 OF INITIAL NOTIONAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT
THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT
ASSUMPTION OR AT ANY OTHER RATE.
Series 1996-2, Class XS
Pass-Through Rate: approximately 0.2259% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Notional Amount of Class XS Certificates as of the Issue Date:
$149,700,153.14
Notional Amount: $149,700,153.14
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
1
<PAGE>
Issue Date: May 23, 1996
CUSIP:
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the Notional Amount of this
Certificate by the aggregate Notional Amount of the Class XS Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class XS Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), the Master
Servicer and the Trustee, a summary of certain of the pertinent provisions of
which is set forth hereafter. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class XS Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class XS Certificates, the
aggregate initial Notional Amount of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Notional Amount of the
Class XS Certificates, or otherwise by check mailed by first class mail to the
address of the Person
3
<PAGE>
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon the presentation and surrender of this Certificate at
the office or agency appointed by the Trustee for that purpose as provided in
the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Notional Amount of the Class of Certificates specified on the face
hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
4
<PAGE>
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the purchase by the party designated in the Agreement at a price
determined as provided in the Agreement from the Trust Fund of all the Mortgage
Loans and each REO Property remaining therein, and (ii) the final payment (or
any advance with respect thereto) on or other liquidation of the last Mortgage
Loan or REO Property remaining in the Trust Fund. The Agreement permits, but
does not require, the party designated in the Agreement to purchase from the
Trust Fund all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan remaining therein at a price determined as provided in the
Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
5% of the aggregate Stated Principal Balance of the Mortgage Loans at the
Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class XS Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _________________, account number ___________________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or _______________________, as its agent.
<PAGE>
EXHIBIT A-9
FORM OF CLASS PO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $433 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 8.04% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.28 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
Series 1996-2, Class PO
Pass-Through Rate: 0% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class PO Certificates as of the Issue
Date: $1,724,199.09
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
1
<PAGE>
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class PO
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class PO Certificates in the Trust Fund created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class PO Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class PO Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class PO Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class PO Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_______________________________________________________________________________.
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of ___________________, account number _________________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ______________________, as its agent.
<PAGE>
EXHIBIT A-10
FORM OF CLASS B-1 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $953 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 7.94% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.43 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES AND THE
CLASS R CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 1996-2, Class B-1
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
1
<PAGE>
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class B-1 Certificates as of the
Issue Date: $2,994,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class B-1
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class B-1 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-1 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class B-1 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class B-1 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of this Certificate or any interest herein shall
be made to (i) 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 the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan") or (ii)
any Person who is directly or indirectly purchasing this Certificate or interest
herein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the Trustee and the Certificate Registrar are provided with a
certification of facts or an Opinion of Counsel that establishes to the
satisfaction of each that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or cause any of the Trustee,
the Certificate Registrar or the Master Servicer to be deemed a fiduciary of
such Plan or result in the imposition of an excise tax under Section 4975 of the
Code. In the absence of its having received the certification of facts or
Opinion of Counsel contemplated by the preceding sentence, the Trustee and the
Certificate Registrar shall require the prospective transferee of this
Certificate to certify either (a) it is not a Plan, (b) that it is neither (i) a
Plan nor (ii) a Person who is directly or indirectly purchasing this Certificate
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan
(including any insurance company using funds in its general or separate accounts
that may constitute "plan assets") or (c) that (i) it is an insurance company
and (ii) all of the funds to be used by it to purchase the Certificates to be
purchased by it are held in its general account and virtually all of the assets
in such general account are from the receipt of premiums for the purchase of
annuity contracts that provide in part (A) for a benefit that is guaranteed
throughout the term of the contract, and (B) for a benefit that is guaranteed
for successive periods of at least twelve months; however, benefits from
premiums received during any twelve month period may be guaranteed only to the
end of such twelve month period, and thereafter for periods of twelve months or
more.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided
5
<PAGE>
in the Agreement from the Trust Fund of all the Mortgage Loans and all property
acquired in respect of such Mortgage Loans remaining therein. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from the Trust Fund all the Mortgage Loans and all property acquired in respect
of any Mortgage Loan remaining therein at a price determined as provided in the
Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
5% of the aggregate Stated Principal Balance of the Mortgage Loans at the
Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-1 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _______________________, account number _____________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ___________________________, as its agent.
<PAGE>
EXHIBIT A-11
FORM OF CLASS B-2 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $968 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 8.15% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.43 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
B-1 CERTIFICATES AND THE CLASS R CERTIFICATES TO THE EXTENT DESCRIBED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 1996-2, Class B-2
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
1
<PAGE>
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class B-2 Certificates as of the
Issue Date: $2,245,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class B-2
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class B-2 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-2 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class B-2 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class B-2 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of this Certificate or any interest herein shall
be made to (i) 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 the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan") or (ii)
any Person who is directly or indirectly purchasing this Certificate or interest
herein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the Trustee and the Certificate Registrar are provided with a
certification of facts or an Opinion of Counsel that establishes to the
satisfaction of each that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or cause any of the Trustee,
the Certificate Registrar or the Master Servicer to be deemed a fiduciary of
such Plan or result in the imposition of an excise tax under Section 4975 of the
Code. In the absence of its having received the certification of facts or
Opinion of Counsel contemplated by the preceding sentence, the Trustee and the
Certificate Registrar shall require the prospective transferee of this
Certificate to certify either (a) it is not a Plan, (b) that it is neither (i) a
Plan nor (ii) a Person who is directly or indirectly purchasing this Certificate
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan
(including any insurance company using funds in its general or separate accounts
that may constitute "plan assets") or (c) that (i) it is an insurance company
and (ii) all of the funds to be used by it to purchase the Certificates to be
purchased by it are held in its general account and virtually all of the assets
in such general account are from the receipt of premiums for the purchase of
annuity contracts that provide in part (A) for a benefit that is guaranteed
throughout the term of the contract, and (B) for a benefit that is guaranteed
for successive periods of at least twelve months; however, benefits from
premiums received during any twelve month period may be guaranteed only to the
end of such twelve month period, and thereafter for periods of twelve months or
more.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided
5
<PAGE>
in the Agreement from the Trust Fund of all the Mortgage Loans and all property
acquired in respect of such Mortgage Loans remaining therein. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from the Trust Fund all the Mortgage Loans and all property acquired in respect
of any Mortgage Loan remaining therein at a price determined as provided in the
Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
5% of the aggregate Stated Principal Balance of the Mortgage Loans at the
Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-2 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _______________________, account number _____________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ___________________________, as its agent.
<PAGE>
EXHIBIT A-12
FORM OF CLASS B-3 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $1,015 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 8.86% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.44 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
B-1 CERTIFICATES, THE CLASS B-2 CERTIFICATES AND THE CLASS R
CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 1996-2, Class B-3
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
<PAGE>
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class B-3 Certificates as of the
Issue Date: $1,422,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class B-3
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class B-3 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-3 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class B-3 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class B-3 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of this Certificate or any interest herein shall
be made to (i) 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 the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan") or (ii)
any Person who is directly or indirectly purchasing this Certificate or interest
herein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the Trustee and the Certificate Registrar are provided with a
certification of facts or an Opinion of Counsel that establishes to the
satisfaction of each that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or cause any of the Trustee,
the Certificate Registrar or the Master Servicer to be deemed a fiduciary of
such Plan or result in the imposition of an excise tax under Section 4975 of the
Code. In the absence of its having received the certification of facts or
Opinion of Counsel contemplated by the preceding sentence, the Trustee and the
Certificate Registrar shall require the prospective transferee of this
Certificate to certify either (a) it is not a Plan, (b) that it is neither (i) a
Plan nor (ii) a Person who is directly or indirectly purchasing this Certificate
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan
(including any insurance company using funds in its general or separate accounts
that may constitute "plan assets") or (c) that (i) it is an insurance company
and (ii) all of the funds to be used by it to purchase the Certificates to be
purchased by it are held in its general account and virtually all of the assets
in such general account are from the receipt of premiums for the purchase of
annuity contracts that provide in part (A) for a benefit that is guaranteed
throughout the term of the contract, and (B) for a benefit that is guaranteed
for successive periods of at least twelve months; however, benefits from
premiums received during any twelve month period may be guaranteed only to the
end of such twelve month period, and thereafter for periods of twelve months or
more.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided
5
<PAGE>
in the Agreement from the Trust Fund of all the Mortgage Loans and all property
acquired in respect of such Mortgage Loans remaining therein. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from the Trust Fund all the Mortgage Loans and all property acquired in respect
of any Mortgage Loan remaining therein at a price determined as provided in the
Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
5% of the aggregate Stated Principal Balance of the Mortgage Loans at the
Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-3 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _______________________, account number _____________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ___________________________, as its agent.
<PAGE>
EXHIBIT A-13
FORM OF CLASS B-4 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $1,180 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 11.81% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.48 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
B-1 CERTIFICATES, THE CLASS B-2 CERTIFICATES, THE CLASS B-3
CERTIFICATES AND THE CLASS R CERTIFICATES TO THE EXTENT DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE AGREEMENT.
1
<PAGE>
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 1996-2, Class B-4
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class B-4 Certificates as of the
Issue Date: $673,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class B-4
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class B-4 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-4 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class B-4 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class B-4 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit F-1,
and (ii) in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee or the Master Servicer in their respective capacities as such), together
with copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee upon
which such Opinion of Counsel is based. None of the Depositor, the Certificate
Registrar or the Trustee is obligated to register or qualify the Class of
Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Certificate
Registrar and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate or any interest herein shall
be made to (i) 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 the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan") or (ii)
any Person who is directly or indirectly purchasing this Certificate or interest
herein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the Trustee and the Certificate Registrar are provided with a
certification of facts or an Opinion of Counsel that establishes to the
satisfaction of each that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or cause any of the Trustee,
the Certificate Registrar or the Master Servicer to be deemed a fiduciary of
such Plan or result in the imposition of an excise tax under Section 4975 of the
Code. In the absence of its having received the certification of facts or
Opinion of Counsel contemplated by the preceding sentence, the Trustee and the
Certificate Registrar shall require the prospective transferee of this
Certificate to certify either (a) it is not a Plan, (b) that it is neither (i) a
Plan nor (ii) a Person who is directly or indirectly purchasing this Certificate
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan
(including any insurance company using funds in its general or separate accounts
that may constitute "plan assets") or (c) that (i) it is an insurance company
and (ii) all of the funds to be used by it to purchase the Certificates to be
purchased by it are held in its general account and virtually all of the assets
in such general account are from the receipt of premiums for the purchase of
annuity
5
<PAGE>
contracts that provide in part (A) for a benefit that is guaranteed throughout
the term of the contract, and (B) for a benefit that is guaranteed for
successive periods of at least twelve months; however, benefits from premiums
received during any twelve month period may be guaranteed only to the end of
such twelve month period, and thereafter for periods of twelve months or more.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-4 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _______________________, account number _____________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ___________________________, as its agent.
<PAGE>
EXHIBIT A-14
FORM OF CLASS B-5 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $1,345 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 15.99% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.51 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
B-1 CERTIFICATES, THE CLASS B-2 CERTIFICATES, THE CLASS B-3
CERTIFICATES, THE CLASS B-4 CERTIFICATES AND THE CLASS R CERTIFICATES
TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE AGREEMENT.
1
<PAGE>
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 1996-2, Class B-5
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class B-5 Certificates as of the
Issue Date: $299,000.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class B-5
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class B-5 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-5 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class B-5 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class B-5 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit F-1,
and (ii) in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee or the Master Servicer in their respective capacities as such), together
with copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee upon
which such Opinion of Counsel is based. None of the Depositor, the Certificate
Registrar or the Trustee is obligated to register or qualify the Class of
Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Certificate
Registrar and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate or any interest herein shall
be made to (i) 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 the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan") or (ii)
any Person who is directly or indirectly purchasing this Certificate or interest
herein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the Trustee and the Certificate Registrar are provided with a
certification of facts or an Opinion of Counsel that establishes to the
satisfaction of each that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or cause any of the Trustee,
the Certificate Registrar or the Master Servicer to be deemed a fiduciary of
such Plan or result in the imposition of an excise tax under Section 4975 of the
Code. In the absence of its having received the certification of facts or
Opinion of Counsel contemplated by the preceding sentence, the Trustee and the
Certificate Registrar shall require the prospective transferee of this
Certificate to certify either (a) it is not a Plan, (b) that it is neither (i) a
Plan nor (ii) a Person who is directly or indirectly purchasing this Certificate
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan
(including any insurance company using funds in its general or separate accounts
that may constitute "plan assets") or (c) that (i) it is an insurance company
and (ii) all of the funds to be used by it to purchase the Certificates to be
purchased by it are held in its general account and virtually all of the assets
in such general account are from the receipt of premiums for the purchase of
annuity
5
<PAGE>
contracts that provide in part (A) for a benefit that is guaranteed throughout
the term of the contract, and (B) for a benefit that is guaranteed for
successive periods of at least twelve months; however, benefits from premiums
received during any twelve month period may be guaranteed only to the end of
such twelve month period, and thereafter for periods of twelve months or more.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-5 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _______________________, account number _____________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ___________________________, as its agent.
<PAGE>
EXHIBIT A-15
FORM OF CLASS B-6 CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID")
RULES TO THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS MAY
23, 1996. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 200% OF THE STANDARD PREPAYMENT ASSUMPTION, USED SOLELY
FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE
THAN $1,685 OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
THE YIELD TO MATURITY IS 38.05% AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $0.49 PER $1,000 OF INITIAL
CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO
REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS
B-1 CERTIFICATES, THE CLASS B-2 CERTIFICATES, THE CLASS B-3
CERTIFICATES, THE CLASS B-4 CERTIFICATES, THE CLASS B-5 CERTIFICATES
AND THE CLASS R CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT
TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE AGREEMENT.
1
<PAGE>
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
Series 1996-2, Class B-6
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class B-6 Certificates as of the
Issue Date: $601,054.05
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
CERTIFICATE.
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class B-6
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class B-6 Certificates in the Trust Fund created pursuant
to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), the Master Servicer and the Trustee, a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-6 Certificates on
such Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class B-6 Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class B-6 Certificates, or otherwise by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee and the Certificate Registrar shall
require receipt of (i) if such transfer is purportedly being made in reliance
upon Rule 144A under the 1933 Act, written certifications from the Holder of the
Certificate desiring to effect the transfer, and from such Holder's prospective
transferee, substantially in the forms attached to the Agreement as Exhibit F-1,
and (ii) in all other cases, an Opinion of Counsel satisfactory to it that such
transfer may be made without such registration or qualification (which Opinion
of Counsel shall not be an expense of the Trust Fund or of the Depositor, the
Trustee or the Master Servicer in their respective capacities as such), together
with copies of the written certification(s) of the Holder of the Certificate
desiring to effect the transfer and/or such Holder's prospective transferee upon
which such Opinion of Counsel is based. None of the Depositor, the Certificate
Registrar or the Trustee is obligated to register or qualify the Class of
Certificates specified on the face hereof under the 1933 Act or any other
securities law or to take any action not otherwise required under the Agreement
to permit the transfer of such Certificates without registration or
qualification. Any Holder desiring to effect a transfer of this Certificate
shall be required to indemnify the Trustee, the Depositor, the Certificate
Registrar and the Master Servicer against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of this Certificate or any interest herein shall
be made to (i) 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 the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan") or (ii)
any Person who is directly or indirectly purchasing this Certificate or interest
herein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the Trustee and the Certificate Registrar are provided with a
certification of facts or an Opinion of Counsel that establishes to the
satisfaction of each that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or cause any of the Trustee,
the Certificate Registrar or the Master Servicer to be deemed a fiduciary of
such Plan or result in the imposition of an excise tax under Section 4975 of the
Code. In the absence of its having received the certification of facts or
Opinion of Counsel contemplated by the preceding sentence, the Trustee and the
Certificate Registrar shall require the prospective transferee of this
Certificate to certify either (a) it is not a Plan, (b) that it is neither (i) a
Plan nor (ii) a Person who is directly or indirectly purchasing this Certificate
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan
(including any insurance company using funds in its general or separate accounts
that may constitute "plan assets") or (c) that (i) it is an insurance company
and (ii) all of the funds to be used by it to purchase the Certificates to be
purchased by it are held in its general account and virtually all of the assets
in such general account are from the receipt of premiums for the purchase of
annuity
5
<PAGE>
contracts that provide in part (A) for a benefit that is guaranteed throughout
the term of the contract, and (B) for a benefit that is guaranteed for
successive periods of at least twelve months; however, benefits from premiums
received during any twelve month period may be guaranteed only to the end of
such twelve month period, and thereafter for periods of twelve months or more.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-6 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _______________________, account number _____________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ___________________________, as its agent.
<PAGE>
EXHIBIT A-16
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON- UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE
TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY
POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER
THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT
FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION
IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3) SHALL
HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (4) AN
AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH
TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II)
SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE
1
<PAGE>
PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE
CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS
CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF
NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED
TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT
LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH
HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF
SECTION 5.02(D) OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN. ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION IS PROHIBITED
FROM ACQUIRING BENEFICIAL OWNERSHIP OF THIS CERTIFICATE.
Series 1996-2, Class R
Pass-Through Rate: approximately 7.50% per annum
Date of Pooling and Servicing Agreement and Cut-off Date: May 1, 1996
First Distribution Date: June 25, 1996
No.
Aggregate Certificate Principal Balance of Class R Certificates as of the Issue
Date: $100.00
Denomination: $
Master Servicer: Norwest Mortgage, Inc.
Trustee: The Chase Manhattan Bank, N.A.
Issue Date: May 23, 1996
CUSIP:
2
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional, one- to four-family, fixed-rate,
first lien mortgage loans (the "Mortgage Loans") formed and sold by
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., THE MASTER SERVICER,
THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
This certifies that ____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class R
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class R Certificates in the Trust Fund created pursuant to
a Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement), the
Master Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class R Certificates on such
Distribution Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto 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 and is the registered owner of Class R Certificates, the
aggregate initial Certificate Principal Balance of which is in excess of the
lesser of (i) $5,000,000 or (ii) two-thirds of the aggregate initial Certificate
Principal Balance
3
<PAGE>
of the Class R Certificates, or otherwise by check mailed by first class mail to
the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon the presentation and surrender
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates designated as Mortgage Pass-Through Certificates of the Series
specified on the face hereof (hereinafter called the "Certificates") and
representing a Percentage Interest in the Class of Certificates specified on the
face hereof equal to the denomination specified on the face hereof divided by
the aggregate Certificate Principal Balance of the Class of Certificates
specified on the face hereof.
The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to Holders
of the Certificates, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions and conditions
provided therein, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer and the Trustee and the rights
of the Holders of the Certificates under the Agreement at any time by the
Depositor, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and upon all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations set forth therein, Certificates are
4
<PAGE>
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
No transfer of this Certificate or any interest herein shall
be made to (i) 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 the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code (each, a "Plan") or (ii)
any Person who is directly or indirectly purchasing this Certificate or interest
herein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the Trustee and the Certificate Registrar are provided with a
certification of facts or an Opinion of Counsel that establishes to the
satisfaction of each that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or cause any of the Trustee,
the Certificate Registrar or the Master Servicer to be deemed a fiduciary of
such Plan or result in the imposition of an excise tax under Section 4975 of the
Code. In the absence of its having received the certification of facts or
Opinion of Counsel contemplated by the preceding sentence, the Trustee and the
Certificate Registrar shall require the prospective transferee of this
Certificate to certify either (a) it is not a Plan, (b) that it is neither (i) a
Plan nor (ii) a Person who is directly or indirectly purchasing this Certificate
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan
(including any insurance company using funds in its general or separate accounts
that may constitute "plan assets") or (c) that (i) it is an insurance company
and (ii) all of the funds to be used by it to purchase the Certificates to be
purchased by it are held in its general account and virtually all of the assets
in such general account are from the receipt of premiums for the purchase of
annuity contracts that provide in part (A) for a benefit that is guaranteed
throughout the term of the contract, and (B) for a benefit that is guaranteed
for successive periods of at least twelve months; however, benefits from
premiums received during any twelve month period may be guaranteed only to the
end of such twelve month period, and thereafter for periods of twelve months or
more.
Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R Certificates have been designated as a
residual interest in the Trust Fund, (B) it will include in its income a PRO
RATA share of the net income of the Trust Fund and that such income may be an
"excess inclusion," as defined in the Code, that, with certain exceptions,
cannot be offset by other losses or benefits from any tax exemption, and (C) it
expects to have the financial means to satisfy all of its tax obligations
including those relating to holding the Class R Certificates. Notwithstanding
the registration in the Certificate Register of any transfer, sale or other
disposition of this Certificate to a Disqualified Organization or an agent
(including a broker, nominee or middleman) of a Disqualified Organization, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Person shall not be deemed to be a Certificateholder for any purpose,
including, but not limited to, the receipt of distributions in respect of this
Certificate.
5
<PAGE>
The Holder of this Certificate, by its acceptance hereof, shall be
deemed to have consented to the provisions of Section 5.02 of the Agreement and
to any amendment of the Agreement deemed necessary by counsel of the Depositor
to ensure that the transfer of this Certificate to any Person other than a
Permitted Transferee or any other Person will not cause the Trust Fund to cease
to qualify as a REMIC or cause the imposition of a tax upon the REMIC.
No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the
Certificate Registrar and any agent of the Depositor, the Master Servicer, the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Trustee, the Certificate Registrar nor any
such agent shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment (or provision for payment) to the
Holders of the Certificates of all amounts held by or on behalf of the Trustee
and required to be paid to them pursuant to the Agreement following the earlier
of (i) the final payment (or any advance with respect thereto) on or other
liquidation of the last Mortgage Loan remaining in the Trust Fund, and (ii) the
purchase by the party designated in the Agreement at a price determined as
provided in the Agreement from the Trust Fund of all the Mortgage Loans and all
property acquired in respect of such Mortgage Loans remaining therein. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all the Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining therein at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Stated Principal Balance of the Mortgage Loans at the time of
purchase being less than 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: May 23, 1996
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By:__________________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, N.A.
as Certificate Registrar
By:__________________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - CUSTODIAN
-------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)
the Percentage Interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:__________________________
________________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________,
for the account of _______________________, account number _____________, or, if
mailed by check, to _____________________________________. Applicable statements
should be mailed to ___________________________________________________________.
This information is provided by ______________________________________,
the assignee named above, or ___________________________, as its agent.
<PAGE>
EXHIBIT B
INTENTIONALLY OMITTED
<PAGE>
EXHIBIT C-1
FORM OF TRUSTEE'S PRELIMINARY EXCEPTION REPORT
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven World Trade Center
New York, New York 10048
[Master Servicer]
___________________________
___________________________
Re: Pooling and Servicing Agreement, dated as of May 1, 1996,
among Salomon Brothers Mortgage Securities VII, Inc.,
Norwest Mortgage, Inc. and The Chase Manhattan Bank, N.A.,
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-2
-----------------------------------------------------------
Ladies and Gentlemen:
Attached is the Trustee's preliminary exceptions in accordance with
Section 2.02.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
THE CHASE MANHATTAN BANK, N.A.
By:________________________________________
Name:______________________________________
Title:_____________________________________
<PAGE>
EXHIBIT C-2
FORM OF TRUSTEE'S INTERIM CERTIFICATION
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven World Trade Center
New York, New York 10048
[Master Servicer]
____________________________
____________________________
Re: Pooling and Servicing Agreement, dated as of May 1, 1996,
among Salomon Brothers Mortgage Securities VII, Inc.,
Norwest Mortgage, Inc. and The Chase Manhattan Bank, N.A.,
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-2
------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-referenced Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that subject
to the exceptions noted on the attached report as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in the preliminary exception report as not
covered by this certification), it has reviewed the Mortgage File and determined
that (i) all documents constituting part of such Mortgage File (other than such
documents described in Section 2.01(v)) required to be delivered to it pursuant
to the Pooling and Servicing Agreement are in its possession, (ii) such
documents have been reviewed by it and appear regular on their face and relate
to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (i), (ii), (iii), (v), (vi), (viii), (ix) and (x) of the
definition of "Mortgage Loan Schedule" accurately reflects information set forth
in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan, or (iii)
<PAGE>
whether any Mortgage File included any of the documents specified in clause (v)
of Section 2.01 of the Pooling and Servicing Agreement.
THE CHASE MANHATTAN BANK, N.A.
By:________________________________________
Name:______________________________________
Title:_____________________________________
2
<PAGE>
EXHIBIT C-3
FORM OF TRUSTEE FINAL CERTIFICATION
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven World Trade Center
New York, New York 10048
[Master Servicer]
__________________________
__________________________
Re: Pooling and Servicing Agreement dated as of May 1, 1996,
among Salomon Brothers Mortgage Securities VII, Inc.,
Norwest Mortgage, Inc. and The Chase Manhattan Bank, N.A.,
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-2
-----------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto), it or a Custodian on its
behalf has received:
(i) the original recorded Mortgage, and the original recorded
power of attorney, if the Mortgage was executed pursuant to a power of
attorney, or a certified copy thereof in those instances where the
public recording office retains the original or where the original has
been lost; and
(ii) an original recorded Assignment of the Mortgage to the
Trustee together with the original recorded Assignment or Assignments
of the Mortgage showing a complete chain of assignment from the
originator, or a certified copy of such Assignments in those instances
where the public recording retains the original or where original has
been lost;
(iii) the original lender's title insurance policy; and
(iv) the original Primary Insurance Policy for each Mortgage Loan
indicated on the Mortgage Loan Schedule as having a Loan-to-Value Ratio
at origination in excess of 80%.
<PAGE>
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
THE CHASE MANHATTAN BANK, N.A.
By:________________________________________
Name:______________________________________
Title:_____________________________________
2
<PAGE>
EXHIBIT D
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
AGREEMENT, dated May 21, 1996, between Salomon Brothers
Mortgage Securities VII, Inc., a Delaware corporation (the "Purchaser"), and
Norwest Mortgage, Inc., a California corporation (the "Seller").
PRELIMINARY STATEMENT
The Seller intends to sell certain fixed rate conventional
residential mortgage loans (the "Mortgage Loans") to the Purchaser on the terms
and subject to the conditions set forth in this Agreement. The Purchaser intends
to deposit the Mortgage Loans into a mortgage pool comprising the trust fund.
The trust fund will be evidenced by a single series of mortgage pass-through
certificates designated as Series 1996-2 (the "Certificates"). The Certificates
will consist of fourteen classes of certificates. The Certificates will be
issued pursuant to a Pooling and Servicing Agreement, dated as of May 1, 1996
(the "Pooling and Servicing Agreement"), among the Purchaser, as depositor, The
Chase Manhattan Bank, N.A., as trustee (the "Trustee"), and the Seller, in its
capacity as Master Servicer. Capitalized terms used but not defined herein shall
have the meanings set forth in the Pooling and Servicing Agreement.
The parties hereto agree as follows:
SECTION 1. AGREEMENT TO PURCHASE. The Seller agrees to sell,
and the Purchaser agrees to purchase, on or before May 23, 1996 (the "Closing
Date"), the Mortgage Loans having an aggregate principal balance as of the close
of business on May 1, 1996 (the "Cut-off Date"), after giving effect to payments
due on or before the Cut-off Date, whether or not received, of approximately
$149,700,153 (plus or minus five percent (5%)), as evidenced by the actual
aggregate principal balance of the Mortgage Loans accepted by the Purchaser on
the Closing Date.
SECTION 2. MORTGAGE LOAN SCHEDULE. The Purchaser and the
Seller have agreed upon which of the mortgage loans owned by the Seller are to
be purchased by the Purchaser pursuant to this Agreement and the Seller will
prepare on or prior to the Closing Date a final schedule describing such
Mortgage Loans (the "Closing Schedule") setting forth all of the Mortgage Loans
to be purchased under this Agreement. The Closing Schedule will conform to the
requirements of the Purchaser as set forth in this Agreement and to the
definition of "Mortgage Loan Schedule" under the Pooling and Servicing
Agreement. The Closing Schedule shall be used as the Mortgage Loan Schedule
under the Pooling and Servicing Agreement.
SECTION 3. CONSIDERATION.
(i) In consideration for the Mortgage Loans to be purchased
hereunder, the Purchaser shall, as described in Section 8, pay to the Seller an
amount (the "Purchase Price") equal to 97.471% of the initial Certificate
Principal Balance of all of the Certificates plus accrued interest thereon from
the Cut-off Date up to, but not including, the Closing Date, as such sum is
reduced by the Prepayment Interest Shortfalls, if any, for the June 1996
Distribution
<PAGE>
-2-
Date to the extent allocable as a reduction in the Interest Distribution Amount
payable on the Certificates for such Distribution Date. The initial Certificate
Principal Balance of the Certificates is equal to the aggregate principal
balance as of the Cut-off Date of the Mortgage Loans listed on the Closing
Schedule, after application of scheduled payments of principal due on or before
the Cut-off Date, whether or not received.
(ii) The Purchaser or any assignee, transferee or designee of the
Purchaser shall be entitled to all scheduled payments of principal due after the
Cut-off Date, all other payments of principal due and collected after the
Cut-off Date, and all payments of interest on the Mortgage Loans allocable to
the period after the Cut-off Date. All scheduled payments of principal and
interest due on or before the Cut-off Date and collected after the Cut-off Date
shall belong to the Seller.
(iii) Pursuant to the Pooling and Servicing Agreement, the
Purchaser will assign all of its right, title and interest in and to the
Mortgage Loans, together with its rights under this Agreement, to the Trustee
for the benefit of the Certificateholders.
SECTION 4. TRANSFER OF THE MORTGAGE LOANS.
(i) POSSESSION OF MORTGAGE FILES. The Seller does hereby sell,
transfer, assign, set over and convey to the Purchaser, without recourse but
subject to the terms of this Agreement, all of its right, title and interest in,
to and under the Mortgage Loans. The contents of each Mortgage File not
delivered to the Purchaser or to any assignee, transferee or designee of the
Purchaser on or prior to the Closing Date are and shall be held in trust by the
Seller for the benefit of the Purchaser or any assignee, transferee or designee
of the Purchaser. Upon the sale of the Mortgage Loans, the ownership of each
Mortgage Note, the related Mortgage and the other contents of the related
Mortgage File is vested in the Purchaser and the ownership of all records and
documents with respect to the related Mortgage Loan prepared by or that come
into the possession of the Seller on or after the Closing Date shall immediately
vest in the Purchaser and shall be delivered immediately to the Purchaser or as
otherwise directed by the Purchaser. The Seller's records will accurately
reflect the sale of each Mortgage Loan to the Purchaser. The Seller shall
release its custody of the contents of any Mortgage File only in accordance with
written instructions from the Purchaser or any assignee, transferee or designee
of the Purchaser, except that where such release is required as incidental to
the Seller's servicing of the Mortgage Loans pursuant to the Pooling and
Servicing Agreement or is in connection with a repurchase of any such Mortgage
Loan pursuant to Section 7 hereof, such written instructions shall not be
required.
(ii) DELIVERY OF MORTGAGE LOAN DOCUMENTS. The Seller has, at
least five (5) Business Days prior to the Closing Date, delivered or caused to
be delivered to the Purchaser or any assignee, transferee or designee of the
Purchaser each of the following documents for each Mortgage Loan:
<PAGE>
-3-
(a) the original Mortgage Note, endorsed by the Seller in the
following form: "Pay to the order of The Chase Manhattan Bank, N.A., as
Trustee for the registered holders of Salomon Brothers Mortgage
Securities VII, Inc., Series 1996-2, without recourse", with all prior
and intervening endorsements showing a complete chain of endorsement
from the originator to the Seller;
(b) the original Mortgage with evidence of recording thereon,
and the original recorded power of attorney, if the Mortgage was
executed pursuant to a power of attorney, with evidence of recording
thereon or, if such Mortgage or power of attorney has been submitted
for recording but has not been returned from the applicable public
recording office or is not otherwise available, a copy of such Mortgage
or power of attorney, as the case may be, certified by the Seller to be
a true and complete copy of the original submitted for recording with
the recorded original to be delivered by the Seller to the Purchaser or
any assignee, transferee or designee of the Purchaser within 90 days of
the Closing Date;
(c) an original Assignment of Mortgage executed by the Seller in
the following form: "The Chase Manhattan Bank, N.A., as Trustee for the
registered holders of Salomon Brothers Mortgage Securities VII, Inc.,
Series 1996-2";
(d) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator to
the Seller or, if any such Assignment has been submitted for recording
but has not been returned from the applicable public recording office
or is not otherwise available, a copy of such Assignment certified by
the Seller to be a true and complete copy of the original submitted for
recording with the recorded original to be delivered by the Seller to
the Purchaser or any assignee, transferee or designee of the Purchaser
within 90 days of the Closing Date;
(e) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any;
(f) the original lender's title insurance policy, or with
respect to Mortgaged Properties located in the State of Iowa a
attorney's title opinion, together with all endorsements or riders
which were issued with or subsequent to the issuance of such policy,
insuring the priority of the Mortgage as a first lien on the Mortgaged
Property represented therein as a fee interest vested in the mortgagor,
or in the event such original title policy is unavailable, a written
commitment or uniform binder or preliminary report of title issued by
the title insurance or escrow company with the original to be delivered
by the Seller to the Purchaser or any assignee, transferee or designee
of the Purchaser within 90 days of the Closing Date; and
(g) if such Mortgage Loan has a Loan-to-Value Ratio at
origination in excess of 80% (as shown in the Closing Schedule), the
original Primary Insurance Policy, or
<PAGE>
-4-
in the event such original Primary Insurance Policy is unavailable, a
written commitment from the mortgage insurer to issue such policy with
the original to be delivered by the Seller to the Purchaser or any
assignee, transferee or designee of the Purchaser by the Seller within
90 days of the Closing Date.
The Seller shall be responsible for the initial recording each
of the above documents requiring recordation. Notwithstanding anything to the
contrary contained in this Section 4, in those instances where the public
recording office has not yet returned or retains the original Mortgage, power of
attorney or Assignment after it has been recorded, the obligations of the Seller
hereunder shall be deemed to have been satisfied upon delivery not later than 90
days after the Closing Date by the Seller to the Purchaser or any assignee,
transferee or designee of the Purchaser of a copy of such Mortgage, power of
attorney or Assignment certified by the public recording office to be a true and
complete copy of the recorded original thereof. Upon delivery to the Seller (x)
by the public recording office of any recorded original Mortgage, power of
attorney or Assignment, (y) by a title insurance or escrow company of any
lender's title insurance policy or (z) by a mortgage insurer of any Primary
Insurance Policy, the Seller promptly shall (and in no event later than five
Business Days following such receipt) deliver such document to the Purchaser or
any assignee, transferee or designee of the Purchaser. The Seller promptly shall
(and in no event later than five Business Days following the Closing Date)
submit for recording, at no expense to the Trust Fund or the Trustee, in the
appropriate public office for real property records, each Assignment referred to
in clauses (c) of this Section 4(ii). In the event that any such Assignment is
lost or returned unrecorded because of a defect therein, the Seller promptly
shall prepare a substitute Assignment or cure such defect, as the case may be,
and thereafter cause each such Assignment to be duly recorded.
(iii) ACCEPTANCE OF MORTGAGE LOANS. The documents delivered
pursuant to Section 4(ii) hereof shall be reviewed by the Purchaser or any
assignee, transferee or designee of the Purchaser at any time before or after
the Closing Date (and each document permitted to be delivered after the Closing
Date within seven days of its delivery) to ascertain that all required documents
have been executed and received and that such documents relate to the Mortgage
Loans identified on the Mortgage Loan Schedule. If the Purchaser or any
assignee, transferee or designee of the Purchaser discovers that any material
document is missing or is defective in any material respect, the Seller shall
correct or cure any such omission or defect or shall repurchase or substitute
for the affected Mortgage Loan in accordance with the terms of Section 7(i)
hereof and Section 2.03 of the Pooling and Servicing Agreement. At the time of
such repurchase, the Purchaser shall, in exchange for a written receipt
therefor, release such documents relating to such Mortgage Loan as are then in
its possession to the Seller.
(iv) TRANSFER OF INTEREST IN THE AGREEMENT. The Purchaser has the
right to assign its interest under this Agreement, in whole or in part, to the
Trustee, as may be required to effect the purposes of the Pooling and Servicing
Agreement without the consent of the Seller, and the assignee shall succeed to
the rights and obligations hereunder of the Purchaser. Any expense reasonably
incurred by or on behalf of the Purchaser or the Trustee in connection with
<PAGE>
-5-
enforcing any obligations of the Seller under this Agreement will be promptly
reimbursed by the Seller.
(v) EXAMINATION OF MORTGAGE FILES. Not later than five (5)
Business Days prior to the Closing Date, the Seller shall either (a) deliver to
the Purchaser or to any assignee, transferee or designee of the Purchaser in
escrow, for examination, the Mortgage File pertaining to each Mortgage Loan, or
(b) make such Mortgage Files available to the Purchaser or to any assignee,
transferee or designee of the Purchaser for examination at the Seller's offices.
Such examination may be made by the Purchaser or any assignee, transferee or
designee of the Purchaser at any time before or after the Closing Date. If any
such person makes such examination prior to the Closing Date and identifies any
Mortgage Loans which do not conform to the requirements of the Purchaser as
described in this Agreement, such Mortgage Loans shall be deleted from the
Closing Schedule, and may be replaced, prior to the Closing Date, by substitute
Mortgage Loans acceptable to the Purchaser. The Purchaser may, at its option and
without notice to the Seller, purchase all or part of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Purchaser or
any assignee, transferee or designee of the Purchaser has conducted or has
failed to conduct any partial or complete examination of the Mortgage Files
shall not affect the rights of the Purchaser or any assignee, transferee or
designee of the Purchaser to demand repurchase or other relief as provided
herein or under the Pooling and Servicing Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller hereby represents and warrants to the Purchaser that as of the Closing
Date:
(a) DUE ORGANIZATION AND AUTHORITY. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all licenses necessary to carry on its
business as now being conducted and is licensed, qualified and in good standing
in each state where a Mortgaged Property is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Seller, and in any event the Seller is in compliance with the
laws of any such state to the extent necessary to ensure the enforceability of
the related Mortgage Loan and the servicing of such Mortgage Loan in accordance
with the terms of this Agreement; the Seller has the fully corporate power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Seller and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Seller; and all requisite corporate action has
been taken by the Seller to make this Agreement valid and binding upon the
Seller in accordance with its terms;
(b) ORDINARY COURSE OF BUSINESS. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller
<PAGE>
-6-
pursuant to this Agreement are not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction;
(c) NO CONFLICTS. Neither the execution and delivery of this
Agreement, the acquisition of the Mortgage Loans by the Seller, the sale of the
Mortgage Loans to the Purchaser or the transactions contemplated hereby, nor the
fulfillment of or compliance with the terms and conditions of this Agreement,
will conflict with or result in a breach of any of the terms, incorporation or
by-laws or any legal restriction or any agreement or instrument to which the
Seller is now a party or by which it is bound, or constitute a default or result
in the violation of any law, rule, regulation, order, judgment or decree to
which the Seller or its property is subject, or impair the ability of the
Purchaser to realize on the Mortgage Loans, or impair the value of the Mortgage
Loans;
(d) ABILITY TO SERVICE. The Seller is an approved
seller/servicer of conventional residential mortgage loans for FNMA or FHLMC,
with the facilities, procedures, and experienced personnel necessary for the
sound servicing of mortgage loans of the same type as the Mortgage Loans and is
a mortgagee approved by the Secretary of HUD pursuant to Section 203 of the
National Housing Act. The Seller is in good standing to sell mortgage loans to
and service mortgage loans for FNMA or FHLMC, and no event has occurred,
including but not limited to a change in insurance coverage, which would make
the Seller unable to comply with FNMA or FHLMC eligibility requirements or which
would require notification to either FNMA or FHLMC;
(e) REASONABLE SERVICING FEE. The Seller acknowledges and
agrees that the Servicing Fee, as calculated at the Servicing Fee Rate,
represents reasonable compensation for performing such services and that the
entire Servicing Fee shall be treated by the Seller, for accounting and tax
purposes, as compensation for the servicing and administration of the Mortgage
Loans pursuant to this Agreement;
(f) ABILITY TO PERFORM. The Seller does not believe, nor does
it have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement;
(g) NO LITIGATION PENDING. There is no action, suit,
proceeding or investigation pending or threatened against the Seller that,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Seller, or in any material impairment of the right or ability of
the Seller to carry on its business substantially as now conducted, or in any
material liability on the part of the Seller, or which would draw into question
the validity of this Agreement or the Mortgage Loans or of any action taken or
to be contemplated herein, or which would be likely to impair materially the
ability of the Seller to perform under the terms of this Agreement;
(h) NO CONSENT REQUIRED. No consent, approval, authorization
or order of any court or governmental agency or body is required for the
execution, delivery and performance
<PAGE>
-7-
by the Seller of or compliance by the Seller with this Agreement or the sale of
the Mortgage Loans as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such approval has been obtained
prior to the Closing Date;
(i) SELECTION PROCESS. The Mortgage Loans were selected from
among the outstanding fixed rate one- to four-family mortgage loans in the
Seller's portfolio at the Closing Date as to which the representations and
warranties set forth in this Agreement and the Pooling and Servicing Agreement
could be made and such selection was not made in a manner so as to affect
adversely the interests of the Purchaser;
(j) NO UNTRUE INFORMATION. Neither this Agreement nor any
statement, report or other document furnished or to be furnished pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of fact or omits to state a fact necessary to make
the statements contained therein not misleading; and
(k) POOL CHARACTERISTICS. With respect to both aggregate
outstanding principal balance and numerical count of all the Mortgage Loans, (a)
none are secured by real property improved by two- to four-family dwellings, (b)
approximately 1.32% are secured by real property improved by individual
condominium units, (c) approximately 84.78% are secured by real property with a
detached one-family residence erected thereon, (d) approximately 13.91% are
secured by a townhouse or by real property improved by an individual unit in a
planned unit development, (e) approximately 8.54% are cash out refinances, (f)
approximately 1.83% are second residences, and (g) approximately 4.44% have
limited documentation. The Mortgage Loans have an approximate weighted average
remaining term of 357 months. The average principal balance of the Mortgage
Loans on the Cut-off Date was at approximately $301,815;
(l) CUSTODIAN ELIGIBILITY. The Custodian selected by the
Seller meets the eligibility requirements set forth in the Custodial Agreement;
(m) SALE TREATMENT. The Seller has determined that the
disposition of the Mortgage Loans pursuant to this Agreement will be afforded
sale treatment for accounting and tax purposes.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE SELLER
RELATING TO THE MORTGAGE LOANS. The Seller represents and warrants to the
Purchaser that, as of the Closing Date:
(a) MORTGAGE LOANS AS DESCRIBED. The information set forth in
the Mortgage -------------------------------- Loan Schedule is complete, true
and correct;
(b) PAYMENTS CURRENT. No payment required under any Mortgage
Loan as of the Closing Date is over 30 days past due nor has any payment under
any Mortgage Loan been over 30 days past due more than one time in the last 12
months;
<PAGE>
-8-
(c) NO OUTSTANDING CHARGES. There are no defaults in complying
with the terms of the Mortgages, and all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments or
ground rents that previously became due and owing have been paid, or an escrow
of funds has been established in an amount sufficient to pay for every such item
that remains unpaid and that has been assessed but is not yet due and payable.
The Seller 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 under the Mortgage Loan,
except for interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is greater, to the day
that precedes by one month the Due Date of the first installment of principal
and interest;
(d) ORIGINAL TERMS UNMODIFIED. The terms of the Mortgage Note
and Mortgage have not been impaired, waived, altered or modified in any respect,
except by a written instrument which has been recorded, if necessary to protect
the interests of the Purchaser and which has been delivered to the Custodian.
The substance of any such waiver, alteration or modification has been approved
by the issuer of any related PMI Policy and the title insurer, to the extent
required by the policy, and its terms are reflected on the Mortgage Loan
Schedule. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement approved by the issuer of any related
PMI Policy and the title insurer, to the extent required by the policy, and
which assumption agreement is part of the Mortgage Loan File delivered to the
Custodian and the terms of which are reflected in the Mortgage Loan Schedule;
(e) NO DEFENSES. The Mortgage Loan is not subject to any right
of rescission, set-off, counterclaim or defense, including without limitation
the defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including without
limitation, the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
(f) HAZARD INSURANCE. All buildings or other improvements upon
the Mortgaged Property are insured by a generally acceptable insurer against
loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where the Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of the Pooling and Servicing
Agreement. If upon origination of the Mortgage Loan, the Mortgaged Property was
in an area identified by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance has been made available) a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect which policy conforms to the
requirements of the Pooling and Servicing Agreement. All individual insurance
policies contain a standard mortgagee clause naming the Seller and its
successors and assigns as mortgagee, and all premiums thereon have been paid.
The Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to do
so, authorizes the holder of the Mortgage to
<PAGE>
-9-
obtain and maintain such insurance at such Mortgagor's cost and expense, and to
seek reimbursement therefor from the Mortgagor. The hazard insurance policy is
the valid and binding obligation of the insurer, is in full force and effect,
and will be in full force and effect and inure to the benefit of the Purchaser
upon the consummation of the transactions contemplated by this Agreement. The
Seller has not engaged in, and has no knowledge of the Mortgagor's having
engaged in, any act or omission that would impair the coverage of any such
policy, the benefits of the endorsement provided for herein, or the validity and
binding effect of either;
(g) COMPLIANCE WITH APPLICABLE LAWS. Any and all requirements
of any federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, and the Seller shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser upon demand,
evidence of compliance with all such requirements;
(h) NO SATISFACTION OF MORTGAGE. The Mortgage has not been
satisfied, cancelled, subordinated or rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has any instrument been executed that would effect any such
release, cancellation, subordination or rescission;
(i) LOCATION AND TYPE OF MORTGAGED PROPERTY. The Mortgaged
Property is located in the state identified in the Mortgage Loan Schedule and
consists of a parcel of real property with a detached single family residence
erected thereon, or a two- to four-family dwelling, or an individual condominium
unit in a low-rise or high-rise condominium project, or an individual unit in a
planned unit development or a townhouse, provided, however, that any condominium
project or planned unit development shall conform with the applicable FNMA or
FHLMC requirements regarding such dwellings, and no residence or dwelling is a
mobile home or a manufactured dwelling.
(j) VALID FIRST LIEN. The Mortgage is a valid, subsisting and
enforceable first lien on the Mortgaged Property, including all buildings on the
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and
assessments not yet due and payable;
(2) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record as of the date of
recording acceptable to mortgage lending institutions generally and
specifically referred to in the lender's title insurance policy
delivered to the originator of the Mortgage Loan and (i) referred to or
otherwise considered in the appraisal made for the originator of the
Mortgage Loan or (ii) do not
<PAGE>
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adversely affect the Appraised Value of the Mortgaged Property set
forth in such appraisal; and
(3) other matters to which like properties are
commonly subject that do not materially interfere with the benefits of
the security intended to be provided by the mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable first lien and first priority security interest on
the property described therein and the Seller has full right to sell and assign
the same to the Purchaser.
(k) VALIDITY OF MORTGAGE DOCUMENTS. The Mortgage Note and the
Mortgage and related documents are genuine, and each is the legal, valid and
binding obligation of the maker thereof enforceable in accordance with its
terms. All parties to the Mortgage Note and the Mortgage had legal capacity to
enter into the Mortgage Loan and to execute and deliver the Mortgage Note and
the Mortgage, and the Mortgage Note and the Mortgage have been duly and properly
executed by such parties;
(l) FULL DISBURSEMENT OF PROCEEDS. The proceeds of the
Mortgage Loan have been fully disbursed and there is no requirement for future
advances thereunder other than customary escrows for on-site improvements not
yet completed due to seasonal weather conditions. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage;
(m) OWNERSHIP. The Seller is the sole owner of record and
holder of the Mortgage Loan and the related Mortgage Note and the Mortgage are
not assigned or pledged, and the Seller has good and marketable title thereto
and has full right to transfer and sell the Mortgage Loan to the Purchaser. The
Seller is transferring the Mortgage Loan free and clear of any and all
encumbrances, liens, pledges, equities, participation interests, claims, charges
or security interests of any nature encumbering such Mortgage Loan;
(n) DOING BUSINESS. All parties which have had any interest in
the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such interest, were)
(1) in compliance with any and all applicable licensing requirements of the laws
of the state wherein the Mortgaged Property is located, or (2) organized under
the laws of such state, or (3) qualified to do business in such state, or (4)
federal savings and loan associations or national banks having principal offices
in such state, or (5) not doing business in such state;
(o) LTV, PMI POLICY. No Mortgage Loan has a LTV greater than
95%. The original LTV of the Mortgage Loan either was not more than 80% or there
exists a PMI Policy
<PAGE>
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in amount that was acceptable to FNMA and FHLMC at the time the Mortgage Loan
was originated. All provisions of such PMI Policy have been and are being
complied with, such policy is in full force and effect, and all premiums due
thereunder have been paid. Any Mortgage Loan subject to a PMI Policy obligates
the Mortgagor thereunder to maintain the PMI Policy and to pay all premiums and
charges in connection therewith. The Mortgage Interest Rate for the Mortgage
Loan as set forth on the Mortgage Loan schedule is net of any such insurance
premium;
(p) TITLE INSURANCE. The Mortgage Loan is covered by an ALTA
lender's title insurance policy or other generally acceptable form of policy of
insurance acceptable to FNMA or FHLMC (including with respect to properties
located in the State of Iowa attorney's title opinions), issued by a title
insurer acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the Seller, its
successors and assigns, as to the first priority lien of the Mortgage in the
original principal amount of the Mortgage Loan, subject only to the exceptions
contained in clauses (1), (2) and (3) of paragraph (j) of this Section 6 and
against any loss by reason of the invalidity of unenforceability of the lien
resulting from the provisions of the mortgage providing for adjustment to the
Mortgage Interest Rate and monthly payment and against any loss by reason of the
invalidity or unenforceability of the lien resulting from the provisions of the
mortgage providing for adjustment to the Mortgage Interest Rate and Monthly
Payment. The Seller is the sole insured of such lender's title insurance policy,
and such lender's title insurance policy is in full force and effect and will be
in force and effect upon the consummation of the transactions contemplated by
this Agreement. No claims have been made under such lender's title insurance
policy, and no prior holder of the Mortgage, including the Seller, has done, by
act or omission, anything that would impair the coverage of such lender's title
insurance policy;
(q) NO DEFAULTS. There is no default, breach, violation or
event of acceleration existing under the Mortgage or the Mortgage Note and no
event that, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event of
acceleration, and neither the Seller nor its predecessors have waived any
default, breach, violation or event of acceleration;
(r) NO MECHANICS' LIENS. There are no mechanics' or similar
liens or claims that have been filed for work, labor or material (and no rights
are outstanding that under the law could give rise to such liens) affecting the
related Mortgaged Property, which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage, which are not insured against
by the title insurance policy required by (p) above;
(s) LOCATION OF IMPROVEMENTS: NO ENCROACHMENTS. All
improvements that were considered in determining the Appraised Value of the
Mortgaged Property lay wholly within the boundaries and building restriction
liens of the Mortgaged Property and no improvements on adjoining properties
encroach upon the Mortgaged Property, which are not insured against by the title
insurance policy required by (p) above. No improvement located on
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or being part of the Mortgaged Property is in violation of any applicable zoning
law or regulation;
(t) ORIGINATION: PAYMENT TERMS. The Mortgage Loan was
originated by a savings and loan association, a savings bank, a commercial bank,
a credit union, an insurance company, or similar institution that 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 or
the National Housing Act. The Mortgage Interest Rate is fixed. The Mortgage Note
is payable each month in equal monthly installments of principal and interest,
with interest calculated and payable in arrears, sufficient to amortize the
Mortgage Loan fully by the stated maturity date, over an original term of not
more than thirty years from commencement of amortization, with a principal
balance at origination of no more than $993,560, and a Stated Principal Balance
of at least $39,975. Each Mortgage Loan has a Mortgage Interest Rate of not less
than 6.875% and not more than 9.250%. The stated remaining term of the Mortgage
Loan is between 239 and 360 months;
(u) CUSTOMARY PROVISIONS. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure. There is no homestead or other exemption available to a
Mortgagor that would interfere with the right to sell the Mortgaged Property at
a trustee's sale or the right to foreclose the Mortgage;
(v) UNDERWRITING STANDARDS. The Mortgage Loan is in conformity
with the underwriting standards of the Seller as described in the Prospectus
Supplement. The Mortgage Note and Mortgage are on forms acceptable to FHLMC or
FNMA;
(w) OCCUPANCY OF THE MORTGAGED PROPERTY. As of the Closing
Date the Mortgaged Property is lawfully occupied under applicable law. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities;
(x) NO ADDITIONAL COLLATERAL. The Mortgage Note is not and has
not been secured by any collateral except the lien of the corresponding Mortgage
and the security interest of any applicable security agreement or chattel
mortgage referred to in (j) above;
(y) DEEDS OF TRUST. In the event the Mortgage constitutes 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 the
Mortgage, and no fees or expenses are or will become payable by the Purchasers
to the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor;
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(z) ACCEPTABLE INVESTMENT. The Seller has no knowledge of any
circumstances or conditions with respect to the Mortgage Loan, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can reasonably
be expected to cause private institutional investors to regard the Mortgage Loan
as an unacceptable investment, cause the Mortgage Loan to become delinquent, or
adversely affect the value or marketability of the Mortgage Loan;
(aa) DELIVERY OF MORTGAGE DOCUMENTS. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other documents required to be
delivered by the Seller under the Custodial Agreement, in the form attached to
the Pooling and Servicing Agreement, for the Mortgage Loans have been delivered
to the Custodian. The Seller is in possession of a complete, true and accurate
Mortgage File, except for such documents the originals of which have been
delivered to the Custodian;
(bb) CONDOMINIUMS/PLANNED UNIT DEVELOPMENTS. If the Mortgaged
Property is a condominium unit or a planned unit development (other than a de
minimis planned unit development), such condominium or planned unit development
project meets FNMA eligibility requirements or is located in a condominium or
planned unit development project that has received FNMA project approval, and
the representations and warranties required by FNMA with respect to such
condominium or planned unit development has been made and remain true and
correct in all respects;
(cc) TRANSFER OF MORTGAGE LOANS. The Assignment of Mortgage is
in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located and the form of
endorsement of each Mortgage Note satisfies the requirement, if any, of
endorsement in order to transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that Mortgage Note;
(dd) DUE ON SALE. The Mortgage or Mortgage Note contains an
enforceable provision, in a form acceptable to FNMA or FHLMC, for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the Mortgagee thereunder;
(ee) NO GRADUATED PAYMENTS OR CONTINGENT INTERESTS. The
Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan
does not have a shared appreciation or other contingent interest feature;
(ff) MORTGAGED PROPERTY UNDAMAGED. To the best of the Seller's
knowledge, the Mortgaged Property is undamaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty so as to affect
adversely the value of the Mortgaged Property as security for the Mortgage Loan
or the use for which the premises were intended;
(gg) COLLECTION PRACTICES; ESCROW DEPOSITS. The origination
and collection practices used with respect to the Mortgage Loan have been in
accordance with Accepted Servicing Practices, and have been in all respects
legal and proper. With respect to escrow
<PAGE>
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deposits and Escrow Payments, all such payments are in the possession of the
Seller and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All Escrow
Payments have been collected in full compliance with state and federal law. An
escrow of funds is not prohibited by applicable law and has been established in
an amount sufficient to pay for every item that remains unpaid and has been
assessed but is not yet due and payable. No escrow deposits or Escrow Payments
or other charges or payments due the Seller have been capitalized under the
Mortgage or the Mortgage Note;
(hh) NO CONDEMNATION. There is no proceeding pending or, to
the best of the Seller's knowledge, threatened for the total or partial
condemnation of the related Mortgaged Property;
(ii) THE APPRAISAL. The Mortgage File contains an appraisal,
made by an appraiser who met the minimum appraiser requirements of FNMA or
FHLMC, of the related Mortgaged Property on forms and riders acceptable to FNMA
or FHLMC, signed prior to funding of the Mortgage Loan;
(jj) LEASEHOLD ESTATES. With respect to each Mortgage Loan
secured by a leasehold estate:
(1) The lease is a lease of a fee or a sublease
executed by the fee owner and the
sublessor;
(2) The use of leasehold or ground rent estates
for residential properties is an accepted
practice in the area where the Mortgaged
Property subject to the leasehold estate is
located;
(3) Residential properties consisting of
leasehold or ground rent estates in the
area where the Mortgaged Property subject
to the leasehold estate is located are
readily marketable;
(4) Mortgage Loans covering such residential
properties are commonly acceptable to FNMA,
FHLMC and private institutional mortgage
investors;
(5) The lease, sublease, or conveyance
reserving ground rents and their provisions
are in a form commonly acceptable to
private institutional mortgage investors in
the area where the Mortgaged Property is
located;
(6) The lease and sublease, if any (including
all amendments), are recorded, and no party
is in any way in breach of any provision of
the lease, sublease or amendment;
<PAGE>
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(7) The leasehold is in full force and effect
and is not subject to any prior lien or
encumbrance by which the leasehold could be
terminated or subjected to any charge or
penalty;
(8) The remaining term or exercised renewal of
the lease and sublease with any renewals
enforceable by the mortgagee do not
terminate earlier than ten (10) years after
the maturity date of the Mortgage Loan
subject to the leasehold estate; and
(9) The sublease payments are at least equal to
the lease payments. The sublease payments
are due no less frequently than the lease
payments.
(kk) BUYDOWN MORTGAGE LOANS. With respect to each Mortgage
Loan that is a Buydown Mortgage Loan:
(1) On or before the date of origination of
such Mortgage Loan, the Seller and the
Mortgagor, or the Seller, the Mortgagor and
the seller of the Mortgaged Property or a
third party entered into a Buydown
Agreement. The Buydown Agreement provides
that the seller of the Mortgaged Property
(or third party) shall deliver to the
Seller temporary Buydown Funds in an amount
equal to the aggregate undiscounted amount
of payments that, when added to the amount
the Mortgagor on such Mortgage Loan is
obligated to pay on each Due Date in
accordance with the terms of the Buydown
Agreement, is equal to the full scheduled
Monthly Payment due on such Mortgage Loan.
The temporary Buydown Funds enable the
Mortgagor to qualify for the Buydown
Mortgage Loan. The effective interest rate
of a Buydown Mortgage Loan if less than the
interest rate set forth in the related
Mortgage Note will increase within the
Buydown Period as provided in the related
Buydown Agreement so that the effective
interest rate will be equal to the interest
rate as set forth in the related Mortgage
Note. The Buydown Mortgage Loan satisfies
the requirements of FNMA guidelines;
(2) The Mortgage and Mortgage Note reflect the
permanent payment terms rather than the
payment terms of the Buydown Agreement. The
Buydown Agreement provides for the payment
by the Mortgagor of the full amount of the
Monthly Payment on any Due Date that the
Buydown Funds are not available. The
Buydown Funds were not used to reduce the
original principal balance of the Mortgage
Loan or to increase the Appraised Value of
the Mortgaged Property when calculating the
Loan-to-Value
<PAGE>
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Ratios for purposes of this Agreement and,
if the Buydown Funds were provided by the
Seller and if required under FNMA and FHLMC
guidelines, the terms of the Buydown
Agreement were disclosed to the appraiser
of the Mortgaged Property;
(3) The Buydown Funds may not be refunded to
the Mortgagor unless the Mortgagor makes a
principal payment for the outstanding
balance of the Mortgage Loan;
(4) No more than 2.12% of the Mortgage Loans,
measured by unpaid principal balance as of
the Cut-off Date, are Buydown Mortgage
Loans;
(5) With respect to each Buydown Mortgage Loan
at origination, the Buydown Funds were 20%
or less of the original principal balance
of such Mortgage Loan; and
(6) As of the date of origination of the
Mortgage Loan, the provisions of the
related Buydown Agreement complied with the
requirements of FNMA and FHLMC regarding
buydown agreements;
SECTION 7. REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION
AND FOR BREACH OF REPRESENTATION AND WARRANTY.
(i) The representations and warranties contained in Sections 5
and 6 shall not be impaired by any review and examination of loan files or other
documents evidencing or relating to the Mortgage Loans or any failure on the
part of the Purchaser to review or examine such documents and shall inure to the
benefit of any assignee, transferee or designee of the Purchaser, including the
Trustee for the benefit of holders of mortgage pass-through certificates
evidencing an interest in all or a portion of the Mortgage Loans. With respect
to the representations and warranties contained herein that are made to the
knowledge or the best of knowledge of the Seller or as to which the Seller has
no knowledge (other than representation (hh)), if it is discovered that the
substance of any such representation and warranty was inaccurate as of the date
such representation and warranty was made or deemed to be made, and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan or the interest therein of the Purchaser or the Purchaser's assignee,
transferee or designee, then notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation and warranty being inaccurate at
the time the representation and warranty was made, the Seller shall take such
action described in the following paragraph in respect of such Mortgage Loan.
Upon discovery by the Seller, the Purchaser or any assignee,
transferee or designee of the Purchaser of any materially defective document in,
or that any material document
<PAGE>
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is missing from, any Mortgage File or of a breach of any of the representations
and warranties contained in Section 5 or 6 that materially and adversely affects
the value of any Mortgage Loan or the interest therein of the Purchaser or the
Purchaser's assignee, transferee or designee, the party discovering the breach
shall give prompt written notice to the others. Within sixty (60) days of its
discovery or its receipt of notice of any such missing or materially defective
documentation or any such breach of a representation and warranty, the Seller
promptly shall deliver such missing document or cure such defect or breach in
all material respects, or in the event such defect or breach cannot be cured,
the Seller shall, within 90 days of its discovery or receipt of notice, either
(i) repurchase the affected Mortgage Loan at the Purchase Price (as such term is
defined in the Pooling and Servicing Agreement) or (ii) subject to the approval
of the Purchaser, cause the removal of such Mortgage Loan from the Trust Fund
and substitute one or more Qualified Substitute Mortgage Loans. The Seller shall
amend the Closing Schedule to reflect the withdrawal of such Mortgage Loan from
the terms of this Agreement and the Pooling and Servicing Agreement and the
addition, if any, of a Qualified Substitute Mortgage Loan. The Seller shall
deliver to the Purchaser such amended Closing Schedule and shall deliver such
other documents as are required by this Agreement or the Pooling and Servicing
Agreement within five (5) days of any such amendment. Any repurchase pursuant to
this Section 7(i) shall be accomplished by transfer to an account designated by
the Purchaser of the amount of the Purchase Price in accordance with Section
2.03 of the Pooling and Servicing Agreement. Any repurchase or substitution
required by this Section shall be made in a manner consistent with Section 2.03
of the Pooling and Servicing Agreement.
(ii) It is understood and agreed that the obligations of the
Seller set forth in this Section 7 to cure, repurchase or substitute for a
defective Mortgage Loan and to indemnify the Purchaser as provided in Section 17
constitute the sole remedies of the Purchaser respecting a missing or defective
document or a breach of the representations and warranties contained in Sections
5 and 6.
SECTION 8. CLOSING; PAYMENT FOR THE MORTGAGE LOANS. The
closing of the purchase and sale of the Mortgage Loans shall be held at the New
York City office of Thacher Proffitt & Wood at 10:00 a.m. Eastern Standard Time
on the Closing Date.
The closing shall be subject to each of the following
conditions:
a) All of the representations and warranties of the
Seller under this Agreement and under the Pooling and
Servicing Agreement shall be true and correct 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 an Event
of Default under the Pooling and Servicing Agreement;
b) The Purchaser shall have received, or the Purchaser's
attorneys shall have received, in escrow (to be
released from escrow at the time of closing), all
Closing Documents as specified in Section 9 of this
Agreement, in
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such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other
than the Purchaser as required pursuant to the
respective terms thereof;
c) The Seller shall have delivered and released to the
Purchaser or to its assignee, transferee or designee,
all documents (including without limitation, the
Mortgage Loans) required to be so delivered by the
Seller pursuant to Section 2.01 of the Pooling and
Servicing Agreement;
d) All other terms and conditions of this Agreement
shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall
deliver or cause to be delivered to the Seller on the Closing Date, against
delivery and release by the Seller to the Trustee of all documents required
pursuant to the Pooling and Servicing Agreement, the consideration for the
Mortgage Loans as specified in Section 3 of this Agreement, by delivery to the
Seller of the Purchase Price in immediately available funds.
SECTION 9. CLOSING DOCUMENTS. The Closing Documents shall
consist of the following:
a) The Pooling and Servicing Agreement, dated as of the
Cut-off Date, substantially in the form of Exhibit 1
hereto and with such further changes therein as the
Seller and the Purchaser shall mutually agree to,
together with all documents required to be delivered
thereunder; and
b) With respect to the Mortgage Loans:
1. An Officers' Certificate of the Seller,
dated the Closing Date, upon which the
Purchaser and Salomon Brothers Inc (the
"Underwriter") may rely, in the form of
Exhibit 2 hereto, and attached thereto
resolutions of the board of directors of
the Seller, together with copies of the
certificate of incorporation, by-laws and
certificate of good standing of the Seller
under the laws of California;
2. An Officers' Certificate of the Seller,
dated the Closing Date, upon which the
Purchaser and the Underwriter may rely, in
the form of Exhibit 3 hereto, with respect
to certain facts regarding the sale of the
Mortgage Loans by the Seller to the
Purchaser;
3. An Opinion of Counsel of the Seller, dated
the Closing Date and addressed to the
Purchaser and the Underwriter,
substantially in the form attached hereto
as Exhibit 4;
<PAGE>
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4. A letter from KPMG Peat Marwick, dated the
date hereof, to the effect that they have
performed certain specified procedures as a
result of which they determined that
certain information of an accounting,
financial or statistical nature set forth
in the Purchaser's Prospectus Supplement,
dated May 21, 1996 under the captions "The
Mortgage Pool" and "Pooling and Servicing
Agreement -The Master Servicer", "-Loan
Production" and "-Delinquency and
Foreclosure Experience" agrees with the
records of the Seller;
5. Such opinions of counsel as the Rating
Agencies or the Trustee may request in
connection with the sale of the Mortgage
Loans by the Seller to the Purchaser or the
Seller's execution and delivery of, or
performance under, this Agreement or the
Pooling and Servicing Agreement; and
6. Such further information, certificates,
opinions and documents as the Purchaser or
Underwriter may reasonably request.
SECTION 10. COSTS. In connection with the issuance of the
Certificates contemplated by the Pooling and Servicing Agreement, the Seller
shall pay (or shall reimburse the Purchaser to the extent that the Purchaser
shall pay) the following amounts: (i) the legal fees and expenses of the
Seller's counsel (other than the cost of obtaining the opinions provided for in
paragraphs 9 and 10 on Exhibit 4 hereof) and (ii) the costs of recording the
Assignment of Mortgage for each Mortgage Loan as provided in Section 4(ii)
hereof. All other costs and expenses in connection with the transactions
contemplated hereunder shall be borne by the party incurring such expense.
SECTION 11. SERVICING. The Seller has represented to the
Purchaser that the Mortgage Loans are serviced by the Seller, in its capacity as
Master Servicer, and are not subject to sub-servicing agreements with third
parties, and it is understood and agreed between the Seller and the Purchaser
that the Mortgage Loans are to be delivered free and clear of any sub-servicing
agreements with third party servicers. The Seller, without reimbursement from
the Purchaser, shall pay any fees or penalties required by any third party
servicer for releasing the Mortgage Loans from any such sub-servicing agreement
and shall arrange for the orderly transfer, as of the Cut-off Date, of such
sub-servicing from any such third party servicer to the Seller. The Mortgage
Loans shall be serviced by the Seller, in its capacity as Master Servicer, in
accordance with the terms of the Pooling and Servicing Agreement. For so long as
the Seller services the Mortgage Loans, the Seller shall be entitled to the
Servicing Fee and such other payments as provided for under the terms of the
Pooling and Servicing Agreement.
SECTION 12. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST.
The sale and delivery on the Closing Date of the Mortgage Loans described on the
Mortgage Loan Schedule in accordance with the terms and conditions of this
Agreement is mandatory. It is specifically
<PAGE>
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understood and agreed that each Mortgage Loan is unique and identifiable on the
date hereof and that an award of money damages would be insufficient to
compensate the Purchaser for the losses and damages incurred by the Purchaser in
the event of the Seller's failure to deliver the Mortgage Loans on or before the
Closing Date. The Seller hereby grants to the Purchaser a lien on and a
continuing security interest in the Seller's interest in each Mortgage Loan and
each document and instrument evidencing each such Mortgage Loan to secure the
performance by the Seller of its obligation hereunder, and the Seller agrees
that it holds such Mortgage Loans in custody for the Purchaser, subject to the
Purchaser's (i) right, prior to the Closing Date, to reject any Mortgage Loan to
the extent permitted by this Agreement and to require another Mortgage Loan to
be substituted therefor pursuant to Section 4 hereof, and (ii) obligation to
deliver or cause to be delivered the consideration for the Mortgage Loans
pursuant to Section 8 hereof. Any Mortgage Loans rejected by the Purchaser shall
concurrently therewith be released from the security interest created hereby.
All rights and remedies of the Purchaser under this Agreement are distinct from,
and cumulative with, any other rights or remedies under this Agreement or,
subject to Section 7(ii) hereof, afforded by law or equity and all such rights
and remedies may be exercised concurrently, independently or successively.
Notwithstanding the foregoing, if on the Closing Date, each of
the conditions set forth in Section 8 hereof shall have been satisfied and the
Purchaser shall not have paid or cause to be paid the Purchase Price, or any
such condition shall not have been waived or satisfied and the Purchaser
determines not to pay or cause to be paid the Purchase Price, the Purchaser
shall immediately effect the redelivery of the Mortgage Loans, if delivery to
the Purchaser has occurred, and the security interest created by this Section 12
shall be deemed to have been released.
SECTION 13. 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 telex, telegraph or facsimile and confirmed by a similar mailed
writing, if to the Purchaser, addressed to the Purchaser, at Seven World Trade
Center, New York, New York 10048, Attention: Secretary, or to such other address
as the Purchaser may designate in writing to the Seller; and if to the Seller,
addressed to the Seller at 405 S.W. 5th Street, Des Moines, Iowa 50309-4625,
Attention: Stephen Morrison, General Counsel, or to such other address as the
Seller may designate in writing to the Purchaser.
SECTION 14. SEVERABILITY OF PROVISIONS. Any part, provision,
representation or warranty of this Agreement which is prohibited or which is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation or warranty of this Agreement that
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
<PAGE>
-21-
law, the parties hereto waive any provision of law which prohibits or renders
void or unenforceable any provision hereof.
SECTION 15. AGREEMENT OF PARTIES. The Seller and the Purchaser
each agree to execute and deliver such instruments and take such actions as the
other may, from time to time, reasonably request in order to effectuate the
purpose and to carry out the terms of this Agreement and the Pooling and
Servicing Agreement.
SECTION 16. SURVIVAL. The Seller agrees that the
representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed to be
relied upon by the Purchaser, notwithstanding any investigation heretofore or
hereafter made by the Purchaser or on the Purchaser's behalf, and that the
representations, warranties and agreements made by the Seller herein or in any
such certificate or other instrument shall survive the delivery of and payment
for the Mortgage Loans and shall continue in full force and effect,
notwithstanding any restrictive or qualified endorsement on the Mortgage Notes
and notwithstanding subsequent termination of this Agreement, the Pooling and
Servicing Agreement or the Trust Fund.
SECTION 17. INDEMNIFICATION.
(i) The Seller agrees to indemnify and hold harmless the
Purchaser and each person, if any, who controls the Purchaser within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Party") against
any and all losses, claims, expenses, damages or liabilities to which the
Indemnified Party may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, expenses, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact contained in the Prospectus or in the
Prospectus Supplement (or in the private placement memorandum relating to the
Class B-4 Certificates, the Class B-5 Certificates or the Class B-6
Certificates) or the omission or the alleged omission to state therein a
material fact necessary in order 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 information furnished in writing to the Purchaser by
the Seller specifically for use therein, which shall include the information set
forth in the Prospectus under the caption "The Mortgage Pool" and in the
Prospectus Supplement on the front cover, in the summary under the subheading
"The Mortgage Pool" and under the captions "The Mortgage Pool" and "Pooling and
Servicing Agreement - The Master Servicer", "-Loan Production" and "-Delinquency
and Foreclosure Experience" (and substantially identical information set forth
in the private placement memorandum relating to the Class B-4 Certificates, the
Class B-5 Certificates and the Class B-6 Certificates), or (b) any
representation, warranty or covenant made by the Seller in this Agreement or in
the Pooling and Servicing Agreement, on which the Purchaser has relied, being,
or alleged to be, untrue or incorrect; provided, however, that to the extent
that any such losses, claims, expenses, damages or liabilities to which the
Indemnified Party may become subject arise out of or are based upon both (1)
statements, omissions, representations, warranties or covenants of the Seller
described
<PAGE>
-22-
in clause (a) or (b) above and (2) any other factual basis, the Seller shall
indemnify and hold harmless the Indemnified Party only to the extent that the
losses, claims, expenses, damages or liabilities of the person or persons
asserting the claim are determined to arise from or be based upon matters set
forth in clause (1) above. This indemnity agreement will be in addition to any
liability which the Seller may otherwise have.
(ii) Promptly after receipt by the Indemnified Party of notice of
the commencement of any such action, the Indemnified Party will, if a claim in
respect thereof is to be made against the Seller under this Section 17, promptly
notify the Seller in writing of the commencement thereof. In case any such
action is brought against the Indemnified Party, and it notifies the Seller of
the commencement thereof, the Seller will be entitled to participate therein,
and to assume the defense thereof, with counsel reasonably satisfactory to the
Indemnified Party, and after notice from the Seller to the Indemnified Party of
its election so to assume the defense thereof, the Seller will not be liable to
the Indemnified Party under this Section 17 for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation.
SECTION 18. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS,
DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (INCLUDING THE CHOICE OF LAW
PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND
THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AGREEMENT.
SECTION 19. MISCELLANEOUS. This Agreement may be executed in
two or more counterparts, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one and the same
instrument. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Seller have caused
their names to be signed by their respective officers thereunto duly authorized
as of the date first above written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By:
Name:
Title:
NORWEST MORTGAGE, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT 1
FORM OF POOLING AND SERVICING AGREEMENT
<PAGE>
EXHIBIT 2
OFFICER'S CERTIFICATE
I, ________________, hereby certify that I am the duly elected
[Vice] President of Norwest Mortgage, Inc., a California corporation (the
"Seller"), and further certify, on behalf of the Seller, as follows:
1. Attached hereto is a true and correct copy of the
Certificate of Incorporation and By-laws of the Seller, all of which
are in full force and effect on the date hereof. There has been no
amendment or other document filed affecting the Certificate of
Incorporation of the Seller since ___________, 19__, and no such
amendment has been authorized. There has been no amendment or other
document filed affecting the By-laws of the Seller since ____________,
19__, and no such amendment has been authorized. Attached hereto is a
good standing certificate issued by the California Secretary of State
with respect to the Seller. No event has occurred since the date
thereof that has affected the good standing of the Seller under the
laws of California.
2. There are no actions, suits or proceedings pending or, to
the best of my knowledge, threatened against or affecting the Seller
that, if adversely determined, individually or in the aggregate, would
adversely affect the Seller's ability to perform its obligations under
the Mortgage Loan Purchase Agreement (the "Mortgage Loan Purchase
Agreement"), dated May __, 1996, between the Seller and Salomon
Brothers Mortgage Securities VII, Inc. (the "Purchaser") or the Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as of May 1, 1996, among the Purchaser as Depositor, the Seller as
Master Servicer and The Chase Manhattan Bank, N.A. as Trustee. No
proceedings looking toward merger, consolidation or liquidation,
dissolution or bankruptcy of the Seller are pending or contemplated.
3. Each person who, as an officer or representative of the
Seller, signed the Mortgage Loan Purchase Agreement, the Pooling and
Servicing Agreement and any other document delivered prior hereto or on
the date hereof in connection with the purchase described in the
Mortgage Loan Purchase Agreement was, at the respective times of such
signing and delivery, and is now, duly elected or appointed, qualified
and acting as such officer or representative, and the signatures of
such persons appearing on such documents are their genuine signatures.
4. Each of the Mortgage Loans referred to in the Mortgage Loan
Purchase Agreement and the Pooling and Servicing Agreement was
originated by the Seller or by an entity described in Section 6(t) of
the Mortgage Loan Purchase Agreement.
5. Attached hereto is a certified true copy of the resolutions
of the Board of Directors of the Seller with respect to the sale of the
Mortgage Loans subject to the Mortgage Loan Purchase Agreement and the
Pooling and Servicing Agreement.
<PAGE>
-2-
6. All of the representations and warranties of the Seller
under the Mortgage Loan Purchase Agreement and under the Pooling and
Servicing Agreement are true and correct in all material respects as of
the Closing Date (subject, in the case of the Closing Schedule
delivered pursuant to the Mortgage Loan Purchase Agreement, to such
amendments thereto as were duly made on or before the date hereof) and
no event has occurred which, with notice or the passage of time or
both, would constitute a default under the Mortgage Loan Purchase
Agreement or an Event of Default under the Pooling and Servicing
Agreement.
7. The information set forth in the Mortgage Loan Schedule
attached as an exhibit to the Pooling and Servicing Agreement is true
and correct in all material respects.
8. The transactions contemplated in the Mortgage Loan Purchase
Agreement will be reported as a sale in the Seller's financial reports.
9. The information contained in the Purchaser's Prospectus,
dated ________ __, 1996, under the caption "The Mortgage Pool" and in
the Purchaser's Prospectus Supplement, dated May __, 1996, relating to
the Mortgage Loans and the Seller, its financial condition and its loan
portfolio, specifically the information on the front cover, in the
summary under the subheading "The Mortgage Pool" and under the captions
"The Mortgage Pool" and "Pooling and Servicing Agreement-The Master
Servicer", "-Loan Production" and "-Delinquency and Foreclosure
Experience", is true and accurate and does not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
10. With respect to its sale of the Mortgage Loans and the
transactions and undertakings contemplated by the Mortgage Loan
Purchase Agreement, the Seller has complied with all the obligations by
which it is bound and has satisfied all the conditions on its part to
be performed or satisfied prior to the Closing Date.
11. Capitalized terms used but not defined herein shall have
the meanings assigned in the Mortgage Loan Purchase Agreement.
<PAGE>
-3-
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated:
--------------------- ----------------------------
Name:
-----------------------
[Seal] Title: [Vice] President
I, __________________, a [Assistant] Secretary of Norwest
Mortgage, Inc., hereby certify that ________________ is the duly elected,
qualified and acting [Vice] President of the Seller and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:
--------------------- ----------------------------
Name:
-----------------------
[Seal] Title:[Assistant] Secretary
<PAGE>
FORM OF RESOLUTION
RESOLVED, that Norwest Mortgage, Inc. (the "Company") is
hereby authorized to (a) sell to Salomon Brothers Mortgage Securities VII, Inc.
(the "Purchaser") certain conventional one- to four-family residential mortgage
loans (the "Mortgage Loans"), having an aggregate principal balance of
approximately $___________, on the terms and subject to the conditions set forth
in the Mortgage Loan Purchase Agreement, dated May ___, 1996, between the Seller
and the Purchaser, and (b) enter into a Pooling and Servicing Agreement, dated
as of May 1, 1996, among the Purchaser as depositor, the Company as master
servicer and The Chase Manhattan Bank, N.A. as trustee.
RESOLVED, that each of the President, and each Senior Vice
President, Vice President, and Assistant Secretary of the Company hereby is
authorized, for and on behalf of the Company, to execute and deliver each of the
foregoing agreements, as well as such other agreements, instruments, and
certificates, and to take such other action, as any of them may deem necessary
or advisable to carry out the purposes of the foregoing resolutions.
<PAGE>
EXHIBIT 3
OFFICERS' CERTIFICATE OF THE SELLER
WITH RESPECT TO CERTAIN FACTS
REGARDING THE SALE OF THE MORTGAGE LOANS
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates
Series 1996-2
Certificate of
Norwest Mortgage, Inc.
Reference is made to the sale of mortgage loans (the "Mortgage
Loans") by Norwest Mortgage, Inc. ("Norwest") to Salomon Brothers Mortgage
Securities VII, Inc. (the "Depositor") pursuant to a Mortgage Loan Purchase
Agreement, dated May __, 1996 (the "Purchase Agreement"), and the simultaneous
issuance of Mortgage Pass-Through Certificates, Series 1996-2, Class A-1, Class
A-2, Class A-3, Class A-4, Class XS, Class PO, Class B-1, Class B-2, Class B-3,
Class B-4, Class B-5, Class B-6 and Class R (the "Certificates"), pursuant to a
Pooling and Servicing Agreement, dated as of May 1, 1996 (the "Pooling and
Servicing Agreement"), among the Depositor, as depositor, Norwest Mortgage,
Inc., as master servicer (the "Master Servicer"), and The Chase Manhattan Bank,
N.A., as trustee (the "Trustee"). In consideration for its purchase of the
Mortgage Loans, the Depositor will deliver to Norwest immediately available
funds. The Depositor will sell the Certificates to Salomon Brothers Inc (the
"Underwriter") for offer and sale pursuant to the terms of an Underwriting
Agreement, dated May ___, 1996 (the "Underwriting Agreement"), between the
Depositor and the Underwriter. The Purchase Agreement, the Pooling and Servicing
Agreement and the Underwriting Agreement together, are hereinafter referred to
as the "Agreements". Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreements.
The undersigned is a duly appointed Authorized Agent of
Norwest Mortgage, Inc.
The undersigned hereby certifies after reasonable
investigation that:
1. The price to be paid to Norwest for the Mortgage Loans will
have been paid in full at the closing of the sales pursuant to the Mortgage Loan
Purchase Agreement, and no agreement or arrangement exists or will exist that
permits the modification of the consideration for the Mortgage Loans subsequent
to those sales. Norwest will not have any right or obligation to repurchase any
Mortgage Loan, except as provided in the Mortgage Loan Purchase Agreement.
2. Each Mortgage Note and each related Mortgage has been
appropriately prepared and duly executed and delivered by the related Mortgagor,
and each Mortgage has been appropriately recorded in the applicable jurisdiction
and any intervening endorsement of any
<PAGE>
-2-
Mortgage Note, and any intervening assignment of any Mortgage, which was
required in order to transfer to Norwest ownership of the Mortgage Loans, was
obtained and completed.
3. Each Mortgage Note has been endorsed or assigned in a
manner that satisfies any requirement necessary to transfer to the Trustee all
right, title and interest of the party so endorsing or assigning, as noteholder
or transferee thereof, in and to that Mortgage Note, as provided in the Purchase
Agreement and the Pooling and Servicing Agreement. Each Assignment to the
Trustee is in recordable form and is sufficient to effect the assignment and
transfer to the Depositor of the benefits of the assignor, as original mortgagee
or assignee thereof, under each Mortgage to which that Assignment relates, as
provided in the Purchase Agreement and the Pooling and Servicing Agreement. Each
Assignment to the Trustee has been or will be appropriately recorded to the
extent required under applicable law, as provided in the Pooling and Servicing
Agreement.
4. Each original Mortgage Note, each original recorded
Mortgage, each original recorded intervening Assignment and each Assignment to
the Trustee has been delivered to the Trustee at the direction of the Depositor,
and the Trustee will maintain continuous actual possession of each of the
foregoing in the State of New York. Neither the Trustee nor any agent of the
Trustee that has or will have possession of any Mortgage Note, Mortgage or
Assignment is, or will be, at any time during the term of the Pooling and
Servicing Agreement, an affiliate of Norwest or otherwise under the direct or
indirect control of Norwest.
5. Immediately prior to the transfer of the Mortgage Loans by
Norwest to the Depositor, Norwest was the sole owner of each Mortgage Loan, free
and clear of any and all prior liens, mortgages, security interests, pledges,
participation interests, adverse claims, charges or other equities or
encumbrances of any nature (collectively, the "Other Liens"), and had full right
and authority to sell, assign and transfer the Mortgage Loans.
6. No Mortgage Note, Mortgage or other document constituting
part of the Mortgage File reflects or will reflect on its face any interest that
is inconsistent with the ownership interest of Norwest in and to the Mortgage
Loans or the transfer of the Mortgage Loans by Norwest to the Depositor.
7. The transfer of the Mortgage Loans by Norwest to the
Depositor as provided in the Purchase Agreement, is intended by Norwest to be,
and is in fact, a contemporaneous exchange in which Norwest receives new value.
8. Norwest was solvent at all relevant times prior to, and
will not be rendered insolvent by, the transfer of the Mortgage Loans to the
Depositor.
9. Norwest did not transfer the Mortgage Loans to the
Depositor with any intent to hinder, delay or defraud any of Norwest's
creditors.
<PAGE>
-3-
10. Neither Norwest nor any agent acting on behalf of any of
them, has been or will become a party to any fraud or illegality affecting any
Mortgage Loan or Certificate.
11. No breach of the Agreements by any party,
misrepresentation or failure by any party to perform all acts required to be
performed prior to the Closing Date, or fraud or mistake on the part of any
party to the Agreements in connection with the transactions contemplated by the
Agreements, has occurred or will occur.
12. No party to the Agreements has taken or will take any
action that is unreasonable, arbitrary or capricious, or that is not taken in
good faith or in a commercially reasonable manner, affecting the Mortgage Loans
in connection with the transactions contemplated by the Agreements.
13. There is not and will not be any other agreement among the
parties to the Agreements that modifies or otherwise supplements the agreement
of the parties as expressed in the Agreements.
14. Norwest does not have and will not have any right to
modify or alter the terms of the transfer of the Mortgage Loans by Norwest to
the Depositor, or to substitute or add any mortgage loan thereafter, except as
provided in the Agreements.
15. Norwest will not take any action that is inconsistent with
the ownership interest in the Mortgage Loans evidenced by the Certificates.
Norwest will promptly indicate to other persons or entities, when a response is
appropriate, that the Mortgage Loans were transferred by Norwest to the
Depositor. Norwest will not claim any ownership interest directly in the
Mortgage Loans other than that represented by Certificates in which it may have
an ownership interest from time to time.
16. Under generally accepted accounting principles ("GAAP")
and for federal income tax purposes, Norwest will report the transfer of the
Mortgage Loans to the Depositor, as provided in the Purchase Agreement as a sale
of all of its interest in the Mortgage Loans. Norwest has been advised by or has
confirmed with its independent public accountants for similar transactions that
the sale will be so classified under GAAP in accordance with Statement No. 77 of
the Financial Accounting Standards Board (December 1983).
<PAGE>
-4-
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of May __, 1996.
NORWEST MORTGAGE, INC.
By:
-----------------------------------
Name:
Title: Authorized Agent
<PAGE>
EXHIBIT 4
FORM OF OPINION OF COUNSEL OF THE SELLER
[Closing Date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven World Trade Center
New York, New York 10048
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
I have acted as counsel for Norwest Mortgage, Inc., a
California corporation (the "Seller"), in connection with the sale of certain
mortgage loans by the Seller to Salomon Brothers Mortgage Securities VII, Inc.
(the "Purchaser") pursuant to a Mortgage Loan Purchase Agreement, dated May ___,
1996, by and between the Purchaser and the Seller (the "Seller's Agreement") and
in connection with a Pooling and Servicing Agreement, dated as of May 1, 1996,
by and among the Purchaser as Depositor, the Seller as Master Servicer and The
Chase Manhattan Bank, N.A. as trustee (the "Trustee") (the "Pooling and
Servicing Agreement"; together with the Seller's Agreement, the "Agreements"). I
am delivering this opinion to you pursuant to Section 9(b)(3) of the Seller's
Agreement. Capitalized terms used but not defined in this letter have the
meanings ascribed to them in the Agreements or in agreements referred to
therein.
In connection with my opinions set forth herein, I have
reviewed executed copies of the Agreements. I also have examined the originals
or copies, certified or otherwise identified to my satisfaction, of corporate
records of the Seller, and other agreements, instruments, certificates and
documents as I have deemed necessary or appropriate as a basis for the opinions
set forth herein. I have assumed the due authorization, execution and delivery
of the instruments and documents referred to herein by the parties thereto other
than the Seller, and have relied as to factual matters on the representations
and warranties made by, and on certificates or other documents furnished by
officers of, the parties to the Agreements. Except as otherwise specifically
stated in this opinion, I have not examined the Mortgage Notes, the Mortgages or
other documents in the Mortgage Files (such documents, collectively, the
"Mortgage Documents"), and I express no opinion concerning the conformity of any
of the Mortgage Documents to the requirements of the Agreements.
For purposes of this opinion, I have assumed that (i) each
Mortgage Note and each Mortgage was appropriately prepared and duly executed and
delivered by the related
<PAGE>
-2-
Mortgagor, each Mortgage was appropriately recorded in the applicable
jurisdiction, and any intervening endorsement of any Mortgage Note, and any
intervening assignment of any Mortgage, which was required in order to transfer
to the Seller ownership of the Mortgage Loans, was obtained and completed; (ii)
the Seller has properly endorsed each Mortgage Note using the form of
endorsement of mortgage note (an "Endorsement"), and has properly completed and
executed forms of assignment of mortgage (each, an "Assignment") with respect to
each Mortgage Loan, copies of which Endorsement and Assignment are described in
or annexed to the Seller's Agreement; (iii) the Seller is the sole owner of the
Mortgage Loans, free and clear of any and all pledges, liens, security
interests, claims, participation interests or other equities or encumbrances of
any nature; (iv) the Mortgage Documents do not reflect on their face any
interest which is inconsistent with the ownership interest of the Seller or the
sale of the Mortgage Loans by the Seller to the Purchaser as provided in the
Agreements; (v) the amount of the consideration paid by the Purchaser to the
Seller for the Mortgage Loans constitutes value reasonably equivalent to the
value of the Mortgage Loans; (vi) the Seller is not selling the Mortgage Loans
with any intent to hinder, delay or defraud any of its creditors; and (vii) the
Seller is solvent, and will be solvent at all times prior to any recording of
the Assignments of the Mortgages contemplated by the Agreements.
In rendering the opinions set forth below, I do not express
any independent opinion concerning law other than the law of the States of New
York and _________ and the federal law of the United States of America. In
rendering the opinion set forth in paragraph 7 below as to matters governed by
the laws of any state other than the states of New York and Minnesota, I have
relied upon the opinions of independent local counsel, and such opinions are
satisfactory in form and scope to me and nothing has come to my attention to
indicate that I am not entitled to rely thereon as of the date hereof.
Based upon the foregoing, I am of the following opinions:
1. The Seller is a corporation duly organized and validly
existing and in good standing under the laws of California
with full power and authority to own its properties and carry
on its business as presently conducted by it. The Seller has
the full corporate power and authority to own the Mortgage
Loans and to transfer and convey the Mortgage Loans to the
Purchaser and has the full corporate power and authority to
execute and deliver, engage in the transactions contemplated
by, and perform its obligations under and observe the terms
and conditions of, the Agreements.
2. Each of the Agreements has been duly and validly authorized,
executed and delivered by the Seller, and (assuming the due
authorization, execution and delivery thereof by the other
parties thereto) constitutes the valid, legal and binding
agreement of the Seller, enforceable against the Seller in
accordance with its terms, except as enforceability may be
limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws
relating to or affecting the rights of creditors generally,
(ii) general principles of
<PAGE>
-3-
equity whether such enforcement is considered in a proceeding
in equity or at law, and (iii) public policy considerations
underlying the securities laws, to the extent that such public
policy considerations limit the enforceability of the
provisions, if any, of the Agreements which purport to provide
indemnification from securities law liabilities.
3. No consent, approval, authorization or order of the State of
New York, the State of Minnesota or any federal court or
governmental agency or body is required for the execution,
delivery and performance by the Seller of or compliance by the
Seller with the Agreements or the consummation of the
transactions contemplated by the Agreements except for those
consents, approvals, authorizations or orders which previously
have been obtained; except that I express no opinion as to the
registration or qualification of the Certificates under
applicable federal or state securities laws.
4. To the best of my knowledge, the Seller is not in default
under any material provisions of any agreement, contract,
instrument or indenture to which the Seller is a party or by
which it is bound, nor has any event occurred which, with
notice or lapse of time or both, would constitute a default
under any such agreement, contract, instrument or indenture,
which event of default could have a material adverse effect on
the Mortgage Loans or the performance by the Seller of its
obligations under the Agreements.
5. Neither the transfer of the Mortgage Loans as provided in the
Agreements, nor the fulfillment of the terms of or the
consummation of any other of the transactions contemplated in
the Agreements, will result in a breach of any term or
provision of the charter or by-laws of the Seller, or, to the
best of my knowledge, will conflict with, result in a breach,
violation or acceleration of or constitute a default under,
the terms of any indenture or other agreement or instrument to
which the Seller is a party or by which it is bound, or any
State of New York or federal statute, or any order or
regulation of any State of New York or federal court,
regulatory body, administrative agency or governmental body
having jurisdiction over the Seller.
6. To the best of my knowledge, after due inquiry, there are no
actions, proceedings or investigations pending or threatened
against the Seller before any court, administrative agency or
other tribunal (i) asserting the invalidity of the Agreements,
(ii) seeking to prevent the consummation of any of the
transactions contemplated in the Agreements, or (iii) which
might materially and adversely affect the performance by the
Seller of its obligations under, or the validity or
enforceability of, the Agreements.
7. The Endorsement of each Mortgage Note satisfies the
requirement, if any, of endorsement in order to transfer all
right, title and interest of the party so
<PAGE>
-4-
endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note, and each Assignment is in recordable form and
is sufficient to effect the assignment of and to transfer to
the assignee thereunder the benefits of the assignor, as
mortgagee or assignee thereof, under each Mortgage to which
that Assignment relates.
8. Nothing has come to our attention that would lead us to
believe that the information contained in the Purchaser's
Prospectus, dated May ___, 1996, under the caption "The
Mortgage Pool" and in the Purchaser's Prospectus Supplement,
dated May __, 1996, relating to the Mortgage Loans and the
Seller, its financial condition and its loan portfolio,
specifically the information on the front cover, in the
summary under the subheading "The Mortgage Pool" and under the
captions "The Mortgage Pool" and "Pooling and Servicing
Agreement - The Master Servicer", "-Loan Production" and
"-Delinquency and Foreclosure Experience", contains any untrue
statement of a material fact or omits to state 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.
9. Fraudulent conveyance opinion, if necessary, satisfactory to
the Rating Agencies.
10. "True Sale" opinion satisfactory to the Rating Agencies.
Very truly yours,
<PAGE>
EXHIBIT E-1
REQUEST FOR RELEASE
(for Trustee/Custodian)
LOAN INFORMATION
Name of Mortgagor: ___________________________
Master Servicer
Loan No.: ___________________________
TRUSTEE/CUSTODIAN
Name: ___________________________
Address: ___________________________
Trustee/Custodian
Mortgage File No.: ___________________________
DEPOSITOR
Name: SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
Address: ___________________________
___________________________
Certificates: Mortgage Pass-Through Certificates,
Series 1996-2.
<PAGE>
The undersigned Master Servicer hereby acknowledges that it
has received from _______________________, as Trustee for the Holders of
Mortgage Pass-Through Certificates, Series 1996-2, the documents referred to
below (the "Documents"). All capitalized terms not otherwise defined in this
Request for Release shall have the meanings given them in the Pooling and
Servicing Agreement, dated as of May 1, 1996, among the Trustee, the Depositor
and the Master Servicer (the "Pooling and Servicing Agreement").
( ) Promissory Note dated _______________, 19__, in the original principal
sum of $__________, made by _____________________, payable to, or
endorsed to the order of, the Trustee.
( ) Mortgage recorded on _________________________ as instrument no.
____________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.
( ) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ______________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County
Recorder's Office of the County of _______________, State of
_______________________ in book/reel/docket ____________ of official
records at page/image ____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ---------------------------------------------
( ) ---------------------------------------------
( ) ---------------------------------------------
( ) ---------------------------------------------
The undersigned Master Servicer hereby acknowledges and agrees
as follows:
(1) The Master Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Master Servicer shall not cause or permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions
nor shall the Master Servicer assert or seek
2
<PAGE>
to assert any claims or rights of setoff to or against the Documents or
any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the
need therefor no longer exists, unless the Mortgage Loan relating to
the Documents has been liquidated and the proceeds thereof have been
remitted to the Collection Account and except as expressly provided in
the Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of the
Trustee, and the Master Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the Master
Servicer's possession, custody or control.
Dated:
NORWEST MORTGAGE, INC.
By:________________________________________
Name:______________________________________
Title:_____________________________________
3
<PAGE>
EXHIBIT E-2
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1996-2
____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH
BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:______________________ BORROWER'S NAME:_________________
COUNTY:___________________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLEC- TION ACCOUNT PURSUANT TO
SECTION 3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE
CREDITED.
________________________________ DATED:_________________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT F-1
FORM OF TRANSFEROR REPRESENTATION LETTER
[Date]
[Trustee]
___________________
___________________
[Certificate Registrar]
___________________
___________________
Re: Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 1996-2,
CLASS ___, REPRESENTING A ___% CLASS ___ PERCENTAGE INTEREST
------------------------------------------------------------
Ladies and Gentlemen:
In connection with the transfer by ________________ (the
"Transferor") to ________________ (the "Transferee") of the captioned mortgage
pass-through certificates (the "Certificates"), the Transferor hereby certifies
as follows:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of May
1, 1996, among Salomon Brothers Mortgage Securities VII, Inc. as Depositor,
Norwest Mortgage, Inc. as Master Servicer and The Chase Manhattan Bank, N.A. as
Trustee (the
<PAGE>
"Pooling and Servicing Agreement"), pursuant to which Pooling and Servicing
Agreement the Certificates were issued.
Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
Very truly yours,
[Transferor]
By:___________________________________________
Name:_________________________________________
Title:________________________________________
2
<PAGE>
FORM OF TRANSFEREE REPRESENTATION LETTER
[Date]
[Trustee]
___________________
___________________
[Certificate Registrar]
___________________
___________________
Re: Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 1996-2,
CLASS ___, REPRESENTING A ____% CLASS ___ PERCENTAGE INTEREST
-------------------------------------------------------------
Ladies and Gentlemen:
In connection with the purchase from ______________________
(the "Transferor") on the date hereof of the captioned trust certificates (the
"Certificates"), _______________ (the "Transferee") hereby certifies as follows:
1. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of
1933 (the "1933 Act") and has completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. The
Transferee is aware that the sale to it is being made in reliance on
Rule 144A. The Transferee is acquiring the Certificates for its own
account or for the account of a qualified institutional buyer, and
understands that such Certificate may be resold, pledged or transferred
only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that
the resale, pledge or transfer is being made in reliance on Rule 144A,
or (ii) pursuant to another exemption from registration under the 1933
Act.
2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the
nature, performance and servicing of the Mortgage Loans, (c) the
Pooling and Servicing Agreement referred to below, and (d) any credit
enhancement mechanism associated with the Certificates, that it has
requested.
<PAGE>
All capitalized terms used but not otherwise defined herein
have the respective meanings assigned thereto in the Pooling and Servicing
Agreement, dated as of May 1, 1996, among Salomon Brothers Mortgage Securities
VII, Inc. as Depositor, Norwest Mortgage, Inc. as Master Servicer and The Chase
Manhattan Bank, N.A., as Trustee, pursuant to which the Certificates were
issued.
[TRANSFEREE]
By:___________________________________________
Name:_________________________________________
Title:________________________________________
2
<PAGE>
ANNEX 1 TO EXHIBIT F-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and The Chase Manhattan Bank, N.A., as Trustee
and Certificate Registrar, with respect to the mortgage pass-through
certificates (the "Certificates") described in the Transferee Certificate to
which this certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
owned and/or invested on a discretionary basis $______________________1 in
securities (except for the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the
category marked below.
___ CORPORATION, ETC. The Transferee is a corporation (other than
a bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ BANK. The Transferee (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, A COPY OF WHICH IS
ATTACHED HERETO.
___ SAVINGS AND LOAN. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth
- --------
1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.
<PAGE>
of at least $25,000,000 as demonstrated in its latest annual
financial statements, A COPY OF WHICH IS ATTACHED HERETO.
___ BROKER-DEALER. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ INSURANCE COMPANY. The Transferee is an insurance company
whose primary and predominant business activity is the writing
of insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by the
insurance commissioner or a similar official or agency of a
State, territory or the District of Columbia.
___ STATE OR LOCAL PLAN. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA PLAN. The Transferee is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ INVESTMENT ADVISOR. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.
2
<PAGE>
___ ___ Will the Transferee be purchasing the Certificates
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.
7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
Dated:
______________________________________
Print Name of Transferee
By:__________________________________________
Name:________________________________________
Title:_______________________________________
3
<PAGE>
ANNEX 2 TO EXHIBIT F-1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and The Chase Manhattan Bank, N.A., as Trustee
and Certificate Registrar, with respect to the mortgage pass-through
certificates (the "Certificates") described in the Transferee Certificate to
which this certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").
2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.
____ The Transferee owned $___________________ in securities (other
than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Transferee is part of a Family of Investment Companies
which owned in the aggregate $______________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
<PAGE>
4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.
5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
Dated:
___________________________________________
Print Name of Transferee or Advisor
By:________________________________________
Name:______________________________________
Title:_____________________________________
IF AN ADVISER:
___________________________________________
Print Name of Transferee
2
<PAGE>
FORM OF TRANSFEREE REPRESENTATION LETTER
The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:
1. I am an executive officer of the Purchaser.
2. The Purchaser is a "qualified institutional buyer",
as defined in Rule 144A, ("Rule 144A") under the Securities Act of
1933, as amended.
3. As of the date specified below (which is not earlier
than the last day of the Purchaser's most recent fiscal year), the
amount of "securities", computed for purposes of Rule 144A, owned and
invested on a discretionary basis by the Purchaser was in excess of
$100,000,000.
Name of Purchaser ____________________________________________________________
By: (Signature)____________________________________________________________
Name of Signatory ____________________________________________________________
Title___________________________________________________________________________
Date of this certificate________________________________________________________
Date of information provided in paragraph 3_____________________________________
<PAGE>
EXHIBIT F-2
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
____________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a Managing Director of Salomon Brothers Inc (the
"Owner") a corporation duly organized and existing under the laws of the State
of Delaware, the record owner of Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 1996-2, Class R (the "Class R
Certificates"), on behalf of whom I make this affidavit and agreement.
Capitalized terms used but not defined herein have the respective meanings
assigned thereto in the Pooling and Servicing Agreement pursuant to which the
Class R Certificates were issued.
2. The Owner (i) is and will be a "Permitted Transferee" as of
May ___, 1996 and (ii) is acquiring the Class R Certificates for its own account
or for the account of another Owner from which it has received an affidavit in
substantially the same form as this affidavit. A "Permitted Transferee" is any
person other than a "disqualified organization" or a possession of the United
States. For this purpose, a "disqualified organization" means the United States,
any state or political subdivision thereof, any agency or instrumentality of any
of the foregoing (other than an instrumentality all of the activities of which
are subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income.
3. The Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Internal Revenue Code of 1986 that applies to all transfers of the Class R
Certificates after March 31, 1988; (ii) that such tax would be on the transferor
or, if such transfer is through an agent (which person includes a broker,
nominee or middleman) for a non-Permitted Transferee, on the agent; (iii) that
the person otherwise liable for the tax shall be relieved of liability for the
tax if the transferee furnishes to such person an affidavit that the transferee
is a Permitted Transferee and, at the time of transfer, such person does not
have actual knowledge that the affidavit is false; and (iv) that each of the
Class R Certificates may be a "noneconomic residual interest" within the meaning
of proposed Treasury regulations promulgated under the Code and that the
transferor of a "noneconomic residual interest" will remain liable for any taxes
due with
<PAGE>
respect to the income on such residual interest, unless no significant purpose
of the transfer is to impede the assessment or collection of tax.
4. The Owner is aware of the tax imposed on a "pass-through
entity" holding the Class R Certificates if, at any time during the taxable year
of the pass-through entity, a non-Permitted Transferee is the record holder of
an interest in such entity. (For this purpose, a "pass-through entity" includes
a regulated investment company, a real estate investment trust or common trust
fund, a partnership, trust or estate, and certain cooperatives.)
5. The Owner is aware that the Trustee will not register the
transfer of any Class R Certificate unless the transferee, or the transferee's
agent, delivers to the Trustee, among other things, an affidavit in
substantially the same form as this affidavit. The Owner expressly agrees that
it will not consummate any such transfer if it knows or believes that any of the
representations contained in such affidavit and agreement are false.
6. The Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class R Certificates will only be
owned, directly or indirectly, by an Owner that is a Permitted Transferee.
7. The Owner's taxpayer identification number is 13-3082694.
8. The Owner has reviewed the restrictions set forth on the
face of the Class R Certificates and the provisions of Section 5.02(d) of the
Pooling and Servicing Agreement under which the Class R Certificates were issued
(in particular, clauses (iii)(A) and (iii)(B) of Section 5.02(d) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
9. The Owner is not acquiring and will not transfer the Class
R Certificates in order to impede the assessment or collection of any tax.
10. The Owner anticipates that it will, so long as it holds
the Class R Certificates, have sufficient assets to pay any taxes owed by the
holder of such Class R Certificates, and hereby represents to and for the
benefit of the person from whom it acquired the Class R Certificates that the
Owner intends to pay taxes associated with holding such Class R Certificates as
they become due, fully understanding that it may incur tax liabilities in excess
of any cash flows generated by the Class R Certificates.
11. The Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds the
Class R Certificates.
12. The Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding.
2
<PAGE>
13. The Owner is not acquiring the Class R Certificates with
the intent to transfer the Class R Certificates to any person or entity that
will not have sufficient assets to pay any taxes owed by the holder of such
Class R Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.
14. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, obtain from its transferee the
representations required by Section 5.02(d) of the Pooling and Servicing
Agreement under which the Class R Certificate were issued and will not
consummate any such transfer if it knows, or knows facts that should lead it to
believe, that any such representations are false.
15. The Owner will, in connection with any transfer that it
makes of the Class R Certificates, deliver to the Trustee an affidavit, which
represents and warrants that it is not transferring the Class R Certificates to
impede the assessment or collection of any tax and that it has no actual
knowledge that the proposed transferee: (i) has insufficient assets to pay any
taxes owed by such transferee as holder of the Class R Certificates; (ii) may
become insolvent or subject to a bankruptcy proceeding for so long as the Class
R Certificates remains outstanding; and (iii) is not a "Permitted Transferee".
16. The Owner is a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
3
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its Managing Director, attested by its Secretary, this 23rd day of May, 1996.
SALOMON BROTHERS INC
By:_______________________________________
Name:_____________________________________
Title: Managing Director
ATTEST:
By:________________________
Name:______________________
Title: Secretary
Personally appeared before me the above-named , known or
proved to me to be the same person who executed the foregoing instrument and to
be a Managing Director of the Owner, and acknowledged to me that he executed the
same as his free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this 23rd day of May, 1996.
_______________________________
Notary Public
County of___________________
State of____________________
My Commission expires:
<PAGE>
FORM OF TRANSFEROR AFFIDAVIT
STATE OF NEW YORK )
: ss. :
COUNTY OF NEW YORK )
____________________________, being duly sworn, deposes,
represents and warrants as follows:
1. I am a Vice President of Salomon Brothers Mortgage
Securities VII, Inc. (the "Owner"), a corporation duly organized and existing
under the laws of the State of Delaware, on behalf of whom I make this
affidavit.
2. The Owner is not transferring the Residual Certificates to
impede the assessment or collection of any tax.
3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Class R Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Class R Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Class R Certificates remain outstanding
and (iii) is not a Permitted Transferee.
4. The Owner understands that the Purchaser has delivered to
the Trustee a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit F-2. The Owner does not know or
believe that any representation contained therein is false.
5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.
6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its Vice President, attested by its Secretary, this 23rd day of May, 1996.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By:_______________________________________
Name:_____________________________________
Title: Vice President
ATTEST:
By:_______________________
Name:_____________________
Title: Secretary
Personally appeared before me the above-named ______________,
known or proved to me to be the same person who executed the foregoing
instrument and to be a Vice President of the Owner, and acknowledged to me that
he executed the same as his free act and deed and the free act and deed of the
Owner.
Subscribed and sworn before me this 23rd day of May, 1996.
____________________________________
Notary Public
County of__________________
State of___________________
My Commission expires:
<PAGE>
EXHIBIT G
FORM OF REMITTANCE REPORT
S4721-50Y N O R W E S T M O R T G A G E , I N C . 05/31/96
PRIVATE POOL DETAIL REPORT PAGE 1
- --------------- --------------- --------------- --------------- ---------------
INVESTOR : B01 SALOMON SERIES
CATEGORY : 001
POOL NO : 94- 001 INV PERCT : 100.00
LAST C/OFF: 04/30/96 ODD CLT/INV:( : ) ALPHA CODE: SASC
PIF DAY PIF PIF CRT RMT PASS TRK ADD PL IND POOL USE S50Y T62C LOAN DEF RMT YR
INT RATE ADJ CAL THRU BAL NEW TP LN ID RES SORT RECP ADV INT C/O N/A MON
00.00000 Y LN 00.00000 Y N CD Y PVT N L N NO NO
<TABLE>
<CAPTION>
<S> <C>
- --------------- --------------- --------------- --------------- --------------- --------------- -------------------- ------------
LOAN NO INT RATE S-FEE YIELD P&I CON BEG SCHED PRIN BAL SCHED PRIN SCH NET INT BUYDOWN REMITTANCE
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ----- ------------
INV LOAN NO DUE DT BEGIN PRIN BAL END PRIN BAL PRIN COLL INT COLL SER- FEE COLL
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
1063912 07.500 00.475 07.025 1,835.44 255,384.67 239.29 1,495.06 0.00 1,734.35
0001063912 06/01/96 255,622.47 255,384.67 237.80 1,597.64 101.18
ENDING SCH BALANCE 255,145.38
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
1105675 07.625 00.600 07.025 2,477.28 343,454.63 294.91 2,010.64 0.00 2,305.55
0001105675 06/01/96 343,747.68 343,454.63 293.05 2,184.23 171.87
ENDING SCH BALANCE 343,159.72
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
1106900 07.875 00.850 07.025 3,172.18 429,349.13 354.58 2,513.48 0.00 2,868.06
0001106900 06/01/96 429,701.39 429,349.13 352.26 2,819.92 304.37
ENDING SCH BALANCE 428,994.55
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
1115185 07.500 00.475 07.025 1,678.12 233,817.50 216.76 1,368.81 0.00 1,585.57
0001115185 06/01/96 234,032.91 233,817.50 215.41 1,462.71 92.64
ENDING SCH BALANCE 233,600.74
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
1126430 08.250 01.225 07.025 1,878.17 243,716.03 202.62 1,426.75 0.00 1,629.37
0001126430 06/01/96 243,917.27 243,716.03 201.24 1,676.93 249.00
ENDING SCH BALANCE 243,513.41
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
1176732 07.250 00.225 07.025 1,466.68 209,682.96 199.85 1,227.52 0.00 1,427.37
0001176732 06/01/96 209,881.61 209,682.96 198.65 1,268.03 39.35
ENDING SCH BALANCE 209,483.11
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
1192779 07.500 00.475 07.025 2,097.65 293,735.41 261.80 1,719.58 0.00 1,981.38
0001192779 06/01/96 293,995.59 293,735.41 260.18 1,837.47 116.37
ENDING SCH BALANCE 293,473.61
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
1197276 07.250 00.225 07.025 1,412.11 197,725.33 217.52 1,157.52 0.00 1,375.04
0001197276 06/01/96 197,941.54 197,725.33 216.21 1,195.90 37.11
ENDING SCH BALANCE 197,507.81
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
1210702 07.625 00.600 07.025 2,412.50 334,476.17 287.18 1,958.08 0.00 2,245.26
0001210702 06/01/96 334,761.54 334,476.17 285.37 2,127.13 167.38
ENDING SCH BALANCE 334,188.99
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---- ------------
</TABLE>
<PAGE>
T4721-62C N O R W E S T M O R T G A G E , I N C .
MONTHLY ACCOUNTING REPORT
SALOMON SERIES POOL NUMBER : 94-001 CUT-OFF DATE : 05/31/96
REPORTING MONTH : MAY
SELLER- SERVICER NUMBER :
INVESTOR / CATEGORY : B01/001
<TABLE>
<CAPTION>
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
SECTION 1 - MORTGAGE ADMINISTRATION
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
POOL ACTIVITY THIS MONTH TOTAL NUMBER CONSTANT P&I INTEREST PRINCIPAL
A. 1. BEGINNING BALANCES 664 1,393,817.10 187,788,078.91
2. LOANS ADDED
B. 1. INSTALLMENT COLLECTIONS 1,237,459.54 169,002.66
2. ADDITIONAL PRIN COLLECTIONS 61,154.89
3. LIQUIDATION-IN- FULL 6 15,477.91 14,581.98 2,035,456.32
C. OTHER (+ OR -) ATTACH EXPLANATION 4,013.34
D. ENDING BALANCES 658 1,378,339.19 1,256,054.86 185,522,465.04
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
E. TOTAL NUMBER - INSTALLMENTS DELINQUENT - INTEREST PRINCIPAL
<S> <C> <C> <C> <C> <C> <C> <C>
DELINQUENT PERCENT-DELQ ONE TWO THREE+ FORC R.E.O. F. AMOUNT PPD 184,975.55 25,581.25 H. SER-FEE
7 1.06 7 0 0 2 G. AMOUNT DELQ 44,608.06 4,579.36 130,920.28
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ----------
</TABLE>
SECTION 2 - SCH MORTGAGE INSTALLMENTS WTD AVG NOTE RATE 7.84122 %
- -------------------------------------------------------------------------------
A. CONSTANT B. INTEREST C. SCHEDULED PRINCIPAL (LINE A - B)
1,393,817.10 1,226,103.91 167,713.19
SECTION 3 - SCHEDULE OF PAYMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
D. OTHER (+ OR -) E. TOTAL PRIN DISTRIBUTION AMOUNT
A. SCHEDULED PRIN B. ADDITIONAL PRIN C. LIQUIDATIONS (ATTACH EXPLANATION) ( A THRU D )
167,713.19 61,154.89 2,035,130.42 1,727.11- 2,262,271.39
F. INTEREST DISTRIBUTION AMOUNT 1,098,474.35
G. ADJUSTMENT FOR INTEREST ON LIQUIDATIONS 0.00
H. LESS PAYOFFS PREVIOUSLY REMITTED 0.00
I. LESS BUYDOWN FUNDS 0.00
J. TOTAL DISTRIBUTION AMOUNT (PRINCIPAL AND INTEREST) 3,360,745.74
</TABLE>
- --------------- --------------- --------------- --------------- ---------------
SECTION 4 - SECURITY BALANCES
- --------------- --------------- --------------- --------------- ---------------
A. BEGINNING AGGREGATE SECURITY BALANCE 187,639,753.19
B. PRINCIPAL DISTRIBUTION AMOUNT (SECTION 3 - TOTAL PRINCIPAL) 2,262,271.39-
C. ENDING AGGREGATE SECURITY BALANCE 185,377,481.80
- --------------- --------------- --------------- ----------------- ------------
SECTION 5 - CUSTODIAL ACCOUNTS
- --------------- --------------- --------------- ---------------- ------------
<TABLE>
<CAPTION>
A. NAME AND ADDRESS OF CUSTODIAL BANKS ACCOUNT NUMBER(S)
<S> <C> <C> <C>
PRINCIPAL & INTEREST SALOMON SERIES 94-9 P&I NORWEST BANK IOWA, N.A. 7083232
TAXES AND INSURANCE SALOMON SERIES 94-9 T&I NORWEST BANK IOWA, N.A. 7083240
</TABLE>
<TABLE>
<CAPTION>
B. STATUS OF CUSTODIAL FUNDS AT CUT-OFF
<S> <C> <C> <C>
1. TAX & INSURANCE 615,827.69 2. PRINCIPAL & INTEREST 2,258,210.16 3. OTHER
</TABLE>
<PAGE>
T4721-62B N O R W E S T M O R T G A G E , I N C . 05/31/96
LOANS ADDED REPORT
PAGE NO: 1
FOR MONTH ENDING 05/96 PREPARED BY : INVESTOR ACCOUNTING
SELLER-SERVICER NUMBER:
SELLER-SERVICER NAME :
405 SW FIFTH INVESTOR: 155
DES MOINES, IA 50328
(800) 288-3212 POOL NUMBER :
<TABLE>
<CAPTION>
- --------------- --------------- --------------- --------------- --------------- -----------------
PASS-THRU NOTE INVESTOR SELL-SERV PURCHASE 1ST
RATE RATE LOAN NUM LOAN NUM CAT PRINCIPAL BALANCE P & I INSTALLMENT DATE
- --------------- --------------- --------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
7.00000 7.25000 0001588640 1588640 004 512,784.75 3,523.45 06/01/96
7.87500 8.12500 0001826455 1826455 004 564,409.45 4,250.06 06/01/96
7.75000 8.00000 0001877794 1877794 004 38,816.02 491.83 06/01/96
8.50000 8.75000 0001894442 1894442 004 63,336.13 503.49 06/01/96
7.37500 7.62500 0001895320 1895320 004 416,155.69 2,958.58 06/01/96
8.25000 8.50000 0001914833 1914833 004 121,939.91 947.31 06/01/96
7.12500 7.37500 0001932884 1932884 004 996,148.31 6,906.76 06/01/96
7.87500 8.12500 0002000976 2000976 004 267,608.24 2,004.75 06/01/96
7.62500 7.87500 0002001280 2001280 004 238,122.34 1,740.17 06/01/96
7.75000 8.00000 0002002254 2002254 004 173,166.16 1,276.76 06/01/96
7.87500 8.12500 0002003969 2003969 004 86,848.57 649.69 06/01/96
7.62500 7.87500 0002008026 2008026 004 241,997.68 1,790.24 06/01/96
7.62500 7.87500 0002010046 2010046 004 178,538.42 1,301.87 06/01/96
7.11500 7.62500 0002014674 2014674 004 254,693.44 1,815.50 06/01/96
7.24000 7.75000 0002018428 2018428 004 284,885.57 2,046.79 06/01/96
7.62500 7.87500 0002025307 2025307 004 102,916.18 749.36 06/01/96
8.00000 8.25000 0002025544 2025544 004 227,112.52 1,712.89 06/01/96
6.25000 6.50000 0002030308 2030308 004 135,079.93 857.72 06/01/96
7.00000 7.25000 0002039171 2039171 004 323,455.61 2,217.08 06/01/96
7.50000 7.75000 0002039648 2039648 004 117,691.29 846.80 06/01/96
6.62500 6.87500 0002043255 2043255 004 213,090.70 1,405.83 06/01/96
7.00000 7.25000 0002045409 2045409 004 330,688.76 2,264.83 06/01/96
7.00000 7.25000 0002045538 2045538 004 372,523.48 2,551.34 06/01/96
7.12500 7.37500 0002048475 2048475 004 298,844.50 2,072.03 06/01/96
7.36500 7.87500 0002052324 2052324 004 262,767.47 1,910.56 06/01/96
7.12500 7.37500 0002053355 2053355 004 241,505.82 1,673.17 06/01/96
7.00000 7.25000 0002053732 2053732 004 313,011.25 2,142.04 06/01/96
7.00000 7.25000 0002054284 2054284 004 214,698.98 1,470.44 06/01/96
7.87500 8.12500 0002054676 2054676 004 234,378.83 1,744.87 06/01/96
7.12500 7.37500 0002056825 2056825 004 211,980.35 1,469.76 06/01/96
7.12500 7.37500 0002057804 2057804 004 326,992.41 2,265.42 06/01/96
6.75000 7.00000 0002061285 2061285 004 398,676.97 2,661.21 06/01/96
7.25000 7.50000 0002061515 2061515 004 638,082.19 4,474.98 06/01/96
7.25000 7.50000 0002061989 2061989 004 259,128.28 1,817.96 06/01/96
7.62500 7.87500 0003039206 3039206 004 120,239.20 893.29 06/01/96
7.87500 8.12500 0003066570 3066570 004 190,536.16 1,425.60 06/01/96
8.11500 8.62500 0003078508 3078508 004 82,689.49 647.51 06/01/96
</TABLE>
<PAGE>
T4721-62A N O R W E S T M O R T G A G E , I N C . 05/31/96
LOAN ACTIVITY REPORT
SALOMON SERIES PAGE NO: 1
FOR MONTH ENDING 05/96 PREPARED BY : MASTER SERVICING
SELLER-SERVICER
NUMBER:
SELLER-SERVICER NAME : N O R W E S T M O R T G A G E , I N C
405 SW FIFTH INVESTOR/CATEGORY: B01/001
DES MOINES, IA 50328
(800) 288-3212 POOL NUMBER : 94-001
<TABLE>
<CAPTION>
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
NOTE YIELD SELL-SER INVESTOR LPI UNPAID - REMITTANCE AMT - ACT ACT OTHER BUYDOWN
RATE RATE LOAN-NO LOAN-NO DATE PRIN-BAL SCH-INT SCH- PRIN CDE DATE P&I FEE FUNDS
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7.87500 7.02500 925223 0000925223 05/96 424,951.91 2487.74 923.73 3712.48 .00 .00
7.50000 7.02500 1063912 0001063912 05/96 255,384.67 1495.06 239.29 1835.44 .00 .00
7.62500 7.02500 1105675 0001105675 05/96 343,454.63 2010.64 294.91 2477.28 .00 .00
7.87500 7.02500 1106900 0001106900 05/96 429,349.13 2513.48 354.58 3172.18 .00 .00
7.50000 7.02500 1115185 0001115185 05/96 233,817.50 1368.81 216.76 1678.12 .00 .00
8.25000 7.02500 1126430 0001126430 05/96 243,716.03 1426.75 202.62 1878.17 .00 .00
7.25000 7.02500 1176732 0001176732 05/96 209,682.96 1227.52 199.85 1466.68 .00 .00
7.50000 7.02500 1192779 0001192779 05/96 293,735.41 1719.58 261.80 2097.65 .00 .00
7.25000 7.02500 1197276 0001197276 05/96 197,725.33 1157.52 217.52 1412.11 .00 .00
7.62500 7.02500 1210702 0001210702 05/96 334,476.17 1958.08 287.18 2412.50 .00 .00
7.50000 7.02500 1211284 0001211284 05/96 242,888.09 1421.91 229.99 1748.04 .00 .00
8.87500 7.02500 1218369 0001218369 05/96 214,507.66 1255.76 145.66 1732.12 .00 .00
7.50000 7.02500 1222550 0001222550 05/96 213,092.15 1249.82 189.96 1524.29 .00 .00
8.12500 7.02500 1228150 0001228150 05/96 261,088.67 1528.46 204.29 1972.08 .00 .00
7.37500 7.02500 1229092 0001229092 05/96 440,378.41 2578.05 401.55 3108.04 .00 .00
7.25000 7.02500 1229697 0001229697 05/96 230,280.42 1348.10 211.84 1603.12 .00 .00
7.25000 7.02500 1229732 0001229732 05/96 267,613.21 1568.70 325.27 1944.21 .00 .00
7.62500 7.02500 1246557 0001246557 05/96 207,593.54 1215.29 178.26 1497.34 .00 .00
7.37500 7.02500 1247712 0001247712 05/96 301,961.01 1767.73 285.30 2141.10 .00 .00
7.62500 7.02500 1250993 0001250993 05/96 334,798.06 1966.03 343.33 2477.28 .00 .00
7.62500 7.02500 1257201 0001257201 05/96 304,693.34 1783.73 261.63 2197.70 .00 .00
7.62500 7.02500 1262565 0001262565 05/96 215,885.68 1263.83 185.38 1557.15 .00 .00
7.87500 7.02500 1263538 0001263538 05/96 292,164.28 1710.38 257.88 2175.21 .00 .00
7.75000 7.02500 1265295 0001265295 05/96 244,813.56 1433.18 209.94 1791.03 .00 .00
7.75000 7.02500 1271571 0001271571 05/96 213,900.99 1252.21 194.67 1576.11 .00 .00
7.75000 7.02500 1275150 0001275150 05/96 223,460.19 1308.17 190.24 1633.42 .00 .00
7.25000 7.02500 1275319 0001275319 05/96 276,082.42 1616.23 255.74 1923.74 .00 .00
7.75000 7.02500 1277432 0001277432 06/96 323,153.58 1893.41 275.36 2364.17 .00 .00
7.62500 7.02500 1278468 0001278468 05/96 217,506.76 1274.49 209.19 1592.54 .00 .00
7.25000 7.02500 1283428 0001283428 05/96 220,864.25 1293.85 215.98 1551.27 .00 .00
8.12500 7.02500 1285314 0001285314 05/96 238,700.69 1397.39 188.07 1804.27 .00 .00
7.50000 7.02500 1291255 0001291255 05/96 216,582.01 1267.91 198.62 1552.26 .00 .00
7.75000 7.02500 1307122 0001307122 05/96 206,973.62 1211.66 174.93 1511.63 .00 .00
7.25000 7.02500 1307282 0001307282 05/96 471,298.83 2762.51 559.90 3410.89 .00 .00
7.62500 7.02500 1318951 0001318951 05/96 235,788.09 1380.35 202.59 1700.83 .00 .00
7.50000 7.02500 1321322 0001321322 05/96 248,553.70 1455.17 229.43 1783.00 .00 .00
8.00000 7.02500 1322632 0001322632 05/96 212,325.98 1242.99 198.78 1614.29 .00 .00
</TABLE>
<PAGE>
S4721-215 N O R W E S T M O R T G A G E , I N C . 05/31/96
CONSOLIDATION OF REMITTANCE REPORTS PAGE 1
INTEREST RATE .99999990 SERVICE FEE .99999990 STATE
SALOMON SERIES INVESTOR B01 CATEGORY 001
<TABLE>
<CAPTION>
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
OUR INVESTOR DATE PMT DATE SERVICE NET DEPOSITED PRINCIPAL LATE OTHER
LOAN NO LOAN NO PAID NO DUE ESCROW PRINCIPAL INTEREST FEE INTEREST /REMITTED BALANCE CHG
TRUST P&I CONSTANT ANN INT RATE SER FEE RATE
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
925223 0000925223 05- 13-96 29 05- 01-96 917.71 2794.77 301.66 2493.11 3410.82
424951.91
3712.48 .0787500 .0085000
1063912 0001063912 05- 06-96 34 05- 01-96 237.80 1597.64 101.18 1496.46 1734.26
255384.67
1835.44 .0750000 .0047500
1105675 0001105675 05- 06-96 25 05- 01-96 293.05 2184.23 171.87 2012.36 2305.41
343454.63
2477.28 .0762500 .0060000
1106900 0001106900 05- 06-96 26 05- 01-96 352.26 2819.92 304.37 2515.55 2867.81
429349.13
3172.18 .0787500 .0085000
1115185 0001115185 05- 06-96 39 05- 01-96 263.01 215.41 1462.71 92.64 1370.07 1585.48
233817.50
1678.12 .0750000 .0047500
1126430 0001126430 05- 14-96 36 05- 01-96 564.37 201.24 1676.93 249.00 1427.93 1629.17
243716.03
1878.17 .0825000 .0122500
1176732 0001176732 05- 15-96 31 05- 01-96 198.65 1268.03 39.35 1228.68 1427.33
209682.96
1466.68 .0725000 .0022500
1192779 0001192779 05- 06-96 27 05- 01-96 260.18 1837.47 116.37 1721.10 1981.28
293735.41
2097.65 .0750000 .0047500
1197276 0001197276 05- 02-96 53 05- 01-96 171.37 216.21 1195.90 37.11 1158.79 1375.00
197725.33
1412.11 .0725000 .0022500
1210702 0001210702 05- 22-96 25 06- 01-96 110.78 3344 76.17
2412.50 .0762500 .0060000
1210702 0001210702 05- 13-96 25 05- 01-96 958.79- 334 476.17
1210702 0001210702 05- 13-96 25 05- 01-96 958.79 285.37 2127.13 167.38 1959.75 2245.12
334476.17
1211284 0001211284 05- 06-96 32 05- 01-96 19.08- 2428 88.09
1748.04 .0750000 .0047500
1211284 0001211284 05- 06-96 32 05- 01-96 385.94 228.56 1519.48 96.23 1423.25 1651.81
242888.09
1222550 0001222550 05- 10-96 26 05- 01-96 788.00 2136 80.93
1524.29 .0750000 .0047500
1222550 0001222550 05- 16-96 27 05- 01-96 142.32- 2134 92.15
1222550 0001222550 05- 16-96 27 05- 01-96 142.32 188.78 1335.51 84.58 1250.93 1439.71
213492.15
1222550 0001222550 05- 16-96 30 06- 01-96 400.00 400.00 2130 92.15
1228150 0001228150 05- 06-96 25 05- 01-96 159.52- 26108 8.67
1972.08 .0812500 .0110000
1228150 0001228150 05- 06-96 25 05- 01-96 363.21 202.92 1769.16 239.52 1529.64 1732.56
26108 8.67
1229092 0001229092 05- 15-96 27 06- 01-96 1530.01 440 378.41
3108.04 .0737500 .0035000
1229092 0001229092 05- 13-96 27 05- 01-96 385.25 399.10 2708.94 128.56 2580.38 2979.48
440378.41
1229697 0001229697 05- 06-96 25 05- 01-96 443.19 210.57 1392.55 43.22 1349.33 1559.90
230280.42
1603.12 .0725000 .0022500
1229732 0001229732 05- 01-96 81 05- 01-96 558.50 323.31 1620.90 50.30 1570.60 1893.91
267963.21
1944.21 .0725000 .0022500
1229732 0001229732 05- 01-96 83 06- 01-96 350.00 350.00 2676 13.21
1246557 0001246557 05- 09-96 25 05- 01-96 324.42 177.13 1320.21 103.89 1216.32 1393.45
207593.54 1497.34 .0762500 .0060000
</TABLE>
<PAGE>
S4721-214 N O R W E S T M O R T G A G E , I N C . 05/31/96
SUMMARY OF PAID IN FULL REMITTANCE REPORT PAGE 1
INTEREST RATE .99999990 SERVICE FEE .99999990 STATE
SALOMON SERIES INVESTOR B01 CATEGORY 001
<TABLE>
<CAPTION>
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ------------
INVESTOR DATE PMT SERVICE NET DEPOSITED PRINCIPAL LATE OTHER
OUR LOAN NO LOAN NO PAID NO ESCROW PRINCIPAL INTEREST FEE INTEREST REMITTED BALANCE CHG TRUST
P&I CONSTANT ANN I/R SF RATE DATE DUE
- --------------- --------------- --------------- --------------- --------------- --------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
1336444 0001336444 05- 09-96 23 63.63 290326.45 2418.06 294.70 2123.36 292449.81
2164.61 .0800000 .0097500 05- 01-96
1571469 0001571469 05- 17-96 25 219279.52 2072.62 131.27 1941.35 221220.87
1852.87 .0750000 .0047500 05- 01-96
1585878 0001585878 05- 31-96 25 206.86 510505.34 3360.24 314.35 3045.89 513551.23
3725.35 .0775000 .0072500 06- 01-96
1587912 0001587912 05- 31-96 42 432.55 534978.72 3242.85 153.90 3088.95 538067.67
3867.78 .0737500 .0035000 06- 01-96
1594251 0001594251 05- 01-96 24 50.55 234439.49 1517.43 163.79 1353.64 235793.13
1729.29 .0787500 .0085000 05- 01-96
1627384 0001627384 05- 31-96 24 205.58 245926.80 1970.78 550.81 1419.97 247346.77
2138.01 .0975000 .0272500 06- 01-96
</TABLE>
CATEGORY TOTAL 6 LOANS 2,035,456.32 1,608.82 2,048,429.48
959.17 14,581.98 12,973.16
<PAGE>
S4721-213 N O R W E S T M O R T G A G E , I N C . 05/31/96
SUMMARY OF CURTAILMENTS MADE REMITTANCE REPORT PAGE 1
INTEREST RATE .9999999 SERVICE FEE .99999990 STATE
SALOMON SERIES INVESTOR B01 CATEGORY 001
<TABLE>
<CAPTION>
- --------------- --------------- --------------- ------- --------------- --------------- --------------- ---------------
INVESTOR DATE PMT SERVICE NET DEPOSITED PRINCIPAL LATE OTHER
OUR LOAN NO LOAN NO PAID NO ESCROW PRINCIPAL INTEREST FEE INTEREST /REMITTED BALANCE CHG TRUST
P&I CONSTANT ANN I/R SF RATE DATE DUE
- --------------- --------------- --------------- ------- --------------- --------------- --------------- ---------------
<S> <C> <C>
1222550 0001222550 05- 16-96 30 400.00 400.00 213,092.15
1524.29 .0750000 .0047500 05- 01-96
1229732 0001229732 05- 01-96 83 350.00 350.00 267,613.21
1944.21 .0725000 .0022500 05- 01-96
1250993 0001250993 05- 07-96 52 1036.55 1036.55 334,798.06
2477.28 .0762500 .0060000 05- 01-96
1278468 0001278468 05- 16-96 30 200.00 200.00 217,506.76
1592.54 .0762500 .0060000 05- 01-96
1283428 0001283428 05- 06-96 32 148.73 148.73 220,864.25
1551.27 .0725000 .0022500 05- 01-96
1307282 0001307282 05- 09-96 78 589.11 589.11 471,298.83
3410.89 .0725000 .0022500 05- 01-96
1318951 0001318951 05- 06-96 25 .59 .59 235,788.09
1700.83 .0762500 .0060000 05- 01-96
1321322 0001321322 05- 06-96 32 17.00 17.00 248,553.70
1783.00 .0750000 .0047500 05- 01-96
1347108 0001347108 05- 31-96 35 184.47 184.47 260,600.88
1946.43 .0787500 .0085000 06- 01-96
1347108 0001347108 05- 07-96 34 184.47 184.47 261,018.84
1946.43 .0787500 .0085000 05- 01-96
1363214 0001363214 05- 31-96 27 108.72 108.72 268,414.46
2229.36 .0912500 .0210000 06- 01-96
1389965 0001389965 05- 01-96 25 100.00 100.00 214,863.44
1538.28 .0750000 .0047500 05- 01-96
1397047 0001397047 05- 06-96 26 200.00 200.00 292,028.34
2201.30 .0800000 .0097500 05- 01-96
1403332 0001403332 05- 10-96 26 12.88 12.88 220,372.78
1572.54 .0750000 .0047500 05- 01-96
1409628 0001409628 05- 10-96 34 400.00 400.00 389,791.12
2796.86 .0750000 .0047500 05- 01-96
1435725 0001435725 05- 02-96 38 61.53 61.53 214,189.58
1538.47 .0737500 .0035000 05- 01-96
1455089 0001455089 05- 22-96 45 250.00 250.00 215,056.81
1553.33 .0737500 .0035000 05- 01-96
1455264 0001455264 05- 31-96 30 170.00 170.00 237,615.53
1929.44 .0887500 .0185000 06- 01-96
1455264 0001455264 05- 01-96 29 165.00 165.00 237,955.09
1929.44 .0887500 .0185000 05- 01-96
1458671 0001458671 05- 09-96 35 1000.00 1000.00 310,060.10
2210.17 .0737500 .0035000 05- 01-96
1480233 0001480233 05- 06-96 27 50.00 50.00 350,774.14
2455.84 .0725000 .0022500 05- 01-96
1481419 0001481419 05- 15-96 26 40.21 40.21 441,153.87
</TABLE>
<PAGE>
T4721-62E NORWEST MORTGAGE, INC. 05/31/96
LIQUIDATION REPORT PAGE NO: 1
NORWEST MORTGAGE, INC. MASTER SERVICING 05/09/96
SELLER-SERVICER NAME CONTACT LIQ DATE
0001336444 B01-001 05/09/96
INVESTOR LOAN NO SELL- SERV-NO INV/CAT PHONE NUMBER DATE PAID
8.00000 7.02500 2,164.61 0.00
NOTE RATE CONTRACT RATE MONTHLY P&I PAYMENT FULL AMOUNT RECEIVED
- --------------- --------------- --------------- --------------- ---------------
LPI-DATE P-I CON INT RATE INT DUE PRIN DUE PRIN-BAL
- --------------- --------------- --------------- --------------- ---------------
LOAN NUMBER : 1336444 TRAN 081 DAYS IN YEAR: 365
LAST-CUT- OFF: 04/30/96 ODD CLT/INV: ( / )
04/96 2,164.61 8.00000 290,326.45
05/96 2,164.61 8.00000 1,935.51 229.10 290,097.35
ENDING PRINCIPAL BALANCE 290,097.35
TOTAL INTEREST DUE 1,698.28
TOTAL AMOUNT DUE 291,795.63
<PAGE>
S4721-238 N O R W E S T M O R T G A G E , I N C . 05/31/96
MONTHLY REPORT OF LOANS PAID IN ADVANCE PAGE 1
INTEREST RATE .0000000 SERVICE FEE .000000 STATE
INVESTOR S01 CATEGORY 001
<TABLE>
<CAPTION>
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
OUR INVESTOR INVESTOR SHORT DUE NEXT TRUST PRINCIPAL P&I - - - ADVANCE- - - - -
LOAN NO BANK CAT LOAN NO NAME DATE NO. BALANCE DESC BALANCE CONSTANT INTEREST PRINCIPAL REMARKS
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C>
3033745 S01 001 0003033745 ORTEGA 06-01- 96 8 250.30 206.63 43.67
07- 01-96 9 388.98 ESC 41,629.63
LOAN TOTAL 1 PAYMENTS 250.30
3125441 S01 001 0003125441 GUSE 06-01-96 8 475.61 390.99 84.62
07- 01-96 9 430.28 ESC 78,717.68
LOAN TOTAL 1 PAYMENTS 475.61
3153416 S01 001 0003153416 STOFFERA 06-01- 96 9 428.17 353.10 75.07
07- 01-96 10 658.46 ESC 71,137.52
LOAN TOTAL 1 PAYMENTS 428.17
3164679 S01 001 0003164679 SENESCAL 06-01- 96 9 298.19 245.90 52.29
07- 01-96 10 567.71 ESC 49,540.57
LOAN TOTAL 1 PAYMENTS 298.19
3186785 S01 001 0003186785 MILLER 06-01- 96 7 240.85 199.03 41.82
07- 01-96 8 379.38 ESC 40,099.09
LOAN TOTAL 1 PAYMENTS 240.85
3224842 S01 001 0003224842 PAGE 06-01-96 9 278.48 228.64 49.84
07- 01-96 10 372.97 ESC 46,062.59
LOAN TOTAL 1 PAYMENTS 278.48
3225995 S01 001 0003225995 KRESS 06-01- 96 9 286.86 236.56 50.30
07- 01-96 10 340.90 ESC 47,659.12
LOAN TOTAL 1 PAYMENTS 286.86
3230143 S01 001 0003230143 RINK 06-01-96 7 293.90 242.81 51.09
07- 01-96 8 178.85 ESC 48,918.45
LOAN TOTAL 1 PAYMENTS 293.90
3235999 S01 001 0003235999 BURKE 06-01- 96 9 283.00 233.38 49.62
07- 01-96 10 316.46 ESC 47,018.12
LOAN TOTAL 1 PAYMENTS 283.00
3239243 S01 001 0003239243 FOGELSON 06-01- 96 9 333.78 275.25 58.53
07- 01-96 10 500.88 ESC 55,454.51
LOAN TOTAL 1 PAYMENTS 333.78
3248180 S01 001 0003248180 POPPENGA 06-01- 96 9 216.16 178.04 38.12
07- 01-96 10 326.79 ESC 35,868.14
LOAN TOTAL 1 PAYMENTS 216.16
3250713 S01 001 0003250713 REIMER 06-01- 96 7 359.89 297.41 62.48
07- 01-96 8 59,919.02
LOAN TOTAL 1 PAYMENTS 359.89
3256218 S01 001 0003256218 ENGLUND 06-01- 96 8 385.06 317.86 67.20
07- 01-96 9 508.15 ESC 64,036.23
LOAN TOTAL 1 PAYMENTS 385.06
3257932 S01 001 0003257932 GEORGE 06-01- 96 10 222.56 183.47 39.09
07- 01-96 11 327.36 ESC 36,963.91
LOAN TOTAL 1 PAYMENTS 222.56
3274616 S01 001 0003274616 ZIRPEL 06-01- 96 9 493.90 407.64 86.26
07- 01-96 10 292.17 ESC 82,127.54
LOAN TOTAL 1 PAYMENTS 493.90
</TABLE>
<PAGE>
S4721-237 N O R W E S T M O R T G A G E , I N C . 05/31/96
MONTHLY REPORT OF DELINQUENTS S/D PAGE 1
INTEREST RATE .0000000 SERVICE FEE .00000000 STATE
INVESTOR S01 CATEGORY 001
<TABLE>
<CAPTION>
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
OUR INV CAT INVESTOR MORTGAGOR DUE NEXT PRINCIPAL TRUST PRIN-INT DELINQUENT HUD
LOAN NO LOAN NO NAME DATE NO BALANCE BALANCE CONSTANT PRINCIPAL INTEREST
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3263294 S01 001 0003263294 DR GRAFF 05-01- 96 7 37,082.84 176.22 ESC 222.56 38.69 183.87
3295077 S01 001 0003295077 DA ARDRY 05-01- 96 4 43,239.45 139.75 ESC 258.92 44.52 214.40
3023813 S01 001 3023813 MJ IRVINE 05- 01-96 10 44,386.60 267.16 47.08 220.08
3091389 S01 001 3091389 AT SCHAFER 05- 01-96 10 74,611.70 111.99 ESC 449.09 79.14 369.95
CATEGORY TOTAL 4 LOANS 199,320.59 1,197.73 988.30
427.96 209.43
</TABLE>
<PAGE>
P4721-139 N O R W E S T M O R T G A G E , I N C . 05/31/96
MONTHLY STATEMENT OF MORTGAGE ACCOUNTS PAGE 1
INTEREST RATE .9999999 SERVICE FEE .99999990 STATE
SALOMON SERIES INVESTOR B01 CATEGORY 001
<TABLE>
<CAPTION>
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
INVESTOR INVESTOR SHORT DUE NEXT TRUST BAL/ PRINCIPAL P&I ----- DELINQUENT---- ------ADVANCE--
OUR LOAN NO BANK CAT LOAN NO NAME DATE NO INT PAID TO BALANCE CONSTANT INTEREST PRINCIPAL INTEREST
PRINCIPAL ANN INT SF- RATE
- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
925223 B01 001 0000925223 OSTRANDE 06- 01-96 29 424,951.91 3712.48
.0787500 .00850000
1063912 B01 001 0001063912 SHOWALTE 06- 01-96 34 255,384.67 1835.44
.0750000 .00475000
1105675 B01 001 0001105675 YERRINGT 06- 01-96 25 343,454.63 2477.28
.0762500 .00600000
1106900 B01 001 0001106900 BLASLAND 06- 01-96 26 429,349.13 3172.18
.0787500 .00850000
1115185 B01 001 0001115185 TUCHLER 06- 01-96 39 620.24
ES 233,817.50 1678.12 .0750000 .00475000
1126430 B01 001 0001126430 BIRNEY 06- 01-96 36 992.22
ES 243,716.03 1878.17
.0825000 .01225000
1176732 B01 001 0001176732 KILROY 06- 01-96 31 209,682.96 1466.68
.0725000 .00225000
1192779 B01 001 0001192779 WHITSON 06- 01-96 27 293,735.41 2097.65
.0750000 .00475000
1197276 B01 001 0001197276 VANACOUR 06- 01-96 53 437.08
ES 197,725.33 1412.11 .0725000 .00225000
1210702 B01 001 0001210702 ORLANDO 06- 01-96 25 638.41
EA 334,476.17 2412.50 .0762500 .00600000
1211284 B01 001 0001211284 RICKARDS 06- 01-96 32 366.86
ES 242,888.09 1748.04 .0750000 .00475000
1218369 B01 001 0001218369 COATES 06- 01-96 25 214,507.66 1732.12
.0887500 .01850000
1222550 B01 001 0001222550 MOE 06-01-96 30 645.68
EA 213,092.15 1524.29 .0750000 .00475000
1228150 B01 001 0001228150 ERNSKY 06- 01-96 25 203.69
ES 261,088.67 1972.08 .0812500 .01100000
</TABLE>
<PAGE>
EXHIBIT H
FORM OF CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from
time to time, the "Agreement"), dated as of May 23, 1996, by and among THE CHASE
MANHATTAN BANK, N.A., not individually, but solely as Trustee (including its
successors under the Pooling and Servicing Agreement defined below, the
"Trustee"), NORWEST MORTGAGE, INC., (together with any successor in interest,
the "Seller" and together with any successor as master servicer under the
Pooling and Servicing Agreement referred to below, the "Master Servicer"),
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC. (the "Depositor") and NORWEST
BANK MINNESOTA, N.A. (together with any successor in interest or any successor
appointed hereunder, the "Custodian").
W I T N E S S T H A T:
WHEREAS, the Master Servicer, the Trustee and the Depositor
have entered into a Pooling and Servicing Agreement, dated as of May 1, 1996,
relating to the issuance of Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 1996-2 (as in effect on the date of
this Agreement, the "Original Pooling and Servicing Agreement", and as amended
and supplemented from time to time, the "Pooling and Servicing Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the
Trustee for the purposes of receiving and holding certain documents and other
instruments delivered by the Master Servicer under the Pooling and Servicing
Agreement, all upon the terms and conditions and subject to the limitations
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the Trustee, the Seller,
the Master Servicer and the Custodian hereby agree as follows:
ARTICLE I
Definitions
Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned in the Original Pooling and Servicing
Agreement, unless otherwise required by the context herein.
ARTICLE II
Custody of Mortgage Documents
Section 2.1. CUSTODIAN TO ACT AS AGENT; ACCEPTANCE OF
CUSTODIAL FILES. The Custodian, as the duly appointed agent of the Trustee for
these purposes, acknowledges receipt of the Mortgage Notes, the Mortgages, the
assignments and other documents relating to the Mortgage Loans identified on the
schedule attached hereto and declares that it holds and will
<PAGE>
-2-
hold such Mortgage Notes, Mortgages, assignments and other documents and any
similar documents received by the Trustee subsequent to the date hereof (the
"Custodial Files") as agent for the Trustee, in trust, for the use and benefit
of all present and future Certificateholders.
Section 2.2. RECORDATION OF ASSIGNMENTS. If any Custodial File
includes one or more assignments to the Trustee of Mortgage Notes and the
related Mortgages that have not been recorded, each such assignment shall be
delivered by the Custodian to the Seller for the purpose of recording it in the
appropriate public office for real property records, and the Seller, at no
expense to the Custodian, shall promptly cause to be recorded in the appropriate
public office for real property records each such assignment and, upon receipt
thereof from such public office, shall return each such assignment to the
Custodian.
Section 2.3. REVIEW OF CUSTODIAL FILES. The Custodian agrees,
for the benefit of Certificateholders, to review, in accordance with the
provisions of Section 2.02 and 2.03(d) of the Pooling and Servicing Agreement,
each Custodial File. If in performing the review required by this Section 2.3
the Custodian finds any document or documents constituting a part of a Custodial
File to be missing or defective in any material respect, the Custodian shall
promptly so notify the Seller, the Master Servicer, the Depositor and the
Trustee.
Section 2.4. NOTIFICATION OF BREACHES OF REPRESENTATIONS AND
WARRANTIES. Upon discovery by the Custodian of a breach of any representation or
warranty made by the Master Servicer or the Seller as set forth in the Pooling
and Servicing Agreement, the Custodian shall give prompt written notice to the
Seller, the Master Servicer, the Depositor and the Trustee.
Section 2.5. CUSTODIAN TO COOPERATE; RELEASE OF CUSTODIAL
FILES. Upon the payment in full of any Mortgage Loan or the receipt by the
Master Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Master Servicer will immediately notify
the Trustee and the Custodian by a certification of a Servicing Officer in the
form of Exhibit A (which certification may be given electronically and shall
include a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account have been or will be so deposited) and shall request delivery
to it of the Mortgage File. Upon receipt of such certification and request, the
Custodian shall promptly release the related Mortgage File to the Master
Servicer.
From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any Primary Mortgage Insurance Policy or any other insurance policy relating to
the Mortgage Loans, the Custodian shall, upon request of the Master Servicer and
delivery to the Custodian of a Request for Release in the form of Exhibit B
(which may be transmitted electronically), release the related Mortgage File to
the Master Servicer, and the Custodian, at the direction of the Master Servicer,
shall execute such documents as shall be necessary to the prosecution of any
such proceedings. Such Request for Release shall obligate the Master Servicer to
return each and every document previously requested from the Mortgage File to
the Custodian when the need therefor by the Master Servicer no longer exists,
unless the Mortgage Loan has been liquidated and the Liquidation
<PAGE>
-3-
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or nonjudicially, and the Master
Servicer has delivered to the Custodian a certificate of a Servicing Officer
certifying as to the name and address of the Person to which such Mortgage File
or such document was delivered and the purpose or purposes of such delivery.
Upon receipt of a certificate of a Servicing Officer stating that such Mortgage
Loan was liquidated and that all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
Collection Account have been so deposited, or that such Mortgage Loan has become
an REO Property, the Request for Release shall be released by the Custodian to
the Master Servicer.
Section 2.6. ASSUMPTION AGREEMENTS. In the event that any
assumption agreement or substitution of liability agreement is entered into with
respect to any Mortgage Loan subject to this Agreement in accordance with the
terms and provisions of the Pooling and Servicing Agreement, the Master Servicer
shall notify the Custodian that such assumption or substitution agreement has
been completed by forwarding to the Custodian the original of such assumption or
substitution agreement, which copy shall be added to the related Custodial File
and, for all purposes, shall be considered a part of such Custodial File to the
same extent as all other documents and instruments constituting parts thereof.
ARTICLE III
Concerning the Custodian
Section 3.1. CUSTODIAN A BAILEE AND AGENT OF THE TRUSTEE. With
respect to each Mortgage Note, Mortgage and other documents constituting each
Custodial File that is delivered to the Custodian, the Custodian is exclusively
the bailee and agent of the Trustee, holds such documents for the benefit of
Certificateholders and undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. Except upon compliance with the
provisions of Section 2.5 of this Agreement, no Mortgage Note, Mortgage or other
document constituting a part of a Custodial File shall be delivered by the
Custodian to the Master Servicer or otherwise released from the possession of
the Custodian.
Section 3.2. CUSTODIAN MAY OWN CERTIFICATES. The Custodian, in
its individual or any other capacity, may become the owner or pledgee of
Certificates with the same rights it would have if it were not Custodian.
Section 3.3. DEPOSITOR TO PAY CUSTODIAN'S FEES AND EXPENSES.
The Depositor covenants and agrees to pay to the Custodian, from time to time,
and the Custodian shall be entitled to reasonable compensation for all services
rendered by it in the exercise and performance of any of the powers and duties
hereunder of the Custodian, and the Depositor will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this
<PAGE>
-4-
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ),
except any such expense, disbursement or advance as may arise from its
negligence or bad faith.
Section 3.4. CUSTODIAN MAY RESIGN; TRUSTEE OR DEPOSITOR MAY
REMOVE CUSTODIAN. The Custodian may resign from the obligations and duties
hereby imposed upon it as such obligations and duties relate to its acting as
Custodian of the Mortgage Loans. Upon receiving such notice of resignation, the
Trustee shall either take custody of the Custodial Files itself and give prompt
notice thereof to the Seller, the Master Servicer, the Depositor and the
Custodian or promptly appoint a successor Custodian by written instrument, in
duplicate, copies of which instrument shall be delivered to the resigning
custodian and to the successor Custodian. If the Trustee shall not have taken
custody of the Custodial Files and no Successor Custodian shall have been so
appointed and have accepted resignation, the resigning Custodian may petition
any court of competent jurisdiction for the appointment of a successor
Custodian.
The Trustee, or the Depositor with the consent of the Trustee,
may remove the Custodian at any time. In such event, the Trustee shall appoint,
or petition a court of competent jurisdiction to appoint, a successor Custodian
hereunder. Any successor Custodian shall be a depository institution subject to
supervision or examination by federal or state authority and shall be able to
satisfy the other requirements contained in Section 3.6.
Any resignation or removal of the Custodian and appointment of
a successor Custodian pursuant to any of the provisions of this Section 3.4
shall become effective upon acceptance of appointment by the successor
Custodian. The Trustee shall give prompt notice to the Seller, the Master
Servicer and the Custodian of the appointment of any successor Custodian. No
successor Custodian shall have been appointed and accepted appointment by the
Trustee without the prior approval of the Seller, the Master Servicer and the
Custodian.
Section 3.5. MERGER OR CONSOLIDATION OF CUSTODIAN. Any Person
into which the Custodian may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any Person succeeding
to the business of the Custodian, shall be the successor of the Custodian
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 3.6. REPRESENTATIONS OF THE CUSTODIAN. The Custodian
hereby represents that it is a depository institution subject to supervision or
examination by a federal or state authority has a combined capital and surplus
of at least $10,000,000 and is qualified to do business in the jurisdiction in
which it will hold any Custodial File.
<PAGE>
-5-
ARTICLE IV
Miscellaneous Provisions
Section 4.l. NOTICES. All notices, requests, consents and
demands and other communications required under this Agreement or pursuant to
any other instrument or document delivered hereunder shall be in writing and,
unless otherwise specifically provided, may be delivered personally, by
telegram, telex or facsimile, or by registered or certified mail, postage
prepaid, return receipt requested, at the addresses specified on the signature
page hereof (unless changed by the particular party whose address is stated
herein by similar notice in writing), in which case the notice will be deemed
delivered when received.
Section 4.2. AMENDMENTS. No modification or amendment of or
supplement to this Agreement shall be valid or effective unless the same is in
writing and signed by all parties hereto, and neither the Seller, the Master
Servicer nor the Trustee shall enter into any amendment hereof except as
permitted by the Pooling and Servicing Agreement. The Trustee shall give prompt
notice to the Custodian of any amendment or supplement to the Pooling and
Servicing Agreement and furnish the Custodian with written copies thereof.
Section 4.3. GOVERNING LAW. This Agreement shall be deemed a
contract made under the laws of the State of New York and shall be construed and
enforced in accordance with and governed by the laws of the State of New York.
Section 4.4. RECORDATION OF AGREEMENT. To the extent permitted
by applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Master Servicer and at its expense on
direction by the Trustee, but only upon direction accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 4.5. SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
<PAGE>
-6-
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
THE CHASE MANHATTAN BANK, N.A.
as Trustee
Address:
By:
4 Chase Manhattan Center, 3rd Floor Name:
Brooklyn, New York 11245 Title:
NORWEST BANK MINNESOTA, N.A.
as Custodian
Address:
By:
1015 10th Avenue, S.E. Name:
Minneapolis, Minnesota 55414 Title:
NORWEST MORTGAGE, INC.
as Seller and Master Servicer
Address:
By:
405 S.W. 5th Street Name:
Des Moines, Iowa 50309-4626 Title:
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
as Depositor
Address:
By:
Seven World Trade Center Name:
New York, New York 10048 Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of May, 1996 before me, a notary public in and
for said State, personally appeared _________________________________, known to
me to be an Assistant Vice President of Salomon Brothers Mortgage Securities
VII, Inc., one of the corporations that executed the within instrument, and also
known to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of May, 1996 before me, a notary public in and
for said State, personally appeared __________________________________________,
known to me to be a ___________________________________ of Norwest Mortgage,
Inc., one of the corporations that executed the within instrument, and also
known to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of May, 1996 before me, a notary public in and
for said State, personally appeared __________________________________________,
known to me to be a ___________________________________ of The Chase Manhattan
Bank, N.A., one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of said corporation,
and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of May, 1996 before me, a notary public in and
for said State, personally appeared __________________________________________,
known to me to be a ___________________________________ of Norwest Bank
Minnesota, N.A., one of the corporations that executed the within instrument,
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
--------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-2
____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET
FORTH BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS
FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS (AS THE TERM IS DEFINED IN THE
POOLING AND SERVICING AGREEMENT) DESCRIBED IN THE ATTACHED
SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN
MADE.
LOAN NUMBER: _______________ BORROWER'S NAME: ________________
COUNTY:_____________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
________________________________ DATED:_________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT B
REQUEST FOR RELEASE
(for Trustee/Custodian)
LOAN INFORMATION
Name of Mortgagor: _____________________________
Master Servicer
Loan No.: _____________________________
TRUSTEE/CUSTODIAN
Name: _____________________________
Address: _____________________________
-----------------------------
Trustee/Custodian
Mortgage File No.: _____________________________
DEPOSITOR
Name: SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
Address: _____________________________
-----------------------------
Certificates: Mortgage Pass-Through Certificates,
Series 1996-2.
<PAGE>
-2-
The undersigned Master Servicer hereby acknowledges that it has
received from _______________________, as Trustee for the Holders of Mortgage
Pass-Through Certificates, Series 1996-2, the documents referred to below (the
"Documents"). All capitalized terms not otherwise defined in this Request for
Release shall have the meanings ascribed to them in the Pooling and Servicing
Agreement, dated as of May 1, 1996, among the Trustee, the Depositor and the
Master Servicer (the "Pooling and Servicing Agreement").
( ) Promissory Note, dated _______________, 19__, in the original principal
sum of $__________, made by _____________________, payable to, or
endorsed to the order of, the Trustee.
( ) Mortgage recorded on _____________________ as instrument no.
____________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.
( ) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image ______________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County
Recorder's Office of the County of __________, State of _______________
in book/reel/docket ____________ of official records at page/image
____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ---------------------------------------------
( ) ---------------------------------------------
( ) ---------------------------------------------
( ) ---------------------------------------------
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Master Servicer shall not cause or permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of
<PAGE>
-3-
attachment or other impositions nor shall the Master Servicer assert or
seek to assert any claims or rights of setoff to or against the
Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the
need therefor no longer exists, unless the Mortgage Loan relating to
the Documents has been liquidated and the proceeds thereof have been
remitted to the Collection Account and except as expressly provided in
the Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of the
Trustee, and the Master Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the Master
Servicer's possession, custody or control.
Date: , 19__
NORWEST MORTGAGE, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT C
FORM OF OPINION OF COUNSEL TO THE CUSTODIAN
[Date]
The Chase Manhattan Bank, N.A.
4 Chase Manhattan Center, 3rd Floor
Brooklyn, New York 11245
Salomon Brothers Realty Corp.
Seven World Trade Center
29th Floor
New York, New York 10048
Ladies and Gentlemen:
I have acted as counsel to Norwest Bank Minnesota, N.A. (the
"Custodian") in connection with the execution and delivery of that certain
Custodial Agreement, dated as of May __, 1996 (the "Agreement"), among Norwest
Mortgage, Inc. (the "Company"), each of you and the Custodian with respect to
certain Mortgage Loans.
I have reviewed the Agreement and such other matters as I have
deemed appropriate in order to deliver the opinions contained herein.
In rendering the opinions expressed below, I have assumed,
without any independent investigation or verification of any kind, that each of
you and the Company is duly organized, validly existing and in good standing
under the laws of the respective jurisdiction of incorporation and has full
power and authority to execute, deliver and perform the Agreement, and that the
execution, delivery and performance of the Agreement by each of you and the
Company has been duly authorized by all requisite corporate action on the part
of each of you and the Company and has been duly executed and delivered by each
of you and the Company.
Based upon the foregoing, it is my opinion that:
1. The Custodian is a national banking association, duly
organized, validly existing and in good standing under the laws of the United
States of America with full right, power and authority to enter into, execute
and deliver the Agreement. The Custodian is eligible to act as custodian under
the terms of the Agreement.
<PAGE>
-2-
2. The Agreement has been duly authorized, executed and
delivered by the Custodian and constitutes the legal, valid and binding
agreement of and is enforceable against the Custodian in accordance with its
terms, subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of the rules of
equity, including those respecting the availability of specific performance.
This opinion is given to you for your sole benefit, and no
other person or entity is entitled to rely hereon, except that the purchaser or
purchasers to which you initially and directly resell the Mortgage Loans may
rely on this opinion as if it were addressed to them as of its date.
Very truly yours,
<PAGE>
EXHIBIT D-1
FORM OF CUSTODIAN'S PRELIMINARY EXCEPTION REPORT
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven World Trade Center
New York, New York 10048
Attention: ___________________
[Master Servicer]
[Trustee]
Re: Custodial Agreement, dated May __, 1996, among Salomon Brothers
Mortgage VII, Securities Inc., Norwest Mortgage, Inc., The Chase
Manhattan Bank, N.A. and Norwest Bank Minnesota, N.A., Mortgage
PASS-THROUGH CERTIFICATES, SERIES 1996-2
Ladies and Gentlemen:
Attached is the Custodian's preliminary exceptions in
accordance with Section 2.02 of the Pooling and Servicing Agreement.
The Custodian has made no independent examination of any
documents contained in each Mortgage File beyond the review specifically
required in the above-referenced Custodial Agreement. The Custodian makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
NORWEST BANK MINNESOTA, N.A.
By:
Name:
Title:
<PAGE>
EXHIBIT D-2
FORM OF CUSTODIAN'S INTERIM CERTIFICATION
[Date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven World Trade Center
New York, New York 10048
Attention: ___________________
[Master Servicer]
[Trustee]
Re: Custodial Agreement, dated May __, 1996, among Salomon Brothers
Mortgage Securities VII, Inc., Norwest Mortgage, Inc., The Chase
Manhattan Bank, N.A. and Norwest Bank Minnesota, N.A., Mortgage
PASS-THROUGH CERTIFICATES, SERIES 1996-2
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-referenced Custodial
Agreement and Section 2.02 of the Pooling and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that subject to the exceptions noted
on the attached report as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the preliminary exception report as not covered by
this certification), it has reviewed the Mortgage File and determined that (i)
all documents constituting part of such Mortgage File (other than such documents
described in Section 2.01(v) of the Pooling and Servicing Agreement) required to
be delivered to it pursuant to the Custodial Agreement and the Pooling and
Servicing Agreement are in its possession, (ii) such documents have been
reviewed by it and appear regular on their face and relate to such Mortgage
Loan, (iii) based on its examination and only as to the foregoing, the
information set forth in the Mortgage Loan Schedule that corresponds to items
(i), (ii), (iii), (v), (vi), (viii), (ix) and (x) of the definition of "Mortgage
Loan Schedule" accurately reflects information set forth in the Mortgage File.
The Custodian has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced the Custodial Agreement and the Pooling and Servicing
Agreement. The Custodian makes no representations
<PAGE>
-2-
as to: (i) the validity, legality, sufficiency, enforceability or genuineness of
any of the documents contained in the Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan, or (iii) whether any
Mortgage File included any of the documents specified in clause (v) of Section
2.01 of the Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA, N.A.
By:
Name:
Title:
<PAGE>
EXHIBIT D-3
FORM OF TRUSTEE FINAL CERTIFICATION
[date]
Salomon Brothers Mortgage
Securities VII, Inc.
Seven World Trade Center
New York, New York 10048
Attention: ___________________________
[Master Servicer]
[Trustee]
Re: Custodial Agreement, dated May __, 1994, among Salomon Brothers
Mortgage Securities VII, Inc., Norwest Mortgage, Inc., The Chase
Manhattan Bank, N.A. and Norwest Bank Minnesota, N.A., Mortgage
PASS-THROUGH CERTIFICATES, SERIES 1996-2
Ladies and Gentlemen:
In accordance with Section 2.3 of the above-captioned Custodial
Agreement and Section 2.02 of the Pooling and Servicing Agreement, the
undersigned, as Custodian, hereby certifies that as to each Mortgage Loan listed
in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
listed on the attachment hereto), it or a Custodian on its behalf has received:
(i) the original recorded Mortgage and the original recorded
power of attorney, if the Mortgage was executed pursuant to a power of
attorney, or a certified copy thereof in those instances where the
public recording office retains the original or where the original has
been lost;
(ii) an original recorded Assignment of the Mortgage to the
Trustee together with the original recorded Assignment or Assignments
of the Mortgage showing a complete chain of assignment from the
originator, or a certified copy of such Assignments in those instances
where the public recording retains the original or where original has
been lost;
(iii) the original lender's title insurance policy; and
<PAGE>
-2-
(iv) the original Primary Insurance Policy for each Mortgage Loan
indicated on the Mortgage Loan Schedule as having a Loan-to-Value Ratio
at origination in excess of 80%.
The Custodian has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Custodial Agreement. The Custodian makes no representations as
to (i) the validity, legality, sufficiency, enforceability or genuineness of any
of the documents contained in the Mortgage File of any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Custodial Agreement.
NORWEST BANK MINNESOTA, N.A.
By:
Name:
Title:
<PAGE>
EXHIBIT E-1
AUTHORIZED REPRESENTATIVES OF MASTER SERVICER
NAME SPECIMEN SIGNATURE
- ---------------------------- -----------------------------
- ---------------------------- -----------------------------
- ---------------------------- -----------------------------
- ---------------------------- -----------------------------
- ---------------------------- -----------------------------
<PAGE>
EXHIBIT E-2
AUTHORIZED REPRESENTATIVES OF TRUSTEE
NAME SPECIMEN SIGNATURE
- ---------------------------- -----------------------------
- ---------------------------- -----------------------------
- ---------------------------- -----------------------------
- ---------------------------- -----------------------------
- ---------------------------- -----------------------------
<PAGE>
EXHIBIT I
FORM OF SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the "Agreement")
is made and entered into as of ________________ between Norwest Mortgage, Inc.
(the "Servicer") and _______________________ (the "Transferee").
PRELIMINARY STATEMENT
_________________ is the holder of the entire interest in Salomon
Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through Certificates,
Series 1996-2, Class B-6 (the "Class B-6 Certificates"). The Class B-6
Certificates were issued pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of May 1, 1996, between Salomon
Brothers Mortgage Securities VI, Inc. as Depositor., Norwest Mortgage, Inc. as
Master Servicer and The Chase Manhattan Bank, N.A. as Trustee. The Class B-6
Certificates evidence partial beneficial ownership interests in a trust fund
(the "Trust Fund") consisting of the mortgage loans (the "Mortgage Loans")
listed on Schedule I of the Pooling and Servicing Agreement. The Servicer will
service the Mortgage Loans pursuant to the Pooling and Servicing Agreement.
_________________ or an affiliate thereof intends to resell all of the
Class B-6 Certificates directly to the Transferee on or promptly after the date
hereof.
In connection with such sale, the parties hereto have agreed that the
Servicer will engage in certain special servicing procedures relating to
foreclosures for the benefit of the Transferee, and that the Transferee will
deposit funds in a collateral fund to cover any losses attributable to such
procedures as well as all advances and costs in connection therewith, as set
forth herein.
In consideration of the mutual agreements herein contained, the receipt
and sufficiency of which are hereby acknowledged, the Servicer and the
Transferee agree that the following provisions shall become effective and shall
be binding on and enforceable by the Servicer and the Transferee upon the
acquisition by the Transferee of the Class B-6 Certificates.
ARTICLE I
DEFINITIONS
Section 1.01. DEFINED TERMS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
BUSINESS DAY: Any day other than (i) a Saturday or a Sunday of (ii) a
day on which banking institutions in New York City or the State of Minnesota are
required or authorized by law or executive order to be closed.
COLLATERAL FUND: The fund established and maintained pursuant to
Section 3.01 hereof.
COLLATERAL FUND PERMITTED INVESTMENTS: Any Eligible Investment as
defined in the Pooling and Servicing Agreement.
<PAGE>
COMMENCEMENT OF FORECLOSURE: The first official action required under
local law in order to commence foreclosure proceedings or to schedule a
trustee's sale under a deed of trust, including (i) in the case of a mortgage,
any filing or service of process necessary to commence an action to foreclose,
or (ii) in the case of a deed of trust, the posting, publishing, filing or
delivery of a notice of sale, but not including in either case (x) any notice of
default, notice of intent to foreclose or sell or any other action prerequisite
to the actions specified in (i) or (ii) above, (y) the acceptance of a
deed-in-lieu of foreclosure (whether in connection with a sale of the related
property or otherwise) or (z) initiation and completion of a short pay-off.
CURRENT APPRAISAL: With respect to any Mortgage Loan as to which the
Transferee has made an Election to Delay Foreclosure, an appraisal of the
related Mortgaged Property obtained by the Servicer at the Transferee's expense
from an appraiser reasonably acceptable to the Transferee as nearly
contemporaneously as practicable to the time of the Transferee's election,
prepared based on the Servicer's customary requirements for such appraisals.
ELECTION TO DELAY FORECLOSURE: Any election by the Transferee to delay
the Commencement of Foreclosure, made in accordance with Section 2.02(b).
ELECTION TO FORECLOSE: Any election by the Transferee to proceed with
the Commencement of Foreclosure, made in accordance with Section 2.03(a).
REQUIRED COLLATERAL FUND BALANCE: As of any date of determination, an
amount equal to the aggregate of all amounts previously required to be deposited
in the Collateral Fund pursuant to Section 2.02(d) (after adjustments for all
withdrawals and deposits pursuant to Section 2.02(e)) and Section 2.03(b) (after
adjustment for all withdrawals and deposits prior to such date pursuant to
Section 2.03(c)) and Section 3.02, reduced by all withdrawals therefrom prior to
such date pursuant to Section 2.02(g) and Section 2.03(d).
Section 1.02. DEFINITIONS INCORPORATED BY REFERENCE. All capitalized
terms not otherwise defined in this Agreement shall have the meanings assigned
in the Pooling and Servicing Agreement.
ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01. REPORTS AND NOTICES. (a) In connection with the
performance of its duties under the Pooling and Servicing Agreement relating to
the realization upon defaulted Mortgage Loans, the Servicer shall provide to the
Transferee the following notices and reports:
(i) Within five Business Days after each Distribution Date (or
included in or with the monthly statements to Certificateholders
pursuant to the Pooling and Servicing Agreement), the Servicer shall
provide to the Transferee a report, using the same methodology and
calculations in its standard servicing reports, indicating for the
Trust Fund the number of Mortgage Loans that are (A) thirty days, (B)
sixty days, (C) ninety days or more delinquent or (D) in foreclosure,
and indicating for each such Mortgage Loan the loan number and
outstanding principal balance.
2
<PAGE>
(ii) Prior to the Commencement of Foreclosure in connection
with any Mortgage Loan, the Servicer shall provide the Transferee with
a notice (sent by facsimile transmission) of such proposed and imminent
foreclosure, stating the loan number and the aggregate amount owing
under the Mortgage Loan. Such notice may be provided to the Transferee
in the form of a copy of a referral letter from the Servicer to an
attorney requesting the institution of foreclosure or a copy of a
request to foreclose received by the Servicer from the related
Subservicer which has been approved by the Servicer.
(b) If requested by the Transferee, the Servicer shall make its
servicing personnel available (during their normal business hours) to respond to
reasonable inquiries, in writing by facsimile transmission, by the Transferee in
connection with any Mortgage Loan identified in a report under subsection (a)(i)
or (a)(ii) which has been given to the Transferee, provided, that (1) the
Servicer shall only be required to provide information that is readily
accessible to its servicing personnel and is non-confidential and (2) the
Servicer shall respond within five Business Days orally or in writing by
facsimile transmission.
(c) In addition to the foregoing, the Servicer shall provide to the
Transferee such information as the Transferee may reasonably request concerning
each Mortgage Loan that is at least sixty days delinquent and each Mortgage Loan
which has become real estate owned, through the final liquidation thereof,
provided, that the Servicer shall only be required to provide information that
is readily accessible to its servicing personnel and is non-confidential.
(d) With respect to all Mortgage Loans that are serviced at any time by
a Subservicer, the Servicer shall be entitled to rely for all purposes
hereunder, including for purposes of fulfilling its reporting obligations under
this Section 2.01, on the accuracy and completeness of any information provided
to it by the applicable Subservicer.
Section 2.02. TRANSFEREE'S ELECTION TO DELAY FORECLOSURE PROCEEDINGS.
(a) The Transferee shall be deemed to direct the Servicer that in the event that
the Servicer does not receive written notice of the Transferee's election
pursuant to subsection (b) below within 24 hours (exclusive of any intervening
non-Business Days) of transmission of the notice provided by the Servicer under
Section 2.01(a)(ii) subject to extension as set forth in Section 2.02(b), the
Servicer may proceed with the Commencement of Foreclosure in respect of such
Mortgage Loan in accordance with its normal foreclosure policies without further
notice to the Transferee. Any foreclosure that has been initiated may be
discontinued (i) without notice to the Transferee if the Mortgage Loan has been
brought current or if a refinancing or prepayment occurs with respect to the
Mortgage Loan (including by means of a short payoff approved by the Servicer) or
(ii) with notice to the Transferee if the Servicer has reached the terms of a
forbearance agreement with the borrower. In such latter case the Servicer may
complete such forbearance agreement unless instructed otherwise by the
Transferee within two Business Days of notification.
(b) In connection with any Mortgage Loan with respect to which a notice
under Section 2.01(a)(ii) has been given to the Transferee, the Transferee may
elect to instruct the Servicer to delay the Commencement of Foreclosure until
such time as the Transferee determines that the Servicer may proceed with the
Commencement of Foreclosure. Such election must be evidenced by written notice
received within 24 hours (exclusive of any intervening non-Business Days) of
transmission of the notice provided by the Servicer under Section 2.01(a)(ii).
The
3
<PAGE>
Transferee shall send a copy of such notice of election to each Rating Agency as
soon as practicable thereafter. Such 24-hour period shall be extended for no
longer than an additional four Business Days after the receipt of the
information if the Transferee requests additional information related to such
foreclosure within such 24-hour period; provided, however, that the Transferee
will have at least one Business Day to make such election following its receipt
of any requested additional information. Any such additional information shall
(i) not be confidential in nature and (ii) be obtainable by the Servicer from
existing reports, certificates or statements or otherwise be readily accessible
to its servicing personnel. The Transferee agrees that it has no right to deal
with the mortgagor. However, if the Servicer's normal foreclosure policies
include acceptance of a deed-in-lieu of foreclosure or short payoff, the
Transferee will be notified and given two Business Days to respond.
(c) With respect to any Mortgage Loan as to which the Transferee has
made an Election to Delay Foreclosure, the Transferee shall obtain a Current
Appraisal as soon as practicable, and shall provide the Servicer with a copy of
such Current-Appraisal.
(d) Within two Business Days of making any Election to Delay
Foreclosure, the Transferee shall remit by wire transfer to the Servicer, for
deposit in the Collateral Fund, an amount, as calculated by the Servicer, equal
to the sum of (i) 125% of the greater of the Scheduled Principal Balance of the
Mortgage Loan and the value shown in the Current Appraisal referred to in
subsection (c) above (or, if such Current Appraisal has not yet been obtained,
the Servicer's estimate thereof, in which case the required deposit under this
subsection shall be adjusted upon obtaining such Current Appraisal), and (ii)
three months' interest on the Mortgage Loan at the applicable Mortgage Rate. If
any Election to Delay Foreclosure extends for a period in excess of three months
(such excess period being referred to herein as the "Excess Period"), the
Transferee shall remit by wire transfer in advance to the Servicer for deposit
in the Collateral Fund the amount of each additional month's interest, as
calculated by the Servicer, equal to interest on the Mortgage Loan as the
applicable Mortgage Rate for the Excess Period. The terms of this Agreement will
no longer apply to the servicing of any Mortgage Loan upon the failure of the
Transferee to deposit the above amounts relating to the Mortgage Loan within two
Business Days of (i) the Election to Delay Foreclosure or (ii) the beginning of
the related Excess Period, as the case may be.
(e) With respect to any Mortgage Loan as to which the Transferee has
made an Election to Delay Foreclosure, the Servicer or the Trustee may withdraw
from the Collateral Fund from time to time amounts necessary to reimburse the
Servicer for all related Monthly Advances and Servicing Advances thereafter made
by the Servicer as Servicer in accordance with the Pooling and Servicing
Agreement. To the extent that the amount of any such Servicing Advance is
determined by the Servicer based on estimated costs, and the actual costs are
subsequently determined to be higher, the Servicer may withdraw the additional
amount from the Collateral Fund to reimburse the Servicer. In the event that the
Mortgage Loan is brought current by the mortgagor and the foreclosure action is
discontinued, the amounts so withdrawn from the Collateral Fund shall be
redeposited therein as and to the extent that reimbursement therefor from
amounts paid by the mortgagor is not prohibited pursuant to the Pooling and
Servicing Agreement as of the date hereof. Except as provided in the preceding
sentence, amounts withdrawn from the Collateral Fund to cover Monthly Advances
and Servicing Advances shall not be redeposited therein or otherwise reimbursed
to the Transferee. If and
4
<PAGE>
when any such Mortgage Loan is brought current by the mortgagor, all amounts
remaining in the Collateral Fund in respect of such Mortgage Loan (after
adjustment for all previous withdrawals and deposits pursuant to this subsection
and after reimbursement to the Servicer for all related Monthly Advances) shall
be released to the Transferee.
(f) With respect to any Mortgage Loan as to which the Transferee has
made an Election to Delay Foreclosure, the Servicer shall continue to service
the Mortgage Loan in accordance with its customary procedures (other than the
delay in Commencement of Foreclosure as provided herein). If and when following
such election, the Transferee shall notify the Servicer that it believes that it
is appropriate to do so, the Servicer shall proceed with the Commencement of
Foreclosure; provided that, in any event, if the Mortgage Loan is not brought
current by the mortgagor by the time the loan becomes six months delinquent, the
Transferee's election shall no longer be effective and at the Purchaser's
option, either (i) the Purchaser shall purchase the Mortgage Loan from the Trust
Fund at a purchase price equal to the fair market value as shown on the Current
Appraisal, to be paid by (x) applying any balance in the Collateral Fund to such
purchase price, and (y) to the extent of any deficiency, by wire transfer of
immediately available funds to the Servicer or Trustee; or (ii) the Servicer
shall proceed with the Commencement of Foreclosure.
(g) Upon the occurrence of a cash liquidation or REO Disposition with
respect to any Mortgage Loan as to which the Transferee made an Election to
Delay Foreclosure and as to which the Servicer proceeded with the Commencement
of Foreclosure in accordance with subsection (f) above, the Servicer shall
calculate the amount, if any, by which the value shown on the Current Appraisal
obtained under subsection (c) exceeds the actual sales price obtained for the
related Mortgaged Property or REO Property (net of Servicing Advances and
accrued interest related to the extended foreclosure period), and the Servicer
or the Trustee shall withdraw the amount of such excess from the Collateral Fund
and shall remit the same to the Trust Fund for application as additional
Liquidation Proceeds (or REO Proceeds, as applicable) pursuant to the Pooling
and Servicing Agreement. After making such withdrawal, all amounts remaining in
the Collateral Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (e).
Section 2.03. TRANSFEREE'S ELECTION TO COMMENCE FORECLOSURE
PROCEEDINGS. (a) In connection with any Mortgage Loan identified in a report
under Section 2.01(a)(i)(B), the Transferee may elect to instruct the Servicer
to proceed with the Commencement of Foreclosure as soon as practicable. Such
election must be evidenced by written notice received by the Servicer by 5:00
p.m., New York City time, on the third Business Day following the delivery of
such report under Section 2.01(a)(i).
(b) Within two Business Days of making any Election to Foreclose, the
Transferee shall remit to the Servicer, for deposit in the Collateral Fund, an
amount, as calculated by the Servicer, equal to 125% of the current Scheduled
Principal Balance of the Mortgage Loan and three months' interest on the
Mortgage Loan at the applicable Mortgage Rate. If and when any such Mortgage
Loan is brought current by the mortgagor, all amounts in the Collateral Fund in
respect of such Mortgage Loan (after adjustment for all withdrawals and deposits
pursuant to subsection (c) below) shall be released to the Transferee. The terms
of this Agreement will no longer apply to the servicing of any Mortgage Loan
upon the failure of the Transferee to deposit
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the above amounts relating to the Mortgage Loan within two Business Days of the
Election to Foreclose.
(c) With respect to any Mortgage Loan as to which the Transferee has
made an Election to Foreclose, the Servicer shall continue to service the
Mortgage Loan in accordance with its customary procedures. In connection
therewith, the Servicer shall have the same rights to make withdrawals for
Monthly Advances and Servicing Advances from the Collateral Fund as are provided
under Section 2.02(e), and the Servicer shall make reimbursements thereto to the
limited extent provided under such subsection. The Servicer shall not be
required to proceed with the Commencement of Foreclosure if (i) the same is
stayed as a result of the mortgagor's bankruptcy or is otherwise barred by
applicable law, or to the extent that all legal conditions precedent thereto
have not yet been complied with, or (ii) the Servicer believes there is a breach
of representations or warranties by the Servicer, which may result in a
repurchase or substitution of such Mortgage Loan, or (iii) the Servicer
reasonably believes the Mortgaged Property may be contaminated with or affected
by hazardous wastes or hazardous substances (and the Servicer supplies the
Transferee with information supporting such belief). The Servicer will
repurchase or substitute a Mortgage Loan pursuant to the preceding clause (ii)
within the time period specified in the Pooling and Servicing Agreement if
required to do so. Any foreclosure that has been initiated may be discontinued
(i) without notice to the Transferee if the Mortgage Loan has been brought
current or if a refinancing or prepayment occurs with respect to the Mortgage
Loan (including by means of a short payoff approved by the Transferee) or (ii)
with notice to the Transferee if the Servicer has reached the terms of a
forbearance agreement unless instructed otherwise by the Transferee within two
Business Days of notification.
(d) Upon the occurrence of a liquidation with respect to any Mortgage
Loan as to which the Transferee made an Election to Foreclose and as to which
the Servicer proceeded with the Commencement of Foreclosure in accordance with
subsection (c) above, the Servicer shall calculate the amount, if any, by which
the Scheduled Principal Balance of the Mortgage Loan at the time of liquidation
(plus all unreimbursed Monthly Advances and Servicing Advances in connection
therewith other than those previously paid from the Collateral Fund) exceeds the
actual sales price obtained for the related Mortgaged Property or REO Property,
and the Servicer or the Trustee shall withdraw the amount of such excess from
the Collateral Fund and shall remit the same to the Trust Fund for application
as additional Liquidation Proceeds pursuant to the Pooling and Servicing
Agreement. After making such withdrawal, all amounts remaining in the Collateral
Fund (after adjustment for all withdrawals and deposits pursuant to subsection
(c) above) in respect of such Mortgage Loan shall be released to the Transferee.
Section 2.04. TERMINATION. (a) With respect to all Mortgage Loans
included in the Trust Fund, the Transferee's right to make any Election to Delay
Foreclosure or any Election to Foreclose and the Servicer's obligations under
Section 2.01 shall terminate on the earliest to occur of the following: (i) at
such time as the Class Certificate Principal Balance of the Class B-6
Certificates has been reduced to zero, (ii) if the greater of (x) 43% (or such
lower or higher percentage that represents the Servicer's actual loss experience
with respect to the Mortgage Loans in the related pool) of the aggregate
principal balance of all Mortgage Loans that are in foreclosure or are more than
90 days delinquent on a contractual basis and the aggregate book value of REO
properties or (y) the aggregate amount that the Servicer estimates through its
normal servicing practices will be required to be withdrawn from the Collateral
Fund with
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respect to Mortgage Loans as to which the Transferee has made an Election to
Delay Foreclosure or an Election to Foreclose exceeds (z) the then-current Class
Certificate Principal Balance of the Class B-6 Certificates, or (iii) upon any
transfer by the Transferee of any interest (other than the minority interest
therein, but only if the transferee provides written acknowledgment to the
Servicer of the Transferee's right hereunder and that such transferee will have
no rights hereunder) in the Class B-6 Certificates (whether or not such transfer
is registered under the Pooling and Servicing Agreement), including any such
transfer in connection with a termination of the Trust Fund. Unless earlier
terminated as set forth herein, this Agreement and the respective rights,
obligations and responsibilities of the Transferee and the Servicer hereunder
shall terminate immediately upon (x) the later to occur of (i) the final
liquidation of the last Mortgage Loan as to which the Transferee made any
Election to Delay Foreclosure or any Election to Foreclose and the withdrawal of
all remaining amounts in the Collateral Fund as provided herein and (ii) ten
(10) Business Days' notice or (y) the occurrence of any event that results in
the Transferee becoming an "affiliate" of the Trustee within the meaning of the
U.S. Department of Labor Prohibited Transaction Exemption 90-30, 55 Fed. Reg.
21461, May 24, 1990 (the "Prohibited Transaction Exemption").
(b) The Transferee's rights pursuant to Section 2.02 or 2.03 of this
Agreement shall terminate with respect to a Mortgage Loan as to which the
Transferee has exercised its rights under Section 2.02 or 2.03 hereof, upon
Transferee's failure to deposit any amounts required pursuant to Section 2.02(d)
or 2.03(b) after one Business Day's notice of such failure.
Section 2.05. NOTIFICATION. The Transferee shall promptly notify the
Trustee and the Servicer if such Transferee becomes aware of any discussions,
plans or events that might lead to such Person's becoming an "affiliate" (within
the meaning of the Prohibited Transaction Exemption) of the Trustee, provided
that the contents of any such notification shall be kept confidential by the
parties to this Agreement.
Section 2.06. LIMITATION ON LIABILITY. Neither the Servicer nor any of
its directors, officers, employees or agents shall be under any liability 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
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any director,
officer, employee or agent thereof may rely in good faith on any document of any
kind prima facie property executed and submitted by any Person respecting any
matters arising hereunder.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. COLLATERAL FUND. Upon payment by the Transferee of the
initial amount required to be deposited in the Collateral Fund pursuant to
Article II, the Servicer shall establish and maintain a segregated account
entitled "Norwest Mortgage, Inc., in trust for The Chase Manhattan Bank, N.A. as
Trustee, Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1996-2" (the "Collateral Fund"). Amounts held in the
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Collateral Fund shall continue to be the property of the Transferee, subject to
the first priority security interest granted hereunder for the benefit of the
Certificateholders, until withdrawn from the Collateral Fund pursuant to the
Section 2.02 or 2.03 hereof.
Upon the termination of this Agreement and the liquidation of all
Mortgage Loans as to which the Transferee has made any Election to Delay
Foreclosure or any Election to Foreclose pursuant to Section 2.04 hereof, the
Servicer shall distribute to the Transferee all amounts remaining in the
Collateral Fund together with any investment earnings thereon.
The Transferee shall not take or direct the Servicer or the Trustee to
take any action contrary to any provision of the Pooling and Servicing
Agreement. In no event shall the Transferee (i) take or cause the Trustee or the
Servicer to take any action that could cause any REMIC established under the
Pooling and Servicing Agreement to fail to qualify as a REMIC or cause the
imposition on any such REMIC of any "prohibited transaction" or "prohibited
contribution" taxes or (ii) cause the Trustee or the Servicer to fail to take
any action necessary to maintain the status of any such REMIC as a REMIC.
Section 3.02. COLLATERAL FUND PERMITTED INVESTMENTS. The Servicer
shall, at the written direction of the Transferee, invest the funds in the
Collateral Fund in Collateral Fund Permitted Investments. Such direction shall
not be changed more frequently then quarterly. In the absence of any direction,
the Servicer shall select such investments in accordance with the definition of
Collateral Fund Permitted Investments in its discretion.
All income and gain realized from any investment as well as any
interest earned on deposits in the Collateral Fund (net of any losses on such
investments) and any payments of principal made in respect of any Collateral
Fund Permitted Investment shall be deposited in the Collateral Fund upon
receipt. All costs and realized losses associated with the purchase and sale of
Collateral Fund Permitted Investments shall be borne by the Transferee and the
amount of net realized losses shall be promptly deposited by the Transferee in
the Collateral Fund. The Servicer shall periodically (but not more frequently
than monthly) distribute to the Transferee upon request an amount of cash, to
the extent cash is available therefor in the Collateral Fund, equal to the
amount by which the balance of the Collateral Fund, after giving effect to all
other distributions to be made from the Collateral Fund on such date, exceeds
the Required Collateral Fund Balance. Any amounts so distributed shall be
released from the lien and security interest of this Agreement.
Section 3.03. GRANT OF SECURITY INTEREST. In order to secure the
obligations of the Transferee hereunder to the Servicer and the Trustee for the
benefit of Certificateholders (other than its obligations under Section 4.10),
the Transferee hereby grants to the Servicer and to the Trustee for the benefit
of the Certificateholders a security interest in and lien on all of the
Transferee's right, title and interest, whether now owned or hereafter acquired,
in and to: (l) the Collateral Fund, (2) all amounts deposited in the Collateral
Fund and Collateral Fund Permitted Investments in which such amounts are
invested (and the distributions and proceeds of such investments) and (3) all
cash and non-cash proceeds of any of the foregoing, including proceeds of the
voluntary or involuntary conversion thereof (all of the foregoing collectively,
the "Collateral").
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The Transferee acknowledges the lien on and security interest in the
Collateral for the benefit of the Servicer and the Trustee on behalf of the
Certificateholders. The Transferee shall take all actions requested by the
Servicer or the Trustee as may be reasonably necessary to perfect the security
interest created under this Agreement in the Collateral and cause it to be prior
to all other security interests and liens, including the execution and delivery
to the Servicer or at its direction the Trustee for filing of appropriate
financing statements in accordance with applicable law.
Section 3.04. COLLATERAL SHORTFALLS. In the event that amounts on
deposit in the Collateral Fund at any time are insufficient to cover any
withdrawals therefrom that the Servicer or the Trustee is then entitled to make
hereunder, the Transferee shall be obligated to pay such amounts to the Servicer
or the Trustee immediately upon demand. Such obligation shall constitute a
general corporate obligation of the Transferee.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. AMENDMENT. This Agreement may be amended from time to
time by the Servicer and the Transferee by written agreement signed by the
Servicer and the Transferee provided that no such amendment shall have a
material adverse effect on the holders of other Classes of Certificates.
Section 4.02. COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 4.03. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 4.04. NOTICES. All demands, notices and direction hereunder
shall be in writing or by telecopy and shall be deemed effective upon receipt
to:
(a) in the case of the Servicer,
Norwest Mortgage Inc.
405 S.W. 5th Street
Des Moines, Iowa 50309
Attention: David V. Gorsche
Telephone: (515) 221-7462
Facsimile: (515) 221-5192
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or such other address as may hereafter be furnished in writing by the Servicer,
or
(b) in the case of the Transferee, with respect to notices pursuant to
Section 2.01,
and with respect to all other notices pursuant to this Agreement:
or such other address as may hereafter be furnished in writing by the
Transferee, or
(c) in the case of the Trustee,
The Chase Manhattan Bank, N.A.
4 Chase Manhattan Center
Brooklyn, New York 11245
Attention: Corporate Trust Department
Telephone: (718) 242-7290
Facsimile: (718) 945-3905
Section 4.05. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever, including regulatory, held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement.
Section 4.06. SUCCESSOR AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and the
respective successors and assigns of the parties hereto; provided, however, that
the rights under this Agreement cannot be assigned by the Transferee without the
consent of the Servicer.
Section 4.07. ARTICLE AND SECTION HEADINGS. The article and section
headings herein are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
Section 4.08. CONFIDENTIALITY. The Transferee agrees that all
information supplied by or on behalf of the Servicer pursuant to Section 2.01 or
2.02, including individual account information, is the property of the Servicer
and the Transferee agrees to use such information solely for the purposes set
forth in this Agreement and to hold such information confidential and not to
disclose such information.
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IN WITNESS WHEREOF, the Servicer and the Transferee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
NORWEST MORTGAGE, INC.
By:_________________________________
Name:
Title:
[Transferee]
By:_________________________________
Name:
Title:
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SCHEDULE I
MORTGAGE LOAN SCHEDULE
